Lend Lease (Millers Point) Pty Ltd v Barangaroo Delivery Authority

Lend Lease (Millers Point) Pty Ltd and Barangaroo Delivery Authority were involved in a dispute concerning the interpretation of the terms of a construction contract. The case was heard in the Supreme Court of New South Wales. The plaintiffs, Lend Lease, sought declarations regarding the correct construction of certain terms in the construction contract, specifically focusing on the definition of "Current Market Value" and the extent to which certain cash contributions should be considered in the valuation process. The Barangaroo Delivery Authority, the defendant, argued for a different interpretation of these terms.

The court had to determine whether the definition of "Current Market Value" in the contract allowed for the inclusion of cash contributions received by the plaintiffs as part of the valuation process. The plaintiffs argued that the valuers could consider the cash contributions but not as part of the internal rate of return (IRR) calculation. The defendant, on the other hand, contended that the cash contributions should be included in the IRR calculation as they were indicative of land values. The court needed to decide on the proper construction of the contract, particularly in relation to the valuation process outlined in the contract.

In its decision, the court found that the definition of "Current Market Value" did permit the valuers to consider the cash contributions received by the plaintiffs, but only to the extent that these contributions were indicative of land values. The court held that the cash contributions should not be included in the IRR calculation as they were not indicative of the presumptive profitability of the project but rather were driven by the plaintiffs' funding arrangements. The court emphasised that the valuation process should be unaffected by decisions about financing arrangements. The court granted the declarations sought by the plaintiffs, clarifying the proper construction of the contract terms in question.

The court's final order was that the Approved Valuers may consider the C4 Agreement and the amounts paid under clause 18 of that Agreement but not as inputs in the IRR calculation. The court clarified that the valuation process should not be influenced by the plaintiffs' funding decisions.