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