Grocon’s multi-million-dollar battle with Infrastructure NSW has taken another turn after global giant Lendlease entered the legal fray.
On Wednesday, Grocon appeared in the NSW Supreme Court where it is seeking compensation from the state government department for its handling of the developer’s failed Central Barangaroo mixed-use project.
The developer is suing Infrastructure NSW for $270 million—the amount it said it lost out on when it sold its stake in the $2 billion mixed-use project to Aqualand because the views to the harbour were blocked by the Crown’s casino project.
Grocon was awarded development rights for the Central Barangaroo project in January 2018 as part of a consortium with Aqualand and Scentre Group. It later introduced Oxford Properties as an investment partner.
Grocon claims the now abolished Barangaroo Delivery Authority (BDA) was aware for years that the Crown and Lendlease sight lines dispute would have an impact on its design for Central Barangaroo but withheld this information.
In September, iNSW won a court order compelling Grocon to pay $1 million of security for its legal costs in order to proceed with its case against the government.
In court on Wednesday, before Justice Patricia Henry, Grocon requested production of the Crown, Lendlease and iNSW settlement deed concerning the arrangements agreed between those parties regarding the sight lines for Barangaroo.
Grocon was represented by Michael Hodge QC, iNSW by barrister Darrell Barnett and Lendlease by David Thomas SC.
Grocon has argued the settlement deed is central to its case as it was cut out of negotiations in the wake of the development authority losing an initial case over the views to Lendlease and Crown and thus placing a significant impact on Grocon’s building heights for its Central Barangaroo project.
The settlement deed was signed prior to Grocon’s forced exit from the project.
It said a notice of resolution of the crucial sight lines dispute was issued to Aqualand just 24 hours after Grocon exited the project in September 2019, meaning it missed a windfall from on-selling a proposed office tower to Canada’s Oxford Properties Group.
“This is relevant because Grocon had been requesting the sight lines resolution notice to be issued for several years, and iNSW had promised to provide it to Grocon on numerous occasions,” a Grocon spokesperson told The Urban Developer.
“When the NSW government, Crown and Lendlease reached agreement in August 2019, Grocon expected the sight lines resolution notice to be issued immediately but it was never issued to Grocon.
“It was revealed that the sight lines resolution notice was issued to Aqualand just 24 hours after Grocon exited the project, with a fire sale of its development rights to Aqualand and iNSW was well aware of the sale of the development rights to Aqualand.”
Lendlease made its position clear arguing the terms of the settlement deed should be kept confidential to which Justice Henry indicated at the conclusion of the hearing the document would likely form part of discovery in the case.
Henry also indicated there would also be limits placed on its distribution.
It was also revealed to the court that iNSW has indemnified Crown and Lendlease against certain third-party legal action by Grocon.
The case hinges on the interpretation of a contract between Crown and Lendlease and the BDA—now iNSW.
Late last year, Lendlease received approval for its third tower in the 22-hectare harbourside precinct.
The developer’s three eventual towers will comprise 284,000sq m of office space as well as 1,008 residential units and 18,000sq m of retail.
Grocon, which has operated in Australia for 73 years, has in recent weeks called in administrators over the group’s construction companies indicating its ongoing legal matter was the main cause of its financial difficulties.
Grollo would not confirm which entities were being placed into administration but told The Urban Developer that 52 entities would be placed into administration.