A 158-metre-tall tower block is part of the NSW government's latest compromise for the Barangaroo development that James Packer's Crown Resorts and infrastructure giant Lendlease fear will hinder harbour views from their waterfront towers.
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Crown and Lendlease launched legal action against the state-run Barangaroo Delivery Authority in the Supreme Court in a bid to protect "sight lines" to the Harbour Bridge and Opera House from their developments.
Confidential documents, released by the court on Tuesday, show the authority put forward a fresh proposal for redevelopment of the site in September – after the companies launched legal action and following more than two years of negotiations.
In a proposal sent to Crown and Lendlease, the BDA says the revised proposal concentrates the tallest building height in the southern part of the site, with one tower block and low-rise buildings.
The BDA said changes to the proposed development "reflect the concessions that have been made by the authority throughout the negotiations in response to requests from Crown and Lendlease to minimise potential view impacts from hotel rooms and apartments respectively".
However, an expert report into the visual impact of the various proposed developments showed proposed buildings fully or partially blocked harbour views from some floors of both companies' towers.
Construction is forging ahead on Crown's $2.2 billion, six-star casino and hotel complex in Barangaroo South. It is set to be completed in 2021.
Lendlease plans to build three residential blocks in the same section of the Barangaroo waterfront.
But the two companies have feared their views would be partially hindered by the proposed developments at neighbouring Barangaroo Central, a five-hectare site with residential and commercial buildings.
That site was also chosen for a future Sydney Metro station, prompting the state government to open a second bidding process to redevelop the precinct.
Grocon, which led a consortium of developers that successfully bid to redevelop the precinct, was told height limits had been scrapped for the site and the BDA had urged it to "go higher", the court heard.
The companies argue their separate contracts with the BDA, dated May 2015, required the authority to negotiate in good faith with them about proposed departures from the initial plan for Barangaroo Central that "guaranteed them sight lines" to the harbour.
Crown and Lendlease say the Metro station announcement had triggered significant changes to the site's masterplan, which had originally been slated for low-rise development.
But the Barangaroo Development Authority's barrister Tony Bannon, SC, maintained the clauses focused on good faith negotiations that did not guarantee those sight lines.
He said the clauses did not amount to an agreement to protect the sight lines and made it clear that preserving the views was "an object that might not be fulfilled despite negotiations in good faith".
There was no agreement between the parties to retain the sight lines or for height restrictions on neighbouring buildings, he said.
He said continued negotiations over the height of its proposed development showed there was "a demonstrated willingness of the authority to faithfully honour its obligation".
The parties have disagreed about what constitues an application, with the authority arguing it should have been consulted on proposals before they were submitted for formal approval.
But Crown's barrister Neil Young, QC, said there was "no basis for it to mean a formal planning application".
He said there should have been "full, bona fide engagement on a frank and open footing with both Crown and Lendlease" before the authority came to any determined view on a proposal.
The companies are seeking declarations and an injunction stopping the authority from breaching the terms of the respective development agreements.
The case returns to court in front of Justice Robert McDougall in November.
