Winky Pop Pty Ltd v Mobil Refining Australia Pty Ltd [2016] VSCA 187

Winky Pop Pty Ltd v Mobil Refining Australia Pty Ltd [2016] VSCA 187 - VSCA 2016 case summary — Zoe

[4]

Manage change in Strategic Redevelopment Areas carefully; protect the existing and ongoing viable use of existing industries; retain employment generating uses where possible; and subject to appropriate justification, introduce new land uses.
Require the following matters be addressed, as appropriate, in consideration of applications for change in Strategic Redevelopment Areas:
- The extent of contamination.
- Range of future uses.
- All infrastructure requirements including community facilities and open space.
- Potential off site impacts, and measures to manage them.
- Traffic management plans which address connectivity within and between sites.
- Staging of development.
- Mechanisms/proposals to protect ongoing viable industries from encroaching sensitive uses such as buffer distances and acoustic measures to attenuate noise levels within the new development.
- Future character of the area and potential impact on neighbouring residential character.
- Measures to protect ongoing viable industry.
- Social Impact Assessment.
- Incorporation of Environmentally Sustainable Design Principles.
- Diversity in housing choice including affordable housing.
- Appropriate zoning and planning controls to guide future development and manage the potential impact of interface issues on adjoining land uses.
Require the preparation of an Outline Development Plan (ie a master plan), for Strategic Redevelopment Areas that are no longer suitable for traditional industrial uses and are in multiple ownership in consultation with land owners, adjoining land owners, key government stakeholders and the Council to ensure that the Strategic Redevelopment Area as a whole can integrate with its surrounds and address significant interface issues.
Support applications for site specific rezoning only if the applicant can demonstrate that the proposal will not prejudice the future development of the remainder of the precinct and that it is consistent with an Outline Development Plan or Master Plan that has been prepared to manage overall change in the precinct.
Ensure that there is an appropriate interface between conflicting land uses when planning for the redevelopment of redundant industrial sites identified as Strategic Redevelopment Areas.
Require residential and other new sensitive land uses to include appropriate measures to protect residential amenity including noise attenuation within new buildings and appropriate design and siting of private open space to protect occupants' amenity.
Ensure that there is an appropriate interface between existing and future land uses within redundant industrial areas identified as Strategic Redevelopment Areas when planning for redevelopment of the precinct.
Where appropriate, consider the potential for new character in future residential areas of the Strategic Redevelopment Areas.
Ensure the provision of appropriate community infrastructure or an adequate contribution to support new communities.
Ensure that the existing road layout and subdivision pattern that defines and characterises the broader neighbourhood is considered and respected by new development.

[52]

This land includes the Hobsons Bay Caravan Park, land previously proposed for the Violet Street development as part of Amendment C1, existing industrial properties in Akuna Drive, 92-100 Champion Road and the remaining vacant land up to Maddox Road. The land is currently zoned Industrial 3 Zone. The land has not been developed to date because the majority of the land is owned by Mobil and has been used as a buffer to the refinery located approximately 1.5 kilometres from the precinct.

There is an existing industrial development in the north east section of this precinct, known as the Akuna Drive Estate. This estate is relatively new, developed in the last 10 years. The quality of development is of a high standard and the uses cater for a different market than the nearby Kororoit Creek Road North Industrial Estate (Precinct 12). A mix of businesses have occupied this precinct, many of which are not traditional industrial uses.

The retention of the whole of the precinct for industrial purposes is likely to have a detrimental impact on the ongoing development and renewal of the nearby older industrial estates to the west and south of this land. The potential for the whole of this precinct to be developed for industrial purposes would be limited by the supply of vacant and redevelopable industrial land that already remains within Precinct 12. It appears that many of the properties within the estate are nearing the end of their economic life and it is expected that they will be redeveloped for small lot industrial purposes.

Retail and commercial land uses are also considered inappropriate given the proximity of the site to the Williamstown commercial precinct, approximately 2km to the east and the neighbourhood-based centre within the Rifle Range Estate fronting Kororoit Creek Road. In addition retail and commercial land uses would be considered 'out of centre development', which would not align with the Councils' Activity Centre Strategy 2006 and current State Planning Policy.

[53]

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.

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.

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.

Land at 92-100 Champion Road has recently been sold by VicTrack to private owners and given its relationship to the Victoria University of Technology (VUT) site adjacent, and the campus impending closure, this land should be considered as part of any broader redevelopment of the VUT site. Therefore, 92-100 Champion Road should also be designated as part of the Strategic Redevelopment Area, with a prospective use finalised in conjunction with the VUT site.

It is recommended that any future rezoning of the precinct have regard to Planning Scheme Amendment C1 (rezoning of land in the Violet Garden Estate) and the accompanying panel report and attend to any unresolved matters. Much of this precinct was operated as a landfill site by the former City of Williamstown, as a result, contamination issues will need to be carefully addressed.

The State Government should also be encouraged to provide a railway station in proximity to Maddox Road to service the existing industrial estate in Precinct 12 and the proposed residential neighbourhood in this precinct.

The Council expects any future development to incorporate a high standard of urban design, and appropriately address any other buffer or interface issues.

Any redevelopment of the site must include Environmental Sustainable Design (ESD) principles including but not limited to Water Sensitive Urban Design (WSUD), energy efficient development and water reuse with the site.

In this context, the majority of this precinct is considered to be a Strategic Redevelopment Area, and the rezoning of the majority of the land to a residential zone should be considered subject to the resolution of the above issues.[54]

[74]

4.1.1 Strategic context

The land zoned Industrial 3 to the east of Maddox Road, continues to serve a strategically important and valid sub-regional and local role as an industrial buffer and potential industrial use area.

In sub-regional terms, the petrochemical facilities to the west are a major economic feature and asset to the State that warrant protection for their effective economic role and continuing operations. Nevertheless, protection from potential environmental hazards should be provided to the community through separation and buffers. A preferred, but not always achievable land use planning outcome is that a use with off site amenity and safety implications should own and or control the use of the land required as a buffer to the source of the potential nuisance or emission. To this extent, Mobil's ownership and control of the major parcel of land east of Maddox Road as part of a buffer area to its own operations should properly be seen as a soundly based planning and land use outcome until such time as either the extent or need for a buffer is demonstrated to not be required.

It is to be remembered that despite the land being held for the purpose of a buffer, it could also be developed for industrial purposes.

At a local level the Industrial 3 land also serves as a buffer and transition zone to the industrial areas west of Maddox Road and as an industrial use area for a number of businesses, industries and commercial operations located on land with access from Akuna Drive. Akuna Drive is not like some other industrial locations considered within the 2008 ILMS, which are long established areas with obsolete uses and building stock. The use and development of Akuna Drive is properly characterised as recent (have been essentially developed in the last 10 years) and only partially implemented, given that it was designed and subdivided with a view to extending to the west with access provided from both Maddox Road and Champion Road.

Despite the more recent planning decisions to include the subject site (except Lots 35 and 36) and the Mobil land within a Strategic Redevelopment Area, the greater part of the Industrial 3 land east of Maddox Road has a continuing and important industrial role. As the supply of industrial zoned land diminishes in the context of Amendment C33, the land east of Maddox Road retains attributes that remain attractive to commercial and industrial use. It is flat, expansive, in large holdings, proximate to other established businesses and sectors, serviced, and has direct access and exposure to arterial roads and a rail crossing.

This is the appropriate context in which to view proposals to use and develop the plaintiffs' site for residential purposes. The majority of any residential use and development of the subject site would be contained in a relatively narrow irregular space between two partially developed industrial zoned areas and by the railway line and a pipe track.

At a strategic level, orderly land use planning would strongly caution against such an outcome due to the potential conflict of uses and impacts upon perceived amenity and industrial operations.

At a more practical community and urban design level, the development of the subject site for residential purposes under these conditions would be likely to result in both compromised residential and industrial outcomes. Shared access between industrial and residential uses should be avoided. Accordingly the new residential community will only be able to integrate with services in the broader Williamstown area through the established residential area to the south, and the potential for Akuna Drive to connect to Maddox Road will be lost.

As a relatively isolated site, as described above, the residential use of the subject land is not sustainable development in the meaning of the Planning and Environment Act and the Hobsons Bay Planning Scheme.[61]

[87]

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.
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. 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. 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.
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.
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. This phrase was unenlightening.[64]

[143]

It needs to be recognised that where there are industrial air emissions from premises, even with good pollution control technology and practice, there may still be unintended emissions which must be anticipated and allowed for. While it is an objective of SEPP (AQM)[86] that such emissions should be eliminated, it is recognised that even 'state of the art' facilities are not always guaranteed to achieve this goal 100 per cent of the time. Equipment failure, accidents and abnormal weather conditions are among the causes that can lead to emissions affecting sensitive land uses beyond the boundary of the source premises.

Unlike routine emissions, unintended emissions - industrial residual air emissions (IRAEs) - are often intermittent or episodic and may originate at or near ground level. Separation distances seek to avoid the consequence of IRAEs. An adequate separation distance should allow IRAEs to dissipate without adverse impacts on sensitive land uses.

However, the recommended separation distances provided in this guideline are not an alternative to source control. In preparing this guideline, EPA is not condoning uncontrolled off-site air emissions in contravention of SEPP (AQM) requirements. Rather, this guideline acknowledges that SEPP (AQM) objectives might not always be met, and the beneficial uses specified in the SEPP (AQM) might not always be protected in the vicinity of a premises.

In addition, if a premises has been located on a site with an inadequate separation distance, subsequent remedial action to alleviate off-site effects, either within or beyond the separation distance, will be required if IRAEs occur. However it should be realised that such action may require costly, high technology solutions, which may not be economically feasible or fully effective, thus jeopardising the economic viability of the industry and potentially not alleviating off-site effects. This is a lose/lose situation which needs to be avoided.

Responsible planning therefore needs to take these issues into account by considering the potential impacts the proposed development might have on its surroundings, and the potential impacts that surrounding land uses might have on the proposed development. This guideline seeks to protect sensitive land uses from odour and dust by taking into account the potential impacts of industry encroaching on sensitive uses and the potential impacts of sensitive uses encroaching on industry.

In addition, under the VPPs,[87] industrial land uses have use rights which enable the industry to operate, provided they comply with relevant regulations. Accordingly, planning authorities and other responsible authorities need to carefully consider the appropriate separation of industrial land uses from sensitive land uses. When strategic land use plans are being developed for a precinct that has been identified for transition from an industrial land use to sensitive land uses, the planning authority should consult with potentially affected industries in order to develop a staged implementation plan that allows for the smooth transition of land uses over a period of time.[88]

[261]

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.

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.

The combination of Mr Mirkov's evidence and the evidence of Messrs Keighran and Stewart was:

(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.

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.

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.[118]

[267]

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.

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.

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.

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.

CUTEP is not a negotiated position as between the polluter and the EPA.

Mobil's remediation is to be undertaken pursuant to the applicable RAP and in accordance with EPA Publication 840.

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.

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.

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.

The plaintiffs' alternative remediation strategy, discussed by Mr Nunn, is not likely to be suitable or adequate or reasonable for the reasons earlier identified by reference to Mr Nunn's evidence.

Remediation to CUTEP is likely to be achieved within the next 5 to 10 years.

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.

For the above reasons, the Mobil leak has not prevented the plaintiffs from being able to develop their land for residential use.[121]

[283]

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

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

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. 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.

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. Mobil also details 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.

[particulars omitted]

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.

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.

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.[125]

[304]

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,[132] likely to be a more reliable and accurate basis upon which to assess damages.
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.
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,[133] reinstatement damages are at odds with the fact that Mobil is remediating the plaintiffs' land and continues to be obliged to do so.[134]

[321]

The respondent seeks to overcome problems of proof by redefining the loss occasioned by the alleged breach of duty as the loss of the chance that the client may have undertaken the inter vivos transactions. The chance could not be of a better testamentary disposition; none is identified as available.
It has been explained that to speak of loss as the loss of a 'chance' distorts the question of causation. It involves the application of a lesser standard of proof than is required by the law and, it follows, by s 13(1)(a). It confuses the issue of the loss caused with the issue of assessing damages which are said to flow from that loss. In that assessment a chance may be evaluated.
The respondent's case on causation is not improved by seeking to equate the chance spoken of with an opportunity lost. It may be accepted that an opportunity which is lost may be compensable in tort. But that is because the opportunity is itself of some value. An opportunity will be of value where there is a substantial, and not a merely speculative, prospect that a benefit will be acquired or a detriment avoided.
It remains necessary to prove, to the usual standard, that there was a substantial prospect of a beneficial outcome. This requires evidence of what would have been done if the opportunity had been afforded. The respondent has not established that there is a substantial prospect that the client would have chosen to undertake the inter vivos transactions. Therefore, the respondent has not proven that there was any loss of a valuable opportunity.
The onus of proving causation of loss is not discharged by a finding that there was more than a negligible chance that the outcome would be favourable, or even by a finding that there was a substantial chance of such an outcome. The onus is only discharged where a plaintiff can prove that it was more probable than not that they would have received a valuable opportunity. To the extent that the majority in Allied Maples Group Ltd v Simmons & Simmons holds that proof of a substantial chance of a beneficial outcome is sufficient on the issue of causation of loss, as distinct from the assessment of damages, it is not consistent with authority in Australia and is contrary to the requirements of s 13(1)(a) of the Civil Liability Act.[144]

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