The NSW government told building company Grocon that height limits had been scrapped for buildings in Barangaroo that James Packer's Crown Resorts and infrastructure giant Lendlease feared would block harbour views from their tower developments, a court has heard.
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Crown and Lendlease launched legal action against the state-run Barangaroo Delivery Authority in a bid to protect "sight lines" to the Harbour Bridge and Opera House from their developments.
A hearing for the lawsuits began in the NSW Supreme Court on Monday, after more than two years of negotiations between the companies and authorities.
Crown's $2.2 billion, six-star hotel, residential and casino complex is under construction at the waterfront in Barangaroo South and is due for completion in 2021. Lendlease is building high-rise apartment blocks in the same area as Crown.
The companies are concerned their views will be hindered by proposed developments at the neighbouring Barangaroo Central, a five-hectare site with a mixed commercial and residential building and a Sydney Metro train station.
The companies say their respective contracts with the BDA required the authority to negotiate in good faith with them about proposed departures from the initial plan for Central Barangaroo that "guaranteed them sight lines" to the harbour.
The authority is arguing the clauses were not directed at an "outcome", but were focused on good faith negotiations that did not guarantee those sight lines.
Crown's barrister Neil Young, QC, said the concept plan for the Barangaroo precinct had "a long history" and arose from government panels, expert investigation and consultation with developers and the community.
A core principle of that plan, which both companies' relied on when they entered into development agreements for the site, was provision for low-rise development in Central Barangaroo, he said.
"All of that was revised, somewhat rapidly, and without consultation, in the second bid process."
Lendlease's barrister Noel Hutley, SC, said the authority had put forward a revised masterplan for Central Barangaroo when it reopened tenders after the new Metro station was announced in 2015.
Mr Hutley said that plan had been "quite a drastic change" from the original masterplan and had "scrapped height limits".
He said the BDA had been aware the two companies wanted to maximise harbour views from their developments.
But the authority had "apparently made it quite clear" to Grocon, which led a consortium of developers that successfully bid to redevelop the precinct, that there were no height limits.
He cited an email in which a Grocon employee wrote to a Crown senior executive: "The priority for us at the moment is height.
"The BDA has said to us there are no height limits and have encouraged us to go higher south of the Highgate line."
The court heard the "Highgate line" referred to the height of an apartment building that was "the main blocking structure" for views towards the Opera House from the companies' developments.
Crown and Lendlease are seeking declarations and an injunction stopping the authority from breaching the terms of the respective development agreements.
The hearing continues on Tuesday in front of Justice Robert McDougall.
