MFESB v Yarra City Council

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION

S CI 2009 06745

METROPOLITAN FIRE AND EMERGENCY SERVICES BOARD	Plaintiff
v
YARRA CITY COUNCIL and OTHERS	Defendants

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JUDGE:	RIORDAN J
WHERE HELD:	MELBOURNE
DATES OF HEARING:	3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 17, 18, 19, 20, 21, 24, 27 AUGUST, 23, 24, 25 SEPTEMBER, 15, 16 OCTOBER 2015
DATE OF JUDGMENT:	24 DECEMBER 2015
CASE MAY BE CITED AS:	MFESB v YARRA CITY COUNCIL & ORS
MEDIUM NEUTRAL CITATION:	[2015] VSC 773

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ENVIRONMENT PROTECTION ACT 1970 – Whether statutory duty under s 45(1) not to cause pollution – Whether municipality liable under s 62A(2) as person causing pollution or appearing to abandon industrial waste – Whether liability extends to pollution caused prior to commencement of the Act – Municipality liable for costs incurred complying with clean up notice.

NEGLIGENCE – Duty of care owed by planning authority to applicant for planning permit –Duty of care of person contaminating land to subsequent purchaser – Duty of care to subsequent purchasers to disclose contamination – Duty of care to subsequent purchasers to ensure contractor complies with contractual terms – Attribution of knowledge of former employees and as contained in historical records – Claims for economic loss or property damage – Salient features in novel duties of care Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649 – Duties not established.

STATUTORY INTERPRETATION – Whether successor municipality liable for claims that were incomplete at succession date.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms F McLeod SC with Ms M Foley, Ms L Barrett, Ms L Hicks & Ms K O’Gorman	Thomson Geer
For the First Defendant	Mr F Tiernan QC with Mr A Horan & Ms L Hicks	Lander & Rogers
For the Second Defendant	No appearance
For the Third Defendant	No appearance	Victorian Government Solicitor
For the Fourth Defendant	No appearance	HWL Ebsworth Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 4

The Plaintiff’s Claims..................................................................................................................... 39

(1)Liability under s 62A(2) of the Environment Protection Act 1970.................................... 40
Did the defendant cause or permit the pollution in the bluestone pit to occur?..... 41
Proximity of the bluestone pit to the stone crushing plant............................ 46
The bluestone pit was constructed in masonry............................................... 46
Proximity of the bluestone pit to the boilers.................................................... 47
Low structure was likely to be a roof for a storage tank................................ 48
The bluestone pit was covered in the 1933 photograph................................. 52
Capacity of the storage tank............................................................................... 53
The 9 February 1959 recommendation that the ‘still be filled in’.................. 54
Was Albion Quarrying Company permitted to store coal tar in the bluestone pit between 1944 and 1958?...................................................................... 56
Presence of a substantial amount of coal tar when the bluestone pit was uncovered................................................................................................................ 59
The content of the bluestone pit was the source of the contamination........ 59

Does s 62A(2) of the Act apply to pollution caused prior to the introduction of the section?.................................................................................................................................. 60
History of s 62A of the Act.................................................................................. 63

Did the defendant abandon the pollution in the bluestone pit by relinquishing possession of the Burnley site to the State of Victoria on or about 20 February 1996?........ 68
Is the defendant liable for the acts of its successor in law, the City of Richmond, under s 62A(2) of the Act?................................................................................................ 72

(2)The Statutory Duty............................................................................................................... 78
Defendant’s submissions.................................................................................................. 79
Plaintiff’s submissions...................................................................................................... 81
Conclusion on the Statutory Duty.................................................................................. 82

General issues applicable to all negligence claims................................................................. 83
Are the claims for pure economic loss?.......................................................................... 83
Knowledge.......................................................................................................................... 85

(3)The Planning Duty............................................................................................................... 88
Plaintiff’s submissions...................................................................................................... 88
Defendant’s submissions.................................................................................................. 90
The Authorities.................................................................................................................. 93
Conclusion on the Planning Duty................................................................................. 101
Causation issues............................................................................................................... 106

(4)The Non-Pollution Duty.................................................................................................... 108
Conclusion on the Non-Pollution Duty....................................................................... 110

(5) The Demolition Duty.......................................................................................................... 111
Conclusion on the Demolition Duty............................................................................. 114

(6)The Disclosure Duty.......................................................................................................... 115
Conclusion on the Disclosure Duty.............................................................................. 117

Conclusion on Liability................................................................................................................ 118

HIS HONOUR:

Introduction

The plaintiff’s claim against the first defendant (‘the defendant’) in this proceeding is for compensation and damages for losses arising from the remediation of contamination on the land situated at 450 Burnley Street, Richmond, in the State of Victoria being the land described as Crown Allotment 20A, Parish of Jika Jika described in Certificate of Title Volume 10874, Folio 568 and comprising 1.781 hectares (‘the Burnley site’). The plaintiff acquired the Burnley site from the State of Victoria in 2004. The claim is made against the defendant in its own right and as the successor in title to the City of Richmond.

On 30 May 2014, Emerton J ordered that pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules2005 the question of the plaintiff’s entitlement to compensation and damages be tried as a preliminary issue. The trial of those issues proceeded before me over 22 days in August, September and October 2015.

For the purpose of ascertaining the facts relevant to the resolution of the preliminary issues, it has been necessary to review a plethora of historical documents, some of which are referred to in the ‘Background’ section below. However, in an attempt to make the issues and the background chronology more understandable, by way of introduction I note the critical issues and the significant facts.

The critical issues are as follows:

(a)The plaintiff claims that the defendant is liable for damages consequent upon the remediation of contamination on the Burnley site on the basis of breaches of various alleged duties of care and provisions of the Environment Protection Act1970 (‘the Act’).

(b) A critical factual dispute in the case was whether a bluestone pit, which was found on the site in 2005, was the storage tank previously used by the City of Richmond for the storage of coal tar.

The significant facts are as follows:

(a)As at 1914, the City of Richmond was operating on the Burnley site an abattoir and a quarry with a powder magazine and stone crushing plant. The City of Richmond was also acquiring distilled tar from external sources for the purposes of road maintenance.
(b)By 1916, the City of Richmond had built, and was operating, a brick refuse destructor and a tar distilling plant together with a masonry storage tank for coal tar with a capacity of 40,000 gallons, near the stone crushing plant.
(c)Minutes of the Council of the City of Richmond (‘the Council’) on 9 April 1929 refer to a report relating to the covering of the ‘tar storage tank’.
(d)A photograph of the Burnley site taken in 1933 shows a low roof structure covering the area of the bluestone pit; and adjacent buildings that included the tar distillery and boilers.
(e)A photograph of the Burnley site taken in 1951 photo shows that the low structure was still in place as at that date.
(f)In 1959, there was a fire at the so called ‘Hot Mix Plant and Tar Still’ and there was a proposal that the tar still not be repaired and the still be filled in.
(g)A photograph of the Burnley site taken on 30 January 1960 appears to show that the low structure had been removed and the bluestone pit had been filled in.
(h)In February 1960, there was a recommendation that, due to the need for extensive repairs, the hot mix plant should be closed.
(i)In 1961, the abattoirs on the Burnley site were leased to a company called Protean Enterprises Proprietary Limited, later known as Protean (Holdings) Limited (‘Protean’).
(j)Minutes of the Public Works Committee of 5 June 1963 record a recommendation that the City Engineer obtain quotes for clearing up and cleaning the area west of the old refuse destructor. The quote noted as being received was generally to clear the site to existing ground level from the abattoir’s unloading ramp to Barkly Avenue.
(k)A photograph of the Burnley site taken on 3 March 1964 appears to show that the boiler buildings had been cleared and the area, where the low structure had been, as rubble.
(l)On 22 June 1994, the defendant became the successor in law to the City of Richmond.
(m)By letter dated 16 December 2003 to Ms Jane Homewood, Manager of Urban Planning at the defendant, Mr John Roan of the Planning Group (Vic) Pty Ltd lodged a planning permit application to construct a new community safety and training facility at the Burnley site.
(n)By contract of sale dated 24 May 2004, the plaintiff entered into a contract to purchase the Burnley site from the State of Victoria for a purchase price of $7.73 million.
(o)By letter dated 9 August 2004 to the plaintiff, Mr Stephen Wainwright, Co-ordinator of Statutory Planning of the defendant, stated that the defendant had resolved to issue a Notice of Decision to Grant a Planning Permit.
(p)In July 2005, construction work of the plaintiff was halted when a test hole identified coal tar in the bluestone pit.

With respect to the existence of a powder magazine on the Burnley site, its location, from time to time, is unclear but the evidence shows that it was moved as follows:

(a)In 1917, on the recommendation of the City Surveyor, it was to be moved 80 feet from wherever it was; and onto ground, which was four feet higher.
(b)In 1928, on the requirement of the Chief Inspector of Explosives because of unknown Melbourne Metropolitan Board of Works (‘MMBW’) works, it was moved to a position 30 yards to the east of wherever it was.
(c)In 1937, Government requirements necessitated the erection of a new powder magazine to be placed within the quarry in a safer position.
(d)In 1942, because the Council’s powder magazine could not ‘be made burglar proof’, the explosives were moved to MMBWs magazine.

I turn now to a more detailed chronology of the background facts relevant to this proceeding.

Background

By a Crown grant published in the Government Gazette on 4 July 1890, the Crown gave possession of certain land including the Burnley site to the City of Richmond and reserved the original Crown grant land for abattoirs and general municipal purposes pursuant to the Land Act 1884. The Burnley site occupied the south-eastern corner of the block of land bounded by Madden Grove to the north, Burnley Street to the east, Rooney Street to the west and Berlin Street to the south (‘the Block’). After the commencement of the Great War, Berlin Street was renamed, and is still named, Barkly Avenue.

A detailed map of the Block in 1895 shows a quarry in the northern portion, the Richmond Abattoirs in the south eastern corner and a stone crushing plant to the west of the Richmond abattoirs.

The City of Richmond’s responsibilities included the maintenance of roads; and, as at 1914, the City of Richmond was being supplied with distilled tar for this purpose. This is evidenced from the minutes of the Public Works Committee dated 16 March 1914, which recorded that the distilled tar being supplied to the Council had been of inferior quality.

An extract from the Council’s Notice of Motion Book dated 2 February 1915 record a resolution to borrow the sum of £16,000 to be applied as follows:

(a) Purchase and Erection of Machinery for the treatment of Refuse £12,000
(b)Erecting a New Mutton House, Pig Killing Pens, Bath Rooms, Retiring Rooms, and Condemned Meat Room at the Municipal Abattoirs £ 5,500

(c) Purchase of Tar Distilling Plant £ 500.[1]

[1]On 1 March, 1915, the resolution was confirmed by ‘special order’ of the Council.

On 28 August 1915, the Council records a loan was made for £500 for a tar distilling plant (‘the tar distilling plant’).

The annual report of the Council for 1914-15 included the following entries with respect to the construction of a brick building to hold a refuse destructor and an extra stone crusher; and the installation of tar tanks to feed the tar distilling plant to be erected:

The Council some time back ordered an extra stone-crusher for use at the quarry, and it is now being erected … The plans for the erection of the new buildings at the Abattoirs and for the garbage destructor building are now ready, and the Council should be able to make a start with these works almost immediately. So soon as the initial work in connection with the destructor building is finished the Council should be able to install the tar tanks to feed the tar distilling plant that is to be erected. This latter work is essential if the Council intends to put our footpaths in proper order and top dress the main streets at least once a year with tar.
…
Owing to the difficulty in securing supplies of tar while the weather conditions were favourable, it was not found possible to carry out the whole of the tarring work intended to be done. By next summer, however, the Council’s storage tanks and distilling plant should be installed, and this very desirable work will be done more extensively, and more cheaply than has been possible in the past.
…
Everything is now in readiness to commence the construction of the building to hold the refuse destructor plant being supplied by Messrs Heenan & Froud Ltd. Plans and specifications have been prepared for the erection of a brick building on the Council’s land adjoining the stone crusher and quarry in Berlin Street. The plant will consist of four trough rate cells, arranged in two units each of two cells, a Babcock & Wilcox water tube boiler for each unit, and a steam engine and electric generating set. Extensive use of the steam produced will be made in the stone crusher, quarry and abattoirs, and arrangements will be made to sell the balance, in the shape of electric power, to the Melbourne Electric Supply Co Ltd.[2]

[2]Emphasis added.

The annual report of the Council for 1915-16 included the following entry with respect to a tar distilling plant with ‘a storage tank, with a capacity of 40,000 gallons’ constructed of masonry near the stone crushing plant:

Work is now proceeding at the installation of a tar-distilling plant. A storage tank, with capacity of 40,000 gallons, is being constructed in masonry, near the stone crushing plant. Elevated service tanks, into which the tar will be pumped, have been erected, and a boiler of 1500 gallons capacity is now being built in. The boiler is designed to produce 1120 gallons of distilled tar from each filling, and the plant has been arranged so that a similar boiler can be installed. This will enable the Council to meet all requirements for tarring, even at the busiest period. The whole boiler and still were made by Messrs W. Anderson & Sons Pty. Ltd., of this city, and the whole plant is being erected by day labour.

The same annual report recorded that ‘Work was commenced by the Council for the preparation of the site for the Refuse Destructor in November; 1915’; and that it was to have a chimney stack 140 feet high.

On 15 August 1916, according to Council records for contract no. 1854, the contract for the supply and delivery of the tar distilling plant was completed. The construction of the tar distilling plant was completed over approximately 12 months. In particular:

(a)on 28 August 1916, £10 was recorded as being paid for ‘Purchase of Bluestone on Land, Swan Street, for Tar Plant’; and
(b)on 4 December 1916, 12 guineas was recorded as being paid to Albion Quarrying Company with respect to ‘21 loads of Rubble for Tar Tank’.

On 21 November 1916, the annual report of the Council for the year 1916 recorded the refuse destructor ‘started 21^st November, 1916’.

The quarrying operations utilised explosives. The storage of the explosives required a powder magazine and there is evidence of a powder magazine at the Burnley site as early as 1865. The site of the powder magazine as at 1917 was unknown but in 1917 the City Surveyor’s Report to the Council recommended that a new magazine be erected. The Notice Paper for a Council meeting on 26 February 1917 recorded the following with respect to ‘Magazine at Quarry’:

The Surveyor recommends that the new powder magazine be erected about 80 feet distant from the present site. The proposed new site is about 4 feet higher than the present one and can easily be seen by the Caretaker. The cost of the new building will be £18.

The annual report of the Council for 1925-26 recorded that steam from the refuse destructor was supplied to the tar still for ‘tar pumping’; and to the quarry.

In December 1923, the City Engineer recommended the purchase of a ‘Duplicate’ Tar Distillation Plant for £569. The entry in the contract register for December 1923 recorded that two tar stills were supplied and erected for £569, which may be explicable by the duplicate plant including two stills.

By letter dated 25 October 1928 to the MMBW, the City Town Clerk noted that the City of Richmond had been required to remove its powder magazine by the Chief Inspector of Explosives ‘in consequence of work carried out by the Board of Works’. The MMBW offered to pay £5 towards the cost of the removal, which offer was accepted.

By letter dated 27 November 1928 to the Chief Inspector of Explosives, the City of Richmond Town Clerk confirmed that instructions had been given to remove the Council’s powder magazine to a position 30 yards in an easterly direction to the Burnley site approved by the Chief Inspector.

By Council minutes dated 19 August 1929, it was recorded that a report by a Mr Allan on the covering of the tar storage tank was referred to the Public Works Committee and the Building Surveyor was directed to report on same.

In winter 1933, an aerial photograph was taken of the Burnley site which was referred to in the trial as the ‘oblique photograph’ but which will be referred in this judgment as ‘the 1933 photograph’. A copy of the photograph is attached below.

It is not disputed that the following matters are depicted in the photograph:

(a)The stone crushing plant building is located immediately to the north (towards the bottom of the photograph) of the refuse destructor building with its chimney, which Mr Andrew Watts, a photogrammetrist called by the plaintiff, estimated as being 30 to 40 metres tall.
(b)To the west of the stone crusher building is a low roof structure (‘the low structure’), which sits over the area where the bluestone pit was found in 2005.
(c)Immediately to the south of the low structure is a building with two small chimneys or flues indicating the presence of boilers underneath (‘boiler north building’) which formed part of the tar distilling plant.
(d)Immediately to the south of the boiler north building with its two small chimneys or flues is a triple roofed saw-tooth section. South of the saw-tooth roofed section is another building later referred to as the ‘old building’. (The buildings south of the low structure as outlined here in (c) and (d) are referred to as ‘the boiler buildings’).
(e)To the west of the boiler buildings is the blacksmith’s shop.

It was agreed by the experts called on behalf of both parties that, at the time of the 1933 photograph, the bluestone pit covered by the low structure was not being used as a powder magazine.

A plan prepared by a MMBW employee dated 11 December 1933 (‘1933 MMBW Plan’) shows the position of the low structure, the boiler buildings and the blacksmith’s shop in relation to the refuse destructor. The diagram labels the low structure as ‘powder magazine’. Although data from 1933 MMBW Plan was later incorporated into a MMBW Detail Plan 920 Municipality of Richmond Index Plan 40 dated 1942 (‘the 1942 MMBW Detail Plan’), the designation of the low structure as a ‘powder magazine’ was not incorporated into the 1933 MMBW Plan. A copy of the plan is below.

The City Engineer’s report dated 2 April 1935 to the Public Works Committee noted that ‘we have over 14,000 gal’s [sic] of crude vertical tar’ and proposed that ‘pending instruction to call for tenders for a larger Hot Mix plant I propose to use our automatic concrete mixer’.

On 15 April 1935, Report No. 15 of the Public Works Committee recorded the receipt of two tenders, one for a ‘Tar Mixing Plant’ and the other ‘to convert Concrete Mixer into a Hot Mix Plant’; and recommends that ‘a lean-to shed – 60 x 20 against the west wall of the Stone Crushing Plant, be erected’ as a ‘Shed for Tar Mixing’.

A specification published by the City Engineer dated 29 May 1935 called for tenders for the supply of crude tar delivered to ‘the Corporations Destructor Yard in Barkly Avenue … Delivery may be made either direct into the Council’s Kettles or Boilers or into the Corporation’s storage Tar tank.’

The Report No. 1 of the Public Works Committee dated 9 September 1935 noted that ‘the City Engineer reports the third Tar Still is in the same condition as caused the recent fire with the two now being repaired.’

The annual report of the Council for the year 1935-36 reported that ‘the quarry pump has been replaced by the pump originally used at the tar still’.

In 1937, it appears that Government requirements necessitated the construction of a new powder magazine. By the City Engineer’s report dated 6 December 1937, he reported that ‘I have a Specification to meet requirements of the Government for a new Powder Magazine, to be placed within the Quarry in a safer position’.

The City Engineer’s Report Book dated 18 February 1942 recorded as follows:

Safety of explosives
For the information of Council our magazine consists of a double corrugated iron box each filled and buried in the rock wall with only the door showing. This is double locked with Yale locks and covered with metal plate also locked in position with a padlock.
The cap and fuses are in a concrete box similarly locked.
Both these magazines were broached by means of steel bars to which there is no effective protection. The explosives are now in the MMBW magazine. I would recommend closer watch being kept during daylight hours by our watchman paying particular attention to the magazine, and the installation of steel safes set in concrete, as the risk of theft and possible consequences are too great to be taken at present.

As previously noted, in 1942 the 1942 MMBW Detail Plan was prepared incorporating some information from the 1933 MMBW Plan.

The minutes of Council meeting held on 22 February 1943 recorded a resolution that ‘overalls be purchased for employees engaged in cleaning out tar well at the Quarry’.

By correspondence between 7 April and 6 May 1942, the Council negotiated with the MMBW to store its explosives at the MMBW’s powder magazine because the Council’s magazine ‘cannot be made burglar proof’.

It appears that, as at October 1943, the City of Richmond did not have a hot mix plant because a letter from Albion Quarrying Company dated 18 October 1943 stated ‘As your council does not possess a hot mix plant’.

Council minutes dated 13 December 1943 recorded a proposal to alter the roof of the tar still and report back to the Council.

Council minutes dated 30 October 1944 recorded the City Engineer’s recommendation to grant Albion Quarrying Company’s application to use ‘the Council Tar Well for storage of bulk tar’. By a letter dated 31 October 1944 to Albion Quarrying Company, the City Town Clerk agreed to allow Albion Quarrying Company to use the tar well at ‘the Council Depot’ for the storage of bulk tar for a rental of £3 per month for the use of the well.

An aerial photograph of the Burnley site was taken on 24 December 1945 (‘the 1945 photograph’). Mr Watts produced a scan of the relevant area cropped from an enlargement of the 1945 photograph displayed on a screen whilst he was giving evidence at trial. A copy is attached below.

The photo includes various relevant features which Mr Watts has drawn and labelled. Critically in this photograph, Mr Watts was able to discern that the boiler buildings, south of the low structure, appeared to be four separate buildings which he identified as boiler north, boiler centre, boiler south and old building. He also identified the position of the MMBW drain, which is noted as the ‘Pipe Easement’ (‘the MMBW drain’). He deposed that the two chimneys were in the boiler north building. (I have previously called these buildings collectively ‘the boiler buildings’ but I will adopt these names when referring to these buildings individually in these reasons for judgment.)

Based on the 1945 photograph, Mr Watts estimated the low structure as measuring 6.3 metres in the east west dimension and 10.6 metres in the north south dimension. This would indicate an area of 66.78 square metres or approximately 720 square feet. However, Mr Watts said that the accuracy of the image could have errors up to 1.5 metres in the extreme but more realistically under 80 centimetres (indicating the ‘realistic’ extremes of the potential area as between about 54 square metres and 81 square metres); and the walls under the roof may house a smaller area. Mr Timothy Sproal, a Health, Safety & Environment Consultant at Noel Arnold & Associates called by the plaintiff, measured the inside measurements of the bluestone pit at 6.5 metres by 10.1 metres, which he said should be accurate to within 50 cm. This would indicate an area of 65.65 square metres or approximately 706 square feet.

The minutes of the meeting of the Council of 16 February 1948 record ‘The Engineer’s reported that the contractors had commenced the erection of this [hot mix] Plant was read and is recommended for adoption’.

A report of the Public Works Committee dated 25 August 1958 recorded the following:

Albion Quarrying Company – Tar Well: The City Engineer reported that the area of land on which the tar well is situated consisted of 600 sq. ft. and the Committee recommends that the rental to be paid by the Albion Quarrying Company for the use of the tar well be fixed at £100 per annum.

A report of the Public Works Committee dated 11 August 1958 noted that the tar well, which had been rented to Albion Quarrying Company, ‘holds’ about 20,000 gallons of tar and consideration had been given to removing the structure over it and filling it in. The report recorded the following:

Tar Well On Council Land, Madden Grove: The Engineer reported that this tar well holds about 20,000 gallons of tar and had been rented by Albion Quarrying Company for £36 per annum. Because of danger to unauthorised people who might gain access to the well it had been decided to remove the structure over it and fill the well. Subsequently, Albion Quarrying Company had repaired the shed over the well and it appears that the danger no longer exists. He, therefore, recommended that since the Council did not at this stage require the area, the rental at a rate to be determined be continued subject to the Company agreeing to vacate the area at four weeks’ notice. The Committee recommends that the report be received and consideration of the matter adjourned for fourteen days to enable Councillors to inspect the well and covering shed and that the Engineer report on the area of the land to be used as a basis for fixing the rental.

On about 1 January 1959, there was a fire at the hot mix plant and tar still. A report of the Public Works Committee dated 9 February 1959 recorded the following:

Hot Mix Plant and Tar Still: The Engineer reported that on New Years’ night a fire had caused serious damage to the plant and the tar still. Damage to the roof of the still is estimated at £200 and the area which it occupies could now be well used by heavy transports unloading stock at the ramp under construction. The Albion Quarrying Company have agreed to remove the tar and he recommended that the work be not carried out and that the still be filled in.
He had conferred with the Insurance Loss Assessor, Mr Smail, and Mr Laby from Major Furnace Company and arranged that Mr Laby’s company install a new 150 gal. bitumen tank and carry out some repairs to the furnaces and that Dentons do the sheetmetal work required. He anticipated that the plant will be again in operation by the 6^th February.
The Committee recommends that the report of the City Engineer be received and his recommendation with regard to the tar still adopted.[3]

[3]Emphasis added.

An aerial photograph was taken of the Burnley site on 18 January 1951 (‘the 1951 photograph’). Mr Watts gave evidence that he could see the low structure in this photo.

Another aerial photograph was taken of the Burnley site on 30 January 1960 (‘the 1960 photograph’). With respect to this photograph, Mr Watts gave the following evidence:

(a)The roof of the low structure was no longer visible. The surface was now irregular although it was elevated.
(b)The area, where the low structure had been, looked ‘more like a lot of building rubble in a reasonably flat plane, slightly elevated around the surrounding land as if something’s been demolished or filled in or pushed up. It’s certainly not a building any more. It could be demolition of a building’.
(c)To the right of this area there was an object in the shape of a cylindrical tank on a stand elevated by 1 to 2 metres. The dimensions of the tank were about 2.5 metres by 1 metre.
(d)There were changes in the shapes of the boiler buildings.

The report of the Public Works Committee dated 22 February 1960 recorded that the Engineer had reported that the hot mix plant required extensive repairs and it was recommended that the plant be closed.

From 1961, the abattoirs were leased to Protean, which operated the abattoirs until 1984.

Council minutes dated 27 February 1962 noted the receipt of a report from the Public Works Committee recommending that quotations be obtained for the demolition of the old hot mix plant in Barkly Avenue, the removal of waste material and a general cleaning up of the area.

By letter dated 9 April 1962, the City Engineer notified the Council that a quote had been received to clear the Burnley site to existing ground level from the abattoirs’ unloading ramp to Barkly Avenue, and that Richmond Metals had offered to pay the Council £25 for the old hot mix plant. It also noted that there was interest from Protean in acquiring some of the old boilers in the area.

The minutes of the Public Works Committee meeting on 5 June 1962 recorded a recommendation that the City Engineer obtain quotes for clearing up and cleaning the area west of the old refuse destructor.

A further aerial photograph was taken of the Burnley site on 3 March 1964 (‘the 1964 photograph’). Mr Watts’ evidence as to this photograph was as follows:

(a)The boiler buildings, the stone crushing plant and the blacksmith’s shop have ‘all gone’.
(b)The refuse destructor and chimney are still present.
(c)The area of the low structure is now rubble or a track with a lot of rubble lying around.
(d)There are two trucks manoeuvred into the loading docks of the ramp immediately to the north of the site where the low structure had previously been.

The version of the 1964 photograph cropped by Mr Watts with drawing and labelling is attached below.

It shows the position of the then demolished low structure, boiler buildings, blacksmith’s shop and stone crushing plant.

By a report dated December 1990, Sinclair Knight & Partners reported on a range of planning, environmental, engineering and land economics investigations undertaken to assess the feasibility of redeveloping the ‘Richmond Abattoirs study area’, which was an area bounded by Burnley and Rooney Streets, Barkly Avenue and Madden Grove (approximately 7.3 hectares). The report recorded the following with respect to site contamination:

The former quarry has been filled with municipal and perhaps industrial type waste, and some contaminated fill has been used to modify levels across much of the site. Levels of contamination are relatively low, and remedial action is unlikely to be required to render those areas suitable for redevelopment. Any sensitive site uses such as residential should aim to avoid contact with contaminated areas, through appropriate design and construction measures. Further, more detailed investigations would be necessary prior to detailed planning for site development.
A formal environmental audit will be required prior to approval for rezoning of the site.

During 1993, the Richmond Abattoir buildings and related structures on the Burnley site were demolished.

On 22 June 1994, the defendant became the successor in law to the City of Richmond.

By a report dated November 1994, ADI Services completed a Site Contamination and Geotechnical Assessment of the Burnley site for the Department of Finance. The purpose of the assessment was to assess the geotechnical conditions of the site, describe the contamination status and attendant risks, and make appropriate recommendations for further works where required. The report divided the area into ‘four domains’. With respect to the land near and to the southwest of the MMBW drain, the report noted ‘significant contamination, with heavy metals, polycyclic aromatic hydrocarbons (‘PAHs’), petroleum hydrocarbons and phenols, was present in several strata over the area’. The report concluded that ‘further work to delineate this contamination may be warranted since, unless remediated, this area would not be suitable for residential use. Indeed, location 18 is sufficiently contaminated with PAHs to warrant remediation regardless of use’.

By order of the Governor in Council on 20 February 1996, the State of Victoria revoked the relevant part of the Crown grant to the Council on the corner of Barkly Avenue and Burnley Street. A brief history of the events leading up to the revocation is contained in a memorandum dated 21 July 1994 from the Manager, Richmond District to the Acting Chief Executive Officer of the City of Yarra, which stated as follows:

The Richmond Abattoir Committee is a three part committee comprising representatives of the former City of Richmond (both management and former Councillors), Representatives of the Department of Planning and Development, and the Department of Finance.
The purpose of the Committee is to plan the (essentially residential) development of the site.
The site is Crown Land under the management of the former City of Richmond and is some 7 plus acres in size. The terms of the 1890 Crown Grant were that the City had control over the land for "Abattoir and General Municipal" purposes.
The City of Richmond operated a Municipal Abattoir on the site up until the 1950s. The site was then leased to Protean Holdings who operated the abattoir up to the early 1980s when it was taken over by Smorgon. Smorgon did not renew the lease in 1988 and the site fell vacant.
In 1992, after legal advice , the Council commenced a test case action against the State Government over permanent rights over the land. That case was decided in the Supreme Court in Richmond Council's favour with costs. The Government did not commence appeal action within time and subsequently were refused the right of appeal by the Full Court.
The terms of the Court decision were that Richmond had the right to lease or sell the land. The Victorian Government subsequently passed legislation in retrospect to 9 April 1992 (the day after the Supreme Court decision) which required any proposed sale or lease by the Council had to first have enabling legislation through the Victorian Parliament. The legislation effectively blocked Richmond's capacity to enjoy the benefits of the Supreme Court decision.
No formal application has been made to the Government for enabling legislation, and the view has been taken that the land has been effectively lost to Richmond.

On 27 June 1994, Sinclair Knight Merz sent a draft brief to the City of Richmond to invite proposals from consultants for the Burnley site. With respect to the site history and conditions, it noted the following:

Site History and Conditions
The site was an operating abattoir for nearly 100 years until its closure in 1987. The site has recently been cleared, with the removal of all above-ground structures, pavements and underground pipes, pits, foundations and other objects to about one metre depth. Asbestos was removed from the buildings prior to demolition. No underground fuel tanks were found. Limited information on site use history is available.
A preliminary geotechnical and contamination investigation was conducted in the area in 1990 (Sinclair Knight "Richmond Abattoirs Site Development Study") which indicated that:
·part of the site (about 10% of the site on the northern boundary) is a former basalt quarry since filled with municipal waste and night-soil and possibly some industrial waste. The depth of the quarry is unknown but indicated to be at least 12 metres;

·fill within the former quarry appears to be contaminated with hydrocarbons, PAH and some heavy metals including lead and zinc;
·the balance of the site appears to have a layer of fill of depth varying from little or no fill on the eastern boundary to up to 2-3 metres near the western boundary (over a major stormwater drain). The fill near the western side of the site has some contamination with PAHs and phenolics.
·both the shallow fill and deeper (quarry) fill are unconsolidated and likely to present constraints on future construction on the site.

The scope of work identified a review of site history information, and the design and conduct of geotechnical and site contamination investigations including a need for sufficient soil chemical data to enable environmental audit under s 57 of the Act.

In 2002, Connolly Environmental (Aust) Pty Ltd (‘Connolly Environmental’) was engaged by the State of Victoria to conduct an environmental assessment of the Burnley site. The stated aim of the assessment was to establish the existing contamination status of soil and groundwater at the site with reference to potential future uses. The work was required in preparation for sale of the site, to assist prospective purchasers in assessing the suitability of the site for their intended use. The resulting environmental assessment report concluded that, with appropriate management of contaminated fill, the Burnley site was suitable for high density residential or commercial/industrial use.

By letter dated 12 February 2003 to Mr Phil Duthie of GHD Pty Ltd (‘GHD’), Mr Martin Grier of the plaintiff sought a fee proposal for a review of the Connolly Environmental site assessment. The letter explained the background to the request as follows:

The MFB is considering the acquisition of a block of land located adjacent to the conjunction of Barkly Avenue and Burnley St Richmond. The owners have recently completed an environmental site assessment and a report has been issued. The report indicates a moderate level of site contamination.
The area of the site is approximately 22120 sq m and the [environmental site assessment] programme comprised 20 boreholes and approximately 240 soil assays for organic and inorganic contaminants. A copy of the executive summary is appended to this letter together with a diagram of the site.
The MFB wises to equip itself with an independent and impartial expert assessment of the report so that it is fully appraised of the risks and appropriate management strategies.

GHD became the plaintiff’s consultant geotechnical engineer from this time onwards.

By its report to the plaintiff dated May 2003, GHD provided an ‘Environmental Investigations Report – Final Report’. The executive summary of the report included the following:

The objective of the investigations was to assess the environmental status of the site with the aim of establishing the suitability of the site for the proposed administration and training facility. Soil samples were collected from 15 environmental test pits and 13 geotechnical test pits. Limited analysis of these samples was undertaken.
The investigation results corroborate previous soil contamination information and provide some assurance that the site would be suitable for its intended use by MFB, provided appropriate management of the contaminated soils is undertaken. The soil results indicate localised contamination exceeding the criteria protective of human health under a commercial/industrial land use (HIL F criteria). These criteria are considered relevant for the proposed use of the site.
The exceedances of the HIL F criteria would require management of the soil contamination under an Environment Management Plan (EMP), providing a mechanism for the management of contaminated soil if disturbed through excavation, or there was access to soil by construction or maintenance workers.
The human health criteria are not protective of ecological values (gardens and lawn) and it may be necessary to replace soils in designated garden and lawn areas with clean landscaping materials.
Whilst the groundwater was found to be polluted with respect to the beneficial use of maintenance of ecosystems by metals and cyanide, consideration of the pollution with respect to the EPA Clean Up to the Extent Practicable (CUTEP) process is likely to result in a conclusion that clean up of the groundwater is impracticable. Hence, under the prevailing EPA guidelines, it is unlikely that there would be a requirement to clean up the groundwater at this site.
The proposed development of the site would result in an impervious cover over much of the site. This would redirect rainfall from the site soils to the stormwater system and would reduce infiltration. This will reduce the potential for migration of contaminants from the soil to the groundwater system and eventually, to the river. Hence the development of the site may provide a net environmental benefit.

By a valuation report from Urbis dated September 2003, the Burnley site was valued as at 8 September 2003 at $8 million, which allowed for clean up costs for industrial/commercial use of $1.1 million. The valuer was supplied with various reports including the reports by Sinclair Knight & Partners dated December 1990, ADI Services dated November 1994, Connolly Environmental dated January 2003 and 17 February 2003 together with the two environmental reports prepared for the plaintiff by GHD dated 31 March 2003 and June 2003. Although the valuer considered that, subject to the cost of remediation not being prohibitive, conversion to a residential use would provide a substantially higher value, the valuation was predicated on the assumption that such conversion would not be considered at least in the short to medium term.

By a memorandum dated 27 October 2003, the Executive Officer of the plaintiff recommended to the plaintiff’s board that the plaintiff acquire the site. The report noted that:

The primary investigations for the site have revolved around the existing contamination on the site, resulting from its former uses, part being a former quarry and then a rubbish tip and part due to the backfill placed over a former creek on the western edge of the site. These investigations are now complete and the estimated costs for clean up work agreed with the State Government.

The memorandum further noted that the Victorian Valuer General valued the Burnley site at $9 million and Urbis valued the site at $9.2 million, and that the final price of the land was expected to be in the vicinity of $8.25 million. On 27 October 2003, the plaintiff’s board resolved to acquire the Burnley site.

By letter dated 16 December 2003 to Ms Jane Homewood, Manager at Urban Planning of the defendant, Mr Roan of the Planning Group (Vic) Pty Ltd lodged a planning permit application on behalf of the plaintiff to construct a new community safety and training facility at the Burnley site.

By contract of sale dated 24 May 2004, the plaintiff entered into a contract to purchase the Burnley site from the State of Victoria for a purchase price of $7.73 million. The special conditions of the contract included the following:

2. Environmental Matters
2.1 The Purchaser acknowledges that:
(a)the Vendor has commissioned an environmental site assessment report (the Report) for the Property which has been prepared by Connolly Environmental in January 2003. A copy of the Report has been produced to the Purchaser on or before the Day of Sale;
(b)the Vendor makes no warranty as to the accuracy or completeness of the Report which has been provided to the Purchaser for information purposes only;
(c)the Purchaser has inspected a copy of the Report and is aware of its contents;
(d)the Purchaser has purchased the Property in its present condition and has entered into this contract on that basis without relying on the Report;
(e)the Purchaser and its consultants have been given access to the Property to undertake its own environmental investigations;
(f)as from the Settlement Date, the Purchaser assumes all risk of loss, damage, liability or injury to any person, corporation or property resulting in any way from the use of the Land or existence or previous existence of any underground storage tank or tanks (including, without limitation, leakage or spillage of oil or the products) or the presence of any contaminant which may be in or on the improvements or any fixtures, fittings or installation in, to or on the improvements or in, on or under the Land;
(g)the Purchaser may not claim any compensation or refuse or delay payment of the whole or any part of the Price because of the existence of any contaminant in, on or under the Land or in or on any improvement or any fixture or fitting in or on the Land;
(h)the Vendor is not required to remove or treat any contaminant which may be in, on or under the Land or in or on any improvement or any fixture or fitting in or on the Land.

2.2As from the Settlement Date, the Purchaser releases and discharges the Vendor and his successors, assigns, employees and agents from and against all claims, suits, demands and actions of every description whatsoever and whenever occurring which the Purchaser has, may have, or which may accrue in the future or which, but for the execution of this contract, the Purchaser would or might have had against the Vendor as a result of the presence of any contaminant in, on or under the Land and from and against all claims for costs and expenses in respect of such claims, suits, demands, financial penalties and actions of every description whatsoever and whenever occurring, resulting or arising from the presence of any contaminant in, on or under the Land (including, without limitation, any costs or expenses incurred in relation to any notice, direction or order issued or made under the Environment Protection Act 1970 or any other Act or Regulation in force from time to time in Victoria relating to the protection of the environment) and from and against all claims for costs and expenses in respect of such loss, damage, liability, claims, suits, demands and actions. This release does not apply to any claim or action brought by any person or any personal injury arising out of the exposure to any contaminant before the Settlement Date.
2.3As from the Settlement Date, the Purchaser indemnifies and holds harmless the Vendor and his successors, assigns, employees and agents from and against all loss, damage, liability, claims, suits, demands, financial penalties and actions of every description whatsoever and whenever occurring resulting or arising from the presence of any contaminant in, on or under the Land (including, without limitation, any costs or expenses incurred in relation to any notice, direction or order issued or made under the Environment Protection Act 1970 or any other Act or Regulation in force from time to time in Victoria relating to the protection of the environment) and from and against all claims for costs and expenses in respect of such loss, damage, liability, claims, suits, demands and actions. This indemnity does not apply to any action or claim brought by any person for personal injury arising out of exposure to any contaminant before the Settlement Date.

By Notice of Decision to Grant a Permit dated 9 August 2004, Mr Stephen Wainwright, Co-ordinator of Statutory Planning of the defendant notified the plaintiff that the defendant had resolved to issue the requested planning permit PL03/1404.

By facsimile dated 16 August 2004 to the Victorian Auditor-General’s office, the Department of Treasury and Finance forwarded a copy of part of the contract of sale, together with the Ministerial approval for the acquisition of the property.

By letter dated 15 September 2004 to the plaintiff, Mr Wainwright advised that the Victorian Civil and Administrative Tribunal had not received any application for review against the Notice of Decision to Grant a Planning Permit and accordingly, the permit was granted.

By way of an Application for Planning Permit form dated 23 November 2004, the plaintiff applied for an extension to the community safety and training facility with a proposed cost of the development at $3 million. The application was enclosed in a letter from Mr Roan of the Planning Group (Vic) Pty Ltd which explained that the purpose of the further application was to extend the approved facility at the Burnley site. It noted that the defendant had issued a planning permit for the facility earlier in the year but it had since been decided to undertake an extension, which in the original permit had been nominated for future expansion, as part of the initial construction.

On 13 December 2004, the plaintiff lodged an Application for Planning Permit to redesign a ‘Building C’. The application noted that the facility had been approved under permit PL03/1404. The proposal included an alteration to the height, setback and layout, which it said improved the function and reduced overshadowing of the building.

On 28 June 2005, the defendant issued planning permits PL04/1159 and PL04/1263. The permits respectively allowed development of the Burnley site for a community safety and training facility with:

(a)an extension to Building A and reconfiguration of the parking area.
(b)a reconfiguration of Buildings B & C, creation of Building D and reconfiguration of the car parking layout.

The project being the MFB Training Complex was to comprise of four buildings being:

Building A: The largest of the four buildings, being a three level office/training facility with a unique architectural cladding system

Building B: A two level amenities complex
Building C: A portal frame structure that will be MFB workshop
Building D: A 6 level concrete tower, that will be utilised for mock training exercises.

In May 2005, Abigroup Contractors (‘Abigroup’) were engaged by the plaintiff to undertake an environmental site assessment report; and in July 2005, Abigroup engaged Noel Arnold & Associates Pty Ltd to carry out analyses of soil samples from the Burnley site.

By a facsimile dated 14 July 2005 to Abigroup, Noel Arnold & Associates reported that, of the seven soil samples taken from the site, three of them exceeded the adopted soil investigation level for a commercial setting which, subject to further investigation, may require the stockpiles to be disposed of off-site.

A file note of Mr Andrew Waters, Site Manager at Abigroup, dated 28 July 2005 recorded the following:

(a)On 27 July 2005 a test hole was dug at the southwest end of the Burnley site.
(b)GHD had previously documented test hole TP14 to only 200 mm but, due to stormwater works to be completed in this area, Abigroup decided to conduct a further test hole to 2 metres.
(c)The test hole identified a black strong odorous liquid between the depths of 1.5 and 2 metres.
(d)Work at the site immediately ceased, and the pit barricaded and tarped to minimise the exposure of the smell.

By a facsimile to Abigroup dated 29 July 2005, Noel Arnold & Associates reported that the analysis of the soil sample identified multiple contaminants present at elevated levels that could potentially represent a health risk, including PAH, cresols and total recoverable hydrocarbons. Noel Arnold & Associates suggested that the excavation should be backfilled to minimise the potential of exposure to vapours; and outlined the safety precautions necessary for the undertaking of excavation works.

By letter dated 5 August 2005 to Abigroup, Noel Arnold & Associates presented a proposal to undertake a soil contamination assessment and develop management plans for the site. In particular, the letter noted the following:

(a)The test-pits excavated on 27 July 2005 identified contaminated soils adjacent to a bluestone brick wall structure buried approximately half a metre below ground surface. It was likely that this structure represented a pit of some description and additional contamination was likely to be bound by its walls.[4]
(b)It was proposed that up to 15 soil samples be obtained for analysis.

[4]This structure was later described and referred to as ‘the bluestone pit’.

By facsimile dated 23 August 2005 to Abigroup, Noel Arnold & Associates reported that the soil sampling program, which had been undertaken on 12 August 2005, indicated that the contamination observed within the bluestone pit extended beyond the walls of the pit and impacted the adjacent soil. Soil collected from test pits outside of the bluestone pit indicated that, although the observed contaminated concentrations were lower than the concentrations observed in the bluestone pit, the extent of the contamination had not been comprehensively delineated. Accordingly, Noel Arnold & Associates proposed four additional test pits be excavated perpendicular to each of the four walls of the bluestone pit in order to delineate the contamination. It was noted that the concentrations would limit the number of landfills that could accept the soil once removed.

By a facsimile dated 6 September 2005 to Abigroup, Noel Arnold & Associates confirmed that the investigations in the southwest corner of the site had identified contamination that included liquid tars, contaminated soil and hard waste material. It was decided that in situ remediation was not appropriate because the contamination was only 1–2 metres deep, it was odorous and it was in close proximity to the stormwater drain.

By facsimile dated 12 September 2005 to Abigroup, Noel Arnold & Associates provided ‘some cost estimates for the removal of the bluestone pit and associated contamination located in the south-western corner of the MFB Training Centre Site’. The facsimile stated:

Based on the findings for the soil contamination assessment completed in the vicinity of the bluestone pit, it [is] estimated that 150 m³ of contaminated soil/hard rubbish/liquid exists within the bluestone pit. Furthermore, an additional 150 m³ of liquid/contaminated soil exists to the east, west and south of the pit.

By letter dated 14 September 2005 to Abigroup, Noel Arnold & Associates provided a fee proposal for the investigation and supervision of the removal of the contamination at the Burnley site. The letter noted by way of background as follows:

The Contamination identified has been horizontally delineated in three directions to the north, east and west. The Contamination has not been fully delineated horizontally to the south due to the location of below ground services impeding previous Investigation works. The extent of Contamination has not been delineated vertically due [to] our consideration to avoid leakage of contamination to groundwater which could have occurred if we had punctured the hard layer noted beneath the liquid contamination at 3.5 m below ground level.
Physical and chemical analytical results of the Contamination reported elevated polycyclic aromatic hydrocarbons (PAHs), total recoverable hydrocarbons (C6-C36 fraction), and monocyclic aromatic hydrocarbons (MAHs) above acceptable concentrations for the ongoing use of the Site as the MFB's Fire Training Centre.

On 14 February 2006, an Excavation Validation Plan was prepared showing, among other things, the area of excavation relative to the bluestone pit and a summary of contamination readings from various bore holes. A copy of this plan is attached below.

The excavated material included waste liquids and hard rubbish. The material was to be removed by Nuplex Environmental (‘Nuplex’), a specialist waste treatment company, over a period of two weekends involving heavy machinery treating the liquid waste and loading the material onto trucks.

The initial excavation works were conducted on 3, 4 and 5 December 2005 and some 1,183.78 tonnes of contaminated material were removed to the Nuplex waste treatment facility in Dandenong. At the completion of the initial excavation, the Nuplex facility had reached capacity. By this time the contents of the bluestone pit and the bluestone walls themselves had been removed and, although the pit remained open, it had been battered and partially backfilled. It was noted that visual observations in the vicinity of the test pit indicated that the soil profile comprised approximately 1 metre of surface clay fill overlying a mixed contaminated zone, including a black oily sludge. The oily sludge was located on sections of the north, west and south walls. The sludge overlaid basalt rock and in some areas filling material which comprised the floor of the pit. The elevated contaminants included:

(1)       total recoverable hydrocarbons (‘TRH’);
(2)       monocyclic aromatic hydrocarbons (‘MAH’);
(3)       polycyclic aromatic hydrocarbons (‘PAH’);
(4)       cresols.

A Summary of Stage 1 Remedial Works carried out in December 2005 was provided by Noel Arnold & Associates to Abigroup in March 2006. The executive summary was as follows:

Noel Arnold & Associates Pty Ltd (NAA) was engaged by ABI Group to assist during the removal of contaminated soil from the MFB Burnley Complex, Burnley Street (the Site). Previous test pitting investigations conducted by NAA on the 12^th and 26^th of August, 2005 at the Site identified significant contamination in the form of a black oily sludge with discarded car parts and building material located within a large bluestone pit in the southwestern corner of the site. Test pitting outside of the bluestone pit at this lime confirmed that this contamination was not totally contained within the pit and had migrated into the adjacent natural clays, and clayey fill and fractured basalt bedrock.
A number of options were presented to manage the contamination, with removal of the material adopted as the preferred option by ABI Group and MFB. Nuplex, engaged directly by ABI Group, conducted the excavation works, with assistance provided by NAA.
The initial excavation works (Stage 1) were conducted between the 3rd and 5th of December, 2005 and involved the removal of approximately 1,200 tonnes of contaminated material to the Nuplex waste treatment facility, Dandenong. NAA observed the excavation works and provided assistance with regard to hygiene conditions, identification of contamination and collected samples at the completion of Stage 1 excavation.
The primary objective of the Stage 1 excavation works was to remove the contents of the bluestone pit, including the pit itself. In addition, at the completion of work the presence of contamination outside the pit could be assessed and the requirement for additional excavation or remedial activities could be considered.
The analytical results obtained from validation samples reflected field observations made during the Stage 1 excavation works. The field observations indicated that a significant amount of contamination existed within the remaining soils and also within the basalt bedrock. This was confirmed by sample analysis with concentrations of PAH and Benzene above the NEPM 'F' level HILs, with TRH, Cresols and Xylene above the Dutch Intervention Levels recorded in five of the seven validation samples recovered from the walls of the excavation.
Based on visual observations and the analytical results for the samples collected at the completion of the Stage 1 excavation works, it is recommended that additional excavation be conducted in all directions from the existing excavation walls to remove the residual significant contamination (i.e. oily sludge) from the disturbed natural and natural soils. It was considered unlikely that the remaining contamination to the perimeter of the bluestone pit would require treatment for spadability prior to off-site disposal. Sample 44072-Vl underwent a flash test and leachability testing to meet the requirements of the SITA Lyndhurst landfill. All analyses were within the criteria specified by SITA and the material could be disposed directly to Lyndhurst and will not require treatment on site or at Nuplex.

On 22 December 2005, there was a meeting between officers of the plaintiff and officers of the defendant. A note of the meeting stated that ‘the City of Yarra was given a comprehensive status briefing of events from the initial discovery to the present state’.

By a memorandum to the City of Yarra Executive Group dated 16 January 2006 (incorrectly dated 2005), Mr Richard Young, Assets Project Co-ordinator of the defendant, reported on the history of the Burnley site including the land ownership issue referred to previously between the plaintiff and the State of Victoria. Of particular relevance to the contamination in the area of the bluestone pit, the following was noted:

(a)On 22 January 1996, the defendant gave approval to Transurban to conduct 12 soil tests on the site and ‘bore hole A9 is virtually in the exact location of the recently discovered drums of petroleum’.
(b)On 4 March 1996, the Council had received a facsimile from the Transfield Obayashi joint venture providing the results of the 12 bores. Bore A9 was determined to contain PAHs which it was noted ‘are formed during the incomplete burning of coal, oil, gas, wood, garbage and other organic materials, including tobacco and charboiled meats’.
(c)The ‘only conclusion that can be drawn is that the drums were deposited in the ground after the demolition works were concluded, by persons unknown’ because otherwise the ripping of the ground to a depth of 750 mm would have identified them.

A Summary of Stage 2 Remedial Works carried out in January 2006 was provided by Noel Arnold & Associates to Abigroup in March 2006. After summarising stage 1 and noting that the additional excavation works of stage 2 were conducted between 26 and 29 January 2006, involving the removal of approximately 3,400 tonnes of contaminated material, the executive summary continued:

The primary objective of the Stage 2 excavation works was to remove as far as practicable the occurrences of 'black oily sludge' identified in earlier test pit investigation works and the Stage 1 excavations.
At the completion of Stage 2 remedial works, which involved the removal of approximately 3,400 tonnes of high-level contaminated soils, twenty-six (26) validation samples were recovered from within the excavation pit to assess the effectiveness of the works undertaken. Analytical results of the samples recovered, together with visual and olfactory evidence documented during excavation works, indicate that residual contamination exists within the fractured basalt bedrock present across the base of the excavation. In addition, test pitting across the area west of the stormwater drain highlighted the presence of soil contamination likely to be associated with the previously removed bluestone pit at the interface between the natural clays and overlying clayey fill in this area. Contamination was also identified immediately beneath the old section of stormwater drain.
Given that some of the oily sludge and impacted soil remains in these areas west of the stormwater drain, it is likely that further works would be required to address this residual contamination. Any excavation works in the vicinity of the stormwater drain would need to take into account the structural stability of the drain to prevent it from being damaged.
The vertical extent of contamination associated with the former bluestone pit would need to be further investigated through the proposed installation of groundwater wells at the site (including wells down gradient of the excavation). These works would also provide further information on the potential for off-site environment impact. It is also recommended that a Health-based Risk Assessment be undertaken to determine whether the residual contamination in soils on the site would represent a potential health risk to future occupants of the site.

The report contained details of the completed excavation work, which I summarise as follows:

(a)The excavation extended up to 15 metres beyond the location of the bluestone pit walls to the north and northeast. Considerable contamination was encountered in these areas.
(b)The excavation extended to the east and south up to 8 metres beyond the bluestone pit walls to a point where there was no visible significant contamination.
(c)Excavation in the area south of the bluestone pit involved the removal of soil to a depth of approximately 5 metres where the presence of bedrock basalt limited further vertical excavation.
(d)Excavations were limited out from the western wall because of the presence of the MMBW drain and at the completion of excavation in this direction contaminated soils were still visible.
(e)Excavation of the south and southeast of the bluestone pit continued until there was no visual or olfactory evidence of contamination.
(f)Excavation beyond each of the south wall and the east wall of the bluestone pit was 8 metres.
(g)Significant volumes of liquid and black oily sludge were observed in the area north and northeast of the bluestone pit at between 1.5 and 3 metres depth. ‘It is likely that this liquid was associated with a zone of purged water present on top of the basalt terrace and has potentially aided the migration of the contamination associated with the bluestone pit into the clays to the north and northeast.’
(h)Excavations were 15 metres to the north and 12 metres to the northeast from the north wall of the bluestone pit at which point the soils contained no visual or olfactory evidence of the black oily contamination.

The report also contained:

(i) a plan showing the position of the bluestone pit and the contamination readings within the excavated area (attached to paragraph 84 above); and[5]

(ii) a cross-section indicating the position of the former bluestone pit within the excavated area (attached below).

[5]See Schedule 4.

By letter dated 3 March 2006 to the plaintiff, the defendant referred to the agreement it had made with the plaintiff by which it agreed to undertake a search of its records to determine the type of operations which had been conducted on the Burnley site. The letter made no reference to coal tar and set out the operations as follows:

The whole site, comprising approximately 3 hectares, was subject to a Crown Grant to the City of Richmond in 1890 for abattoir and municipal purposes. From that time, an abattoir existed on the site up until April 1987. In the initial stages the municipal abattoir was run by the City of Richmond but from the early 1950's the operations were leased firstly to Protean Limited and then to Smorgon Consolidated Industries from 1984 onwards.
Since that time the site in turn was occupied by the Transfield Obayashi Joint Venture and Melbourne City Link Authority.

By letter dated 17 March 2006 to the defendant, the plaintiff replied requiring the following further detail, particularly with respect to activities in the southwest of the Burnley site:

1.further detail as to precisely what activities were undertaken by the Richmond City Council at the site.
2.when the coal tar pit was constructed and by whom and the use to which the tar pit was put;

3. when the coal tar pit was sealed or concealed; and
4. precisely when the municipal purposes ceased.

By letter dated 4 April 2006 to the plaintiff, the defendant replied to the letter of 17 March 2006 stating that no records existed as to when the bluestone pit was constructed, its purpose, how it was managed or when it was covered.

By a Draft Soil Contamination Assessment dated August 2006 to Abigroup, Noel Arnold & Associates summarised its assessments of the Burnley site. With respect to the contamination in the area of the bluestone pit, it reported as follows:

It is noted that previous assessments were completed by GHD (June 2003) at the site, which in turn provided guidance for the development of a site management plan. However, the original assessments conducted by GHD did not identify the bluestone pit and related contamination or address biological or asbestos hazards. Therefore, additional assessment works were required to characterise the contamination and enable a management plan to be developed.

By email of 6 October 2006 to Abigroup, Noel Arnold & Associates reported that the excavation was ready to be backfilled with clay.

By letter dated 20 December 2006 to the plaintiff, the Environment Protection Authority (‘EPA’) served a clean up notice pursuant to s 62A of the Act. In summary, the notice required the plaintiff to engage an environmental auditor to submit an environmental audit report to the EPA by 30 June 2007.

By letter dated 21 December 2006 to the plaintiff, Noel Arnold & Associates reported on the sampling undertaken to determine:

(a)whether the contamination identified on the Burnley site (i.e. the bluestone pit) has impacted the internal areas of the barrel drain; and
(b)whether additional potential contamination sources are present to the north of the [Burnley] site.

The conclusion of the report was as follows:

Based on visual observations and the analytical results it is considered likely that the contamination detected within the barrel drain on the MFB site is associated with the former bluestone pit. However, the contamination detected off-site to the northwest may potentially be related to the former tar distillery adjacent to the barrel drain.

By letter dated 31 July 2007 from the EPA to the plaintiff, the EPA granted a request for an extension of time so that the date for submission of the s 53V environmental audit report was revised from 30 June 2007 to 31 December 2007; and served a notice accordingly.

By a report dated August 2008, Noel Arnold & Associates reported on investigations which had been requested by the plaintiff in order to provide the basis for the further assessment and reporting of groundwater quality beneath the western portion of the Burnley site as part of the required environmental audit under s 53V of the Act. The executive summary of the report included the following comments about the bluestone pit and coal tar:

The primary on-site source of contamination at the Site is coal tar which is a multi-component dense non aqueous phase liquid (DNAPL). Coal tar like contaminants such as Polycyclic Aromatic Hydrocarbons (PAHs) can be very persistent in the subsurface because their components have low aqueous solubility and tend to persist for long periods in the environment.
Coal tar material was historically stored in a concrete lined, basalt brick walled pit, located in the western portion of the site towards the southern area. It is also likely that bitumen and asphalt operations including waste storage may have occurred at the Site during Albion Reid's of the Citipower site. The historical use of the Site and its surrounding sites is considered to be the likely reason for the elevated concentrations of contaminants detected in the groundwater at the Site. The specific area of investigation is the western portion of the site defined by the current car parking area.
The results of testing of groundwater quality indicates that free phase coal tar (DNAPL) present within the shallow portion of the Burnley Basalt Flow aquifer in the centre of the site, equating to the location of a former tar containing pit that was removed during the soil remediation works. The tar was identified in a shallow groundwater well (GW3) of this location, however has not been identified within a groundwater well screened towards the base of the aquifer (GW3C).

Mr Anthony Lane, an environmental auditor at Lane Piper, was formally engaged by the plaintiff on 21 November 2006 and, after the EPA issued the clean up notice on 20 December 2006, he was requested to carry out the environmental audit under s 53V of the Act. With respect to land contamination and risks, Mr Lane in his report of 2 September 2008 noted as follows:

Soil contamination was observed to varying degrees within the Audit Site. The main contaminations of potential concern (CoPC) are benzene, naphthalene, benzo(a)pyrene, toluene, petroleum hydrocarbons, and to a lesser extent chlorinated hydrocarbons and metals. The source of the hydrocarbon contamination is coal tar potentially derived from activities at the site between about 1890 and 1950 including a possible asphalt plant including a Tar Pit. Additional contamination may have derived from tars migrating along the alignment of the Richmond Main Drain from the former Albion Reid asphalt plant (operated between 1955 and 1964) now occupied by Citipower to the north west of the site. Contaminants associated with a former municipal landfill located mainly on the adjacent City of Yarra site to the north also impact the site.
Soil contamination remaining on site is most evident in the vicinity of the former Tar Pit (located where bore GW3 was subsequently installed) where residual contamination (coal tar present as NAPL) occurs within fractured basalt rock in the base of the remediation excavation at approximately 4.5 m below ground level. Soil contamination is also present to the south of the Trench Rescue Pit and in the south west corner of the site (associated with the Richmond Main Drain alignment) and at multiple locations across the northern half of the site.

Mr Lane recommended the following measures to reduce and manage risks to beneficial uses at acceptable levels:

1. Groundwater levels should be monitored continuously [at two specified points] for the purpose of assessing the risk of excessive mounding in the landfill due to the impeding of shallow groundwater seepage from the landfill towards the river by the placement of engineered fill in the remediation of the western car park site.
2. Groundwater should be monitored on the Audit site for level and groundwater quality in all available bores on a 6 monthly basis for the contaminants Total Petroleum Hydrocarbons, benzene, toluene, naphthalene and cresols, chlorinated aliphatic and aromatic hydrocarbons as well as major ions, TDS, pH and monitored natural attenuation (MNA) parameters.
3. Implement a diversion of the Dog Pound spoon drain away from the car park…
4. Monitor the stormwater recycling storage…
5. A Site Management Plan shall be prepared and implemented immediately...
6. A concise annual report be prepared by an EPA auditor to review the results of the previous years [sic] monitoring…

By an Environmental Audit Report dated October 2008, Mr Lane provided his final report which included the following recommendations and proposed timelines:

Further Investigations
1.It is recommended that further assessment be conducted to fully assess and delineate the soil and fill at the site. The Scope of this work to be agreed with EPA or their delegate. (Complete within next 6 months of the date of the Audit Report).
2.It is recommended that the City of Yarra contribute to the wider regional study the information derived from its investigations of the audit site. (Commence immediately).
3.It is recommended that further investigations be undertaken to characterise the quality of the groundwater in the underlying Burnley Basalt aquifer at the site. Deeper bores to be installed into the underlying basalt aquifer are required at locations of existing bores and new bores in the basalt aquifer to the north and west boundaries. The Scope of this work to be agreed with EPA or their delegate. (Complete within next 6 months of the date of the Audit Report).
4.To investigate potential contamination in the far western portion of the site in the location of the Dog Pound Spoon Drain. The Spoon Drain collects potentially contaminated water runoff from the former dog pound. (Complete within next 6 months of the date of the Audit Report).
5.The soils surrounding the Richmond Main Drain should be investigated. This drain intersects the tip of the south western corner of the site and has been identified on surrounding sites as a potential pathway for transporting contamination. (Complete within next 6 months of the date of the Audit Report).
6.It is recommended that the area where the vent pipes were found is investigated for the presence of USTs. If found these should be removed and the pits validated. (Complete within next 6 months of the date of the Audit Report).

Monitoring and Management
7.A Groundwater Quality Management Plan shall be prepared to detail the objectives of groundwater management and the monitoring program required. The groundwater monitoring shall include monitoring all available bores for level and groundwater quality on a 6 monthly basis for the contaminants Total Petroleum Hydrocarbons as well as major ions, TDS, pH and MNA parameters. (Commence immediately).

In my opinion, the powers to be exercised by the defendant in this case were more for the public benefit, as in Heyman,[132] than for the prevention of the very sort of damage that was suffered by the plaintiff, as in Pyrenees.[133]
[132](1985) 157 CLR 424.
[133](1998) 192 CLR 330.

Fifthly, whether at the time of consideration of the planning application the planning officers should have reasonably foreseen that, if they did not require further investigations, the plaintiff would suffer harm is in my opinion questionable. The planning officers were not aware of the contractual arrangements between the plaintiff and the vendor, the construction methods that were to be employed or whether the plaintiff would proceed with the purchase if further contamination was discovered. The reasonable foreseeability test is not to be applied in hindsight[134] but it has been properly described as undemanding.[135] Its limits were examined by Callinan J in Koehler v Cerebos (Aust) Ltd:

Three Justices of this Court in Wyong Shire Council v Shirt held that any risk, however remote or even extremely unlikely its realization may be, that is not far-fetched or fanciful, is foreseeable. I suppose that it is true that there is nothing new under the sun. With enough imagination and pessimism it is possible to foresee that practically any misadventure, from mishap to catastrophe is just around the corner. After all, Malthus in 1798 famously predicted that the population of the world would inevitably outstrip the capacity of the Earth to sustain it. The line between a risk that is remote or extremely unlikely to be realized, and one that is far-fetched or fanciful is a very difficult one to draw. The propounding of the rule relating to foreseeability in the terms that their Honours did in Wyong requires everyone to be a Jeremiah, and has produced the result that undue emphasis has come to be placed upon the next element for the establishment of tortious liability, the sorts of measures that a reasonable person should be expected or required to take to guard against the risk. Wyong has however been constantly applied throughout this country and in this Court since it was decided, and neither party sought to challenge it here. I am therefore bound to apply it.[136]

[134]Homestyle Pty Ltd v Perrozzi (2007) 33 WAR 209, 222 [44] (Buss JA).

[135]Davies v Tomkins[2009] WASCA 228 [68] (Buss JA).

[136](2005) 222 CLR 44, 64 [54].

One could say that a reasonable person in the position of the planning officers would be generally aware that, if:

(a)the land turned out to be more contaminated than anticipated; and
(b)the purchase proceeded without it being identified or subject to contractual protection;

the plaintiff may suffer loss.
However, given that the planning officer in this case had no knowledge of any such contamination and the powers being exercised were not for the protection of the applicant for the permit, it is not likely that the reasonable planning officer in these circumstances would or necessarily should have turned his or her mind to the fact that if he or she did not require further examinations of the land, the plaintiff would suffer damage.
Causation issues

The first causation issue facing the plaintiff with respect to the claim based on a breach of the Planning Duty is that the plaintiff entered into a binding contract of sale on 24 May 2004, which was before the defendant issued the Notice of Decision to Grant a Permit on 9 August 2004.

The plaintiff contended that, if the defendant had not granted the permit, it would not have proceeded to settlement of the contract of sale in respect of the Burnley site.

The plaintiff submitted that it could not have proceeded to settle the contract of sale because government policy, as set out in the Government Land Monitor Guidelines, would not have permitted it to do so if the Valuer-General’s valuation of the Burnley site was demonstrated to be excessive. However, this submission has the following difficulties:

(a)There was no evidence led from any officer of the plaintiff about what would have occurred if the planning permit had been rejected or conditioned in some manner. I do not consider on the evidence that I could do other than speculate about how the plaintiff would have responded.
(b)The plaintiff had an unconditional contract with the State of Victoria as vendor and, given the provisions with respect to contamination contained within the contract, it does not seem possible that the discovery of contamination would have entitled the plaintiff to withdraw from the contract of sale. In any event, there was no evidence that the plaintiff would have done so or could have had any basis to do so.
(c)The plaintiff’s submission about the effect of the Government Land Monitor Guidelines was unpleaded; and there was no evidence about how such guidelines would operate particularly after the plaintiff was already bound to the contract of sale.

The second causation issue arises from the plaintiff’s submission that the defendant’s negligence was its failure to require an independent peer review of the environmental assessments or condition the grant of a permit on the obtaining of an environmental audit. The first issue is that there was no evidence as to what the recommendations from a peer review would have been, but it may have recommended an environmental audit.

The second issue is that there was no evidence that an environmental audit would have identified the coal tar in or around the bluestone pit. Mr Mival was an expert geologist and environmental consultant called by the plaintiff. His evidence was that, statistically, some 710 samples of the Burnley site would have been required to detect the bluestone pit, which would have been very expensive and was, in his opinion, well beyond what industry practice required for the purchase of a former industrial site, particularly when it was not intended to be used for a sensitive use, such as a residential site.

I had no evidence about how many samples would have been taken on any recommended audit. Accordingly, I am unable to form a conclusion about whether an audit would have resulted in information becoming available so as to enable the plaintiff to avoid its loss.

Accordingly, if the defendant did owe the Planning Duty, I am not satisfied that there was any breach of such duty that caused loss to the plaintiff.

(4) The Non-Pollution Duty

The plaintiff contended that the City of Richmond and therefore the defendant owed a duty to future owners and occupiers of the Burnley site to take reasonable care:

(a)to ensure the safe, effective, long-term containment of coal tar so as to prevent it from polluting the environment; and
(b)to prevent the dumping, depositing or abandoning of hazardous toxic waste in the tar storage tank.

The plaintiff submitted that because there were no authorities ‘precisely applicable’ to the alleged Non-Pollution Duty, it was necessary to have regard to the salient features of the relationship between the plaintiff and the defendant.[137]
[137]Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185, 203 [30] (French CJ).

With respect to the salient features as noted by Allsop P in Caltex,[138] the plaintiff submitted as follows:

(a)The City of Richmond should have foreseen the cause of damage to the future owners or occupiers if it contaminated the Burnley site with coal tar.
(b)No issue of indeterminacy of liability arose because claimants would be limited to subsequent purchasers, who were required to remediate.
(c)The plaintiff was vulnerable because it could only have discovered the presence of the abandoned pit containing the coal tar by undertaking searches at a cost that, according to the evidence of Mr Mival, was excessive considering the perceived risk involved.
(d)The nature of the activity undertaken by the City of Richmond in covering over the bluestone pit containing the coal tar was needlessly reckless. It may have saved the cost of removing the bluestone pit from the site, after it fell into disuse, but it put future occupiers at a real risk of harm.

[138](2009) 75 NSWLR 649, 676 [102]–[103].

The defendant denied that it owed the Non-Pollution Duty to the plaintiff and submitted, with respect to the salient features, as follows:

(a)The plaintiff did not provide any material facts in support of the allegation that, at the time that the coal tar polluted the Burnley site, it was reasonably foreseeable to the officers of the City of Richmond that there was a risk of harm to future owners or occupiers.
(b)The plaintiff was not relevantly vulnerable because of the following:
(i)it knew of contamination around the Burnley site and the consultants’ reports available to it for review;
(ii)it had the opportunity to protect itself by contractual means to limit the risks associated with the purchase of the Burnley site by negotiating price and/or terms; and
(iii)it was advised to engage an environmental auditor to audit the Burnley site or arrange for whatever further investigations as were necessary.

(c)The plaintiff negotiated a contract of sale which included terms disclaiming liability for contamination.

The defendant further points to the vagueness of the allegation of when the alleged duty was breached and what was actually known about the risks to future occupiers or owners at the time of the breach.

Conclusion on the Non-Pollution Duty

Given the terms of the alleged Non-Pollution Duty, it presumably would have been breached continuously by the use of the bluestone pit to store coal tar up to 1960, although there was no evidence from which it could be concluded that the City of Richmond officers would have, or could have, known that the coal tar was leaking through the bluestone pit.

It may be inferred that the City of Richmond officers involved in the filling in of the bluestone pit must have been aware of the fact that there was still coal tar in the pit at the time that it was filled in. This argument is supported by the report of the Public Works Committee dated 9 February 1959 which relevantly stated: ‘The Albion Quarrying Company have agreed to remove the tar and [the engineer] recommended that the work be not carried out and that the still be filled in’. However, without evidence, it is not easily inferred that such persons knew that remediation would be necessary or could not take place at some time in the future. It is even more difficult, without evidence, to infer that, at any time up to 1960, it was reasonably foreseeable that future environmental policies and legislation would require remediation of the Burnley site.

It would seem, on the plaintiff’s submission, that any owner who has contaminated its land at any time would be liable to any subsequent purchaser who acquires it without knowledge of the contamination. This position does not appear to be consistent with the observations of McPherson JA in Bamford who, when considering the liability of a council for approving the subdivision of defective land, stated:

What nevertheless appears anomalous is that, according to the present state of the law, the same is not necessarily true of the developer, who, on one view, is the party primarily responsible for the defect in the land. That is because, in contract at least, the dominant principle remains one of caveat emptor, according to which, on the sale of real estate, there is no implied warranty that the property sold has any particular quality, or is suitable for any particular purpose: see Stoneham, Vendor and Purchaser, (1964), §350 at 219. The authorities cited in support of that proposition are, when examined, found to be cases concerning sales of leasehold interests. It may be that they should not and would not be so readily applied to a developer and vendor of land who, by subdividing a larger area, brings into existence new allotments intended for use for residential purposes.[139]

[139][1998] 2 Qd R 125, 127.

Considering the principle of caveat emptor, the acceptance of the Non-Pollution Duty being owed by an owner to a subsequent purchaser would appear to undermine the performance and coherence in the structure and fabric of the common law by providing a remedy to a subsequent purchaser, which was not available to the original purchaser from the owner in breach of duty.[140]
[140]Caltex (2009) 75 NSWLR 649, 676 [103], salient feature (q).

The proposition that an owner may be liable in tort for damages consequential upon contamination by its use of the land could place a significant imposition on the rights of persons to pursue their own interests with respect to the land. No authority was cited in support of such a broad duty, and in my opinion, analysis of the salient features approach in respect of the alleged duty does not support the imposition of such a duty.[141]
[141]Ibid salient feature (n).

(5) The Demolition Duty

On 10 February 1993, the City of Richmond accepted a tender by R & D Plant Hire Contracting to demolish the Richmond Abattoirs for a fixed lump sum of $102,000. The demolition works were to be carried out in two stages being:

(a)Stage 1: demolition to ground level and removal of all materials from the site; and
(b)Stage 2: removal of concrete slabs, footings, services and underground structures, clean up of site, level and surfaces.

The accompanying contract included the following term with respect to ‘Clean Up and Completion Works’:

The Contractor is to ensure that all footings, pipes and other underground constructions are located and removed.
Upon completion of demolition works the whole of the site is to be checked to ensure all underground constructions have been removed.
The checking method to be carried out shall be as follows:-
·the whole of the site is to be ripped using a dozer ripper or a narrow bucket excavator to a depth of 750mm (minimum).
·the ripping is to be carried out on a 10 metre grid pattern across the whole site.
·the above specified ripping operation is to be carried out under continuous supervision by the Superintendent.
·the Superintendent may also direct additional ripping/excavation in any areas suspected of containing underground constructions.
·any obstructions encountered are to be investigated and removed.
·naturally occurring rock formations will not be required to be removed.

The plaintiff contended that the City of Richmond and thus the defendant owed to the class of subsequent purchasers of the Burnley site a duty to take reasonable care to ensure that the demolition of the Richmond Abattoirs was conducted with reasonable care and skill. The plaintiff recognised that such a duty was novel and not an established category of duty. However, it was contended that reference to the salient features identified by Allsop P in Caltex[142] supported the finding of such a duty. The plaintiff referred to the following salient features:

(a)The City of Richmond ought to have foreseen that its conduct in failing to ensure that the demolition was carried out with reasonable care was likely to cause damage to future owners and occupiers of the Burnley site. It was submitted that ‘the loss that is reasonably foreseeable for a subsequent purchaser to incur is the loss or damage that arises out of the failure to remove the noxious materials and underground structures that were previously associated with the above-ground structures’.
(b)The class of subsequent purchasers is determinate and therefore no issue of indeterminate liability arises.
(c)The plaintiff was vulnerable to the City of Richmond’s failure to take reasonable care because the plaintiff ‘had no way of knowing that it had reason to be concerned about the noxious waste and underground structures that were associated with those above-ground structures’.
(d)The nature of the demolition entails not only the removal of the above-ground structures but the concealment of the reasons to suspect the presence of underground structures.

[142]Ibid.

The defendant denied the existence of any such duty of care on the basis of the following:

(a)The City of Richmond did not have actual knowledge of the existence of the bluestone pit or the tar coal pollution. It submitted, on the authority of D & F Estates Ltd v Church Commissioners of England,[143] that the employer of an independent contractor would only be liable for the negligence of the contractor if it had knowledge that the work was being done in a defective manner.
(b)The circumstances of the defendant engaging a contractor did not give rise to a non-delegable duty such that the plaintiff would be liable for the negligence of the contractor. The defendant referred to Burnie Port Authority v General Jones Pty Ltd,[144] Kondis v State Transport Authority[145] and Glenmont Investments Pty Ltd v O’Loughlin[146] and contended that these cases demonstrate that the non-delegable duty was not owing because:
(i)the plaintiff’s claim was for pure economic loss;
(ii)the City of Richmond did not actually know of the coal tar pollution in 1993; and
(iii)the activity carried out by the demolition contractor was not an inherently dangerous activity.

(c)There was no anterior duty, in 1993, owed by the City of Richmond to a person to ensure that the contractor complied with the terms of the demolition contract; such as could be then applied to the plaintiff, as a subsequent purchaser. The concept of the anterior duty was derived from Bryan v Maloney,[147] where the duty owed by a builder to an original owner was found to be a prerequisite for the imposition of a similar duty on the builder to subsequent purchasers.
[143][1988] 2 All ER 992.
[144](1994) 179 CLR 520.
[145](1984) 154 CLR 672.
[146](2000) 79 SASR 185.
[147](1995) 182 CLR 609, 624 (Mason CJ, Deane and Gaudron JJ).

Conclusion on the Demolition Duty

Senior counsel for the plaintiff conceded that this posited duty was novel and was unable to refer to any authority in which the failure of one of the contracting parties to require the other contracting party to do certain things was, of itself, a breach of a duty to a third party.

A common issue arises where a defendant who owed a duty to a third party contends that it has fulfilled its duty by engaging a competent independent contractor; and it is not liable for the negligence of the independent contractor. This was the issue in the cases referred to by the defendant.[148]
[148]Also see Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16.

In these circumstances, the defendant could only have an effective duty to supervise the independent demolition contractor if it had an overriding duty to future purchasers to clean up contamination on the Burnley site; and wished to rely upon the engagement of the independent contractor as satisfying its duty.

The plaintiff’s submissions suggest that the duty with respect to the demolition contract may arise by reason of the demolition work disguising the existence of the contamination on the land. However, the circumstances at the time of the demolition contract in 1993 were as follows:

(a)The City of Richmond had no knowledge of the bluestone pit or its contents of coal tar.
(b)The demolition work did not remove the tar distilling plant or any other building which could have indicated the existence of the bluestone pit (those buildings had been removed 30 years earlier).
(c)The fact that there was some contamination on the Burnley site was a matter of which both the plaintiff and the City of Richmond were aware at the time the plaintiff purchased the Burnley site.

Applying the salient features to this alleged duty of care, as formulated by the plaintiff, I consider that the extension of a duty of care in these circumstances is not made out for the same reasons as the Planning Duty.

(6) The Disclosure Duty

The plaintiff contended that the City of Richmond owed a duty of care to future owners and occupiers of the Burnley site to disclose the fact that the Burnley site had previously been used for general municipal purposes including the operation of a tar distilling plant, which included the tar storage tank.

The plaintiff acknowledged that the proposed duty is not ‘necessarily’ an established category of duty but contended that it is supported by reference to the following salient features:

(a)It is consistent with the terms, scope and purpose of a relevant statute being s 62A of the Environment Protection Act 1970, which makes occupiers and owners liable to pay the costs of cleaning up pollution found on land. The plaintiff submitted that given the ‘onerousness of that statutory liability, and the strictness of the liability, the relationship between the occupiers and owners of land and the class of future occupiers and owners is so proximate that the courts ought to recognise the disclosure duty’.
(b)The Disclosure Duty will not give rise to indeterminate liability because the class of persons listed in s 62A(1)(a) of the Act limits the duty owed to occupiers.
(c)The plaintiff was vulnerable to the defendant’s want of reasonable care to disclose the details of its potentially environmentally significant previous uses of the Burnley site.

The plaintiff relies on Noor Al Houda Islamic College,[149] which recognised a duty on a landlord to disclose a known risk of contamination to a tenant, which was proposing to operate a school on the relevant site.
[149](2005) 215 ALR 625.

The defendant disputed the existence of the Disclosure Duty on the following bases:

(a)The defendant did not have knowledge of the coal tar pollution and it relied upon the statement of Fletcher Moulton LJ in Joel v Law Union and Crown Insurance: ‘You cannot disclose what you do not know’.[150]
(b)It was not possible for the City of Richmond to have made a disclosure after it ceased to exist on 22 June 1994 and the plaintiff does not allege when the defendant failed to disclose the information or detail how it should have been disclosed.
(c)The plaintiff’s claim is for pure economic loss.
[150](1908) 2 KB 863, 884.

Conclusion on the Disclosure Duty

The relevant facts of Noor Al Houda Islamic College[151] were as follows:

(a)The defendant controlled the Bankstown Airport and it leased the subject land to the plaintiff in 1994.
(b)At the time of the lease, the site was contaminated so as to adversely affect the construction of permanent buildings.
(c)As a result of reports that it held, the defendant was aware that the site was potentially contaminated and that further investigation should be carried out before allowing the site to be used as a school, which was the plaintiff’s disclosed purpose.
(d)The defendant did not disclose the report or its knowledge about the state of contamination on the site to the plaintiff.[152]

[151](2005) 215 ALR 625.

[152]Ibid 625, 660 [210].

The plaintiff contended that the defendant owed it a duty being a positive obligation to disclose matters of importance relating to the known purpose for which the site was to be leased.[153]
[153]Ibid 660 [208].

Hoeben J found that the defendant did owe a duty to the plaintiff to ‘exercise reasonable care to provide information which it possessed which was directly related to the use of the site as a school, that is the potential contamination of the site’.[154] His Honour considered that duty to be a form of negligent misstatement[155] and said it arose from:

(a)the context of the parties being a landlord and tenant;[156] and
(b)the vulnerability of the plaintiff because, given the fact that the risk of contamination was not communicated to them, there was nothing realistically that the plaintiff could do to protect itself.[157]

[154]Ibid 663 [229] (emphasis added).

[155]Ibid 661 [219].

[156]Ibid.

[157]Ibid 662–663 [220]–[229].

In my opinion, the above features identified by Hoeben J demonstrate why the Disclosure Duty, for which the plaintiff contended, does not apply to the facts of the present case:

(a)The plaintiff and the defendant do not have a relationship of landlord and tenant or any similar relationship.
(b)The defendant did not have any information that was not available to the plaintiff.
(c)The plaintiff was aware of the existence of contamination on the Burnley site and of the risk that there may be further unknown contamination; but it chose not to undertake further investigations and to enter into a contract with the vendor disclaiming any claim arising from contamination.

Accordingly, I do not consider that the decision in Noor Al Houda Islamic College supports the Disclosure Duty and for the reasons indicated above and similar reasons to the rejection of the Planning Duty, I find that the defendant did not owe the Disclosure Duty to the plaintiff.

Conclusion on Liability

For the reasons set out above, I have found that the defendant is a person described in sub-ss 62A(1)(b) & (c) of the Act and accordingly, pursuant to s 62A(2), the Court may order the defendant to compensate the plaintiff ‘for any costs incurred by the [plaintiff] which the court is satisfied are reasonable and were incurred in good faith in complying with the notice or under subsection (4)’.

I have otherwise found that the plaintiff has not established any other causes of actions against the defendant.

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[2015] VSC 773

24 DECEMBER 2015