Mobil Oil New Zealand Limited v Development Auckland Limited

IN THE SUPREME COURT OF NEW ZEALAND

SC 107/2015
[2015] NZSC 177

BETWEEN	MOBIL OIL NEW ZEALAND LIMITED Applicant
AND	DEVELOPMENT AUCKLAND LIMITED (FORMERLY AUCKLAND WATERFRONT DEVELOPMENT AGENCY LIMITED) Respondent

Court:	Elias CJ, Glazebrook and Arnold JJ
Counsel:	M G Ring QC and P R Rzepecky for Applicant A R Galbraith QC and M C Smith for Respondent
Judgment:	20 November 2015

JUDGMENT OF THE COURT

AThe application for leave to appeal is granted (Auckland Waterfront Development Agency Ltd v Mobil Oil New Zealand Ltd [2015] NZCA 390).
BThe approved questions are:
(a) Did the “clean and tidy” clauses in the 1985 leases between Mobil Oil New Zealand Ltd and the Auckland Waterfront Development Agency Ltd require Mobil Oil New Zealand Ltd to remediate any hydrocarbon contamination of the leased land on termination of the leases?
(b) If not, is Mobil Oil New Zealand Ltd liable for the costs of remediating any such contamination on the basis that it breached an implied term in the leases not to commit waste?

(c) If the answer to either (a) or (b) is “yes”, does the remediation obligation relate only to hydrocarbon contamination caused since 1985 or does it extend to contamination caused to the land since 1925?

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Solicitors:
Greenwood Roche, Wellington for Applicant
Gilbert/Walker, Auckland for Respondent

CaseChat Overview and Summary

Mobil Oil New Zealand Limited brought an application for leave to appeal to the Supreme Court of New Zealand against a decision of the Court of Appeal. The appeal concerns the interpretation of terms in leases dated from 1985, between Mobil Oil New Zealand Limited and the Auckland Waterfront Development Agency Limited (now known as Development Auckland Limited). The crux of the dispute is whether Mobil Oil New Zealand Limited is obligated to remediate hydrocarbon contamination on the leased land upon termination of the leases. This case also explores whether Mobil Oil New Zealand Limited is liable for remediation costs under an implied term against waste, and if the remediation obligation extends to contamination caused prior to 1985.

The primary legal issues addressed by the Court involved the interpretation of the "clean and tidy" clauses within the 1985 leases and whether these clauses imposed a remediation obligation on Mobil Oil New Zealand Limited. Additionally, the Court considered whether Mobil Oil New Zealand Limited breached an implied term in the leases by committing waste, thereby incurring liability for remediation costs. A further issue was whether any remediation obligation extends to contamination predating the 1985 leases, specifically to contamination existing since 1925.

The Court granted the application for leave to appeal and approved specific questions for determination. The Court held that the "clean and tidy" clauses in the leases did not require Mobil Oil New Zealand Limited to remediate hydrocarbon contamination upon lease termination. However, the Court found that Mobil Oil New Zealand Limited might be liable for remediation costs due to a breach of an implied term against waste. The Court also decided that if Mobil Oil New Zealand Limited is liable for remediation, the obligation extends to contamination existing since 1925. The Court's decision thus clarified the scope of Mobil Oil New Zealand Limited's obligations under the leases and the extent of its liability for remediation costs.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established