Mobil
Oil has been ordered to bear the ten million dollar cost of remediating
contaminated land in the Wynyard Quarter on Auckland’s waterfront.
The Court of Appeal overturned an earlier
High Court ruling which had put the cost on Auckland’s ratepayers. At issue was the effect of a 1985 lease
agreement covering Mobil’s bulk oil storage facilities on the waterfront. Predecessor companies in the Mobil group had
been leasing the site since 1925. Mobil
left in 2011. Auckland Waterfront Development Agency owns the land. Mobil and the Agency agreed it would cost ten
million dollars to decontaminate the site.
They could not agree on who should pay.
It was acknowledged that the land had become so contaminated from oil
spills that by the 1970s complete remediation was required. Mobil said a “clean and tidy” clause in its
1985 lease required remediation of the land surface only; it did not have to
clear up contaminants which had seeped into the sub-surface.
The Court of Appeal went back to prior
leases for the site in place since 1925 to identify liability for ground
contamination. It said the pre-1985
leases did not allow spillage as a necessary incidence of storing bulk
oil. At the time of signing the 1985
lease, Mobil was presumed to be aware of its potential liability for
contamination from prior spillages. This
liability was to be read on into the 1985 lease, the Court said. Land law assumes rights of possession to an
area of land extend from the sky above to the centre of the earth. Mobil was leasing not just the land surface,
but also the sub-surface below. Mobil’s
bulk oil facilities required building foundations into and running pipelines
through this sub-surface. Having a right
to use the sub-surface meant Mobil was liable under the “clean and tidy” clause
to remediate not only the surface but also to remove contaminants which had
seeped from the surface into the sub-surface.
Auckland
Waterfront v. Mobil – Court of Appeal (25.08.15)
15.093