Grocon chief executive Daniel Grollo. Picture: Stuart McEvoy
Development and construction company Grocon claims it is in a David and Goliath-style fight against the NSW government as it warns it may have to make 80 staff redundant so it can fund a legal battle over its costly exit from Sydney’s harbourside Barangaroo precinct.
The Daniel Grollo-owned company told a Sydney court it may need to make staff cuts and reduce itself to a “litigation shell” to fight the case, but the government agency it is fighting, Infrastructure NSW, queried whether one of the country’s best-known private developers would actually take this drastic course of action.
“Grocon should not be shut out from bringing this litigation in circumstances in what’s now really a David and Goliath situation,” Grocon counsel David Studdy SC told the Sydney court hearing.
The company is locked in a court battle against the Berejiklian government agency, claiming it suffered heavy losses after a confidential settlement was reached last year without its knowledge, to protect views from towers being built at Sydney’s Barangaroo by James Packer’s Crown Resorts and global developer Lendlease.
Grocon’s complaint is that actions by forerunner government agency, the Barangaroo Development Authority, left it in a significant financial hole as it missed out on key financial deals and eventually sold out of the precinct at a discount.
The company says it was left in a dire position, although its current finances were suppressed by court order, as a result of the NSW government authority effectively selling the same famed Sydney Harbour views twice as it looked to develop Barangaroo precinct.
Grocon led a consortium backed by Chinese-backed developer Aqualand and local Westfield owner Scentre which was granted the rights to develop the central Barangaroo precinct by the BDA in 2017, although it was being encouraged to build a large tower even before its position was locked in.
But its dreams of leading a $5bn project were shattered when the BDA in 2018 lost a court case to James Packer’s Crown Resorts and global company Lendlease and then settled with the powerful pair in 2019, protecting their views from neighbouring Barangaroo of a vista including the Sydney Harbour Bridge.
The move effectively stymied Grocon’s hopes of building an office skyscraper and other tall buildings, slashing the value of its precinct as it lost a nearly complete deal to sell the commercial building and had to sell at a discount.
Grocon lost a bid to be given a copy of the settlement deed to help fight its case on Thursday.
The hearing heard that it could struggle to pay costs in the event it lost the case. Daniel Grollo, who owns Grocon, struck a $4m deed with creditors of the company’s Queensland and Victorian subsidiaries last year but Infrastructure NSW pointed to the rapidly changing position of the company.
Grocon missed out on a windfall from selling a planned $1.5bn skyscraper to Canadian pension-fund-backed Oxford Properties Group, on which it would have received an upfront $116m and ongoing development fees.
It was later forced to transfer the development to Chinese partner Aqualand for $73m on a “take it or leave it” basis, the court was told, far lower than an offer of $140m in 2018.
Grocon is arguing that Infrastructure NSW’s failure to issue a crucial notice stating the sight lines dispute had been resolved meant that it could not complete the deal with Oxford and missed out on a benefit of about $43m.
The company argued the BDA had provided a letter of comfort stating the office tower could be at least 60,000sq m but it delayed issuing the notice so the Oxford deal could not go ahead, effectively getting the authority off the hook on its promise in the letter.
The court reserved judgment on whether Grocon have to put up security for costs.
