BP plc v Woolworths Limited

The dispute in *BP plc v Woolworths Limited* concerned the interpretation of a deed of covenant entered into between BP Australia Pty Ltd (as predecessor to BP plc) and Woolworths Limited. The deed stipulated that BP would not operate a service station on certain land unless it also operated a supermarket on that land. The core of the disagreement revolved around whether Woolworths' subsequent acquisition of a supermarket business on the land, and its subsequent operation of that supermarket, constituted a breach of the deed. The matter came before the High Court of Australia.

The High Court was required to determine whether Woolworths, by acquiring and operating a supermarket on the land, had breached the terms of the deed of covenant. Specifically, the court had to consider whether the deed imposed an obligation on Woolworths to operate a supermarket, or whether it merely imposed a negative covenant on BP, restricting BP's ability to operate a service station without a co-located supermarket. The interpretation of the operative clauses of the deed was central to this determination.

The High Court held that the deed of covenant imposed a negative restriction on BP, not a positive obligation on Woolworths. Their Honours reasoned that the language of the deed clearly indicated an intention to restrict BP's activities, rather than to compel Woolworths to operate a supermarket. The court found that Woolworths' acquisition and operation of a supermarket did not, in itself, trigger a breach of the covenant as it was framed. The covenant was concerned with BP's conduct, not Woolworths' independent business operations. The appeal was accordingly dismissed.