BP Refinery (Westernport) Pty Ltd v Shire of Hastings

The case of BP Refinery (Westernport) Pty Ltd v Shire of Hastings was before the Privy Council on appeal from the Supreme Court of Victoria. The central issue was the interpretation of a rating agreement between the BP Refinery and the Shire of Hastings, concerning the preferential rates for an oil refinery. The dispute arose when the refinery was transferred to another company within the BP group, leading to a contention over whether the new company was entitled to the benefits of the rating agreement.

The Privy Council held that the rating agreement was not personal to the original company but should be interpreted in light of the refinery agreement, which allowed for assignments within the BP group. The Court rejected the implied term suggested by the Full Court that the rating agreement should end if the original company ceased to occupy the refinery. Instead, the Court implied a term that would allow the assignee company to benefit from the rating agreement, aligning it with the provisions of the refinery agreement. This interpretation was deemed reasonable, equitable, and necessary to give business efficacy to the contract. The Court also rejected the argument that the agreement was terminated by mutual consent or by a fundamental breach, as no such evidence was present.

The Privy Council allowed the appeal and remitted the case to the County Court to make the appropriate order, with costs to be borne by each party in the Privy Council.