07 February 2014

Pollution: Auckland Waterfront v. Mobil

Auckland ratepayers face a ten million dollar cost to remove contaminated subsoil before completing redevelopment of the Wynyard Quarter, site of the former tank farm facing Auckland’s harbour front.   Attempts to hold Mobil Oil liable for the cost were described by the High Court as being untenable, commercially unrealistic and not in accordance with the site lease.
The tank farm on land formerly owned by the Auckland Harbour Board has been used to store bulk fuel for over a century.  Storage tanks sat on land reclaimed in the early 1900s.  The land is now owned by the Auckland Waterfront Development Agency which has site plans for mixed residential and commercial use.   It first requires remediation.  Fill used for the reclamation included toxic waste from a nearby gas works together with city rubbish.  Further subsoil contamination arose later from oil spills and leakages.  Various oil companies held site leases during the tank farm’s 100 year existence.  When alternative storage facilities were built at Wiri in South Auckland, oil companies moved out.  Mobil stayed on site temporarily under a series of short-term tenancies from 1985.  When Mobil departed, city authorities claimed Mobil was liable to remove subsoil contaminated by over a century’s use as an oil depot.
The High Court was asked to rule on the effect of a “clean and tidy” clause in successive short-term Mobil leases operating from 1985.  This clause mirrored similar clauses in the original long-term Harbour Board leases.
Auckland Waterfront argued the wording obliged Mobil to leave the land in an uncontaminated condition (with the exception of the gas works and rubbish waste used originally as fill).  Mobil said the “clean and tidy” obligation referred to the surface of the land only.
Justice Katz ruled the “clean and tidy” clause applied to the surface only.  The wording best suited surface contamination only.  There was no discussion of liability for subsurface contamination when negotiating the short-term leases.  It would be unusual, she said, for a tenant to be liable for historic contamination, much of it caused by others, without some prior discussion and negotiation followed by clear and unambiguous wording in the lease.
Auckland Waterfront v. Mobil – High Court (7.02.14)
14.008