Written by Environmental Manager editor Deborah Nesbitt
Yarra City Council confirmed today (February 2) it will appeal against an important Vic Supreme Court ruling the ‘polluter pays’ principle under the state Environment Protection (EP) Act can be applied retrospectively.
Vic Supreme Court Justice Peter Riordan on December 24 ruled the council (formerly Richmond Council) could be ordered to compensate Vic’s Metropolitan Fire and Emergency Services Board (MFB) for the costs of remediating contaminated land the board bought in 2004.
Although the council was unaware of the contamination when the site was sold, and it had occurred before the state EP Act was passed, under s1F(2) of the Act liability for its remediation rested with the person that caused the pollution, Justice Riordan found. However, he threw out MFB claims the council had breached duties of care under state planning regulations.
The council’s spokesperson explained to EM: “The court has not yet made formal orders and so the time has not commenced for the appeal process. Yarra Council has decided that, at the appropriate time, it will appeal this decision. It is unclear when the appeal process will commence.”
A directions hearing will be held on Friday.
‘Harshness’ of clean-up notices ‘ameliorated by compensation entitlement’
Central to the case was a dispute over the facts around MFB’s discovery of a bluestone pit previously used as a coal tar storage tank on the site. It meant the court had to examine documents on the site’s history from as far back as 1890.
The court heard MFB bought the site in 2004 for $7.73m and discovered in 2005 it was contaminated. MFB alleged the council had breached its duties of care under the state Planning and Environment (P&E) Act.
It argued the council was liable to compensate MFB for cleaning up the site under the EP Act, even though the pollution occurred before s62A(2) of the Act was introduced. The section inserted in 1984 allowed the Vic Environment Protection Authority to issue clean up notices.
But the council submitted s62A(2) imposed a civil liability on the recipient of the clean up notice, not the person that caused the pollution. Justice Riordan disagreed, saying “this distinction is not valid. The purpose of the Act was plainly the protection of the environment”.
Referring to the polluter pays principle expressed in s1F(2) of the Act, he said “the liability imposed on the person who caused the pollution to bear the cost of remediation was preconditioned on the service of a clean up notice and the incurring of costs by the recipient of the notice”.
The council had argued “it was acting lawfully at the time it caused the pollution; and therefore it should not be required to compensate another person”.
But Justice Riordan said the “harshness” of the provision requiring compliance with a clean up notice was “ameliorated by providing the occupier, as recipient of the notice, with an entitlement to obtain compensation for the costs incurred … from the person who caused the pollution”. That was “entirely consistent with the polluter pays principle in s1F(2)”.
No ‘non-pollution’ or disclosure duties
MFB (above) had also contended the council owed MFB a “planning duty” to protect it from suffering damage as a result of the pollution because it was responsible for administrating and enforcing the Yarra planning scheme and had development permit powers under the P&E Act.
P&E Act s60(1)(e) required the council to consider “any significant effects” a land use or development may have on the environment or “the environment may have on the use or development”, MFB claimed.
P&E Act ‘not to protect developers’
Under P&E Act s60(1A)(f)(g) and (j) the council could also consider the state environment protection policy (prevention and management of contamination of land) and other relevant policies and plans, MFB (above) argued.
The council argued MFB’s claim “was for pure economic loss and ‘a stronger case is required to establish a duty of care'”. MFB was aware the site was contaminated because public 1915-16 and 1916-17 council reports obtained by the board recorded a tar distilling plant on the site.
Justice Riordan agreed with the council the P&E Act was “focused on the interests and amenity of the community at large”. It was “not expressed to be directed to the protection of applicants for planning and developments permits”.
He rejected MFB’s claim the council had a “non-pollution duty” because there was no evidence council officers “would have, or could have known that the coal tar was leaking through the bluestone pit”.
“It is even more difficult, without evidence, to infer that, at any time up to 1960, it was reasonably foreseeable that future environmental policies and legislation would require remediation of the Burnley site.” The council was unaware of the coal tar pit, he said.
MFB’s contention the council owed a duty to disclose the contamination was also rejected. Justice Riordan said the council “did not have any information that was not available to the plaintiff” and had no control over MFB’s investigations to assess the site’s risks.
He found MFB was aware the contamination existed “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”.
In doing so, it “deliberately assumed the risk of later discovering further contamination on the site”.
Justice Riordan ruled under EP Act s62A(1)(b) and (c) of the EP Act, pursuant to s62A(2), the court may order the council to compensate MFB for its remediation costs. But MFB “has not established any other causes of actions against the defendant”.
(Metropolitan Fire and Emergency Services Board v Yarra City Council & Ors , VSC 773, 24/12/2015)
(This story first ran in Environmental Manager Issue 1034, 2 February 2016)
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