The removal of the Dan Murphy's store on Darley Road at Leichhardt will be costly for the taxpayer. Credit:Nick Moir Labor is demanding the government reveal why senior officials from Transport for NSW suddenly changed their minds and extended the lease, despite earlier concerns about "potential risks" and probity concerns. The lease was due to expire in 2018 and, had it not been extended in 2012, could now have been acquired for next to nothing. The risks in "continuing with the tenancy" were outlined by Transport for NSW's director of asset management, John Fisher, in an email three days before Christmas 2011 in which he recommended against extending the lease on 7 Darley Road. Those risks included increasing the financial exposure to RailCorp and raising a compensation claim if the site was later required.

WestConnex has been highly controversial in Sydney's inner west. Credit:Peter Rae "[The tenant] may merely be trying to secure the site on better terms in order to find and [sic] end buyer at a profit," Mr Fisher wrote to the then deputy director general of Transport for NSW's projects division, Chris Lock. "This will quarantine the site and may result in unjustly enriching the tenant." Eight days later, after the Christmas break, Mr Lock asked Mr Fisher to "pop over" to discuss the Darley Road site, according to the emails and documents obtained by Labor under freedom of information laws. At Mr Lock's request, Mr Fisher sent an email on January 4, 2012, to a person whose name has been redacted, to arrange a meeting about 7 Darley Road to "obtain a better understanding of your situation and consider various options with a view to reaching an in principle agreement".

Two days later, Mr Fisher emailed Mr Lock to outline the key terms of a heads of agreement between Transport for NSW and Tdrahhciel to extend the lease until 2038. The agreement was subject to a "satisfactory probity report". On January 13, 2012, Mr Fisher emailed a person whose name has been redacted to say he believed advice from probity advisory Procure Group was no longer relevant due to a "change in circumstances". He said he wanted to "engage Procure Group to re-assess the matter and provide a new, updated report which takes account of the current situation". After receiving a draft advice from Procure more than a week later, Mr Fisher responded in an email that "you have missed the scope". Transport for NSW later engaged a separate advisory, O'Connor Marsden, which, in advice in August 2012, emphasised the benefit to the government of avoiding a legal dispute with Tdrahhciel. The lease was extended a month later.

The state opposition's acting leader, Michael Daley, said the government should give a clear explanation of why the lease extension was granted against the initial advice of the department and an independent probity adviser. "We know that Liberal Party lobbyists were involved, but we need a proper explanation of who or what made transport officials suddenly change their minds," he said. "It should come clean and release all documents so that taxpayers are no longer kept in the dark about a site that they are going to have to pay $50 million to get back." Tdrahhciel owner Shane Barr has previously told Fairfax Media that former Liberal leader Kerry Chikarovski helped him get "in front of the person" in government who could assist in dealing with the issue. In response to questions that detailed what Mr Lock and Mr Fisher said in the emails, Transport for NSW said the lease was extended in 2012 at the instigation of its projects division due to the requirements of a station at Leichhardt North for the inner west light rail line extension.

The agency said it entered into a conditional heads of agreement with Tdrahhciel to inform planning for the light rail extension and "provide greater certainty regarding site access and land" for the project. "The agreement made clear that it would not be binding and the lease would not be extended unless Transport for NSW received probity advice that endorsed dealing directly with Tdrahhciel," it said. Loading "The extension was only granted after we investigated options for acquiring land at the site needed for the light rail, including compulsory acquisition, in accordance with recommendations from Procure Group." Roads and Maritime Services, which handles acquisitions for WestConnex, declined to comment on what compensation would be paid to the leaseholders at 7 Darley Road, citing commercial in confidence.