Infrastructure NSW Statement - Current Legal Proceedings

The following points have been prepared to provide creditors and interested parties with information relating to Grocon’s legal proceedings against Infrastructure NSW.

  1. Grocon and its consortium partners were awarded rights to develop Central Barangaroo in 2016 following an open and competitive process.
  2. The development agreement was entered into by the former Barangaroo Delivery Authority (BDA). Infrastructure NSW became the responsible body for Central Barangaroo on 1 July 2019.
  3. The development agreement required Grocon to pay Infrastructure NSW for development rights. Neither the BDA nor Infrastructure NSW was required to pay Grocon any money under the agreement.
  4. At the time of awarding the development rights for Central Barangaroo, the BDA was in negotiations with Lendlease and Crown Resorts about the sight lines from buildings in Barangaroo South to the Harbour Bridge and the Opera House.
  5. The development agreement for Central Barangaroo addressed the sight lines negotiations and expressly provided for a range of design and development outcomes for Central Barangaroo (and correspondingly adjusted the development rights fees) depending on the agreement ultimately reached with Lendlease and Crown Resorts.
  6. The sight lines negotiations (which became the subject of court proceedings) were resolved by agreement on 19 August 2019.
  7. Grocon had sought to exit the Central Barangaroo development for some time prior to settlement of the sight lines dispute. Grocon sold its rights to its consortium partner Aqualand, completing its exit in September 2019.
  8. Grocon commenced proceedings against Infrastructure NSW in the NSW Supreme Court in February 2020. The Grocon entities which commenced the proceedings are not in administration.
  9. In August 2020, in the context of a security for costs application, Grocon attempted to demonstrate that Infrastructure NSW was the cause of Grocon’s financial difficulties. Amongst other matters, Henry J found[1] that:
    a. Grocon’s claim is one for loss of opportunity, not actual loss (paragraphs 106-7);
    b. “To the extent that Grocon claims to have thrown away funds by incurring costs of $37.5 million by reason of Infrastructure NSW’s conduct, in my view, those funds were “recovered” on receipt of the payment of $73 million from Aqualand” (paragraph 107);
    c. “I am not persuaded that Grocon has established that Infrastructure NSW’s conduct has materially contributed to the impecuniosity of Grocon” (paragraph 108).
  1. Her Honour also noted the existence of Grocon liabilities which preceded or were otherwise unrelated to Central Barangaroo (paragraphs 100 – 101).
  2. The findings were made in the context of an interlocutory application and do not finally determine Grocon’s claims, which Grocon has since amended. Nevertheless, the findings are consistent with Infrastructure NSW’s views.
  3. Grocon’s claim of c.$270 million is what Grocon says it might have made over the life of the development. For Grocon to have realised any financial expectation, it would have had to successfully complete the development.
  4. Infrastructure NSW is defending the claims by Grocon because Infrastructure NSW considers that the claims lack merit.
  5. The litigation is on course to proceed through further amendments to the pleadings, evidence (including expert evidence) and discovery. The final hearing will occur in accordance with a timetable to be set by the Court but is unlikely to take place before the end of 2021.

 

[1] The judgment can be found here: https://www.caselaw.nsw.gov.au/decision/174516409b9d21ba3708baf2.

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