CBRE (V) Pty Ltd v Trilogy Funds Management Limited [2021] NSWCA 316

In December 2021, Trilogy Funds Management (as the trustee of the Pacific First Mortgage Fund (“the Fund”)) commenced proceedings against CBRE (V) Pty Limited (“CBRE”) to recover monies lent by the Fund to the Indigo Group to purchase properties.

The Fund claimed that it only made loans to the Indigo Group because CBRE had provided misleading property valuations (“the 2021 Proceedings”).

CBRE sought a summary dismissal of the 2021 Proceedings claiming that they were an abuse of process. CBRE pointed to proceedings that had been brought against it in 2015 by City Pacific, an entity previously responsible for the Fund (“the 2015 Proceedings“).

CBRE argued that the 2021 Proceedings were an abuse of process because they concerned the same issues the subject of the 2015 Proceedings.

The Factual Circumstances

On 25 May 2006, City Pacific engaged CBRE to provide a valuation of properties owned by Marina Cove Pty Ltd.

On 1 June 2006, CBRE valued the properties at $34.8 million. Shortly after the valuation, Marina Cove Pty Ltd sold the properties to the Indigo Group for $30.47 million. Indigo Group obtained a loan of $27.84 million from the Fund to assist its purchase of the properties (“2006 Valuation”).

On 8 October 2007, City Pacific obtained a separate valuation from the Indigo Group for two other properties. This related to a separate transaction and arose from separate circumstances. In reliance of the valuation obtained from the Indigo Group, City Pacific entered into a contract with the Indigo Group and paid an amount of $11.11 million (“2007 Valuation”).

In 2015, City Pacific and its related entity commenced proceedings against CBRE and claimed that the properties valued substantially less than what CBRE had valued. City Pacific said CBRE knew that the valuation was not reliable and knew that such a valuation would assist City Pacific in lending money to the Indigo Group to purchase the said properties.

Decision at first instance

In the 2021 Proceedings, CBRE argued that the 2021 Proceedings were an abuse of process and should have been joined with the 2015 Proceedings. The trial judge ruled against CBRE and made the following comment:

“…the claims in the two sets of proceedings were properly made by different plaintiffs in respect of different losses arising from different transactions incurred at different times.”

Decision on appeal

CBRE appealed to the New South Wales Court of Appeal.

The key issue on appeal was whether the nature of the claims made in the two sets of proceedings were regarded as the same.

The Court undertook a comparison between the 2015 Proceedings and the 2021 Proceedings and made the following findings:

  1. In the 2015 Proceeding, City Pacific commenced proceedings in respect of $11.1 million.
  2. In the 2021 Proceedings, the Fund commenced proceedings in respect of $27.84 million.
  3. The only overlap between each of the proceedings were the 2006 Valuation but the claims are ultimately issued by different parties for different losses arising from different transactions.

The Court of Appeal found in favour of the Fund and dismissed the appeal brought by CBRE.

The Court held that in order to constitute an abuse of process, the conduct of the plaintiffs must be so unreasonable as to bring the administration of justice into disrepute. The Court found that in these circumstances this would not bring disrepute to the administration of justice and although there are some overlap between the respective proceedings, they ultimately were brought by different parties, related to different issues and arose from different transactions.