1. In application P375/2010, pursuant to section 149A of the Planning and Environment Act 1987, the Tribunal declares that:
   • (a) The proposal to use the subject land for the purpose of contaminated soil remediation is not a "petrochemical industry" as defined in clause 2.0 of schedule 3 of the Special Use Zone and is, therefore, not a section 1 use.
   • (b) The proposal to use the subject land for the purpose of contaminated soil remediation is a section 2, permit required use.
2. In application P2153/2010, pursuant to section 149B of the Planning and Environment Act 1987, the Tribunal declares that:
   • (a) The proposed use of the subject land for the purpose of contaminated soil remediation would not breach the provision of the restrictive covenant B149259 burdening the subject land, which provides that the land must not be used "except primarily for the manufacture of products derived from petroleum and other chemical products".

Mr Jeremy Gobbo QC and Mr David Deller of counsel, instructed by Norton Rose.

• Jonathan Medd, environmental scientist and environmental auditor, Golder Associates Pty Ltd

Application P375/2010 - section 149A Planning and Environment Act 1987

Application P2153/2010 - section 149B Planning and Environment Act 1987

1. The subject land is part of the Altona Petrochemical Complex. The applicant, Innova Soil Technology Ltd (Innova), proposes to use three hectares of land owned and used by Dow Chemical Australia Limited as a centre for contaminated soil remediation.
2. Currently soils containing petrochemical industry residues and other hydrocarbons are largely disposed of to landfill. The proposed use will remediate soil containing petrochemical industry residues and other hydrocarbons into clean soil products suitable for reuse, significantly reducing the volume of soil which would otherwise be disposed of to landfill. Potentially up to 100,000 tonnes per annum may be processed under Innova's proposal.
3. Innova is seeking declarations to facilitate the establishment of this soil remediation centre. The issues to be determined can be summarised as follows:
   1. Does the proposed use fall within the meaning of "petrochemical industry" in clause 2.0 of schedule 3 to the Special Use Zone?
   2. Will the proposed use breach a restrictive covenant burdening the subject land?
4. The first issue about whether the use can be described as a petrochemical industry arises from the provisions of the Special Use Zone. SUZ3 applies to the Altona Petrochemical Complex. Schedule 3 to the Special Use Zone (Petrochemical Complex Area) sets out the controls applicable to this land. The purpose of SUZ3 includes:

To provide for the operation and expansion of the petrochemical industry in a manner that does not affect the safety and amenity of nearby areas.

1. In the table of uses for SUZ3[1], industry is a section 1 - permit not required use subject to the following condition:

Must be a petrochemical industry in accordance with Clause 2.0 of the schedule.

1. Clause 2.0 of the schedule to SUZ3 provides as follows:

For the purpose of this schedule, a petrochemical industry is an industry that includes processes for the use, manufacture and storage of:

• chemicals or products wholly or partially derived from petroleum based feed stocks; or
• other products associated with an industry which existed at the approval date.

The use of the land for a petrochemical industry is exempt from the standard and reduced parking requirements of Clause 52.06 if parking is provided on the site to the satisfaction of the responsible authority.

1. It is common ground between the parties, and we agree, that if the use of the land for a soil remediation centre can be described as a petrochemical industry, no planning permit will be required for use of the land. A permit will be required for buildings and works but it would be exempt from third party notice and review rights.[2]
2. If the proposed use is not a petrochemical industry, it would fall within section 2 of the table of uses and a permit will be required[3]. If a permit is required for the proposed use as a section 2 use, it would not be exempt from third party notice and review rights.
3. The second issue relating to the restrictive covenant arises because the land is burdened by the following restrictive covenant:[4]

[The covenantor] will not at any time hereafter use or permit to be used the land hereby transferred except primarily for the manufacture of products derived from petroleum products and other chemical products.

1. The Tribunal comprises Deputy President Helen Gibson, who is a legally qualified and presidential member of the Tribunal, and Member Ian Potts, who is a member with science/environmental expertise. On 15 April 2010, the Tribunal made an order at the request of the parties that the Tribunal hearing the merits of the proceeding include a legal member and a member with science/environmental expertise. Although a declaration under section 149A of the Planning and Environment Act 1987 can only be made by a legal member and a declaration under section 149B of the Act can only be made by a presidential member, the technical nature of the subject matter of the proceeding was considered to justify a non-legal member sitting on the Tribunal in the event that any findings of fact regarding technical evidence are required to be made. This has been the role of Member Potts. All findings involving questions of law and the declarations themselves have been made by Deputy President Gibson, notwithstanding the language used in these reasons.

What category of industry does the use fall within?

1. There is no doubt in our view that this soil remediation centre falls within the definition of industry in the planning scheme. Industry is defined as follows:

1. any process of manufacture;
2. dismantling or breaking up of any article;

1. winning clay, gravel, rock, sand, soil, stone, or other materials (other than Mineral, stone, or soil extraction);
2. laundering, repairing, servicing or washing any article, machinery, or vehicle, other than on-site work on a building, works, or land; or
3. any process of testing or analysis.

If on the same land as any of these operations, it also includes:

1. storing goods used in the operation or resulting from it;
2. providing amenities for people engaged in the operation;

1. selling by wholesale, goods resulting from the operation; and

1. accounting or administration in connection with the operation.

If Materials recycling, goods resulting from the operation may be sold by retail.

1. In analysing the processes involved in this use, they are essentially directed to removing contaminants from the soil and then destroying those contaminants. We accept that the contaminated soil may contain one or more of the following contaminants:
   • Olefins and petrochemical aromatics;
   • Chemicals or products wholly or partially derived from petroleum based feed stocks.
2. Methane will be used as the energy source for the various heat processes. The methane used will be in the form of natural gas reticulated to the site.
3. The contaminated soil that will be remediated on the site will come from:
   • The Dow property;
   • Other petrochemical industry sites in the Altona Petrochemical Complex; and
   • Other locations from around Melbourne.
4. We accept the evidence of Dr Nadebaum that petrochemical industry operations can involve loss of product, accidents and major spillages. Historically, such incidents have resulted in soil and/or groundwater contamination and the industry is involved in the treatment and management of sites that have these problems. We accept that this treatment and management of contaminated soil and groundwater can take place while a site is in operation or after operation has ceased and forms part of the programme of environmental management required in the petrochemical industry.
5. Equally, we accept the submission of Innova that if the treatment and management of contaminated soil and groundwater takes place on site, it would be ancillary to the primary use of the site for petrochemical industry. However, Innova has made it clear that whilst the centre will remediate contaminated soil from the Dow site, it is not relying on any argument that what is proposed is ancillary to use of the Dow land in general. Because contaminated soil from other sites will be treated, it is an industry in its own right.
6. Innova says it is a petrochemical industry within the meaning set out in clause 2.0 of SUZ3, whereas the council says it is not a petrochemical industry but an industry falling within the general category of industry, which involves operations treating waste materials.
7. Having regard to the categories of operations that are listed in the definition of industry in the planning scheme, we consider that the operations or processes that will be used in the soil remediation fall more naturally within the category of "treating waste materials", rather than the category of "any process of manufacture".
8. This conclusion is based on the evidence of Dr Nadebaum that petrochemical industry operations can involve loss of product, accidents and major spillages and that when this occurs the treatment and management of contaminated soil must be undertaken. We regard the contaminants and the soil as waste materials that must be treated and disposed of.
9. Nevertheless, we do not consider that the soil remediation centre can be said to be part of the petrochemical industry simply because some of the soil (or even a large proportion of the soil) will come from petrochemical industry operations. Contaminated soil is likely to come from a variety of sites, including former petrol filling stations, gas works and other industrial operations. It is clear to us therefore that while the soil remediation centre will provide a service to petrochemical industries, which have contaminated soil they need to have treated or disposed of, it will also provide a service to other industries or land owners, which also have contaminated soil they wish to have treated or disposed of. In other words, the soil remediation undertaken on the site will not be exclusive to the petrochemical industry. In this sense, we do not consider that it can be said to be part of the petrochemical industry.
10. Mr Medd's evidence was that the primary purpose of the centre is as a waste treatment facility, which receives soils contaminated with organic compounds from the Dow site or off site and treats them using a thermal process to attain a reusable soil product. Thus, in his view, the primary purpose is to manufacture a reusable soil product from contaminated soils rather than from "petroleum and other chemical products". Although the contaminants within the soil may be of a petrochemical nature, the contaminants are not the feedstock required to manufacture the reusable soil products. They are an element of the primary feedstock (ie contaminated soils) that need to be treated in order to achieve the desired non-petrochemical product.
11. In response to questions from the Tribunal, Mr Medd indicated that indicative charges for accepting contaminated soil for treatment was in the order of $300.00 - $1,000.00 per tonne. The likely value of the reusable soil at the end of the process was in the order of $6.00 - $20.00 per tonne.
12. We agree with Mr Medd that the primary feedstock is soil and the primary purpose is to treat this soil. However, given the economics we do not agree with Mr Medd's analysis that the real and substantial purpose of the proposed use of the land is to produce a reusable soil product. Rather, we consider that the primary purpose of the proposed use is to treat contaminated soil so that it is no longer contaminated. Processing the soil to achieve this outcome is what people will pay for. Innova will derive income primarily from what it charges to accept the contaminated soil for remediation. It will be able to sell the end product as a means of disposing of it, as distinct from having to pay to dispose of it, but we do not consider that the manufacture of a product for end sale is the primary purpose of the exercise.

1. If we do not consider that the purpose of the use is to manufacture a reusable soil product, does the use involve any process of manufacture?
2. The definition of industry includes land used for any process of manufacture. The definition of petrochemical industry also includes processes for the manufacture of certain materials or products. In characterising the use of this land, it is therefore relevant to determine whether the soil remediation centre comes within the category of industry that involves any process of manufacture.
3. The definition of manufacture is:

1. the making of goods or wares by manual labour or by machinery, especially on a large scale. 2. the making of anything. 3. to make or produce by hand or machinery, especially on a large scale. 4. to make in any manner. 5. to work up (material) into form for use. 6. to invent fictitiously; concoct; devise.[5]

1. to bring into existence by shaping material, combining parts, etc

1. The essence of manufacture is to make something out of component elements. This contrasts to other types of industry included in the definition, which include the dismantling or breaking up of any article; treating waste materials etc.
2. We do not consider that the processes involved in the use of the land for soil remediation involves any process of manufacture.
3. From the evidence we have been provided about the process it is self evident that it will not include the manufacture of:
   • Olefins or petrochemical aromatics;
   • methane;
   • chemicals or products wholly or partially derived from petroleum based feed stocks; or
   • other products associated with an industry which existed at the approval date.
4. As previously stated, we consider that the process to be undertaken can best be described as treating waste materials, more particularly as treating contaminated soil.

Does the use otherwise come within the definition of petrochemical industry?

1. Having determined that the real and substantial purpose of the use of the land is not for any process of manufacture but to treat waste materials, does the use otherwise come within the definition of petrochemical industry? The definition of petrochemical industry in clause 2.0 of SUZ3 is an inclusive definition that includes processes other than manufacture. Can it be said that the processes involve the use or storage of the chemical products listed in the definition in clause 2.0? If they can, should the term "processes for the use, manufacture and storage of" be read conjunctively or disjunctively?[6]
2. It was common ground between Mr Medd and Dr Nadebaum that some of the soils may be contaminated with petrochemicals or petrochemical residues. Thus it can be said that the soils to be remediated by Innova could contain "chemicals or products wholly or partially derived from petroleum based feed stocks" (the third dot point of clause 2.0). But in our view, just because contaminants within the soil may include such components, does not mean that the proposed processes can be said to use or store these components. The processes are designed to remove and destroy these contaminants, not use or store them. We disagree with the suggestion by Mr Gobbo that storage of contaminated soil prior to treatment would come within the meaning of storage of the particular chemicals or products. That is an artificial interpretation, which focuses on the contaminants, not the bulk of the material that is to be held on the site for treatment, which is the soil.
3. The same can be said for olefins or petrochemical aromatics, which are listed in the first dot point of clause 2.0.
4. There remains the second dot point to consider, which is methane. The processes will not manufacture or store methane, but will use methane as an energy source for heating. It was submitted by Innova that the substantial use of methane in the soil remediation process is sufficient to bring the process within the meaning of petrochemical industry in clause 2.0. It submitted that notwithstanding the use of the conjunction "and" between the words "use, manufacture and storage", the clause ought to be interpreted as though it meant "use, manufacture or storage". Thus it was submitted that the proposed use "is an industry that includes processes for the use of methane" and therefore the proposed use comes within the second dot point of clause 2.0.
5. We accept the council's submission that the word "use" in the first sentence of clause 2.0 must be given its ordinary meaning rather than the defined meaning of use appearing in section 3 of the Planning and Environment Act 1987. Use is defined variously as "the act of employing or using, or putting into service" and "an instance or way of employing or using something and "a way of being employed or used; purpose for which something is used".
6. The difficulty with accepting Innova's submission is that whilst the conjunction "and" is used in the first sentence, the conjunction "or" is used in the remainder of the paragraph to separate each of the dot points. The drafters of clause 2.0 have, therefore, deliberately chosen "and" in part of the paragraph and "or" in another part of the same paragraph. The council submitted that the only reasonable conclusion is that the drafters of the planning scheme intended to differentiate between the provisions.
7. The council pointed to the history of the planning controls for the Altona Petrochemical Complex. Originally, the land was in the Altona Special Industrial Zone under the Altona Planning Scheme. The table of uses for this zone[7] included as a permit not required - section 1 use, the following:

Industry in which processes are for the use, manufacture and storage of -

(a) olefins or petrochemical aromatics or, the separation of methane,

(b) chemicals or products wholly or partially derived from petroleum based feedstocks, or

(c) other products associated with an industry at the approval date. [Tribunal emphasis added]

The separation of methane from other hydrocarbons is a recognised technical process. This process was clearly intended to be counted as a petrochemical industry when the Altona Petrochemical Complex was first established and the controls initially devised. The detail has been lost in translation to the new format planning scheme. However, we do not consider that when read in the overall context of clause 2 and having regard to the history of the Petrochemical Complex and its planning controls, it was intended that the mere use of methane, which is no more than what is commonly called natural gas, should transform any sort of industry into a petrochemical industry enjoying the benefits accorded under the SUZ3. If we were to follow this line of logic, as submitted by Innova, any facility using methane gas could be considered to be a petrochemical industry. Clearly this is an absurd outcome and not what is intended under clause 2.

1. The council referred to recent amendments to the Hobsons Bay Planning Scheme, Amendments C38 and C40, which rezoned land from Special Use Zone 3 - Petrochemical Complex area to Special Use Zone 4 - Altona Special Industrial Area. The explanatory report for each amendment referred to the history of the Altona Petrochemical Complex and the distinction between the two zones.
2. The explanatory report for Amendment C40 said:

Because of its status, the land had been treated as part of the Petrochemical Complex and was within the Special Use Zone 3 - Petrochemical Complex Area. This is a Zone which has been tailored especially to provide for the operation and expansion of the petrochemical complex (as-of-right) to the exclusion of all alternative forms of industry.

1. In Amendment C38, the explanatory report states:

The purposes of the Special Use Zone (Schedule 4) compared with those of the Special Use Zone (Schedule 3) primarily allow for a wider range of industrial uses rather than uses specifically associated with the petrochemical industry. This will allow the land to be used for industrial purposes other than those associated directly with the petrochemical industry. The zoning of Special Use Zone (Schedule 4) provides for industry that will not prejudice the existing petrochemical complexes located on the southern side of Kororoit Creek Road.

1. These explanations support the view that petrochemical industry, which is allowed in SUZ3 without a permit, is confined in its meaning to a particular type of industry, compared to the more general type of industry allowed without a permit in SUZ4.
2. Innova submitted that the correct approach when interpreting a planning scheme is set out in Egan v Glenelg SC[8] as follows:

[36] ... I must interpret the planning scheme as it currently stands. This requires me to give effect to the plain meaning of the words used. If words are used that are capable of more than one meaning, I should give effect to a construction that would promote the purpose or object underlying the scheme (whether or not that purpose or object is expressly stated) rather than a construction that would not promote that purpose or object. If the words of the planning scheme are clear and they would support the apparent purpose of the scheme, it is not appropriate to manufacture an ambiguity or refer to documents outside the scheme in an attempt to construe a purpose or meaning that is at odds with evidence of the purpose found within the scheme unless it is very clear that there is an obvious mistake.

1. In the present case, it is Innova which is arguing that the words of clause 2.0 means something other than their plain meaning: ie. that the word "or" should be substituted for the word "and" in the first sentence. In these circumstances, we consider it is appropriate to look at the historical context of the subject legislation.[9] In Maroondah CC v Fletcher[10], Warren CJ and Osborn AJA said:

[27] As observed by Gleeson CJ in Singh v Commonwealth, context, including the historical context, assists with the ascertainment of meaning:

Meaning is always influenced, and sometimes controlled, by context. The context might include time, place, and any other circumstance that could rationally assist understanding of meaning.[11]

1. Dr Nadebaum included in his evidence a brief overview of current and previous operations within the Altona Petrochemical Complex. Having regard to this history and Dr Nadebaum's general overview of the petrochemical industry, together with statements in the explanatory reports of recent amendments to the planning scheme about the relationship and respective purposes of the Special Use Zone 3 and Special Use Zone 4, we have concluded that the words in the first paragraph of clause 2.0 must be read conjunctively, not disjunctively. In other words, a petrochemical industry is an industry that includes processes for the use and manufacture and storage of the chemicals and products identified in the four dot points. It is not sufficient to isolate one of these verbs and say that something is a petrochemical industry where methane may be used when there are not also elements of manufacture and storage of methane. As a result, we do not accept that just because methane may be used in the soil remediation process, this makes it a petrochemical industry.

1. We consider that a purposive approach should be applied to the definition of petrochemical industry, rather than a strained literal approach as advocated by Innova.
2. Dr Nadebaum said that petrochemical industry is a broad term generally used to encompass those processes associated with the manufacture and supply of products derived from petroleum. The industry may include primary processing operations that are carried out on the raw materials and feedstocks, and downstream processing operations which convert intermediate petroleum products into more complex products. We consider that it is this range of processing operations that are intended to be captured within the definition of petrochemical industry in clause 2.0 of SUZ3.
3. The wording of the restrictive covenant applying to the land supports this interpretation of petrochemical industry in terms that the covenants refers to the manufacture of products derived from petroleum products and other chemical products.
4. We consider it would make nonsense of the definition and the operation of the scheme provisions in SUZ3 for the soil remediation centre to be regarded as a petrochemical industry within the meaning of the definition simply because the soil might contain one of the listed materials as a contaminant or simply because methane gas might be used as an energy source, including to incinerate the contaminants extracted from the soil. Such an interpretation would allow a wide range of industrial uses to be located within the SUZ3 without the need for a permit, whereas we consider that this concession is intended to be confined to a limited type of industry, namely industry that is a petrochemical industry. A key component of the petrochemical industry is the manufacture and use of products derived from petroleum. Soil remediation cannot be so categorised. It is more accurately categorised as treating waste materials.
5. This does not mean that a soil remediation centre, which may serve the petrochemical industry, may not be appropriately located in the SUZ3. That is why industry that does not meet the condition in section 1 of being a petrochemical industry in accordance with clause 2.0 of schedule 3 to the Special Use Zone is a section 2 use. However, in order for such industry to establish in the SUZ3 a permit is required.
6. We therefore find that the proposed use of the subject land for a contaminated soil remediation centre is an industry, but it is not a petrochemical industry within the meaning of clause 2.0 of schedule 3 of the Special Use Zone.

1. The restrictive covenant that applies to the Dow property, of which the subject site forms part, is in the following terms:

[The covenantor] will not at any time hereafter use or permit to be used the land hereby transferred except primarily for the manufacture of products derived from petroleum products and other chemical products.

1. We find that the restrictive covenant is directed to the whole of the land burdened by the covenant.
2. When created, the land burdened by the covenant was an area of land of approximately 205 acres to the west of Maidstone Street, bounded to the north by Kororoit Creek Road and to the south by the railway. That land has been subsequently subdivided. The land owned by Dow has an approximate area of 76 acres (approximately 30.7 hectares). The subject site, which is part of the Dow land, has an area of approximately 3 hectares.
3. The nature of covenants is such that the burden continues to attach to all the land originally burdened notwithstanding any subdivision.
4. Therefore, we find that reference to "the land hereby transferred" in the covenant refers to the whole of the land burdened by the covenant. This means that it is the whole of the burdened land that must be used primarily for the manufacture of products derived from petroleum and other products.
5. We find as a question of fact that most of the land burdened by the covenant is used for this purpose.[12]
6. We find that the use of the subject site, which has an area of approximately 3 hectares, would not mean that the land burdened by the covenant was no longer used primarily for the manufacture of products derived from petroleum and other chemical products.
7. We were told that the covenant was created at the time the Altona Petrochemical Complex was first established in early 1961[13] and was intended to facilitate establishment of the petrochemical complex. We consider it would be unduly restrictive to interpret the covenant as requiring that every use of every part of the land must be for the manufacture of products derived from petroleum and other chemical products. That is not what the covenant says. The use of the word "primarily" allows some other uses so long as they do not eclipse the primary use of the land for the manufacture of products derived from petroleum and other chemical products.
8. We therefore conclude that the proposed use of the land is not contrary to the restrictive covenant.

[1] Clause 1.0 of schedule 3 to the Special Use Zone, Hobsons Bay Planning Scheme.

[2] Clause 4.0 Schedule 3 Special Use Zone Hobsons Bay Planning Scheme

[3] Clause 31.01 of the Hobsons Bay Planning Scheme provides as follows:

Section 1 uses

A use in Section 1 does not require a permit. Any condition opposite the use must be met. If the condition is not met, the use is in Section 2 and requires a permit unless the use is specifically included in Section 3 as a use that does not meet the Section 1 condition..

Section 3 of the table of uses in SUZ3 does not include a use that does not meet the Section 1 condition. Consequently, clause 31.01 operates to include industry in Section 2 where the Section 1 condition is not met.

[5] www.macquariedictionary.com.au

[6] Considering the four dot points of the definition in clause 2.0, there was general agreement that the last dot point is not relevant.

[7] Included in clause 106-1.1 of the former Altona Planning Scheme

[8] [2005] VCAT 2700

[9] See Maroondah CC v Fletcher [2009] VSCA 250 at [26]

[10] [2009] VSCA 250

[11] [2004] HCA 43; (2004) 222 CLR 322 at 332

[12] According to Dr Nadebaum's evidence, which is supported by aerial photographs of the land, the following operations occupy the great majority of the land burdened by the covenant:

• Qenos: own and operate three processing facilities within the complex, being:

- Qenos Olefins, which produces olefins as a raw material to feed into other processing operations within the Complex;

- Qenos Plastics, which manufactures low density polyethylene; and

- Qenos Resins, which manufactures high density polyethelene;

• Dow Chemicals (Australia) Ltd: currently manufactures latex and propylene oxide derivatives within the Complex; and
• BASF: which produces acrylic and styrene butadiene dispersions and other specialties.

[13] The transfer of land creating the covenant (B149259) was dated 19 December 1960.