Crown Sydney Property v Barangaroo Delivery Authority; Lendlease (Millers Point) v Barangaroo Delivery Authority

1. [1]

   HIS HONOUR: On the eastern shore of what is now Darling Harbour, where once Aboriginal people went about their daily lives, and later, in the Great Depression of the 1930’s, men fought for jobs, thousands of Australians now work in air-conditioned comfort. Competition for work and wages has been replaced by competition for that most characteristic of Sydney fixations: harbour views. How did this transformation occur?

The development of the Barangaroo precinct

1. [2]

   The precinct now known as Barangaroo is about 22 hectares in extent. It has been divided into three separate areas. Running from the south to the north, they are Barangaroo South, Central Barangaroo and the Barangaroo Reserve (although some of the land in Central Barangaroo is also designated as public reserve). Barangaroo South and Central Barangaroo have been divided, for development purposes, into a number of blocks.

2. [3]

   Barangaroo is either owned by, or effectively under the control of, the defendant in each proceeding (“the Authority”, often referred to in the documents as the “BDA”). Development at Barangaroo is controlled by “Concept Plans”, which are intended to implement the overall approach to urban design and planning reflected in a series of Master Plans.

3. [4]

   The Authority or its predecessor the Sydney Harbour Foreshore Authority (the SHFA) entered into a number of development agreements for the blocks in Barangaroo South. Effectively, all those blocks are now developed or in the process of development. The plaintiffs (who I will refer to respectively as “Crown” and, although there are two related entities, “Lendlease”) have entered into development agreements with the Authority for the northernmost blocks of developable land within Barangaroo South. Crown is constructing what is called an integrated hotel resort, which includes residential apartments and a casino. Lendlease is developing two towers of what are said to be luxurious residential apartments.

4. [5]

   The approved Concept Plan, so far as it relates to Central Barangaroo, has undergone a number of modifications over the years since it was first promulgated in 2007. However, at all material times until mid 2015, that Concept Plan contemplated that development on Central Barangaroo would be relatively low in height. The height restriction was intended to give effect to an overall design imperative which had the buildings on Central Barangaroo rising from north to south, and with the tallest building to the south of what is called the “Highgate line” (a notional line whose point of reference is the Highgate building in Kent Street).

5. [6]

   With development on Central Barangaroo being thus limited, rooms located on the north-eastern faces of the Crown building, and rooms located on the north-eastern face of one of the Lendlease buildings known as Tower R4A, would enjoy sweeping views over Hickson Road and Observatory Hill to the Sydney Harbour Bridge and the Sydney Opera House. Those views are of great value to Crown and Lendlease respectively.

6. [7]

   The development agreements made between Crown and the Authority (the Crown Development Agreement, or “CDA” [1] ) and Lendlease and the Authority (the Project Development Agreement, or “PDA”) contain provisions intended to protect those views. The parties called those provisions, cl 5.5 of the CDA and cl 2.5 of the PDA, the “Sight Lines Clauses”, and I shall do likewise. In effect, the Sight Lines Clauses:

   1. (1)

      recognise that optimisation of the development of Central Barangaroo is of critical importance to the Authority;

   2. (2)

      recognise that retention of the sight lines is of critical importance to Crown and Lendlease respectively; and

   3. (3)

      provide that if any application is made for development on Central Barangaroo different to that provided for in the Concept Plan, the Authority must discuss and negotiate in good faith with Crown and Lendlease to seek to agree changes that would retain the sight lines while at the same time optimising development opportunities.

7. [8]

   The Sight Lines Clauses, and specifically, their third feature that I have just summarised, lie at the heart of these disputes.

8. [9]

   When the development agreements were made on 27 May 2015 [2] , the State Government was considering whether a metro stop, for the Sydney metro system then being planned, should be located at Barangaroo. However, no decision had been made. That soon changed. On 23 June 2015, the State Government announced that there would be a metro station at Barangaroo.

9. [10]

   Over a year earlier, the Authority had issued a “Call for Expressions of Interest” (CEOI) seeking expressions of interest for the development of Central Barangaroo. In October 2014, the Authority issued a request for development bids (RDB). Both the CEOI and the 2014 RDB contemplated that the development would be carried out within the height restrictions imposed by the Concept Plan as it then stood.

10. [11]

    When the announcement of the Barangaroo metro station was made, it became obvious that the remaining undeveloped land at Barangaroo could accommodate, in particular, a higher intensity of development for office and commercial purposes. Accordingly, shortly after the announcement was made, the Authority terminated the 2014 bid process. Thereafter, in December 2015, the Authority issued a further RDB. Under the 2014 RDB, there was to be a maximum gross floor area (GFA) of 120,000m². Under the 2015 RDB, there was to be a maximum GFA of 150,000m².

11. [12]

    The Authority received several responses to the 2015 RDB. One came from a consortium led by a Grocon company. For convenience, I shall refer to that consortium, singularly and simply, as “Grocon”. Grocon provided two “envelopes”, or schematic proposals, in response to the Authority’s 2015 RDB. One provided for a tower located on the south-eastern corner of Central Barangaroo with an indicated height of about RL 245 metres. Another building within the envelope was to have a height of about RL 115 metres. The remainder of the buildings proposed for that envelope appear to fall within the heights denoted by the Concept Plan.

12. [13]

    The second envelope reduced to some extent the bulk of the tower on the south-eastern corner, and reduced its height to RL 197 metres. It did not include a structure at RL 115 metres. However, for most of the other structures, the maximum proposed heights exceeded those allowable under the Concept Plan.

13. [14]

    Construction in accordance with either of those envelopes would impede to some extent the sight lines (as the expression is used in the CDA) from Crown’s development, and to a very large extent, sight lines (in the sense used in the PDA) from Lendlease’s tower R4A.

14. [15]

    The plaintiffs say that the operation of the Sight Lines Clauses was triggered either by that initial Grocon bid or by Grocon’s subsequent bids, or refinements of bids. The Authority denies this. The plaintiffs say that the Authority has never negotiated in good faith in accordance with the terms of the Sight Lines Clauses. The Authority denies this.

15. [16]

    The resolution of those disputes requires a decision as to the proper construction of the Sight Lines Clauses, and the application of those clauses, so construed, to the facts. That exercise, although not simple, could have been performed within two days or thereabouts.

16. [17]

    However, the plaintiffs plead alternative cases. Each relies upon the attribution of expansive content to the contractual requirement of good faith, and also on the implication of a Mackay v Dick [3] term of good faith, again with expansive attributed content. The argument and resolution of the plaintiffs’ implied term case would require the analysis of many documents produced on (or as on) discovery, and of the very detailed submissions as to the inferences that should be drawn from those documents.

17. [18]

    For reasons that I shall give, I have come to the conclusion that the plaintiffs are entitled to succeed on the first limb of their case: that is to say, on the proper construction and application of the Sight Lines Clauses. In those circumstances, and because there is a very good reason why a decision is required as quickly as possible [4] , I shall not deal with the good faith case.

18. [19]

    The primary evidence relevant to the good faith case is, for the most part, documentary. There is no real controversy as to the primary facts. It is the inferences of ultimate fact to be drawn from those primary facts that are controversial. I enjoy no particular advantage, as trial judge, that would render it desirable (far less necessary) that I express a view on those ultimate facts.

19. [20]

    When the matter goes on appeal (as no doubt it will, assuming that leave be granted [5] ), the Court of Appeal will be in as good a position as I am to decide those ultimate issues of fact should it be necessary to do so. Indeed, the Court of Appeal may be in a better position. The hearing was brought on with extreme urgency. The process of production of documents occurred up until, and throughout most of, the hearing. It was apparent that Counsel were, to an extent, labouring to absorb the impact of what had been produced. It is likely that if the matter goes to the Court of Appeal, Counsel will be able to concentrate far more effectively and selectively on the documents most relevant to the good faith case.

The Sight Lines Clauses

1. [21]

   It is clear, and was common ground, that the Sight Lines Clauses must be read in the context of the agreements as a whole. The parties accepted that the immediately preceding clauses, cl 2.4 of the PDA and cl 5.4 of the CDA, were of particular relevance. Accordingly, I set out the relevant parts of cls 2.4 and 2.5 of the PDA and cls 5.4 and 5.5 of the CDA.

2. [22]

   There was more to cl 5.4 than I have set out. However, it is only the first two paragraphs (which effectively mirror cl 2.4 of the PDA) that are significant for present purposes.

3. [23]

   Words and phrases with initial capital letters are defined terms. For the most part, there is no need to set out the definitions. It is however to be noted that the word “application” in both cl 2.5(c) and cl 5.5(c) does not have an initial capital letter. That is of some significance, given the existence of, and the meaning ascribed to, the defined term “Application”. I set out, first, the definition of that term and of the embedded defined term “Approval” in cl 1.1 of the PDA and, next, the definition of that term and of the embedded defined terms “Approvals” and “SEARS Application” in cl 1.1 of the CDA.

4. [24]

   The acronym “SEARS” denotes “Secretary’s Environmental Assessment Requirements”. It refers, as I understand it, to the requirements that the Secretary of the relevant government Department requires to be addressed in any application to modify the currently approved version of the Concept Plan. When the Barangaroo Project was younger, there was an equivalent initialism, “DGRS” referring to the requirements of the then Director-General of the relevant Department.

Progress of Grocon’s bid

1. [25]

   Grocon was one of three bidders who responded to the 2015 RDB. Its initial bid was submitted on 29 February 2016. The other bidders were another Lendlease company (which in fact submitted two bids) and Mirvac. To jump ahead for a moment: the Authority took the view that, while Grocon and the Lendlease company were competing bidders, “probity” requirements prevented it from disclosing any of the content of the Grocon bid to Lendlease. That rationale disappeared by 23 June 2016, when the Authority confirmed to the Lendlease company that it was not, and to Grocon that it was, the preferred bidder.

2. [26]

   Internal Grocon documents reveal that before Grocon submitted its initial bid, it was given to understand, in discussions with the Authority, that there would be no height restrictions, or height limits, necessarily hampering its bid. I think that those communications should be understood as saying no more than that the bid should not be constrained by the height limits shown in the then approved version of the Concept Plan.

3. [27]

   Even before the Grocon initial bid was lodged with the Authority, Crown and Lendlease had raised with the Authority their concerns “that the request for bids for Barangaroo Central will not contain any height restrictions and that proponents will be free to submit proposals without any limitation as to height or having regard to the retention of sight lines” [6] . The Authority replied on 1 December 2015, stating that it was “very aware of its obligations” under the Sight Lines Clauses, and that it was not, nor would it in the immediate future be, “considering or approving any application” which would trigger the Sight Lines Clauses. The Authority said that there could be no “consultation process on the proposed design with Lendlease, Crown and other stakeholders” until a preferred bidder was selected. That was so, the Authority said, because a Lendlease entity was also likely to make a bid.

4. [28]

   There was much further correspondence between Crown and Lendlease on the one side (frequently writing joint letters) and the Authority on the other. Much of that was said by the plaintiffs to be relevant to their good faith case, and may be passed over for the reason earlier indicated. What is notable is that on 10 March 2016, the Authority wrote to Crown and Lendlease seeking to initiate the process of consultation for which the Sight Lines Clauses called. That letter (which reflects a position totally at odds with the Authority’s position in the litigation) stated, among other things:

5. [29]

   Also in March 2016, the Authority made two requests for clarifications to Grocon. Grocon provided responses in April 2016. Again, the content of those responses is said to be relevant to the good faith case. Again, for the reasons indicated, I will not go into the detail.

6. [30]

   On 29 April 2016, representatives of the Authority met representatives of Crown and Lendlease. It would appear that the Authority proposed three alternative forms of development for Central Barangaroo. Crown and Lendlease rejected each of those alternatives, because of their adverse impacts on the sight lines. Following that rejection, there were further discussions, which failed to yield agreement.

7. [31]

   The full bids received by the Authority in response to the 2015 RDB (one by Grocon, two by the Lendlease company and one by Mirvac) were reviewed by an Evaluation Panel. That panel reported to the Authority’s Executive Review Panel. The Executive Review Panel endorsed the Evaluation Panel’s report, and adopted a proposed development for Central Barangaroo involving total above-ground GFA of 120,000 square metres [7] , and a tower with a height of RL 127 metres [8] .

8. [32]

   In May 2016, there were negotiations between the Authority and Grocon in relation to the “preferred bidder conditions”. Thereafter, as I have said, Grocon was selected as the preferred bidder. On 12 July 2016, the Authority issued the final preferred bidder conditions to Grocon.

9. [33]

   The process of negotiation and design refinement, as between Grocon and the Authority, continued after Grocon had become the preferred bidder. At the same time, the Authority continued its process of discussion and negotiation with Crown and Lendlease.

10. [34]

    On 20 December 2016, Grocon delivered to the Authority what the parties called the Escrow Bid. It included architectural design documents. As the name suggests, that bid was delivered in escrow.

11. [35]

    Thereafter, negotiations continued, both between the Authority and Grocon and, separately, between the Authority and Crown and Lendlease. Again, given what I have said as to the good faith case, it is not necessary to go to the detail of those negotiations. All that need be noted is that some 11 months elapsed before the negotiations between the Authority and Grocon got to the point that their agreement could be finalised in writing.

12. [36]

    On or about 15 November 2017 [9] , the Authority and Grocon executed the Central Barangaroo Development Agreement (CENDA). The CENDA included provisions relating to completion of the “Sight Lines Negotiations” between the Authority and Crown and Lendlease.

13. [37]

    As I have said, Grocon was part of a consortium. Other members of the consortium included an entity referred to in correspondence as Oxford, who sought to develop commercial office space in Central Barangaroo as part of the overall Grocon development, and Aqualand, who sought to develop residential accommodation.

14. [38]

    The Authority gave commitments to Oxford as to a minimum above ground GFA that would be available for commercial office space on Central Barangaroo, and to Aqualand, indicating support for a tower with a height of RL 158. Again, those matters are said to be relevant to the good faith case. That, it seems to me, is not their only relevance; but it is the fact of the commitments, rather than their detail and the process by which they were given, that has some significance.

15. [39]

    On 11 January 2018, the Authority informed Lendlease that the Authority would be the applicant on any application for planning approval for Central Barangaroo. On 19 January 2018, the Authority announced that Grocon had been chosen to undertake the development of Central Barangaroo.

16. [40]

    On 15 August 2018, the Authority issued a “commissioning letter” to Grocon. That letter was replaced a few days later, by one dated 20 August 2018. By that second letter, the Authority commissioned Grocon “as the Central Developer to prepare a development scheme for Central Barangaroo… in advance of the next stage of the Sight Lines Negotiations…”. The letter specified a number of conditions that the development application must satisfy.

17. [41]

    The second commissioning letter was supplemented by a third commissioning letter dated 4 September 2018. That letter proposed further “additional controls” relating to height, massing and other considerations.

18. [42]

    Grocon responded to the commissioning letters on 6 September 2018, providing an “envelope interpretation in response to BDA’s commissioning letters”. It is not necessary to go to the detail.

19. [43]

    The evident purpose of the commissioning letters was to require Grocon to prepare an application for modification of the approved Concept Plan as it then stood. That topic had been raised back in 2017, when Grocon provided a draft SEARS request to the Authority on 15 December 2017.

20. [44]

    It was common ground that if development on Central Barangaroo were to proceed in a way that was inconsistent with the then approved Concept Plan, it was necessary that the Concept Plan be modified. A SEARS request (seeking an indication from the Secretary of the Department as to the requirements that the application for modification should cover) was the recognised way of initiating a request for modification. As I have said already, the application could be made by the Authority or by a private developer. If made by the latter, the Authority’s approval, as land owner, would be required.

21. [45]

    On about 5 March 2018, Grocon prepared and sent to the Authority another form of draft SEARS request. That request sought confirmation of the requirements to be satisfied in an application for planning approval.

22. [46]

    The Authority considered the draft request. It engaged in extended consultation with Grocon over its terms and content.

23. [47]

    It is self-evident that the details of the development, including matters of height, massing, mix of uses and the like, had to be finalised before the request could be sent to the Secretary for consideration.

24. [48]

    The draft SEARS request was discussed and redrafted from time to time, as the negotiations between the Authority and Grocon progressed. That process appears to have continued at least until September 2018. On 13 September 2018, the Authority sent the current version of the draft SEARS request to Crown and Lendlease for their consideration. It is the Authority’s case in the litigation that this was the first “application” that attracted the operation of the Sight Lines Clauses.

The real issues in dispute

1. [49]

   I set out (without the extensive footnotes in the original) the parties’ statement of the real issues in dispute, refined to reflect the abandonment of two minor issues in the course of the hearing. The parties disagreed as to whether the italicised part of issue 9(i)(ix) was an issue that arose on the pleadings. It is unnecessary to decide this point:

The background known to all parties

1. [50]

   The parties addressed detailed submissions to the factual background against which the PDA and the CDA were made. In the usual way, much of that material had little relevance and less weight. However, there are some circumstances that do need to be stated.

2. [51]

   The 2015 RDB was not in existence as at May 2015. Thus, its content could not form part of the relevant factual background. However, as at May 2015, the parties must have understood that development of Central Barangaroo would take place pursuant to some form of bid process. That is apparent from the way the 2014 RDB process had evolved.

3. [52]

   First, in April 2014, the Authority issued the CEOI to which I referred at [10] above. The CEOI invited parties who were interested in undertaking some or all of the development on Central Barangaroo to make submissions. What was called “The Opportunity” was summarised in Part 1.1 of the CEOI. The bid process was summarised in Part 1.3. I set out relevant extracts from those parts of the CEOI:

4. [53]

   There was much more detail, but it is not necessary to set out any of it.

5. [54]

   The 2014 RDB followed a similar pattern. The “Opportunity” was summarised in Part 1.1. What was said had been adapted from the CEOI to reflect the fact that a short list of potential bidders had been selected from those who responded to the CEOI. Relevantly Part 1.1 of the 2014 RDB stated:

6. [55]

   Again, there was a summary of the bidding process in Part 1.3 of the 2014 RDB. So far as it is relevant, it stated the following:

7. [56]

   The 2014 RDB included a part entitled “Terms and Conditions”. The CEOI had also, it appears, included Terms and Conditions, but it is not clear whether they were available to be found in the substantial volume of documents that the parties tendered. In any event, the Terms and Conditions contained in the 2014 RDB included the following features:

   1. (1)

      they specified that bids would be assessed and evaluated in accordance with the criteria set out in the 2014 RDB, and that the Authority expected (or, in the language curiously preferred by the drafter, “anticipate[d]”) that it would enter into a development agreement with the successful bidder (cl 2.1);

   2. (2)

      they noted that the Authority reserved the right to accept, reject, or exclude bids; to select bidders to enter into detailed negotiations or to submit further bids; to accept all or any parts of bids; and to appoint a successful bidder (cl 3.2);

   3. (3)

      they specified that bids must be available for acceptance up until and including “the Bid Acceptance Date” (cl 8.5);

   4. (4)

      they limited the rights of bidders to withdraw bids (cl 9.1); and

   5. (5)

      they made it clear that the RDB was not an offer; that the Authority was not obliged to proceed with the process set out in it or to accept any bid; and that no legal or other obligations would come into existence until contracts were signed and all ministerial and other approvals were obtained (cl 14.1).

8. [57]

   As at 27 May 2015, the parties must have understood that the process briefly summarised above was the process to be followed in relation to the proposed development of Central Barangaroo. Thus, the parties must have understood that the process involved several steps:

   1. (1)

      first of all, interested parties would bid for the opportunity to become the preferred bidder. As the CEOI and the 2014 RDB made clear, that process was likely to include negotiations and discussions with the Authority to refine and develop bids;

   2. (2)

      once a preferred bidder had been selected, that bidder would work with the Authority to refine further and develop its bid until it got to the point where the Authority was prepared to accept it; and

   3. (3)

      it was likely that the successful bidder and the Authority would enter into a development agreement whereby, assuming planning approval was obtained, the bidder would become the developer of Central Barangaroo [11] .

9. [58]

   That shared understanding of the bid process seems to me to be an important feature of the relevant background. So, too, is the repeated emphasis in the CEOI and the 2014 RDB that development was to take place in accordance with the Concept Plan as it then stood. Both documents included, among many other details, indicative envelopes that showed height limits conforming to those approved under that Concept Plan.

10. [59]

    Next, and as I have said already, the height of permissible development of Central Barangaroo was severely limited, as at 27 May 2015, pursuant to the Concept Plan as it then stood. Further, the overall design concept contemplated that the height of buildings would rise from north to south, and that relatively high buildings would be located behind, or to the south of, the Highgate line. Those aspects of the Concept Plan for Central Barangaroo had not changed from the time it was first promulgated in 2007, despite the several modifications to the Plan up to May 2015.

11. [60]

    Next, it was known as at 27 May 2015 that the Government was considering whether to locate a metro station at Barangaroo. It must have been obvious that if that happened, it would be much easier for many thousands more workers to travel to Barangaroo, and that this in turn would help support more intensive development at Barangaroo, in particular for commercial purposes. The only blocks then available for development were those located in Central Barangaroo.

12. [61]

    Next, any development on Central Barangaroo that exceeded the height limits set by the then current version of the Concept Plan would require the approval of the Minister or his or her delegate. The parties understood that this process would be initiated by a SEARS request (from time to time referred to in the documents as a “SEARS Confirmation”), and must have known that the terms of that request would be negotiated between the developer and the Authority. I have set out at [40] and following above some detail of the SEARS process that was followed in this case.

13. [62]

    The parties must have understood that, as I have said at [47] above, the details and at least general design of the proposed development must be finalised before a SEARS request was made. If there were relevant changes to the proposed development after the SEARS requirements have been confirmed, a further request would be necessary.

14. [63]

    Next, neither the Authority nor its predecessor the SHFA had any power to grant planning approvals. Neither was a consent authority. Each was, in law or in substance, the owner of the land. Each was able to make an application for planning approval (and, in relation to some iterations of the Concept Plan, did so). However, as I understand it, it was common ground that a developer whose bid had been accepted and had crystallised into a development agreement could also make an application for consent.

15. [64]

    Next, it was common ground that the process of submission and evaluation of bids was, in the jargon often employed, iterative in nature. That is to say, when the Authority called for bids and bids were submitted, the Authority would examine them and, if there were no immediate obstacle to further consideration, evaluate them. Often, the Authority would work with the bidder to refine the bid, including elements of the design. Frequently, that negotiation related not only to matters of design and town planning, but also to the financial terms that were a critical feature of any bid. Frequently, that process of negotiation involved various trade-offs: the bidder asking for more than was allowed, and the Authority seeking either to restrain the bidder’s appetite or to exact a greater reward for yielding.

16. [65]

    Generally, the evaluation of the bids would reveal an applicant who could be nominated as the “Preferred Bidder”. When this stage was reached, the negotiation between the Authority and the applicant as preferred bidder would intensify, in particular in relation to evolution of the design.

17. [66]

    Generally, in the process of evaluating bids and of negotiating with a preferred bidder, the Authority would take into account the opinions of adjacent owners (strictly speaking, long-term lessees) whose interests would be affected by the bid if accepted and implemented. That of course is, in part, reflected in para (c) of each of the Sight Lines Clauses.

18. [67]

    The matters identified in the three preceding paragraphs were features of the Authority’s dealings with Grocon. The Authority negotiated with Grocon over the terms of its bid, and negotiated extensively with Crown and Lendlease [12] in relation to the impact that Grocon’s proposed development (in its many different manifestations), if implemented, would have on their developments.

19. [68]

    Next, at the time the draft CDA and the draft PDA were being finalised and at the time they were signed, the Authority had solicited and received development bids pursuant to the 2014 RDB. It had done so, knowing that if the State government approved a metro station for Barangaroo, there would be sound commercial and planning reasons (as to the latter, leaving aside the interests of Crown and Lendlease) for developing Central Barangaroo more intensively than was provided by the Concept Plan as it then stood.

20. [69]

    Next, there is the constitution of the Authority and its functions. The Authority is constituted by the Barangaroo Delivery Authority Act 2009 (NSW) as a corporation (s 6) which is “a NSW Government Agency (s 7). It is subject to the control and direction of the “Minister” (s 8). Subject to that control and direction, it is managed by a Board which includes a Chief Executive Officer (ss 9 and 10).

21. [70]

    The objects of the Act are set out in s 3:

22. [71]

    The principal functions of the Authority are set out in s 14(1) of the Act:

23. [72]

    The Authority may have other functions conferred upon it, and (ss 16 and following) has various “ancillary functions” which do not need to be set out.

24. [73]

    One other suggested matter of background, on which the Authority in particular relied, relates to the word “application” used in each of the Sight Line Clauses. The Authority suggested that the parties understood that this could extend to an application made by a would-be developer to the Authority for the Authority’s consent to a development application.

25. [74]

    Crown submitted that no such consent was necessary. It referred to cl 8F(1) of the Environmental Planning and Assessment Regulation 2000 (NSW). Those regulations, including cl 8F(1), were current as at 27 May 2015.

26. [75]

    I set out cl 8F(1):

27. [76]

    In my view, that provision does not apply to an application made by a private developer such as Grocon. The requirement for the owner’s consent is dispensed with, relevantly, only where the applicant is a public authority. The Authority is indeed a public authority. If (as in fact seemed likely to happen [13] ) it were the applicant, there would be no need for the owner’s consent (and in any event, the whole question would be meaningless, because the Authority is also the owner). But if, as from time to time was contemplated, Grocon were to be the applicant, cl 8F(1) would have no application.

28. [77]

    As I have indicated, the parties’ submissions as to factual background ranged very, very widely. However, I see little point in dealing with them beyond what I have said so far.

The parties’ submissions as to construction

1. [78]

   The parties’ submissions were extensive. They were stated twice in writing (for the initial hearing on 29/30 October 2018, and for the further hearing commencing on 21 November 2018). They were developed at some length in oral openings. They were repeated, although thankfully with less detail, in oral closing submissions. Crown and Lendlease supplemented their written and oral submissions on construction with notes identifying what were said to be relevant contextual and linguistic features of the CDA and the PDA.

2. [79]

   I do not propose to recount the full detail of the submissions. Instead, I shall summarise enough of the competing submissions to identify the essential differences in approach, and to provide some background to my decision.

3. [80]

   There were three key points of difference. The first related to the legal effect to be attributed to the word “application”. The second related to the content of the express obligation of good faith (and whether, in addition, a Mackay v Dick obligation of good faith should be implied). The third related to the legal effect to be attributed to the requirement to discuss and negotiate in good faith to agree changes “so as to retain the sight lines… while at the same time optimising… development opportunities”.

4. [81]

   There was a measure of common ground. All parties agreed that the approach to construction was that specified in many cases of the highest authority: see, by way of example only, Kiefel, Bell and Gordon JJ in Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd [14] at [16]-[17]. That approach requires the Court to give to the words of the parties’ bargain the meaning that a reasonable business person, cognisant of the relevant matters of background and context, would give them. And it requires the Court, so far as possible, to give all parts of the contract work to do, to read them so far as possible harmoniously, and to avoid so far as possible commercial absurdity.

5. [82]

   Crown and Lendlease accepted that the Sight Lines Clauses did not guarantee that in all circumstances, they would be entitled to retain the benefit of the sight lines. They accepted that it was possible, as a matter of construction of the Sight Lines Clauses and their operation in practice, that there could be discussions and negotiations that would satisfy the substantive requirements of the Sight Lines Clauses but which, nonetheless, ended in disagreement.

6. [83]

   The plaintiffs emphasised that the Sight Lines Clauses did not use the defined term “Application”, nor for that matter the defined term in the CDA (but not the PDA), “Amendment Application” [15] . Instead, the parties used the undefined word “application”. Thus, the plaintiffs submitted, the word should bear its ordinary English meaning. The concept of making an application necessarily involves that it is an application, for something described in the application, which may be granted or refused (in either case, absolutely or conditionally). The relevant kind of “application” was specified in the Sight Lines Clauses: an application “which provides for development…”.

7. [84]

   The plaintiffs emphasised that the Authority had no planning function. It was the owner of land. Except where an applicant for planning approval was itself a public authority, the Authority’s approval would be required to any application for planning approval. Thus, the content of “application” could not be restricted (as the Authority submitted) to “any application relating to modification of an existing Concept Plan Approval”.

8. [85]

   In those circumstances, the plaintiffs submitted, the kinds of “application” with which the Sight Lines Clauses were concerned were applications to the Authority either for permission to undertake development on Central Barangaroo (subject of course to obtaining all necessary planning approvals) or, as a subset, for the Authority’s approval to a development application to be submitted to the consent authority.

9. [86]

   The plaintiffs’ submissions emphasised the prefatory words of the Sight Lines Clauses: “[p]rior to considering or approving any application…”. Those words, they submitted, fixed the time for the commencement of the good faith discussions and negotiations required by those clauses.

10. [87]

    The plaintiffs accepted, although with some reluctance, that if the Authority received an application (for example, a proposal, whether provided in response to an RDB or as an unsolicited proposal) that was obviously unacceptable, so that it should be dismissed out of hand, the Authority could do so without engaging in those discussions and negotiations. The plaintiffs accepted, again reluctantly, that the Authority would need to consider the proposal for the purpose of forming that view. However, they submitted, when one moved from that limiting case to a case where a proposal was one that was capable of leading to, or being developed to lead to, an “application” in their sense of the word, the obligation to discuss and negotiate kicked in.

11. [88]

    The plaintiffs submitted that there were good reasons for that approach. They submitted that it was of the essence of good faith discussions and negotiations that the Authority should not have formed a preconceived view as to what might or might not be acceptable. They relied upon the uncontroversial fact that if a proposal were to proceed towards acceptance, much back and forth negotiation, development and refinement would be necessary. The plaintiffs submitted that it was inconsistent with the Sight Lines Clauses that this process should take place before the Authority and the plaintiffs had done what those clauses required, in effect to seek to resolve between themselves how the object of those clauses might be achieved.

12. [89]

    The plaintiffs submitted that the obligation of good faith should be understood to involve an obligation to act honestly and with fidelity to the bargain; an obligation not to act to the contrary of those points; and an obligation to act reasonably and with fair dealing, although accepting that the parties’ interests were different and that they were not in a fiduciary relationship. They referred to numerous cases, including the decision of Allsop CJ in Paciocco v Australia and New Zealand Banking Group Limited [16] at [288] – [289], and to some of the cases to which his Honour referred.

13. [90]

    The plaintiffs accepted that the content of the good faith obligation would depend very much on the factual context and on the terms of the particular contract [17] . They referred to the fact that the Authority is a public body whose functions are to be directed towards the achievement of specified statutory objectives. They submitted that the Authority owed a higher standard of good faith and fair dealing than an equivalent private entity might. They referred to the judgment of Finn J in Hughes Aircraft Systems International v Airservices Australia [18] at 196 – 197.

14. [91]

    In this case, the plaintiffs submitted that the contractual good faith obligation both overlapped with and, to an extent, was informed by, the Mackay v Dick implied obligation. They submitted that the Mackay v Dick implication was a rule of construction [19] , and thus that the contractual and implied obligations could coexist, with the latter informing the content of the former.

15. [92]

    As to the subject-matter of the negotiations, the plaintiffs submitted that there was a stated purpose: retaining sight lines whilst at the same time optimising development opportunities. They noted that the verb “retain” has an absolute character. It does not encompass “retaining in part” or “retaining some of”; nor did the parties word their bargain so as to admit of partial retainer. On the other hand, the plaintiffs submitted, the concept of optimisation, in relation to development opportunities, was one of necessarily indeterminate content and susceptible to fact-dependant operation.

16. [93]

    The plaintiffs submitted that there was only one way that they could “retain” the sight lines: namely, by continuing to enjoy the full and unrestricted benefit of those sight lines. On the other hand, they submitted, there were many factors to be taken into account and balanced in the optimisation of development opportunities. Those factors included, but were by no means limited to, the financial returns to be garnered.

17. [94]

    The plaintiffs’ submissions contrasted the language of the Sight Lines Clauses with the language of other clauses of the CDA and the PDA that referred (for example) to “good faith”, or to “negotiations” or “discussions”. They noted the precise content of the Sight Lines Clauses, and compared that with the more imprecise language of the other clauses to which they referred.

18. [95]

    The plaintiffs submitted that the first objective of the required good faith discussions and negotiations was retention of sight lines. The second objective, optimisation of development opportunities, was to be achieved subject to, or so as to allow for, retention of sight lines. The plaintiffs accepted that it was entirely possible that, in the course of negotiations, they might give way to an extent, and agree to some infringement of their sight lines in return for what they perceived as amelioration of a proposed non-complying form of development. However, they submitted, that was a matter for negotiation, not an outcome explicitly required by the Sight Lines Clauses; there was nothing in the Sight Lines Clauses themselves that required the plaintiffs, as a matter of contractual interpretation rather than commercial decision, to accept some infringement of their sight lines.

19. [96]

    The plaintiffs submitted that this did not equate to a construction of the Sight Lines Clauses as guaranteeing, in all circumstances, retention of the sight lines. That follows from the fact that discussions and negotiations of the kinds for which the Sight Lines Clauses call might be conducted, with the requisite good faith and with each party proceeding on the basis of a proper understanding of the construction of those clauses, and yet fail to achieve consensus. The plaintiffs accepted that, if the processes for which the Sight Lines Clauses call were exhausted without result, they might lose some or all of their sight lines. In other words, the plaintiffs accepted as part of their case on construction that what they had was the opportunity to negotiate to retain those sight lines, not a guarantee that they would retain them.

20. [97]

    The Authority’s submissions on construction were conveniently summarised in its written outline provided prior to the hearing on 29/30 October 2018. For reasons of efficiency, I set out, without footnotes and with some very minor textual changes, those submissions.

21. [98]

    It will be noted that the Authority’s submissions called up cl 3.17 of the CDA. That clause has no counterpart in the PDA. Although it seems to me to have very little significance, I set it out:

Decision on the construction issues

1. [99]

   The starting point, it seems to me, is that Lendlease and Crown each acknowledged that the Authority would be considering its development options within the Barangaroo precinct, and, subject to the relevant deed, could pursue other developments both within and outside Barangaroo [20] . The words “subject to this deed” direct attention to the Sight Lines Clauses, which as I understand it are the only clauses imposing any relevant restriction on the Authority’s acknowledged right to pursue other developments.

2. [100]

   Turning from that point to the background, there seem to me to be three key features. First, the parties knew how the Authority would conduct the process of entertaining and dealing with bids for the development of Central Barangaroo; how it would proceed to choose a preferred bidder; and how it would work from there to enter into a development agreement with that preferred bidder. That was all made clear in the CEOI and the 2014 RDB.

3. [101]

   Next, the parties knew that it was at least possible that a metro station would be located at Barangaroo. The announcement had been made in November 2014. It stated that:

4. [102]

   It is obvious, and the parties must have understood, that a metro station at Barangaroo would support and justify more intensive development within and around Barangaroo. The metro line was projected to run from Chatswood (where it would connect with the North West Rail Link) to Bankstown. It would provide, according to the announcement, a boosted “capacity to deliver more services for rail commuters right across Sydney” with “fast, safe and frequent automated rapid transit all the way between Rouse Hill and Bankstown”. As the announcement said, that capacity increase would “[i]mprove access to jobs” and “[e]ncourage greater commercial development – and jobs – in key areas of the city and North Sydney”.

5. [103]

   The third key background feature is that the only available land for development in the Barangaroo precinct was Central Barangaroo. Thus, the parties must have realised that any additional development to accommodate the additional workers who could travel quickly and safely to the Barangaroo precinct, via the metro line, would involve Central Barangaroo. And the parties must have realised that any development of Central Barangaroo that differed from the Concept Plan because it provided for higher density development would involve a revised RDB process.

6. [104]

   It is, I think, clear that the purpose of the Sight Line Clauses, regarded objectively, was to provide a mechanism for the Authority on the one side and Crown and Lendlease on the other to accommodate what was at least a possibility when the CDA and the PDA were made, namely that the Authority would seek bids for the development of Central Barangaroo that exceeded the limits available under the Concept Plan as it then stood. The reference [21] to “potential [or additional] development sites within Barangaroo” must have been understood, as at 27 May 2015, to encompass the blocks located in Central Barangaroo. There was other land available, but it was at least in theory reserved for public uses. Thus, the only “other developments within… Barangaroo” that the Authority could “pursue” were those to be undertaken in Central Barangaroo.

7. [105]

   Against that background, the purpose of the Sight Lines Clauses seems clear. They were intended, objectively, to give Crown and Lendlease what might be called a seat at the table, enabling them to negotiate with the Authority about the form of development of Central Barangaroo, if it were proposed to differ from that for which the Concept Plan then provided.

8. [106]

   It is not without significance that the rights given by the Sight Lines Clauses were triggered by an “application” (leaving aside what that means) which had the effect just described. The trigger event was not limited to applications whose implementation would have an adverse effect on sight lines as described in para (b) of the Sight Lines Clauses. The Sight Lines Clauses, in my view, recognise that although the matters of critical importance to Crown and Lendlease may be retention of their sight lines, nonetheless their interests might be affected adversely by any form of development which differed from that for which the Concept Plan then provided.

9. [107]

   That leads to the first key question of construction: the meaning to be attributed to the word “application” in the Sight Lines Clauses.

10. [108]

    The noun “application” has a number of ordinary English meanings, as does the corresponding verb “apply”. Relevantly, for present purposes, the ordinary meaning of “application” may be expressed as “request” or “the act of requesting” (corresponding to the meaning of the verb form, “to make a formal request”). Looking at para (c) of each of the Sight Lines Clauses, it is evident that the application they contemplate would be one made to the Authority for its consideration or approval (noting the disjunct in the phrase “considering or approving”). Thus, as a matter of ordinary English, the Sight Lines Clauses are concerned with requests made to the Authority, for its consideration or approval, which have something to do with development within Barangaroo. Against the known background, that must refer at least, and probably only, to applications to the Authority for its consideration or approval which provide for development within Central Barangaroo.

11. [109]

    That then leads to the question: what functions, of consideration or approval, does the Authority have? As I have noted, the Authority is not a consent authority; it is not a body that has any power of granting planning approval. It is, in substance at least, no more than the owner of the land upon which the development is proposed to be carried out.

12. [110]

    Those considerations suggest that an application to the Authority for its consideration or approval, being of necessity an application for the development of Central Barangaroo, must relate to the Authority in its capacity as land owner. At a level of generality, the Authority’s consent would be required simply because it owns the land. And at a level of greater particularity, the Authority’s consent would be required to any application for planning approval, if (and I refer back to what I have said at [76] above), its consent as owner were needed before the planning authority which has the power to grant planning approval deals with the application.

13. [111]

    The factual background suggests that that the meaning of “application” in the Sight Lines Clauses should not be narrowly confined. If the parties had wished to restrict the class of applications that were the subject of the para (c) of the Sight Lines Clauses to applications for planning approval, they had an easy way to do so: namely, using the defined term “Application”. Their decision not to use that defined term, and to use instead the undefined noun, indicates that they intended the word to have its ordinary English meaning, of course in so far as that fits within the concept of the paragraph, the Sight Lines Clauses more generally, and the agreements themselves overall.

14. [112]

    The parties must be taken to have understood as at 27 May 2015 that:

    1. (1)

       if a bidder for development of Central Barangaroo became the preferred bidder, and thereafter was chosen to undertake development of Central Barangaroo, planning approval would be needed;

    2. (2)

       an application for such approval could be made either by that developer or by the Authority;

    3. (3)

       if it were made by the developer, it could only go forward with the approval of the Authority; and

    4. (4)

       an application that was no more than an application for planning approval, made by the developer with the consent of the Authority, would fall squarely within the defined term “Application”.

15. [113]

    If, for the reasons I have just given, the parties did not intend the word “application” when used in the Sight Lines Clauses to be limited to applications for planning approval, what other forms of “application” should they be taken to have had in mind? The answer, it seems to me, must be or include an “application” – a “request”, or a “bid” – to the Authority to become the developer of part or all of Central Barangaroo. In terms of the 2014 RDB, it would be a bid to undertake development of part or all of Central Barangaroo, in accordance with the criteria specified in the RDB.

16. [114]

    That approach is supported by the consideration that applications with which the Sight Lines Clauses are concerned are not merely applications made to the Authority for its consideration or approval. They are applications that provide for development of an identified kind. That is to say, in the ordinary meaning of the verbal phrase “provide for”, they are applications that cover, or are applicable to, or describe, the identified kind of development. Logically, that directs attention once again to applications for, or relating to, development at Central Barangaroo.

17. [115]

    Further, for an application to be one that attracts the operation of the Sight Lines Clauses it must be one which the parties, objectively, understood as at 27 May 2015 the Authority was required to consider or to approve. No doubt, in the ordinary way, the Authority (or anyone to whom an application is made) should think about it – consider it – before deciding to approve or refuse it. The parties’ deliberate choice of the disjunctive particle shows that either process – the process of consideration or the act of approval – is sufficient to engage the Sight Lines Clauses.

18. [116]

    It follows, in my view, that the kinds of applications that will trigger the operation of the Sight Lines Clauses include applications made by prospective developers to become the developer of land within Central Barangaroo. As a matter of practice, the parties knew that such applications would be made in the form of bids responding to an RDB. The parties knew that there would be a process of consideration, leading through the stages that I have described earlier, to (assuming successful completion) the award of a development contract. The parties, in my view, must be taken to have intended, objectively, that any such application, if it provided for development different to that provided for in the Concept Plan as it then stood, would trigger the operation of the Sight Lines Clauses.

19. [117]

    The Authority submitted that this view of the operation of the Sight Lines Clauses would cause practical difficulties. It would mean, in principle at least, that any application made to the Authority for development must be the subject of good faith discussions and negotiations if that application provided for development different to that for which the then approved Concept Plan provided. That would mean, as the Authority submitted, that apparently hopeless bids must be the subject of discussion and negotiation. But even leaving aside that limiting case, it would mean that the Authority would be required to engage with Crown and Lendlease not only when the bids were first made but at every stage of their development or refinement.

20. [118]

    As to those suggested practical difficulties, I note that the Authority did not conduct itself in such a way as might lead the observer to think that the difficulties were insuperable or hugely burdensome. That is because, as the documents show, it engaged with Crown and Lendlease at a very early stage of the process of analysis (to use a neutral term) and refinement of the Grocon bid. Although this cannot bear directly on the process of construction (neither Crown nor Lendlease suggested that some form of admission could be spelled out of the Authority’s conduct), it does seem to me to be available as a common sense check on the Authority’s submissions as to the immense difficulties that would flow from acceptance of the plaintiffs’ construction.

21. [119]

    There is in any event, in my view, a strong practical consideration operating the other way. Crown and Lendlease submitted that if the process of good faith negotiations were not to commence until, a preferred bidder having been selected, its bid had progressed to the stage of award of a development contract so that an application for modification of the Concept Plan (i.e., a SEARS request) could be prepared, it would be too late. The plaintiffs submitted that, by the time matters had reached that stage, the Authority would have expended much time and effort on analysing the bid and formulating how, in its mind, the development of Central Barangaroo could best be undertaken having regard to its statutory duties and the principles stated in the Master Plan. In those circumstances, the plaintiffs submitted, it would be too late for the good faith discussions and negotiations to have any meaningful content.

22. [120]

    In short, the plaintiffs submitted that, on the Authority’s preferred construction, the benefit of the opportunity given by the Sight Lines Clauses would be rendered nugatory by the time the process of good faith discussion and negotiation was required to commence. In my view, that submission is correct. I shall explain why.

23. [121]

    The evident purpose of the Sight Lines Clauses is, as I have said, to give Crown and Lendlease a seat at the table, enabling them to put their case as to how the development of Central Barangaroo should proceed (assuming, of course, that what was proposed was different to what was provided for by the Concept Plan). To my mind, there is embedded within the concept of good faith discussions and negotiations the implied proposition that the party required expressly so to negotiate – in this case, the Authority [22] – must not have reached a final view on one of the matters to be canvassed in that process. But on the Authority’s submission as to construction, that would be the case when the good faith discussions and negotiations commenced.

24. [122]

    The history set out earlier, including in particular the Authority’s commitment to Oxford and Aqualand referred to at [38] above, demonstrates that this consideration is not hypothetical. At the time when (on the Authority’s case) good faith discussion and negotiations should start, the Authority had committed itself to supporting a form of development that was flatly inconsistent with retention of the plaintiffs’ sight lines. Even if those commitments were not legally binding (and the commitment to Oxford was expressed to have that character), it is impossible to see how the Authority, having so committed itself at least in good faith, could then negotiate in good faith to seek to achieve retention of the plaintiffs’ sight lines.

25. [123]

    In summary, therefore, I conclude that at least from the time Grocon became the preferred bidder, it was an applicant whose application, to become the developer of Central Barangaroo, attracted the operation of the Sight Lines Clauses, because on any view that application (as it was amended from time to time) proposed a form of development different to that provided for by the Concept Plan. It follows that at least from the time Grocon became the preferred bidder, the Authority was required to undertake the process of good faith discussion and negotiation for which the Sight Lines Clauses provide.

26. [124]

    I accept that the choice of the preferred bidder stage is somewhat arbitrary. It does however have two practical advantages. First, it marks the point where a development agreement is a likely or realistic outcome. And secondly, it accommodates the concept of “probity” concerns upon which the Authority relied as a reason for not giving Lendlease access to Grocon’s application. I add that the more strictly logical view could not assist the Authority.

27. [125]

    That leads to the second key question of construction, which is: what is the objective of that which is to be discussed and negotiated?

28. [126]

    The plaintiffs submitted that the discussions must start with retention of their sight lines, and that the process of optimising development opportunities was restricted, in effect, to those opportunities that remained on the assumption that the sight lines were retained. The Authority’s position was that the two objectives were of equal importance, and that it was not necessary to start from the proposition that the sight lines should be retained.

29. [127]

    That difference is of fundamental importance in this case. The Authority accepted that if the plaintiffs’ submissions were correct, it had breached the Sight Lines Clauses because it had never engaged in discussions and negotiations of the kind which, on that assumption, were required.

30. [128]

    The subject matter of the discussions and negotiations is to be the actual “application which provides for development different to that provided for in the Concept Plan Approval… as it relates to… Central Barangaroo”. What are to be discussed and negotiated are “changes to that application”. The objective to which those discussions and negotiations are to be directed, and that they are to seek to achieve, is two-fold:

    1. (1)

       retaining the sight lines; and

    2. (2)

       “at the same time optimising the development opportunities for Central Barangaroo”.

31. [129]

    I accept that in the Sight Lines Clauses, the conjunction used is not “and”. It is “while”; more accurately, the phrase “while at the same time”. At a level of some generality, the conjunction “while” suggests that the two subjects linked by it are in opposition.

32. [130]

    The Authority submitted that the two objectives were in competition. The plaintiffs submitted that they were not. On a proper construction of the Sight Lines Clauses, the plaintiffs submitted, the development opportunities that were to be optimised were those that were compatible with, or allowed for, retention of the sight lines.

33. [131]

    In this case, I think, the conjunctive phrase “while at the same time” indicates that the two matters linked by it are to be pursued – discussed and negotiated – together and contemporaneously. It is obvious that one may have an adverse impact on the other; that they are, to that extent, in some degree of opposition. But to rely on the syntactical import of the phrase whilst ignoring the context, most importantly the two described objectives that are to be so pursued, may lead to error.

34. [132]

    The plaintiffs submitted, in my view correctly, that the state of affairs that is constituted by retention of the sight lines is absolute and unqualified. There are no doubt many ways in which development on Central Barangaroo may be undertaken. But the limiting condition is absolute. Retention of sight lines means just that. That can only be achieved by undertaking the development in such a way that it does not infringe on – does not diminish, or restrict, or limit, or impede – those sight lines.

35. [133]

    At one point, the Authority relied on cl 1.2(d) of the PDA and the CDA. Clause 1.2 deals with “certain general terms”. Relevantly, it provides that unless the contrary intention appears, a reference to “anything (including an amount) is a reference to the whole and each part of it”. If it were intended to suggest, by this submission, that sight lines as defined in the Sight Lines Clauses could be “retained” by retaining some part of them, I do not agree. First, if that is the proper effect of cl 1.2(d), it is flatly inconsistent with the Sight Lines Clauses, which emphasise the criticality of the defined sight lines. And secondly, cl 1.2(d) does not refer to “the whole or any part”. By speaking of “the whole and any part" [23] , it emphasises the importance of construing the reference to a thing as extending to every part of that thing.

36. [134]

    Nor is there any doubt about what constitutes those sight lines. They are defined by para (b) of the Sight Lines Clauses. The Authority suggested that the definition raised were questions of fact and degree: does “the Harbour Bridge” encompass only the arch and road deck, or does it encompass the pylons as well? If it encompasses the pylons, does it encompass the whole of the pylons? In the same vein, the Authority asked, does “the Sydney Opera House” comprise only the superstructure and sails, or does it include the podium and the forecourt as well?

37. [135]

    Some people might think it more than a little puzzling that a public authority of this State should see fit to raise, as an issue in legal proceedings, precisely what is meant by “the Harbour Bridge” and “the Sydney Opera House”. Fortunately, it is not necessary to resolve that debate. It is not the case that Grocon’s development might interfere with sight lines only to the point of obscuring a few masonry blocks on the western face of the northern pylon of the Harbour Bridge, or a portion of the Opera House forecourt immediately below the Tarpeian Walk. The proposed development would have far greater impact than that on sight lines. In short, those fascinating puzzles are questions of fact that do not need to be resolved.

38. [136]

    One side issue thrown up by the submissions on the requirement for good faith discussions and negotiations arises out of the words “that application”. The plaintiffs submitted that it was necessarily implicit, in the stipulation that the particular application that triggered the operation of the Sight Line Clauses be the subject of discussions and negotiations, that they should have full access to that application. I think there is much to be said for that submission. However, on the view that I take, it is unnecessary to resolve this point.

39. [137]

    By contrast to the first of the two subjects that are to be, if possible, reconciled, namely retaining sight lines, the second does not have any fixed or absolute quality. The concept of optimisation of development opportunities carries with it the idea that the various attributes that might be seen to improve, or make better, the proposed development are to be considered and balanced. Thus, as the plaintiffs submitted, while there is only one way to retain sight lines, there are many ways in which development opportunities could be optimised.

40. [138]

    Thus, there is a contrast between the fixed or objective quality of retention of sight lines on the one hand, and the subjective and judgmental quality of optimisation of development opportunities on the other. It is difficult to see how reasonable people, properly informed and considering matters objectively, could disagree as to whether a particular development did or did not enable sight lines to be retained. By contrast, it is entirely foreseeable that reasonable people, properly informed and considering the matter objectively, might have different views as to how development opportunities could be optimised. One could say that the malleable or flexible quality of the concept of optimisation enables it to be moulded to the fixed or rigid quality inherent in the concept of retention. That may be a way of saying that retention of sight lines is, objectively, a definable and fixed state of affairs around which optimisation of development opportunities may be discussed and negotiated.

41. [139]

    It is also significant, in my view, that the root verb of choice is “optimise” and not “maximise”. If the consideration were expressed as “maximising the development opportunities”, there could be something to be said for the proposition that highly intensive development that would maximise the financial return to be garnered for the citizens of this State was the paramount consideration. But where what is required is optimisation, not of any particular development but of development opportunities overall, financial returns are but one of many considerations. Considerations of mix of uses, solar access, public space and the like are also important.

42. [140]

    Indeed, taking into account the “vision” for the Barangaroo precinct as it is stated in the various documents to which I have referred, it could be said that those aspects of the development that bear on what is often summarised as “amenity” are more important than mere matters of dollars and cents.

43. [141]

    It must follow, in my view, from the contrasting nature of the factors to be balanced in the good faith discussions and negotiations and from the absolute quality of the first of them, that the parties should at least start with the proposition that the sight lines are to be retained. Any discussion which starts from the proposition that some part of the sight lines is to be lost is not, in my view, a discussion of the kind required by the Sight Lines Clauses. As Hammerschlag J put it (I accept, in an entirely different factual context) in Crown International Consortium Pty Ltd v Bruce Lyon (Holdings) Ltd [24] at [86], it is inconsistent with an obligation of good faith negotiation for one party to require the other to consider a proposal that is in direct conflict with the (or, I add, an) object that, if possible, is to be achieved by the negotiations.

44. [142]

    I accept, as the plaintiffs also accepted, that it is possible that discussions and negotiations may start from the correct starting point, may be conducted in good faith, but may fail to achieve a resolution of whatever it is with which they are concerned. But it does not follow that one party, in particular the party expressly bound by the obligation to discuss and negotiate in good faith [25] , may as it were anticipate what it perceives to be inevitable by jumping ahead and selecting as the starting point of the negotiations something which is incompatible with one of the fixed points of reference.

45. [143]

    I should make it clear that neither plaintiff pleaded that the Authority acted with conscious or deliberate bad faith, and neither plaintiff so submitted. The question for decision is whether, on the proper construction of the Sight Lines Clauses, the Authority engaged in the process of good faith and negotiation which, in my view, was triggered, at the very latest, when Grocon became the preferred bidder. In my view, because the Authority never contemplated, as a starting point, the retention of the sight lines, it did not do so.

46. [144]

    I add that the Authority accepted, in final submissions, that if I were to come to the conclusion that the Sight Lines Clauses should be construed as the plaintiffs submitted, then it must lose. That is to say, the Authority accepted that if the Sight Lines Clauses had been triggered at some stage before Grocon provided its draft SEARS confirmation to the Authority, and if the obligation to negotiate in good faith required, as a starting point, a proposal that envisaged retention of the sight lines, it must lose [26] .

Resolution of the agreed issues

1. [145]

   I return to the agreed issues that I have set out earlier in these reasons. Not all those issues require resolution. To the extent that they do, I set out the issue and the answer to it:

2. [146]

   That deals with all issues except the eleventh – the form of relief to be granted. I shall address that in the next section of these reasons.

Form of relief

1. [147]

   The plaintiffs initially sought declaratory relief, injunctive relief preventing the Authority from proceeding further with the CENDA or Grocon bids until such time as the good faith discussions and negotiations had been completed, and relief in the nature of specific performance. The Authority, very properly, accepted that if I were to decide the principal questions adversely to it, I need do no more than express my conclusions in the form of appropriate declaratory relief. Of course, that acceptance does not preclude the Authority from seeking leave to appeal.

2. [148]

   The plaintiffs in turn accepted that they would not insist on injunctive relief to back up and give force to any such declaration. Accordingly, I turn to the precise declaratory relief that the plaintiffs sought.

3. [149]

   Each plaintiff sought wide-ranging declaratory relief. That relief related in substantial part to the good faith cases, and what were said to be breaches of the expansive attributes of good faith asserted by each plaintiff in its pleadings and submissions.

4. [150]

   However, each plaintiff sought more limited relief, directed to the various Grocon bids and what was said to be Authority’s breach of the Sight Lines Clauses in considering each of those bids. It seems to me that that is the relief that ought be granted in this case, given the conclusions I have reached.

5. [151]

   Crown is entitled to declaratory relief directed to vindicating its case that the Authority breached cl 5.5 of the CDA by considering the various Grocon bids, at least from the Escrow Bid made on 20 December 2016 (the first bid pleaded after Grocon had become the preferred bidder on about 23 June 2016) onwards. Since Lendlease is a party to the CDA, it is entitled to the same measure of relief. Lendlease is also entitled to equivalent relief in respect of clause 2.5 of the PDA.

6. [152]

   The parties did not direct submissions as to costs. However, it is hard to see what argument there could be against the proposition that the unsuccessful defendant, the Authority, should pay the costs of each plaintiff. I propose to make that order.

Orders

1. [153]

   In each matter, I make the following declarations:

   1. (1)

      declare that each of the “Grocon Applications” described in para 50B(f), (g), (h), (i), (n) and (r) of the Further Amended Commercial List Statement in proceeding 2018/244619 was an application for the purposes of cl 5.5(c) of the development agreement dated 27 May 2015 made between, among others, the plaintiff, the defendant and Lendlease (Millers Point) Pty Ltd (the “CDA”); and

   2. (2)

      declare that the defendant breached cl 5.5 of the CDA by considering each of those Grocon Applications without first discussing and negotiating with the plaintiff changes to that application so as to retain the plaintiff’s [or plaintiffs’] sight lines as defined in cl 5.5 of the CDA.

2. [154]

   As I have indicated, an equivalent declaration should be made in the Lendlease proceeding and accordingly I make the following declaration in that proceeding:

   1. (1)

      declare that the defendant breached cl 2.5 of the Fifth Deed of Amendment dated 27 May 2015 made between the plaintiffs and the defendant (the “PDA”) by considering each of the “Grocon Applications” (as defined in paras (e) to (k) of the definition of that expression in the Amended Summons in proceeding 2018/244638) without first discussing and negotiating with the plaintiffs changes to that application so as to retain the plaintiffs’ sight lines as defined in cl 2.5 of the PDA.

3. [155]

   Finally, costs, return of exhibits and the like should be dealt with in each proceeding. Accordingly, I make the following further orders in each proceeding:

   1. (1)

      order the defendant to pay the plaintiff’s [or plaintiffs’] costs;

   2. (2)

      order that the exhibits be returned;

   3. (3)

      list the matter for directions on 8 February 2019; and

   4. (4)

      reserve liberty to apply on 3 days’ notice.

4. [156]

   I stand the matter over until 2pm on 17 December 2018 for the making of orders.