Tank farm $10 million clean up fight goes to Supreme Court

Auckland's waterfront 'tank farm' shown in 2010. Photo / Richard Robinson

The $10 million fight between oil giant Mobil and a council-controlled organisation over who pays for the clean-up of a heavily contaminated area of Auckland's Wynyard Quarter will go all the way to the Supreme Court.

Mobil Oil leased two properties in Auckland's waterfront 'tank farm' for more than 50 years.

When Mobil's lease for the two sites ended in 2011, it was found the land they were on had been heavily contaminated.

While it was established the company was not solely responsible for contamination to the land - other oil companies as previous tenants and neighbouring tenants all contributed too - Waterfront Auckland claimed Mobil had to deliver the land in a completely "uncontaminated condition" at the end of its lease term.

It took the oil company to the High Court at Auckland, where it was decided that if Mobil was liable, it would pay the council-controlled organisation $10 million in damages.

But that court in February last year decided that Mobil was not contractually obliged to decontaminate the subsurface of the land.

Waterfront Auckland - now called Panuku Development Auckland - then challenged the decision and the Court of Appeal reversed it, awarding a $10 million judgment to the council-controlled organisation.

The Supreme Court, in a just released decision, has now agreed to take the case.

The argument will focus on whether "clean and tidy" clauses in the leases require Mobil to fix any hydrocarbon contamination of the leased land on termination of these agreements and, if no, is the oil giant liable for fixing any contamination on the basis of an implied term in the lease.

The parties will also argue about, if there was a requirement to clean up, whether that obligation relates only to hydrocarbon contamination caused since 1985 or does it extend to contamination caused to the land since 1925.