The original High Court ruling in favour of Mobil found that a requirement to maintain the sites in a "clean and tidy condition" in tenancy agreements dating back to 1985 didn't extend ti severe subsurface contamination.
Mobil will not have to pay for a $10 million cleanup of its heavily contaminated former oil storage site at Auckland's tank farm in Wynyard Quarter.
The global oil giant has succeeded in a Supreme Court challenge to the clean-up bill from Auckland Council-controlled Waterfront Auckland (now Panuku Development Auckland).
Instead, chief Justice Sian Elias and Justices Terence Arnold, William Young, Susan Glazebrook and Mark O'Regan reinstated the original High Court ruling and ordered Waterfront Auckland to pay nearly $1 million in court costs.
The original High Court ruling in favour of Mobil found that a requirement to maintain the sites in a "clean and tidy condition" in tenancy agreements dating back to 1985 didn't extend to severe subsurface contamination.
Mobil stopped using the Pakenham and Beaumont Street sites for bulk oil storage in 2005 and handed them back to Waterfront Auckland in 2011 but decades of use for oil and petroleum had led to substantial contamination.
It was made worse because the 27ha area known as the Western Reclamation in Freemans Bay had originally been reclaimed by Auckland Harbour Board between 1905-1917 using already-contaminated fill. The sites were first used for oil storage in 1925 by companies that were later amalgamated into what became Mobil NZ.
The harbour board was disestablished and its interest in the sites eventually transferred to Waterfront Auckland.
In 2014, Justice Sarah Katz found contamination of the sites had reached a "tipping point" before the end Mobil's tenancy in 1985. Mobil had argued that point was reached in the 1970s and if that were the case, the Supreme Court says, "it would follow that the subsequent actions of Mobil caused no loss."
"The harbour board understood from the outset – that is from 1925 – that spillage was a risk associated with bulk oil storage," the Supreme Court judgment says.
"Over the following decades, the records show that the harbour board was made aware of incidents which had resulted in petroleum products going into the ground" and at least from 1963 the board had known the reclaimed land was porous and in 1979 that the area had become "saturated with petroleum products."
An assessment of the cleanup requirements set out in the Supreme Court judgment show the exercise will involve the removal of soil to a depth of 3.5 metres over an area of about 2.5ha and replacement with clean fill.
The costs to Mobil would have run to about $50 million but the actual $10 million claim represented "the incremental cost to Waterfront Auckland of remediating the land as part of its own development work."
Demand for the waterfront storage facilities fell away in the 1980s after the major oil companies commissioned a pipeline between a shared terminal at Wiri in South Auckland and Marsden Point, with a second pipeline built between Wiri and Auckland Airport for aviation fuel.
Read the judgment here
(BusinessDesk)
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