Infrastructure NSW kept Grocon scion Daniel Grollo in the dark about the progress of crucial negotiations with Crown Resorts and Lendlease regarding sight lines at Central Barangaroo while it held secret discussions with other investors involved in the project, a court has heard.
The May and August 2019 exchanges, via a confidential WhatsApp channel, between Tim Robertson, an executive director at INSW, and David Matheson and Gawain Smart, managing directors at Canada’s Oxford Properties, which at the time was the office investment partner of Grocon’s $2 billion project, were read out at a NSW Supreme Court hearing by Grocon’s barrister, Michael Hodges, QC.
Grocon is suing INSW for about $270 million in losses it claimed it suffered on the $2 billion project because of the alleged “unconscionable conduct” of INSW and its predecessor, the Barangaroo Delivery Authority.
A trial is due to begin next year. Mr Grollo is banking on a successful outcome to repay creditors of the 88 collapsed Grocon companies, who are owed more than $100 million under a deed of company arrangement negotiated in May.
Mr Hodges read from the affidavit filed by Mr Robertson, which showed he was confidentially messaging Mr Matheson in May, a few months before debt-laden Grocon sold its stake in Central Barangaroo to Aqualand for $73 million after long delays relating to the unresolved “sight lines” issue sent the once-powerful developer and builder spiralling towards financial collapse.
In September, the day after the Grocon sale was finalised, Aqualand was issued the sight lines resolution notice by the NSW government which ensured views across Sydney Harbour from the new Crown casino would be unobstructed, thus limiting the height of Central Barangaroo.
“Re[garding] government stakeholders, we have had a green light to proceed with engaging with Crown and Lendlease, a very important step,” Mr Robertson’s message to Mr Matheson read.
“I’m not keen to disclose to Daniel [Grollo] yet … because I am not keen to hand him more leverage, but will be moving quickly on the negotiation, no interest in a long-drawn-out process.”
Mr Robertson went on to say that he hoped to have negotiations wrapped up by the end of June and that it was “critical the other process is completed beforehand”.
By the “other process”, Mr Hodges said this was understood in the context “by which Grocon is being forced out and Aqualand is going to take over as the developer”, a characterisation rejected by INSW’s barrister Darrell Barnett who said Grocon had “voluntarily entered into an agreement with Aqualand”.
Mr Matheson responded to this message from Mr Robertson by saying that the thing Oxford was looking for from INSW was “comfort that you will activate step in rights once we place Grocon into administration”.
In August, among messages exchanged on the WhatsApp channel between Mr Robertson and Oxford’s Mr Smart, Mr Robertson said he was “hesitant” to give Daniel Grollo the sight lines resolution notice “knowing that what he will do with it will just further complicate the project”.
“What is going on is INSW is engaged in separate discussions with Aqualand and Oxford that it is not revealing to Grocon and the question of the issuing the sight lines resolution notice is something being considered by INSW based on the commercial outcomes for either it or the deal with Aqualand and Oxford,” Mr Hodges said.