BP Australia Pty Limited v Nyran Pty Limited

REASONS FOR JUDGMENT 1 The applicant brings a motion seeking orders that the hearing of this proceeding be expedited and be set down on a date before 1 July 2002.

Background circumstances 2 As appears from the statement of claim, the applicant entered into a fuel supply agreement ("the FSA") with the respondent on or about 1 April 1998 whereby the applicant agreed to supply fuel to the respondent for a period of three years commencing on 2 April 1998. It is pleaded that pursuant to the FSA, clause 11 thereof, provided that the applicant would supply fuel to the respondent at specified prices. Clause 21 provided: "21. The Second Price Negotiation will be deemed to have concluded on the Second Year Anniversary and; 21.1 … 21.2 if new prices have not been agreed, then the prices specified in clause 11 will continue to apply; for the remainder of the Term." 3 It is then pleaded that in October 1999 the applicant and the respondent undertook negotiations in relation to the FSA. On or about 17 November 1999 it is pleaded that there was agreement reached between them to the effect that the respondent would take supply of fuel from the applicant and would not seek supply from an alternative source; the term of FSA would be extended from three years to seven years; and the respondent would pay a clean fuel quality premium ("CFQP") charged by the applicant upon the applicant's assurance that such CFQP would not exceed that paid by other customers of the applicant. The position in relation to the CFQP is not a matter of further concern for the purpose of these reasons. Around 14 December 1999 it is alleged that the applicant proposed the first draft of amendments to the FSA. 4 However, in May 2000 the same parties undertook further negotiations. It is alleged that in early May 2000 the respondent agreed with the applicant that: "(a) a price renegotiation take place each year during the month preceding the anniversary of the commencement of the FSA ("the price negotiation period"), with the aim of agreeing new prices for the fuel to be supplied pursuant to the FSA; (b) if new prices were agreed during the price negotiation period, those new prices would take effect for a period of twelve months commencing on the next anniversary of the commencement of the FSA ("the next twelve months"); (c) if new prices were not agreed the prices specified by BP during the price negotiations period would be the prices at which fuel would be supplied for the next twelve months subject to Gull's rights in subpar (d) (d) if new prices were not agreed during the price negotiation period, Gull was entitled (except in the case of a failure to agree new prices for the CFQP), within 7 days of the date on which the next twelve months commenced to give 90 days' notice in writing of the termination of the FSA and, the new prices specified by BP during the price negotiation period would apply to the fuel supplied pursuant to the FSA (e) the CFQP for motor spirit would be $0.0035 until the agreed Changeover Date (as defined) unless a "Suitable Regional Marker" was agreed by both parties prior to 30 June 2000 provided that any increases in prices be no greater than any increase to any other customer of BP in Western Australia." 5 The statement of claim also pleads that around the same date the applicant forwarded to the respondent written confirmation of agreed amendments to the FSA and further pleads that in early August 2000 the respondent orally reconfirmed its agreements to the terms discussed and agreed in early May 2000. On 29 November 2001 the applicant submitted a first draft of a Deed of Restatement and Variation ("the Deed") and restated fuel supply agreement ("the RFSA"). Following further negotiations and amendments it is pleaded that around February 2002 the applicant and respondent executed the final version of the Deed and the RFSA. The applicant alleges that upon the proper construction of these documents: (a) if new prices are not agreed during a price negotiation period then (except in the case of a failure to agree a new CFQP) Gull may, within 7 days of the date on which the next twelve months commenced give 90 days' notice in writing of termination of the RFSA; (b) if new prices are not agreed during a price negotiation period then the prices specified by BP during the price negotiation period will apply to the fuel to be supplied pursuant to the RFSA for the next twelve months. 6 It is further pleaded that if the Deed and the RFSA do not upon their proper construction reflect the above position relied on by the applicant then there was mutual mistake entitling the applicant to rectification to give effect to the common intention of the parties. 7 It is additionally pleaded that representations were made by the respondent to the applicant in trade or commerce to the effect of pars (a) and (b) immediately above and that such representations were future representations within the meaning of s 51A of the Trade Practices Act 1974 (Cth) ("the Act"). That allegation falls to be considered against a further pleaded allegation that by a letter dated 5 April 2002 ("the Letter") the respondent advised the applicant that the intention of the Deed and the RFSA, and its intention when negotiating and entering into those documents, was that if new prices were not agreed in the price negotiation period the prices for the next twelve months would not increase but remain at the prices charged for the preceding twelve months. It is alleged that if that was the respondent's intention then it engaged in conduct which is misleading or deceptive or is likely to mislead or deceive. 8 Then it is pleaded that new prices were not agreed between the applicant and the respondent in the price negotiation period preceding 2 April 2002. Accordingly, the applicant claims an entitlement to charge for fuel supplied to the respondent under the RFSA at the prices specified by the applicant in the letter dated 28 March 2002, liability for which is denied by the respondent. As a consequence of the alleged misleading or deceptive conduct the applicant claims to have suffered or be likely to suffer loss and damage and the RFSA is liable to be varied by order under s 87(2)(b) of the Act to ensure that it gives effect to the representations alleged. 9 Alternatively and finally, it is pleaded that if the applicant's construction of the Deed and the RFSA is not correct and the RFSA is not liable to be rectified or is not liable to be varied pursuant to s 87(2)(b) of the Act, then the agreement between the parties as to prices is void and there is no obligation upon it to supply fuel to the respondent under the RFSA. 10 In accordance with these pleadings in the statement of claim the application seeks declarations directed to the proper construction of the Deed and the RFSA and the entitlement of the applicant to charge the prices specified in its letter to the respondent dated 28 March 2002. It also seeks in the alternative orders for rectification of the RFSA, an order for variation of the RFSA or a declaration that the RFSA is void. Finally, damages and interest are sought.