An Auckland Council organisation will have to fork out $10 million to clean up a heavily contaminated area of Wynyard Quarter after a judge rejected claims Mobil Oil New Zealand were responsible for the bill.
A newly released decision by Justice Sarah Katz ruled in favour of the oil company, which was taken to court by the Auckland Waterfront Development Agency (AWDA) - formerly the Auckland Harbour Board - over two sites leased by Mobil at the western end of the Port of Auckland in the 1950s and 1960.
When Mobil's lease for the two tank farm sites ended in 2011, it was found the land they were situated on had been heavily contaminated.
While it was established the company were not solely responsible for contamination to the land - other oil companies as previous tenants and neighbouring tenants all contributed too - the AWDA claimed Mobil had to deliver the land in a completely
"uncontaminated condition'' at the end of its lease term.
Justice Katz's decision on the High Court matter, which examined tenancy agreements drawn up in 1985 between Mobil and AWDA and prior negotiations, found this was not the case.
At the centre of the matter was a disagreement over a "clean and tidy clause'' in the agreements.
AWDA argued the clause held Mobil responsible for completely decontaminating the land - including rectifying any damage caused to the site before their tenancy.
Mobil disputed this, highlighting in its arguments that no specific mention of subsurface contamination was made in the agreements - with the clause referring to the requirement of the appearance of the land being "clean and good'' and in "good order''.
Justice Katz agreed with this, and noted in her decision the main focus of the negotiations prior to the tenancy agreements being signed was the "ownership of buildings and improvements on the site and the extent to which Mobil would be entitled or obliged to remove these at lease end''.
"The phrase 'clean and tidy' is used elsewhere in the 1985 tenancy agreements in the context of restoring the condition of the surface site, following removal of buildings or improvements.''
The agreement also instructed that the clean and tidy clause apply before, during and after the termination of the tenancy agreements, Justice Katz said.
The fact the tank farms were already operational and the land heavily contaminated at the time the agreements were signed also added to Mobil's case, she found.
Had Justice Katz ruled in favour of AWDA, Mobil would have been required to pay $10 million in damages. Instead, the company have been awarded costs to be paid by AWDA in the case.
An extensive clean up and decontamination of the two sites previously tenanted by Mobil is required as part of the Wynward Quarter development.
A spokesman for Waterfront Auckland said the council body was reviewing the judgment and was yet to make a decision on whether to appeal.