Clayton Utz Insights
02 August 2012
By Mark Etherington and Susannah Hill.
The decision in Coffey could have major implications for deciding who is responsible for site contamination.
Responsibility for remediation is a major issue when dealing with contaminated sites, but there has been some uncertainty about how WA's Contaminated Sites Committee should approach assigning it under the Contaminated Sites Act 2003 (WA). This might soon be dispelled by the WA Supreme Court.
The Contaminated Sites Committee issued a draft decision holding Coffey LPM Pty Ltd (an environmental consultant) 70% responsible for the contamination of a former service station site because it caused the contamination when it damaged a subterranean fuel pipe during a site investigation.
Coffey denied that the manner in which it had conducted the site investigation could have caused the damage (and therefore the contamination), and asked the WA Supreme Court:
- to set aside the draft decision; and
- order the Committee to further investigate the cause of damage to the fuel pipe (including through an on-site investigation and an oral hearing).
Before it makes a final decision, the Court issued a preliminary decision setting out what it thought was at least arguable by Coffey (Re Contaminated Sites Committee; Ex parte Coffey LPM Pty Ltd  WASC 242). The importance of this is that we now know which important questions will soon be answered by the Court.
Coffey argued there was no reasonable basis for suspecting that Coffey had caused the contamination by damaging the fuel pipe.
The Court noted that:
- "the degree of satisfaction needed to reach the level of reasonable suspicion will need to take into account… the nature and consequence of the fact or facts to be established and the seriousness of the allegation made and the inherent unlikelihood of an occurrence of a given description or the gravity of the consequences flowing from the finding"; and
- it was "not… immediately apparent how, or on what basis… two documents were regarded by the Committee as establishing as a fact capable of reasonable suspicion, that hand augering during test drilling by the applicant or an associated company in July 2004 damaged the underground fuel line";
The two documents were:
- a consultant report that through contention rather than the establishment of objective fact "advances the claim that the alleged damage to the remote fill line was a major source of this pollution"; and
- Coffey's report that "makes reference to these tests discovering petroleum contamination at various points but makes no reference to any damage being caused to underground fuel lines by the sampling process, whether by hand auger or otherwise".
What should the Committee include in a draft decision?
Coffey argued the draft decision failed (contrary to the requirements of the Contaminated Sites Act 2003 (WA)) to state the material acts or details underlying its findings of contamination and responsibility. If the acts undertaken without lawful authority and the details of the contravention of law were not specified, how could it respond to the Committee's draft decision?
The Court considered that it was open to Coffey to argue that the Committee should have:
- specified the act that was undertaken without lawful authority, and details of the contravention of law;
- formulated its decision in a manner that afforded an opportunity for affected parties to respond by means of specific answers and explanations; and
- outlined the reasons why it preferred evidence of one side of the dispute over another.
Was the process unfair to Coffey?
The Committee's determination turned on disputed opinions as to how the fuel pipe was damaged. Given this, the Court considered that it was open to Coffey to argue that the Committee had denied it procedural fairness by refusing Coffey's prior request for an:
- onsite meeting to excavate and inspect the subterranean fuel pipe (as Coffey had not been able to previously inspect the fuel pipe); and
- oral hearing so that the parties could cross-examine witnesses who gave conflicting evidence or opinions on the cause of damage to the fuel pipe.
Implications for parties to a remediation decision
Under the hierarchy of responsibility in the Contaminated Sites Act 2003 (WA), landowners will bear responsibility if the relevant polluter cannot be identified.
The Court's expected clarification of the Committee's approach may make it harder for the Committee to be reasonably satisfied that a party's actions render it a polluter of the site.
Notably, the Committee's decisions to date often involve inadequate information stretching back over a considerable period of time. In these cases the factual conflict may be such that the Committee cannot reasonably identify and therefore suspect that a particular act or chain of events caused contamination.
In those cases, it may be that:
- landowners effectively bear a heavier factual burden (commensurate with the risk of being allocated a higher proportion of liability); and
- arguments may turn on whether inferences can be drawn from the record keeping practices of or the historical standards of operation undertaken by various parties.
Depending on the final outcome of the Court's determination, parties to actions for the assignment of remediation responsibility (and landowners in particular) may have to reconsider the adequacy of the information that they propose to provide or have provided to the Committee.
Notably in this case Coffey was only required to demonstrate that its views were arguable. It remains to be seen whether the Court will accept them as correct.
Whichever way it does decide, the Court will likely identify more broadly applicable principles for when a party's act may be reasonably suspected of causing contamination.
The sizeable costs involved in remediating contaminated sites, and the potential changes to the way responsibility for contamination is allocated, mean that the outcome of this proceeding is one to watch.
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