Mobil Oil New Zealand has launched a Supreme Court challenge to a $10 million bill for cleaning up the heavily contaminated part of Auckland's downtown Wynyard Quarter where oil has been stored for decades.

The country's second-biggest petrol station chain today kicked off an application in the Supreme Court to overturn a decision finding Mobil liable to decontaminate the land to a level that would make it suitable for residential use. Counsel Michael Ring QC told the court that the contract's "clean and tidy" clause related to buildings, not land, and was simply to leave the site suitable for industrial use.

"We say the site was reasonable and suitable for that type of tenant," Ring said. "The $10 million was on the basis Mobil is obligated to remediate to a residential standard. Our position is that it is at an industrial standard so it's nothing."

In a majority decision last year, the Court of Appeal found Mobil was liable to remediate the land, which was polluted by various oil companies that had operated on the site since 1925.


The Supreme Court agreed to hear Mobil's case on whether the "clean and tidy" clauses meant the oil company was obliged to remediate the land, and if not whether there was an implied breach of its lease not to commit waste. If it's found liable, the Supreme Court will have to decide how far back Mobil's obligation stretches.

Ring said an agreement to hand back an adjacent lot to the Auckland harbour board, which left restoration up to the city entity, meant there can't have been an obligation for Mobil to remediate the other sites.

"It's inconceivable that the parties would have left Lot 30 if they thought there was going to be a contamination obligation that had to be fulfilled by Mobil," he said.

If an obligation to remediate the land was found, Ring said the liability didn't necessarily stretch to Mobil New Zealand, as the leases had been held by Australian companies that became part of Mobil Australia.

The one-day hearing before Chief Justice Sian Elias and Justices Terence Arnold, William Young, Susan Glazebrook and Mark O'Regan is continuing.