The proposed $90 million Creative Precinct development in Launceston is under a cloud as a legal battle over the sale of the Paterson Street Central car park drags on.
Owner of the site, Car Parks Super, and a proposed developer of the precinct, Creative Property Holdings (CPH), have been in a legal battle in the Federal Court of Australia since February about a $12 million contract for the sale of the so-called Birchalls car park site.
The vision to put Launceston on the world stage for the best artistic, cultural and creative thinkers was launched more than a year ago.
The Creative Precinct was touted as the home to a new creative hub which would include learning spaces, commercial tenancies and retail spaces to link to other parts of the hub, such as the bus mall and Birchalls' retail space being developed by the City of Launceston council.
The proponents, New Creative Group is a consortium of designers, strategists and educators who have banded together to develop the vision for the precinct.
In the Federal Court proceedings Creative Property Holdings, whose director is Chris Billing, has alleged Car Parks Super breached a November 23, 2020 contract. It has sought that the owner be required to transfer the property and is also seeking damages and costs.
Car Parks Super, represented by barrister Shaun McElwaine SC, says that the firm did not make an offer to sell the property that was "capable of acceptance by the purchaser (CPH) and the Launceston City Council and in any event was expressly made subject to the exchange of contracts".
Documents filed in the Federal Court reveal attempts to agree a contract between the two parties in June 2020, September 2020 and November 2020.
A hearing in the Federal Court was due in May this year, but did not go ahead.
Since June 8 Justice David O' Callaghan has made six orders that CPH as the applicant file and serve its written submission, but nothing further has been filed.
If it went ahead the development would have been scheduled to use federal and state government funding of more than $20 million.
The Federal Court documents suggest the City of Launceston council was a guarantor for CPH in two of the proposed car park purchase contracts.
In the proposed June contract the City of Launceston would "guarantee the obligations of the applicant (CPH) and undertook to complete the contract in the event that the applicant breached its obligations to do so".
The council paid a $1.2 million bank cheque, or 10 per cent deposit for the car park on July 9 2020, but the contract was not finalised.
After further negotiations a September 2020 contract was proposed which excluded the council as guarantor.
However, Car Parks Super terminated the contract on October 14 with the company saying CPH had failed to complete by the required date. It claimed the failure meant the deposit was forfeited.
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The deposit became a vexed issue between Car Parks Super, CPH and the council and it was not until March 8 2021 that a bank cheque was sent from Car Parks Super lawyers Archer Bushby to Launceston firm Sproal and Associates on behalf of CPH.
Counsel on behalf of CPH, Viridian Lawyers, demanded that the deposit be returned to it or Sproal and Associates on November 13 .
The court filings reveal the council was named as the guarantor for CPH in a proposed third contract dated November 20, 2020 which "provided that the second respondent [council] would complete the contract in the event of default by the applicant".
Email correspondence from council lawyers Simmons Wolfhagen stated that the purported November 2020 offer was "signed by the second respondent (council) in its capacity as guarantor". However, it was not signed by Car Parks Super.
Simmons Wolfhagen wrote to Car Parks Super counsel in December 2020 saying "if exchange does not occur within this time frame then my client's contract will be withdrawn and my client will cease to be guarantor".
The City of Launceston denied to The Examiner that it was ever guarantor for CPH for the car park purchase.
The Examiner asked whether the council was ever in a position where it "would as guarantor complete the contract (for the car park) in the event that the purchaser (CPH) defaulted in its obligations"?
"No, the council was never in that position," a spokesman said.
Launceston Mayor Albert van Zetten said "The council has a legal agreement to purchase the site should the CPH development not proceed."
The council has committed funds to a Metro bus interchange on the site and previously paid $8.8 million for the former Birchalls building to enable a connection to the Brisbane Mall.
Car Parks Super, whose directors are Don and Janet Allen of Hagley, deny breach of contract saying that there was no enforceable contract signed in November 2020.
CPH had a recent change of legal counsel from the Sydney firm Viridian Lawyers to the Hobart firm Murdoch Clarke. The company placed an unregistered caveat on the car park site in February to prevent its sale.
Educational enterprise Foundry, of which Mr Billing is a founding director, was last year criticised for failure to pay staff entitlements and alleged rental failure for its Launceston premises resulting in eviction by the landlord.
The Examiner reported that outstanding rent owed by Foundry was $83,614.82.
Cr van Zetten said the council was hopeful a resolution of the car park litigation would be reached in the near future.
"The City of Launceston appreciates the acquisition of the Paterson St Central Car Park has been a drawn-out process," he said.
This has been frustrating both for the council and CBD stakeholders who want to see a strategic, higher order use for this site as soon as possible.Cr van Zetten
"The redevelopment of the Birchalls building and the construction of a dedicated Launceston Bus Interchange are exciting projects for our city, which will create new economic activity and employment opportunities in the CBD.
"Creative Property Holdings - which intends to build a Creative Precinct on part of the car park - is the proposed purchaser of the site and the council has legal agreements with this company to facilitate the construction of a bus interchange on the site, post-acquisition.
"All council funds which have been authorised for the development of the bus interchange remain under the control of the council."
A Department of Infrastructure, Transport, Regional Development and Communications spokeswoman said the Australian government had committed $7.5 million under the Community Development Grants Programme and $10 million through the Building Better Regions Fund towards the $90 million Launceston Creative Precinct.
Mr Billing said the Creative Precinct was still alive. "I am looking forward to things progressing," he said.
A $6 million interest-free loan was provided to the council as part of the state government's response to the impact of Covid-19.
State Growth Minister Roger Jaensch said the state government will await the outcome of the legal process and remained enthusiastic about the potential of the proposal to transform Launceston.
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