Grocon cops $1m costs hit in Barangaroo court stoush
Melbourne construction baron Daniel Grollo has suffered a major blow in his $270m battle to prove NSW sold rights to Barangaroo’s priceless views twice.
Melbourne developer Grocon has been slugged with a $1m costs order as it begins a legal fight against the NSW government’s development agency after being left on the brink as it tried to develop the Central Barangaroo precinct in Sydney.
Barangaroo was once billed as a $5bn opportunity to build a harbourside precinct, but Grocon says it was left in a dire financial position by the actions of the Barangaroo Development Authority, which has now become part of Infrastructure NSW.
The Daniel Grollo-owned company is seeking close to $270m after being cut out of a secret settlement made between the BDA and James Packer’s Crown Resorts and the listed developer Lendlease, which protected views from their multi-billion towers in the neighbouring Barangaroo South precinct.
Grocon alleges the NSW government effectively sold the same famed Sydney Harbour views, twice and it was encouraged to build a super tall tower until the government lost a court case against Crown and Lendlease before settling with them, locking in views in vista from the Sydney Harbour Bridge to the Opera House.
This restricted development at the central precinct to low-rise towers and delays in issuing a crucial sight line certificate also derailed a major deal to sell an office tower to Canadian investor Oxford Properties Group, forcing Grocon to sell out to one time backer, Chinese company Aqualand, at a discount.
Grocon is making claims against INSW for misleading and deceptive conduct, estoppel and breaches of contract and seeks damages and equitable compensation of up to $269.7m.
INSW won security of $1m which Groocn has must pay in two parts. The developer had argued that the agency‘s conduct that led to the case “materially contributed” to Grocon’s financial position and that to order security would stultify the proceedings.
NSW Supreme Court Justice Trish Henry ordered Grocon to provide security for INSW’s costs by way of two tranches up to the conclusion of expert evidence and mediation.
The case revealed Grocon, which led consortium including Aqualand and Scentre, owner of the Westfield empire, would pay to INSW a development rights fee of $422,584,261, calculated on the basis that it could develop space of about 124,208sq m, and subject to sight lines.
In mid-2018 Grocon entered into an agreement with Oxford so the Canadian company would pay about $140m for the office component of Central Barangaroo and formation of a joint venture for the entire development. About $116m was payable by the end of 2018 and would be used to refinance an expensive loan to MaxCap and pay listed landlords Dexus and GPT a total of $49.3m to settle liabilities on a Brisbane tower.
Grocon warned it may be unable to continue the case if hit with a hefty costs order. However, Justice Henry, in a judgment released this week, found: “I am not satisfied that Grocon has established that making an order for security would stultify the proceedings or render them being unable to pursue their claims.”
The case continues.
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