1
Summary of Judgment
Winky Pop Pty Ltdvmobil refining australia pty ltd
[2016] VSCA 187
5August 2016
The Court of Appeal today dismissed an appeal by Winky Pop Pty Ltd and OR Australia Pty Ltd (‘the applicants’) against a decision that they were not entitled to damages for a claimed loss of opportunity to residentially develop industrially zoned land at North Williamstown.
The applicants’ land was contaminatedby petroleum hydrocarbons following the perforation in late 2006 of a nearby pipeline owned and operated by Mobil Refining Australia Pty Ltd (‘Mobil’). Mobil accepted responsibility for the leak and has taken steps to remediate the land under a plan reviewed by the Environment Protection Authority (‘EPA’), which will continue until the EPA accepts that the land is cleaned up to the extent practicable.
At trial, the applicants alleged that, prior to the leak, they possessed a valuable opportunity to have their land rezoned and to obtain a planning permit for residential development. They alleged that the leak deprived them of that opportunity and that Mobil should compensate them for that loss. The trial judge rejected those contentions and awarded the applicants $104,273.93 plus interest for costs they incurred in investigating the leak.
The Court of Appeal found that it was open on the evidence for the trial judge to conclude that, prior to the leak, there was no practical prospect of the applicants obtaining a rezoning of their land which would permit residential development. Under the applicable planning policy framework, there were a series of material impediments which would have had to be resolved before there could be a real prospect of rezoning of the applicants’ land. These included pre-existing contamination of the land, the interface of the land with surrounding industrial land, access and traffic issues, and the need for an appropriate buffer between any residential land and the nearby Mobil refinery.
Although other industrial land in the area had been rezoned, it did not follow that an application to rezone the applicants’ land would have been successful, given the site-specific nature of the relevant considerations. Notably, the applicants’ land extended further into the EPA buffer area surrounding the refinery, had been contaminated by industrial use over a lengthy period, abutted newly developed industrial land, and did not have direct access to a main road.
The Court held that the EPA buffer and access issues in particular posed material impediments to the residential rezoning of the applicants’ land. The Court considered it was unlikely the applicants’ land would have been approved for rezoning without the agreement of the EPA to vary the buffer requirement. Further, it was open on the evidence to conclude that the EPA would be unlikely to accept a reduction of the refinery buffer distance. In addition, the Court held the applicants had not demonstrated they had any prospect of successfully addressing the need to provide access arrangements appropriate to their hypothetical development plans.
The Court of Appeal affirmed the trial judge’s conclusion that,even if the applicants did in fact have an opportunity prior to the leak of pursuing residential development of their land, the leak did not deprive them of that opportunity. Leaving the other impediments to rezoning to one side, it was likely that once Mobil had cleaned up the land to the extent practicable, the applicants would be able to secure a Statement of Environmental Audit which would enable residential development of their land despite the contamination caused by the leak.
Finally, the Court confirmed that, in a case of damage to land, the overriding goal in the assessment of damages is to award a plaintiff fair and just compensation that will, as far as money can, put the plaintiff in the position it which it would have been if the tortious conduct had not occurred. Ordinarily, damages will be awarded on the basis of diminution in the value of the land, or the cost of remediation. However, consequential losses may also be available in particular cases. Assuming that damages can be awarded for a loss of opportunity, a risk of overcompensation can and should be addressed in the analysis of the relevant probabilities and possibilities. Nevertheless, it should also be considered whether compensation on a diminution in value basis would be likely to provide a more reliable assessment of damages. The Court upheld the trial judge’s conclusion that diminution in value damages, which the applicants chose not to pursue, would be the more appropriate measure in this case.
The Court found it unnecessary to consider the applicants’ contentions that the trial judge’s assessment of the value of the lost opportunity, if one existed, was incorrect.
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NOTE: This summary is necessarily incomplete. It is not intended as a substitute for the Court’s reasons or to be used in any later consideration of the Court’s reasons. The only authoritative pronouncement of the Court’s reasons and conclusions is that contained in the published reasons for judgment.