Yarra City Council v Metropolitan Fire and Emergency Services Board and Ors (according to the attached Schedule)
[2017] VSCA 194
•26 July 2017
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0025
| YARRA CITY COUNCIL | Applicant |
| v | |
| METROPOLITAN FIRE AND EMERGENCY SERVICES BOARD & Ors (according to the attached Schedule) | Respondents |
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| JUDGES: | WARREN CJ, TATE and OSBORN JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 27 July 2016 |
| DATE OF JUDGMENT: | 26 July 2017 |
| MEDIUM NEUTRAL CITATION: | [2017] VSCA 194 |
| JUDGMENT APPEALED FROM: | [2015] VSC 773 (Riordan J) |
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ENVIRONMENT PROTECTION – Contamination of land – Clean up notices - Identity of polluter – Whether responsibility for pollution lies with successors to original occupier of the land – Whether industrial waste had been or appeared to be abandoned – Relevance of subjective knowledge - Whether evidence of actual intention of abandonment – Compensation – Liability to compensate subsequent occupier for costs of clean up - Environment Protection Act 1970 ss 1K, 4, 27A and s 62A – Leave to appeal granted – Appeal allowed in part – Remitted to trial judge.
LIABILITIES – Transitional provisions – Contingent liabilities – Inchoate liabilities – Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1, followed – R (National Grid Gas plc) v Environment Agency [2007] 1 WLR 1780, considered – Walters v Babergh District Council (1983) 82 LGR 235, considered.
RETROSPECTIVITY – Events before enactment of legislation – Event giving rise to liability – Creation of new liability – Time of event creating liability – Public purpose – Premier Building and Consulting Pty Ltd (recs apptd) v Spotless Group Ltd (2007) 64 ACSR 114, considered.
STATUTORY INTERPRETATION – Environment Protection Act 1970 s 62A– ‘the person who has caused or permitted the pollution to occur’ – ‘any person who appears to have abandoned or dumped any industrial waste’ – ‘liabilities’ – ‘instrument’ – ‘waste’ – ‘environment’ – ‘abandon’ – ‘appears to have abandoned’ - Interpretation ofLegislation Act 1984 ss 9(2), 38 – Subordinate Legislation Act 1994 s 3(1) – Legislative instrument – Meaning of ‘other document’ in Order in Council – Whether Act of Parliament an ‘instrument’.
LOCAL GOVERNMENT – Order in Council – Constitution of new council – Transfer of contingent liability – Successor at law – Public interest - Power to make orders – Purpose of order to effect implementation of the restructuring of local government – Local Government Act 1989 ss 220Q, 220R and 220S.
DECLARATION – Discretion – Determination of a preliminary question - Supreme Court (General Civil Procedure) Rules 2005 r 47.04 – Relevance of consent or acquiescence by a party to orders – Whether declaration prematurely made.
WORDS AND PHRASES – ‘other document’ – ‘instrument’ – ‘causing pollution to occur’ – ‘the person who has caused or permitted the pollution to occur’ – ‘any person who appears to have abandoned or dumped any industrial waste’ – ‘liabilities’ – ‘instrument’ – ‘waste’ – ‘environment’ – ‘abandon’ – ‘appears to have abandoned’.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr O P Holdenson QC with Mr A P Horan and Mr A M Dinelli | Lander & Rogers |
| For the First Respondent | Ms F M McLeod SC with Ms M H Foley and Ms L L Barrett | Thomson Geer |
| For the Second Respondent | No appearance | Terrill & Holmes |
| For the Third Respondent | No appearance | Victorian Government Solicitor |
| For the Fourth Respondent | No appearance | HWL Ebsworth |
TABLE OF CONTENTS
| Introduction and summary......................................................................................... | 3 |
| History of contamination............................................................................................ | 4 |
| Early historical use of Burnley site as abattoir and quarry.............................................. | 4 |
| Environmental assessments from 1990............................................................................ | 7 |
| Discovery of contamination on Burnley site – 2005........................................................ | 10 |
| The MFESB’s suit against Yarra................................................................................ | 12 |
| The judge’s reasons....................................................................................................... | 13 |
| Grounds of appeal........................................................................................................ | 17 |
| Legislation..................................................................................................................... | 19 |
| Analysis......................................................................................................................... | 21 |
| (1) Was Yarra liable for the pollution caused by Richmond?.......................... | 21 |
| Introduction..................................................................................................................... | 21 |
| Judge’s reasons................................................................................................................. | 22 |
| Yarra’s submissions......................................................................................................... | 23 |
| The MFESB’s submissions.............................................................................................. | 28 |
| Other matters................................................................................................................... | 32 |
| Conclusion on liability of Yarra to pollution caused by Richmond.................................. | 34 |
| (2) The retrospectivity issue.................................................................................. | 51 |
| History of s 62A............................................................................................................... | 52 |
| The judge’s reasons on retrospectivity.............................................................................. | 54 |
| Does s 62A(2) apply to pollution caused prior to the introduction of s 62A and prior to the introduction of the Act?............................................................................................. | 63 |
| (3) Did Yarra appear to abandon the industrial waste in the bluestone pit when relinquishing possession of the Burnley site to the State of Victoria in or about February 1996?.............................................................................. | 67 |
| General construction considerations................................................................................ | 76 |
| The subjective knowledge of the person abandoning the waste........................................ | 82 |
| A conscious decision to abandon?................................................................................... | 84 |
| Yarra’s general intention with respect to contamination................................................. | 84 |
| Can the forgotten waste be said to appear to have been abandoned?................................ | 84 |
| Conclusion concerning s 62A(1)(c)................................................................................. | 87 |
| (4) Should an order or declaration under s 62A(2) have been made?.............. | 88 |
| Introduction..................................................................................................................... | 88 |
| Treatment of the discretion point at trial.......................................................................... | 88 |
| The declaration of 5 February 2016.................................................................................. | 90 |
| Yarra’s submissions.......................................................................................................... | 92 |
| The MFESB’s submissions............................................................................................... | 94 |
| Conclusion on declaration................................................................................................ | 96 |
| Conclusion on the application for leave to appeal and the appeal....................... | 97 |
WARREN CJ
TATE JA
OSBORN JA:
Introduction and summary
The Environment Protection Act 1970 (‘the Act’) provides that a person who is obliged to comply with a clean up notice issued by the Environment Protection Authority (‘the EPA’) can recover compensation for the costs of compliance from the person who caused the pollution. Compensation can also be sought from a person who appears to have abandoned industrial waste on the site identified in the clean up notice. This proceeding arises from a claim by the Metropolitan Fire and Emergency Services Board (‘the MFESB’) for compensation and damages for losses arising from the remediation of contamination of land situated at 450 Burnley Street Richmond, Victoria (‘the Burnley site’). The compensation was sought against the Yarra City Council (‘Yarra’) in its own right and as the successor in title to the City of Richmond (‘Richmond’).
The trial judge found that Yarra was liable to the MFESB under the Act in that Yarra was a person who caused or permitted the pollution to occur (s 62A(1)(b) of the Act) or, in the alternative, was a person who appears to have abandoned or dumped any industrial waste or potentially hazardous substance (s 62A(1)(c) of the Act).[1] He declared, pursuant to s 62A(2) of the Act, that Yarra was liable to compensate the MFESB for any costs incurred by it that are reasonable and were incurred in good faith in complying with clean up notices issued to the MFESB by the EPA.
[1]Metropolitan Fire and Emergency Services Board v Yarra City Council [2015] VSC 773 (‘Reasons’).
Yarra now seeks leave to appeal against the judge’s decision on liability.
For the reasons that follow, we would grant leave to appeal and allow the appeal in part.[2]
[2]For convenience, on most occasions we refer simply to ‘the appeal’.
We consider that the judge was correct in his construction and application of s 62A(1)(b) as to liability.
We consider that the judge was correct in interpreting s 62A(2) as not applying retrospectively.
We do not accept that Yarra was a person who appears to have abandoned industrial waste. We consider the judge’s finding that Yarra had a complete lack of knowledge of the presence of the industrial waste buried within land occupied by it precludes a finding that Yarra appears to have abandoned that waste. We consider that the judge erred in his construction and application of s 62A(1)(c) of the Act.
We consider that it was premature for the judge to have made the declaration of liability that he did, which was a discretionary order, without first taking into account a range of necessarily relevant considerations. Thus, although we consider that the judge made no error in his finding of liability with respect to s 62A(1)(b), we consider that the matter should be remitted to the judge for the making of any consequential declaration or order, if considered appropriate, informed by these reasons, together with the determination of the remaining issues in the proceeding.
History of contamination
Early historical use of Burnley site as abattoir and quarry
A Crown grant was issued on 4 July 1890, granting possession of certain land to Richmond for use as abattoirs and general municipal purposes. Part of that reserved land included the Burnley site (some 1.781 hectares).
Richmond’s responsibilities included the maintenance of roads. It acquired distilled tar from external sources for that purpose.
As at 1914, Richmond was operating an abattoir and a quarry with a powder magazine and stone crushing plant on the Burnley site.
On 28 August 1915, the Council of Richmond (‘the Council’) recorded a loan being made for £500 for a tar distilling plant (‘the tar distilling plant’).
On 15 August 1916, a contract for the supply and delivery of the tar distilling plant was completed. It was expected that the tar distilling plant would be completed over approximately 12 months.
By 1916, Richmond had built, and was operating, a brick refuse destructor and the tar distilling plant together with a masonry storage tank near the stone crushing plant. On 21 November 1916, the refuse destructor was started.
As the quarrying operations utilised explosives, a powder magazine was required. Evidence suggested that a powder magazine had been at the Burnley site as early at 1865, although the site of the powder magazine in 1917 was unknown. Sometime in 1917, it was recommended in the City Surveyor’s Report to the Council that a new powder magazine be erected.
In December 1923, the City Engineer recommended that a duplicate tar distillation plant be purchased for £569.
In November 1928, it was confirmed that instructions had been given to Richmond to remove the Council’s powder magazine to a position 30 yards in an easterly direction to the Burnley site. That instruction had been approved by the Chief Inspector.
By way of 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. The Building Surveyor was also directed to report on the same issue.
In winter 1933, an aerial photograph was taken of the Burnley site (‘the 1933 photograph’). It was agreed by the experts called on behalf of the MFESB and Yarra at trial that, at the time of the 1933 photograph, a bluestone pit covered by a low structure was not being used as a powder magazine.
A further photograph of the Burnley site taken in 1951 showed that the low structure was still in place at that date.
On 30 January 1960 a photograph of the Burnley site was taken which appeared to show that the low structure had been removed and the bluestone pit had been filled in.
On about 22 February 1960, a recommendation was made that the hot mix plant should be closed as a result of the need for extensive repairs.
In 1961, the abattoirs on the Burnley site were leased to a company then called Protean Enterprises Pty Ltd, later known as Protean (Holdings) Ltd (‘Protean’). Protean operated the abattoirs until 1984.[3]
[3]These operations led to the seminal decision in Protean (Holdings) Ltd v Environment Protection Authority [1977] VR 51.
Council minutes dated 27 February 1962 noted the receipt of a report from the Public Works Committee which recommended that quotations be obtained for the demolition of the old hot mix plant in Barkly Avenue, the removal of waste material and a general clean up of the area.
Minutes of the Public Works Committee dated 5 June 1962 record 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 of the Burnley site was taken on 3 March 1964. This photograph appeared to show that boiler buildings, the stone crushing plant and a blacksmith’s shop had gone. The area of the low structure had been reduced to rubble.
Environmental assessments from 1990
In December 1990, Sinclair Knight & Partners reported on a range of planning, environmental, engineering and land economics investigations undertaken to assess the feasibility of redeveloping an area known as the ‘Richmond Abattoirs study area’ (located by Burnley and Rooney Streets, Barkly Avenue and Madden Grove).
Sometime in 1993, the Richmond abattoir buildings and related structures on the Burnley site were demolished.
On 22 June 1994, Yarra became a body corporate and the successor in law to Richmond by Order in Council (‘the Order in Council’)[4] which read:
[4]Victoria, Victoria Government Gazette, No S 35, 22 June 1994, 7.
Constitution of New Councils
3. On the appointed day—
(a) there is constituted—
…
(iii)a body corporate constituted as a City Council by the name of Yarra City Council—
(b) the following councils cease to exist—
…
(v) City of Collingwood;
(vi) City of Fitzroy; and
(vii) City of Richmond—
…
City of Yarra is Successor in Law
18. On the appointed day-
(a) all property, rights and assets of the former Councils[[5]] are vested in the Yarra City Council;
(b) all liabilities of the former Councils are liabilities of the Yarra City Council;
(c) the Yarra City Council is the successor in law of the former Councils.
…
References—Transitional Provisions
30.From the appointed day, any reference in any instrument or any other document of any kind to a former council is, except as otherwise provided in this Order, to be construed as a reference to the Moreland City Council, the Darebin City Council and the Yarra City Council as the case may be, unless the contrary intention appears.[6]
[5]Clause 1 provides that in relation to Yarra City Council, ‘former Council’ means the former Cities of Collingwood, Fitzroy and Richmond.
[6]‘The Order in Council’ in Victoria, Victoria Government Gazette, No S 35, 22 June 1994, 8, 10, 11–12.
In a report dated November 1994, ADI Services completed a site contamination and geotechnical assessment of the Burnley site for the Department of Finance.
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 with respect to the corner of Barkly Avenue and Burnley Street.
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 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 resulting environmental report concluded that, with appropriate management of contaminated fill, the Burnley site could be suitable for high density residential or commercial/industrial use.
In February 2003, GHD Pty Ltd (‘GHD’) was engaged by the MFESB to review the Connolly Environmental site assessment.
In May 2003, GHD provided its ‘Environmental Investigations Report - Final Report’. The objective of the investigation was identified as the assessment of the environmental status of the site with the aim of establishing the suitability of the Burnley site for an administration and training facility proposed by the MFESB. The executive summary of the report included the following:
The investigation results corroborate previous soil contamination information and provide some assurance that the site would be suitable for its intended use by [MFESB], 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.
In September 2003, Urbis provided a valuation report. In that report, the Burnley site was valued at $8 million (as at 8 September 2003), which included an allowance of $1.1 million for clean up costs for industrial/commercial use.
On 27 October 2003, the Executive Officer of the MFESB recommended that the MFESB acquire the Burnley site and the MFESB resolved to acquire the Burnley site.
By letter dated 16 December 2003 to Ms Jane Homewood, Manager of Urban Planning at Yarra, Mr John Roan of the Planning Group (Vic) Pty Ltd lodged a planning permit application on behalf of the MFESB to construct a new community safety and training facility at the Burnley site.
On 24 May 2004, the MFESB entered into a contract to purchase the Burnley site from the State of Victoria for $7.73 million.
By letter dated 9 August 2004 to the MFESB, Mr Stephen Wainwright, Co-ordinator of Statutory Planning at Yarra, stated that Yarra had resolved to issue a Notice of Decision to Grant a Planning Permit (no PL03/1404).
By letter dated 15 September 2004 to the MFESB, Wainwright advised that VCAT had not received any application for review against the Notice of Decision to Grant a Planning Permit. Accordingly, the permit was granted.
On 23 November 2004, the MFESB applied for an extension to the community safety and training facility by way of an Application for Planning Permit form. The estimated cost of the development was $3 million.
On 13 December 2004, the MFESB lodged an Application for Planning Permit to redesign ‘Building C’. The proposal included an alteration to the height, setback and layout to reduce overshadowing of the building.
In May 2005, the MFESB engaged Abigroup Contractors to conduct an environmental site assessment report.
On 28 June 2005, Yarra issued planning permits PL04/1159 and PL04/1263. The permits respectively allowed for the 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; and
(b) a reconfiguration of Buildings B & C, creation of Building D and reconfiguration of the car parking layout.
Discovery of contamination on Burnley site — 2005
In early July 2005 Abigroup Contractors engaged Noel Arnold & Associates Pty Ltd (‘Noel Arnold’) to carry out analyses of soil samples from the Burnley site.
Noel Arnold reported to Abigroup Contractors via facsimile dated 14 July 2005. In that report, it was noted that of the seven soil samples taken from the Burnley site, three of them were found to exceed the adopted soil investigation level for a commercial setting which, subject to further investigation, might require the stockpiles to be disposed of off-site.
On 27 July 2005 a test hole was dug at the southwest end of the Burnley site. The test hole identified coal tar in the bluestone pit and, as a consequence, construction work was halted.
A facsimile from Noel Arnold to Abigroup Contractors dated 29 July 2005 revealed that the analysis of the soil sample had identified multiple contaminants present at elevated levels that could potentially represent a health risk.
A soil sampling program was undertaken by Noel Arnold on 12 August 2005. It was reported on 23 August 2005 to Abigroup Contractors that the contamination observed within the soil at the bluestone pit extended beyond the walls of the pit and impacted the adjacent soil.
Noel Arnold sent a facsimile to Abigroup Contractors on 6 September 2005 and confirmed that the investigations in the south west corner of the Burnley site had identified contamination that included liquid tars, contaminated soil and hard waste material.
Noel Arnold then provided Abigroup Contractors with a cost estimate for the removal of the bluestone pit and associated contamination on 12 September 2005. Based on the findings for soil contamination, it was estimated that ‘150 m3 of contaminated soil/hard rubbish/liquid exists within the bluestone pit’.
In early December 2005, the walls of the bluestone pit and its contents were removed.
By letter dated 20 December 2006 to the MFESB, the EPA served a clean up notice directed to the MFESB pursuant to s 62A of the Act (‘the first clean up notice’). The notice required the MFESB to engage an environmental auditor to submit an environmental audit report to the EPA by 30 June 2007.
The time for the MFESB to provide an environmental audit report was extended until 31 December 2007 by way of a second clean up notice issued on 31 July 2007 (‘the second clean up notice’).
On 21 November 2006, Mr Anthony Lane (‘Lane’) was formally engaged by the MFESB to carry out an environmental audit under s 53V of the Act.
Lane provided a report on 2 September 2008, in which he provided details regarding soil contamination as well as recommendations of measures to reduce and manage the risks of contamination.
In October 2008, Lane provided a final Environmental Audit Report. Further investigations, as well as monitoring and management, were recommended.
The MFESB’s suit against Yarra
The MFESB’s suit against Yarra[7] relied on the following causes of action, as described by the judge:
[7] On 17 September 2010, Zammit AsJ ordered that Connolly Environmental, the State of Victoria, and GHD be joined as defendants to the proceeding, on the basis that Yarra had pleaded that they were concurrent wrongdoers. The MFESB made no claim against any of those defendants, and they did not play any active role in the trial or on the appeal.
(1) Liability of Yarra pursuant to s 62A(2) of the Act, which broadly provides that an occupier who incurs costs complying with a clean up notice may claim compensation from certain persons including those who caused, or appear to have abandoned, the pollution.
(2) Breach of statutory duty imposed on Yarra under s 45(1) of the Act (‘the statutory duty’).
(3) Breach of Yarra’s duty to take reasonable care in the exercise of the planning requirements to protect the MFESB from suffering loss and damage as a result of the pollution of the Burnley site (‘the planning duty’).
(4) Breach of Yarra’s duty to future owners of the Burnley site including the MFESB to prevent pollution of the Burnley site (‘the non-pollution duty’).
(5) Breach of Yarra’s duty of care to future owners and occupiers of the Burnley site (including the MFESB), to ensure that the contractor complied with its obligations under the demolition contract between Yarra and the contractor (‘the demolition duty’).
(6) Breach of Yarra’s duty to future owners and occupiers of the Burnley site (including the MFESB) to disclose the fact that the Burnley site had previously been used for general municipal purposes including the operation of the tar distilling plant including the tar storage tank (‘the disclosure duty’).
On 30 May 2014, Emerton J ordered, pursuant to rule 47.04 of the Supreme Court (General Civil Procedure) Rules 2005, that the question of the MFESB’s ‘entitlement to compensation and damages be tried as a preliminary issue’.
The judge’s reasons
The judge identified the principal issue as consisting in the question: is Yarra 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 Act?[8]
[8]Reasons [4(a)].
He identified as a critical issue of fact ‘whether a bluestone pit, which was found on the site in 2005, was the storage tank previously used by [Richmond] for the storage of coal tar’.[9] He found that it was.[10] He also found that the bluestone pit was the source of the contamination.[11]
[9]Ibid [4(b)].
[10]Ibid [147].
[11]Ibid [146].
He further identified the following residual issues with respect to liability under s 62A(2):
(a) Did [Yarra] cause or permit the pollution in the bluestone pit to occur; and, if so, does s 62A(2) apply with respect to pollution which was caused or permitted prior to the commencement of the Act?
(b) Did [Yarra] appear to abandon the industrial waste in the bluestone pit when relinquishing possession of the Burnley site to the State of Victoria on or about 20 February 1996?
(c) Is [Yarra] liable for the acts of [Richmond] under s 62A(2) of the Act?[12]
[12]Ibid [108].
The judge acknowledged the difficulty involved in looking at relevant events which occurred up to 100 years earlier.[13] He considered that the ‘proper approach to this case is to have regard to the entirety of the relevant evidence and only then to determine whether I can be satisfied on the balance of probabilities of the asserted fact’.[14]
[13]Ibid [111].
[14]Ibid. He took into account the approach in Chong v CC Containers Pty Ltd (2015) 49 VR 402, 441–2 [134]–[135], which in turn referred to remarks of Winneke P in Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, 128.
The judge accepted that the evidence established that Richmond had constructed a tar distilling plant with an associated tar storage tank in 1916-17.[15] He further accepted that the bluestone pit was the tank constructed for the storage of crude tar as part of the tar distilling plant in 1916.[16] He found that, by at least 1960, the bluestone pit had been filled in.[17]
[15]Reasons [112].
[16]Ibid [113].
[17]Ibid [137].
He rejected Yarra’s submissions that because it was ‘forced’ to relinquish possession of the Burnley site this meant that it could not be said that it appeared to abandon the waste.[18] He was satisfied that it could be inferred from the conduct of Yarra in vacating the Burnley site without remediating the waste that it ‘appears to have abandoned’ the waste in accordance with the meaning of s 62A(1)(c).[19] This was despite finding that, at the time Yarra vacated the site, ‘none of its officers or employees were aware that there was coal tar at the bottom of a filled-in bluestone pit’.[20]
[18]Ibid [178].
[19]Ibid [179].
[20]Ibid [177].
He further concluded that Yarra was liable for the acts of Richmond, because the words ‘all liabilities’ in cl 18(b) of the Order in Council extended to liabilities which were prospective and inchoate at the succession date in June 1994.[21]
[21]Ibid [194]. See [29] above.
In respect of the alleged breach of statutory duty by Yarra, he held that ‘a careful reading of the Act does not demonstrate an intention that an individual should have a private right of action for breach of s 45(1) of the Act’.[22]
[22]Ibid [200].
He rejected any liability arising from the alleged planning duty, finding as follows:
(c) Yarra did not have a substantial degree of control or knowledge of the coal tar contamination;[23]
[23]Ibid [253].
(d) the MFESB was not relevantly vulnerable to harm from Yarra’s conduct;[24]
(e) the conduct of Yarra in responding to an application for a planning permit by the MFESB for commercial development did not indicate an assumption of responsibility by Yarra or reliance by the MFESB with respect to pure economic loss arising from contamination of land;[25] and
(f) reference to the statutory framework did not indicate a statutory assumption of responsibility for protection of persons in the class of the MFESB with respect to pure economic loss arising from contamination of land.[26]
[24]Ibid [254]–[255].
[25]Ibid [256].
[26]Ibid [257].
With this in mind, he held that in the event that Yarra did in fact owe a planning duty, there was no breach of such duty that caused loss to the MFESB.[27]
[27]Ibid [269].
He rejected the MFESB’s arguments based upon the non-pollution duty.[28] More specifically, he noted that:
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.[29]
[28]Ibid [275]–[279].
[29]Ibid [279].
He rejected the proposition that Yarra owed a demolition duty to the MFESB for the same reasons as he rejected the planning duty.[30]
[30]Ibid [288].
Finally, he rejected the MFESB’s argument based on the alleged duty of disclosure. The MFESB had submitted that Richmond (and therefore Yarra) 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 judge rejected this argument having regard to the following factors:
(g) the MFESB and Yarra did not have a relationship of landlord and tenant or any similar relationship;
(h) Yarra did not have any information that was not available to the MFESB; and
(i) the MFESB 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.[31]
[31]Ibid [296].
The result was that the MFESB succeeded on liability only with respect to compensation under s 62A(2) of the Act. On 5 February 2016, the judge declared that Yarra was liable pursuant to s 62A(2) to compensate the MFESB for any costs incurred by it which are reasonable and which were incurred in good faith in complying with either or both’ of the clean up notices issued by the EPA.[32] There was no order made for damages as the claim for damages was dependent upon the five causes of action based upon various duties, each of which was unsuccessful. Section 62A does not provide for any form of damages for consequential loss. It provides only for actual costs incurred in meeting the requirements of a clean up notice.
[32]Where necessary we discuss the judge’s reasons in more detail below in considering specific issues.
Grounds of appeal
There are 13 grounds of appeal, many of which are inter-twined:
(1) The judge erred in his construction of s 62A(1)(b) of the Act.
(2) The judge erred in finding that Yarra was a person described in s 62A(1)(b) of the Act for the purposes of s 62A(2) of the Act.
(3) The judge erred in his determination that Yarra was liable to compensate the MFESB pursuant to the combined operation and effect of ss 62A(1)(b) and (2) of the Act in circumstances where he found that Richmond ‘caused … the pollution to occur’ within the meaning of s 62A(1)(b) of the Act.
(4) The judge erred in his determination that an order for compensation could be made under s 62A(2) against a person described in s 62A(1)(b) of the Act in circumstances where that person had caused the pollution to occur prior to:
(a) part of the Act coming into operation and effect on 15 March 1971;
(b) the remainder of the Act coming into operation and effect on 1 March 1973; and
(c) s 62A of the Act coming into operation and effect on 1 July 1984.
(5) The judge erred in his construction of s 62A(1)(c) of the Act.
(6) The judge erred in finding that Yarra ‘appears to have abandoned … industrial waste’ within the meaning of s 62A(1)(c) of the Act in circumstances where the learned primary judge found that:
(a) in February 1993 Richmond had no knowledge of the bluestone pit or its contents of coal tar; and
(b) in February 1996, when vacating the Burnley site, none of the officers or employees of Yarra were aware that there was coal tar at the bottom of the filled-in bluestone pit.
(7) The judge erred in finding that Yarra was a person described in s 62A(1)(c) of the Act for the purposes of s 62A(2) of the Act.
(8) The judge erred in his determination that Yarra was liable to compensate the MFESB pursuant to the combined operation and effect of ss 62A(1)(c) and (2) of the Act.
(9) The judge erred in failing to consider the exercise of the discretion conferred on the Court by s 62A(2) of the Act not to make an order for compensation pursuant to s 62A(2) of the Act prior to making the declaration that Yarra was liable to compensate the MFESB pursuant to s 62A(2) of the Act.
(10) The judge erred in failing to consider, prior to determining that Yarra was liable to compensate the MFESB pursuant to s 62A(2) of the Act, whether or not, in the exercise of the discretion conferred on the Court by s 62A(2) of the Act, he ought not make an order for compensation pursuant to s 62A(2) of the Act.
(11) The judge erred in his construction of s 62A(2) of the Act.
(12) The judge erred in determining that Yarra was liable to compensate the MFESB pursuant to s 62A(2) of the Act.
(13) The judge erred in declaring that Yarra was liable pursuant to s 62A(2) of the Act to compensate the MFESB for any costs incurred by the MFESB which are reasonable and which were incurred in good faith in complying with either or both of the Notices dated 20 December 2006 and 31 July 2007 issued to the MFESB by the EPA pursuant to s 62A(1)(a) of the Act.[33]
[33]The grounds of appeal have been modified in the light of matters already defined.
Yarra accepted that grounds 11, 12 and 13 were umbrella grounds which raised nothing further than that raised by grounds 1–10.
There is no challenge to the judge’s rejection of the MFESB’s submissions that Yarra was in breach of the statutory duty; the planning duty; the non-pollution duty; the demolition duty or the disclosure duty.
There is no challenge to the findings of fact; in particular, there is no challenge to the finding that the bluestone pit, which was found on the site in 2005, was the source of the contamination and was the storage tank previously used by Richmond for the storage of coal tar. There is no challenge to the finding that, at the time Yarra vacated the Burnley site, none of its officers or employees was aware that there was coal tar at the bottom of a filled-in bluestone pit.
There is no direct challenge to the judge’s construction of cl 18(b) of the Order in Council by reason of which he found Yarra liable for the acts of Richmond.
The challenge rests solely upon the construction and application of s 62A of the Act and the question of the appropriateness of the grant of declaratory relief.
Legislation
Section 62A of the Act, in its current form, commenced on 30 August 2006,[34] and provides as follows:
[34]Victoria, Government Gazette, No G 35, 31 August 2006, 1815. See Environment Protection (Amendment) Act 2006 s 60.
62A Notice to take clean up and on-going management measures
(1)Notwithstanding anything to the contrary in this Act, the Authority may by notice in writing direct —
(a)the occupier of any premises upon or from which pollution has occurred or been permitted to occur;
(b) the person who has caused or permitted the pollution to occur;
(c)any person who appears to have abandoned or dumped any industrial waste or potentially hazardous substance; or
(d)any person who is handling industrial waste or a potentially hazardous substance in a manner which is likely to cause an environmental hazard —
to take the clean up and on-going management measures as specified in the notice.
...
(2)On the application of the occupier of any premises which is the subject of a notice, a court of competent jurisdiction may order that the person described in subsection (1)(b), (1)(c) or (1)(d) compensate the occupier for any costs incurred by the occupier which the court is satisfied are reasonable and were incurred in good faith in complying with the notice or under subsection (4).
(3)Subject to subsection (3A), any person to whom a notice under subsection (1) or (1AA) is directed who contravenes without reasonable cause the requirements of the notice shall be guilty of an indictable offence against this Act.
Penalty: 2400 penalty units.
(3A)A person to whom a notice under subsection (1) or (1AA) is directed must comply with the reporting requirements specified in the notice.
Penalty: 60 penalty units
The Act commenced, in part, on 15 March 1971[35] and, in part, on 1 March 1973.[36] It did not contain s 62A.
[35]Victoria, Victoria Government Gazette, No 22, 11 March 1971, 629.
[36]Victoria, Victoria Government Gazette, No 6, 31 January 1973, 215.
Section 62A (including s 62A(2)) commenced on 1 July 1984, and relevantly applied to ‘(b) the person who has caused the pollution to occur’.[37] Section 62A was thus potentially applicable to Richmond, for activities it had previously carried out, before the Order in Council of 1994 and the transfer of Richmond’s liabilities to Yarra.
[37]Victoria, Victoria Government Gazette, No 69, 27 June 1984, 2038 (emphasis added).
Relevantly, sub-s 62A(1)(c) was added and commenced on 1 January 1986: ‘(c) any person who appears to have abandoned or dumped any industrial waste or potentially hazardous substance’.[38]
[38]Victoria, Victoria Government Gazette, No 125, 18 December 1985, 4641 (emphasis added). See s 32(2) of the Environment Protection (Industrial Waste) Act 1985.
Section 62A was further amended in 1988 including by the substitution of a new s 62A(2), in substantially the same terms as those that currently apply, commencing on 17 May 1988.[39]
[39]Victoria, Victoria Government Gazette, No G 18, 18 May 1988, 1272. See Environment Protection (Amendment) Act 1988 s 20.
Relevantly, sub-s 62A(1)(b) was amended on 5 December 1989 as follows: ‘(b) the person who has caused or permitted the pollution to occur’.[40] Minor amendments were also made to s 62A(2).[41]
[40]Victoria, Victoria Government Gazette, No G 48, 6 December 1989, 3128 (emphasis added). See Environment Protection (General Amendment) Act 1989 s 59.
[41]Ibid. It is necessary to discuss some other sections of the Act and more specific legislative history when analysing various issues below.
Analysis
It is convenient to examine the issues as they were argued before us:
(1) Was Yarra liable for the pollution caused by Richmond (Grounds 1, 2 and 3 – s 62A(1)(b))? We will refer to these as the liability grounds.
(2) Is s 62A(2) impermissibly retrospective (Ground 4 – s 62A(2))? We will refer to this as the retrospectivity ground.
(3) Did Yarra appear to abandon the industrial waste in the bluestone pit when relinquishing possession of the Burnley site to the State of Victoria in or about February 1996 (Grounds 5, 6, 7 and 8 – s 62A(1)(c))? We will refer to these as the abandonment grounds.
(4) Should an order or declaration under s 62A(2) have been made (Grounds 9 and 10 — s 62A(2))? We will refer to these as the discretion grounds.
We will consider each issue in turn.
(1) Was Yarra liable for the pollution caused by Richmond?
Introduction
As already observed,[42] it is not in dispute in this application for leave to appeal that Richmond caused the contamination at the Burnley site. The fundamental question the subject of Yarra’s proposed grounds 1–3 is whether Yarra can be held liable for that contamination on account of its being the successor in law to Richmond or as the result of the transfer to Yarra of Richmond’s liabilities, pursuant to the Order in Council.
Judge’s reasons
[42]See [78] above.
Before the judge Yarra submitted that it was Richmond that caused or permitted the pollution to occur and that the Court had no power to make an order for compensation against Yarra because Yarra was a person other than Richmond. Yarra submitted that Parliament had not legislated to provide that references to former councils were deemed to be references to newly constituted councils. Further, the Order in Council dated 22 June 1994[43] did not provide that Yarra was deemed to be the person described in s 62A(1)(b) for the purpose of making a compensation order under that section.
[43]See [29] above.
The MFESB submitted before the judge that the word ‘liabilities’ in the Order in Council included prospective and inchoate liabilities. In this regard the MFESB relied on the High Court’s decision in Crimmins v Stevedoring Industry Finance Committee.[44]
[44](1999) 200 CLR 1 (‘Crimmins’).
The judge analysed Crimmins and the decision of Woolf J in Walters v Babergh District Council,[45] which was cited by Gleeson CJ and considered by McHugh, Kirby and Callinan JJ in Crimmins. He observed that Babergh concerned a local government reorganisation. In particular, the case concerned the interpretation of the word ‘liabilities’ in a transitional provision ordered by the Secretary of State pursuant to the Local Government Act 1972 (UK) c 70. Under the transitional provision, ‘all property and liabilities vesting in or attaching to an authority ... shall by virtue of this Order be transferred to and vest in or attach to [the transferee authority]’. The judge summarised Woolf J’s decision as follows:
[45](1983) 82 LGR 235 (‘Babergh’) (Queen’s Bench Division).
In interpreting the word ‘liabilities’, Woolf J referred to the danger in looking at similar words in different Acts as aids to interpretation and held that ‘liabilities’ taken over in a local government reorganisation extended to contingent potential liabilities for the following reasons:
(a)His Honour had regard to the purpose of the Act as reorganising local authorities and said:
The whole tenor of the order is designed to ensure that the reorganisation would not effect events which would otherwise have occurred further than is absolutely necessary because of that reorganisation. That the public should be able to look to the new authority precisely in respect of those matters which it could look to the old authority; that the public’s position should be no better or no worse. If the draftsman has not used words which are appropriate to cover potential liabilities it can only be because he was so crassly incompetent as not to appreciate that for actions in tort it is not sufficient to have a breach of duty; you must also have damage.
(b)Given the amplitude of meaning of the word ‘liability’, his Honour had a choice in interpreting the word broadly in which case he ‘had no hesitation in choosing an interpretation which makes, in [his] view, sense of this part of the order, rather than leaving a large gap between obligations and causes of action which have accrued.’[46]
[46]Reasons [192] (citations omitted).
The judge noted that Babergh received strong approval in Crimmins. He considered Babergh to be directly apposite and then concluded that:
for the same reasons as those expressed by Woolf J, I consider that the words ‘all liabilities’ in the Ministerial Order in the present case extends to liabilities which were prospective and inchoate at the succession date in June 1994.[47]
[47]Ibid [194].
It was on this basis that the judge ultimately held that Yarra was a person described in s 62A(1)(b) of the Act,[48] namely a person ‘who has caused or permitted the pollution to occur’.
Yarra’s submissions
[48]Ibid [298].
Yarra submitted before this Court that it was not the person described in s 62A(1)(b) because it was not ‘the person who has caused … the pollution to occur’, within the meaning of that subsection. Yarra advanced two arguments in support of its position.
First, the words ‘the person’ in s 62A(1)(b) are neither deemed nor defined in the Act to include the successor in law to ‘the person who has caused … the pollution to occur’. Yarra here relied on R (National Grid Gas plc) v Environment Agency.[49] This point primarily concerns the proper construction of s 62A.
[49][2007] 1 WLR 1780 (‘National Grid’) (House of Lords).
Secondly, there is nothing in the Order in Council that deems Yarra to be Richmond for the purposes of s 62A(1)(b) or (2) of the Act. Further, the Order in Council does not deem acts of Richmond to be acts committed by Yarra for the purposes of s 62A(1)(b) or (2) of the Act. This point primarily concerns the proper construction of the Order in Council.
Returning to the first argument, Yarra submitted that the judge erred in his construction of s 62A(2). The only person against whom the court can make an order under s 62A(2) is the person described in s 62A(1)(b). That subsection refers to the person who caused the pollution, and the judge found that the pollution was caused by Richmond. Section 62A(1)(b) does not refer to the person who bears the liabilities of the person who caused the pollution to occur. Rather, it catches only the person who actually caused the pollution.
In National Grid the House of Lords considered the operation of ss 78E and 78F of the Environmental Protection Act 1990 (UK) c 43 (‘the UK Act’), which Yarra submitted was a statutory scheme indistinguishable from s 62A of the Act. Sections 78E(1)(b) and 78F(1)–(3) of the UK Act provide, respectively:
78EDuty of enforcing authority to require remediation of contaminated land etc.
(1) In any case where—
…
(b) a local authority has identified any contaminated land (other than a special site) in its area,
the enforcing authority shall, in accordance with such procedure as may be prescribed and subject to the following provisions of this Part, serve on each person who is an appropriate person a notice (in this Part referred to as a ‘remediation notice’) specifying what that person is to do by way of remediation and the periods within which he is required to do each of the things so specified.
…
78FDetermination of the appropriate person to bear responsibility for remediation.
(1) This section has effect for the purpose of determining who is the appropriate person to bear responsibility for any particular thing which the enforcing authority determines is to be done by way of remediation in any particular case.
(2) Subject to the following provisions of this section, any person, or any of the persons, who caused or knowingly permitted the substances, or any of the substances, by reason of which the contaminated land in question is such land to be in, on or under that land is an appropriate person.
(3)A person shall only be an appropriate person by virtue of subsection (2) above in relation to things which are to be done by way of remediation which are to any extent referable to substances which he caused or knowingly permitted to be present in, on or under the contaminated land in question.
In National Grid the Environment Agency had served a remediation notice on National Grid Gas plc (‘National Grid’), claiming that it was an appropriate person within the meaning of ss 78E(1)(b) and 78F(2). Lord Hoffmann (with whom Lord Mance agreed) observed that National Grid did not cause or knowingly permit any substances to be in, on or under the land in question. In fact, it was a predecessor gas undertaker that caused the relevant pollution before National Grid came into existence. Lord Hoffmann found that there was
nothing in the Act to say that an appropriate person shall be deemed to include some other person or which defines who that other person should be. National Grid is plainly not an appropriate person within the meaning of the [UK Act].[50]
[50]Ibid 1781 [2].
Further, Lord Scott, with whom Lords Hoffmann, Walker and Mance agreed, also held that National Grid was not an ‘appropriate person’ because on its proper construction, the phrase ‘appropriate person’ does not include statutory successors to the liabilities of the actual polluters.[51] Lord Scott observed:
The argument for the agency … was that ‘person’ in s 78F, as in the phrase ‘person … who caused or knowingly permitted’ should be construed so as to include every person who became by statute the successor to the liabilities of the actual polluters … This is, in my opinion, a quite impossible construction to place on the uncomplicated and easily understandable statutory language. The emphasis in s 78F, both in subsection (2) and in subsection (3), is on the actual polluter, the person who ‘caused or knowingly permitted ’.[52]
[51]Ibid 1785-6 [19]–[20].
[52]Ibid 1786 [20].
According to Yarra, National Grid is authority for the proposition that the word ‘person’ does not include successors. Yarra submitted that the MFESB did not identify any authority to the contrary.
Yarra accepted that in National Grid the relevant transfer of liabilities to the successor entity was worded differently to cl 18 of the Order in Council. In National Grid the relevant transfer of liability, pursuant to successive versions of the Gas Act 1948 (UK), 11 & 12 Geo 6, c 67 and the Gas Act 1986 (UK) c 44, was limited to liabilities that existed immediately before the relevant vesting date, whereas in the present case, the MFESB argued that the Order in Council effected a transfer of existing and contingent liabilities. However, Yarra submitted that in National Grid the proper construction of ‘appropriate person’ in ss 78E and 78F and the proper construction of the transfer of liabilities were treated as two independent arguments. The Environment Agency failed on both arguments.[53]
[53]Ibid 1789 [33].
According to Yarra, similarly to National Grid, the proper construction of ‘person’ in s 62A and the meaning of the Order in Council are separate issues. It submitted that the Order in Council has no bearing on the construction of s 62A(2). The language of s 62A(2) does not permit reference to, and indeed there is no need to consider, the Order in Council. The Order in Council cannot amend the words in s 62A(2). Yarra submitted that even if it were possible for the Order in Council to amend the Act, there is in fact nothing in the Order in Council that affects or bears upon the proper construction of s 62A(1)(b) or (2) of the Act.
In its second argument Yarra did not challenge ‘what is said about … clause 18(b) in the order made by the Governor-in-Council and published on 22 June 1994’. As a consequence, Yarra did not directly impugn the basis on which the judge found that Yarra was liable for the acts of Richmond, namely the transfer of all liabilities pursuant to cl 18(b) of the Order in Council. In effect it took the position that if it was correct on its first argument this was not a live issue.
Yarra did take issue, however, with the MFESB’s position on cl 30 of the Order in Council. Yarra submitted that cl 30 of the Order in Council does not have the effect that ‘person’ in s 62A(1)(b) and (2) is a reference to Yarra. This is because the words ‘any instrument or any other document’ in cl 30 do not cover Acts of Parliament. Further, the Act does not make any reference to a former council.
When asked whether a court order made under s 62A(2) referring to Richmond might fall within ‘any other document’, senior counsel for Yarra submitted that first, ‘no one could say that a court order is just a document’. The word ‘document’ concerns ‘agreements and transferring liabilities and transferring assets and staff, and the like’. Secondly, there could not be a court order against Richmond because it does not exist. Yarra accepted, however, that a declaration could be made in respect of a non-existent person such as Richmond.
With respect to the meaning of ‘instrument’ in cl 30, Yarra relied on the Court of Appeal’s decision in R v Ng.[54] There the Court of Appeal considered whether a warrant issued under the Customs Act 1901 (Cth) was an instrument within the meaning of s 46(1)(b) of the Acts Interpretation Act 1901 (Cth). The Court, constituted by Winneke P, Batt and Eames JJA, said:
The second further matter is whether a warrant granted or issued under s 219B is an ‘instrument’ within the meaning of s 46(1). Unfortunately, we did not have the benefit of submissions on this far from easy point. According to Stroud’s Judicial Dictionary an instrument is a writing, and generally imports a document of a formal legal kind. Black’s Law Dictionary relevantly defines it as ‘A written legal document that defines rights, duties, entitlements or liabilities, such as a contract, will, promissory note, or share certificate.’ Most helpful perhaps is the following definition in The Oxford English Dictionary:
5a Law. A formal legal document whereby a right is created or confirmed, or a fact recorded; a formal writing of any kind, as an agreement, deed, charter, or record, drawn up and executed in technical form, so as to be of legal validity.
Amongst the examples of the word used in that sense is an extract from Trial of the Regicides, (1660), where it is used of the warrant for the execution of Charles I. In Azevedo v Secretary, Department of Primary Industries and Energy French J, in holding that a plan of management under the Commonwealth fishing legislation was an instrument within s 46, referred to the definition in The Shorter Oxford English Dictionary, which is the same as that set out above from The Oxford English Dictionary. Earlier, in Chittick v Ackland Lockhart and Morling JJ had in another context stated that the word ‘instrument’ was a word of wide import and that its meaning was to be ascertained having regard to its context, whilst Jenkinson J had considered that the word included a document the making or issuing of which operated as an act in the law.[55]
[54](2002) 5 VR 257.
[55]Ibid 280 [48] (citations omitted).
Yarra contended that there is no suggestion in R v Ng that ‘instrument’ includes an Act of Parliament. In the context of the Order in Council, the word ‘instrument’ must mean a document because it is followed by the words ‘or any other document of any kind’. Acts of Parliament are not referred to as documents. Further, even if ‘instrument’ does include an Act of Parliament, the Act does not refer to ‘a former council’ or Richmond, either expressly or by implication. Again, cl 30 therefore does not have the effect that ‘person’ in s 62A(1)(b) and (2) is a reference to Yarra.
The MFESB’s submissions
The MFESB’s submissions largely focused on the interpretation and effect of the Order in Council. It advanced two independent arguments as to why the Order in Council has the effect that Yarra is liable under s 62A(2) of the Act. The first argument relied on cl 18(b); the second on cl 30. The MFESB’s third and final argument was that on the ordinary principles of statutory construction, in general the word ‘person’ in s 62A(1)(b) and (2) includes successors in law.
With respect to cl 18(b) of the Order in Council, the MFESB submitted that the liability of a successor in law depends on the wording of the particular transferring provision. Here, cl 18(b) of the Order in Council uses the words ‘all liabilities’. The MFESB relied on Crimmins and Babergh to argue that the expression ‘all liabilities’ includes contingent, prospective and inchoate liabilities. The MFESB submitted that Richmond’s contingent, prospective or inchoate liability was therefore transferred to Yarra pursuant to cl 18(b).
A narrow construction of the Order in Council that relieved Yarra of liability and defeated inchoate claims would be unjust or capricious and contrary to the intention of the Order in Council. Relying on the judgment of McHugh J in Crimmins,[56] the MFESB submitted that in determining whether the defeating of a claim is ‘unjust or capricious’ the Court should take into account the purpose of the Order. Here the Order in Council was, as senior counsel for the MFESB put it, ‘intended to make sure nobody misses out, nothing changes, rights and responsibilities are preserved by reason of the amalgamation’. The MFESB submitted that it would be surprising if it was intended that the liabilities of Yarra be any less than those of the former councils.
[56](1999) 200 CLR 1, 56 [147].
The MFESB also noted that s 62A came into force in 1984, when Richmond still existed.[57] Accordingly, even if cl 18 of the Order in Council were construed narrowly such that the liability must have existed at the time of the transfer in 1994, then it is plain that Richmond did have the relevant liability at that time.[58] This may be contrasted with the facts in National Grid, where the transfer from British Gas plc to National Grid occurred before the relevant provisions generating liability for remediation works were inserted into the UK Act.
[57]See [83] above.
[58]Cf our findings in [216]-[219] below as to when liability under s 62A arises.
In National Grid there were two limbs to the decision:
(j) that the ‘appropriate person’ as defined in the UK Act referred to the person who had knowingly permitted the relevant contamination and not to a mere successor to the business of that person; and
(k) the transfer of liabilities under successive versions of the Gas Act had been limited to liabilities existing immediately before the relevant vesting date and did not extend to a liability created under statutory provisions first coming into force nine years after the transfer.
The MFESB sought to distinguish National Grid on three bases. First, the transferring provision in that case contained an express limitation, namely, only liabilities existing ‘immediately before’ the transfer date were transferred. Clause 18(b) of the Order in Council does not contain any such limitation. Secondly, the legislation considered in National Grid concerned the privatisation of an industry, in contrast with the legislation in this case, which concerns the reorganisation/amalgamation of local government entities. Thirdly, while Crimmins and Babergh were cited in argument in National Grid, they were not referred to in the decision of the House of Lords. The MFESB also emphasised that Yarra did not rely on National Grid at trial.
As we have already noted, there is a sense in which the primary cases as put forward on behalf of the MFESB and Yarra do not meet because Yarra does not directly challenge the judge’s finding that ‘liabilities’ in cl 18(b) of the Order in Council includes contingent, prospective and inchoate liabilities. Nevertheless, it is implicit in Yarra’s case that it contends this concession is not dispositive of the question of its potential liability.
During the hearing of the appeal before this Court it was put to the MFESB that its position on ‘liabilities’ in cl 18(b) of the Order in Council did not directly answer Yarra’s submission on the proper construction of s 62A of the Act. It was put to the MFESB that in the circumstances of National Grid the statutory construction point and the transfer of liabilities point were treated as independent arguments. The MFESB agreed that the two points were treated there as alternative arguments. However, it ultimately proceeded on the basis that, in the circumstances here, the second alternative was sufficient to sustain its case.
The MFESB also argued that cl 30 of the Order in Council has the effect that any reference in the Act to Richmond is a reference to Yarra. Therefore if the words ‘the person’ in s 62A(1)(b) referred to Richmond, they now refer to Yarra. The MFESB submitted that cl 30 of the Order in Council interacts with s 62A of the Act because an Act of Parliament is either an ‘instrument’ or an ‘other document’ within the meaning of cl 30.
It was initially submitted by the MFESB that the term ‘instrument’ plainly extends to Acts of Parliament. However, the MFESB was unable to identify any authority for the proposition that the word ‘instrument’ extends to primary legislation. The MFESB submitted that pt 3 of the Interpretation of Legislation Act 1984 refers to subordinate instruments. However, pt 3 does not include a definition of ‘instrument’ and there is no specific definition of ‘instrument’ elsewhere in that Act. The MFESB accepted that s 9(2)(a)–(d) of the Interpretation of Legislation Act might suggest that Acts on the one hand, and instruments or other documents on the other hand, are separate categories. Ultimately the MFESB expressed some reservation about its position that ‘instrument’ in cl 30 of the Order in Council includes an Act of Parliament. It submitted that ‘an instrument may include something made under an Act but may not be an Act’.
The MFESB then relied on the words ‘or any other document’ in cl 30 of the Order in Council. Section 38 of the Interpretation of Legislation Act includes a definition of ‘document’, para (f) of which definition provides ‘anything whatsoever on which is marked any words, figures, letters or symbols which are capable of carrying a definite meaning to persons conversant with them’. Therefore an Act might be an ‘other document’ within the meaning of cl 30 of the Order in Council.
The MFESB submitted that if, however, an Act is not an ‘instrument’ or an ‘other document’, and cl 30 cannot be used in aid of the interpretation of s 62A, then it relied on ordinary principles of statutory construction. This was the MFESB’s third argument.
The MFESB submitted that the question in relation to Yarra’s first argument, which concerns the proper interpretation of s 62A(1)(b) and (2), is what is contemplated by the expression ‘the person’. Under the ordinary principles of construction, ‘person’ necessarily includes a successor who for all intents and purposes is the same entity. The MFESB here relied on Project Blue Sky Inc v Australian Broadcasting Authority[59] and the purpose of the Act, particularly its ‘polluter pays’ principle and its object of promoting environmental protection.
Other matters
[59](1998) 194 CLR 355.
At the conclusion of the hearing of the appeal the Court requested Yarra to provide it with the full legislative history of s 62A of the Act and the provisions of the Local Government Act 1989 referred to in the Order in Council as in force on the date of the Order in Council (22 June 1994). The various amendments were provided. The parties were also permitted to make further written submissions on the legislative history of s 62A; however, they did not file any further submissions. The legislative history of s 62A is discussed elsewhere.[60]
[60]See [81]-[86] above and [185]-[188] below.
The Order in Council was made by the Governor in Council pursuant to pt 10C of the Local Government Act. At the time the Order in Council was made, the provisions of pt 10C relevant for present purposes provided:
220Q Power to make Orders
The Governor in Council may on the recommendation of the Minister make an Order in Council to do any one or more of the following—
…
(d) re-constitute an existing Council;
(e) constitute a new Council;
(f) abolish an existing Council;
…
(h) give a name to, or alter the name of, a Council;
…
220R Matters which may be included in Order
(1) The Governor in Council may by Order in Council provide for any matter necessary or convenient to give effect to this Part or to any other Order in Council made under this Part and to enable the effective implementation of any restructuring.
(2)Without limiting the generality of sub-section (1), an Order in Council may provide for—
(a)any property, income, assets, rights, liabilities, expenses or other matters to be apportioned, settled, transferred, adjusted or determined;
…
(f)the application, continuation, amendment or revocation of existing local laws;
(g)transitional provisions in relation to any act, matter or thing done or required to be done by or in relation to any Council affected by the Order in Council.
…
220S General provisions relating to Orders
(1) An Order in Council made under this Part—
…
(b)upon being published in the Government Gazette has the like force and effect as if it were expressly enacted in this Act;
…
(2) An Order in Council made under this Part may—
…
(e)apply, adopt or incorporate, with or without modification, the provisions of any Act or of any regulations made under any Act;
(f)contain provisions of a savings and transitional nature consequent on the making of the Order, including providing for the construction of references in any instrument or in any other document of any kind;
(g)provide that during a transitional period specified in the Order the provisions of the Local Government Act 1989 specified in the Order apply as varied or modified by the Order;
(h)modify the application of the Valuation of Land Act 1960 by providing that existing valuations are to be used until a date specified in the Order;
(i)modify the application of section 3(2) of the Local Government (Consequential Provisions) Act 1989;
…
Conclusion on liability of Yarra to pollution caused by Richmond
Yarra’s first argument concerned the proper construction of the expression ‘the person’ in s 62A(1)(b) and (2). As the majority said in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT), ‘the task of statutory construction must begin with a consideration of the text itself … The language which has actually been employed in the text of legislation is the surest guide to legislative intention’.[61] The majority also said that the ‘meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy’.[62]
[61](2009) 239 CLR 27, 46-7 [47] (Hayne, Heydon, Crennan and Kiefel JJ) (citations omitted).
[62]Ibid (citations omitted).
We must also apply the principles laid down in Project Blue Sky Inc v Australian Broadcasting Authority[63] and, in particular, the principle that the language of a particular provision must be construed by reference to the terms of the statute viewed as a whole.[64]
[63](1998) 194 CLR 355.
[64]Ibid 381 [69]–[70].
The opinions in National Grid provide some limited assistance as to the language used. The House of Lords considered that the words ‘appropriate person’ in a legislative scheme similar to s 62A did not extend to successors in law. Rather, ‘appropriate person’ in s 78F(2) of the UK Act referred only to the actual polluter. As noted above,[65] Lord Scott considered the phrase ‘the person … who caused or knowingly permitted’ to be ‘uncomplicated and easily understandable statutory language’.[66] Looking at the ‘plain and unambiguous statutory language’, interpreting the phrase to extend to successors in law would have been an ‘impossible construction’.[67]
[65]See [100] above.
[66][2007] 1 WLR 1780, 1786 [20].
[67]Ibid 1786 [20], 1787 [23].
Lord Neuberger (with whom Lord Walker and Lord Mance agreed) held that:
the appellant is plainly not, as a matter of ordinary language, a ‘person … who caused or knowingly permitted’ the contamination to occur: it is a company which (albeit indirectly) acquired the business and assets of such a person. The respondent’s case does not merely run into problems because of the clear language of section 78F(2) of the 1990 Act. If the section is to be interpreted as extending to a successor to the business of the original polluter, is the extension to be limited to a statutory successor, or to a successor who has not acquired the business at arm’s length, or to a successor who has occupied or owned the land, or is it to apply to any successor to the business? And what if the relevant business had wholly ceased before the polluter’s assets were acquired? As my noble and learned friend, Lord Mance, pointed out in argument, additional difficulties of interpretation arise on the respondent’s interpretation, in the case of the transfer of a business, where the original polluter still exists.
…
In my judgment, each of the respondent’s contentions involves redefining, rather than interpreting, the relevant statutory words.[68]
[68]Ibid 1789 [34], 1790 [36].
Returning to the construction question at hand, we note that the word ‘person’ is not defined in the Act. It is defined in s 38 of the Interpretation of Legislation Act as including ‘a body politic or corporate as well as an individual’. This definition does not appear to address the issue of whether, in context, ‘person’ can extend to successors in law. Further, the expression ‘the person’ as it appears in s 62A(1)(b) and (2) does not on its face extend to successors in law. The plain meaning of ‘the person’ does not include successors in law. Of course, the context of s 62A may require the expression to be interpreted as extending to successors in law.
The context relied on by the MFESB is the statutory purpose underpinning s 62A, namely the ‘polluter pays’ principle. In our opinion, there is no inconsistency between this context and the plain meaning of the words. Where the polluter still exists, it may be ordered to pay compensation under s 62A(2). Where the polluter no longer exists, the ‘polluter pays’ principle has no direct work to do. The statutory purpose therefore does not readily lead to a legal meaning that is different from the literal meaning of the statutory language.
We therefore accept that s 62A(1)(b) and (2) refer to the polluter.
Accepting the MFESB’s interpretation of s 62A(1)(b) and (2) would require reading additional words into those subsections. However, in DPP v Walters (a Pseudonym) four members of the Court of Appeal said:
except in extremely limited circumstances, the court has no power to fill a gap in a statute or otherwise to read in words which the legislature has not used. The limits of the judicial role require that courts ‘abstain from any course which might have the appearance of judicial legislation’.[69]
[69](2015) 49 VR 356, 359 [4] (citation omitted).
It is not clear in this case that there is in fact a gap in the operation of s 62A or an error that requires additional words to be read in. The statutory purpose is one of making polluters compensate occupiers for the costs of cleaning up contamination. Further, if this Court were to read additional words into s 62A, it is not clear what those words would be. Lord Neuberger in National Grid identified the problems that would arise if the Court were to extend the meaning of ‘person’ in general to all successors in law.
Yarra’s second argument and the weight of the MFESB’s submissions concerned the Order in Council. We do not consider that the Order in Council has any role to play in the actual construction of s 62A itself. The section stands on its own.
The Order in Council is, however, the key to the topics of succession and liability with respect to Richmond’s unchallenged pollution. In our view, it is the key to determining whether the MFESB is entitled under the Act to recover from Yarra its costs of compliance with the first and second clean up notices issued by the EPA.
Section 220R of the Local Government Act permitted the relevant Order in Council to provide for the transfer of rights and liabilities.
Section 220R(1) and (2)(a) are in the widest terms.[70] Section 220R(1) makes clear that the purpose underlying the Order in Council is the effective implementation of the restructuring of local government. Both s 220R(1) and (2)(a) are on their plain meaning wide enough to enable the Order in Council to provide for the transfer of contingent liability.
[70]See [124] above.
The Order in Council relevantly did the following:
(l) constituted the City of Yarra;[71]
[71]See cl 3(a)(iii).
(m) abolished Richmond;[72]
[72]See cl 3(b)(vii).
(n) established the boundaries of Yarra;[73]
[73]See cl 17.
(o) vested all property, rights and assets of Richmond in Yarra;[74]
[74]See cl 18(a).
(p) provided that all liabilities of Richmond are liabilities of Yarra;[75]
(q) provided that Yarra is the successor in law to Richmond;[76] and
(r) made transitional provisions with respect to any references to Richmond in any instrument or other document of any kind, namely that such reference be construed as a reference to Yarra unless the contrary intention appeared.[77]
[75]See cl 18(b).
[76]See cl 18(c).
[77]See cl 30.
Both s 220R and cl 18(b) provide for the transfer of ‘liabilities’. As the judge noted, the starting point for the analysis of cl 18(b) must be the analysis of that word. As mentioned above, the judge relied upon Crimmins.[78] In Crimmins, the High Court made it clear that the word ‘liabilities’ can include contingent or prospective liabilities. In that case, Crimmins suffered from mesothelioma caused by the inhalation of asbestos fibres which was alleged to have occurred during his employment as a waterside worker. Crimmins had been exposed to asbestos fibres during the period in which a predecessor of the Stevedoring Committee regulated his employment. He did not suffer injury however until the predecessor authority had been abolished and the Stevedoring Committee had been established as its successor in law. The Act establishing the Committee provided for a transition period at the end of which the Committee was made ‘liable to perform all the duties and to discharge all the liabilities and obligations of the Authority that existed immediately before the end of [the transitional] period.’[79]
[78](1999) 200 CLR 1.
[79]Ibid 13 [6].
The judgments of the High Court reveal that, in a context analogous to the one with which we are concerned, the word ‘liability’ may include contingent, prospective, and inchoate liabilities.
Gleeson CJ said:
Depending upon the context, the meaning of ‘liability’ can include a contingent or potential liability. When the legislature, in providing for replacement of the Authority by the respondent, stipulated that the respondent was to perform all the duties, and discharge all the liabilities, of the Authority, which was abolished and which had no further capacity itself to meet any claims upon it, there was no good reason to distinguish between complete and inchoate causes of action in cases where the Authority had committed a breach of a legal duty. Such a distinction is not required by the use of the word ‘liability’, and to give it a narrow construction would defeat the evident purpose of the legislation, which was to preserve the just entitlements of those who had dealings with the Authority before its abolition.[80]
[80] Ibid 13–14 [8] (citations omitted).
Gaudron J said:
The evident purpose of s 14(b) of the Termination Act is to ensure that persons who had a claim on the Authority in respect of unperformed duties and undischarged liabilities and obligations could, once the Authority had gone out of existence, look to the Committee for their performance and discharge. That being its purpose, s 14(b) should be construed as widely as its terms permit. The argument for the Committee is that those terms permit only of the transfer of liabilities and obligations that were enforceable immediately before the expiration of the transitional period. That was so, it was said, because otherwise they would not constitute liabilities or obligations ‘that existed immediately before the expiration of that period’.
The word ‘existed’ is not synonymous with ‘were enforceable’. Nor, in my view, should it be so construed. There is no difficulty in speaking of the existence of a liability or obligation that is not presently enforceable: equally, there is no difficulty in speaking of a liability or obligation that existed in the past but was not then enforceable. At least that is so if there is or was some foundation for the liability or obligation in question. For example, there is no difficulty in speaking of the existence — whether past or present — of a person’s liability in damages in the event of breach of contract if that person is or was, at the relevant time, under a contractual obligation to do or refrain from doing some particular thing. The example illustrates the potential width of the concluding words of s 14(b). Those words are capable of meaning not only that the liability or obligation should have been enforceable at the expiration of the transitional period, but that its foundation should then have been in existence. In my view, they should be construed to include that latter meaning.[81]
[81]Ibid 15 [14]–[15].
McHugh J said:
The second question in the appeal is whether, assuming that the Authority would have been liable to the plaintiff, s 14 of the Termination Act makes the respondent liable to the plaintiff. That section provides:
On the expiration of the transitional period —
(a)all rights and property that, immediately before the expiration of the transitional period, were vested in the Authority are, by force of this section, vested in the Committee; and
If a person never knows of the presence of industrial waste on or in land, it is difficult to see that that person can or should be regarded as responsible for it. It is difficult to see that that person’s culpability is any greater than that of the occupier who ultimately discovers the presence of the waste.
In this sense, the construction advanced by the MFESB does not give effect to the scheme of s 62 which senior counsel articulated in argument, namely, that an occupier who cleans up land in response to a notice can recover the cost of the clean up from the party actually responsible for the abandonment of the waste.
A conscious decision to abandon?
An associated question is whether the Court must be satisfied that there appears to have been a conscious decision to abandon the industrial waste by the person who may be subject to a notice under s 62A(1)(c).
In our view, a person may appear to have abandoned waste whether that person acted deliberately or inadvertently when leaving it on or within land. What is critical is simply that the waste presents as apparently abandoned by that person.
Yarra’s general intention with respect to contamination
The judge found that Yarra, through its officers and employees, was aware of contamination upon the site at the time it vacated it. He further found that Yarra intended to leave such contamination behind without cleaning it up.
In our view, this finding does not address the carefully pleaded distinction between the knowledge derived from the Sinclair Knight and ADI reports, and knowledge of the industrial waste constituted by the coal tars within the bluestone pit. As the judge recorded, it was common ground that the clean up notices related to the industrial waste in the bluestone pit.[162]
[162]Reasons [107].
It seems to us that the evidence did not establish an actual intention on the part of Yarra’s officers and employees to abandon the industrial waste at the time the site was vacated. There was simply no contemporaneous awareness of the presence or possible presence of the waste.
Can the forgotten waste be said to appear to have been abandoned?
The fact that the existence of the waste was not within the corporate memory of Yarra’s officers and employees at the time that Yarra left the site, raises a further issue. In some circumstances, a loss of corporate memory as a result of a change in personnel cannot be relied upon by a corporation. In Fightvision Pty Ltd v Onisforou,[163] the New South Wales Court of Appeal[164] stated the general principles as follows:
[163](1999) 47 NSWLR 473.
[164]Sheller, Stein and Giles JJA.
In Tesco Supermarkets Ltd v Nattrass, Lord Reid discussed ‘the nature of the personality which by a fiction the law attributes to a corporation’. His Lordship said:
A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company.
…
We can see the force of the observation by von Doussa J in Beach Petroleum NL v Johnson that knowledge imputed to a company should not be treated as capable of being simply forgotten or lost at the death of the director whose knowledge was imputed. In El Ajou v Dollar Land Holdings Plc Hoffmann LJ, as his Lordship then was, said that once knowledge was treated as being the knowledge of a company in relation to a given transaction, the company continued to be affected with that knowledge for any subsequent stages of the same transaction, whether or not it was imputed from the knowledge of a director who had in the interval ceased to be a director. We do not think this was in contest, and there are sound practical reasons for corporate knowledge including the knowledge of former officers and employees. A corporation cannot cause itself to shed knowledge by shedding people, and it cannot be that a head of sporting acquisitions can sign-up a sporting identity whom his predecessor could not sign up simply because of the change in personnel. There may be limits to the continuation of corporate knowledge, for example, by regard to the transaction as suggested by what Hoffmann LJ said, but in the present case the knowledge of Mr Dodds and Mr Lyons in our view would persist as knowledge of Sky Channel when the question of signing-up Mr Tszyu arose.[165]
[165]Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473, 572 [242], [244] (citations omitted).
In the present case, the members of staff of Richmond became members of staff of Yarra upon the implementation of the council amalgamation process.[166] Nevertheless, it appears that the industrial waste was buried and incorporated into the land by Richmond more than 30 years prior to the alleged apparent abandonment of it. There was no continuing transaction in relation to the waste and knowledge of its presence cannot readily be imputed to Yarra.
[166]’The Order in Council’ in Victoria, Victoria Government Gazette, No S 35, 22 June 1994, 10, cl 19(1).
It follows that the critical issue is whether Yarra can be said to be ‘the person’ who appeared to have abandoned the industrial waste in circumstances where the evidence demonstrated:
(w) Richmond deposited the waste in the pit;
(x) Richmond subsequently buried the waste in the pit;
(y) Richmond continued in possession of the site containing the waste until 22 June 1994;
(z) Yarra took possession of the site on 22 June 1994 and vacated it on 20 February 1996;
(aa) Yarra vacated the site leaving it with all the physical attributes that it had;
(bb) Yarra did not know of the presence of the waste either during the time it possessed the site or when it vacated it;
(cc) the waste was of no apparent value; and
(dd) Yarra did not seek to remove the waste when advised of its existence.
Ultimately it seems to us that if the evidence available proved each of the above matters save for the sixth, then Yarra would be the person who appeared to have abandoned the waste. Once, however, it was apparent to the Court on the whole of the evidence that Yarra first occupied and then vacated the site not knowing of the waste, Yarra cannot be said to appear to have abandoned the waste.
The facts as found by the judge establish that Yarra never knowingly possessed the waste. In these circumstances, it does not seem to us that Yarra can be said to appear to have abandoned it.
Conclusion concerning s 62A(1)(c)
In summary, we accept the MFESB’s submissions that:
(ee) the Act differentiates between ‘abandon’ and ‘appear to abandon’; and
(ff) it is not necessary to prove an actual intention to abandon in order to prove that a person appears to have abandoned industrial waste.
Conversely, we do not accept that:
(gg) a person can be said to appear to have abandoned waste if the evidence shows that person never knew of the presence of the waste buried within land occupied by it;
(hh) an awareness of other limited contamination upon the site can be regarded as giving rise to knowledge of the industrial waste; or
(ii) the circumstances in which the waste was left by Yarra within the site constituted an apparent abandonment in circumstances where the evidence positively established Yarra did not know of the presence of the industrial waste during its occupation of the site.
We accept Yarra’s submission that the judge’s findings as to its complete lack of knowledge of the presence of the industrial waste preclude a finding that it appears to have abandoned that waste.
In other words, while we do not accept Yarra’s submission that to establish that a person appears to have abandoned industrial waste requires proof that the person had knowledge of the waste and intended to abandon it, we do accept the converse proposition, namely, that proof that a person never knew of the presence of industrial waste buried within land it occupied precludes a finding that the person intended to abandon it. We consider the judge fell into error in this respect.
The final issue that arises on the appeal is, ought the judge have made an order or declaration under s 62A(2) of the Act.
(4) Should an order or declaration under s 62A(2) have been made?
Introduction
On 5 February 2016 the judge declared that Yarra was liable pursuant to s 62A(2) to compensate the MFESB for any costs incurred by it which were reasonable and which were incurred in good faith in complying with either or both of the clean up notices. In its proposed grounds 9 and 10 Yarra challenged the making of this declaration.
Treatment of the discretion point at trial
The MFESB pleaded that Yarra was liable to compensate pursuant to s 62A(2) for the costs it had incurred in complying with the clean up notices. Yarra, in response, pleaded that the court should not exercise its discretion to order compensation under s 62A(2). As mentioned, prior to the trial an order was made that the question of the MFESB’s entitlement to compensation and damages be tried as a preliminary issue.[167] The order was made before Yarra filed its final pleading.
[167]Order of Emerton J on 30 May 2014. See [59] above.
The trial proceeded on the basis that an order for compensation was sought by the MFESB and opposed by Yarra. It must be recalled that the matter before the judge was interlocutory only and not the final determination of the proceeding.
During the trial Yarra raised the issue of a general or residual discretion under s 62A(2) not to order compensation and sought to make submissions about certain factors it said were relevant to that discretion. However, when senior counsel for Yarra sought to raise this issue, the following exchange took place:
His Honour: The next position is you say well, in any event, we should get a credit for [known pollution], that will be an argument for next time if we get there.
Yarra’s Counsel: I think your Honour’s correctly analysed it … at the very least a reduction in the damages should be awarded and yes, a credit as your Honour said.
His Honour: That should be next time, shouldn’t it? If there is a next time we will have that argument at that time rather than now because then we will know what the extent of the damage is and it might completely extinguish any claim or reduce the claim if the argument is a good argument.
Counsel: Precisely, your Honour.
His Honour: We don’t need to trouble too much more about it.
Counsel:Could I then go to the duties. We do mention at the end of our submissions, your Honour, which [junior counsel for Yarra] has reminded me, we say that the court does have a discretion under the provision. It certainly uses the word ‘may’ and we know all the Blue Sky talk about it but we say it is intended to be a discretion.
His Honour: That’s for next time that argument too, isn’t it? I understand the argument but I don’t - - -
Counsel: Yes, I understand.
The MFESB then made submissions on the discretion issue and said that there was no residual or general discretion to reject its claim. The judge responded by saying:
I’m not going to deal with that question now but I will allow, if it’s necessary [Yarra’s senior counsel] to argue that on the next occasion. I want to be clear about that. If he wants to argue there’s a general discretion, for whatever reason, for the court to reject the claim because of the word ‘may’, then that’s an argument that will be had if and when it becomes necessary but not on this hearing. So he won’t be precluded from making it, neither will he win it at this point in time.
Later on in the trial, senior counsel for Yarra said he could not ‘remember whether [he] conceded that [the discretion under s 62A(2)] was a matter for quantum’, but then submitted that ‘the discretion is at the liability stage’. The following exchange then occurred:
His Honour: The discretion to compensate?
Yarra’s Counsel: Yes.
His Honour: I’ll deal with it on quantum. The argument remains alive.
Counsel: I understand.
His Honour: I’m not going to deal with it now.
Counsel: I just want to make that point.
His Honour: It hasn’t been dealt with by the plaintiff and it is a bit like the proportionate liability. For practical reasons, if nothing else, I don’t want to force anybody to deal with something that they didn’t think they had to deal with at this time.
Counsel: Thank you, Your Honour.
The declaration of 5 February 2016
The judge delivered judgment on 24 December 2015. On delivery of the judgment it was apparent that he determined Yarra is a person against whom an order could be made under s 62A(2). The judge was also satisfied that he may order Yarra to compensate the MFESB ‘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)’.[168]
[168]Reasons [298].
His Honour indicated his view that:
the sooner that … the damages get dealt with, the parties can then consider their appeal rights and that should be done sooner rather than later. I’m always subject to an application but my current view pretty firmly is that I should assess the damages on the basis of liability rather than make any order at the moment which would be capable of being appealed. So at the moment no orders are being made. There’s nothing capable of being appealed. I’ve just simply made findings.
The MFESB then said it sought an order for judgment on liability then and there. The judge said he was ‘not currently minded to do that’. His Honour listed the matter for hearing on 5 February 2016 and said that if the parties wished to press for an order, they ‘could have that argument at that stage’.
On 5 February 2016 both parties asked the judge to make an order as to liability. The judge said ‘If the parties are of the same view I will not get in the way of that’. The parties provided the Court with two sets of draft orders.[169] The MFESB submitted that Yarra’s draft order might suggest that nothing was payable to the MFESB, or that there was some issue that remained open on the question of liability. Otherwise, there was not much difference between the two sets of draft orders. The MFESB submitted that its draft orders reflected the wording of s 62A(2).
[169]The draft orders are described more fully at [317] below.
The judge noted that the expression ‘may’ in s 62A(2) might leave an argument open for Yarra to say that for various reasons the Court ought not make any order for compensation. Doubtless the judge was anticipating the parties’ different views on the scope of any discretion under s 62A(2). The MFESB submitted that its draft order took that into account:
MFESB’s Counsel: So you’ll see we picked it up in the second line of our draft Your Honour, compensate the plaintiff for any costs incurred by it which are — and then the language of the section’s picked up under the two relevant notices.
His Honour: I’ll hear from [Yarra’s senior counsel] about it, but it struck me what he might say that even if they’re reasonably incurred in good faith - - -
Counsel: Reasonable and in good faith - - -
His Honour: - - - the section only sees [sic] that the court may order those costs that are reasonable and incurred in good faith.
Counsel: Except that Your Honour we have had a preliminary trial - - -
His Honour: Yes.
Counsel:- - - on the question of liability in accordance with [Emerton J’s] order of May last year Your Honour has made findings, and we say this version directly refers both to the wording of s 62A(2) of the Environmental [sic] Protection Act, but it also is consistent with Your Honour’s finding at paragraph 298.
His Honour: All right. Well I’ll hear from [Yarra’s senior counsel] about that distinction…
Yarra’s senior counsel then said:
we’re not fussed about either one really. I agree with my learned friends that even on their own order that wouldn’t prevent the cost [sic] ultimately exercising a discretion if it thought it appropriate to order nothing, or to order less.
Thus at that point Yarra seemed to move away from its pleaded case and early submissions. It seemed to be acquiescing, even consenting to a different position.
The judge then said he was inclined to use the MFESB’s draft declaration. His Honour confirmed with Yarra’s senior counsel that there was no objection to using the MFESB’s proposed declaration:
His Honour: I think [the MFESB’s proposed declaration is] good only because it adds a bit of specificity to - - -
Yarra’s Counsel: It captures the wording of the provision.
His Honour: Yes, and identifies the notices that they rely upon - - -
Counsel: Yes.
His Honour: And ultimately if the matter goes to an assessment of compensation they’ll give particulars of the losses, and they’ll particularise why they’re reasonable, but more importantly how they relate to the notices.
Counsel: Yes. Well as I say we’re not fussed about that.
His Honour: All right. Anything else, … ?
Counsel: No, Your Honour.
Yarra’s submissions
The question for this Court is whether there was error in making the declaration. It is not necessary for this Court to consider whether there is a general or residual discretion under s 62A(2) of the Act or how such a discretion should be exercised if it exists.
According to Yarra, it made submissions before the judge as to why he ought exercise the Court’s discretion not to make an order for compensation. It also submitted in its closing submissions that the discretion ‘is a liability question, and not an issue of quantum’. Yarra submitted to the judge that the Court should exercise its discretion by not ordering Yarra to compensate the MFESB. Yarra submitted to this Court that it did not concede at trial that discretion should be dealt with later. In the circumstances, the judge was bound to consider whether, in all the circumstances of the case, he should not make an order for compensation against Yarra. It submitted the approach that his Honour took, however, was to refuse to consider that question prior to his determination to make a declaration as to liability. Thus, Yarra submitted that approach was in error.
The factors relied on by Yarra went to the exercise of the discretion and were factors relevant to the making of the declaration. These factors included the terms of the contract of sale; the supervision of demolition work by a contractor; the lack of particularity of the pollution claim; the absence of knowledge of Richmond; and the consequences of the representations of the MFESB’s planning consultants.[170]
[170]Yarra referred to the first defendant’s further amended defence, 20 November 2014, [86F].
In light of these unresolved factors Yarra submitted the judge was bound to consider in all the circumstances not making an order for compensation. Given that his Honour postponed the consideration of those factors, Yarra submitted he should not have made the declaration. Having made the declaration, which is final in terms of liability, it is now not possible for the judge to exercise the s 62A(2) discretion in Yarra’s favour.
Yarra submitted liability has been determined without the MFESB first succeeding in having the discretion exercised in its favour. Yarra submitted that the onus was on the MFESB to persuade the judge that the s 62A(2) discretion should be exercised in its favour. In other words, it had to satisfy the judge that the justice of the case required the discretion to be exercised in its favour. It would have been all the more difficult for the MFESB to do so in light of several of the judge’s findings in the judgment on the preliminary question, including findings as to Yarra’s knowledge and awareness of the pollution. These findings included:
(jj) that Yarra did not have any information that was not available to the MFESB;
(kk) that Richmond had not breached any law or obligation at the time it caused the pollution;
(ll) Richmond’s knowledge of the leaking tar;
(mm) that Richmond did not owe a duty of care to future owners and occupiers to ensure the safe and long-term containment of tar, or to disclose that the Burnley site had previously been used for general municipal purposes; and
(nn) that the principle of caveat emptor applied.
In relation to discretion, Yarra also relied on the MFESB being aware of some contamination at the time of purchasing the Burnley site and having assumed the risk of unknown pollution. Further, Yarra never sold the Burnley site; it was compulsorily acquired by the State. Yarra relied on certain terms in the contract of sale between the State of Victoria and the MFESB. Yarra noted that the MFESB had not put forward the reasons why it said the discretion should be exercised in its favour.
Yarra’s position was that the ultimate trial Court may, based on those factors, decline to order compensation under s 62A(2). The discretion was therefore not confined, as the MFESB submitted, to the assessment of whether the MFESB’s costs were reasonable and incurred in good faith in complying with the clean up notices. That assessment occurs at the quantum stage, after liability has been determined.
Yarra seeks that the declaration in respect of liability be set aside and the matter be remitted to the judge so that he may exercise the discretion conferred by s 62A(2) before making any order against it.
The MFESB’s submissions
The MFESB submitted that these proposed grounds of appeal are misconceived because the judge deferred the discretion issue to any subsequent trial on quantum. The declaration made on 5 February 2016 was preliminary in nature and the question of whether, and if so, how much, compensation Yarra should be ordered to pay has been deferred. The Court has not made any order requiring Yarra to pay any compensation, as contemplated by s 62A(2) of the Act.
The MFESB submitted that Yarra conceded at trial that the discretion issue is properly a matter for later determination. Further, the judge deliberately deferred the discretion argument to the quantum stage, and when judgment was handed down the judge said his inclination was not to make an order with respect to liability despite the MFESB asking for such an order. The MFESB relied on the transcript of 24 December 2015, when judgment was handed down.[171]
[171]See [299]–[301] above.
As mentioned, on 5 February 2016 the parties returned before the judge having agreed that an order should be made. The judge had before him two draft orders. The MFESB submitted that Yarra proposed an order which provided ‘The first defendant is liable to pay to the plaintiff such compensation as is payable pursuant to section 62A(2) of the Environment Protection Act 1970’. By contrast, the MFESB proposed a declaration in terms that:
There be a declaration that the first defendant is liable pursuant to section 62A of the Environment Protection Act 1970 to compensate the plaintiff for any costs incurred by it which are reasonable and which it has incurred in good faith.
The MFESB said that in formulating its proposed declaration it was guided by the order made in Spotless. It then conceded that this case differed from Spotless in that it was not argued in the latter case that there was a general discretion under s 62A(2).
The declaration ultimately made by the judge followed the MFESB’s draft declaration. The MFESB submitted before this Court that Yarra agreed to the declaration being made in those terms. Consequently, there is no issue of fairness in the making of the declaration because the declaration was plainly intended to be preliminary in nature and both parties’ submissions led the judge to it, or they agreed that he should make it. Further, Yarra’s position is preserved because it may argue the discretion point at the quantum stage.
When asked whether the declaration allows the judge subsequently, when hearing the discretion argument, to find no entitlement to compensation, the MFESB submitted that ‘may’ in s 62A(2) does not contemplate that sort of discretion. The Act does not indicate a discretion at large. Rather, the ‘may’ relates to assessing whether the clean up notice has been issued, if there are any reasonable costs incurred in good faith, and whether the costs are attributable to the notice.
The MFESB submitted that if this Court is of the view that the judge ought not have made the declaration, then the discretion issue should go back to the judge for determination at the quantum stage.
Conclusion on declaration
In our view, all that was needed to enable Yarra to appeal the judge’s findings on liability was a declaration consistent with the conclusion of the Reasons,[172] to the effect that Yarra was a person against whom an order could be made under s 62A(2). A declaration in these terms would have preserved the parties’ respective positions on the scope of any discretion under s 62A(2). However, the parties’ submissions led his Honour to make the declaration.
[172]Reasons [298].
From the extracts of the transcript of 5 February 2016 set out above,[173] it seems Yarra either acquiesced or consented to the declaration in the form it was made and in the end his Honour made the declaration that Yarra now challenges.
[173]See [302–[306] above.
Yarra did not make any submissions as to why it should now be allowed to challenge the wording of a declaration to which it at least acquiesced, and arguably consented. Generally an appellate court might be hesitant to disturb a declaration where the parties acquiesced, even agreed. However, we have held that one basis on which the declaration was made, namely that relating to s 62A(1)(c), should not be upheld. For this reason alone the appropriateness of the order is at large.
Moreover, the making of the declaration here was premature and inappropriate. A declaration should not have been made until the outstanding issues identified above had been determined.[174] In our view, the declaration should be set aside. At most his Honour should have published his judgment which of itself answered the preliminary question. We note the parties consented to the determination of the preliminary question and agreed to the formulation of the question as submitted. It is the form of the question referred for preliminary determination that largely creates the difficulty that arose in the making of the declaration.
[174]See [309] above.
Accordingly, we will grant leave to appeal with respect to grounds 9 and 10 and allow the appeal on that basis, and with respect to grounds 5-8, and set aside the declaration. We otherwise consider the matter should be remitted to the judge for determination of the remaining issues and, if appropriate, for the making of any consequential declaration or order informed by these reasons.
Conclusion on the application for leave to appeal and the appeal
In summary, we grant leave to appeal with respect to all grounds. The appellant fails on the liability grounds, namely grounds 1–3, and the retrospectivity ground, ground 4. We allow the appeal in part with respect to grounds 5–8, 9 and 10. As mentioned, Yarra accepted that proposed grounds 11–13 were umbrella grounds which raised nothing further than the matters raised by grounds 1–10. It is not necessary, therefore, to consider proposed grounds 11–13.
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SCHEDULE
YARRA CITY COUNCIL
Applicant
and
METROPOLITAN FIRE AND EMERGENCY SERVICES BOARD
First Respondent
CONNOLLY ENVIRONMENTAL (AUST) PTY LTD (ACN 085 671 236)
Second Respondent
THE STATE OF VICTORIA
Third Respondent
GHD PTY LTD (ACN 008 488 373)
Fourth Respondent
8
6
0