Plaintiffs v First Defendant Second Defendant

DAMAGES - Loss of opportunity - Did an opportunity to develop the land residentially exist - Was that opportunity lost because of the contamination from the leak - Valuation of the alleged opportunity - Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, applied.

DAMAGES - Assessment of claims for loss of profit.

Mr P Riordan SC with Ms P Neskovcin and Ms F Spencer

1 In around December 2006, in excess of 486,000 litres of petroleum hydrocarbon leaked from Pipeline No 1 near Champion Road, Altona ('the leak' or 'the Mobil leak').[1] Pipeline No 1 was owned and operated by the first defendant, Mobil Refining Australia Pty Ltd ('Mobil'). The leak created a plume of petroleum hydrocarbon in the groundwater underneath nearby land, including the plaintiffs' land. The contamination comprises petroleum hydrocarbons Light Non Aqueous Phase Liquid ('LNAPL') that floats on top of the groundwater, and dissolved phase pollution from the contact of the LNAPL with the groundwater in the form of Benzene, Toluene, Ethyl Benzene, Xylene and Naphthalene (the dissolved phase pollution).[2]

2 Mobil is currently in the process of cleaning up the petroleum plume in the groundwater in accordance with the Environment Protection Authority ('EPA') requirements.

3 The plaintiffs, Winky Pop Pty Ltd ('Winky Pop') and OR Australia Pty Ltd ('OR'), are companies that form part of the Hallmarc Group; a vertically integrated group of companies that develop residential and commercial properties. The plaintiffs' land currently lies vacant and at the time of the leak the plaintiffs were seeking to have the land rezoned from industrial to residential, so that it could be subdivided and developed residentially. The plaintiffs' land is located in Akuna Drive, Williamstown North and comprises Lots A,[3] B,[4] 35[5] and 36.[6]

4 The plaintiffs make claims against Mobil in negligence, nuisance, and for compensation under s 151 of the Pipelines Act 2005 (Vic). The plaintiffs also make claims against the State of Victoria (the 'State') in negligence. Mobil admits that it has contaminated the plaintiffs' land and Mobil has conceded responsibility for the leak and the ongoing clean up. The primary issue to be determined by this Court in this proceeding is the appropriate form of relief.

5 Initially, the plaintiffs sought a mandatory injunction against the defendants for the remediation of their land, beyond what was likely to be required by the EPA. During the course of the trial, the plaintiffs abandoned the claim for a mandatory injunction. The dispute then shifted to focus on the appropriate form and measure of damages.

6 The plaintiffs submit that the opportunity to develop the land residentially at some time in the future has now been lost on account of the leak. The plaintiffs contend that damages should be calculated on the basis of the value of the plaintiffs' preferred residential development, less the cost of that development, less the residual value of the land following the leak.

7 The defendants dispute this categorisation and valuation of damages in a number of different ways. In summary, the defendants contend that the appropriate form of damages is the costs reasonably incurred by the plaintiffs in investigating the leak and the diminution in value of the plaintiffs' land caused by the leak.

8 The plaintiffs paid $730,000 for the purchase of the plaintiffs' land in April 1998. Since 1998 the plaintiffs' land has stood as vacant unimproved land. However the plaintiffs' case is that because of the Mobil leak it should be compensated for what it asserts is the lost opportunity to develop that land residentially. The plaintiffs contend that if their planned Higher Density Development was able to be successfully completed it would yield $304,200,000 in revenue ($276,545,455 after remittance of GST), at a cost of development of $116,732,888 ($106,120,807 after recovery of input tax credits), and therefore the plaintiffs have lost an opportunity which should be valued at $170,424,648 (inclusive of those GST adjustments), less the residual current value of Lots A and B of the plaintiffs' land, namely $9,938,500.[7]

9 For the reasons referred to below I have found that:

1. The proper basis for the measurement of damages in relation to the plaintiffs' causes of action is diminution in the value of the plaintiffs' land.

2. In this matter the assessment of damages on a loss of opportunity basis would be unacceptably uncertain and is more likely to lead to an unjust result than diminution of value damages and is also otherwise inappropriate.

3. Prior to the Mobil leak it was most unlikely that the plaintiffs' land would be rezoned by the relevant planning authority so as to be able to be developed for residential use.

4. Prior to the Mobil leak it was most unlikely that the relevant planning authority would grant development permits for the plaintiffs to develop their land for residential purposes.

5. At the time of the Mobil leak and thereafter the plaintiffs have not established that they had, or but for the Mobil Leak would have had, the opportunity to develop the plaintiffs' land residentially.

6. The plaintiffs have not lost the opportunity to develop the plaintiffs' land because of the Mobil leak.

7. The opportunity to develop the plaintiffs' land residentially, as identified by the plaintiffs, has no real prospect of being successfully pursued and is therefore of negligible or no value.

8. The Mobil leak, in itself, will not prevent or impair the plaintiffs' ability to develop their land for residential purposes.

9. In case I am incorrect in relation to my above findings, I have also determined that in the event that the plaintiffs were entitled to damages on the bases which they assert (which I have rejected) the sum of those damages would be $66,829,900, subject to interest entitlements.[8]

10. The plaintiffs are entitled to be paid the sum of $104,273.93 by Mobil in relation to the plaintiffs' costs incurred in investigating the Mobil leak.

11. The plaintiffs are also entitled to interest, in relation to the sum of $104,273.93.

10 The plaintiffs are the registered proprietors of land in Williamstown North, more particularly described as Lots A, B, 35, and 36 of LP221219C ('the plaintiffs' land').[9] Lot B was purchased on 2 July 1999 by Winky Pop, pursuant to a contract of sale entered into on 6 April 1998.[10] Lots A, 35 and 36 were purchased on 20 May 1999 by OR, pursuant to contracts of sale entered into on 6 April 1998.[11] The plaintiffs' land was purchased for the sum of $730,000. At the time of sale the plaintiffs' land was zoned Garden Industrial under the Williamstown Section of the City of Hobsons Bay Planning Scheme, and prior attempts to have the land zoned residential had failed.

11 When the plaintiffs purchased the land, the vendor's statement included an environmental audit report completed by Gutteridge Haskins & Davey Pty Ltd ('GHD') in December 1997.[12] The report noted the presence of polycyclic aromatic hydrocarbons and metals in excess of criteria for human health and asbestos on or beneath portions of the soil.[13] Groundwater testing was not undertaken as part of the report, although it was considered unlikely that the groundwater was contaminated "due to the likely depth to groundwater (10m), the clay soil and the low mobility of the contaminants".[14]

12 The contracts of sale were executed subject to the outcome of a due diligence report.[15] A report was obtained from PPK Environment and Infrastructure Pty Ltd ('PPK') on 15 April 1998.[16] The PPK report confirmed the presence of soil contamination of the type identified in the GHD report.[17] The PPK report also identified a number of risks and difficulties with regard to residential development on the land, including the need to have the land rezoned.[18] The report did not consider the condition of the groundwater.

13 At the time the plaintiffs purchased the land they were aware that it was contaminated and were also, more specifically, aware of the nature of that contamination.[19]

14 The plaintiffs have now abandoned their earlier intention to rezone and develop the land for residential purposes, because there is no reasonable prospect of the land being adequately remediated and decontaminated.[20]

15 The land, both before and after it was purchased by the plaintiffs, has been the subject of numerous rezoning and development applications. Before going into the details of these rezoning and development applications, it is appropriate to say something about the planning law framework.

16 Land use and development planning is given legislative authority by the Planning and Environment Act 1987 (Vic) ('the Planning Act'). The Planning Act provides for the preparation and operation of planning schemes in each municipality. The overall framework, format and content of standard provisions for municipal planning schemes are provided by the Victorian Planning Provisions.[21]

17 Planning schemes and decision making is intended to be driven and influenced by both the State Planning Policy Framework and the Local Planning Policy Framework (SPPF and LPPF). This policy framework includes a Municipal Strategic Statement that is intended to provide a clear direction to the nature of land use and development outcomes to be achieved in a municipality over a ten year timeline.[22]

18 Minister's Direction No 1, published on 27 September 2001, addresses amendments to a planning scheme that may affect the permitted use of potentially contaminated land. The direction defines "sensitive use" as a residential use, amongst others. In accordance with the explanatory statement accompanying the direction, potentially contaminated land is considered to be land, amongst other things, used or known to have been used for industry, or the storage of chemicals, gas, wastes or liquid fuel.[23] This direction is relevant to the plaintiffs' land, as it was previously the site of an abattoir between 1930 and 1989[24] and subsequent to 1989 the site had also been vacant and may have formed part of a refuse tip in the general area of Challis Street,[25] and some dumping of waste and fill appears to have occurred recently in the area immediately adjacent to the dead end of Akuna Drive.[26]

19 This Direction, which is state-wide and of application to all Councils, requires the relevant planning authority, Hobsons Bay City Council ('the Council'), to either: ensure that a Certificate of Environmental Audit or Statement of Environmental Audit with conditions that are suited to sensitive use has been issued; or, include a requirement in the amendment that such a Certificate or Statement be issued before a sensitive use, construction or works in association with the sensitive use commence.[27]

20 A planning application must go through a number of stages, including a panel hearing, approval by the planning authority and ultimately adoption and approval of any amendment by the Minister for Planning, where the Minister is not the planning authority seeking the amendment.[28]

21 Amendment L14 went through an exhibition and panel process with a Panel Report being handed down January 1995.[29] The proposed rezoning of the plaintiffs' land from Garden Industrial to Reserved Living was opposed by the Department of Business and Employment, the EPA, the Minister for Planning, and Mobil. The Panel considered Amendment L14 to be premature and recommended that it be abandoned by Council. The Panel's recommendation was based on the desire to maintain the 2km buffer distance recommended by the EPA between sensitive uses and petrol refineries.[30]

22 In September 1998, an application was lodged for 107 industrial warehouses with associated car parking on the plaintiffs' land.[31] A number of objections were received as a result of the notification process and the Council requested further information from the applicant. The following C1 amendment was a modification of this earlier proposal.

23 The C1 amendment for rezoning was accompanied by a proposed residential development (an Incorporated Plan Overlay), which was modified following the exhibition period to provide for 104 attached dwellings.[32] The C1 amendment was considered in the context of two contradicting land development strategies: the 1997 Hobsons Bay Industrial Land Management Strategy (ILMS), which identified the land as an area with potential for industrial expansion, and the 1999 Living in Hobsons Bay: Population & Housing Beyond 2000 - Our Changing Neighbourhoods, which recognised the potential for the land to be rezoned for residential purposes.[33] The Panel Report of March 2001 recommended that the amendment be abandoned. Reasons given for the recommendation were:

(a) poor response to the strategic planning framework;

(d) inappropriate access opportunities and points;

(f) pressures may come to rezone other industrial land in the area;

(g) located within the 2km buffer zone of the Mobil complex; and

(h) proposal is in an insufficient state of readiness for approval and is premature.

24 The application for 69 warehouses and associated offices on Lot B was lodged with the Council on February 2006. The application was put on hold until 10 May 2010, when it was withdrawn by the plaintiffs upon the request of the Council.

25 By December 2006 the leak had been discovered. Mobil first learned of a possible hydrocarbon leak on 6 December 2006. On 12 December 2006, Mobil became aware that Pipeline No. 1 was likely to be the source of the leak.[34] Upon making this discovery, Mobil activated its emergency response procedures.[35] In the following days Mobil discovered a small pinhole leak in the pipeline, and on 20 December 2006, a 9.2 metre section of Pipeline No. 1 around where the pipeline passes under Champion Road was removed and replaced. Pipeline No. 1 subsequently passed a pressure test, and Mobil resumed using the pipeline.[36]

26 Discovery of the leak led to a Clean-Up Notice ('CUN') being served on Mobil by the EPA on 9 February 2007 pursuant to s 62A of the Environment Protection Act 1970 (Vic) requiring Mobil to:[37]

(a) Actively clean up hydrocarbons discharged from Pipeline No.1 together with land and groundwater polluted by the hydrocarbons at specified locations and at any other location to which the pollution was found to spread and to prevent further migration until such time as a Remedial Action Plan ("RAP") was approved;[38]

(b) Submit an environmental audit report addressing, among other things, recommended measures to reduce any risk of possible harm or detriment to a segment of the environment to an acceptable level;[39] and

(c) Submit a RAP for the clean-up of polluted land and groundwater and, upon instruction from the EPA, implement the plan.[40]

27 The plaintiffs were made aware of the leak and the contamination of their land at a meeting between Mr de Greene, an environmental engineer employed by Golder Associates, and Mr Cini, a director of both plaintiffs, held on 14 June 2007.[41] Although access to the plaintiffs' land was sought at that meeting, Mobil was unable to gain access to the land and commence remediation of that part of the plume until June 2009.[42] At the time the plaintiffs were informed of the leak they were engaged in the process of having the land rezoned.[43]

28 The CUN also required the submission of an environmental audit report by Mobil to the EPA. The report completed by LanePiper dated August 2007 provided:

(a) Mobil had carried out the immediate clean-up requirements set out in the CUN;[44]

(b) While the CUN did not require LanePiper as auditor to review and/or endorse the RAP, it did require the auditor to make recommendations to reduce risks to acceptable levels, which LanePiper did by reviewing the proposed remediation strategy, as it stood, prior to the issue of the RAP;[45] and

(c) The remediation strategy prepared proposed by Mobil's consultant, Golder Associates, was generally sound and applicable.[46]

29 The Remedial Action Plan ('RAP') (prepared by Golder Associates) was submitted to the EPA in September 2007 and an updated RAP was submitted on 14 January 2008, in compliance with the CUN.

30 Mobil is presently remediating the leak in accordance with the RAP; and has removed significant quantities of hydrocarbon from the groundwater through its various remediation activities and will continue its remediation until it achieves clean-up to the extent practicable ('CUTEP').[47]

31 The EPA Information Bulletin - The Clean-up and Management of Polluted Groundwater[48] includes at 6.2, the statement that polluted groundwater should be cleaned up such that the protection of beneficial uses is restored. Where acceptable to the EPA, groundwater may be cleaned up to the extent practicable.[49]. Mr Mirkov outlines the CUTEP processes at [71]-[77] of his Report dated October 2011.[50]

32 Amendment C33 to the Hobsons Bay Planning Scheme sought to adopt the updated 2007 ILMS as a reference document to the scheme and make associated changes to local planning policy.[51] Amendment C33 related to all industrially zoned land in the City of Hobsons Bay. The Council submitted that all the industrial land in Precinct 13 (including the plaintiffs' land) be included in the Strategic Redevelopment Area ('SRA') with its preferred future zoning being Residential 1. However, the Panel recommended that the area in Precinct 13 to be included in the SRA be limited to two parcels of land owned by Arundel Stud Farm and Tedesco and Piccolo. The Panel's recommendation took into account Mobil's opposition to the rezoning (both of its land at Maddocks Road and the plaintiffs' land), that the various matters raised by the C1 Panel had not been addressed, and the existence of the plaintiffs' land within the buffer zone.

33 Following a legal process in relation to Amendment C33,[52] the Council's final decision was not to follow the recommendations of the C33 Panel, but rather to designate all land within Precinct 13 (excluding the Akuna Drive industrial estate including lots 35 and 36) as within the SRA.[53]

34 Relevantly the June 2008 Hobsons Bay Planning Scheme ILMS included the following statements which emphasise both the intention of the Planning Authority to support the continued operation of the Mobil Refinery and the significance of the EPA Buffer and reducing the impacts on residential amenity and environment.

The Strategy

2.1 Future Industrial Land Use Framework

In many cases, there will remain existing industries that wish to operate within the precinct for the short to medium term, or even the long term. The Council must ensure that any redevelopment of sites with existing industry must protect the existing and ongoing viable industrial uses and further intensification for as long as they wish to remain in the area. This may mean that areas close to the industries cannot be fully redeveloped until the industry relocates or that they must include measures that mitigate the impact of the industry.[54]

Site specific rezoning of industrial land may be appropriate as a means of allowing a gradual change, whilst providing the maximum support for existing viable industrial businesses to continue to operate.[55]

2.3.4 Part Precinct 13 - Land at corner of Maddox Road and Kororoit Creek Road, excluding existing Akuna Drive industrial developments. Includes 92-100 Champion Road, Williamstown North. (See Industrial Land and Future Directions map page 25)

Therefore a residential outcome for the majority of the precinct could be considered, provided appropriate justification for a residential outcome can be provided to the Council. This new neighbourhood should link in with the existing residential area to the immediate east by road and pedestrian access, provide signalised road access to Kororoit Creek Road. It will also be necessary to provide appropriate social and community infrastructure as determined by a social impact assessment. Provision of affordable housing, with a range of dwelling sizes and types must also be provided.[56]

The development of the new residential area will also have to take into consideration the treatment along Maddox Road to buffer against existing industry and provide appropriate links to Maddox Road for vehicle, bicycle and pedestrian movements. A landscape buffer should be provided along Maddox Road. An Industrial 3 rezoning of Part Precinct 12 from Orange Street to Maddox Road will provide a land use buffer for the new residential area.[57]

Akuna Drive Industrial Estate will be allowed to remain in its current form, but be appropriately buffered from any other land use proposed on the land south and west. This could be achieved through a variety of techniques, including landscaping and rear garage access for new residences.[58]

3.10 Mobil Petroleum Refinery, Altona - Precinct 10

• Support the ongoing operation of the Core Petroleum Refining Industry in Altona.
• Reduce impacts on residential amenity and the environment.[59]

35 Although the June 2008 ILMS was produced more than two years after the leak, it emphasises the Planning Authority's obligations and objectives. The plaintiffs' land forms part of Precinct 13.

36 Soon after the Council came to its final decision, the plaintiffs lodged an application for rezoning and residential development on 10 September 2008.[60] Council's initial response to this application in a letter dated 23 February 2009 noted the outstanding issues for the land and the fact that an Outline Development Plan ('ODP') would be required for the SRA as a whole before residential rezoning could take place in Precinct 13.[61]

37 On 23 December 2009, the plaintiffs sent an amended application to the Council, containing additional information and a concept ODP.[62] Ongoing consultation and correspondence led to an ODP for Precinct 13, prepared by Hansen Partnership, being presented to the Council in early 2011, aspects of which the plaintiffs did not support.[63] The ODP and a request to rezone the plaintiffs' land were considered by the Council in February and April 2011. Amendment C74 has yet to be authorised for exhibition.[64]

38 As the C74 amendment application appeared to stagnate, the plaintiffs first sought the Minister for Planning's intervention by letter dated 2 February 2011. Following ongoing correspondence and a ministerial briefing, the Minister declined to intervene by letter dated 25 October 2013. This leaves the application in the hands of the Council. The Council's concerns with the application relate to contamination, industrial interface, access, traffic, drainage, and buffer issues.[65]

39 In their Further Amended Statement of Claim, the plaintiffs sought against Mobil damages in negligence, an injunction abating the nuisance or damages in nuisance in lieu of an injunction, and compensation under s 151 of the Pipelines Act 2005 (Vic). After the close of evidence they abandoned their claim for a mandatory injunction and sought damages instead. Against the State the plaintiffs sought an injunction abating the nuisance and damages in negligence. As with Mobil, the plaintiffs abandoned their claim for a mandatory injunction against the State. Against the State, the plaintiffs now seek damages in negligence only.

40 That leaves to be determined the plaintiffs' claim for damages:

(c) for breach by Mobil of s 151 of the Pipelines Act 2005 (Vic).

41 The plaintiffs claimed the same heads of damages in their negligence and s 151 claims. In those claims, they claimed that they have suffered loss and damage in the form of:

(a) costs of investigating the contamination of the land;

(c) the diminution in the value of the land; and

(d) loss of profits that would have been realised from development of the land but for the contamination.

42 In the nuisance claim, the plaintiffs claimed those four heads of damages, and the following additional heads of damages:

(b) unlawful interference with the use and enjoyment of the land.[66]

43 In the nuisance claim, the plaintiffs also sought damages in lieu of an injunction abating the nuisance.[67] However, the damages sought in lieu of the mandatory injunction were damages for loss of opportunity; a head of damage already pleaded.[68] Accordingly, the damages in lieu of an injunction did not represent a separate head of damages.

44 The plaintiffs abandoned their claim for damages for the costs of remediating the land. The plaintiffs ultimately sought only damages for loss of opportunity.[69] This was the focus of their case. They submitted that the diminution in value principle was not applicable when assessing loss of opportunity.[70]

45 In relation to the loss of profits head of damages, the plaintiffs pleaded that the loss of profits was equal to A less B less C. 'A' is the gross sum the plaintiffs would have realised by developing the land, 'B' is the cost to the plaintiffs of the completed development, and 'C' is the post-leak value of the land. They say C takes into account the fact that the land cannot now be developed for residential purposes. The example given for A is the expected gross return on the subdivision and 121 residence development proposal in the C33 application; not less than $120m. The example given for B is the expected cost of that development; approximately $35m.

46 Importantly, the plaintiffs claim damages for loss of profits. In their pleadings they do not claim damages for loss of a valuable opportunity. Ultimately their case at trial was that one particular development, the higher density residential development, would have been completed but for the leak, and they claimed damages for loss of the profits they would have derived from that development. As will be seen below, the plaintiffs' case at trial was framed in terms of loss of a valuable opportunity to develop residentially, rather than loss of profits. Given the defendants conducted their defence on the basis of loss of opportunity, I will determine the case on that basis, rather than the pleaded loss of profits claim.

47 The plaintiffs have not claimed damages for delay in any proposed development. The loss of opportunity claim did not have any time element. That is, the plaintiffs did not claim that the opportunity was to develop the land residentially within the next ten years, or any other specific period of time. At trial, the claim was put in absolute terms. The plaintiffs now claim that because of the leak, development is not possible at all, and will never be possible. Time and delay form no part of the plaintiffs' case. Accordingly, if it is found that residential development was possible before the leak, but because of the leak it will not be possible until some point in the future, the plaintiffs will not be entitled to damages for the delay in development occasioned by the leak.

48 Mobil conceded liability in negligence, and under the Pipelines Act 2005 (Vic), but has denied liability in nuisance. Mobil pleaded that since December 2006 it has undertaken remediation works to minimise the risk of damage to the land from the leak. Remediation works on the land did not begin for some time after that, because between about 1 May 2007 and about 2 June 2009, the plaintiffs denied Mobil access to the land. Mobil also denied any liability to clean up the contamination to a standard that would permit the alleged intended use of the land for residential development.

49 Mobil admitted that the land is contaminated with petroleum hydrocarbons and their breakdown products, but denied that the extent of the contamination is not fully defined or that the contamination continues to spread. Mobil admitted that a source of the contamination was petroleum hydrocarbon products from the leak.[71] This was in response to the plaintiffs' pleading that the source of the contamination of the land was the leak.[72]

50 Mobil denied that the plaintiffs have suffered loss and damage in the forms pleaded in relation to the negligence, s 151 and nuisance claims.[73] Mobil also denied that such loss and damage was a natural and foreseeable consequence of Mobil's breaches of its duty of care.[74]

51 In its submissions Mobil largely accepted the plaintiffs' claim for the costs of investigating the contamination of the land. Mobil accepted that the plaintiffs are entitled to damages for the diminution in value of the land, but denied that this should be calculated by reference to lost profits. Mobil denied that the plaintiffs are entitled to damages for loss of opportunity. Mobil denied that the plaintiffs are entitled to damages for interference with the use and enjoyment of the land.[75]

52 In relation to the nuisance claim, Mobil denied that the plaintiffs have suffered the additional damages of damage to the land and unlawful interference with the use and enjoyment of the plaintiffs' land.[76] Mobil also denied that the presence of petroleum hydrocarbons beneath the land constitutes a continuing nuisance.[77]

53 In their written closing submissions, the plaintiffs submitted that on the State's application, the Court ordered that issues of liability and relief against the State be split and the issue of relief be heard first, concurrently with the hearing of those issues against Mobil.[78] The plaintiffs submit that for the purposes of this trial, the liability of Mobil is established and the liability of the State (for breaches of the State's duty to the plaintiffs) is to be assumed. Accordingly, the plaintiffs submit that the only issue before the Court is what relief is appropriate against each defendant.[79]

54 The State submitted that this is the trial of the proceeding brought against the first defendant, though the State will be bound by necessary and indispensable findings of fact relevant to the proceeding against it and, in particular, as to loss and damage.[80] Put another way, the current trial involves the case on liability and quantum against Mobil, and affects the plaintiffs' case on quantum against the State only to the extent indicated by Dixon J in Blair v Curran.[81]

55 During closing submissions, the State explained that the plaintiffs' submission that issues of liability and relief against the State have been split and that the issue of relief is being heard first, is incorrect.[82]

56 On 14 December 2012 Daly AsJ ordered, among other things, that 'Save for the filing of a defence ... the second defendant be relieved of the obligations to take any further steps in the proceeding until the hearing and determination of the proceeding against the first defendant, or further order, save that the second defendant will be bound by any findings made in the trial against the first defendant'.[83] In the 'Other Matters' section of the orders it was stated that 'It is in the interests of efficiency and the prompt resolution of the main issues in dispute for the trial to proceed, in the first instance, against the first defendant alone'.

57 The State explained that the loss and damage claimed against Mobil and the State is identical. The State was joined as a party to the proceeding by an order made at the end of November 2012, and was invited to participate in this trial. The State decided to participate, and will suffer the estoppels that are outlined by Dixon J in Blair v Curran.[84] The State explained that because of the stage the proceeding was at when the State was joined as a party, and the fact that the relief sought against the two defendants was the same, it was decided that the plaintiffs should first go to trial against Mobil alone.[85] The liability and quantum issues are being run against Mobil, but not the State. The State had an opportunity to be heard on the quantum issue, and will be bound as described by Dixon J in Blair v Curran.[86] The State submitted that it entered into the debate on the appropriate measure of damages and the quantum of the plaintiffs' loss only insofar as it was necessary to protect its interests.[87]

58 In closing submissions, the State said that this was the State's formal position on its involvement in the proceeding,[88] and that was made clear at the directions hearing on 23 May 2013 and at the start of the trial.

59 At the directions hearing on 23 May 2013, the State said that the orders of 14 December 2012 meant that the trial would proceed against Mobil. The State accepted that it would suffer issue estoppel in respect of the issues in this proceeding that affect the State in its case. Those issues would be predominantly the quantum issues, because the same damages were sought from Mobil and the State. The State said it was prepared to take part in the trial in relation to those issues and other factual issues relevant to relief.[89]

60 In its opening submissions, the State submitted that in this trial of Mobil's liability, the State is concerned principally with the defence in relation to quantum, and in those circumstances, in any subsequent action or in the liability case against the State, there will be issue estoppel in relation to the necessary findings made in this proceeding. The State said that the issue estoppel was the reason for the State's presence in this trial.[90]

61 In closing submissions, the State submitted that a consequence of the loss and damage claim against the defendants being identical, is that the Court's ability to draw inferences from the State's failure to call certain evidence is constrained.[91] Where two parties have interests which are the same in respect of the issue before the court, and where at least one of those parties has called evidence on a subject, an inference cannot arise against the other party because there is no relevant gap in the evidence from which such inference might arise.[92]

62 The plaintiffs had a different understanding of the orders of Daly AsJ made on 14 December 2012. In closing submissions the plaintiffs said that they opposed the making of the relevant order, which was made because the State said it was not ready for the trial as then scheduled. The plaintiffs emphasised the words 'any findings' in the order 'that the second defendant will be bound by any findings made in the trial against the first defendant'.[93]

63 The plaintiffs said that Blair v Curran dealt with judgment estoppel.[94] There is no judgment estoppel in this case. Rather, the State is bound by any findings, not just the findings that would be encompassed by a judgment estoppel.[95] For example, if the Court finds that the plaintiffs lost the opportunity to develop the land, that finding will bind the State. The State cannot go behind any findings the Court makes in this case.[96] That is the reason for the State's participation in the trial. The plaintiffs conceded, however, that there must be a separate trial against the State to establish its liability.[97]

64 The plaintiffs accepted that their written closing submissions[98] misstated the position,[99] but they disagreed with the State's description of its position in this trial. They said their closing submissions should read 'for the purposes of this trial, the liability of Mobil is established and the liability of the State (for breaches of the State's duty to the plaintiffs) is to be determined later, with the State being bound by any findings made against Mobil in this trial'.[100]

65 In response to this, the State said its formal position on its involvement in this trial was put on the transcript as early as 23 May 2013 and then again on 4 June 2013 (day two of trial), but there was no response or comment by the plaintiffs until 13 February 2014, the last day of trial.[101]

66 The State said that the argument put to Daly AsJ before the making of the 14 December 2012 orders made reference to Blair v Curran, and the argument was accepted by her Honour.[102] The State submitted that the meaning of paragraph 3 of the 14 December 2012 orders and the extent to which the State is bound by any determination of fact made in this proceeding, may be a matter for another day.[103]

67 Finally on this matter, the State submitted that in referring to Blair v Curran, the State was not raising matters of judgment estoppel or res judicata. This part of the proceeding is not a part which will result in a judgment against the State. So, the estoppel arising from judgment in this part of the proceeding must be the second layer of issue estoppel.[104] The State submitted that if there is a need to reopen the order of Daly AsJ, that will be done if appropriate.[105]

68 What is clear is that this part of the proceeding will determine the main issues as between the plaintiffs and Mobil. That is, it will determine liability and quantum in respect of Mobil. It is also clear that this part of the proceeding will not determine whether the State is liable. What is not clear is the extent to which findings against Mobil in relation to quantum will bind the State.

69 In my view it is unnecessary to determine at this stage which findings in this part of the proceeding will bind the State in the next part of the proceeding concerning the State's liability. The extent to which the State is bound by findings in these reasons for judgment will be determined if and when the State's liability is decided upon.

70 Also to be determined at that stage is the State's proportionate liability claim against Mobil. The State pleaded that if any act or omission of the State caused the alleged loss and damage, then the plaintiffs' claims against the State are apportionable claims within Pt IVAA of the Wrongs Act 1958 (Vic).[106] Mobil is a concurrent wrongdoer, and the State's liability is limited to an amount reflecting the proportion of the loss or damage that the Court considers just and equitable having regard to the extent of the State's responsibility for the loss or damage.[107] The State pleaded that it is just and equitable that Mobil be liable to the plaintiffs for the whole of any proven loss or damage.[108]

71 In its opening submissions, the State noted that for the purposes of this trial, the State has alleged proportionate liability as against Mobil.[109] Neither the plaintiffs nor Mobil dealt with the State's proportionate liability claim in pleadings or in oral or written submissions. This is not surprising, given this part of the proceeding deals only with the extent of loss and damage suffered by the plaintiffs (if any), and does not determine whether the State is liable.

72 If the plaintiffs bring their liability claim against the State and the State is found liable, the State's proportionate liability claim against Mobil will be decided at that stage. It would be expected that Mobil would address the Court on proportionate liability. Given this part of the proceeding does not concern the State's liability, and Mobil has not addressed the Court on proportionate liability, it would be inappropriate to determine the State's proportionate liability claim at this stage.

The plaintiffs' submission calling for inferences to be drawn against the State

Adverse inference sought in relation to potential rezoning evidence

73 The plaintiffs submitted that the State, being seized of the rezoning application and therefore the most relevant knowledge, could have called evidence as to the likelihood of rezoning.[110] Accordingly, on the plaintiffs' case, the Court should conclude that such evidence would not have advanced the defendants' case. The responsible Minister is no longer considering the application to re-zone the plaintiffs' land, having declined to intervene.

74 The State submitted that no adverse inference can or should be drawn against the State for the absence of an EPA or Ministerial witness.[111]

75 In my view no adverse inference of the type sought by the plaintiffs should be drawn because such witnesses were not called. This is because the subject witnesses were likely to have been addressing the very complex array of considerations relevant to any course that may have been considered possible or likely by such witnesses in relation to the rezoning and EPA related question raised in this proceeding. Furthermore, evidence likely to be available from such witnesses would concern the discretion reposed in both the EPA and the Minister in relation to environmental provisions and conditions and re-zoning decisions and related conditions respectively. Because of these likely complexities and discretionary considerations, I consider that it is not safe or appropriate to speculate as to what evidence might, or might not have been given by such witnesses.[112] For the same reasons, I am not willing to draw any inferences in relation to the Minister's decision not to intervene.

76 As discussed above,[113] this part of the proceeding does not concern the State's liability. However, given the State has filed a defence, I will briefly set out the State's pleaded case.

77 The State denied liability in negligence. The State opposed the plaintiffs' claim against it for injunctive relief on the basis that the plaintiffs did not allege nuisance against the State, so no order for abatement could be made. As above,[114] the plaintiffs no longer press the claim for a mandatory injunction.

78 The State admitted that the land is contaminated with petroleum hydrocarbons and their breakdown products, but denied that the extent of the contamination is not fully defined or that the contamination continues to spread. The State admitted that a source of the contamination was petroleum hydrocarbon products from the leak. However, the State denied that the plaintiffs have suffered loss and damage by reason of Mobil's breach of duties. The State also denied that the plaintiffs have suffered loss and damage as a result of the State's alleged breaches of duty, and denied that any such loss and damage was a natural and foreseeable consequence of those alleged breaches.

79 The State also pleaded that any damage to the plaintiffs was caused by Mobil's breach of duty. If the State breached any duty of care to the plaintiffs, Mobil's negligence in failing to repair the pipeline to avoid the leak was an intervening cause wholly responsible for any loss and damage suffered by the plaintiffs.

80 The State pleaded that in any event, the land's residential development potential was subject to pre-existing contamination, therefore no damages as alleged by the plaintiffs properly arise by reason of the leak. The State particularised several reasons why the land was unsuitable for residential development. Those particulars included that by reason of the pre-existing contamination the land would not have been suited to 'sensitive use', defined to include residential use, within the meaning of Ministerial Direction No 1. It would not have been practicable to remediate the pre-existing contamination to the standard required for the issue of a Certificate of Environmental Audit and/or a Statement of Environmental Audit. Further, the land is within the 2km buffer distance recommended by the EPA for industrial residual air emissions. For those reasons, it would not have been commercial for the plaintiffs to remediate the land for residential development before the leak. The particulars also referred to the plaintiffs' inability, since 1999, to achieve rezoning of the land or a planning scheme amendment to allow residential development.

81 The State's case on damages is that the constraints on the plaintiffs' land are such that the Court cannot be satisfied that the plaintiffs' land would have been developed for residential purposes in the way asserted by the plaintiffs. The State contends that the circumstances do not favour the grant of an injunction and the true measure of the plaintiffs' loss is any diminution in the value of the plaintiffs' land.[115] As earlier noted[116] the State's response to the plaintiffs' initially instigated injunction application is now not relevant.

82 In respect of the heads of damage claimed by the plaintiffs, the State outlines its position as follows:

(a) any cost of investigating the contamination by the plaintiffs should not include investigation costs the plaintiffs would have undertaken in any event, including the AECOM environmental assessment analysis which was relied upon for the purpose of the C74 amendment application;

(b) the plaintiffs have not incurred and are not, on balance, likely to incur, any cost for remediating groundwater by reason of the first defendant's clean-up;

(c) no allowance should be made for damage to the plaintiffs' land in nuisance because the damage is being remediated to CUTEP;

(d) the costs of remediating the pre-existing contamination should be deducted from any damages awarded;

(e) no allowance should be made for the claimed unlawful interference with the use and enjoyment of the plaintiffs' land in circumstances where the land has been vacant at all material times and the plaintiffs' claimed desire to develop the land for residential purposes has not been impeded by the Mobil leak. Alternatively, any damage assessed under this head should be nominal.[117]

83 With regards to the plaintiffs' claim for loss of opportunity damages, the State submits that the opportunity has not been lost.[118] The planning history of the land shows that the most significant advances in the plaintiffs' efforts to develop the land occurred post-leak, with its inclusion in the SRA as part of Amendment C33.

84 Alternatively, the State submits that even if the plaintiffs were able to prove the opportunity which they identify had been lost, the State argues that the available evidence is insufficient to found a Sellars analysis.[119] The State points out in this regard that the Court would have to be satisfied that the negligence or other wrongdoing caused the loss of the chance on the balance of probabilities.[120] The State submits that the constraints on the land are such that the Court cannot be satisfied that but for the contamination of the groundwater beneath the land, the plaintiffs would have developed the land for residential use for the profits claimed. Alternatively, the State claims that the first defendant's remediation of the plaintiffs' land to CUTEP likewise means causation cannot be established.[121]

85 In this proceeding, Mobil has conceded liability in negligence. The plaintiffs also allege that Mobil has caused a private nuisance. Mobil denied liability in nuisance. Negligence and nuisance may overlap, however, private nuisance remains a distinct tort and has not been assimilated into the law of negligence.

86 To establish a claim in negligence, a plaintiff must establish that the defendant owed him/her a duty of care, that the defendant breached that duty of care, and that the plaintiff suffered damage. That damage must satisfy the tests for causation and remoteness.

87 The plaintiffs pleaded their negligence claim against Mobil as follows. Mobil owed a duty of care at common law to persons such as the plaintiffs who it was reasonably foreseeable would suffer loss or damage from the leakage of petroleum hydrocarbon product from the Mobil pipeline.[122] That duty required Mobil to carry out repairs properly and promptly to prevent or minimise leakage, whenever Mobil became aware that such repairs were necessary.[123] Mobil breached that duty by failing to maintain the pipeline to prevent or minimise leakage, and by failing to carry out necessary repairs properly and promptly to prevent or minimise the leakage.[124] By reason of the breach of duty, the plaintiffs suffered the loss and damage set out above.[125] The plaintiffs pleaded that the contamination of the land and the loss and damage suffered by the plaintiffs as a consequence of the contamination, were natural and foreseeable consequences of Mobil's breaches of duty.[126]

88 Mobil admitted liability in negligence. It pleaded that it had a duty of care to exercise reasonable care in the management and operation of the Mobil pipeline so as to prevent property damage arising from the operation of the pipeline.[127] Mobil admitted that the leak was the result of its breach of that duty and/or its failure to manage the operation of the pipeline in accordance with the requirements of s 124 of the Pipelines Act 2005 (Vic), and that the leak caused some of the contamination of the land.[128] Mobil denied that its duty of care required it to carry out repairs properly and promptly to prevent or minimise leakage, whenever Mobil became aware that such repairs were necessary.[129] Mobil denied that the plaintiffs suffered loss and damage as pleaded in the Further Amended Statement of Claim.[130] Mobil admitted that the land was contaminated with some petroleum hydrocarbons and their breakdown products, and that the leak caused some of that contamination, but otherwise denied that the contamination of the land and the loss and damage suffered by the plaintiffs were reasonably foreseeable consequences of Mobil's breaches of duty.[131]

89 The tort of nuisance is essentially concerned with interference with the enjoyment of rights or interests in land. The types of acts that are recognised by the law as constituting a nuisance are acts causing:

(b) unreasonable and substantial interference with the use and enjoyment of land; or

90 Where physical injury is relied upon, the plaintiff must prove that his/her property has suffered a sensible material injury that is not merely trifling in nature and that results in a diminution of the value of the property.[133] Diminution in value of the land is not in itself 'material injury' to the property.[134]

91 Where unreasonable and substantial interference with the use and enjoyment of land is relied on, courts may consider the locality where the act is performed in order to determine whether the interference is unreasonable and substantial.[135] When assessing reasonableness, courts will usually weigh the nature and circumstances of the defendant's activity against the nature and extent of the resulting interference with the plaintiff.

92 The plaintiffs pleaded their nuisance claim against Mobil as follows. On a date unknown but believed to be before 6 December 2006 and continuing thereafter, petroleum hydrocarbons and their breakdown products were present beneath the land.[136] Those petroleum hydrocarbons and their breakdown products had escaped from the Mobil pipeline into the surrounding environment, were continuing to spread to the surrounding soil and groundwater including onto the land, and unreasonably interfered with the plaintiffs' use and enjoyment of their land.[137] The plaintiffs called this the petroleum hydrocarbon nuisance. They pleaded that Mobil created the petroleum hydrocarbon nuisance.[138] They claimed that Mobil continued the petroleum hydrocarbon nuisance at all times from 6 December 2006, and failed to abate it within a reasonable time from 6 December 2006.[139]

93 Further and in the alternative, the plaintiffs pleaded that it was reasonably foreseeable to Mobil that unless the nuisance was abated, the plaintiffs were in a class of persons likely to suffer loss and damage due to damage to the land and the unreasonable interference with the use and enjoyment of the land (and rights connected to it) caused by the unabated nuisance.[140]

94 The plaintiffs pleaded that as a result of the nuisance they suffered the loss and damage set out above.[141] They sought an injunction abating the nuisance, or alternatively damages.[142] As discussed above,[143] the plaintiffs no longer seek a mandatory injunction.

95 In their pleadings, the plaintiffs defined 'the petroleum hydrocarbon nuisance' as the hydrocarbons and their breakdown products that escaped from the Mobil pipeline into the land, continued to spread to the soil and groundwater on the land, and unreasonably interfered with the plaintiffs' use and enjoyment of the land.[144] It appears, therefore, that in their nuisance claim the plaintiffs relied on substantial interference with use and enjoyment, rather than on physical injury to land. When it came to damages for nuisance, the plaintiffs pleaded that they suffered and continue to suffer loss and damage in the form of, among others, damage to the land, substantial interference with the use and enjoyment of the land, and diminution in value of the land.[145] The pleadings there suggest that the plaintiffs relied on physical injury to the land and substantial interference with the use and enjoyment of the land, as constituting the nuisance. However, had the plaintiffs sought to rely on physical injury to land, it would be expected that they would have led evidence as to the sensible material injury to the land, namely the diminution in value. They did not lead any such evidence, because they sought loss of opportunity damages, not damages for diminution in value. It seems, therefore, that the plaintiffs' nuisance claim relied on substantial interference with use and enjoyment, and not physical injury to the land, the interference being the rendering of the land unsuitable for the residential development the plaintiffs claim they intended to pursue.

96 As to the plaintiffs' nuisance claim, Mobil admitted that the land was contaminated with some petroleum hydrocarbons and their breakdown products, and that the leak caused some of that contamination.[146] Mobil denied that the petroleum hydrocarbons and their breakdown products were continuing to spread to the surrounding soil and groundwater including onto the land.[147] Mobil also denied that the petroleum hydrocarbons and their breakdown products unreasonably interfered with the plaintiffs' use and enjoyment of the land.[148] By denying that the contamination caused by the leak unreasonably interfered with the plaintiffs' use and enjoyment of the land, Mobil denied liability in nuisance.

97 Mobil denied that it continued the 'petroleum hydrocarbon nuisance' at all times from 6 December 2006, and that it failed to abate the alleged nuisance within a reasonable time from 6 December 2006.[149] Mobil pleaded that since 6 December 2006 it carried out remediation works to minimise the risk of damage to the land from the leak, and from about 1 May 2007 to 2 June 2009, the plaintiffs denied Mobil access to the land and thereby prevented Mobil from undertaking remediation works on the land in that period.[150]

98 Mobil also denied that it was reasonably foreseeable to Mobil on and from 6 December 2006 that unless the alleged nuisance was abated, the plaintiffs were in a class of persons likely to suffer the pleaded loss and damage.[151]

99 However, the parties' submissions did not deal with the nuisance claim in any detail. This appears to be due to the fact that the plaintiffs no longer seek a mandatory injunction.

100 In their opening submissions the plaintiffs submitted that Mobil's unlawful acts interfered with the plaintiffs' use and enjoyment of the land and the opportunity to develop the land for profit.[152] They submitted that that interference will continue until the contamination is removed, and having established the interference, the plaintiffs are entitled to an injunction preventing such continuation or repetition.[153] The plaintiffs submitted that the fact that Mobil had repaired the leak did not preclude the grant of an injunction because the repair did not address the loss and damage being caused as a consequence of the leak, which is ongoing and continues as long as the land is contaminated.[154] The plaintiffs' opening submissions went on to outline the reasons why confining the plaintiffs' remedy for the harm caused by the defendants to damages would produce substantial injustice, and why the Court should exercise its discretion to grant an injunction. The plaintiffs submitted that as an alternative to an injunction, they sought damages for the losses they have sustained as a consequence of the contamination of the land, calculated on the basis of loss of opportunity.[155]

101 Originally, the primary relief sought by the plaintiffs was a mandatory injunction that the defendants remove the contamination for which they are responsible. Mandatory injunctions are a form of relief available for nuisance. Now that the plaintiffs have abandoned their claim for a mandatory injunction, and seek only damages for loss of opportunity, the nuisance claim loses its importance to the plaintiffs' case. This is because the loss of opportunity damages are available for negligence as well as for nuisance. As Mobil has admitted liability in negligence, the plaintiffs may be entitled to the claimed damages in their negligence case. Accordingly, the plaintiffs do not now need to establish their nuisance claim against Mobil in order to obtain the relief they seek.

102 The plaintiffs' closing submissions only dealt with nuisance in terms of the appropriate measure of damages.[156] They did not deal with whether the contamination of the land from the leak amounted to an unreasonable and substantial interference with their use and enjoyment of the land.

103 In its opening submissions, Mobil submitted that the gist of private nuisance is the interference with a plaintiff's use and enjoyment of its land or the interference with some right in connection with the land. Here, the plaintiffs are not entitled to damages for interference with the use and enjoyment of the land, because at the time of the contamination the land was zoned industrial and industrial use is not affected by the contamination.[157] Mobil also submitted that the contamination from the leak was not a continuing nuisance, because '[t]he nuisance ceased once the pipeline leak was stemmed'.[158]

104 Mobil's closing submissions only dealt with nuisance in terms of the appropriate measure of damages for torts affecting land, and the inappropriateness of a mandatory injunction in this case.[159] Mobil submitted that a mandatory injunction was not appropriate in this case because, among other reasons, the leak has ceased and there is no continuation or repetition of a wrongful act.[160]

105 Neither the plaintiffs nor Mobil dealt with the nuisance claim in oral submissions.

106 Furthermore the plaintiffs did not seek to quantify any loss in relation to their pleaded heads of damage in nuisance, including loss of enjoyment, and did not press these claims.

107 The plaintiffs submitted that they are professional developers of land, not sellers. They said they acquired the land for residential development of Lots A and B, and industrial development of Lots 35 and 36. The plaintiffs now submit that the opportunity to rezone and develop the land for residential purposes is pointless and has been lost as a result of the contamination caused by the leak. The plaintiffs submitted that they have abandoned their development aspirations for the land because it is clear that no development at all is now possible. Accordingly, the Court should find that the plaintiffs, acting reasonably, will not proceed with the development of the land.

108 In these circumstances, the plaintiffs did not press their claim for a mandatory injunction. Rather, they now seek compensation for lost development opportunity, assessed by reference to the profits associated with the higher density development. That lost profit was estimated at $170,424,648. From that, the maximum amount that may be deducted is $9,938,500; the post-leak value of the land.

109 The plaintiffs submitted that the object of an award of damages in tort is to compensate for loss. This means putting the plaintiff in the same position it would be in if the wrong had not occurred, so far as money can do that. In order to do justice, the principles of compensation in tort must be applied in a pragmatic manner suitable to the circumstances of the case. Here, that means the Court should award damages for the lost opportunity to develop the land.

110 The plaintiffs accept that there is limited case law where damages for loss of opportunity have been given for torts affecting land. Looking at the case law on torts affecting land, the assessment of damages is normally based on the cost of reinstatement of the land or the amount of the diminution in value.[161] The plaintiffs said that this is due to loss of opportunity not being raised in the cases. They relied on several authorities to establish two propositions. First, that in cases of torts affecting land, damages are not confined to reinstatement costs or diminution in value. Second, that loss of opportunity damages are available.

111 In his dissenting judgment in Port Stephens v Tellamist,[162] Santow JA said that in cases of physical damage to land, the remedy may not be limited to the cost of reinstatement or diminution in value, because of the overriding requirement that damages reflect fair and reasonable compensation to the plaintiff. His Honour did not decide the point.

112 In Farmer Giles v Wessex,[163] a case of negligence, Russell LJ said that the authorities did not confine him to award either diminution in market value or the cost of rebuilding. A similar statement was made by May J in CR Taylor (Wholesale) Ltd v Hepworths Ltd.[164] The plaintiffs say that these authorities, as well as Evans v Balog[165] and Minter v Eacott,[166] demonstrate that reinstatement costs and diminution in value are not the only form of damages available.

113 The plaintiffs then relied on Lonie v Perugini & Perugini (Lonie),[167] Hobbs v Oildrive (Hobbs),[168] and Commonwealth of Australia v Murray (Murray)[169] to argue that loss of opportunity damages are available for torts affecting land. They contended that Murray is the most authoritative decision supporting the proposition that loss of opportunity damages are available in nuisance actions.

114 In Murray, B leased land to M for the purpose of intensive commercial flower growing. The land flooded because the Commonwealth built a perimeter road around the adjacent air base. The jury awarded damages. In the appeal by the Commonwealth, the Court of Appeal discussed the calculation of damages for nuisance, and accepted that one of the heads of damage the jury had to consider was B's claim for compensatory damages including any loss of opportunity to earn profit.

115 The plaintiffs submitted that, similar to the circumstances in Murray, damages for diminution in value would not restore them to the position they would have been in had the torts not been committed, and would not be consistent with the underlying compensatory rationale of damages. Diminution in value assessed by reference to market values is largely irrelevant in this case, because the plaintiffs were not sellers at the time the torts were committed; rather, they were developers for a profit.

116 In relation to Qantas Airways Ltd v Mascot Galvanising (Holdings) Pty Ltd (Qantas),[170] on which Mobil relies, the plaintiffs submit that the Court did not consider loss of opportunity damages because Qantas did not claim for loss of opportunity. Further, they submitted that the contamination did not affect Qantas's existing use of the land (car park), and there was no intention to change the use of the land. As the contamination could be cleaned up within 12 months, there was no ongoing loss and damage.

117 In terms of the form of the nuisance in that case, groundwater contamination, and the presence of pre-existing contamination on the plaintiff's land, the facts of Qantas are similar to the facts of this case. Beyond that, I agree with the plaintiffs that Qantas is of little assistance here because Qantas claimed either the cost of remediation or the diminution in value resulting from the contamination; not loss of opportunity damages. In Qantas Windeyer J granted an injunction restraining further groundwater contamination, and awarded damages for the expenses Qantas incurred as a result of the contamination. Windeyer J did not award any damages for remediation or diminution in value.

118 The plaintiffs also submit that the text McGregor on Damages[171] notes that reinstatement costs and diminution in value are not the only measures of damages for torts affecting land. Rather, consequential loss is also available, and loss of profits is a recoverable head of consequential loss.

119 Finally on this aspect, the plaintiffs submitted that awarding damages for loss of opportunity simply recognised that damages must be assessed to be what is reasonable as between the plaintiff on the one hand and the defendant on the other. The land should be valued in the hands of the plaintiffs, by reference to their intended use of the land; residential development. As a result of the torts, the plaintiffs said that acting reasonably, they will no longer pursue that intended use because of the associated legal and financial risks.

120 Mobil denies that the plaintiffs are entitled to loss and damage on the bases pleaded. It accepts the plaintiffs' submission that the object of an award of damages in tort is to compensate for loss, but said the normal measure of damages for torts affecting land is the amount of diminution in value of the land or the cost of reinstatement of the land to the condition it was in before the tort, unless those costs are disproportionate to the diminution in value. Courts can, however, shape the relief to suit the circumstances of the case if it is necessary in the interests of justice.

121 Mobil contends that in this case, the plaintiffs' land is a vacant site that was purchased for redevelopment at some time in the future, and has no special value to the plaintiffs. The normal measure of damages, diminution in value, is therefore appropriate.

122 Mobil submits that although the diminution in value is normally assessed at the date the pollution is discovered, in this case it should be assessed at or about the date of trial because Mobil has substantially remediated the contamination. Mobil submits valuations of land take into account the land's present and future potential, including the potential to develop the land for residential use. The drop in market value reveals the market's assessment of the impact of the contamination on the land and its beneficial uses.

123 Mobil further submits that given the market assesses the effects of the contamination, courts should normally defer to the wisdom of the market rather than themselves assessing the various contingencies, such as whether: rezoning will occur; a planning permit will be given for the preferred development; the residual contamination will impact on the chosen development; such a development will yield greater profits than developments permitted by the current industrial zoning.

124 Mobil submits that the Court should not address the question of what it would do if it was charged with the responsibility of determining questions of zoning, planning permits, and the like. It would be a difficult task to foretell how tribunals, councils and authorities would determine such issues in the future.

125 Mobil contends that an award of damages for diminution in value will allow the plaintiffs to sell the property and purchase a replacement property for development of similar quality.

126 The cases relied upon by the plaintiffs in which damages for loss of profit were awarded involved damage to functioning, operational and profitable land, such as land supporting an agricultural business. Mobil submits that the plaintiffs were not able to put forward any case that suggested the loss of opportunity to develop the land would not be reflected in its diminution in value.

127 Mobil's valuation expert, Mr Brown, estimated that as at April 2013 the land was worth $10.4m. Assuming the leak had not occurred, Mr Brown estimated the land would be worth $11.3m as at April 2013. As at April/May 2007, those figures were $13m and $12m respectively. Accordingly, Mobil contends the diminution in value, taking into account all potentialities for the land, is no more than $1m.

128 Mobil also notes that the plaintiffs did not file any valuation evidence for the purposes of establishing diminution in the value of the land. Rather, the plaintiffs claimed diminution in value by reference to the lost opportunity to develop the land for residential purposes.

129 The State submits that the appropriate measure of damages for the plaintiffs' loss is the diminution in market value of the land, plus $104,273.95, being the plaintiffs' reasonable costs of investigating the leak. The State also submits that diminution in market value is the usual measure of damages for damage to land, and the evidence in this case does not disclose any loss of a kind that justifies departure from that principle.

130 The State points out that because the plaintiffs shifted their case during closing submissions by abandoning their claim for a reinstatement remedy, the appropriate remedy is damages. In the present factual scenario, the State submits that the principle of recovery is unarguably that the diminution in value of the land represents the damage suffered by the plaintiffs. The State relies on Jones v Shire of Perth,[172] Pantalone v Alaouie,[173] and Seiwa Pty Ltd v Owners Strata Plan 35042.[174]

131 During these proceedings, and at trial, the plaintiffs initially argued that the development opportunity of the land still exists. The bulk of the plaintiffs' evidence at trial was directed to establishing that the development opportunity still exists and would be imminently achieved. It was only in closing submissions that the plaintiffs argued the opportunity was lost and that the land cannot be developed. The plaintiffs submit that they will not now develop the land.[175] Accordingly, the State submits that if the plaintiffs are awarded damages for loss of opportunity, they will be over compensated in the event that notwithstanding their present submitted position, the plaintiffs' land is in the future developed.

132 I deal below[176] with my conclusions as to the Court's consideration of the plaintiffs' late assertion that they will no longer seek to develop their land.

133 On the valuation evidence presented at trial, the State submits that the market value of the land has reduced by reason of the leak. The State noted that Mr Brown's valuation of the land's pre-leak value was not challenged by the plaintiffs, which did not lead any evidence of such value.

134 As to the post-leak value of the plaintiffs' land, the State submits that an appropriate valuation taking into account any residential development potential of the land has not been undertaken. There is no expert valuation evidence of the post-leak market value of the land with a highest and best use that contemplates residential development and use. Highest and best use means the most profitable potential use to which land can be put having regard to planning considerations and all the circumstances of the land.

135 The State submitted that when assessing the present value of the land, the comparable sale of the Arundel Estate could be taken into account, and this would lead to the market value of the land being $42m.[177]

What is the appropriate measure of damages for torts affecting land?

In General - diminution in value - reinstatement of costs

136 Fleming's The Law of Torts makes a distinction between damages for harm to the property itself, and damages for consequential loss arising from the harm to the property, including lost business profits.[178] General damages may also be awarded for the loss of use of the land.[179] In the case of the harm to the land, despite the widespread impression favouring diminution in value, there is no categorical rule that that is the measure of damages.[180] There is a wide range of circumstances that could justify reinstatement over diminution in value, even though reinstatement costs would exceed the diminution in value.[181] What the court must assess is whether the plaintiff's desire to rebuild, refurbish or be reinstated is reasonable in light of the benefits to the plaintiffs of reinstatement, the extent of the diminution in value and the cost of reinstatement.[182] For instance, reinstatement may not be reasonable if the costs of reinstatement far outweigh the diminution in value and the plaintiff can purchase a similar property in the open market.[183] Reinstatement would be reasonable, however, in the case of a plaintiff whose factory has been destroyed and there is no reasonable alternative in which the plaintiff can carry on its business and retain its labour force.[184]

137 The authors of Law of Torts state that in cases of nuisance, the principle generally applied is to award the plaintiff the diminution in value of the property brought about by the nuisance.[185] Moreover, plaintiffs may recover losses that are a reasonably foreseeable consequence of the commission of the nuisance.[186] As an alternative to damages for diminution in value, the costs of reinstatement may be recoverable if not out of all proportion to the diminution in value.[187]

138 In relation to damages for harm to the property itself, the below cases demonstrate that whether reinstatement is reasonable will depend on the facts of each case.

139 In Evans v Balog[188] the NSW Court of Appeal upheld an award of damages for reinstatement costs in a case of nuisance, negligence and breach of contract. The plaintiffs' home was damaged when the defendants were excavating the adjoining property. In relation to the appropriate damages for the claims in tort, Samuels JA (with whom Moffitt P and Hutley JA agreed) said the 'proper assessment is determined by the circumstances of the case and by the overriding requirements of what is reasonable'.[189] In cases of tortious damage to buildings, it could not be said that the normal measure of damages is diminution in value. In this case, Samuels JA decided that damages for reinstatement costs were reasonable:

The question is whether it was reasonable for the plaintiffs to desire to reinstate their property. In my opinion, there is only one answer. It undoubtedly was. They had, in effect, lost their family home. That is the nature of their damage, and not some diminution in the value of their land. Fair compensation requires that they be given back what they had before; and the only way in which that purpose can be achieved is to award them the sum reasonably necessary to restore their property to the condition in which it was before the defendants effectively destroyed it...It is not to the point that the diminution in value basis might on one view produce no damages, while the reinstatement basis produces a substantial sum. The disproportion in question in cases of this kind are not always to be revealed by arithmetical comparison. The cost to a defendant of competing measures is a significant factor. But it is but one ingredient in the calculation of whether the plaintiffs' claim is reasonable or not. There are cases, and this, in my opinion, is one, where the nature of the plaintiffs' loss is such that there is only one mode of fairly repairing it. If that turns out to be more expensive than another, the wrongdoer has no one but himself to blame.[190]

140 In Fish Steam Laundry Pty Ltd v Col Johnson Electrics Pty Ltd,[191] fire had destroyed buildings occupied by tenants that did not add substantially to the total value of the land. The plaintiff had sold the land after the fire, instead of seeking to reinstate the buildings. Had reinstatement been sought, Dowsett J would have been inclined to award damages based on reinstatement costs. Given the special nature of the plaintiff company and the history of its ownership of the land, it would have been reasonable for the plaintiff to reinstate the buildings and continue to derive income from the land.[192]

141 An example of a plaintiff's request for reinstatement damages being found to be unreasonable is in Pantalone v Alaouie.[193] There, the cost of rebuilding a collapsed building was $172,000 while the diminution in value was $116,000. After stating that the 'general principle in awarding damages in tort is to seek to restore the

plaintiff to the position in which he would have been had the wrongful act

not been committed',[194] Giles J found that the plaintiff's desire to rebuild on their investment property was not reasonable having regard to the additional cost that would be imposed on the defendants if damages were assessed on the basis of rebuilding.[195] Giles J therefore awarded damages based on diminution in value and the conveyancing expenses involved in selling the property and purchasing a new one. He did so despite the inconvenience to which the plaintiffs would be put in searching for a replacement investment property.

142 A further example is in Jones v Shire of Perth,[196] a trespass case, where the plaintiffs' land had subsided and soil had been removed, and damages of $2,500 were awarded for the diminution in value of the land and the costs of replanting grass and shrubs. Jackson CJ said the plaintiffs would also be entitled to the expenses incurred in engaging professionals to advise on the remedial measures that might be taken to restore the land to its former state, even though the plaintiffs were held not to be entitled to restoration costs. The costs of reinstatement (soil back-filling and building a retaining wall) would have been over $10,000, which was considered to be out of proportion to the injury done to the land.[197]

143 In Seiwa Pty Ltd v Owners Strata Plan 35042,[198] Brereton J summarised the measure of damages in nuisance as follows:

...Ordinarily, the proper basis for assessing damages for nuisance is the diminution in value of the plaintiff's land occasioned by the breach. Reasonably foreseeable consequential losses are also recoverable, including for example loss of custom in the case of interruption to a business conducted from the premises, or costs of relocation. Although the cost of restoring the plaintiff's property to its previous condition may be recoverable - unless there is no prospect of the plaintiff performing the works, or such costs are entirely disproportionate to the diminution in value - that does not extend to performance of works on the land from which the nuisance emanates...[199]

144 Brereton J awarded a mandatory injunction for rectification, damages for loss of use, and damages in lieu of the mandatory injunction in the event that the injunction was not performed, calculated on the basis of diminution in value.

145 Besides damages for harm to the land itself, damages may also be awarded for loss of profits if the land harmed is profit-earning. This includes loss of a chance, as long as the chance is substantial and not entirely speculative.[200] Below are several examples of damages being awarded for harm to property and also for profits lost by reason of that harm.

146 An example of reinstatement damages and loss of opportunity damages being given in a case of harm to property is Glenmont Investments Pty Ltd v O'Loughlin.[201] In that case, a 12 metre high mechanical T-Rex was destroyed by fire. Damages in negligence were awarded for the cost of reinstatement (rebuilding) and for loss of commercial opportunities that T-Rex allegedly would have had from the time it was destroyed to the time it would be rebuilt. On appeal, the Full Court reduced the amount of damages but did not alter the bases of recovery.

147 An example of damages for diminution in value and loss of opportunity damages being claimed is Masha Nominees Pty Ltd v Mobil Oil Australia Pty Ltd.[202] That was a breach of contract and nuisance case. Although the case was decided on the breach of contract claim, the assessment of damages remains helpful. Mobil leased land from the plaintiff. The lease obliged Mobil to clean up any contamination at the end of the lease. The plaintiffs ultimately sold the land. They claimed from Mobil either damages for loss of opportunity to lease the land to Woolworths up until the sale, or licence fees pursuant to the contract for the same period, and secondly, damages for diminution in value. The plaintiffs elected to receive licence fees instead of loss of opportunity damages, but the Court accepted that loss of opportunity damages would have been available had the plaintiffs pursued that claim. Hargrave J said:

Where a plaintiff suing for breach of contract has been deprived of the opportunity to enter into a second contract, damages are recoverable for the lost opportunity, provided that the prospect of the second contract occurring is "sufficiently substantial to stamp it as a real commercial advantage."

There was no dispute about the applicable legal principles...

The Court's assessment as to the value of the lost opportunity to lease the land to Woolworths is capable of being relevant at two levels. This is because there are two limbs to the plaintiffs' damages claim. First, the plaintiffs seek as damages either the amount of rent which Woolworths would have paid under a lease prior to the sale of the land in November 2004 or the amount of licence fees payable by Mobil under cl 7(d) of the lease for the period between the expiration of the lease and the sale of the land in November 2004. The quantum of these two alternative claims is, if a lease to Woolworths is treated as a certainty, almost identical. However, if the Court assesses the lost opportunity to lease the land to Woolworths as less than certain, then damages for loss of rent could be significantly less than the claim for licence fees...

...Under [the second] limb, the plaintiffs claim as damages the difference between the actual sale price obtained by them on sale of the land in November 2004 and the sale price which it is alleged could have been obtained if Mobil had complied with the clean up obligation. The Court's assessment of the prospect that the plaintiffs would have secured a lease to Woolworths, and on what terms, is relevant to this limb of the damages claim.[203]

148 The diminution in value damages were calculated by comparing the actual sale price with the expected sale price had there not been any contamination. Hargrave J held that had the contamination been cleaned up, the plaintiffs would have leased the land to Woolworths, and the sale price should be estimated accordingly. The plaintiffs were not allowed diminution in value assessed on the basis of a sale of cleaned up vacant land.[204] Hargrave J determined what the plaintiffs would have done had Mobil cleaned up the contamination, and assessed the plaintiffs' recovery accordingly.

149 Damages for loss of profits (consequential loss) were awarded in Lonie, a case of negligence. There, fire from an adjoining property escaped onto the plaintiff's land and destroyed 167 fruit trees in the plaintiff's orchard, and some unpicked apples. The plaintiff was awarded damages for loss of profits in the period of replacement and until the new trees became productive (including loss of sales of the destroyed apples). Damages for loss of profits were awarded for a 10 year period, because after 10 years the replacement trees would bear fruit. The plaintiffs did not seek damages for diminution in value. The defendant appealed the assessment of damages. The Full Court rejected the defendant's argument that damages should have been assessed based on the diminution in value of the land.

The trees, of course, in contemplation of law form part of the realty and it is no doubt true that one way, perhaps the normal way, of assessing damages for injury to real property is to award the amount of the depreciation in the value of the land as a result of the injury. But this is obviously not sufficient, and perhaps not appropriate at all, if the land is devoted, or was intended to be devoted, by the owner to some profitable purpose which the damage has frustrated, postponed, interrupted or made less profitable.

In Williamson v. Commissioner for Railways, a case of a claim for damages for negligence causing damage by fire to a grazing property, fencing and stock, Sugerman J. said:

The appropriate method of assessing damages in respect of damage caused by negligence (including the negligent lighting and spread of fire) to the property of another, is dependent upon the circumstances. The plaintiff may claim (that is, as a capital loss) the difference in value of the property to him before and after the fire: Genders v. South Australian Railways Commissioner; Moss v. Christchurch Rural Council. Or, more particularly where the property is employed in a business, he may claim the cost of repairing or making good the damage, the diminution in value of the property after repairing or making good, and for losses sustained by reason of loss of use during the period occupied in repairing or making good."

Mr Mangan, for the appellant, contended that the damages had been assessed on a wrong principle. He contended that the proper measure of damages was the difference between the value of the land prior to the fire and the value of the land after the fire. In many cases this is the appropriate method of assessing the damages (see, for example, Genders v. South Australian Railways Commissioner). But it is not the only method. In some cases the cost of reinstating the property might be more appropriate (see, for example, Hollebone v. Midhurst & Fernhurst Builders).

In addition to compensation for the actual damage to the land, consequential losses may be recovered. I think that it is quite clear that where the land produces income, the loss of income must be reflected in the damages in one way or another: Rust v. Victoria Graving Dock Co. Where the difference in the value of land before and after is the basis of assessment, loss of income may be reflected in whole or in part in the diminution of value. It seems to me that in a case such as this, the respondents' loss resulting from the damage to their land by fire is properly assessed upon the basis of loss of net income. On this basis of assessment, the respondents would also be entitled to the cost of reinstating the land including the cost of procuring and planting new trees, but they were unable to recover under those heads due to lack of proof.[206]

152 Bray CJ and King J noted that nothing had been allowed for the cost of purchasing replacement trees or the cost of removing the injured trees and planting the new ones, because no such evidence had been led.[207] Perhaps Bray CJ thought the award should have included those costs. His Honour also said it would have been inappropriate for the plaintiffs to be compensated for the loss of profit that the trees could have earned had they lived out their lives; that period would be considerably longer than 10 years.[208] Rather, replacement of the trees and damages for loss of profits during the replacement period was the proper assessment. This is a form of mitigation. In terms of mitigation, a deduction was allowed for profits made from the cultivation of strawberries after the fire. This was because by destroying 167 trees, the fire caused the plaintiffs to have extra time to cultivate strawberries, and profits made from the strawberries increased.

153 When determining the length of the replacement period, the trial judge considered the time it would take the plaintiffs, acting promptly, to bring new trees to the economically fruit bearing stage. King J accepted this approach.[209] By assessing damages based on a plaintiff acting promptly, the court was again applying mitigation principles. King J also noted that '[f]uture loss must, of course, be affected by contingencies...'.[210]

154 Lonie was distinguished by Daubney J in Hobbs.[211] In that case, a fire on the defendant's mango farm spread to the plaintiff's recently purchased property and the defendant was found liable in negligence. The plaintiff's property was also a mango farm. The fire destroyed many of the plaintiff's mango trees and the fruit on them. The plaintiffs claimed for loss of income from the mango orchard, removal and replacement of 8,512 mango trees in the orchard, and replacement of damaged equipment, but not for diminution in value of the land.

155 Before the plaintiffs purchased the land, the orchard had been abandoned for some time, as the type of mango grown was not profitable. There would have been great expense involved in bringing the farm back to production. A valuation said the mango trees had minimal added value, and that the highest and best use of the land was rural residential. The plaintiffs had purchased the farm as an investment, but they did not have any prior experience in mango farming or managing mango orchards. After purchase, the plaintiffs commenced some restoration works, including slashing the grass, upgrading the irrigation system, and pruning the trees. The plaintiffs acquired the necessary plant and equipment. After the fire, some fruit had been produced and sold.

156 His Honour first considered a claim for income lost as a consequence of the destruction of the existing crop, and then a claim for loss of the commercial opportunity to derive income from the orchard. He distinguished Lonie, saying:

An obvious distinction between Lonie v Perugini and the present case, of course, is that Lonie concerned damage which was done to a functioning, operational, and profitable cherry orchard. What the plaintiffs had purchased in the present case was an abandoned mango farm, which had not been tended, and in fact was neglected in large part for several years, with no equipment and little infrastructure. It was obviously not an extant horticultural operation at the time they purchased the property. At best for them, it held potential for the future.[212]

157 As to the crop lost in the fire, Daubney J said there was no evidence as to how many mangoes the plaintiffs could have sold, how many would have been delivered or accepted by a purchaser, or the plaintiffs' costs of picking and delivering the mangoes.[213] His Honour was not prepared to speculate on those matters.[214] As to loss of opportunity to earn future profits, Daubney J found it was not the plaintiffs' intention at the time of the fire to commence immediately with full-scale mango farming, and that they did not have the capacity to fund the immediate rehabilitation and ongoing operation of the farm. This meant the opportunity claimed to have been lost was speculative.[215] Even if there had been an opportunity to rehabilitate and operate the farm, the opportunity did not have any commercial value because the expert evidence was that the farm was not profitable.[216]

158 Daubney J did not award any damages for reinstatement of the property, because the replanting of new mango trees would not add significantly to the value of the property, or provide a foundation for a profitable farming operation.[217] Damages were awarded for removal and clearing of the destroyed trees, lost irrigation equipment on part of the orchard, and sundry other matters.

159 The plaintiffs relied on Port Stephens v Tellamist.[218] That case concerned a trespass to land and damages for diminution in value. Santow JA dissented in the appeal, but helpfully discussed the principles governing awards of damages in tort. His Honour said that when awarding compensation for tortious injury, including to land, courts must not be constrained by rigid or inflexible rules.[219] The common law rules and principles that have been developed are not inflexible, and must always be applied with the overriding goal of fair and just compensation that will, as far as money can, put the plaintiff in the position she/he/it would have been in if the tort had not occurred.[220]

160 As to the available remedies for torts affecting land, his Honour said:

...Two alternative bases for assessment have been established to compensate a plaintiff whose land has been physically damaged: (1) the diminution in value, or (2) the reasonable cost of re-instatement. As a matter of principle, these cannot be said to be the only methods of assessing damage in trespass cases. In fact, counsel for the Council conceded on appeal that a claim for loss of profits was in principle open to a plaintiff in the position of Tellamist. That would seem to flow from the general law of damages, but, whatever the case, diminution in value and reinstatement certainly appear to be the most commonly employed bases for assessment...[221]

161 His Honour went on to consider the ways in which courts have assessed damages under the diminution in value and reinstatement bases. These cases demonstrated that:

...in cases of physical damage to land, the measure of damages may be either the diminution in value of the land or the reasonable cost of reinstatement, subject always to the overriding requirement that damages be a fair and reasonable compensation to the plaintiff for the injury he has suffered...

I should add, although it is not strictly necessary to decide, that given the overriding principle is proper compensation, the Court may not be confined to the two established bases of diminution and re-instatement cost. [222]

162 Santow JA also said that although the plaintiff has some say in the way damages are assessed:

It is wrong to say that the plaintiff has an untrammelled election between the alternative bases for assessment. As shown in Minter v Eacott, a plaintiff will be denied the cost of re-instatement if it is disproportionate either to the injury suffered or to the diminution in value. It seems that in such cases, the Court will refuse to overcompensate the plaintiff, and will reject re-instatement cost if it is not in accordance with the compensatory principle. This does not mean that re-instatement will be refused merely because it exceeds diminution in value. The plaintiff may recover reinstatement cost in excess of diminution in value where there is evidence of special value, such as the need of the plaintiff and his family to occupy their home: Hollebone v Midhurst and Fernhurst Builders Ltd [1968] 1 Lloyd's Rep. 38. In such cases, there is clearly no over-compensation. But it is true that if re-instatement is disproportionate, it will not be awarded even despite the plaintiff's desire for it.

... The Court would of course give credence to the preference of the plaintiff as a guide to what he considers his real loss to be, but I would not consider the Court ultimately bound to follow it...

...

I am in no way suggesting that this substitutes an unguided, free-wheeling inquiry in which the Court is freed from all principles and left to do arbitrary 'justice'. Rather, if it appears that the amount claimed by the plaintiff is disproportionate to the true loss suffered, it may award damages on an alternative basis to that claimed, where the evidentiary basis for doing so can be found.[223]

163 Santow JA then discussed two cases involving damage to trees in which the court discounted damages for diminution in value due to the potential for the trees to grow back to their former glory.[224] As his Honour said, it is 'always necessary to look to the plaintiff's real interest in the land...and his or her actual loss'.[225]

164 In their submissions, the plaintiffs also relied on Rust v Victoria Graving Dock Company,[226] Dodd Properties v Canterbury City Council,[227] and UYB Ltd v British Railways Board[228] for the proposition that damage by way of lost profits is a recoverable head of consequential loss in cases concerning torts against land.[229]

165 In Rust the defendants were responsible for the flooding of the plaintiff's land. On part of the land there were completed houses that were being leased out, on another part there were part-built houses that the plaintiff had agreed to let to builders, and another part had not been dealt with at all.

166 The Court of Appeal held that in respect of the completed houses that were being leased out, the plaintiff was entitled to damages for the cost of repair and the loss of rental during the time required for repair.[230] That is, the plaintiff was entitled to the cost of reinstatement and the lost profits during the period of reinstatement. The Court of Appeal did not allow damages for depreciation to the houses by the reduction of rentals, because once repaired, there was no depreciation of rental. Nor were damages allowed for diminution in value of the plaintiff's reversionary interest, because it was not proved that the damage was of so permanent a nature that the reversion would be worth less when it fell in.[231]

167 In respect of the part-built houses, the plaintiff had made advances to the builders on the security of the value of the houses, and the builders were required to repay the advances to the plaintiff before the leases were granted. Damages for the injury to this part of the land were to be calculated as follows. There was to be an assessment of the cost of repair, the pre-flood value of the houses, and the post-flood value of the houses. The defendant would be required to pay the cost of repair or the diminution in value of the houses, whichever was the lesser.[232]

168 As to the vacant land, the plaintiff claimed damages for delay in letting the land. The referee had assessed the delay for part of that land as six months and for the other part as three months. None of the vacant land had since that time been let for building purposes. The referee had concluded that the land would soon have been let had the flood not occurred. Cotton LJ felt 'some difficulty about this', but not having all the evidence before him, he was not willing to strike out that head of damages.[233] Lopes LJ said 'I reluctantly acquiesce in this'.[234] Given the referee considered that the land was not in a position to be let for three or six months, the court reluctantly allowed that head of damage. Cotton LJ, however, was clear that the defendants were not answerable for the 'entire ceasing of the letting of land on this property'.[235] The plaintiffs in this case are seeking damages for the 'entire ceasing' of the residential development of the land, rather than damages for delay in developing the land.

169 In short, in Rust the plaintiff was awarded damages for reinstatement and loss of profits in the period of reinstatement, damages for diminution in value or reinstatement whichever was the lesser amount, and (reluctantly) damages for delay.

170 In Dodd, the defendant had admitted liability in nuisance. The first plaintiff was the owner of a garage. The second plaintiff leased the garage and carried on its business there. The defendants caused damage to the garage. There was no dispute that the first plaintiff was entitled to reinstatement damages and the second defendant entitled to lost profits in the reinstatement period. The key question in the case was the date at which the repair costs should be assessed. The defendants challenged the assessment of the loss of profits damages on the basis that if the first plaintiff did not receive the current repair costs, there was a chance that the first plaintiff would not carry out the repairs, in which case the second plaintiff's business would not be disrupted. Accordingly, the second plaintiff's damages should be reduced by the chance that the first plaintiff would not carry out the repairs. As the Court of Appeal held that the first plaintiff was entitled to the current cost of repairs, there was only a 'de minimis' chance that the first plaintiff would not carry out the repairs. That chance was to be disregarded, so the defendants' challenge to the loss of profits damages was dismissed.

171 Browne and Donaldson LJJ separately commented that in cases of torts affecting land, the correct measure of damages is either the cost of repair or diminution in value.[236] Donaldson LJ said that occasionally a combination of the two measures may be used. In the result, however, damages were given for reinstatement costs and consequential loss in the form of lost profits in the period of reinstatement.

172 In UYB the defendant landlord (BRB) entered into a three year tenancy with the plaintiff tenant (UYB) to lease two railway arches, commencing in July 1992. BRB had, however, indicated that it would grant a 25 year licence. The plaintiffs wished to open and run a leisure business. BRB arranged for work to be carried out on the roadway above the arches, which resulted in the arches becoming unusable from the end of August 1992. UYB's fitting out of the arches was halted. But for the damage, UYB would have opened its business on 1 October 1992. BRB searched for a solution to the problem but gave up the search in November 1993. From November 1993, there were no prospects of UYB's business plan going ahead.

173 UYB claimed that it had an expectation of a tenancy for 25 years, and sought damages for loss of profits for 25 years. BRB argued that from November 1993 UYB unreasonably failed to seek other premises from which to operate the proposed business, and UYB was only entitled to damages for lost profits until the expiry of a reasonable time after November 1993. The trial judge found that that period was 18 months to two years.

174 The trial judge held that the appropriate basis for quantifying UYB's loss was:

a) lost profits from October 1992 to November 1993; and

b) the value of the hypothetical business in November 1993 less such loss as should have been avoided by steps taken in mitigation.[237]

175 Essentially UYB was compensated for loss of profits from the date the business otherwise would have opened to the date that BRB abandoned searching for a solution, and for the value of the lost business as at November 1993. UYB was not awarded 25 years of lost profits. The Court of Appeal said the court below was entitled to calculate damages in the way that it did.[238]

176 In the appeal, UYB argued that in addition to those two heads of damage, it should be awarded damages for loss of profits for 18 months or two years (the reasonable time it would have taken UYB to find other premises to start their business). The Court of Appeal disagreed.

177 The Court of Appeal said that if UYB had found other premises for its business at the end of the two year or 18 month period, damages would not have been assessed by reference to the value of the business, because UYB would still have had the business.[239] So UYB could be compensated either for complete loss of the business, which is what the trial judge did, or for delay in starting the business, which delay was from October 1992 to 18 months or two years after November 1993. Both methods of calculation resulted in approximately the same amount.[240] In fact, the two individuals behind UYB had moved on to other ventures during 1993 and 1994 and made profits in those ventures that they would not have made if they had been pursuing the railway arches business. It would also have been open to the trial judge to award loss of profits from October 1992 to the end of 1993 or start of 1994, when the individuals behind UYB put their efforts into other ventures.[241] The Court of Appeal therefore identified three methods of assessing UYB's damages.

178 The Court of Appeal agreed with the trial judge that UYB was under a duty to mitigate its ongoing loss by seeking alternative premises for the same business or possibly an alternative business in which to employ its resources.[242]

179 The plaintiffs submitted that in UYB the loss of profits was calculated on the basis of an inability to use certain premises for a projected business.[243] I agree, however it must be noted that UYB was not awarded damages for the loss of profits for the entire lifetime of the business (25 years). Rather, UYB was under a duty to mitigate its losses, and it was entitled to:

(a) damages for loss of profits in the period BRB was searching for a solution plus damages for the value of the destroyed business as at the date BRB abandoned the search (this was the form of damages ultimately awarded);

(b) damages for loss of profits in the period BRB was searching for a solution plus damages for loss of profits in the period UYB reasonably required to start up the projected business elsewhere; or

(c) damages for loss of profits in the period up until alternate profitable businesses were pursued.

180 Damages for loss of profits were only awarded because it was found that but for the damage to the arches, the business would in fact have opened on 1 October 1992, and that the business would have been profitable. The arches were being fitted out for the business and at the time of the damage, the business was just over one month away from opening. The facts of this case are vastly different. Another point to note is that in this case the plaintiffs seek damages for the full expectation of profits to be made from developing the land residentially, which profits were not awarded in UYB.

181 The plaintiffs in this case do not seek damages in the form of [179(b)] or [179(c)]. Indeed, the plaintiffs deny that they are under any obligation to mitigate their losses by pursuing development or residential development elsewhere. Applying the methodology in [183(a)] to this case, the plaintiffs would be awarded damages for diminution in value of the land. In UYB the court held that as at November 1993, UYB's business would have been operating and profitable. The business was valued and UYB was given damages for destruction of the business. Damages were calculated on the basis of a hypothetical sale of the business. Applying that here, the plaintiffs' damages would be calculated on the basis of a hypothetical sale of the land, plus any loss of profits in the period leading up to the sale. As the plaintiffs have not established that they would have been profiting from the land in the period leading up to a hypothetical sale, the methodology in [183(a)] would simply result in damages for the diminution in value of the land. UYB therefore does not help the plaintiffs.

Conclusion as to the appropriate measure of damages

182 The cases discussed above indicate that usually, the appropriate measure of damages for injury done to land is the diminution in value of the land or the costs of reinstatement. Courts will start with what the plaintiff has asked for, and then consider whether that measure of damages is fair and reasonable in light of the injury suffered, the difference between the diminution in value on the one hand and reinstatement costs on the other, and any special value in the land. Damages may also be awarded for consequential losses, including lost profits or lost commercial opportunities. The measure of damages must be approached in a realistic way.[244]

183 Where loss of opportunity damages have been awarded in nuisance and negligence cases, they have been awarded as consequential loss, and not as a substitute for diminution or reinstatement damages. In this case, the plaintiffs do not claim for consequential loss. Rather, they make a claim for injury done to the land, and they claim loss of opportunity damages rather than diminution or reinstatement damages.

184 There may be circumstances where the overriding goal of compensation, namely putting the plaintiff in the position it would have been in but for the commission of the tort, requires that loss of opportunity damages be awarded as a substitute for diminution or reinstatement damages. Such circumstances may include where the plaintiff establishes that it has a special value in the land, that remediation is not possible, and that there are no replacement properties available on the market for the plaintiff to purchase. Another example might be where a plaintiff loses a once-off opportunity to sell the land for a price above the market value. In that case, damages for diminution in value, ordinarily calculated by reference to market values, would not adequately compensate the plaintiff, and reinstatement would be unhelpful because the purchaser has moved on.

185 I consider, however, that at law and in the circumstances of this case, as addressed in detail below,[245] the appropriate measure of damages is the diminution in value.

186 Critically, the plaintiffs have not established that remediation/reinstatement is not possible. This is because at trial the plaintiffs sought a mandatory injunction for remediation of the land, and to that end, argued that remediation was possible. It is therefore no surprise that the plaintiffs have failed to establish that remediation is not possible.[246]

187 A question arises here as to what is meant by remediation. The plaintiffs, at the closing stages of the trial, submitted that remediation will not be undertaken to a standard that will allow development to proceed. The plaintiffs' land is still in the process of being decontaminated by Mobil, at Mobil's expense. That process has been ongoing for some time. The decontamination efforts are pursuant to a CUN issued by the EPA on 9 February 2007 and subsequent formal RAPs of September 2007 and January 2008, and are directed to achieving the point at which the EPA considers that the land has been cleaned up to the extent practicable (CUTEP). It is not clear if and when CUTEP will be realised.

188 This remediation process is also directed to the possible achievement of other environmental goals. Pursuant to the Environment Protection Act 1970, a Certificate of Environmental Audit may be issued by the EPA. Such a certificate would certify that there were no beneficial uses of the land which were precluded as a result of contamination.

189 It is however accepted by the parties that in this case the extent of contamination of the plaintiffs' land before and after the leak, is such that a Certificate of Environmental Audit is unlikely to ever be attainable.[247] The GHD Environmental Audit Report of December 1997 had concluded that a Certificate of Environmental Audit could not be issued.[248] Accordingly, the remediation being undertaken on the plaintiffs' land is more relevantly directed in part to attaining a Statement of Environmental Audit under the Environment Protection Act 1970, which would permit proposed use of the plaintiffs' land for residential development, subject to conditions and restrictions necessary to avoid risk to health as a result of contamination of the land.

190 It was not until final submissions that the plaintiffs' case changed to one asserting that it is now pointless and improbable, if not impossible, to expect that the plaintiffs' land will be able to be sufficiently decontaminated to enable it to be re-zoned and developed as residential land.

191 Further, the claimed opportunity is not a once off opportunity, such as an opportunity to sell to an over-anxious buyer who moves on and purchases elsewhere. The claimed opportunity is an enduring or ongoing opportunity. It is tied to the land. As long as the land is remediated, the opportunity may be pursued and realised. As is discussed below,[249] the plaintiffs have not established that the opportunity which they assert is lost because of the Mobil leak. The plaintiffs may later develop the land and make the profits claimed in this proceeding. To award the plaintiffs damages for loss of opportunity when the plaintiffs will retain the land and the opportunity continues to exist would be likely to overcompensate the plaintiffs.

192 In my view this conclusion is supported by the plaintiffs having no special value[250] in the land. At the time of the leak they had not decided how or when they were going to develop the land.

193 In relation to the possible uniqueness of the plaintiffs' land, the plaintiffs originally asserted that there are no development sites on the market in Melbourne which could be said to be reasonably comparable to the land.[251] Senior counsel for the plaintiffs also submitted in closing that whether there are comparable properties for development throughout Melbourne is irrelevant, because as a property developer "it's not either/or". I understood that submission to mean that potential development properties are not mutually exclusive and the plaintiffs could develop other alternative sites.[252]

194 Mr Cini gave evidence that, in his opinion, no development sites exist on the market in Melbourne which could be said to be equivalent or reasonably comparable to the plaintiffs' land, taking into account the site being 20 acres, within a 5-10km radius of the CBD and with the prospect of rezoning to residential.[253]

195 The most recent opportunity, which was, on the plaintiffs' assertion in any way comparable, was a site in Bell Street, Coburg. Mr Cini's opinion was that the Coburg site in terms of its overall size and location was inferior to the plaintiffs' land. Hallmarc was, however, unsuccessful in acquiring that site due to an offer which exceeded the $10 million Hallmarc offered being accepted by the vendor.[254]

196 Mobil submits that Mr Cini's contention that there are no other comparable development sites available should be rejected for the following reasons:[255]

(a) Mr Cini's suggestion that the Coburg site is inferior appears to be inconsistent with the fact that it had no serious soil contamination; was not within 2km of a refinery; was zoned either residential or mixed use; and did not adjoin industrial land. The only reason given by Mr Cini for the Coburg site being inferior was that Coburg was "a less popular area than Williamstown". No evidence was led to support this proposition, and Mr Cini's evidence does not take into account that the plaintiffs' land is in Williamstown North and suffers from many impediments that the Coburg site does not;

(b) Mr Cini's evidence is that Hallmarc is "constantly" developing sites and it is submitted that it is preposterous to suggest that the plaintiffs would be unable to find another property or properties which alone or in combination would provide to the plaintiffs the same opportunity to develop and make profits as this land;

(c) There are no apparent time constraints within which the plaintiffs would need to find such a property because Mr Cini says that he is prepared to wait as long as it takes to obtain the necessary planning approval for the plaintiffs' land; and

(d) The proposition that there will be no comparable opportunity for the plaintiffs to invest in a development property is inconsistent with their contention that there is an oversupply of unused industrial land in the Williamstown/Altona area.[256]

197 In my view the plaintiffs have not established that there are no comparable development sites available. This is because no independent expert evidence was adduced by the plaintiffs to this effect and to the extent Mr Cini sought to assert, without any substantive back-up research, that the above Coburg site was inferior, I am unpersuaded by that evidence. In my view, Mr Cini's stated reasons and conclusions on this issue were unsubstantiated, were not in the nature of expert evidence and were not probative. Further, I accept Mobil's argument that it is unlikely that there will be no comparable development opportunities available to the plaintiffs in the timeframe which the plaintiffs themselves have described as relevant to the development of the subject land.

198 Furthermore, for reasons I have explained below,[257] I consider that in this case the question of comparable development sites is irrelevant to the issue of whether the opportunity to develop the plaintiffs' land has been lost.

199 The plaintiffs have abandoned their earlier claim for the mandatory injunction because it would not be practical to order an injunction and the cost of remediation may exceed $200m whereas the loss of opportunity damages are only $170m. The plaintiffs submit that the more appropriate and practicable remedy is damages for loss of opportunity in lieu of an injunction.[258]

200 The plaintiffs no longer press their claim for damages based on reinstatement costs and they now assert that they will not seek to develop the land. As Dowsett J said, 'where there is to be no reinstatement, the reinstatement cost cannot be recovered'.[259]

201 Had the plaintiffs not abandoned their claim for a mandatory injunction or damages based on reinstatement costs, I would still have found that the appropriate measure of damages is damages for diminution in the value of the plaintiffs' land. This is because reinstatement costs are out of all proportion to the diminution in value, and the plaintiffs have not established any special value in the land. Furthermore, Mr Nunn's evidence was not addressing the cost of actions required to permit the plaintiffs to be able to use their land unrestricted by the effects of the Mobil leak, but addressed a much broader scope of remediation.[260] Mr Nunn accepted that the action he had costed would not come within the EPA's definition of practicality and conflicted with Mobil's RAP which had been approved by the EPA. Finally, damages based on diminution in value are likely to enable the plaintiffs to purchase and develop another property.

Circumstances rendering diminution in value damages more appropriate and just than loss of opportunity damages

(i) at the time of the leak, the plaintiffs had not decided how and when to develop the land;

(ii) pre-leak, it was uncertain how and when the land may be developed;

(iii) after the leak, it is uncertain how and when the land may be developed;

(iv) the plaintiffs no longer seek to enforce remediation by their earlier injunctive relief (as proposed by Mr Nunn);

(v) remediation of the plaintiffs' land to CUTEP is likely to restore that land to its highest and best use;

(vi) I am not satisfied that the plaintiffs have established that their land will not be developed in some manner in the future;

(vii) damages for diminution in value are likely to be more reliably and accurately ascertained;

(viii) the upper bound of the reinstatement costs in excess of $200M is such as to probably render such remediation uncommercial when considered against the likely market value of the plaintiffs' land and likely upper bound development yield, and therefore also impractical and not a reasonable measure of the plaintiffs' loss; and

(ix) diminution of value damages are essentially determined by the market at the relevant time;

damages based on diminution in value represent a more appropriate, fair and reasonable compensation to the plaintiffs for the injury suffered.

203 An assessment of damages based on diminution of value of the land as a result of the contamination injury is, in my view, the much more preferable measure. That is because the alternative sought by the plaintiffs, namely damages for loss of opportunity carries with it a significant risk in this case that the plaintiffs will, or may be, overcompensated because they ultimately develop the land in some way involving residential development. Alternatively, the plaintiffs may well sell their land for a price that factored in potential residential development in the future. This is in my view exacerbated by the way the plaintiffs frame their damages claim. They seek to be compensated on the basis that their residential development plan would have been achieved in all respects as envisaged in relation to cost, timing and scope notwithstanding the many planning and environment vicissitudes which are likely to affect that development, including the resolution of the re-zoning constraints and also the construction and marketing uncertainties. The plaintiffs' compensation involves accepting now, outcomes which would, theoretically, be achieved many years hence and the commercial environment which then exists. Furthermore, the plaintiffs' claim for damages based on their asserted loss of opportunity is by its nature (at this point of time) hypothetical and pregnant with projections and uncertainties whereas the assessment of damages on the basis of the diminution in the value of the plaintiffs' land as a result of the contamination injury caused by Mobil is, for the reasons I have explained,[261] likely to be a more reliable and accurate basis upon which to assess damages.

204 Furthermore, compensation based on diminution of value would value the plaintiffs' opportunity to develop their land residentially, pre-leak, with any decline in the value of the same opportunity post-leak.

205 Similarly, in my view, reinstatement damages would not be as appropriate as damages for diminution of value. This is because, in addition to the reasons I have earlier identified,[262] reinstatement damages are at odds with the fact that Mobil is remediating the plaintiffs' land and continues to be obliged to do so. Furthermore, the ultimate extent of remediation by Mobil is unknown, albeit directed to the beneficial uses of the land being restored via the CUTEP process. It is also unlikely that the alternative reinstatement addressed by Mr Nunn[263] would remove all contamination caused by Mobil and, as I have alluded to, those proposals appear to be somewhat divergent with the RAP and would in any event not control vapour issues as would be likely to be insisted upon by the EPA.[264]

206 The evidence of Mr Nunn, to which I have referred, was that reinstatement costs range between $93M and $206M. Such costs render it very likely that the Nunn remediation proposals would be uncommercial given the evidence of the yield of the plaintiffs' proposed development, which Mr Brown opines has a total upper likely selling price being between $65M (subdivision only) and $234M.[265] Mr Papworth put the total upper likely selling price as being $79M (subdivision only) to $304M.[266] Further, once the construction costs involved in the residential development of the land are factored in, Mr Nunn's remediation costs would probably exceed any profits the plaintiffs could achieve by residentially developing the land. Mr Keighran's evidence was that the subdivisional profit would be between $74M (subdivision only) and $175M.[267]

207 In my view, for the above reasons,[268] diminution in value is the appropriate measure of damage to be applied to the plaintiffs' causes of action.

208 However, assuming that I am wrong and that the appropriate measure of damages is loss of opportunity, I turn to consider loss of opportunity damages.

209 As mentioned above,[269] in their pleadings the plaintiffs claimed damages for loss of profits.[270] In a claim for loss of profits, a plaintiff is required to prove on the balance of probabilities that it would have made those profits but for the defendant's tortious conduct. At trial and in their closing submissions, the plaintiffs made it clear that their claim was for loss of a valuable commercial opportunity, rather than for loss of profits.

210 The plaintiffs did not clearly identify the opportunity that they claim has been lost. At times it was described as the opportunity to rezone and develop the land for residential purposes, or to proceed with such rezoning and development.[271] It was also identified as the opportunity to proceed with one of three alternative residential development scenarios.[272]

211 In other parts of the plaintiffs' case the relevant "opportunity" was identified as the opportunity to develop the land in accordance with the higher density development scenario. The plaintiffs seek to persuade the Court that, acting rationally, the plaintiffs would have proceeded with the higher density development.[273] They submitted that their loss should be assessed by reference to the lost profits associated with the higher density development scenario.[274] Accordingly, the plaintiffs argued that the value of the lost opportunity is $170,424,648.[275] The maximum amount that may be deducted from that sum is $9,938,500 to account for the 'as is' value of the land.

212 The plaintiffs submit that they are required to establish two elements on the balance of probabilities.[276] First, that had the leak not occurred they would have sought to secure the benefit of the opportunity to rezone the land and then develop it for residential purposes. Second, that the opportunity to rezone the land and develop it had some value and not merely a negligible value.

213 On the plaintiffs' submission on the first element, the Court would need to assess three matters:

(i) Would the plaintiffs have pursued the prospect of rezoning the land and developing it for residential purposes?

(ii) What factors supported the likelihood of the land being rezoned and developed?

(iii) What were the impediments to achieving the rezoning and residential development of the land?

214 As to the first of the three matters to be assessed in relation to the plaintiffs' first element, the plaintiffs submit that they were prepared to wait for the appropriate time to develop the land when it had been rezoned rather than undertake a less profitable development in the short term, such as an industrial subdivision, which would not realise the full potential of the land.[277]

215 The plaintiffs admit that before they were informed of the leak they had not decided which of the three development scenarios (with or without variation) would have been constructed or the precise timing of any development.[278]

216 The three alternative development scenarios proposed by the plaintiff were:

(iii) Higher Density development plan.[279]

217 The plaintiffs submitted that the final form of the development would depend to a degree on the timing of the rezoning process and when the development would have commenced. The plaintiffs contend that they would have persisted in holding the land even if there were delays in processing an application for a permit and any appeal against a decision by the Council.[280]

218 The plaintiffs also contended that since purchasing the land they have been actively engaged in the pursuit of rezoning the land, including at the time they were informed of the leak.[281] Even since the leak, the plaintiffs have been actively engaged in seeking to maximise the economic potential of the land by securing its rezoning.[282] They submitted that the most likely form of development would have been the higher density development because it would have generated the highest return.[283]

219 After learning of the leak the plaintiffs continued with their efforts to secure the rezoning based on limited knowledge of the extent and consequences of the contamination, and on the assumption that the defendants would fully remediate the land.[284]

220 In relation to the first matter I am satisfied, on the balance of probabilities, that immediately before the leak the plaintiffs would have pursued the prospect of rezoning the land and developing it for residential purposes.

221 The plaintiffs' case is that at all times they were willing and able to pursue the opportunities inherent in the plaintiffs' land and that at the time contamination from the leak was discovered, Mr Cini intended for the plaintiffs to maximise any realistic opportunity to develop the plaintiffs' land for residential purposes. I accept that the Hallmarc Group, of which the plaintiffs were part, had a track record of undertaking such developments. However, Mr Cini gave evidence that what would have been built would have been a question of timing and what the market demands were at the time.[285]

222 I am satisfied of the plaintiffs' residential development intention for their land at this pre-leak point in time because such a conclusion is supported by the plaintiffs acting by that time to prosecute a residential development, notwithstanding what Mr Cini explained to be a tactically inspired industrial use application during the pre-leak period. Furthermore, I accept Mr Cini's evidence of the plaintiffs' intentions and plans at this time as the best evidence available as to whether the plaintiffs would have pursued the prospects of residential rezoning and development.

223 I am of the view that Mr Cini's evidence as to the plaintiffs' intention at that time is probative and of significant weight, notwithstanding the evidence about the difficulties confronting the plaintiffs' plans to develop residentially. I am persuaded that immediately prior to the leak the plaintiffs intended to, and would have pursued the prospect of re-zoning the land and developing it for residential purposes.

224 As to the second of the three above matters to be assessed, namely, factors supporting the likelihood of the land being rezoned and developed, the plaintiffs submitted that the opportunity presented by the land to them, from its rezoning and residential development pre-leak was substantial and not merely speculative.[286] The plaintiffs submit that Mr McGurn's evidence established that there was a good chance that a rezoning could receive the necessary support and that the land was a prime candidate for rezoning.[287]

225 The plaintiffs also submitted in reply that they were required to establish the likelihood of rezoning being achieved and that the prospects were likely and not merely speculative.[288] They are not required to prove that it would be a certainty. At other times, however, the plaintiffs spoke of the onus being to establish that the prospects of realising the development were likely on the balance of probabilities.[289]

226 They also suggested there could be tax consequences to the extent any damages award is properly characterised as lost profits. This submission, however, leads to further confusion as to whether the plaintiffs are claiming damages for loss of profits or loss of a commercial opportunity.

227 As to the third of the matters to be assessed, the plaintiffs submitted that none of the impediments to rezoning raised by the defendants represented a significant barrier to achievement of rezoning.[290] Those impediments (at this time omitting the groundwater contamination caused by the Mobil leak) principally relate to:

(a) the 2km EPA buffer around the Altona Refinery;

228 I note that in these reasons I have interchangeably referred to the matters which stand in the way of the plaintiffs achieving the rezoning of their land for residential usage and obtaining the necessary development permits as "impediments" and "constraints".

229 In relation to the second and third matters (the impediments/constraints) concerning the factors which supported or stood in the way of the plaintiffs' land being redeveloped as residential land, considered immediately before the leak and on the balance of probabilities, I find, for the reasons I have addressed separately below,[291] that the impediments to the rezoning of the plaintiffs' land were such that the plaintiffs' land was most unlikely to be rezoned so as to enable it to be developed residentially.

230 I also find that the impediments to the plaintiffs having their land rezoned for residential development, which affected that land immediately before the leak, have not changed in any material way subsequent to the leak.

231 As to the second element the plaintiffs submit they are required to prove that, on the balance of probabilities, the opportunity to rezone the land and develop it had some value and not merely a negligible value.

232 Mr Papworth, a valuer called by the plaintiffs, gave evidence as to the likely selling prices that would be realised from the three development scenarios provided by Mr Keighran. Mr Keighran, who also gave evidence for the plaintiffs, detailed the costs of the three development scenarios.

233 The plaintiffs accepted that the onus was on them to establish, also on the balance of probabilities, that an opportunity with more than negligible value was lost.[292] In this regard, they asserted that contamination does, at present, prevent any type of development of the land.[293] The plaintiffs submitted that the evidence established that after the leak no confident conclusion can be drawn that residential development would be possible. This is partly because there is no certainty as to the timing or standard of CUTEP, which the defendants have failed to prove.[294] Indeed, it is entirely speculative that CUTEP can and will be achieved. The plaintiffs submit that the defendants have failed to call an EPA officer or the environmental auditor to give evidence about what standard of CUTEP will be required of Mobil, or will be achieved by Mobil or when CUTEP will be achieved, or what conditions are likely to be imposed by the EPA in relation to any residential development undertaken by the plaintiffs.[295]

234 Development is currently impossible as no Statement of Environmental Audit has been issued.[296] The plaintiffs submit that it was common ground that a Statement of Environmental Audit cannot sensibly be issued at the present time.[297] The plaintiffs also submit the effect of the leak on the residential development opportunities will not be known until an environmental audit of the land is complete, and it is entirely speculative to seek to predict the outcome of an environmental audit.[298] As with the hypothetical achievement of CUTEP, until it is known what conditions will be imposed on any Statement of Environmental Audit of the land, it cannot be said how or whether the land can be used, residentially or otherwise.[299] The defendants cannot say what conditions might be imposed on residential development of the land.[300] There can be no confidence that the outcome of any future audit will not preclude residential use.

235 Further, as earlier noted,[301] the plaintiffs contend that it is now pointless to pursue the rezoning and development of the plaintiffs' land for residential purposes. The plaintiffs submit that they therefore do not now intend to develop the land for residential use.[302]

236 The plaintiffs also now submit that no reasonable developer in the plaintiffs' position would proceed to develop the land residentially in the current circumstances.[303]

237 The plaintiffs have however adduced no cogent evidence that a reasonable developer acting reasonably would not pursue a residential development of the plaintiffs' land. For reasons I address below,[304] I do not consider that the evidence of Mr Williams, whom the plaintiffs called, is relevant or probative on this issue. I address this aspect of Mr Williams' evidence later in these reasons.

238 The plaintiffs argued that to assess damages on the basis that CUTEP will be achieved and a constrained form of development might proceed at some point in the future would be to expose the plaintiffs to financial and legal risks.[305] This would be contrary to the compensatory principles of tort law.

239 It follows, according to the plaintiffs' case, that the opportunity to develop the land for any of the three indicative development scenarios has been lost.[306] They also contend that such an opportunity has been lost as a matter of pragmatic common sense.[307]

240 When arguing that the opportunity to develop the land has been lost, the plaintiffs at times proceeded on the basis that the opportunity was to develop residentially, and at other times proceeded on the basis that the opportunity was to achieve a specific residential development. For instance, the plaintiffs raised several arguments as to why the higher density development scenario is no longer possible,[308] while at other times they argued that residential development generally is no longer possible on the land.[309]

241 The plaintiffs submit that damages have been proved in the order of $170M.[310] Although the defendants did not establish that there are other development opportunities available post-leak on the plaintiffs' land, the plaintiffs allowed a 'salvage' amount of up to $9.9M, which they submit appropriately accounts for any development with which a less risk-averse developer might proceed. [311]

242 Mobil's primary submission was that the appropriate measure of damages in this case is the diminution in value of the land. Mobil submitted that if damages are to be assessed on the basis of loss of an opportunity to develop the land residentially, the Court must consider:

(a) whether the plaintiffs will commit to proceeding with one of the three development scenarios or some other unspecified proposal;

(b) whether the land will at some point in the future be rezoned for residential development;

(c) whether the plaintiffs are able to obtain a planning permit for their desired development proposal through the Council and VCAT processes;

(d) whether the state of the Mobil contamination of the land at the time the above pre-conditions have been satisfied, prevents residential development or inhibits the manner in which the land can be developed residentially (in a manner which the pre-existing soil and groundwater contamination does not); and

(e) an estimation of the difference between the profit that would be made on the plaintiffs' desired and approved development proposal, and the profit that would be made on a development which they are able to undertake.[312]

243 Put another way, Mobil in essence submitted that once the plaintiffs have established on balance that Mobil has caused some damage to the plaintiffs' opportunity to develop the land residentially, the Court should assess the damages as follows:

(a) value the opportunity available to the plaintiffs;

(b) determine the extent to which the opportunity has been lost/diminished due to the wrongful conduct;

(c) if lost/diminished, value the remaining opportunity; and

(d) assess damages as the difference between (a) and (c).[313]

244 As to the plaintiffs' intentions with the land, Mobil contended that Mr Cini's evidence was that the one proposal presently before the Council is unlikely to be pursued. Mr Cini could not say what proposal the plaintiffs would ultimately put to Council for approval.[314]

245 Since purchasing the land the plaintiffs have made various applications for industrial and residential developments, but have not chosen to proceed with any of them. Mobil also submits that there was some evidence that the plaintiffs purchased the land with the intention of developing it industrially.[315]

246 Accordingly, Mobil submits that the plaintiffs have not established that the higher density development scenario was the most likely development at the time of the leak. Mr Cini said that no decision had been made as to how the plaintiffs would develop the land, and he did not rule out industrial development.[316] The plaintiffs have previously made two applications for industrial development and two applications for subdivisional developments.

247 Mobil submitted that it is highly unlikely that the land will be rezoned for residential development.[317] This is due to the 2km buffer requirement, previous failed attempts to rezone the land, industrial interface and amenity issues, pre-existing contamination, odour issues, and access and servicing issues.

248 Mobil asserts that if the land were rezoned, the plaintiffs are unlikely to obtain planning approval for any of the three development scenarios.[318] The terrace house and higher density development scenarios have not been submitted for approval and the plaintiffs have not led any evidence about the prospects of obtaining a planning permit for any of the three scenarios.[319] Mobil submits that the only evidence as to the prospects of obtaining a planning permit was that of its planning expert, Mr Milner. Mr McGurn, the plaintiffs' planning expert, did not give any opinion on the likelihood of the three scenarios obtaining planning approval.[320]

249 As to the opportunity to develop the land residentially being lost, Mobil submits that the plaintiffs have not abandoned their pursuit of residential development, and there is no evidence that a reasonable developer would abandon development plans.[321] Rather, Mr Cini's evidence was that he would be prepared to hold the land for as many years as it takes to achieve a planning result.[322] His evidence was that the plaintiffs would not sell the land, because that is not what the plaintiffs do.

250 Mobil submitted that even if the plaintiffs had abandoned their pursuit of residential development, the assessment of the loss of opportunity must be carried out objectively and the fact that a plaintiff might choose to pass up an opportunity does not entitle them to recover the full quantum of a loss of opportunity they have decided to forego.[323]

251 Assuming, however, that an opportunity has been lost and the Court is required to quantify the loss, Mobil submitted that the Court should estimate the difference between the profit that would be made on the desired and approved development proposal (which is prevented because of contamination), and the development that the plaintiffs are actually able to undertake post-leak ('comparative scenario').[324] Mobil asserts that amount should be discounted by the various contingencies raised by Mobil, in accordance with Sellars.

252 The plaintiffs submitted that the opportunity lost was the opportunity to develop the land residentially. They must therefore prove, on the balance of probabilities, that that opportunity has been lost.

253 Mobil submitted that the plaintiffs have not provided any evidence of the likely profits from a comparative scenario (a development that the plaintiffs can proceed with; either a less profitable residential development or an industrial development).[325] Mobil said that in a Sellars analysis, the Court must estimate the difference between the profit that would be made on the plaintiffs' desired development and the profit that would be made on the comparative scenario. The profit achievable on the lost opportunity must be compared with the profit that could be achieved on the comparative scenario. As the plaintiffs have not given any evidence of comparative scenarios, the Court does not have the evidential foundation to make any assessment of the value of the alleged loss of opportunity. Put another way, the Court cannot make an 'informed estimation'[326] of the value of the loss suffered.

254 Mobil's submissions confuse the matters that must be proved by the plaintiffs and those that must be established by the defendants. The plaintiffs cannot be expected to provide the Court with any evidence of less profitable residential developments that are still viable on the land. Providing such evidence would have undermined their case that the opportunity to develop residentially has been lost.

255 The plaintiffs are not required to prove that the land cannot be put to any profitable use whatsoever. All they are required to prove is that the opportunity to develop residentially has been lost. If the plaintiffs have proved that the opportunity to develop the land residentially has been lost, the next step is to value the opportunity by reference to the contingencies in the way of realising the benefits of residential development.

256 If the land could be put to profitable non-residential use, for instance by developing the land industrially, that is a matter of mitigation of damages. The onus is on the defendants to establish that the plaintiffs have not mitigated their damages.

257 Accordingly, the plaintiffs must show that no residential development is possible on the land. If the defendants rely on mitigation principles, they must show that some form of profitable non-residential development is possible on the land.

258 If the plaintiffs' case had been that the opportunity was to pursue a particular form of residential development, they would have been required to prove that that particular form of residential development is no longer possible. If other, less profitable forms of residential development were still available, that would be a mitigation issue for the defendants to establish.

259 'Informed estimation' refers to estimation of the probabilities or possibilities of achieving the benefits presented by the opportunity. The probabilities or possibilities do not need to be proved on the balance of probabilities. In this case, the 'informed estimation' would relate to assessing the likelihood of the plaintiffs achieving the benefits of residential development. Mobil's submission that the 'informed estimation' relates to an estimation of the difference between the profits achievable on the lost opportunity and the profits achievable on the comparative scenario, must be rejected. 'Informed estimation' refers to the burden of proof or level of satisfaction, but it does not address which party bears the onus of proof in relation to the various issues in the case.

260 Paragraph [195] of the Plaintiffs' Closing Submissions refers to Mr Cini's evidence that there were no comparable development sites on the market in Melbourne which could be said to be reasonably comparable to the plaintiffs' land by reference to the characteristics cited by the plaintiffs.[327]

261 The plaintiffs also pointed out that although there was evidence that Mobil has at one point actively investigated the prospect of rezoning the Mobil land between 2002 and 2004, Mobil's position became that it would resist moves for rezoning to residential use.[328] The relevant Mobil land is the parcel of Mobil land adjacent to the plaintiffs' land referred to as the Maddox Road land.[329]

262 The Plaintiffs' Closing Submissions at [195] form part of their overall submissions dealing with the question 'Has the opportunity been lost?'.[330] It appears that the plaintiffs refer to Mr Cini's evidence, which I have alluded to earlier,[331] as to there being no reasonably comparable sites as primarily relevant to their argument that they have lost the opportunity to develop residentially. I think, however, that this evidence is relevant to which form of damages is appropriate, and also relevant to valuing the opportunity to develop residentially.

263 However, as I have earlier mentioned, the plaintiffs make the submission about a lack of comparable potential development sites as part of their loss of opportunity claim. In my view, when deciding whether the opportunity to develop the plaintiffs' land has been lost, it is of no significance whether or not the plaintiffs could have pursued the same development on some other parcel of land.

264 In relation to the assessment of the value of the opportunity claimed to be lost, Mr Cini's evidence has some potential relevance. I have elsewhere[332] found that the very vague and undefined opportunity to 'develop the land residentially' is problematic to value, including because the plaintiffs did not have any particular form of development in mind at the time of the leak. In such circumstances, a court may consider similar residential developments or potential residential developments which could be available to the plaintiffs to develop at about the time of the leak, so as to ascribe a value to the lost opportunity in that way. That is, if there had been another comparable parcel of land which had been developed as a residential development at about the time of the Leak it may have assisted the Court's evaluation of the profits which the plaintiffs are seeking to establish in this proceeding. The plaintiffs, however, contend that there are no comparable sites.

265 The plaintiffs' evidence that there were no comparable developments has the potential to assist the plaintiffs in that such evidence might be said to give the Court no alternative but to use the three alternative development scenarios put forward by the plaintiffs to value the lost opportunity, if the financial and other aspects of those alternatives were persuasive.

266 Returning now to Mobil's submissions, Mobil submitted that the plaintiffs do not take into consideration the contingencies inherent in the realisation of the development opportunity, and only impliedly accepted that damages for loss of opportunity are limited by the chance that rezoning will occur.[333] Mobil submitted that such an attempt to quantify the loss would be impossible, which reinforces that the normal measure of loss for damage to property should be applied.[334] The task is made more difficult by the plaintiffs not adducing any evidence of the likely profits from a current comparative scenario.[335] In the circumstances, the Court does not have the evidential foundation to quantify the value of the alleged loss of opportunity.[336]

267 Finally, Mobil submitted that the Court should also consider the likely corporate structure of any development. As the plaintiffs did not lead any evidence as to the likely structure, it is not clear that any profits that may be made from a development would accrue to the plaintiffs and not some other entity/entities.[337]

268 Mobil's case contained contradictory elements. At times Mobil appeared to argue that there was not ever an opportunity to develop the land residentially, and at other times Mobil argued that the opportunity to develop the land residentially has not been lost because the land can be developed residentially.[338] Mobil also submitted that after CUTEP, the residential development of the land will not be impeded in any way.[339] Mobil submitted that if the land is rezoned, the plaintiffs will be able to obtain a Statement of Environmental Audit that permits residential development.[340]

269 In this context, and also in relation to the broader issues, it is to be noted that it was no part of the plaintiffs' case that the leak has prevented or will prevent their land being rezoned.[341]

270 In the end result on this aspect I understand Mobil's case to be that it was highly unlikely that the land would ever be rezoned for residential development. Whatever chance there was of rezoning was not affected by the leak. If the land is rezoned and planning permits are obtained, the plaintiffs will be able to pursue their desired development unimpeded by the leak. Further, Mr Mirkov's evidence is that the Mobil leak itself does not prevent residential development of the plaintiffs' land, because the contamination of the groundwater caused by that leak will not prevent the plaintiffs obtaining a Statement of Environmental Audit.

271 The plaintiffs did not lead any evidence that rezoning and planning permits would be unachievable because of the leak. Nor did the plaintiffs lead any evidence of the remediation and other costs associated with undertaking the post-leak contamination management solution addressed by Mr Mirkov, Mobil's expert. Messrs Nunn and Ramsay who were the plaintiffs' remediation experts did not deal with the costing presented by Mr Mirkov.

272 In relation to the pre-Mobil leak contamination, the plaintiffs accepted the cost of remediating the pre-existing contamination would be in the range of $3.5m-$7m,[342] although it appears that Mr Cini conceded it could be more than that.[343]

273 The State submits that a Sellars analysis is not available to the plaintiffs because the plaintiffs' case at trial was directed at proving the reality of the opportunity to develop the land residentially, not the loss of that opportunity.[344]

274 The State submits that damages for loss of opportunity are only available where the opportunity relied upon is proven, on the balance of probabilities, to have been lost. There was no evidence that the plaintiffs have abandoned their development aspirations. Even at the time of trial the plaintiffs were still pursuing the permit and planning scheme amendment application C74.[345] Further, from a planning perspective the most significant advance in the plaintiffs' efforts to develop the land occurred after the leak. That was the inclusion of the land within Precinct 13 in the Council's 2008 ILMS. The State submits that the land has the potential for residential use in the future. In circumstances where the development opportunity still exists, which the plaintiffs sought to prove during much of the trial, awarding the plaintiffs damages for loss of opportunity would be over compensating them.[346]

275 If a Sellars analysis is to be conducted, the State argues that there are several issues with the initial requirement of establishing the existence of the opportunity.

276 One such issue was the plaintiffs' intentions with the land. The loss of opportunity case was advanced on the basis of three development scenarios, but the plaintiffs could not prove that they would have gone ahead with any one of those developments.[347]

277 The State submitted that even if the C74 Amendment is approved, the plaintiffs do not have any fixed plans as to the kind of development they would pursue.[348] Mr Cini said he would not pursue the development in accordance with the plans submitted with the C74 amendment. The State submitted that Mr Cini was unwilling to give evidence as to the plaintiffs' current intentions for the land.

278 While the State accepted that the plaintiffs have always intended to develop the land, the precise nature of the development, whether industrial or residential and whether low or high density, has changed over time.[349]

279 The State also submitted in relation to the pre-leak likelihood of realising the opportunity identified by the plaintiffs, that the plaintiffs have not established, on the balance of probabilities, that but for the leak they would have obtained a planning amendment or permit allowing residential use and development.[350]

280 The State submitted that the land will be developed residentially in time, which is consistent with the land being included in Precinct 13, but the current C74 Amendment is premature.[351] The State submits that the current application does not respond to the constraints of the land. The State also submits that the existing constraints affecting the plaintiffs' land prevent rezoning and residential development.

281 I do not accept that the plaintiffs' land will be developed residentially in time. I am far from persuaded to that view. The evidence adduced does in my view, however, establish that the plaintiffs' land will not be rezoned for residential development in the ascertainable future.

282 The State observes that it should be borne in mind that the plaintiffs have been pursuing a residential outcome for the land since about 1999 but have been unsuccessful due principally to the following issues: access; traffic management; noise; oil refinery buffer; pre-existing contamination; industrial interface; and a restriction on title.[352]

283 On balance, immediate residential use, or development for residential use of the land, was not possible before the leak, and is unlikely to proceed until pre-existing constraints on the land are addressed.[353] Given those pre-existing constraints, a Certificate of Environmental Audit was never achievable for the land, and the plaintiffs would only ever have been able to obtain a Statement of Environmental Audit with conditions for the management of environmental risks.[354]

284 The State, like Mobil, argues that the chance of the plaintiffs obtaining rezoning and planning permits for residential development was unaffected by the leak.

285 The State accepts that the leak will likely result in further conditions being added to the Statement of Environmental Audit to deal with residual groundwater contamination, but submits that this will not preclude residential development.[355] Mobil appears to agree with this contention.[356] The further conditions that may be imposed will not necessarily be any more onerous than those already required to manage risks associated with the pre-existing soil contamination.[357]

286 The State submits that although there are uncertainties in the timing of CUTEP and the particular works necessary, CUTEP remains an appropriate standard of remediation, and it is sufficient to restore all protected beneficial uses to the fullest extent possible, and will on balance enable residential development of the land.[358] In this regard the State submitted that there was no evidence to establish that after the EPA accepts Mobil has performed CUTEP, there would be any remaining curtailment of development of the land.[359]

287 The State submits the evidence overwhelmingly supports the conclusion that the leak has not resulted in the loss of the land's development potential.[360] There is no indication that the leak is causative of any lack of progress in the current C74 amendment application.[361]

288 In Sellars v Adelaide Petroleum NL[362] the plaintiff claimed damages for loss of an opportunity or chance to secure a commercial advantage/benefit. That opportunity/chance was to secure the benefits that entering into a contract with another purchaser and completing it would have brought. The trial judge found that it was more likely than not that the plaintiff would have concluded the contract with the other purchaser. He found there was a 40 per cent chance the plaintiff would complete that contract, owing to several conditions precedent. Damages were essentially calculated as 40 per cent of the benefit to be acquired on completion.

289 The High Court accepted that assessment of damages. Mason CJ, Dawson, Toohey and Gaudron JJ said that assuming a lost opportunity or chance has value, it is a compensable form of economic loss:[363]

And, where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages. The damages will then be ascertained by reference to the degree of probabilities, or possibilities, inherent in the plaintiffs succeeding had the plaintiff been given the chance which the contract promised.[364]

290 In Sellars the majority view was that causation and the suffering of loss must be proved on the balance of probabilities, while the amount of the loss is determined according to the degree of probabilities or possibilities:

...the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.[365]

291 This approach also applies to damages in tort.[366] Their Honours distinguished between claims for the profit a plaintiff would have made had he/she not been deprived of an opportunity as a result of the defendant's conduct,[367] and claims for damages for loss of opportunity to secure that profit. Brennan J explained that if the loss had been identified as the financial benefits that would have flowed to the plaintiff had the contract been concluded and completed, the plaintiff would have failed because it did not prove all the links in the chain of causation.[368] The plaintiff's claim, however, was that the relevant loss was the loss of the opportunity to continue negotiations with the other purchaser.

292 Brennan J said that the loss of an opportunity to acquire a benefit will be compensable if the plaintiff proves he/she could and would have taken the opportunity and that the benefit would then have been yielded.[369] His Honour explained that the opportunity must have offered a substantial and not merely speculative prospect of acquiring the benefit that the plaintiff sought to acquire.[370] That is, the prospect must be substantial. If it was, the opportunity is valuable.

293 As to the distinction between causation and fact of loss on the one hand, and the assessment of the amount of loss on the other hand, Brennan J said:

Although the loss of a valuable opportunity and the assessment of its amount are concepts that can be logically separated, in practice it will usually be the same body of evidence that tends to establish both the existence of a loss and the amount to be recovered. That evidence may establish the loss of a valuable opportunity more clearly than the value of the opportunity lost...

To prove the substantiality of a prospect of acquiring a benefit or of avoiding a detriment and what would have been the plaintiffs actions if the opportunity had been offered, it will usually be necessary to tender evidence to establish the plaintiff's objectives and the contingencies in the way of their achievement. Evidence of that kind will bear upon both the existence and the value of the lost opportunity.[371]

Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point when there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probabilities. A constant standard of proof applies to the finding that a loss has been suffered and to the finding that that loss was caused by the defendant's conduct, whether those findings depend on evidence of historical facts or on evidence giving rise to competing hypotheses. In any event, the standard is proof on the balance of probabilities...[372]

...A plaintiff seeking to prove the amount of a loss does not obtain the right to argue for a possibility by refraining from adducing evidence of the fact...[373]

296 In Heenan v Di Sisto,[374] Giles JA (with whom Mason P and Mathews AJA agreed) described the determination of loss of opportunity damages as follows:

As a general proposition past hypothetical events in the assessment of damages are not decided on the balance of probabilities, by which satisfaction that it is more likely than not that they would in fact have occurred establishes for the assessment that they would have occurred. Rather, the damages are assessed according to the degree of probability that the events would have occurred, provided that the probability is not so low as to be speculative or so high as to be practically certain: Malec v J C Hutton Pty Ltd. As was stated with particular reference to commercial transactions in Sellars v Adelaide Petroleum NL, "damages for deprivation of a commercial opportunity ... should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued".

There is, however, an initial question of causation: has the negligence or other wrong caused the loss of a chance? This is decided on the balance of probabilities...[375]

297 In a loss of opportunity claim, a plaintiff must prove on the balance of probabilities that the defendant's wrongdoing has caused the loss of a valuable opportunity. Once that is established, the Court assesses the value or extent of the loss by reference to the degree of probabilities. Where causation and the fact of loss end, and where valuation of the loss on the degree of probabilities begins, will depend on two things: the way the plaintiff has framed its case; and, as Brennan J stated in Sellars, the point at which the prospect of acquiring the benefit becomes substantial. Proof on the balance of probabilities will not end before the point to which Brennan J referred, but it may continue past that point if the plaintiff has framed its case in that way.

298 At the outset, the opportunity alleged to have been lost must be identified. As highlighted above,[376] the plaintiffs at times in this case contended that the opportunity was to develop the land residentially, however at other times contended that the relevant opportunity was to develop the land in accordance with one of the three development scenarios, and at other times the plaintiffs also contended that the relevant opportunity was to develop the land according to the higher density development scenario.

299 In circumstances, as pertain here, where the plaintiffs have put forward a case in which they say that at the time of the leak they had not decided how and when to develop the land, it is, I consider unlikely that the opportunity they claim to have lost is the opportunity to pursue a particular development. On a Sellars analysis a plaintiff must prove, on the balance of probabilities, that they would have acted to secure the benefit of the opportunity, but for the defendant's wrongdoing. If the claimed opportunity was to pursue the 121 lot subdivision, or the terrace house development or higher density development, the plaintiffs' claim for loss of opportunity would, in my view, fail because the plaintiffs cannot establish to the required standard, that they would have pursued any one of those developments at the time of the leak.

300 I understand the plaintiffs' case to be that the relevant opportunity was to seek to rezone and develop the land residentially. In relation to the question of whether or not the plaintiffs have or had the relevant opportunity, the plaintiffs define that opportunity no more specifically than an opportunity to develop their land residentially. However the plaintiffs advance the three more specific alternative development scenarios to furnish the Court with material upon which to value the opportunity the plaintiffs say was lost. This means on the plaintiffs' case, the plaintiffs must establish on the balance of probabilities that but for the leak, they would have sought to rezone and develop the land residentially, by pursuing rezoning and planning permits to that end. The plaintiffs do not claim that rezoning would have occurred. This means they do not need to prove, on balance, that the land would have been rezoned. Rather, matters such as rezoning and the obtaining of planning permits are contingencies in the way of realising the benefits of residential development.

301 After establishing that they would have sought to rezone and develop the land residentially (and they would have done all the things required of them), the plaintiffs must prove, on balance, that that opportunity was valuable. This is done by proving that pursuing residential development offered a substantial prospect of acquiring the benefits of residential development. The plaintiffs may discharge this burden by establishing that there were substantial prospects of obtaining rezoning and planning permits.

302 Once the plaintiffs have established that the opportunity was valuable, the Court will value the opportunity by reference to the contingencies in the way of acquiring the benefits presented by the opportunity. Evidence concerning those contingencies is relevant to proving, on the balance of probabilities, that the opportunity was valuable, and also to valuing the opportunity.

303 The plaintiffs' alleged opportunity was not time-based. That is, the plaintiffs do not claim that the opportunity was to develop the land residentially within a specific timeframe. The plaintiffs make no claim for compensation on the basis of delay to their development plans. This may result in the prospects of obtaining rezoning and planning permits being greater, because the Court will be assessing the prospects of obtaining rezoning and planning permits at some point in the future. Framing the case this way may be perceived by the plaintiffs as making it easier for the plaintiffs to establish that the opportunity was valuable, and may also be seen as resulting in lower discounts on account of contingencies. However, no evidence was adduced which established these matters.

304 However, framing the case this way raises a likelihood of it being harder for the plaintiffs to establish that the opportunity has been lost. The plaintiffs must prove, on the balance of probabilities, that the opportunity has been lost. It is not enough for the plaintiffs to say they have walked away from the opportunity. On this analysis, the Court would ordinarily assume that the plaintiffs still seek to rezone and develop the land residentially, and consider whether that opportunity is still valuable. Here, however, the plaintiffs now submit that they do not intend to pursue the residential development of the plaintiffs' land because it would be futile to continue to attempt to do so.

After the Mobil leak was there a substantial prospect of acquiring the benefit of the identified opportunity

305 I consider that it is necessary to consider whether, after the leak, there is still a substantial prospect of acquiring the benefits of residential development. This will involve assessing, post-leak, the contingencies which may be impediments to the plaintiffs acquiring the benefits presented by the asserted opportunity. As the plaintiffs' case was not tied to a specific timeframe, the Court will assess the post-leak likelihood of obtaining rezoning and planning permits at some point in the future.

306 In many cases the loss of the opportunity will be obvious. Loss will be obvious where an event such as a competition has passed, or a potential purchaser or vendor has moved on. That is not the case here. In this case, the opportunity relates to land and its potential uses. The plaintiffs retain the land, and may yet in the future put it to profitable use. The plaintiffs must establish on the balance of probabilities that the opportunity to develop the land residentially has been lost.

307 The plaintiffs will be entitled to damages if an opportunity has been lost, or if its value has decreased. The plaintiffs' case was that the opportunity has been lost, not merely damaged or diminished.

308 If it is found that the opportunity to develop residentially has indeed been lost, the Court would ordinarily consider whether the land could be used for some other form of development. However, this is dependent upon what evidence is placed before the Court. In this case, the plaintiffs adduced no evidence in relation to the pre or post-leak value of their land. There was no evidence tendered by the plaintiffs as to the value of their land with its highest and best use.

309 Mitigation principles have been applied in cases of torts affecting land and in loss of opportunity cases. In Conti v Chenery, a nuisance case, Owen J explained that a claimant has the same duty to mitigate the loss in tort as it has in contract.[377] In Lonie, Bray CJ said it would have been inappropriate for the plaintiffs to be compensated for the loss of profit that the trees could have earned had they lived out their lives. Rather, the plaintiffs were expected to act promptly, plant new trees, and mitigate their loss. In Lawrence v Kempsey Shire Council,[378] a nuisance case, Young J criticised the plaintiff for failing to mitigate his damage. In Glenmont Investments Pty Ltd v O'Loughlin the plaintiff was expected to rebuild T-Rex and the loss of opportunity damages were only calculated for the period of replacement. The plaintiff was not entitled to claim a lifetime of T-Rex profits. In Rust the plaintiff was not entitled to damages for the entire ceasing of the letting of the land. In UYB the plaintiff was under a duty to mitigate its ongoing loss by seeking alternative premises for the same business or possibly an alternative business in which to employ its resources.

310 To award the plaintiffs damages for loss of the opportunity to develop residentially without making an allowance for post-leak development options for the land appears to give rise to a real risk of overcompensating the plaintiffs. This is so even if those remaining development options were not favoured by the plaintiffs before the leak.

311 Based on the above, leaving aside for the present whether it is necessary for the plaintiffs to identify a specific form of development, the plaintiffs must prove on the balance of probabilities that:

(a) before the leak, they would have sought to rezone and develop the land residentially;

(b) before the leak, there was a substantial prospect of acquiring benefits of some value at least of residential development (that is, the opportunity was of some value); and

(c) the opportunity to develop the land residentially has been lost.

312 I have found sub-paragraph (a) above is established for the reasons I have earlier addressed.[379]

313 For the reasons I have addressed below[380] in relation to the impediments to rezoning and obtaining development permits to permit residential development, I have found that it is most unlikely that the plaintiffs would in the past, or will in the ascertainable future, achieve the residential rezoning of their land or obtain the necessary development permits. No residential development permit would be issued from the responsible planning authority if the land was not already zoned for residential development. In this way the prospect of obtaining residential development permits is contingent upon rezoning of the land for residential use.

314 Accordingly, I consider that before the leak the plaintiffs did not have a substantial prospect of acquiring the benefits presented by the asserted opportunity. In other words, the asserted opportunity was of no or negligible value.

315 I have also found[381] that because of the impediments to rezoning and attaining development permits, the plaintiffs have not lost an opportunity to develop their land residentially because that opportunity was not a realistic or attainable one in any event.

316 Finally I have found[382] that the leak itself, considered in isolation, does not prevent the plaintiffs from developing their land residentially.

317 If the plaintiffs establish those things on the balance of probabilities, the Court will value the loss claimed by reference to the degree of probabilities of acquiring the benefits of residential development. Put another way the Court will at this second stage assess the prospects of success of that opportunity, had it been pursued. In this task, the Court's role is to come to a global assessment of the likelihood of the plaintiffs acquiring those benefits. On this question the Court comes to a single overall figure, assessed to represent the overall probability of acquiring the benefits.[383]

318 The Court will then usually multiply the expected benefits of residential development by that overall probability. The relevant quantum of those expected benefits, in a case of the type the plaintiffs' advance here, is the likely loss of profit in relation to the development they contend they have lost the opportunity to undertake, which profits are to be established in the usual way on the balance of probabilities. When the opportunity is framed as 'to develop residentially', rather than as 'to pursue a particular form of development', it is problematic for the Court to assess the value of that opportunity. With a specific proposed development, it may be possible to estimate the profits that would be made, as the plaintiffs have sought to do with the three alternative development scenarios. But it is problematic to estimate the profits that would be made from 'a residential development' otherwise undefined. In my view, it would be inappropriate for the Court to undertake such an exercise in speculation.

319 After the Court has valued the loss of the opportunity, it will also ordinarily consider what use may now be made of the land. If the defendants have established, on balance, that other forms of development are still possible, then the profits expected to be made from such a development (discounted by the various contingencies inherent in the realisation of that development) will be subtracted from the plaintiffs' damages for loss of opportunity.

The state of the plaintiffs' land at the time of purchase by the plaintiffs

320 The plaintiffs were aware at the time of purchasing the land that there was pre-existing soil contamination on Lots A and B, but they said this would not have been an impediment to realising a residential development opportunity.[384] They submitted that the pre-existing contamination could have been remediated such that the land could be developed residentially.[385] I note in this regard, however, that prior to the Mobil leak no such remediation was in fact commenced but rather the plaintiffs lodged planning applications without having undertaken remediation.[386]

321 Mobil and the State rely on the reports of GHD and PPK that the plaintiffs had at the time of purchase of the plaintiffs' land as evidencing the pre-existing contamination.[387] Mobil and the State note that these reports did not include testing of the groundwater.[388] The history of the plaintiffs' land and the pre-existing contamination led to the conclusion in the GHD Report that a Certificate of Environmental Audit could not be issued. As a result, it is common ground between the parties that a Statement of Environmental Audit would have been required.[389]

322 Accordingly, the State submits that the plaintiffs' land was constrained by significant pre-existing soil contamination and the condition of groundwater was unknown. The parties accept that the plaintiffs' land required remediation and the cost associated with that remediation ranges in the millions.[390]

323 The plaintiffs' case is that at all times they were willing and able to pursue the opportunities inherent in the plaintiffs' land and that at the time contamination from the leak was discovered, Mr Cini intended for the plaintiffs to maximise any realistic opportunity to develop the plaintiffs' land for residential purposes. I accept that the Hallmarc Group, of which the plaintiffs were part, had a track record of undertaking such developments. However, Mr Cini gave evidence that what would have been built would have been a question of timing and what the market demands were at the time.[391]

324 The plaintiffs point to the report by Mr Keighran[392] as outlining the development possibilities before the leak.

325 However, at the time immediately prior to the leak and discovery of the added contamination for which Mobil accepts liability, the plaintiffs had not decided on the type of residential development scenario they might pursue on the land, nor had they decided on the future timing of such a development. Furthermore, the form of any future development the plaintiffs acknowledge would ultimately depend to a degree, on the timing of the re-zoning process and when the development commenced.[393] The plaintiffs have also put forward an expert report from Mr Williams, which opined that the plaintiffs would be likely to undertake the terrace house or higher density developments which offered a higher potential profit.[394]

326 As to the requirement that to achieve their pre-leak residential development the land would have to be re-zoned, the plaintiffs submit that they had, since about 1999, been seeking to have the land re-zoned.

327 The plaintiffs say that the opportunity presented by the land to the plaintiffs from its re-zoning and development for residential purposes "pre-leak" was substantial and not merely speculative.[395] However, I note that Mr McGurn states at [63] of his Report that "... subject to various issues being resolved and managed (eg. The industrial interface, contamination, vehicular access, and subdivision design), I consider that there is a good prospect that a rezoning could receive the necessary support and approval from Council and the Minister for Planning". They rely on Mr McGurn's evidence to submit that there was a good chance that re-zoning could receive the necessary support from Council and the Minister for Planning.

(i) other land in the Hobsons Bay municipality has been re-zoned from non-residential to residential;

(ii) the Hobsons Bay Planning Scheme has identified the plaintiffs' land as falling within a Strategic Development Area, meaning that the industrial use of the land is considered redundant and in the plaintiffs' contention, that the land has been specifically identified as suitable for residential development;[396]

(iii) the plaintiffs' land is within the ILMS which is the overarching strategy used by the Council when ascertaining whether to re-zone. The ILMS recognises that most of the land in Precinct 13 (in which Precinct the plaintiffs' land is situated) is a suitable SRA for residential purposes;

(iv) the ILMS is a planning scheme which is being actively implemented by the Hobsons Bay City Council; and

(v) the re-zoning of the plaintiffs' land would be entirely consistent with what the plaintiffs say is a well-established trend in Melbourne to evolve underutilised industrial land and transform it into housing,

there is a strong platform for the re-zoning of the plaintiffs' land for residential purposes.

329 I note that the ILMS was not finalised until June 2008, after the leak.[397]

330 The plaintiffs contend, relying on Mr McGurn's evidence, that the re-zoning of their land would also be consistent with land use trends in Melbourne, and that a redevelopment of land for housing would comply with the State Planning Policy Framework. Mr McGurn's evidence also establishes that about 25 per cent of industrial land in Hobsons Bay is vacant and there has been little demand for new industrial development.

331 The plaintiffs also put forward evidence of additional factors which their expert Mr McGurn states provide a planning environment suitable for the plaintiffs' land to be re-zoned residential, namely, the plaintiffs' land is not attractive to commercial and industrial use, and most planning policy provisions do not support the retention of the industrial zoning of the plaintiffs' land.

332 Mr Cini and Mr McGurn both gave evidence that the highest and best use of the plaintiffs' land, in a planning sense, is for residential purposes, and Mr McGurn's evidence was that the Local Council also held that view.[398]

333 The plaintiffs submit that the EPA, subject to concerns about re-zoning Mobil's own land, would appear to support re-zoning of the area within which the plaintiffs' land is located.[399]

334 The plaintiffs also observe that Mobil at one time actively investigated the prospect of re-zoning the Mobil land nearby from industrial to residential, however in about 2004 Mobil gave up the pursuit of such a rezoning.

335 As to the position of the Minister, the responsible Department and the Council regarding re-zoning the plaintiffs' land, the plaintiffs acknowledge that the Minister has declined to intervene and made no decision on re-zoning, and no Departmental decision or communication of relevance is relied upon by the plaintiffs in their closing submissions in support of the likelihood of the re-zoning to residential.

336 I have dealt elsewhere[400] with the reason for rejecting the plaintiffs' submission that I should conclude from the failure by the State to call evidence as to the re-zoning application, that such evidence would not have assisted the defendants' case that the prospect of re-zoning was unlikely.[401]

337 The plaintiffs contend that the evidence establishes that the plaintiffs' land enjoys both significant strategic support and the support of the Council for rezoning residential 1.[402] However, the plaintiffs accept that the Council's position on the re-zoning of the plaintiffs' land included that it opposed the exclusion of third party notice and appeal rights under the Development Plan Outlay, and recognised that any future development required a detailed solution to access and layout issues.[403]

Impediments/constraints to Rezoning for residential use and the issue of necessary development permits

338 The identified impediments to rezoning and the issue of development permits have been drawn from the reports of previous planning panels, in particular in regard to Amendments C1 and C33. As a preliminary point, the plaintiffs submit that limited weight should be given to the recommendations of previous planning panels because there has been a significant shift in the policy context applicable to any application to rezone the plaintiffs' land.[404]

339 It is to be noted however, that the re-zoning and planning issues which are addressed below,[405] both beset the plaintiffs' land pre-leak, and did so in the same way (save for contamination issues arising from the Mobil leak) in relation to the plaintiffs' land after the Mobil leak.

340 The plaintiffs submit that the 2km buffer zone is a guideline only.[406] The buffer guidelines allow for variations to the default buffer distance to be considered in identified circumstances, including where there are exceptional topographic or meteorological characteristics which will affect dispersion of residual air emissions.[407] The plaintiffs put forward Mr Pollock's directional buffer assessment model which supports the argument that the buffer can be significantly reduced between the Refinery and the plaintiffs' land.[408]

341 Mobil submits that previous attempts to have the plaintiffs' land rezoned have failed with the 2km buffer identified as a recurring issue.[409] Attempts to rezone have consistently been opposed by the EPA, which seeks to prevent residential encroachment within the buffer zone.[410]

342 The EPA's guideline Recommended Separation Distances for Industrial Residual Air Emissions provides for a 2km buffer around petroleum refineries and says that six criteria must be considered for a site-specific variation to the buffer distance. The guideline provides that the party seeking the variation must justify the variation to the satisfaction of the EPA and that approval should not be given by planning or other responsible authorities to a variation in a recommended separation (buffer) distance until the EPA is so satisfied.[411]

343 Where a sensitive land use (such as residential) is proposed, the onus is on the proponent of the proposed development to demonstrate that reduction in the recommended separation distance is appropriate having regard, as a minimum, to the six criteria identified by the EPA for site specific variation:[412]

(a) existing industry has formally indicated that it will transition out of an area and over a specified timeframe;

(b) the industrial plant and equipment have an exceptionally high standard of emission control technology;

(c) an environmental risk assessment of IRAEs (industrial residual air emissions) has been completed that demonstrates a variation is justified;

(d) the plant is significantly smaller or larger than comparable industries;

(e) there are exceptional topographic or meteorological characteristics which will affect dispersion of IRAEs; and

(f) particular IRAEs are either highly likely or highly unlikely to occur.

344 In addition to these criteria, the guideline provides that additional information may be required in many cases including sufficiently detailed data to enable dispersion modelling.[413]

345 However, there is no evidence before the Court that the minimum criteria for site-specific variation of the buffer are met. There is no evidence that particular IRAEs are either highly likely or unlikely to occur, and there is evidence that:[414]

(a) Mobil does not intend to cease or reduce its refinery operations;

(b) Mobil does not have best available technology;

(c) no environmental audit of residual emissions has been completed;

(d) the refinery is not significantly smaller or larger than comparable industries; and

(e) there are no exceptional topographic characteristics that will affect dispersion of IRAEs.

346 Mobil submits that Mr Pollock's evidence should be disregarded because his analysis was merely directed to ascertaining how meteorological data might support a variation from a radial buffer to a non-radial buffer because of greater dispersion of odours in certain directions. His analysis did not concern itself with whether, using the nominal emission rates he assumed, the odour levels produced by his modelling at or within the boundary of his new non-radial buffers (the odour contour levels) were at an acceptable level for residents living at or within the new buffer boundary.[415]

347 Mr Davies modelled the 3.9 odour unit contour according to the 2002 and 2008 meteorological data and found that for 2002, about half of the plaintiffs' land fell within the 3.9 odour unit boundary and for 2008, all of the plaintiffs' land fell within the 3.9 odour unit boundary. He said that he considered that people would respond to odours in the range to which they would be subjected on the plaintiffs' land as assessed by both Mr Pollock and himself.[416]

348 The plaintiffs were aware at the time of purchase of the land that there was pre-existing contamination in the surface soil on Lots A and B.[417] The plaintiffs accept that the cost of remediating the pre-existing soil contamination is estimated to be in the range of $3,500,000-$7,000,000, with the final cost being dependent upon the form of residential development.[418] The evidence of Mr Ramsay, an EPA approved environmental auditor, establishes that a Statement of Environmental Audit allowing residential use would be achieved for the limited pre-existing contamination identified in the environmental reports and investigations obtained pre-leak.[419]

349 The plaintiffs accept that there was soil contamination on their land at the time it purchased that land in April 1998 for $730,000. The plaintiffs also accept that such pre-existing contamination was factored into the $730,000 which they paid for 8 hectares of land in Altona in 1998.

350 Mr Cini's estimate of the cost of remediation to the plaintiffs' land to deal with pre-leak soil contamination is between $3.5M and $7M, depending on the extent of remediation required.[420]

351 Notwithstanding the pre-existing contamination, and the other re-zoning related impediments I shall come to, the plaintiffs pursued a number of attempts to re-zone and develop their vacant land for both industrial and residential purposes.[421] The latest amendment and planning permit application by the plaintiffs was C74, lodged in September 2008, close to two years after the discovery of the leak.

352 In February 2007 the EPA directed Mobil to clean up the plaintiffs' land and the decontamination efforts that are detailed above[422] were progressed and are still continuing with no date for completion yet projected.[423] Mr de Greene's view is that CUTEP could probably be achieved in 5 years based on current information.[424] Mr Mirkov was, however, of the view that 3-10 years was, before the Mobil leak, the likely timeframe for achieving a Statement of Environmental Audit.[425] Mr Mirkov's timeline for achieving a Statement of Environmental Audit, as assessed after the Mobil leak goes out to 5-13 or 15 years.[426]

353 As early as 1997 an environmental audit had been carried out on the plaintiffs' land, however the auditor would not issue a Certificate of Environmental Audit due to the presence of heavy metals, polycyclic aromatic hydrocarbons (PAH), asbestos,[427] and required remediation before residential use of the plaintiffs' land.

354 Expert witness Mr Ramsay, for the plaintiffs, gave evidence that the Winky Pop land could be the subject of a Statement of Environmental Audit, with conditions attached which permitted high density residential development, subject to a number of controls and remediation, including the removal of unacceptable lead concentrations at a certain location.[428]

355 Mobil's expert Mr Mirkov considered the contamination pre-leak was such as to render the plaintiffs' land incompatible, in its then state, for development for sensitive use.[429] Mr Mirkov was of the opinion that no Certificate of Environmental Audit would be issued in respect of the plaintiffs' land unless it was remediated of soil contamination, petroleum hydrocarbons and other contaminating materials.

356 The State submits that the constraints on the plaintiffs' land, including the pre-existing soil contamination, remain unresolved and a constraint on development.[430]

357 The plaintiffs' submission is that Mr Cini did not believe that the pre-existing contamination of the plaintiffs' land would be an impediment to the realisation of what the plaintiffs saw as the land's residential development potential. Mr Cini thought, on the basis of the GHD and PPK reports, that the pre-existing contamination could be dealt with.

358 The plaintiffs rely on Mr Ramsay, an experienced environmental auditor, who gave evidence that a statement of environmental audit permitting residential use (without conditions which would restrict residential development options) would be attainable. Mr Ramsay's evidence was that the pre-leak contamination could be remediated and the land would be suitable for a sensitive land use, including residential use, with the remediation of one "hot spot" affected by lead contamination.[431]

359 As to the pre-leak contamination by diesel, the plaintiffs contend that contamination identified by Mr Mirkov was probably mobilised by the leak and brought onto the plaintiffs' land from an offsite source. Mr Gilbert's evidence was to the effect that prior to the leak, the groundwater on the plaintiffs' land was not contaminated by diesel. I note that this was an assumption based anecdotally on the prior land use not involving the storage of diesel. However the groundwater was not ever tested prior to the leak. In this setting, Mr Gilbert's theory is that the leak 'leached' this diesel contamination from the ground offsite and brought it on to the plaintiffs' land.

360 In relation to this sub-issue I am not persuaded that Mr Gilbert's opinion that the diesel contamination found in the groundwater beneath the plaintiffs' land was probably brought onto that land by the light hydrocarbons from the 2006 Mobil leak transporting diesel down gradient and onto the plaintiffs' land is more likely. Mr Mirkov's view on this issue was that the diesel contamination originated on the plaintiffs' land. However, given that there is no evidence of any storage of diesel on the plaintiffs' land and Mr Gilbert's evidence on this issue appears to be largely in the nature of conjecture I consider that it is not possible to come to any conclusion. The evidence is too ephemeral and the opinions I have referred to too conjectural.

361 The evidence does not support a finding that before the Mobil leak, the plaintiffs' land was materially affected by any contamination of its groundwater.[432]

362 The soil contamination which was present in 1999 when the plaintiffs purchased the subject land, would not, considered alone, have been likely to prevent the plaintiffs from developing that land for residential purposes.

363 I accept Mr Ramsay's evidence that the plaintiffs would have probably been able to attain the issue of a Statement of Environmental Audit allowing residential use, and without significant conditions restricting residential development options. This Statement I note would have likely been issued with some conditions including in relation to pre-leak contamination remediation. However, because the plaintiffs' had not at about the time of purchase of the land, nor at the time of discovery of the Mobil leak, nor indeed at the conclusion of this trial made any decision on the form of residential development they planned to prosecute, it is not possible to come to any decision as to the specific or general conditions which might attach to such a pre-leak Statement of Environmental Audit or the constraints on residential development which may thereby arise or as to the cost ramifications to the plaintiffs of such conditions.

364 The plaintiffs submit that, based on Mr Gilbert's assessment, the diesel contamination on the plaintiffs' land was the result of the light hydrocarbons from the leak acting as a solvent that leached and transported the diesel contamination from up gradient in the substrate when the LNAPL from the leak came into contact with it.[433] I have addressed this sub-issue above[434] and concluded that no finding should be made in relation to it, one way or the other. At all events Mr Mirkov's evidence in relation to the attainment of a Statement of Environmental Audit addressed the contaminated groundwater on the plaintiffs' land (dealt with in detail below) and would appear to also address any issue of diesel contamination.

365 Accordingly, I accept the State's submission that pre-leak the plaintiffs' land was constrained by the existence of soil contamination which would probably cost between $3.5M and $7M to remediate and that unremediated, this factor was an impediment to the residential rezoning and the issue of development permits in relation to the plaintiffs' land.

366 The plaintiffs submit that measures to address interface issues between the plaintiffs' land and surrounding industrial uses include acoustic wall treatments, landscaping, and separation distances from the nearest dwellings (such as access roads provided between dwellings and the industrial uses).[435] Specifically, the noise from McIver Constructions could be addressed through acoustic attenuation measures.[436] Further, the plaintiffs submit that any industrial development undertaken by Mobil on the Maddox Road land is irrelevant given the purpose of the Industrial Zone 3 to act as a buffer between residential communities and the more intensive industrial land uses permitted within Industrial Zones 1 and 2.[437]

367 Mr Milner was of the view that the Mobil land to the west and south of the plaintiffs' land was being used by Mobil as a buffer between the Refinery and residential uses. Further, even if the Mobil land was rezoned residential, this would not prevent Mobil from continuing to leave the land vacant and using it as a buffer.[438] If Mobil was to develop the land industrially, in accordance with its Industrial 3 zoning, in Mr Milner's opinion the plaintiffs' land would be seriously constrained and compromised for residential purposes.[439]

368 Mobil relies on Mr Milner's opinion that notwithstanding the inclusion of landscaping buffers and acoustic walls, any residential development along the lines proposed by the plaintiffs would create a residential enclave girded by a railway to the north and industrial land to the south, east and west, with inadequate access to transport, and to retail facilities which typically form part of inner urban redevelopment projects, therefore rendering the planning proposals unlikely to gain planning approval.[440]

369 The plaintiffs submit that the issue of access and addressing the effect of adjoining land uses are issues of design and can be accommodated, and therefore do not unduly impinge upon the capacity for, or likelihood of, the land being rezoned for residential purposes.[441] The use of Violet Street as the principal access point to the plaintiffs' land for residential traffic is preferable in a planning sense given the existing residential character of Violet Street.[442] The unmade Hygeia Avenue road reserve also provides an access option for the plaintiffs' land.[443]

370 Mobil submits that both Mr Milner and Mr McGurn recognise access as an issue which remains unresolved.[444] In essence, Mobil submits that a single access point via Violet Street is inadequate and the plaintiffs have not been able to address this issue. Although the plaintiffs repeatedly suggested to Mr Milner in cross examination that access issues could be overcome through the development of Hygeia Avenue, the plaintiffs' planning firm have advised that road access via Hygeia Avenue is "not on the table" as an option potentially because it is unfeasible due to its cost.[445]

371 The section 173 agreement prohibits the use of Violet Street for traffic associated with industrial development.[446] The plaintiffs' proposed development scenarios do not relate to industrial use and development and the Council had been advised that the restrictions contained in the agreement were unenforceable.[447] In any event, ss 178 to 178E of the Planning Act provide the responsible authority with the power to remove or amend a section 173 agreement. The plaintiffs were aware that the agreement would need to be removed from the title and were not concerned with undertaking that step.[448] Further, alternative access could be provided by Hygeia Avenue.

372 The State of Victoria submits that the s 173 agreement is enforceable until it is removed from the title.[449]

373 A contingency exists in relation to the plaintiffs obtaining a Statement of Environmental Audit that would permit residential development of the land (whether or not subject to conditions).

374 The next contingency is obtaining development permits to develop residentially.

375 Mobil submits that it is unlikely any of the three alternative development scenarios would receive planning approval, even if the plaintiffs' land were rezoned.[450] The State submits that the plaintiffs have not proved, on the balance of probabilities, that they would (but for the leak) have obtained a permit permitting residential use and development of the land.[451]

376 Mr Cini's evidence was that the plaintiffs' present C74 rezoning application related to the plaintiffs' 121 Lot subdivision proposal only. Mr Cini's evidence was that he does not believe that it is likely, if the plaintiffs' land was rezoned, that the plaintiffs would pursue the 121 Lot subdivision development.[452]

377 Ultimately, I consider it to be unlikely, as a matter of common sense, that a specific development permit in the nature of a Planning Permit would be issued by the Council in respect of undefined development proposals. Accordingly, in my view, it is problematic for the Court to ascertain the likelihood of a planning permit being granted for an unknown residential development. Furthermore, as earlier observed,[453] the destiny of the plaintiffs' development permits will abide the plaintiffs' success in having their land rezoned.

378 By planning amendment C1[454] dated 15 July 1999 the plaintiffs submitted a planning amendment application which was not supported by the EPA for several reasons. One of those reasons was that the proposal breached the two kilometre buffer associated with the Mobil refinery. Further, the Panel considered that there were several constraints in the nature of traffic and access issues, issues with noise and residential/industrial interface issues and the effect of a s 173 agreement between the City of Williamstown and Analed Pty Ltd requiring that a barrier be erected in Violet Street.

379 The Panel did not support the plaintiffs' C1 amendment application, and the application was abandoned by the plaintiffs.

380 The plaintiffs also participated in a C33 amendment process to have their land included in the Council's ILMS. The C33 Panel concluded that the land should remain a secondary industrial area[455] and observed that it was not persuaded that certain matters raised by the earlier C1 Panel had been dealt with. These concerns included the EPA buffer required in relation to the Mobil refinery and access issues.

381 The Council's ILMS ultimately recognised the plaintiffs' land as part of Precinct 13,[456] but also noted the unresolved constraints and requirements that the C1 Panel report identified needed to be addressed.[457]

382 The plaintiffs' most recent rezoning application of 10 September 2008 is an amendment and planning permit application to the Council numbered C74.[458] This application includes a request to the Council to amend the Hobsons Bay Planning Scheme to rezone the plaintiffs' land from Industrial to Residential 1 Zone with an Environmental Audit Overlay, and an application for the residential subdivision of the land.[459]

383 Mr Cini confirmed that the C74 application is in relation to a proposed subdivision only[460] which the plaintiffs did not intend to construct as such but which provided an option to the plaintiffs.[461]

384 The plaintiffs' expert Mr McGurn in relation to the plaintiffs' rezoning prospects is notable in that his reports[462] do not identify any specific development scenario with which the plaintiffs plan to proceed.

385 Mr McGurn, when giving evidence under cross examination, stated that when he had given his opinion about the plaintiffs' rezoning prospects in relation to their land he had not taken into account that the EPA was likely to maintain its opposition to that land being rezoned. Mr McGurn claimed that EPA considerations were matters outside his expertise.[463]

386 Mr McGurn's evidence included him accepting that "disbenefit" issues in relation to traffic movements, traffic volumes, unsuitable access and buffer zone differences were also outside his expertise.[464] Additionally he conceded that the detail of the differences between C1 and C74 were not matters on which he was in a position to comment. Mr McGurn also agreed that future development of the plaintiffs' land would have to address the matters identified by the C1 Panel.[465]

387 Robert Milner, in his Town Planning Report of November 2011, states that there are a number of constraints on the plaintiffs' land. He observes that the constraints are not uniform and for that reason his evidence was that there would be some justification for the rezoning of a portion of the plaintiffs' land east of Hygeia Avenue and south of Akuna Drive ("the area of potential rezoning") for residential purposes but subject to the 2 kilometre buffer being varied[466] and subject to remediation of contamination as required and also subject to the construction of necessary visual and acoustic barriers.

388 Mr Milner's evidence was that the Mobil leak did not impact on the planning process in relation to the plaintiffs' land.

389 Mr Milner's evidence was the only expert planner's evidence as to the prospects of C74 and the proposed development scenarios. His opinion was that the plans presented by the plaintiffs would not be approved.[467]

390 Mr Milner was of the opinion that the whole of the plaintiffs' land was seriously constrained and compromised for residential purposes, and that a rezoning of the whole of Lots A and B was unlikely in the circumstances.[468]

391 Having come to the conclusion that the whole of Lots A and B would not be rezoned, Mr Milner observed that it necessarily followed that none of the plaintiffs' alternative development plans could take place on the plaintiffs' land. However, Mr Milner went on to consider the hypothetical position if all of Lots A and B were one day rezoned. Mr Milner's evidence was that if Lots A and B were rezoned none of the plaintiffs' alternative development plans would have been approved for the following reasons.

Subdivision development****[469]

In relation to the plaintiffs' subdivisional development which is the subject of their C74 application, Mr Milner states that this proposed development is problematic because:

(a) It only provides for a landscape buffer and acoustic wall adjacent to the existing industrially zoned land and development adjacent to Akuna Drive, but not for other borders the land shares with industrially zoned land.

(b) The siting of so many lots on the common boundary with industrial land would have the effect of accentuating the existing interface issues.

(c) It does not provide for a cul-de-sac on Akuna Drive.

(d) Provision for a temporary section of roadway in the nature of a court head on the western boundary would be unnecessary if the land to the west is used and developed for industrial purposes.

Terrace House development****[470]

In relation to the plaintiffs' proposed development for Terrace Houses, Mr Milner stated:

(e) No diversity is offered in terms of dwelling type.

(f) Many of the criticisms with regard to the subdivision development apply to this proposal.

(g) Increased density is not responsive to the site's relative remoteness to community services, activity centres or the site's constrained access.

(h) The development creates a series of rear lanes abutting site boundaries, which would present long term security and safety problems given the nature of abutting areas and the lack of surveillance and landscaping.

(i) The development exhibits greater proximity to established industrial areas and zones with reduced buffers and no other acoustic or visual treatment.

Higher Density development****[471]

In relation to the plaintiffs' proposed Higher Density development Mr Milner stated:

(j) Many of the earlier criticisms apply to this proposal.

(k) Amenity consequences of this proposal are worse as it is proposed to locate many of the apartment buildings on the common boundary with the existing industries on Akuna Drive or the railway line.

392 Mr Milner was of the view that in relation to their C74 application the plaintiffs' land would not meet a number of the critical tests.[472] This was because of the plaintiffs' land being unsuitable to attain sufficient connection with the local community,[473] and he considered that the sustainability of the plaintiffs' land could not be met.[474] Mr Milner's view was that the 'sustainability' of a residential development, as required by clause 56 of the Victorian Planning Provisions, was to be determined by reference to the ability to connect the development into the rest of the surrounding community.

393 Mr McGurn's evidence was that, in his opinion, the plaintiffs' land was likely to be rezoned residential. He stated that there was a good chance that a rezoning could receive the necessary support from Council and the Minister for Planning and that the plaintiffs' land was very suitable for rezoning because of its physical, strategic and locational context.[475]

394 Mr Milner's evidence was to the opposite effect. He identified five matters which he stated would have to be resolved before the plaintiffs' land could be developed for residential purposes.[476] Those five matters being: Local and State governments to determine that the land is not required to be retained for industry (either for supply or protection of existing industrial uses); land to be remediated of contamination; agreement from the EPA and Mobil that the two kilometre refinery buffer is no longer required; establishment of appropriate buffers from existing industrial uses; and construction of roads providing appropriate access to the site.

395 The plaintiffs say each of the rezoning impediments is capable of resolution. I have elsewhere[477] dealt with the detail of these impediments.

396 Mr Milner's evidence, to which I have earlier alluded,[478] was that although the plaintiffs' land would in time be able to be developed residentially, the existing constraints, especially the present buffer requirements, were impediments to residential development.[479]

397 In my view, Mr Milner's evidence is preferable to Mr McGurn's on these issues because Mr Milner's evidence, which was not effectively impugned by cross-examination, was the only expert planning evidence as to the plaintiffs' proposed development scenario and their current C74 application.

398 By contrast, the cross-examination of Mr McGurn revealed that his evidence about whether C74 was likely to be approved was founded upon a superseded ILMS.[480] Further, Mr McGurn conceded that he was not conversant with the details of planning application C1 and he gave evidence that the C74 application was not subject to the same criticisms that had been directed to the C33 application.[481] In my view Mr McGurn's failure to research all potentially relevant earlier applications, such as C1 and his lack of diligence in referencing an outdated ILMS are sufficient bases for me to give less weight to his evidence.

399 Mr McGurn's independence as an expert was also questionable, in my view, because of his earlier involvement with the plaintiffs from about 2005 in relation to the C33 and the C74 applications. I consider that this lengthy association with the plaintiffs renders him less than independent and gives rise to another reason to give more weight to Mr Milner's evidence on matters where the experts are in conflict. I also consider that Mr McGurn's concession that he did not take into account the EPA's attitude to the plaintiffs' land being rezoned when he put forward his opinion about the plaintiffs' rezoning prospects, stating, in that regard, that EPA considerations were matters outside his expertise, is a further sound reason to give less weight to Mr McGurn's evidence, when it is in conflict with the evidence of Mr Milner. In my view the interrelation of EPA requirements and concerns is so clearly of importance, including by way of potentially constraining the rezoning and development of the plaintiffs' land, that Mr McGurn's failure to factor EPA matters of relevance into his considerations significantly weakens his evidence on rezoning and development prospects.

400 Finally, I found the way Mr McGurn addressed the prospects of resolution of the constraints in relation to the plaintiffs' land, described by him as being able to be "worked through", to be of little assistance.[482] This phrase was unenlightening.

401 For these reasons I consider that I should prefer Mr Milner's evidence and place less weight upon Mr McGurn's evidence in relation to contested issues.

402 Furthermore, the State points out that:[483]

Also relevant to the likelihood of the Winky Pop land's current prospects of rezoning is EPA Publication AQ 2/86, "Recommended Buffer Distances for Industrial Residual Air Emissions" (1990 Buffer Guidelines).[484] The 1990 Buffer guidelines recognise the principle that if sensitive land uses are not sufficiently separated from industry, amenity and quality of life may be reduced. The EPA first recognised this principle in 1977, buffer guidelines have operated in Victoria since that time. The 1990 Buffer Guidelines designate a buffer distance of 2 kilometres between sensitive uses and petroleum refineries. The 1990 Buffer Guidelines were reviewed in 2013 and re-issued as EPA Publication 1518, "Victoria Separation Distance Guidelines" (2013 Buffer Guidelines).[485] The 2013 Buffer Guidelines maintain the 2 kilometre buffer and make plain that the onus is on the agent of change to establish a basis for a directional buffer.[486]

403 Mr Pollock, the plaintiffs' expert environmental engineer, gave evidence to the effect I have earlier addressed.[487] He acknowledged the present constraint created by the 2 kilometre EPA buffer and agreed during his evidence that the EPA strictly enforced the buffer requirement.[488]

404 However, Mr Pollock's second report dated 23 February 2012 stated that a directional buffer assessment revealed that the buffers would not need to extend to the plaintiffs' land.

405 Mr Milner, I note, was willing to accept on a conditional basis that if the relevant authorities and the experts considered a directional buffer assessment of the plaintiffs' land to be appropriate, he would also consider that to be sufficient to address his buffer concerns.[489]

406 The plaintiffs submit that the issue relating to buffer distances between the Mobil refinery and any residential use of the plaintiffs' land would be resolved.[490] They also submit that buffer guidelines are in the nature of recommendations and do not mandate a 2 kilometre buffer between the petroleum refinery and sensitive uses and also point out that buffer guidelines issued by the EPA allow for variations to the default buffer distance. The plaintiffs submit that the critical issue leading to the buffer requirement is odour.

407 Mr Pollock gave evidence that he specialises in buffer distance assessments and his assessment was that, on the plaintiffs' land, the buffer can be varied to place the plaintiffs' land outside the buffer.[491] He supports this statement by the modelling of potential modes of release of emissions from the refinery. Mr Pollock's modelling takes into account the release of emissions from various heights and under various meteorological conditions.[492]

408 The plaintiffs made submissions in relation to the evidence of Mr Davies, Mobil's expert who has undertaken assessments of the significance of various sets of meteorological data. The plaintiffs contend that the resultant modelling shows that a 2,000 metre directionally dependent buffer distance is located outside the perimeter of the plaintiffs' land for emissions released at certain heights. The plaintiffs submit that although Mobil has had access to the relevant modelling and data, it has not put on evidence in respect of this issue and the plaintiffs submit that because Mobil has not provided potentially relevant information which may affect emissions modelling, the Court can infer that such information would not have assisted Mobil.

409 I am unwilling to draw the inference which the plaintiffs invite. I am not satisfied that the general information the plaintiffs say Mobil possesses in fact exists, nor am I satisfied that I can conclude that such material is likely to assist the plaintiffs.[493] Nor am I satisfied that any such information would have been relevant to Mr Davies' evidence.

410 At [120] of the Plaintiffs' Closing Submissions the plaintiffs also submitted that because Mobil failed to provide Mr Davies with information about the closure of a bitumen plant and copies of certain odour audits, the Court should infer that such material, if provided, would not have assisted Mobil's case. I am again not willing to draw such an inference. Absent clear and specific evidence as to the significance of the information complained about, I do not believe such an inference would be properly founded or fair.

411 Mr Pollock also addressed the EPA complaint database and his evidence was that the pattern for complaints in certain respects supports his directionally derived buffer.[494]

412 The plaintiffs also submit that there is no evidence before the Court to establish that there will be any increase in the foot print of the refinery or change of operations or any significant increase in emissions or odour generation from the refinery.[495]

413 The plaintiffs' reply submission [6] is that the State[496] acknowledges that the evidence suggests that the south-east portion of the plaintiffs' land may presently be suited to residential use, subject to the plaintiffs being able to adequately address the issues earlier identified of soil contamination, acoustic buffers and the refinery buffer. The plaintiffs contend, however, that there is no reason to differentiate between the south-eastern part of the land and the balance of the plaintiffs' land.

414 In my view this contention on the plaintiffs' part is unconvincing. This is because at best the State only acknowledges that the south-east portion of the land may be suitable for residential use. Furthermore, at the same time as making the acknowledgement relied upon by the plaintiffs, the State highlights that any residential use of the south-east portion of the plaintiffs' land is subject to three substantial constraints each being satisfactorily addressed. I do not consider therefore that the State's position on this issue justifies the plaintiffs' submission that the whole of the plaintiffs' land should be viewed in the same way as the State views the south-eastern part of that land. The State has not conceded that the nature and effect of the constraints on those respective parts of the land are the same. Nor, at all events, has the State conceded that the south-eastern part of the land would be able to be developed residentially.

415 Mobil argues in relation to the buffer that the rezoning of the plaintiffs' land for residential use is highly unlikely to occur because there is no evidence that the plaintiffs will attain a site specific variation of the presently required 2 kilometre buffer around the refinery. Mobil points to six criteria to be addressed to achieve a site specific variation.

Where a sensitive land use (such as residential) is proposed, the onus is on the proponent of the proposed development to demonstrate that reduction in the recommended separation distance is appropriate having regard, as a minimum, to criteria identified by the EPA for site specific variation:

(a) existing industry has formally indicated that it will transition out of an area and over a specified timeframe;

(b) the industrial plant and equipment have an exceptionally high standard of emission control technology;

(c) an environmental risk assessment of IRAEs (industrial residual air emissions) has been completed that demonstrates a variation is justified;

(d) the plant is significantly smaller or larger than comparable industries;

(e) there are exceptional topographic or meteorological characteristics which will affect dispersion of IRAEs;

(f) particular IRAEs are either highly likely or highly unlikely to occur.

In addition to these criteria, the guideline provides that additional information may be required in many cases including sufficiently detailed data to enable dispersion modelling.[497]

However, there is no evidence before the Court that the minimum criteria for site-specific variation of the buffer are met. Instead, there is evidence that:

(a) Mobil does not intend to cease or reduce its refinery operations;

(b) Mobil does not have best available technology;

(c) no environmental audit of residual emissions has been completed;

(d) the refinery is not significantly smaller or larger than comparable industries;

(e) there are no exceptional topographic characteristics that will affect dispersion of IRAEs.[498]

There is no evidence that particular IRAEs are either highly likely or unlikely to occur.[499]

418 Mr Pollock's evidence, in support of the plaintiffs' case, essentially sets out to show that meteorological circumstances existed which justified varying the 2 kilometre buffer to a non-radial buffer.[500] He has stated that the available meteorological data could support a non-radial buffer because in his view the meteorological conditions were likely to disperse odours from the refinery in specific directions.[501]

419 Mr Pollock did not, however, directly opine that the plaintiffs' land should be exempted from the EPA buffer in respect of the refinery.

420 Although Mr Pollock sought to explain the justification for his directional buffer, based on meteorological data, he accepted that such data might not come within the EPA's guidelines in relation to "exceptional meteorological conditions" and might therefore not satisfy the 2013 Buffer Guidelines for change.[502]

421 Mr Davies concluded that based on the 2002 and 2008 meteorological data, all the plaintiffs' land fell within the relevant odour unit boundary, which in his view would result in the residents within that boundary responding to emitted odours.[503]

422 The plaintiffs' response was to argue that Mr Davies did not give evidence that modelled odour levels would be unacceptable for future inhabitants of the plaintiffs' land. The plaintiffs point out that Mr Pollock did not dispute that residents on the plaintiffs' land would be subjected to an unacceptable level of odours because there was no such evidence in dispute.[504] The plaintiffs also contend that the EPA buffer system is to protect against odour levels in abnormal circumstances and that relevant models do not indicate residents would be exposed constantly to specified odour levels.

423 However, Mr Davies gave evidence that for a variation to be achieved in relation to the 2 kilometre buffer it would be necessary to put forward modelling based on specific odour emission data in relation to unintended or accidental emissions from the refinery.[505]

424 Mr Davies also stated that Mr Pollock's 3.9 odour unit contour (based on 1995 meteorological data) was not based on an acceptable rate of emission.[506]

425 Mr Davies gave the following evidence in relation to Mr Pollock's view that because of the prevailing wind direction established by the meteorological data, most of the effect of odours would be at the southern end of the buffer:

...because there's no houses located further than 2 kilometres or 2000 metres to the south, we don't know whether or not there would be complaints occurring if there people that were there. The problem is that you have an arbitrary - there's an arbitrary emission rate that's being used in the modelling, so we don't know whether or not those arbitrary emissions reasonably reflect the emissions from the refinery and therefore what the impact would be, what the actual impact is at 2000 metres in any direction, where you could compare it with an odour criteria that would suggest what the impact would be.[507]

426 Mr Davies' opinion was that most complaints about odours occurred close to the refinery.[508]

427 The plaintiffs' Reply Submissions re-emphasise that EPA Buffer Guidelines are not mandatory, but are only as entitled "guidelines". The plaintiffs also submit that for some criteria in Table 4 of the Guidelines,[509] the plaintiffs are, in any event, not in possession of the evidence, and only Mobil and the EPA could address those matters.[510]

428 The plaintiffs submit that there is no requirement that they satisfy the EPA criteria for buffer variation.

429 Mobil submits that the plaintiffs have not attempted to establish that the buffer would not prevent rezoning of the plaintiffs' land to residential usage.[511]

430 The plaintiffs respond by acknowledging that they are required to establish the likelihood of rezoning being achieved and that the prospects are likely and not merely speculative.[512]

431 I consider that Mr Davies' opinions are more persuasive on the issue of the likelihood that the existing buffer would be favourably varied by the EPA. In my view Mr Davies' evidence is of more weight and is more convincing because I am persuaded that, for the reasons given by Mr Davies, Mr Pollock's proposed variation to the buffer is most unlikely to be acceptable to the planning authority or the EPA. This is because Mr Pollock's directional analysis uses an arbitrary emission rate and it is not possible to know whether those emission rates reasonably reflect the emissions from the Mobil Refinery. Accordingly, Mr Pollock's modelling does not convince me of the impact of the likely emissions, to a distance of 2,000 metres in any direction. It would not be possible to compare the effect of Mr Pollock's arbitrary emissions with the odour criteria.

432 Furthermore, the acceptance by the parties that the EPA strictly enforces its buffer requirements in respect of the extant position requiring the proper management of the 2 kilometre buffer, in my view bolsters my conclusion that the plaintiffs are highly unlikely to achieve variation of the buffer impediment and are consequently by reason of this impediment alone highly unlikely to have their land rezoned for residential use.

433 Further, the plaintiffs have not established that the six minimum criteria set by the EPA for a site specific variation of an existing buffer, have been or could be satisfied. Mr Pollock's evidence deals only with one of the six minimum criteria; exceptional meteorological characteristics.

434 Further, for reasons I have separately addressed,[513] Mr Davies' evidence convinces me that no variation of the buffer is likely to be supported by Mr Pollock's directional analysis. This analysis does not refute that unacceptable odour levels would be detectable by residents on the plaintiffs' land.[514]

435 The evidence is that rather than the six EPA criteria being met, or likely to be met, Mobil's refinery does not employ the best relevant technology.[515]

436 No environmental audit of residual emissions has been undertaken, there is no evidence that Mobil intends to relevantly change its refinery operations and there are no other special features which are shown to favourably affect dispersions of IRAEs.[516]

437 Finally, Mr Pollock's analysis was in my view limited in an important way in that it only analysed complaints relating to odours and appeared to ignore noise, smoke and other buffer related sensitivities.

438 In my view, Mr Pollock's evidence also failed to establish that with his suggested buffer modifications residents on the plaintiffs' land would not be subjected to unacceptable levels of odour.

Conclusion - plaintiffs' prospects of having their land rezoned for residential use

439 For the reasons I have referred to above,[517] I consider that on the basis of the EPA buffer impediment alone there was no prospect, is no present prospect, nor is there any prospect in the ascertainable future, of the plaintiffs succeeding in having their land rezoned for residential use.

440 In this respect, the plaintiffs have not satisfied their own test, namely to establish the likelihood of rezoning being achieved by establishing that the impediments addressed above[518] are likely to be resolved to clear the way for the responsible planning authority to rezone the plaintiffs' land for residential use. In particular the plaintiffs have not established that they have any prospect of varying the buffer constraint so that it does not stand in the way of their residential rezoning.

441 I consider that because of the above impediments and in particular the EPA buffer, access issues, interface issues, pre-existing contamination, industrial interface issues, service issues, amenity issues and the s 173 agreement, rezoning was speculative, and most unlikely to be achieved.

442 I find that for the reasons Mr Milner gives, and that Mobil submits, it is presently most unlikely that the plaintiffs' land will be rezoned for residential development.

443 I make the following further findings in relation to the effect of other impediments to the prospect of the plaintiffs' land being rezoned for residential development both before and after the leak, and for the ascertainable future.

444 The plaintiffs' land experienced a long history of being subject to a number of impediments to it being rezoned for residential development. Both the C1 and the C33 Panels confirmed those constraints which included access issues, noise and traffic issues, contamination, issues with the plaintiffs' land and nearby industrial land and activity and the EPA requirement for a refinery buffer.

445 In relation to the position both before and after the Mobil leak, before the plaintiffs' land can be rezoned, the constraints referred to above[519] which affected the land will have to be addressed to the satisfaction of the responsible planning authority.

446 However, on the evidence there is no basis upon which to conclude that the identified impediment in relation to access has been adequately addressed. Mr McGurn is not an expert in relation to this issue and his evidence fails to persuade me that the plaintiffs have any prospect of successfully resolving this constraint.

447 The plaintiffs do not put forward a specific design solution to industrial interface impediments.

448 The pre-existing soil contamination on the plaintiffs' land remains an unresolved issue.

449 Further, by its terms,[520] the section 173 agreement touching the plaintiffs' land gives rise to a further constraint, and it remains in force.

450 There is no basis upon which to conclude that the current impasse between the Council and the plaintiffs in relation to the above identified constraints[521] and the rezoning of the plaintiffs' land enjoys any prospect of being resolved. Similarly, there has been no resolution of these issues by the responsible Minister. The plaintiffs' C74 application remains stagnant.

451 There is no basis upon which to conclude that the plaintiffs' current subdivisional amendment application (C74), in its current form, will be approved. I also consider that no planning permit application by the plaintiffs to develop the land residentially will succeed because of the constraints to the necessary rezoning and the other unresolved impediments referred to above.[522]

452 For the above reasons,[523] the plaintiffs have not established, on the balance of probabilities, that the opportunity they have identified in fact exists or has been lost because of the Mobil leak.

453 Further, on the same bases, I consider it to be most unlikely that any of the plaintiffs' three costed development plans will obtain development permit approvals in the circumstances which prevail now and in the ascertainable future, even if the effects of the Mobil leak were entirely removed from consideration.

454 Finally, there appears to be an increased prospect that the plaintiffs' land in the south-eastern part may be able to be developed, however, no resultant damage would arise because for that part, on any view, there would be no loss of the relevant opportunity. Furthermore, the ability to develop part of the plaintiffs' land and not the remainder would result in the plaintiffs' attempts at proving their financial opportunity losses being rendered uncertain and speculative because no adjustment has been made to allow for part of the land being developed.

455 I am also unpersuaded that the plaintiffs have abandoned their intention to develop their land residentially. Throughout the proceedings, up until the plaintiffs' written submissions dated 4 February 2014, the plaintiffs put forward a case directed in part to establishing that at all material times they pursued their residential development plans and intended to develop the land residentially. In their Closing Submissions of 4 February 2014 the plaintiffs submitted that their pursuit of rezoning and development was pointless and their opportunity in that regard had been lost. Even during the course of evidence at trial the plaintiffs confirmed that they were pursuing the planning process so as to rezone and be granted planning approval for a residential development of their land. The plaintiffs adduced evidence from Mr Cini to this end. That evidence is conveniently summarised in Schedule A of Mobil's Closing Submissions.

The plaintiffs' claimed abandonment of residential development plans

456 At no point did the plaintiffs adduce any evidence that the plaintiffs had decided to abandon their development plans.

457 The plaintiffs have, since Mr Mirkov filed his first report, been aware of the criticisms of Mr Nunn's approach and the plaintiffs have at all times been able to obtain information about the progress of the clean-up efforts. The State submits therefore that the plaintiffs' "apparent about face", which the State emphasises remains unsupported by the evidence, in relation to their ability and intention to develop the land, should not be accepted.[524] The State cites in this regard the plaintiffs' closing submissions [63] which argued that the plaintiffs had, before and after they were advised that their land was contaminated, actively engaged in seeking to maximise the economic potential of their land by having it rezoned.

458 Mobil argued in Reply [11] that the evidence is that the plaintiffs have not abandoned their development plans. In this regard Mobil cited Mr Cini's evidence at trial that the plaintiffs did not intend to sell the land.[525] Mobil also details[526] other parts of Mr Cini's evidence as set out below in support of the State's submissions that the plaintiffs have not abandoned their plans to develop the land and that the plaintiffs have called no evidence to the contrary.

1. Mr Cini said at [27], [28], [36] and [37] of his witness statement:[527]

"27. I have always taken the view that I would retain Lots A and B, unencumbered by any debt, and continue to progress and satisfy the various planning processes that are required to achieve what I consider to be the highest and best development outcome, being a residential development.

1. My view regarding the rezoning of Lots A and B has since been vindicated by professional reports commissioned by Hobsons Bay City Council (and its predecessor councils) ("Council"), such as the various Industrial land Management Strategy documents that have been discovered in this proceeding. Up until the contamination of the land and groundwater by Mobil that is the subject of this proceeding, there has been no significant obstacle that has caused me to change my view that Lots A and B will be rezoned from their current use to residential. The rezoning process will take as long as it takes, and I am confident that Lots A and B will be rezoned to residential.

1. The possibilities in respect of the development of the land includes the potential developments referred to in paragraph 8 of Mr Craig Williams' expert report and in section 1.3 of Mr Bradley Papworth's first expert reports. ... I have not yet decided which of the development scenarios (with or without variation) will actually be constructed on Lots A and B.
2. While I am certain that (subject to the land being remediated as sought in this proceeding) the land will be developed, the final form of the development is yet to be determined. The final decision as to how Lots A and B are actually developed will depend to a degree on the timing of the rezoning process (discussed in paragraph 29 above) and when the development is to commence."
3. Mr Cini said that at all times since the residential rezoning and 121 lot subdivision (Amendment C74) application have been on foot (since September 2008, see paragraph 25 below), he has persisted with the application to rezone:[528]

During the time that this application has proceeded you at all times have remained of the view that this land is suitable for low density residential development?---Ah it - it has a market suitability for that yes.

No I didn't ask you about that?---I can't answer that question.

All right. You can't - you can't say what views been. Certainly you would agree you have persisted with the council impressing them to rezone this - - -?---Yes.

- - - and to for the planning permit for resident - low density residential development. You've done that haven't you?---Yes.

1. Mr Cini confirmed that the plaintiffs are still going through the planning process:[529]

MR RIORDAN: All right, now the fact is that over the last at least five years since 2008 you've fought very hard to have this land rezoned and a planning permit granted, haven't you?---Um we we're still going through the - the normal process of town planning, yes.

1. In response to a question about the plaintiffs' intentions regarding the application for residential rezoning and 121 lot subdivision (Amendment C74) which is currently on foot, Mr Cini said that if the application was granted, the plaintiffs would make a further application for some other residential development:[530]

...And the position is if in fact you get a statement of environmental audit and the council approves the rezoning and the planning permit you'll proceed and construct the 121 lots or whatever's specifically approved as a low density residential development, is that so?---No that would be an option attached to the rezoning process rather than - rather than a development one.

And so the answer, is that at the moment would you proceed with a - if granted a planning permit for the 121 lots?---No. If your question is would we proceed with a subdivision of some sort ultimately the answer is yes, but not necessarily in that form - - -

No my question was whether you would proceed with the planning permit you've applied for?---No.

And so if your rezoning application was successful you would then propose to launch or make a further application for some other residential development?---Correct. We are generally not sellers of unimproved land as an organisation.

No I'm not talking about - - -?---I understand.

- - - selling the land at the moment so what - - -?---Well it's the only reason you would - the only reason you would proceed with what you're referring to would be to sell the land.

And so if this planning permit is successful your evidence is that you won't proceed with it but you will make a further application for a planning permit for some sort of residential development?---Ah it - it could very well include the base being the 121 lot subdivision, but the likelihood of us proceeding with the construction of the dwellings on top of those 121 lots would be more than probable rather than just selling off the 121 lots.

1. When asked whether his current intention is to act on the current planning permit application, if it is successful, Mr Cini said that it was an option or the plaintiffs could make a further application:[531]

With respect I'm asking you for your current intention, so what I'm asking you is whether your current intention is if the planning permit is successful whether you will act upon it, whether by subdividing it in accordance with the planning permit?---Ah unlikely in the - in the form that it's in.

What about in substantially the form that it's in?---It's a - it's an option.

Understand that and what's your current intention? Would it to be proceed and subdivide it substantially in the form of your current planning permit application?---I ah honestly can't answer you that question with - with any - with any - with any conviction - - -

All right?---Because it's a matter of timing.

So you may or may not?---It's an option.

And if you don't then you would need to make a further planning permit application?---Yes, that would absolutely be the case and the reason part of that - - -

1. Mr Cini said that the plaintiffs would persevere in their application for residential rezoning and that his first priority is to achieve a residential outcome:[532]

If in fact you were to make a further planning permit application after the approval of C74, that would need to go through the normal planning processes?---Yes.

And that would usually involve a permit going to the council?

---Yes, application going to the council.

Application going to the council, VCAT considering the council determination one way or the other in normal circumstances?---No, no, not necessarily.

Not necessarily but usual isn't it, in this sort of style of application?---No.

If you were unsuccessful would you not take it to VCAT?---Sure.

You would take it to VCAT?---The council can as well. It's an adjudication system as part of the planning process.

All right, and again that could take a number of years?---Sure.

But your persistence is such you'd be prepared to hold the land for that period if that's what it takes?---They're the laws we live with Mr Riordan, yes, we've got no choice.

I take it the answer to my question is yes?---The answer is you've got no choice. The answer is yes, obviously.

You have got a choice, you can sell the land?---That's not what we do in our business.

All right?---And start all over again, is that what you're referring to?

If in fact your residential rezoning application fails then what would you do?---That would depend the grounds in which the failure comes.

So you may persist and make a further application?---Previous experience with this particular site has been outcomes from planning authorities which essentially the best word I've seen used in most of them was the word premature, based on other things needing to happen.

So the answer to my question?---We would persevere, yes, most likely.

Most likely persevere. The alternative to persevere would be to develop it as an industrial site?---Minor possibility.

And you could sell it?---Obviously always an option.

But ultimately you believe that what's achievable here is a residential outcome and that's your first priority to achieve?---Yes.

1. Mr Cini confirmed that his first priority is residential development in re-examination:[533]

... This morning you said to Mr Riordan that residential developments was your "first priority"? ---Yes.

Is that correct?---Yes.

Why is that?---Ah, it's the highest and best use for the land, given the market that is available to us there at the moment. And the public demand for that type of property.

459 It is for these reasons that I am unpersuaded by the plaintiffs' submission that they have now abandoned their intention to develop the land. In my view, on the evidence I have referred to and the overwhelming thrust of the case long put forward by the plaintiffs, the plaintiffs maintain their intention to develop their land residentially, if and when they are able to do so. As a result, in my view, the plaintiffs remain likely, when convenient for them, to continue to prosecute their planning application to that end.

460 Further, in my view, the plaintiffs' persistent and long term pursuit of their several applications to develop their land residentially reflects the plaintiffs' long held belief that they have not, by reason of the Mobil leak, lost the opportunity to develop their land residentially.

461 In this regard I also find that the plaintiffs are prepared to continue to hold their land and pursue the rezoning process for as long as it takes to conclude a suitable development.[534]

462 I have earlier found[535] immediately before the Mobil leak there was in fact no valuable opportunity of the type the plaintiffs' assert. However, if I am wrong as to that conclusion, and there was such an opportunity, I now consider whether that opportunity has been lost.

463 If it be relevant, because I am incorrect in relation to my earlier findings as to the proper measure of damages,[536] and there being no opportunity of the type the plaintiffs' assert,[537] the plaintiffs must establish on the balance of probabilities that the opportunity has been lost. In this regard the plaintiffs submitted that the relevant opportunity has been lost because:

(a) the land is significantly contaminated and the contamination is continuing to spread;

(b) it is not economically feasible to remove all the contamination;

(c) Mobil does not propose to remove all the contamination and the EPA will not require it to do so;

(d) there is significant uncertainty about the proposed level of remediation, which is being undertaken to the CUTEP standard, and the timing of that remediation being achieved;

(e) residential development will not be possible, or will be seriously constrained by design limitations and other conditions;

(f) in these circumstances, neither the plaintiffs, nor Mobil, nor any reasonable developer, would undertake the development of the land; and

(g) there are no comparable development opportunities available to the plaintiffs.

464 The plaintiffs submitted that no reasonable developer would proceed with residential development of the land, and also submitted that the defendants have not established to the contrary.[538]

465 Mobil however submits that the plaintiffs seek to reverse the onus of proof.[539]

466 I consider that it is for the plaintiffs to prove, on the balance of probabilities, that the relevant opportunity has been lost. Much of the plaintiffs' submission, however, appeared to seek to reverse the onus of proof.[540] It is not for the defendants to prove that residential development is still possible on the land.

467 I consider that because the plaintiffs claim that the relevant opportunity was to develop the land residentially at some point in the future, in contrast to an opportunity to develop the land residentially within a certain timeframe, the plaintiffs must establish, on the balance of probabilities, that residential development is no longer possible for the land in the ascertainable future.

468 Mr Cini is a Director of both of the plaintiff companies, and a Director of the Hallmarc Group. Mr Cini put before the Court three alternative potential development scenarios for the plaintiffs' land and their associated feasibility profiles.[541] The three alternatives were as follows.

121 lot land subdivision plan and feasibility profile

469 The first of Mr Cini's scenarios was the 121 lot subdivision plan which was designed by Taylors Development Strategists and dated 17 March 2009. It provided for a gross realisation value of $88,735,500, and after deducting the total development costs of $15,124,412, the contribution to land and profit was $73,611,088.[542]

Townhouse development plan and feasibility profile

470 The second of Mr Cini's scenarios was the townhouse development plan which was designed by Malcolm Elliot Architects and dated June 2011. The plan provided for the development of 77 two bedroom terrace houses, 137 three bedroom terrace houses and 32 four bedroom terrace houses with a gross realisation value of $212,825,000. After deducting the total development costs of $79,089,498, the contribution to land and profit was $133,735,502.[543]

Townhouse and apartment combination development plan and feasibility profile

471 The third of Mr Cini's scenarios was the townhouse and apartment combination development plan which was designed by Malcolm Elliot Architects and dated June 2011. The plan provided for a combination of terrace houses, town houses and apartments, with varying numbers of bedrooms, for a gross realisation value of $301,575,000. After deducting the total development costs of $126,782,639, the contribution to land and profit was $174,792,361.[544]

472 Mr Cini gave evidence at trial that he had not yet decided which of the alternative development scenarios, with or without variation, would be developed on the land.[545] Rather, Mr Cini stated, the plaintiffs' final decision as to how the land would be developed would depend on the timing of the rezoning process and when the development was to commence.[546]

473 During cross examination, Mr Cini expressed the view that if the C74 Amendment was ultimately successful and the land was rezoned residential, it would be unlikely that he would proceed with the 121 lot subdivision plan, and that he would instead make a further planning permit application.[547] In response to a question from Counsel for Mobil about his current intention for the development of the land, Mr Cini noted that it had been five years since the 121 lot land subdivision plan had been put in place and that it did not take into account subsequent changes in the market.[548]

474 Mr Williams, a property developer, gave evidence that he had nearly 40 years of experience in undertaking commercial assessments in the construction and development industry.[549] He stated that his current positions were as an executive director of Far East Consortium International Ltd and as a director of Tokai Kanko Co Ltd; both organisations are multinational property developers.[550]

475 Mr Williams' evidence was that a commercial assessment is "quite simple" and "what you do to analyse the worth of a project".[551] A commercial assessment of a prospective development requires you to tally up the total project cost (by adding together the land component, design, construction, selling, marketing, and finance costs), which you then subtract from the sales revenue to give you the profit.[552]

476 Having considered Mr Cini's three alternative potential development scenarios, Mr Williams opined:

(a) that the 121 lot subdivision did not work the land hard enough, considering it is an infill site and not on the urban fringe;[553]

(b) a professional developer would be more likely to undertake a development similar to the Terrace House Development or the Higher Density Development because of the higher profit achieved from those built form type developments;[554] and

(c) that the methodology used by the plaintiffs in the three alternative development scenarios was standard in the development and construction industry, and was very similar to the way in which he had been analysing and preparing development and construction project feasibilities for approximately 30 years.[555]

477 In providing the three above opinions Mr Williams was asked to assume that the dollar amounts in the plans and feasibility profiles was correct and that the plaintiffs' land was not contaminated.[556]

478 Mr Williams was also asked whether, as a property developer, he would be interested in purchasing the plaintiffs' land, if it were for sale. Mr Williams was asked to assume that the land was currently undeveloped, and that there are petroleum hydrocarbons in the groundwater under the plaintiffs' land.[557]

479 Mr Williams' view was that if the plaintiffs' land was presented to him for sale, at any price, he "would not even bother driving to Williamstown to look at it".[558] This view was the result of his belief that the development and sale of the completed product developed on that land would be too difficult, mainly because:

(a) it is likely to cost a significant amount of money to properly remediate the plaintiffs' land;

(b) Mr Williams, and the entities he is associated with, would not be in a position to finance the purchase and development of the land. They would need finance from a bank, which in his opinion would be highly unlikely to provide finance given the level of contamination;

(c) it would be difficult to sell the final completed product, given that he believes it would be necessary to disclose to purchasers the history of contamination on the plaintiffs' land; and

(d) he would not feel comfortable selling the completed product on land that had been contaminated to the extent that the plaintiffs' land had been contaminated.[559]

480 Mr Williams' opinion that he would not develop the plaintiffs' land was based on the assumption that he as the developer would be responsible for the remediation of the land. It did not take into account the role Mobil would play in remediating the leak to CUTEP. In my view this erroneous assumption, is particularly significant, given Mr Williams' first reason, in subparagraph (a) above, for not being interested in the land. In my view because it is clear that Mr Williams proceeded on the erroneous assumption that the plaintiffs would have to pay to remediate their land, his evidence on this issue is of very little or no weight.

481 Mr Williams' opinion was also based on the need for him, and the entities he is associated with, to seek finance for the development from a bank. Mr Cini's evidence was that he was under no such similar constraint and that the Hallmarc Group had the funds and was willing and able to fund the development when the time came to do so.

482 On the basis of Mr Williams' and Mr Cini's evidence, the plaintiffs argued that the opportunity to develop the land is lost. They contend that a reasonably prudent landowner would not develop the land, and that the question is not whether a landowner is legally entitled to develop the land.[560]

483 This distinction drawn by the plaintiffs between what a reasonable developer would do and what the landowner is entitled to do is, in my view, unhelpful. When establishing the existence of the opportunity, the plaintiffs focussed on what a landowner would be entitled to do. They argued about the likelihood of rezoning and obtaining a planning permit, and the like. The case was put on the basis of what was possible, not simply what the plaintiffs wanted to do.

484 On the issue of establishing that the relevant opportunity was lost, however, the plaintiffs eschewed focus on what could still be done with the land. Instead, they asked the Court to focus on the plaintiffs' loss of desire to develop. In a Sellars analysis, the plaintiffs must establish the loss of an opportunity to develop the land residentially, not the loss of desire to develop the land residentially. I consider the plaintiffs' case to be misdirected in this regard.

485 Mr Williams' evidence that he would not develop the land is, in my view, quite inadequate to establish that the land cannot be put to any profitable residential use and further Mr Williams' evidence does not probatively inform as to the plaintiffs' past or present intention as to the development of their land. These observations add to my earlier reasons[561] for giving no weight to Mr Williams' evidence on this aspect of the plaintiffs' case.

486 Further, although Mr Cini was the first witness to give evidence at the trial he did not state that he no longer intends to develop the land.

487 However, as earlier noted,[562] by the time the plaintiffs made their final submissions, their case was that their opportunity to re-zone and develop the plaintiffs' land for residential purposes was pointless and had been lost because the plaintiffs' land would always be significantly contaminated and remediation will not be undertaken to a standard which will allow development to proceed, and further because "no reasonable developer in the plaintiffs' position faced with the level of uncertainty regarding the status of remediation, its timing and restraints on development and the unascertainable financial and legal risk profile would proceed with development of the plaintiffs' land".

488 Mr Nunn gave evidence for the plaintiffs about what was required to remove the contamination from the land. He did not give evidence about what was required to allow the plaintiffs to develop the land residentially.

489 Mr Nunn was an expert witness called by the plaintiffs to give evidence on the method and cost of remediating the plaintiffs' land following the leak. Mr Nunn gave evidence that he had 18 years' experience in the assessment, remediation and management of contaminated sites and environmental auditing.

490 Mr Nunn was asked by the plaintiffs to prepare a report[563] responding to two questions:

(i) What steps are required to remove the contamination from the plaintiffs' land and to protect the plaintiffs' land from further contamination arising from the leak?

(ii) What is the likely cost of undertaking the steps set out in the first question?

491 Mr Nunn was instructed to make the following assumptions in preparing his report:

(a) the entirety of the plaintiffs' land is currently undeveloped;

(b) there are petroleum hydrocarbons in the groundwater under the plaintiffs' land arising from the defined leak the plume of which (as at 16 June 2011) is set out in Annexure 4 of your letter of instruction; and

(c) for the purpose of responding to question (i), that the groundwater on the site rises and falls from 1m above and below the water table within the fractured rock, to 3 m above and below the water table.

492 Mr Nunn assumed that the contamination must be fully removed from the site. Having made this assumption, Mr Nunn then considered that the only way to fully remove the petroleum hydrocarbons would be to excavate the contaminated soil and rock and remove contaminated groundwater.

493 In Mr Nunn's opinion the contaminated groundwater could then be treated and reinjected. Mr Nunn's proposals included the contaminated soil and rock being removed from the site following excavation. Mr Nunn notes that it may be possible following excavation to remediate some of the contaminated soil and rock onsite, however this would take time and space, and full remediation would not be guaranteed. As a result, this option was not factored into his report.

494 To prevent recontamination of the plaintiffs' land, Mr Nunn proposed an effective barrier constructed around the site where offsite contamination is present so as to prevent subsequent migration of contaminated groundwater or soil vapours.

495 Mr Nunn stated that the steps required to remove the contamination from the site were as follows:

(a) removal of grass and excavation and stockpiling of shallow fill materials;

(b) excavation of clean soils/rock and stockpiling for reuse;

(c) excavation and classification of contaminated soil/rock and removal from site;

(d) dewatering of excavations and treatment of groundwater prior to reinjection at southern boundary;

(e) installation of boundary barrier to prevent re-contamination from offsite contamination; and

(f) reinstatement of excavation using clean excavated soil/rock and imported clean soil, compaction and geotechnical supervision.

496 Mr Nunn provided three alternative remediation valuations, based on the assumptions he had been asked to make. The three scenarios he considered and costed were:

(a) 2 m smear zone (+/- 1 m) and 1 m deep dissolved phase plume ($95,379,528);

(b) 6 m smear zone (+/- 3 m) and 1 m deep dissolved phase plume ($206,158,080); and

(c) 2 m smear zone (+/- 1 m) and 3 m deep dissolved phase plume ($133,752,192).

497 Mr Nunn stated that the 'smear zone' was the result of the assumed oscillation of the water table through the vertical profile. Assumptions about the oscillation of the water table were made by Mr Nunn because he stated that there was no information at the time as to the contaminant concentrations or the depth over which it occurs in the soil/rock profile.

498 Mr Nunn stated that his alternative cost scenarios were intended to provide an indication of cost sensitivity to both increased smear thickness and deep dissolved phase plume thickness. Mr Nunn stated that the figures above also included a 20 per cent contingency for each scenario to account for a range of potential uncertainties which may arise during the excavation and management works.

499 Mr de Greene, of Golder Associates, is Project Lead for the clean-up of the contamination caused by the leak, and he gave evidence in relation to CUTEP.

500 Mr de Greene gave evidence that the hydrocarbon plume caused by the Mobil leak was not expanding further into the plaintiffs' land. He was of the view that the hydrocarbon plume had stabilised.[564] Mr de Greene's evidence also is that, in his opinion, CUTEP will be reached within the next five years.[565]

501 Mr James Hadwen, an employee of Mobil, was the Project Manager of the Champion Road Project from about mid-December 2006 until approximately March 2007 and then from October 2007 until May 2011.[566] During the intervening period, Mr Hadwen was not project manager of the Champion Road Project due to a Mobil internal restructure, but the project remained part of his portfolio and his responsibility.[567]

502 The 'Champion Road Project' was the name given by Mobil to the project group it established once it was confirmed that Mobil was responsible for the leak. The Champion Road Project dealt with issues arising as a result of the leak including managing the emergency response, investigation and remediation of the leak.[568]

503 As Project Manager of the Champion Road Project, Mr Hadwen was responsible for:

(a) all field stewardship of assessment and remediation activities post-emergency response, including assessing where Mobil could get access to land to install groundwater wells, planning where wells should be installed and overseeing their installation;

(b) engaging URS in approximately early 2007 to assist in the implementation of the emergency response plan and to perform general environment assessment work in relation to the project;

(c) engaging Golder in approximately early 2007 to design and implement the remediation plan for the project based on the information collected by URS and Golder;

(d) receiving regular reports from URS and Golder in relation to the services and tasks they were engaged to provide in connection with the project;

(e) regular (usually weekly) meetings with Golder's representatives to discuss the project, progress towards milestones, difficulties Golder said they were encountering in meeting those milestones, budget issues and resourcing issues; and

(f) arranging, with the assistance of URS, to identify an Environmental Auditor and engaged Lane Piper to provide an Environmental Audit Report in response to the CUN dated 9 February issued by the EPA.[569]

504 Following further correspondence between Mobil and the plaintiffs, including Mobil being served with the Statement of Claim in this proceeding, on 2 June 2009 Golder Associates entered the plaintiffs' land and took samples from the groundwater wells on the land.[570] Between approximately 15 July 2009 and late April 2011, when Mr Hadwen left his role as Project Manager, the wells on the plaintiffs' land were included in the skimming process for the Champion Road Project.[571]

505 Mr Hadwen gave detailed evidence as to Mobil's decontamination works. Mr Hadwen also addressed the practical result of CUTEP.

506 Mr Mirkov was called as Mobil's environmental expert. Mr Mirkov's evidence included evidence in relation to the level of contamination caused by the leak and the likely course of remediation, achievement of CUTEP and the interrelationship between the hydrocarbon contamination caused by the leak and the plaintiffs' ability to residentially develop their land.

507 Mr Mirkov's evidence was the subject of extensive objection by the plaintiffs, as outlined below.[572]

508 The plaintiffs submit that Mr Mirkov's evidence is unreliable, and as such the Court should substantially reduce or give minimal weight to matters where there is a contentious issue between Mr Mirkov and other witnesses.[573] The plaintiffs' substantive criticisms of Mr Mirkov's evidence can be separated into two categories; that he relied on work done by others in preparing his Report and was not qualified to give evidence on those matters and that, as a result of his conduct, he was not an impartial expert witness.[574]

509 The plaintiffs rely on Mr Mirkov's failure to identify in his reports the persons responsible for or involved in the preparation of a report and their contributions. Further, the plaintiffs submit that in the course of his oral evidence Mr Mirkov made numerous references to other unidentified persons who may have contributed to the preparation of his reports but he could not recall the identity of those persons.[575] The plaintiffs submitted that this had the consequence of denying the plaintiffs the opportunity to examine the circumstances of the production of the evidence, the assumptions upon which it was founded, methodologies and the author of that evidence.[576]

510 The plaintiffs submit that in his evidence, Mr Mirkov conceded that the bulk of the health risk assessment and natural attenuation assessment (Supplementary Reports 5 and 6) were not his work.[577] The plaintiffs submit that at the time of his cross-examination by the plaintiffs' Senior Counsel, Mr Mirkov could not provide information, as required by the Expert Witness Code of Conduct, as to the methodology, parameters and workings undertaken in relation to the expressions of opinion in those reports. Accordingly, the plaintiffs submit that no weight should be given to the expressions of opinion provided in those reports.[578]

511 In relation to Mr Mirkov's alleged partiality, the plaintiffs rely upon the Supreme Court (General Civil Procedure) Rules 2005 as establishing an obligation on parties to litigation to provide a copy of the "Expert Witness Code of Conduct" in Form 44A. Those Rules also require that the report of the expert must include an acknowledgment that "the expert has read the code and agrees to be bound by it". Form 44A provides that:

(i) A person engaged as an expert witness has an overriding duty to assist the Court impartially on matters relevant to the area of expertise of the witness.

(ii) An expert witness is not an advocate for a party.

512 The plaintiffs submit that Mr Mirkov has not complied with the Code and the associated Court Rules in the following ways:

(a) Mr Mirkov was provided with material to provide an update to his report but it was decided not to provide an update to the Court.[579] The plaintiffs assert that Mr Mirkov should have qualified his report to note the fact that he had been provided with data to update his report but had not undertaken that work. The plaintiffs submit that Mr Mirkov had the opportunity and the material to provide the Court with a current assessment of the contamination of the plaintiffs' land, whether it was moving and whether the theories expressed in his initial reports had been substantiated by monitoring data, but he did not take that opportunity.[580]

(b) Mr Mirkov assisted with cross examination material for Mr Gilbert by providing detailed notes. The topics canvassed during the cross examination of Mr Gilbert included the points covered in an email from Mr Mirkov to Mobil's solicitors. Mr Mirkov's emails also confirm his instructions from Mobil that he was not required to prepare a reply report responding to Mr Gilbert's analysis and critiques of his reports. The plaintiffs contend that by allowing himself to be used by Mobil for the purpose of preparing cross examination of expert witnesses and by accepting instructions that he not provide responses to Mr Gilbert in the form of a report to be filed, Mr Mirkov was guilty of improper conduct.[581]

(c) Mr Mirkov has a 'strategic alliance' with Mobil and cannot be regarded as properly independent of Mobil. The plaintiffs argue that Mr Mirkov was making a profit from his retention of other consultants to assist with the matters upon which he was instructed and the tests conducted to assist him in his tasks. Mr Mirkov charged a surcharge on the fees of consultants retained by him and passed this on to Mobil. Mr Mirkov was uncertain as to the billing arrangements for 'secondees' to his firm.[582]

(d) Mr Mirkov's instructions post-dated his involvement in this matter. The plaintiffs submit that Mr Mirkov was provided with instructions after initial briefings and after extensive discussions with Mobil's solicitors as to what he could do or give evidence on, a fact which was not disclosed in any of his reports. The plaintiffs contend that this is suggestive of 'witness shopping' on the part of Mobil.[583]

513 Ultimately, as footnoted above,[584] the plaintiffs withdrew reliance on s 135 of the Evidence Act 2008 and submitted that, in the circumstances of the present case the matters that the plaintiffs raised in relation to Mr Mirkov's evidence provided a strong basis for the plaintiffs to argue that substantially reduced or minimal weight should be placed on Mr Mirkov's evidence in regard to any contentious questions of fact between the parties.[585]

514 Ultimately, the Mirkov Expert Witness Report dated October 2011 with the attached six Supplementary Reports and the Mirkov Additional Expert Witness Report dated April 2013 were tendered absolutely at trial with the plaintiffs adopting the position that those Reports would be admitted but subject to the plaintiffs' submissions as to the weight which the Court should ascribe to Mr Mirkov's evidence.

515 At trial the plaintiffs had ample opportunity to cross-examine Mr Mirkov as to the circumstances of the production of his evidence, the assumptions upon which it was founded, the methodologies and the nature and the extent of the contribution of others in relation to the production of those reports.

516 Furthermore, at all material times, it was open to the plaintiffs to seek or have produced or to subpoena documents, including Mr Mirkov's draft expert reports and other materials created, including by others, in connection with the production of the Mirkov Reports. The plaintiffs did not press this course.[586]

517 In response to the plaintiffs' criticisms of Mr Mirkov's evidence, Mobil submits that Mr Mirkov's first and supplementary reports were tendered subject to the plaintiffs' objections.[587] The plaintiffs accepted that the reports were admissible and reserved their position to make submissions as to the weight that should be given to the reports, or to parts of the reports.[588]

518 Mr Mirkov was not cross-examined on the substance of the reports or his opinions. The plaintiffs did not challenge Mr Mirkov on any of the findings he made on issues that are critical in this case, rather the plaintiffs' cross-examination of Mr Mirkov focused on the preparation of his reports.[589]

519 Mobil submits that the delegation of work by Mr Mirkov to others in the preparation of his reports was a permissible practice, provided Mr Mirkov considered the work performed by the delegates and through his own specialised knowledge and transparent reasoning adopted that work as his own.[590]

520 Although Supplementary Reports 5 and 6[591] were outside Mr Mirkov's field of expertise, Mr Mirkov said he had knowledge in the relevant topics covered and an understanding of the relevant processes adopted.[592] The plaintiffs have not established that the delegation by Mr Mirkov prevented the plaintiffs from cross-examining Mr Mirkov on any part of the reports.[593]

521 With regard to the plaintiffs' submissions that Mr Mirkov failed to comply with the Expert Code of Conduct, Mobil submits that a failure to comply with the Code is a matter that may be relevant to the Court's discretion to exclude an expert report, but it does not itself render the report inadmissible. In any event, the plaintiffs accept that the reports are admissible.

522 Mobil addresses the plaintiffs' submissions that Mr Mirkov was not an impartial expert witness with the following submissions:

(a) Mr Mirkov gave evidence in cross-examination that the reason he did not provide an updated report was because a month or two before the trial he received a vast amount of material produced by Golder Associates and did not have time to review it before the trial.[594]

(b) Mr Mirkov was not required to provide a supplementary report because his opinion had not changed as a result of reading Mr Gilbert's Report.[595] The proposition that an expert witness who provides assistance to counsel for the purpose of cross-examining the other party's expert is an advocate is incorrect. Mobil points out in its submissions that in fact frequently the Court will give leave to an expert, yet to be called, to be present during cross-examination of another witness for that specific purpose.[596]

(c) The fact that Mr Mirkov had previously undertaken work as a consultant for Mobil, and had described his relationship with Mobil as a 'strategic alliance' in his curriculum vitae, among other companies such as Caltex, Shell and Esso, is not enough in itself to doubt his independence.[597] The position of Mr Mirkov can be contrasted with that of Mr McGurn, who had been a witness and advocate for the plaintiffs in respect of the C33 and C74 planning applications.[598]

(d) Mr Mirkov admitted that he had discussions with Mobil's solicitors before he received instructions to prepare an expert report. This does not suggest a lack of independence or partiality on the part of Mr Mirkov.[599] The plaintiffs engaged in a similar practice with some of their own witnesses.[600]

Conclusion - Objections to the evidence of Mr Mirkov

523 In my view there is no established basis for a minimisation, or reduction, in the weight to be placed on Mr Mirkov's expert reports and evidence at trial.

524 I consider Mr Mirkov's tendered reports to be manifestly detailed, well researched, comprehensible, logical, balanced and persuasive. My view of the nature and quality of his oral evidence at trial is the same.

525 The plaintiffs conceded that Mr Mirkov's written and oral evidence could be admitted, subject to their right to make submissions as to weight, to which I have earlier referred.[601]

526 The plaintiffs were not unfairly prejudiced by the reliance by Mr Mirkov upon material in his report which was apparently produced by others. This is because I am satisfied that the plaintiffs had the opportunities afforded by the Court processes including the right to demand the production of documents, to subpoena persons and documents and to cross-examine persons brought before the Court, including Mr Mirkov. Those processes were sufficient to examine the circumstances of the production of Mr Mirkov's Reports and draft Reports and material contributing to the production of those Reports, assumptions, methodologies and to identify any person who may have materially assisted Mr Mirkov and to interrogate their qualifications and contributions, subject to any proper limit in relation to those processes.

527 Further, I am satisfied that material contained in Mr Mirkov's Reports which the plaintiffs complain was produced by others, including the material referred to in Mr Mirkov's Supplementary Reports 5 and 6, was compiled by, in effect, the technical team under Mr Mirkov's supervision and was input which Mr Mirkov supervised and verified.[602] Furthermore, the said input was within Mr Mirkov's areas of knowledge and was produced or collated by processes which he understood and, I consider it is appropriate to infer, processes of which he approved.

528 Furthermore, I accept Mobil's submissions that the plaintiffs chose not to challenge Mr Mirkov on the central planks and conclusions of his Reports.[603] Mr Mirkov was not cross-examined on key areas including:

(i) the plaintiffs' ability to obtain a Statement of Environmental Audit for the plaintiffs' land; and

(ii) the plaintiffs' ability to obtain a Statement of Environmental Audit for their land would result in the plaintiffs being permitted to develop their land for residential purposes without constraint caused by groundwater contamination on their land.

529 In my view the plaintiffs' submissions seeking to diminish or minimise the weight of Mr Mirkov's evidence, are themselves of minimal weight in relation to areas of his evidence in respect of which the plaintiffs chose not to challenge in cross-examination.

530 I am not satisfied that Mr Mirkov's failure to strictly comply with the Expert Witness Code, and associated Court Rules in that regard, gives rise to a proper basis upon which to lessen or minimise the weight of Mr Mirkov's evidence, because:

(i) In relation to the criticisms that he failed to update his report subsequent to being provided with additional data, Mr Mirkov explained that this was because he did not have time to undertake this task before trial. Mr Mirkov gave sworn evidence to this effect.[604]

(ii) In relation to the criticisms that Mr Mirkov did not produce a report responding to Mr Gilbert's Report, Mobil submits, and I accept, that the substantive reason for this was that Mr Gilbert's Report had not caused Mr Mirkov to change the views he had already expressed. In my view, that is a reasonable explanation for why Mr Mirkov did not respond to Mr Gilbert's subsequent report.

(iii) In my view, for the reasons I have stated above,[605] the material produced by others and presented in Mr Mirkov's Reports is neither inappropriate in relation to the nature of the opinions put forward by Mr Mirkov nor a reason to reduce the weight of Mr Mirkov's evidence. This is because Mr Mirkov has in the relevant reports expressly identified the principal person providing assistance, identified that person's specialist discipline and what assistance they have provided in preparation of the report.[606] Furthermore, Mr Mirkov has in his evidence established the reason for enlisting the assistance of other specialist persons in compiling his natural attenuation report (Report 5) and health risk assessment report (Report 6), and also established his approval of the process of production of the work done to assist him with these reports, as well as Mr Mirkov's instruction, supervision and verification of material compiled by identified other experts.[607]

531 To the degree Mr Mirkov failed to identify any contributors to his Reports, and/or identify their qualifications, I consider that if such a failure constitutes non-compliance with Order 44 of the Court's Rules, such non-compliance should not, in the circumstances of this matter, diminish the weight of Mr Mirkov's evidence. This is because I am satisfied that Mr Mirkov has specifically and transparently identified the principal person engaged to assist with the compilation of his reports, when such assistance was provided, and because I am satisfied, for the reason to which I have alluded,[608] that Mr Mirkov is sufficiently conversant with the material being compiled by others and he instructed, discussed, supervised and verified the input of others in relation to his reports.

532 Further, and in any event, after objections by the plaintiffs to many parts of Mr Mirkov's reports and submissions in relation to those objections, with the consent of the plaintiffs, I granted leave to Mobil to tender and adduce Mr Mirkov's expert evidence in these proceedings, notwithstanding the plaintiffs' complaints including in relation to non-compliance with Order 44 of the Supreme Court Rules.[609] I would also note that as a result of the plaintiffs' acceptance of the tender of Mr Mirkov's evidence, and the plaintiffs' ultimate position being one in which they reserved merely their right to make submissions as to the weight to be ascribed to that evidence, I consider that there is in this instance no need to identify a special circumstance so as to justify the receipt of an expert report which had failed to comply with the requirements of Order 44 of the Supreme Court Rules.

533 I am also unpersuaded that Mr Mirkov's assistance to Mobil in relation to material for the cross-examination of a counterpart expert witness renders Mr Mirkov partial or an advocate for Mobil. Further, assistance of this nature after such an expert has independently committed his opinions on relevant issues by way of an expert report does not, without more, establish either of these criticisms of Mr Mirkov.

534 Finally, I am likewise unpersuaded that Mr Mirkov's pre-instructions communication with Mobil's solicitors, or his relationship with Mobil, described at one point as a "strategic alliance", or the way he structures his consultancy cost to his client, including the addition of a margin in relation to Mr Mirkov's retention of sub-consultants to assist him, either alone or in combination compromises Mr Mirkov or establishes that he is not sufficiently independent and impartial.

535 For these reasons I reject the plaintiffs' arguments as to why I should reduce or minimise the weight to be placed on Mr Mirkov's evidence in this proceeding.

536 Both Mr Gilbert and Mr Mirkov gave evidence identifying substantial groundwater contamination on the plaintiffs' land caused by the Mobil leak and Mr Mirkov and Mr de Greene were both of the opinion that this plume of groundwater contamination on the plaintiffs' land had stabilised. However, Mr Gilbert did not consider that Mr Mirkov's assessment of the extent of the contamination plume was reliable.

537 Mr Mirkov provided plume maps[610] to demonstrate that the groundwater contamination is generally limited to the south-eastern part of the plaintiffs' land which, I note, is the part in relation to which Mr Milner stated there could be justification for rezoning for residential purposes (subject to the resolution of certain other constraints).[611]

538 Accordingly, on the evidence, much of the northern part and the western part of the plaintiffs' land has not been shown to be materially contaminated by the leak.

539 Furthermore the requirements of the RAP imposed on Mobil and the continuing efforts of Mobil to achieve CUTEP, and also the successful containment measures which have been implemented; namely efforts to stop further migration of hydrocarbons to the southeast and the pulling back of dissolved phase contaminants that had extended beyond the extraction barriers, in my view render it likely that the leak will not negatively impact on the grant of development permits if, as Mr Mirkov opines, the groundwater contamination of those parts of the plaintiffs' land which exhibit groundwater contamination do not prevent the issue of a Statement of Environmental Audit.

540 Importantly, it is to be noted that the plaintiffs do not advance a case that the Mobil leak has prevented or will prevent the rezoning of the plaintiffs' land. The plaintiffs do not advance a case that if the land was rezoned and the plaintiffs were also granted the necessary development permits to pursue some particular residential development, the contamination caused by the Mobil leak would nevertheless result in the plaintiffs being unable to develop their land.

541 Furthermore, I consider that it is likely that the plaintiffs will, at the conclusion of the CUTEP process, be able to secure a Statement of Environmental Audit in respect of their land. Leaving aside the above impediments which prevent residential rezoning of the plaintiffs' land, such a Statement of Environmental Audit would, likely be subject only to the condition that any development by the plaintiffs will not breach the depth where the underlying groundwater contamination would pose health risks. Mr Mirkov's evidence was that such a Statement of Environmental Audit would enable the plaintiffs to develop their land residentially notwithstanding the contamination caused by the Mobil leak. Mr Mirkov's unchallenged evidence was to this effect.[612]

542 Mr Mirkov's evidence on the above matters, which I consider to be of critical importance, was not opposed by any contradictory evidence adduced by the plaintiffs. Nor was Mr Mirkov cross-examined on the substance of his reports on critical areas of his evidence. Mr Mirkov was not cross-examined by the plaintiffs as to:

(i) whether Mobil's remediation to CUTEP would be a definitive outcome for the plaintiffs' land so far as it was necessary to deal with groundwater contamination;

(ii) whether the plaintiffs would be able to obtain a Statement of Environmental Audit; and

(iii) his evidence that the issue of a Statement of Environmental Audit would allow the plaintiffs to undertake a residential development on their land.

543 The combination of Mr Mirkov's evidence and the evidence of Messrs Keighran and Stewart was:[613]

(a) there was no unacceptable risk to residential occupants or an onsite workforce down to 2.5 metres;

(b) the plaintiffs' one basement storeroom/carpark development scenario was within the envelope of excavation down to 2.5 metres;

(c) there was no unacceptable risk to onsite construction and maintenance workers down to 4.5 metres.[614]

544 The above evidence establishes that the plaintiffs will not be prevented by groundwater contamination from proceeding with their Terrace House or Higher Density residential development scenarios. Those forms of development that involve excavation levels above the contaminated groundwater, are likely to be able to be undertaken as authorised by a Statement of Environmental Audit. This is the substance of Mr Mirkov's unchallenged evidence on this pivotal matter.

545 Further, the evidence is that Mobil is remediating the leak in accordance with the RAP and will continue to remediate the plaintiffs' land until it achieves CUTEP, as it is legally required by the EPA to do.

On the achievement of CUTEP, no further remediation will be required. Mobil's environmental expert Peter Mirkov has provided a supplementary report dated 12 April 2013 opining that in circumstances where Mobil is remediating the entire footprint of hydrocarbon pollution to CUTEP, this would be a definitive outcome for the plaintiffs' land in terms of groundwater remediation and the plaintiff need do nothing further with their groundwater to achieve groundwater CUTEP for their property. Mr Mirkov was not challenged on this in cross-examination.[615]

Accordingly, it is submitted that, if the plaintiffs at any point succeed in their application for re-zoning of their land to enable residential development, there is no evidence that the plaintiffs' proposed residential developments (both high and low density) would be impeded in any way by the presence of any residual hydrocarbon in the groundwater.[616]

The plaintiffs did not lead any evidence on the standard of remediation required to enable residential development to proceed on the plaintiffs' land.[617]

547 As is already noted,[618] the engineer who leads the consultant clean-up team, Mr de Greene, gave evidence that in his opinion CUTEP is achievable within the next five years.[619]

548 The plaintiffs' case does not include a claim that they have suffered loss and damage as a result of their planned residential development of the land being delayed.

549 Although Mr Nunn gave evidence for the plaintiffs that the cost of the remediation of the plaintiffs' land to a depth of approximately 10 metres would be $95 to $206 million, he gave no evidence as to the level of remediation required to permit the plaintiffs to use the land unrestricted by the contamination caused by the leak.

550 Mr Mirkov's evidence was that Mr Nunn's remediation proposals were unreasonable including because his remediation extended to levels where the soil-gas concentration was not at levels that presented any unacceptable risk to human health.[620] Furthermore, Mr Mirkov's evidence that remediation of groundwater contamination to CUTEP is a definitive outcome was not challenged. I have elsewhere[621] dealt with the other reason why Mr Nunn's remediation proposals are at odds with the EPA's remediation requirements and are unreasonable in the circumstances.

551 For these above reasons,[622] I prefer Mr Mirkov's evidence both in relation to the extent to which groundwater contamination will, when addressed to the extent it is legally required to be, prevent the plaintiffs from carrying out their residential development plans, and in relation to the extent of remediation reasonably necessary to allow the plaintiffs to be able to develop their land residentially unaffected by groundwater contamination caused by the Mobil leak via the issue of a Statement of Environmental Audit.

552 I am also unpersuaded by the plaintiffs' argument that their land will suffer from "stigma" once it has been remediated to the standard required by the EPA.

553 On this issue I give no weight to the evidence of Mr Williams because his views about the plaintiffs' land, given its contaminated state, appeared to be entirely in the nature of his personal perception and reaction to the plaintiffs' land rather than properly based expert opinion.

554 I also accept Mobil's submissions that the acknowledged friendship between Mr Cini and Mr Williams rendered Mr Williams a person lacking independence. Furthermore, Mr Williams conceded relevant lack of expertise.[623]

555 Finally, I also accept Mobil's submission that Mr Williams' views were based upon incorrect assumptions, in particular as Mobil submits that:

(c) Mr Williams was instructed to opine on whether, as a property developer, he would be interested in purchasing the plaintiffs' land, if it was for sale on the basis of incomplete or unsubstantiated assumptions, which were as follows:

(i) First, Mr Williams was not given instructions on the cost of remediating the plaintiffs' land - he merely thought 'anecdotally from Mr Cini over lunches it was a hell of a lot of money'. It is trite that the cost of remediating the plaintiffs' land is fundamental to the question whether a property developer would be interested in purchasing the plaintiffs' land.

(ii) Second, in cross-examination, Mr Williams said he had no understanding of where the contamination was and he thought it was 'pretty well over the whole site' and it was 'pretty well everywhere.' He said he assumed this was 'a 20 acre parcel of land ... heavily contaminated, permeated through everything.'

(iii) Mr Williams said he had in mind that it was likely to cost a significant amount of money to properly remediate the plaintiffs' land. He confirmed that his concern, in undertaking the remediation, was that it would be very expensive. He was asked to confirm whether, in coming to his decision, he took into account that, if he acquired the plaintiffs' land, he would have the responsibility of removing the hydrocarbons to the extent that he practically could. Mr Williams' response was:

"Well, I wouldn't acquire the land. I've said that and if - if the person that put them there wasn't forced to clean them up then you would have to clean them up if it was viable but I sort of had the view that it wasn't viable."

Later, Mr Williams confirmed that he was proceeding on the basis that it would be the responsibility of the developer to clean the land.[624]

556 Because as earlier addressed[625] Mr Williams has clearly proceeded on the basis of erroneous assumptions as outlined above, I have rejected his evidence as to his views in relation to the plaintiffs' land. This is because Mr Williams clearly gave his evidence about the plaintiffs' land not appreciating that Mobil was obliged to pay for remediation. In addition to this basis for rejecting Mr Williams' evidence in relation to the plaintiffs' land I now add that Mr Williams has also failed to appreciate that remediation would have to be undertaken to the EPA's requirements. Furthermore, it appears that Mr Williams wrongly assumed when he gave his evidence that remediation of the plaintiffs' land was not viable. In the result I give no weight to Mr Williams' evidence.

557 Finally, the plaintiffs chose not to call any valuation evidence to establish dwellings of the type which the plaintiffs say they might develop would, if constructed on previously contaminated land which had been remediated, be subject to a certain, or any stigma or decrease in value.

558 Mr Hadwen and Mr de Greene gave detailed evidence as to the decontamination measures and works which Mobil and its agents have undertaken and are undertaking. Mr Mirkov's evidence was also that Mobil's remediation work was adequate, reasonable in scope and within a timetable that was also reasonable by reference to decontamination industry norms.

559 Mr Hadwen explained that Mobil's goal is to achieve CUTEP as determined by the EPA and that this meant that remediation would be pursued to the extent that the available decontamination technologies could achieve.[626]

560 Mr de Greene also stated that the clean-up of the contamination on the plaintiffs' land would be undertaken to the extent required by the EPA and that if the EPA required remediation to restore all beneficial uses of the land that would be done.[627]

561 Mr Nunn, the plaintiffs' expert, agreed that the remediation required by the EPA to CUTEP was to restore all beneficial uses of the plaintiffs' land.[628]

562 Mr Mirkov's evidence was that the attainment of CUTEP was a definitive outcome for all the hydrocarbon pollution as is present on the plaintiffs' land and in his view the relevant Environmental Auditor at the EPA would not require that additional remediation be undertaken.[629] However, Mr Mirkov explained that post CUTEP, Mobil may be required to implement a groundwater management plan to manage any risk arising from any element of contamination which could not be removed as part of CUTEP.

563 I find in relation to the contamination evidence as follows.

564 It is likely that the plaintiffs' land can be remediated so as to attain a Statement of Environmental Audit. The condition likely to attach to the Statement of Environmental Audit is that the development should not reach the depth where the underlying groundwater contamination would become a risk.[630]

565 The groundwater beneath the plaintiffs' land is, in addition to the hydrocarbons from the Mobil leak, contaminated by diesel or a similar contaminant of unknown source. It is unclear when diesel-like contamination occurred.

566 The Mobil leak has contaminated the groundwater beneath the plaintiffs' land with petroleum hydrocarbons in the area of the plume. That groundwater contamination is stable.

567 As required by the EPA, Mobil has been remediating and continues to remediate the groundwater contamination caused by the Mobil leak. Mobil is required to do so to the EPA's satisfaction and at Mobil's expense.

568 CUTEP is not a negotiated position as between the polluter and the EPA.[631]

569 Mobil's remediation is to be undertaken pursuant to the applicable RAP and in accordance with EPA Publication 840.[632]

570 Mobil's clean up and remediation works, to CUTEP as required by the EPA, will restore all the beneficial uses of the plaintiffs' land to the extent practicable.

571 When CUTEP is determined by the EPA, following receipt of a satisfactory Environmental Auditor's Report, it is likely that the EPA will impose a Groundwater Management Plan on Mobil. The conditions relating to the plaintiffs' land and arising from the Environmental Audit or Statement of Environmental Audit are likely to restrict developments on the plaintiffs' land to a maximum of one underground construction level.

572 It is, in my view, not established by the evidence that after CUTEP there will be any significant financial or regulatory risk to the plaintiffs.

573 The plaintiffs' alternative remediation strategy, discussed by Mr Nunn, is not likely to be suitable or adequate or reasonable for the reasons earlier identified[633] by reference to Mr Nunn's evidence.

574 Remediation to CUTEP is likely to be achieved within the next 5 to 10 years.[634]

575 It is likely that the plaintiffs can obtain a Statement of Environmental Audit which would enable the plaintiffs to pursue their plans to residentially develop the plaintiffs' land unconstrained by the groundwater contamination caused by the Mobil leak save as to the conditions likely to be applied by such a Statement of Environmental Audit.

576 For the above reasons,[635] the Mobil leak has not prevented the plaintiffs from being able to develop their land for residential use.

Uncertainty of statement of environmental audit - conditions

577 The plaintiffs contend that there is such uncertainty arising from the unknown "conditions" that will be imposed by any Statement of Environmental Audit of the plaintiffs' land, that until such conditions are known, it cannot be said how the presently contaminated land can be used.[636]

578 Mobil's expert, Mr Mirkov says that the only condition which would be attached to the Statement of Environmental Audit, which he states the plaintiffs will be able to attain, is that the "development not breach the depth of underlying groundwater". A Statement of Environmental Audit imposing such a condition would not appear to impact the plaintiffs' projected costs of development. The Higher Density Development includes an excavated car park. The evidence is that such structures are likely to be constructed within the excavation depth limit which Mr Mirkov states will be imposed by the expected Statement of Environmental Audit.

579 Immediately prior to the leak, development of the plaintiffs' land would also have required a Statement of Environmental Audit, and with likely associated conditions. Mr Ramsay's evidence outlines the likely conditions which would attach to the issue of a pre-leak Statement of Environmental Audit. Those conditions were outlined as:

1. For any sealed/paved areas, capping the contaminated fill with a geofabric liner/marker barrier and then up to approximately 0.5m of clean fill. In my experience, a minimum of 0.2m of clean fill beneath hardstand is considered to be acceptable to satisfy the requirements of an environmental audit.

2. For any garden bed areas, the contaminated fill should be capped with a geofabric liner/marker barrier and the approximately 0.5m of clean fill. Alternatively the contaminated fill could be removed and replaced with approximately 0.5m of clean fill.

3. An EMP must be implemented to ensure that the capping layer is appropriately managed in the future. The EMP would need to be implemented by an Owners Corporation or similar managing body.

580 I also note that it is accepted that even before the leak, the land would not have been able to be granted a Certificate of Environmental Audit.

581 Likewise, I am unpersuaded by the plaintiffs' submission that it would be unreasonable to expect the plaintiffs to be exposed to the financial and legal risks arising from factual unknowns as to the level and extent of contamination and its migration, and from possible future changes in EPA requirements or changes to the clean-up regimes. In my view all of these matters are in the realm of conjecture and for that reason cannot be meaningfully evaluated at this time. It is therefore, in my view, not established on the balance of probabilities that such matters will have an effect on the plaintiffs.

582 I am also unpersuaded that a sufficient evidentiary basis exists to find that there will be any material further contamination of the plaintiffs' land as a result of migration of pollution from the land up-gradient of the plaintiffs' land.[637]

583 Mr Mirkov gave evidence that on the achievement of CUTEP, no further remediation will be required.

Conclusion as to existence of opportunity and whether the opportunity has been lost

584 I find that, pre-leak, there was no opportunity to rezone and develop the plaintiffs' land residentially. Therefore, the plaintiffs had no prospect of acquiring the benefits of residential development of their land because of the impediments which existed and were highly likely to prevent re-zoning of the plaintiffs' land to residential use and further highly likely to consequently prevent the issue of development permits for residential development. Accordingly, I find that there was no opportunity, of the type asserted by the plaintiffs, which has been lost.

585 For the reasons I have identified above,[638] I find that the groundwater contamination caused by the Mobil leak does not prevent the plaintiffs from developing their land residentially. This is because, notwithstanding the present state of groundwater contamination caused by the Mobil leak, the plaintiffs are able to obtain a Statement of Environmental Audit which will permit the residential development of their land (that is if the other impediments to rezoning addressed above are resolved to the satisfaction of the Planning Authority), subject to a likely condition that the development works do not breach the depth of the underlying groundwater contamination.

586 I also find, for the same reasons, that the opportunity to develop their land residentially, identified by the plaintiffs, was in any event, at all material times of negligible or no value because the asserted opportunity was unrealisable, or highly likely to be unrealisable.

587 Given my findings and conclusions to this point the plaintiffs fail in their loss of opportunity claim, however, in case I am incorrect in relation to my findings to this point, I shall also deal with the plaintiffs' claimed losses.

588 I deal below[639] with the damages I would assess, if the plaintiffs were entitled to recover on the basis of a loss of opportunity claim (which I have held they are not), and if the plaintiffs had lost the asserted opportunity (which I have found they have not) and assuming that there was a basis for the plaintiffs to recover the type of damages they have set out to establish. I undertake this exercise, in case I am wrong as to the antecedent issues referred to above.

589 As an initial matter I note that the plaintiffs have not sought to adduce evidence of the current value of their land. This sum is, I consider, a required input for the equation which should be applied to calculate the plaintiffs' claim for loss of opportunity damages.

590 In essence the plaintiffs seek to prove their lost opportunity claim as follows:

• lost profits equal gross yield from residential development;
• less, costs of development;
• less, the value of the land post contamination.

591 The plaintiffs' evidence on the projected gross yield expected for each of the three development scenarios was given by Mr Papworth, a valuer. The Mobil expert as to the projected selling price of completed properties was Mr Brown.

592 The plaintiffs' evidence of the anticipated cost of the three alternative developments was given by Mr Keighran. A number of Mr Keighran's costings were disputed by Mr Stewart, the Quantity Surveyor called by Mobil.

593 There was no evidence adduced by the plaintiffs as to the current value of their land. However, Mobil's witness Mr Brown gave evidence that at April 2013, the plaintiffs' land was worth $11,300,000 (with no leak) and $10,400,000 (with the leak). Mr Brown was also of the opinion that the plaintiffs' land in April 2007 was worth $13,000,000 (assuming no leak) and $12,000,000 (assuming the leak).

594 Accordingly, were the plaintiffs to have pursued a diminution of value claim the material above appears to indicate that claim would only sound in a sum of about $1,000,000.

595 The plaintiffs submit that to assess damages on the basis that CUTEP will be achieved, and at some point a form of constrained residential development might proceed, would expose the plaintiffs, and not the defendants, to financial and legal risks associated with the prospect of the achievement of CUTEP whatever that may mean and whenever that might actually be achieved.[640]

596 The plaintiffs also contend that such a result would be plainly unjust because it would not assess damages on the available evidence and it would not satisfy the compensatory principle. The plaintiffs would not be restored to the position they would be in had the leak not occurred and therefore would not be adequately compensated for the acts and omissions of the defendants.[641]

597 In my view, as I have earlier concluded,[642] to award the plaintiffs loss of opportunity damages would be more unjust. The plaintiffs' claim for compensation based on a loss of opportunity, were it to be acceded to, would give rise to a greater risk of unfair compensation and injustice. This is because, here, the plaintiffs' development plans were non-specific at the time of the leak and the plaintiffs assert that they no longer intend to develop the land residentially.

598 In my view, to award damages for the loss of a commercial opportunity would be doing so in circumstances where there is a real prospect of such an award being unjust to the party with the burden of that award. This is because the circumstances of this case render the plaintiffs' likely damages unable to be evaluated with a sufficient degree of confidence and accuracy because:

(i) the plaintiffs may yet develop their land in some manner in the future, reaping the financial benefit thereof;

(ii) there is no clarity nor sufficient degree of probability as to the type of development which the plaintiffs will pursue;

(iii) there is negligible or no prospect the plaintiffs would in the ascertainable future have been permitted to develop their land for residential use; and

(iv) there are missing components of a comprehensive calculation or estimate to determine the plaintiffs' projected loss of profits (for example, the lack of evidence from the plaintiffs in relation to the costs to them of financing the residential development), resulting in the Court having to speculate as to the deduction to be made from the plaintiffs' profits on account of such missing components.

599 Further, I consider for the above reasons[643] that there is an unacceptable probability that the plaintiffs would be overcompensated were they to succeed in recovering the damages they seek for loss of opportunity.

600 I have decided that the plaintiffs have most unlikely prospects of achieving the required rezoning before the leak, now, and in the ascertainable future. I have also found that the development permits necessary to undertake their intended residential development, are most unlikely to be attainable. As a matter of logic, such development permits will not be attainable if the plaintiffs' land is not rezoned for residential use. Therefore, the position in relation to the development permits the plaintiffs require is tied to the rezoning of the plaintiffs' land. In my view neither of these pre-requisites to residential development will be attained on either the pre-leak or the post-leak scenarios.

601 As stated above,[644] notwithstanding the above findings, I shall determine the plaintiffs' loss of opportunity claim.

Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s 52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.

On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.[645]

603 In the situation where a party such as the plaintiffs establishes that an opportunity of some value has been lost, and the Court then embarks on the exercise of valuing the lost commercial opportunity, ascertained by reference to the degree of probabilities inherent in the plaintiffs succeeding with the identified opportunity, the Court will ordinarily multiply the overall likelihood of acquiring the benefits of residential development by the expected benefits. I have found that before the leak, now and in the ascertainable future, the plaintiffs had/have negligible or no prospect of succeeding with the fulfilment of their asserted residential development opportunity, because of the impediments to the rezoning of the plaintiffs' land for residential use. However, for the reason I have earlier stated,[646] for completeness, I proceed to deal with the plaintiffs' financial claims.

604 The plaintiffs must establish such benefits here asserted as a loss of profit, on the balance of probabilities, before the asserted benefit can be brought into account.

605 The plaintiffs advanced three alternative development scenarios as a means of establishing the value of the expected benefits. Quantifying the expected profits of 'a residential development' in circumstances where, at the time of the leak, the plaintiffs had not decided upon any particular form of development, is a difficult task.

606 The question is whether there is mere difficulty in quantifying those profits, or if it is impossible for the Court to quantify the profits. Mere difficulty will not deprive the plaintiffs of relief in the form of damages for loss of opportunity; impossibility will.[647] The fact that the leak occurred before the plaintiffs had the chance to finalise their plans for the land should not preclude the plaintiffs from relief. As Hayne J said in Placer Granny Smith Pty Ltd v Thiess Contractors Pty Ltd:

It may be that, in at least some cases, it is necessary or desirable to distinguish between a case where a plaintiff cannot adduce precise evidence of what has been lost and a case where, although apparently able to do so, the plaintiff has not adduced such evidence. In the former kind of case it may be that estimation, if not guesswork, may be necessary in assessing the damages to be allowed. References to mere difficulty in estimating damages not relieving a court from the responsibility of estimating them as best it can may find their most apt application in cases of the former rather than the latter kind.[648]

The cases dealing with the assessment of the measure of damages, whether in contract or tort, are replete with exhortations that precision may not be possible and the trial judge or jury must do the best it can. The treatment in Malec v J C Hutton Pty Ltd of the assessment of damages for future or potential events that allegedly would have occurred, but cannot now occur, or that allegedly might now occur, is an example...[649]

608 The plaintiffs must prove the amount of the loss with as much precision as the subject matter reasonably permits, however in relation to hypothetical matters, in appropriate circumstances, an estimation may be acceptable proof.[650]

609 The plaintiffs in this case have presented evidence of the asserted profits that would be made from three different residential developments. The expert evidence put forward in relation to the valuations of those three development scenarios are considered below.

610 Mr Bradley Papworth, director of Charter Keck Kramer, was called by the plaintiffs to give expert evidence as to the valuation of the average selling price expected for the three alternative development scenarios. Mr Papworth gave evidence that he had expertise in property consultancy and valuation advice centred around residential subdivisions throughout metropolitan and rural Victoria, including several valuations within the western surrounding localities.[651] Mr Papworth provided this evidence in a report dated 8 August 2011.[652]

611 In preparing the report, Mr Papworth was requested to make the following assumptions:

a) the plaintiffs' land is not, and never has been, contaminated;

1. the quality of the end product, fixtures and fittings to be used, and the exterior facade, to be substantially identical to other various identified developments of the Hallmarc group; and

612 Mr Papworth's valuations of the average selling price of the different types of developments in his report of 8 August 2011 are set out in the table below:[653]

613 In a further report of 23 February 2012[654] Mr Papworth responded to the expert report prepared by Mr Leslie Brown of M3 Property Strategists on behalf of Mobil. Mr Papworth's further report makes the following comparisons and comments:

(i) Mr Brown's valuation of the standard lots as ranging from $500,000-$625,000, although lower, is within an acceptable range. However, Mr Brown's valuation of the allotments within the body corporate factors as attracting a discount of 5 per cent to 25 per cent is inappropriate when considering the sale price of lot values in master planned communities that have a body corporate structure, such as Sanctuary Lakes and Settlers Run.

(ii) Mr Brown's valuation uses sales evidence from townhouses and unit sites far removed from the subject property, when the most comparable sales are those occurring within the Williams Cove estate, south of the plaintiffs' land.

(iii) Mr Brown's valuation of the apartment scenario vastly understates the value of the individual apartments, when considering the sales evidence indicates there is little discrepancy between prices attributable to the size of the areas of the apartments, but rather variations were found attributable to the number of bedrooms, location, quality of fittings and finishes and layout.

614 Mr Leslie Brown, of M3 Property Strategists, prepared two expert reports, the first dated 28 September 2011,[655] the second dated 12 April 2013.[656]

615 In the first report, Mr Brown valued the plaintiffs' land in around April or May 2007 and as at September 2011. These valuations assumed that there was no contamination from the leak and that the land was zoned Industrial 3, and disregarded the plaintiffs' rezoning application and the allegedly proposed residential developments.[657] Mr Brown was also required to consider and state whether the assessment of the condition of the plaintiffs' land as set out in the AECOM Report dated 10 April 2010 was relevant to his opinion.

616 Having considered the AECOM Report, Mr Brown was of the opinion that it was immaterial to his valuation because it addressed environmental issues not relevant to an industrial zone and development.[658] Taking into account his instructions, Mr Brown's valuation assumed that the highest and best use for the site was an industrial development.[659]

617 Mr Brown employed a direct comparison approach, whereby he used comparable site sales in 2007 and 2011 to determine the price paid per square metre of land area in those respective years. From this sales evidence, for the valuation as at April/May 2007, he adopted a rate of $150 per square metre of land for Lots A and B and a higher rate of $400 per square metre for Lots 35 and 36, leading to a rounded estimated value of $13,000,000.[660] For September 2011, the respective figures adopted were $130 and $350 per square metre, leading to a rounded estimated value of $11,300,000.[661]

618 Further, Mr Brown valued the likely sale values of the plaintiffs' three alternative proposed development scenarios. His valuation was based on information provided by the plaintiffs to Mr Papworth for the purposes of his report. The valuation assumed that the plaintiffs' land had been rezoned with the necessary planning permits issued and ignored any contamination from the leak.[662] For the valuations, Mr Brown used the direct comparison method whereby sales evidence of similar size and standard lots, townhouses and apartments were directly compared to that proposed at the plaintiffs' land.[663]

619 The resultant likely sale value ranges for the three alternative development scenarios were:

121 Subdivision Development - $59,675,000 to $64,700,000

Terrace House Development - $140,200,000 to $164,800,000

Higher Density Development - $191,750,000 to $234,250,000[664]

620 In the second report, Mr Brown provided valuations as at April/May 2007 and April 2013, taking into account various alternative scenarios. The first comparison was between the valuation of the plaintiffs' land assuming the leak did not occur and then taking the leak contamination into account.[665] The second comparison was between assuming the plaintiffs' land was the source of the diesel contamination, assuming that it was not, and assuming that there was no hydrocarbon contamination of the groundwater beneath the plaintiffs' land prior to the leak.[666] In arriving at his valuations, Mr Brown was instructed to rely on other expert advice concerning planning, the EPA buffer and environmental considerations.[667]

621 Having considered the planning report of Mr Milner and the EPA Buffer guidelines, Mr Brown reached the view that it would appear "highly unlikely" that the plaintiffs' land, in whole or in part, could be rezoned residential successfully at the valuation dates of April/May 2007 and April 2013.[668] Based upon the information provided, in particular the advice provided by the experts in regard to planning, Mr Brown reached the view that "the highest and best use of the land at both dates of valuation would reasonably be industrial as per the existing zoning".[669] As a result, he reached the conclusion that the valuations of $13,000,000 at April/May 2007, and $11,300,000 at September 2011, contained in the first report remained unchanged for the plaintiffs' land with no leak.

622 Mr Brown then valued the land at those two points in time with the leak by applying a discount of 7.5 per cent.[670] This discount was arrived at by taking into account a number of considerations, primary amongst them that contaminated groundwater would not preclude industrial development but if a purchaser had the option between a site with a leak and a site with no leak, the no leak site would be preferred.[671] This discount of 7.5 per cent resulted in a valuation with the leak as at April/May 2011 of $12,000,000, and as at April 2013 of $10,400,000.

623 Mr Brown concluded that the highest and best use of the plaintiffs' land was industrial, and that groundwater contamination would not preclude industrial development, whether or not the plaintiffs' land was the source of the diesel contamination, or if there was no diesel contamination prior to the leak. As outlined in Mr Brown's second comparison, Mr Brown was of the view that the above matters had no effect on the valuation of the land. Accordingly, he summarised his valuations as:[672]

624 Mr Brown also responded to the two expert reports prepared by Mr Papworth, including by commenting on the sales data used by Mr Papworth in his report.

625 The plaintiffs submit that their claim for damages is based on the possibilities which existed for the residential development of their land. The plaintiffs have tendered in support of these possibilities three alternative scenarios describing possible forms of residential development on their land.

626 The plaintiffs recognise that, if they were to succeed on their claims in these proceedings and the defendants were to satisfy any order in the plaintiffs' favour to pay damages, the plaintiffs will still own their land which will have some value. The plaintiffs submit that they accept that the current value of their land is $9,938,500.

627 The sum of $9,938,500 is put forward in the proceedings by Mr Brown, an expert witness for Mobil, on an industrial utilisation basis, and only takes into account the value of Lots A and B, upon which the residential development would be built.

628 The plaintiffs also submit that because there was evidence from Mr Williams that an experienced developer would not have anything to do with developing the plaintiffs' land, the $9,938,500 valuation referred to would lead to the allowance of an amount which would be favourable to Mobil and the State.[673]

629 I observe that in the areas of divergence referred to below,[674] Mr Papworth's valuations are higher than those of Mr Brown.

630 The plaintiffs estimate the profits for the three possible development scenarios presented in Mr Keighran's evidence as $64.4m, $124.6m and $177.2m (each inclusive of GST adjustments) for the plaintiffs' 121 Lot Subdivision scenario, the Terrace House Development scenario and the Higher Density Development scenario, respectively.

631 The key basis for the divergence of valuation opinions to which I have referred, is that Mr Brown has not placed the same significance upon the sales at Williams Cove. Whereas Mr Papworth contends that the Williams Cove development is similar to the plaintiffs' proposed projects, Mr Brown does not consider the Williams Cove sales to be comparable to the potential sales of the plaintiffs' land. Mr Brown's view in this regard is that Williams Cove is a higher standard than the plaintiffs' planned development and a number of the Williams Cove properties were at waterfront or near waterfront locations, a contention which is refuted by the plaintiffs.

632 I consider that Mr Brown's identification of the sea side location of the comparator development at Williams Cove, provides a cogent and significant basis for that development to be valued more highly than the plaintiffs' development. I consider that Mr Brown's valuation which did not place the same significance on the Williams Cove properties, is to be preferred.

633 I also prefer Mr Brown's valuations because they identify comparable sales data, whereas Mr Papworth did not do so in his first report, indicating a less transparent approach to the development of his report, compared to Mr Brown. I acknowledge however that Mr Papworth's second report did exhibit all relevant comparable sales data.

634 The plaintiffs also argue that Mr Papworth's evidence should be preferred over Mr Brown's evidence because Mobil's instructions to Mr Brown, and the assumptions he was requested to accept, resulted in Mr Brown's expert evidence being inaccurate and distorted. Those assumptions criticised by the plaintiffs were that Mr Brown was instructed to ignore possible future rezoning in reaching his valuation. The plaintiffs also noted Mr Brown's evidence that absent his instructions he would have had regard to potential residential development including the Arundel Stud land also known as 240 Kororoit Creek Road. However, I consider that Mr Brown's evidence was of no lesser weight as a result of the instruction referred to because it is not contested that the plaintiffs' land was able to be developed for industrial purposes, and it is clear that Mr Brown's Report of 12 April 2013[675] factored into his evaluation all the potential beneficial uses of the plaintiffs' land,[676] clearly including development for residential use. Furthermore, the plaintiffs themselves regard Mr Brown's evidence as probative, and they rely on his evidence (with certain adjustments not based on any criticisms of Mr Brown) when it suits their case.[677]

635 The plaintiffs also assert that Mr Brown's evidence is to be given little weight because Mr Brown has overlooked key comparable sales. In particular, the plaintiffs submit that Mr Brown failed to take into account a relevant sale at 240 Kororoit Creek Road. Mr Brown stated in cross-examination that he would without doubt have had regard to that sale had he known of its occurrence.

636 I do not regard Mr Brown's apparent failure to factor into his September 2011 valuation the then recent sale of 240 Kororoit Creek Road necessarily, or probably, impugns his valuations. Although Mr Brown made it clear that, had he known of the sale of that property he would have factored that sale into his valuation, he did not say that the sales result at 240 Kororoit Creek Road would have altered his September 2011 valuation.[678]

637 I am unpersuaded by any of the plaintiffs' arguments that Mr Brown's evidence is of a lesser weight than Mr Papworth's. I consider that Mr Brown's evidence was carefully considered, well based and convincing.

638 Accordingly, I consider that the sales yield which is appropriate to be used in any calculation of the plaintiffs' loss of opportunity is $213M, the middle of Mr Brown's range for the Higher Density development.

639 I have utilised the Higher Density development because the evidence establishes that, if a residential development were undertaken it would be likely to be the type of development which would return the highest yield. I have used the mid figure between Mr Brown's high and low bound yields because I am not persuaded that the higher or the lower bound is the more appropriate.

640 The competing evidence in relation to the plaintiffs' projected costs of developing their land was given by Mr Keighran, Residential and Commercial Construction Director at the Hallmarc Group for the plaintiffs and Mr Stewart, Quantity Surveyor for Mobil.

641 The plaintiffs' overarching submissions in relation to the competing evidence in relation to the plaintiffs' costs of development were that:

(i) there was little difference in the assessment made by Mr Keighran for the plaintiffs and Mr Stewart for Mobil;

(ii) in relation to different assessments between these witnesses, Mr Keighran's evidence should be preferred because he was familiar with the plaintiffs' projects and their mode of delivery; and

(iii) Mr Keighran's evidence was that the required design process was handled internally by Hallmarc and therefore it retained such control of design that a contingency cost need not be allowed for this activity. The plaintiffs also noted that Mr Stewart accepted that a design contingency cost could be ignored in the case of the plaintiffs' developments.

642 When assessing the evidence concerning the construction costs of the plaintiffs' proposed alternative developments, generally I have preferred the evidence of Mr Stewart over Mr Keighran. This is because although Mr Keighran is the Residential and Commercial Construction Director for the Hallmarc Group, a circumstance which I accept probably results in Mr Keighran having a greater understanding of the plaintiffs' methods and ways of operating, that intimate relationship with the Hallmarc Group, including the plaintiffs, in my view, also deprives Mr Keighran of independence. Mr Keighran was at all material times the employee of the Hallmarc Group and, thereby in substance, working for and expected to serve and promote the interests that Group and of the plaintiffs which were part of that Group. This can be contrasted with the position of Mr Stewart, who is an independent expert not employed by Mobil.

643 Further, in my view, Mr Stewart also has the more relevant formal qualifications for this assessment. Mr Stewart is a quantity surveyor with more than 25 years' experience including in relation to costing exercises of the type he has undertaken in his evidence filed in this proceeding. Mr Keighran, a qualified building surveyor, does not, in my view, have the same specialised qualification knowledge as Mr Stewart when it comes to costing a property development, despite that being part of his role with the Hallmarc Group.

644 The plaintiffs submit that Mr Keighran's evidence should be preferred to the evidence of Mobil's expert, Mr Stewart, in relation to the costs of completing their development scenarios, subject to the plaintiffs' position on the adjustment of a number of relatively minor specific items.

645 I have separately dealt with my views in relation to the competing evidence of Mr Keighran and Mr Stewart including my overarching view that Mr Stewart's expert evidence is generally to be preferred.

646 The plaintiffs and Mobil have identified a number of specific areas of dispute in relation to the projected costs of the plaintiffs' development scenarios as addressed below.

647 Both Mr Keighran and Mr Stewart agree on the costs of pre-Mobil leak decontamination being $7 million for the 121 Lot Subdivision and $3.5 million for each of the Terrace House and High Density Developments.

648 However Mr Keighran does not presently allow for contamination removal cost, therefore I consider that an adjustment is required in that regard to Mr Keighran's cost estimate. Mr Stewart has, I consider, included all appropriate contamination remediation costs in his costings.

649 Both Mr Keighran and Mr Stewart agree on the wall fencing rate of $6,000 per linear metre (for concrete walls). Those experts however disagree as to the length of wall required. Mr Keighran initially allowed the cost of this item as a provisional cost item of $500,000 for each development scenario.

650 In the Experts' Joint Report,[679] the amount of resultant difference between the experts for the cost of the Acoustic Wall was $1,891,400 for the Terrace House and Higher Density developments.

651 Mobil submits that on Mr Stewart's measurements, which were taken off the plaintiffs' own plans, the cost adjustment to Mr Keighran should be $1,891,400 (namely Mr Stewart's overall fencing ($2,391,400), less Mr Keighran's $500,000 PC ('Provisional Cost') allowance = $1,891,400).

652 The plaintiffs submit that Mr Keighran's PC allowance of $500,000 should now be replaced by the increased cost allowance of $1,051,300.[680]

653 I consider that Mr Stewart's estimate of the likely cost of fencing at a total of $2,391,400 is the more persuasive estimate, principally because Mr Stewart's measurements for the acoustic wall were based on the plaintiffs' subdivisional plan,[681] and Mr Keighran appeared to accept the calculations made on the basis of that plan.[682] Mr Keighran also undertakes an exercise of omitting certain fencing where he considers that walls of buildings can effectively substitute for fencing.

654 I note in relation to this cost item that the acoustic wall was part of the subdivision plan, not the higher density plan. The higher density plan has apartment blocks backing on to the Akuna Drive estate, and potentially reducing the need for an acoustic wall, in part. However, the evidence adduced by the parties is not, in my view, sufficiently comprehensive or clear enough to permit me to evaluate the cost ramifications which may arise as a result of these observations. I therefore consider that the Stewart costing, utilising the subdivisional plan, is a more reliable measure.

655 Accordingly, an adjustment to the plaintiffs' assessed costs of the development should be made by substituting $2,391,400 as the cost of the acoustic wall.

656 The plaintiffs submit that Hallmarc does not charge a builders' margin and, therefore, Mr Keighran has not added such a cost. The plaintiffs say that the evidence is that the plaintiffs would engage Hallmarc to undertake the development construction work and Hallmarc would not charge the plaintiffs a builders' margin.

657 Therefore the plaintiffs say no builders' margin should be allowed.

658 Mr Stewart allowed a builders' margin at 3 per cent to the construction costs estimate. However, Mobil points out that on other projects Hallmarc has charged a project and construction management fee.[683] In my view the Hallmarc Group appears to have charged a project and construction management fee synonymously to a builders' profit margin.

659 In my view Mr Keighran's evidence as to what should be appropriately allowed in relation to this item, which conflicts with Mr Stewart's evidence, should be given less weight, for the reasons I have addressed elsewhere[684] as to why Mr Stewart should be preferred on points of conflict. On the expert evidence of Mr Stewart I am satisfied a builders' profit margin of 3 per cent is reasonable and should be applied to the plaintiffs' developments costs.

660 The plaintiffs argue that because Hallmarc does not employ unionised labour, their lower construction costs should be accepted.

661 Mobil argues that, in relation to the Higher Density development only, Mr Stewart's evidence in relation to this item of costing, was that any project costing for a financier or developer would include an allowance for unionised labour. For that reason I consider that Mr Stewart's estimates are more likely to be aligned with proper industry practice and therefore reliable and to be preferred. I also prefer Mr Stewart's evidence on this point because of Mr Stewart's higher qualifications to give such evidence and his greater independence. I have elaborated these reasons elsewhere.[685]

662 I also accept Mobil's submissions that there is no proper evidentiary basis upon which to be satisfied that Hallmarc Constructions does not use unionised labour. I do not regard Mr Keighran's single example of a non-unionised project as probative or persuasive on this issue. It does not demonstrate a modus operandii on the part of Hallmarc in relation to the labour it uses to construct high density residential developments in Victoria.

663 Mr Keighran's evidence that it is in this instance appropriate to cost the plaintiffs' prospective development works on a non-unionised labour basis, appears to be based on one empirical example.[686] Furthermore, Mr Keighran did not more generally assert or justify whether valuing on a union or non-union basis was the correct method. In my view, the evidence of Mr Keighran on this issue is insufficient to establish that on the balance of probabilities the plaintiffs' project will not have to absorb the cost of unionised labour. Mr Stewart's evidence is to the effect that with future higher density development projects, banks and finance companies require the allowance of an additional 20-40 per cent to construction costs to allow for any union activity. Mr Stewart was of the view that it was appropriate in the costing of the plaintiffs' proposed higher density development to add a cost to account for unionised labour.

664 For the above reasons,[687] and for the reasons I have stated elsewhere as to why I give more weight to Mr Stewart's evidence,[688] I consider that Mr Stewart's allowance for unionised labour should be added to the plaintiffs' construction costs. Mr Stewart has included this allowance in his construction cost calculations for the Terrace House and Higher Density development.

665 Mr Stewart allowed a construction cost contingency of 2.5 per cent for the subdivisional project and 5 per cent for the Terrace House and Higher Density developments. Mr Keighran made no allowance for the cost of a contingency for design.

666 Mr Stewart allowed a 5 per cent construction cost contingency and a design contingency of 3 per cent for the higher density development. As to the design contingency, whereas Mr Stewart initially conceded that such a contingency may be discarded,[689] this concession was made before Mr Keighran gave his evidence that the Hallmarc Group does not employ its own architects or engineers.[690]

667 I consider that in light of the timing and nature of Mr Stewart's concession that a design contingency could be taken out of the plaintiffs' costing, it is appropriate to disregard that concession and focus on Mr Stewart's original assessment that a 3 per cent design contingency was appropriate.

668 I accept Mr Stewart's evidence, which I consider to be inherently more probable, that Hallmarc, which did not have the benefit of its own architects or engineers, may incur design costs during construction. The evidence was also that the existing prospect drawings are only conceptual and that the design for services and structure has not been undertaken. Mr Stewart also stated that it was usual to allow for these design contingencies.[691]

669 I consider that for the above reasons a design contingency of 3 per cent, namely $1,762,383, for the Terrace House development and $3,070,715 for the Higher Density development should be added to the plaintiffs' costing.

670 The plaintiffs submit that the difference on this item is between Mr Keighran's cost of $3,180,000 and Mr Stewart's cost of $3,424,253 and that the Court should split the $244,253 difference.

671 Mobil's submissions in reply on this item, in essence refer to the plaintiffs' proposed resolution by the Court splitting the difference between the experts' evaluations.

672 I consider, given the above approach of the parties, that with this relatively modest item I am justified in following the plaintiffs' submitted approach. Accordingly, I determine that the sum of $3,302,126.50 (being the average of Mr Keighran's adjusted allowance of $3,180,000 and Mr Stewart's $3,4224,253) represents the cost of road and earthworks.

673 For the above reasons the same adjustment, by adding a further $122,100.00, could be made both for the Terrace House and the Higher Density Construction Costs.

674 In relation to the 121 lot subdivision and the Terrace House scenarios, Mr Keighran applies a 2 per cent sale cost for what he describes as marketing and sales costs. Mr Keighran's calculation applied to the selling costs. Mr Stewart conceded that in Hallmarc Constructions' case, the calculations of marketing and sales costs as a percentage of selling costs may be more appropriate. Mr Stewart applies 8 per cent of the costs of construction to calculate this item. Further, discrepancy arises between Mr Keighran and Mr Stewart on this item because Mr Stewart applies his chosen percentage to costs calculated with unionised labour.

675 In my view, Mr Stewart accepted, during his evidence at the joint expert "hot tub" with Mr Keighran, that Hallmarc was in a special position in relation to the way it deals with marketing and selling, and was probably particularly well able to minimise those costs which related to controllable internal aspects of its operation and associated costs. For this reason, I accept Mr Keighran's calculation of marketing and selling expenses and that those costs should be calculated at 2 per cent of the cost of sale.

676 Accordingly, I consider that the sum of 2 per cent of the middle sales yield of the Higher Density development should be added to the plaintiffs' overall development costs. That additional sum is $4,260,000.

677 The plaintiffs submit that if the Court accepts the plaintiffs' submissions on the costs of development issues above, the total construction cost of the High Density Development (including marketing and sales) is $116,732,888 (and that this sum will reduce to $106,120,807 after recovery of input tax credits).[692]

678 Mobil submits in relation to the plaintiffs' damages case that:

Any award of damages for the plaintiffs' loss of opportunity claim requires the Court to estimate the difference between the profit that would be made on the plaintiffs desired and approved development proposal and the development which it is able to undertake; be it a less profitable residential development or an industrial development.[693]

679 Mobil submits that there needs to be an evidentiary basis for an informed estimation of the value of the lost opportunity.

680 Mobil says the plaintiffs' losses are the difference between:

(i) the hypothetical profit on the plaintiffs' desired development opportunity; and

(ii) the profit which could be achieved on a development that the plaintiffs can undertake, notwithstanding residual contamination;

681 Mobil says that any attempt to measure loss in the above manner would be impossible and also submits that this position reinforces that the normal measure of loss for damage, diminution in value, should be applied.[694]

682 Mobil also points out in its submissions that the plaintiffs did not lead any evidence as to the current value of their land.[695]

683 I have earlier[696] dealt with this issue as it arose at a point of principle. For the reasons explained above, I reject this argument by Mobil.

684 Mobil highlights that the plaintiffs' evidence is that the residential development proposal before the Council is unlikely to be the form of residential development which the plaintiffs would pursue.

685 Mobil also highlights that at the time of the leak, and throughout most of this proceeding, the plaintiffs were unable to say in what form their residential development would be undertaken. Mr Cini was of the view that if amendment C74 was accepted, it was "unlikely" that he would proceed with the 121 Lot subdivision attached to that application.[697]

686 The plaintiffs have, in their final submissions, submitted that they have now decided that it is pointless to pursue their residential development plans and they have therefore abandoned those plans.

687 Mobil also points to the history of the plaintiffs' applications to develop their land and the various types of proposed industrial and residential developments the plaintiffs have put forward since 1998. Mobil submits that this history underscores the unpredictable nature of the plaintiffs' development plans. Mobil also points to Mr Keighran's evidence as to the different ways of staging the plaintiffs' development[698] and highlights that, depending on how a future project is staged, there will be uncertainties as to cost.

688 Mobil submits that the constraints and other issues presently standing in the way of planning approval for the residential development of the land would probably result in future changes to any residential development the plaintiffs may pursue.

689 Mobil submits that to establish the loss of opportunity claim the plaintiffs pursue, the plaintiffs must prove not only the type of development they are likely to undertake but also the corporate structure and development plan by which the development will be undertaken.

690 Mobil submits that Mr Keighran's costing is based on a corporate structure wherein the developer entity makes no profit, and a development vehicle which can reduce profits by means of tax contribution.

691 Mobil submits that because in this proceeding the plaintiffs have not adduced evidence about the likely corporate structure of the development, the Court cannot be confident that the plaintiffs will make any development profits, nor can it be confident about what those profits might be.

692 Mobil submits that given Hallmarc's development structures for the Highett and St Albans projects, the Court should regard the plaintiffs' most likely corporate structure for the development of the land as one where all profits accrue to entities other than the plaintiffs.

693 Mobil submits in Schedule 5 of its Closing Submissions that Mr Keighran's evidence as to the costs of the plaintiffs' three development scenarios is flawed because:

(i) Mr Keighran's costing experience appears to be based on different types of earlier development; and

(ii) His experience was with earlier developments that were undertaken using different corporate and tax structures.

694 Mobil submits that given the history of other projects undertaken by Hallmarc, the Court should conclude that as with two relatively recent development projects, the plaintiffs will ultimately develop the land via a project specific joint venture vehicle. Mobil contends that if such a joint venture vehicle were used to develop the plaintiffs' land, the profits from such a development would accrue to a joint venture partnership and would be distributed to the Hallmarc Group entity which participates in the partnership.

695 Mobil also poses other hypotheses, namely the plaintiffs may be mere custodians for the type of joint venture partnership referred to above and not themselves take any profits from the development. Alternatively, the plaintiffs may become 100% subsidiaries of Hallmarc and members of a tax consolidation group and take certain tax effective steps which may result in a material reduction in the plaintiffs' profits (within the Group structure) as a result of the plaintiffs' deductable expenses being increased as part of the overall Group accounting practices.

696 The plaintiffs submit that Mr Cini's unchallenged evidence was that the plaintiffs would themselves develop their land. The plaintiffs also submit that they are not required to establish the detail of every element of the proposed developments to meet the onus that the prospects of realising the development were on the balance of probabilities, likely.[699]

697 The plaintiffs submit that Mr Cini's evidence was that each of the developments undertaken by his companies was profitable. The plaintiffs also submit that the utilisation of other structures for other developments does not provide a basis to say that those historical structures will be used in relation to the development of the plaintiffs' land.

698 The plaintiffs also submit that Mr Keighran's evidence about the staging of the project did not establish significant uncertainties, but rather illustrated that there were different ways for a "self-funding" development to proceed.

699 The plaintiffs argue that the corporate tax structures they may have used on earlier developments are irrelevant to their costing of the present three development scenarios. The plaintiffs also point out that the matters Mobil now submits as to the possible corporate structures the plaintiffs might adopt for the development were not put to Mr Cini.

Conclusions (form of development and type of corporate vehicle)

700 In my view the uncertainty in the form of residential development which might ultimately be permitted by the relevant authorities and decided upon by the plaintiffs, and the obvious consequential uncertainty which is likely to flow including in relation to development costs, strongly indicate that the conventional method of assessing damage in relation to injured land, namely damages for diminution of value, is the more suitable method. This is because a diminution in value basis for assessing damages largely obviates the considerable uncertainties, to which I have referred, in relation to what in fact the plaintiffs would be able to residentially develop in the future. Damages for diminution in value, were they addressed and sought by the plaintiffs, could be more predictably evaluated and evaluated by reference to a specific point in time and would represent a damages calculation more directly informed by the market for the plaintiffs' land at the relevant time.

701 However, I am unpersuaded that the plaintiffs are required, in the proof of their loss of opportunity damages claim, to define the precise corporate and tax structure which the plaintiffs would employ to undertake their development.

702 Save for the matters I have addressed elsewhere in relation to the Builders' Margin,[700] in relation to the projected construction costs of the plaintiffs' development, in my view the plaintiffs' costing directed to the establishment of projected profits[701] are in terms of their structure and logic adequate to address all the necessary elements of the type of financial claim made by the plaintiffs. That is, subject to the adjustments to those costs which I have determined above[702] and also subject to my views about the ill-defined financing cost which the second and third development scenarios will probably generate.

703 Likewise, I am not persuaded that earlier Hallmarc Group developments bear upon, or are probative of the likely corporate structure the plaintiffs would employ to residentially develop their land in the future. Mr Cini said, and I accept, that the plaintiffs would themselves develop the plaintiffs' land. That evidence was not challenged, nor was Mr Cini cross-examined as to the various Mobil hypotheses referred to above,[703] as to the corporate and tax structures the plaintiffs might employ to undertake the relevant development.

704 Finally, in relation to Mobil's criticisms of Mr Keighran, in my view the types of projects and prior cost estimating work undertaken by him were sufficiently analogous to enable him to give the expert evidence he did in this proceeding. Further, the fact that his past project cost experience may have been in relation to projects undertaken with different corporate and tax structures and perhaps structures which may prove to be different to that used by the plaintiffs to develop their land in due course does not, in my view, in itself in any way diminish the weight to be given to Mr Keighran's evidence in this proceeding. However, for the reasons I have earlier explained,[704] in areas of conflict of evidence between Mr Stewart and Mr Keighran, I have given less weight to Mr Keighran's evidence.

The plaintiffs' need for finance for the Residential Developments

705 The plaintiffs submit that the only evidence before the Court is that financing will not be required because the development is likely to be staged. The plaintiffs also point out that Mr Cini was not cross-examined on this issue.

706 The plaintiffs also submit that Mobil has not called any evidence which establishes, or supports the proposition that the plaintiffs will require finance to undertake the development scenarios, nor has Mobil put on any evidence as to the cost of such finance and its impact on the feasibility of the possible developments.

707 The plaintiffs also submit that reference to financial requirements for other Hallmarc projects is not probative of any requirement for finance for the plaintiffs' proposed project. Mr Keighran's evidence in cross-examination as to certain loans for development was equivocal and his evidence in cross-examination in relation to various Hallmarc accounts was not probative because he was not conversant with those accounts.

708 The plaintiffs also submit that they are financially strong and that there is no established basis for the Court to conclude that the plaintiffs would have any difficulty financing the development scenarios they have put forward.

709 Mr Cini in his Supplementary Witness Statement refers to Hallmarc's statutory audited accounts that disclose net equity of the Hallmarc Group in excess of $50,000,000. While I accept this rough estimate, that is less than half the amount that will ultimately be required in construction costs. Further, the Hallmarc Group financial statements disclose that only a small portion of this net equity of $50,000,000 is in cash or cash equivalents, with the rest of this net equity tied up in investment properties held by Hallmarc. Accordingly, I consider it likely that Hallmarc would need to seek finance for the Higher Density development.

710 Mr Keighran also sought to establish that the plaintiffs would not require finance to fund the proposed development. Mr Keighran was however not able to speak to this position from his own direct knowledge.[705]

711 Furthermore, the evidence was that the Hallmarc Group has, on a number of relatively recent occasions, required third party finance to fund its projects,[706] even when those projects were undertaken in stages.[707]