THE SUBMISSIONS OF THE PARTIES ON THE APPEAL
81 It is appropriate to first refer to BP's submissions only briefly, since they were essentially confirmatory of the reasons for judgment of the primary judge on the issue of penalty. BP emphasised from the outset of the appeal that there was no prospect of windfall or advantage accruing to BP, at least of any significance, resulting from the exclusion of 'goodwill attaching to any business' (to adopt the expression used in clause 2.5 of the Option Deed), from the valuable consideration to be provided by BP for the re-purchase of each of the three service stations the subject of the appeal (BP Lansvale, BP Silverwater and BP Auburn). That was said to be for the reason, in line with the conclusions of the primary judge and in particular with his Honour's reliance upon Wollondilly, that those service stations would have been worth no more to the respective appellants than the so-called 'resale price', which was determinable pursuant to clause 2.1 of each Option Deed throughout the period of time stipulated for exercise of the option to re-purchase, 'encumbered' as they were by the POSAs and Option Deeds.
82 BP emphasised also that although BP was not required to make payment to the appellants for goodwill under clause 2.1 of the Option Deed, BP did not acquire goodwill of the appellants in respect of those three service stations, in line with the primary judge's conclusions on the expert evidence. That absence of acquisition by BP of goodwill from the appellants was said to be exemplified by the circumstance that following re-purchase by BP on termination of the POSA, each appellant was free to conduct its then existing service station business at and from another site in the neighbourhood, if it so chose, without restriction from BP's contractual documentation as to location or identity of customer patronage. It was further emphasised that each appellant was not restricted by the POSA from exploiting commercially any personal goodwill acquired in the course of its operation as a dealer of any of its previously owned service stations (which service stations reverted of course to BP upon the exercise by BP of its options to re-purchase). BP submitted that the appellants were compensated in principle, pursuant to the terms of the Option Deed, for the value of the service station assets which each of the appellants had originally acquired from BP, except to the extent of any so-called locational goodwill, the latter belonging inherently to BP because of its re-acquisition of ownership of the location of, and of course the land title to those sites. It appears that no sum was allocated to goodwill, in relation to any of the subject service stations, at the time the appellants purchased the same from BP, in the circumstances outlined in [44] above. In any event of course, as we have already recorded, the unchallenged finding of the primary judge was to the effect that no goodwill of value was attributable to any of the subject three service stations, at the time of reversion of the freehold titles to BP.
83 BP emphasised that the option to re-purchase conferred in its favour by the Option Deed was not designed to secure performance of the POSA, and referred in that regard to subclause A13.2.2 of the POSA (extracted in [57] above). That submission was somewhat of an overstatement, once regard is paid to the entire text of the circumstances which would trigger BP's entitlement to exercise of the Option Deed. The subject of emphasis, in terms of the appellants' obligations the subject of the POSA, was of course the prohibition upon the sale of foreign fuel imposed by clause A4.15 of the POSA, breach of which was the raison d'etre for BP's termination of the POSA. It may thus be inferred from the text of clause A4.15 of the POSA that prominent to BP's concern for protection was the potential retail market component of foreign fuel, being a potential market contributed partly by the availability of ethanol as a cheaper product.
84 Understandably, the appellants' submissions on the appeal tended to be more wide-ranging than those advanced by BP, the appellants undertaking the formidable task of negating the comprehensive reasons for judgment below on the penalty issue, upon which reasons, BP wholly relied. The cardinal submission made by the appellants may be summarised to the effect that although BP's right to exercise the choses the subject of each Option Deed was designed to ensure adherence by the appellants to the stipulations of the POSA, that adherence being conceded by the appellants to be a legitimate condition precedent to the exercise of that right, nevertheless the operation of the Option Deed, in the context of the POSA, was not so limited, and travelled impermissibly beyond the legitimate protection of BP's commercial interest in maintaining each site as a BP branded service station, by virtue of the consequences of any exercise of that right. Nevertheless the appellants asserted as a starting point that the objective of the Option Deed was reflected in the primary judge's finding, not eschewed by BP on appeal, that '[t]he evident purpose of the option was to protect BP's commercial interests in the site being maintained as a BP service station'. On that footing, the appellants set about their endeavours to characterise the provisions of each to purchase as a penalty, having the effect of invalidating the purported exercise by BP of the option the subject thereof.
85 The appellants cited at the outset of its submissions the following passage from the leading speech of Lord Dunedin in the House of Lords in Dunlop Pneumatic Tyre Company Limited v New Garage and Motor Company Ltd [1915] AC 79 at 87:
'(a) [i]t will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach...
(b) [i]t will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid…' (described by Lord Dunedin as 'truly a corollary to the last test').
(iii) [t]here is a presumption (but no more) that it is penalty when "a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage"…'
That dictum has been described as the 'classic passage' of exposition of the doctrine of penalties: Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (4th ed) (Butterworths LexisNexis 2002). The reference above to 'greatest loss' is of significance in the present context, and presents at the outset a formidable hurdle to the appellants' case.
86 The appellants acknowledged the principle that whether or not a contractual stipulation constitutes a penalty is a question of construction to be determined upon the terms and surrounding circumstances of the particular contract, being terms and surrounding circumstances required to be viewed or assessed at the time when the contract was made, and not at the time of subsequent breach (O'Dea at 368, 378 and 399). One such circumstance identified by the appellants was that the Option Deeds, and the contemporaneous POSAs relating to each service station site, were entered into by the appellants at a time when BP was engaged in the process of exodus from some of the franchised and commission agency service station sites then subject to BP's freehold ownership, on the basis that the franchisees and commission agents would convert to the status of freehold owners of those sites, and to the operation thereof as so-called dealers, yet would remain effectively tied commercially to BP for the ensuing five years as sellers exclusively of BP motor fuel at what would continue to be BP branded service stations.
87 The appellants made the uncontentious threshold submission on the appeal that although one effect of clause 1.2(a) of each Option Deed was to render the option to purchase exercisable by BP upon termination consequential upon breach, rather than upon breach alone, that feature of the contractual arrangements '[did] not mean that the clause escapes the scrutiny of the law relating to penalties', the appellants citing in that context Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131at 140 (Wilson and Toohey JJ). The appellants drew attention to the last sentence of SC1.2(e) of the POSA, stipulating as it does that if upon termination of the POSA, BP exercised its right of re-purchase of the service station site, liquidated damages would not be 'repayable' by the dealer to BP under SC1.3 of the POSA. It was pointed out that BP was required to elect between those alternative remedies, pursuant to SC1.2(e). Though not literally framed as an election, it is no doubt true that recourse to termination of the POSA on BP's part, operated to deny recourse to liquidated damages.
88 The appellants submitted on that footing that since liquidated damages, and the right to purchase pursuant to the exercise of the option, were the alternative prices each appellant was required to pay or sustain for termination consequent upon breach of the POSA, BP was required to elect between those alternative rights or remedies. The appellants reasoned that '[t]he contractual assumption underlying the concept of election is that each right is validly granted and therefore available for exercise', and therefore if one such alternative remedy was not available as a matter of construction, by virtue of the operation of legal principles concerning liquidated damages, the alternative right to exercise the option of re-purchase, conferred as it was by the Option Deed operating collaterally to the POSA, was also unavailable to BP, as a matter of construction of those contemporaneous instruments when read together. In order to make that proposition good, the appellants submitted that the liquidated damages provisions of the POSA were unenforceable in terms, the same not purporting to constitute pre-estimates of the loss or damage likely to be sustained by BP as a result of breach by BP of the foreign fuel prohibitions of the POSA. A corresponding submission was made in relation to the liquidated damages provisions of the contemporaneous contracts of sale in respect of each other site made between BP as vendor and each appellant as purchaser.
89 The foregoing submission of the appellants should not be accepted. The quantification of liquidated damages stipulated by SC1.3 is geared to the point in time during the five year term of the POSA when termination might occur at the instance of BP in consequence of the dealer's default, and is designed to reflect the loss of the benefit of a bargain of five years duration. Bearing in mind the inherent likelihood of the involvement of cost in connection with the re-starting of a business in the wake of the departure from the business of a defaulting contracting party at arms length, whether that departure be voluntary or otherwise, the estimates of liquidated damages the subject of SC1.3 were not in our opinion vulnerable to characterisation as penal or punitive in contrast to compensatory. Equity looks to the intent of documentation, in circumstances where relief is sought against penalties, and the intent of SC1.3 is we think directed not to breach but rather to loss of the bargain. We do not think that it is open to predication that the 'sliding scales' of monetary amounts the subject of SC1.3 reflect any greater loss to BP of its five year bargain with each dealer beyond what might reasonably be adjudged to be the measure of common law damages. In that regard, we refer once again to the expression 'greatest loss that could conceivably be proved' in Dunlop (ante).
90 We would not accept the proposition in any event that the invalidity of any one of two contractual remedies has the consequence of invalidating as well an otherwise not invalid alternative remedy. No authority was cited in support of any such principle. Nevertheless it is necessary to record that on the final hearing day of the appeals, the appellants sought to amend their respective grounds of appeal by the addition of contentions to the effect that the liquidated damages provisions of the relevant POSAs, and of the corresponding provisions of the contracts of sale of the relevant service stations, did not provide or purport to provide, a pre-estimate of the damages likely to be incurred by BP as a consequence of breaches of the POSA, or of the contract for sale, relating to each appellant. The appellants undertook not to seek the recovery of the liquidated damages already paid, presumably by way of appropriation by BP out of the proceeds of sale of the relevant service stations, pursuant to SC1.2(e) of the POSA, and the contract of sale entered into between BP as vendor and each appellant as purchaser in conformity therewith, if the amendments were to be allowed. The appellants indicated they would bear their own costs of the appeal, in so far as those costs related to the implementation of the proposed amendments, if the amendments were to be allowed. Having regard to the conclusions reached by the Full Court on the appeals that the same should be dismissed, and the reasons for those conclusions later to follow, it becomes unnecessary to consider those belated amendment applications.
91 Returning then to the appellants' primary case on appeal on the ground of penalty, unrelated to the liquidated damages provisions of the POSA, the appellants contended that although his Honour's characterisation of each option to re-purchase as restitutionary might imply that exercise of the option was remedial in character, nevertheless the option was expressed to be exercisable otherwise than solely upon breach of the POSA by the dealer (appellant). The Court was referred to clause A13.2.2 of the POSA, extracted in [57] above, and in particular, to the condition precedent to its operation being, '[i]f BP reasonably believes, for any reason (and whether or not the Dealer has breached a provision of this Agreement) that… the Dealer is no longer suitable to carry on the Retail Business…'. That illustration of the submission is not entirely compelling, since the notion of unsuitability would conceivably encompass the circumstance of a dealer not being in default in the observance or performance of specific conditions of the POSA. In any event, there is no reason in principle why a condition of defeasance, exigible by one contracting party alone, cannot be invoked if so authorised contractually, by reference to the crystallisation of an agreed event not involving default by the other.
92 More compelling however was the appellants' submission that the options of re-purchase were susceptible to exercise by BP upon termination by BP of the POSA upon the basis of solitary breach by an appellant of the POSA, even of a non-essential term. Subparagraph (i) of clause A13.2.1(a) of the POSA refers in that regard to any failure by the dealer to perform any obligation imposed on the Dealer… to abide by any direction…'. That aspect of the contractual arrangements was contended by the appellants to 'stamp the option with the character of a stipulation "in terrorem" designed to deter breach', and to involve a penal liability different from, and more drastic than, payment of common law damages or genuinely pre-estimated liquidated damages.
93 The appellants invoked the principle, enunciated in Legione v Hateley at 445 (per Mason and Deane JJ), that '[a] penalty… is in the nature of a punishment for non-observance of a contractual stipulation [consisting] of the imposition of an additional or different liability, upon breach of the contractual stipulation, to the liability to pay common law damages'. It was submitted that it was not open to BP to rely on the severance condition of clause A16.5 of the POSA, in order to validate the liquidated damages provisions of SC1.3 to SC1.5 thereof, or alternatively to validate the operation of the Option Deed per se, to enable either of those contractual provisions to apply to the purported termination of the POSA by BP upon the basis of breach thereof by the appellants, since clause A16.5 authorised only excision, and did not permit any re-writing of the POSA in order to avoid an imputation of invalidity, illegality, or enforceability. That severance condition was framed as follows:
'If any provision of this Agreement is or becomes invalid, illegal or unenforceable the provision is deemed to be severed from this Agreement but as far as possible all the remaining provisions are not to be affected.'
94 The primary judge disposed of the thrust of the submission by what we have earlier summarised in [75] above, and by reference to the ratios of the decisions of the New South Wales Court of Appeal in Wollondilly and Revell. The appellants submitted that Wollondilly was wrongly decided 'because the decision negativing penalty was based on the question begging assumption that the clause under attack was valid', and that Revell was in any event distinguishable and moreover contained nothing incompatible with the appellants' case. Both of those authorities serve to exemplify the conceptual difficulties which may arise in the resolution of an issue as to forfeiture of property in specie, in contrast to forfeiture of a monetary fund. We are unable with respect to distil error in principle in the approach of the New South Wales Court of Appeal in either case, and we observe incidentally that the reference by Handley JA to 'maximum damage' in Wollondilly at 556 is consonant with Lord Dunedin's description of 'greatest loss' in Dunlop. We have earlier set out at some length the circumstances and reasoning appearing in both of those authorities as recorded by the primary judge.
95 The primary basis for characterisation of the option exercisable by virtue of the Option Deed as a penalty, as submitted by the appellants on the present appeal, was the stipulation for the transfer of property comprising the subject service stations, following upon breach of the POSAs by the appellant owners, without payment by BP for the appellants' goodwill appertaining to the service stations, implementation of that stipulation being contended to have the effect of affording BP a windfall unrelated to any recognised measure of damages. We were more extensively referred to the reasons for judgment of Handley JA in Wollondilly at 555-557, in the course of which his Honour observed that in principle, 'the doctrine as to penalty should apply not only to contractual provisions which provide for the payment of money on breach but also to those which provide for the transfer of money's worth'. That observation reflected what had been earlier confirmed bythe members of the High Court in Stefanetto (Barwick CJ, Mason and Jacobs JJ) to the effect that a contractual stipulation for the transfer of property, by the party in breach to the innocent party, may be struck down as a penalty (Mason J dissented in the outcome of the appeal).
96 The appellants' principal submission was that the critical effect of the Option Deed and the POSA, in combination, was to subject each of the appellants, in the event of BP seeking to rely on its right to exercise the option of re-purchase, to acceptance of a sale price for its service station property which would exclude any allowance for the goodwill. In that context, the submission continued, it would be correct to conclude that the provisions of clause 2.1 of the Option Deed were required to be read consistently with clause 2.5 thereof, the latter excluding significantly any allowance for goodwill. Yet each appellant had furnished valuable consideration to BP in the context of its earlier purchase of each service station business in combination with the service station land and buildings relating thereto. The appellants contended in that setting that the 'contractual infliction of that disadvantage necessarily produced a windfall in favour of BP, because BP's exercise of the option of re-purchase conferred by the Option Deed enabled BP to acquire each service station site and the business conducted thereon on a "going concern" basis without payment by BP for that latter asset', and further that the windfall thereby gained by BP on re-acquisition was to be characterised as falling 'within the mischief of the doctrine as to penalties'. In short, the contention amounted to the complaint that BP acquired the goodwill of each service station without providing valuable consideration for any such intangible property of value. We observe incidentally that if the appellants' proposition be correct, any such 'going concern' value for goodwill would presumably include as a component in its calculation or assessment the extent of foreign fuel purchases previously made by the appellants, albeitin deceptive breach of contract, and in the present context, on a significant scale (see again [61]-[63] above). That consequence would flow because turnover or gross sales would necessarily be a factor of relevance to the assessment of goodwill, unless of course the quantity of foreign fuel was to be specifically excluded. Thus BP would conceivably reward the appellants, in the calculation of any repurchase price for goodwill postulated by the appellants, for their radical breaches of contract. Since however that subject was not raised in argument, it is unnecessary to incorporate our observation in that regard into any aspect of our reasoning upon the issues arising for determination.
97 In our opinion the submission provides no sufficient answer to the approach adopted by the primary judge, involving as it did his Honour's application of the principles enunciated by the High Court in Murry, and further involving the implications flowing from BP's ownership and usage of its marks and signage. We have earlier summarised his Honour's application to the present circumstances of dicta in Murry of present application. There is no good reason to infer, much less to conclude, that whatever goodwill of the service station businesses could be attributed to the respective appellants personally, whether directly or indirectly, would not have been retained by the respective appellants for any ongoing exploitation by the appellants if they should so choose.
98 Moreover in conformity with the approach adopted unanimously by the Court of Appeal in Wollondilly, the appellants' ownership of each of the subject service stations, and of the choses thereby entailed, was by operation of law rendered subject to, or 'encumbered by', the provisions of the POSA and of the contemporaneous Option Deeds. This occurred to the extent and for the purposes predicated by the primary judge as we have earlier summarised, so that the subsequent reversion of the freehold titles to the subject service stations in favour of BP, in consequence of its exercise by BP of the options conferred by those Option Deeds, did not operate in law to confer upon BP any proprietary rights, and in particular rights in relation to goodwill, additional to what BP may have already possessed prior to its re-acquisition of the freehold titles to the service station.
99 The appellants submitted further that it was unrealistic to suggest otherwise than that BP, by virtue of its exercise of each of the three options of re-purchase, and of completion of each such re-purchasing transaction, would not reacquire what it had previously sold to each appellant, that is, a service station property together with the service station business until then conducted thereon by each appellant on a going concern basis. Yet under the valuation formula stipulated by the Option Deed for application in relation to each re-purchase the contention of the appellants continued, BP would not provide valuable and adequate consideration to the appellants for its acquisition of those 'going concern' businesses. Contrary to what the primary judge found, in the context of his Honour's examination of the implications flowingfrom the High Court's reasons for decision in Murry, the appellants contended that not only would BP re-acquire that which it had previously sold to each appellant, but that each re-purchase by BP, pursuant to its exercise of the option the subject of each Option Deed, would create the inherent entitlement on its part to carry on that very business which each appellant had been contractually required to continue to conduct until completion of each re-purchase by BP, upon the terms and conditions of the pro forma contract of sale attached to each Option Deed. A conceptual difficulty attends however the appellants' submissions, by reason of the implications of the appellants' ambiguous reference to their former "business" in that global way, rather specifically to the asset in the nature of the goodwill of that "business". The incidents of a service station customer base more than possibly containing each of the three differing zoological illustrations of the nature and incidents of goodwill, made by Scrutton LJ in Whiteman Smith Motor Co v Chaplin [1934] 2 KB 35 at 42, would tend to manifest in varying degrees to a city or suburban service station operation, such as those here involved, particularly where each of the operators engaged in foreign fuel trading to a significant extent during the time when the nature and value of goodwill fell for appraisal.
100 It was submitted by the appellants that the grant to BP of the right to exercise the option on termination of each POSA carried no rational, or at least no proportionate, relationship to any genuine or consensual pre-estimate of damages for breach, or to any contractual right or interest that BP was legitimately entitled to protect in the context of its relationship with each appellant. That contractual right or interest, so the appellants contended, was confined to the preservation of the site as a BP service station for the mutually intended duration of the POSA of five years. The right to re-acquire title to the freehold (including of course the buildings) of each service station site, even if the price formula for so doing was appropriate, was described by the appellants as disproportionate to the protection of that interest of BP, given that a service station business would be conducted at each site up to the time of reversion thereof to BP pursuant to exercise of the option. The appellants' submission went further than to address the implications of goodwill accruing to BP, and extended to the freehold property which had purportedly reverted to BP as well. Any appropriate protection of BP would have required, in the appellants' submission, no more than the grant of an option for BP to take a lease of the service station site, albeit also of the business conducted thereon up until then by the appellants, for the balance remaining unexpired of the term of the POSA computed from the time of early termination by BP for breach by each appellant, irrespective of the length of the preceding times during which the purchase of foreign fuel had been taking place, albeit to an extent radically in contravention of each POSA.
101 The appellants further submitted that each Option Deed was mutually intended to serve the inherent purpose of constituting only a form of security for the performance of the appellants' contractual obligations in favour of BP by subject of the corresponding POSA. The appellants referred in that context first to special condition 38.1 of each contract of sale (earlier identified at the commencement of [45] above), and additionally to special condition 41.1 of each such contract of sale reading as follows:
'41.1 The purchaser agrees to grant a mortgage in favour of the vendor on the terms and conditions set out in (the annexed mortgage) to secure:
(a) payment of the Liquidated Damages in the event of a termination of the POSA prior to the expiry of the 5 year term of the POSA; and
(b) any moneys payable by the purchaser to the vendor pursuant to the Option Deed.'
102 The appellants next referred to clause 1.2 of the Option Deed (extracted in [44]-[45] above), and additionally to clause 5.1 thereof not previously cited, which contained the mutual acknowledgement of BP and each appellant '… that the Grantee [ie BP] has been granted a mortgage by [the dealer] contemporaneously upon entering into this Option', and to clause 4 of each mortgage entered into by each of the appellants in favour of BP, contemporaneously with its acquisition of each service station in the first place, whereby each appellant as mortgagor covenanted in favour of BP as mortgagee as follows:
'4. This mortgage is given by the Mortgagor to secure the rights of the Mortgagee pursuant to the Option and the Contract including any damages payable to the Mortgagee for any breach or failure to comply by the Mortgagor with its obligations under the Option or the Contract and as a separate and independent covenant to secure repayment to the Mortgagee of any credit which the Mortgagee may agree to extend to the Mortgagor or any related company of the Mortgagor at a future date.'
103 In the light of the inter-related transactions, the subject of the documentation which we have summarised in the preceding paragraphs, the appellants submitted that the mortgages granted by the appellants over their respective service station properties in favour of BP, at the time of completion of their respective purchases of the subject service station properties, must be discharged, if a conclusion in the appellants' favour on penalty was to be reached by the Full Court, for the following reasons in summary:
(i) an evident purpose of each Option Deed was to secure the continued availability of the site, during the currency of the trade tie of five years stipulated by each POSA as an outlet for BP petroleum products; in other words, part of the intended operation of the Option Deed was to secure to BP such benefits as would accrue to BP, for so long as the trade tie with each appellant would continue in operation;
(ii) BP elected however, by notices given on 2 December 2002 to terminate each of the POSAs with effect from 1 January 2003, without any contemporaneous exercise of the corresponding options; '[t]hus, on any view of the facts, the Dealer was legally free of the tie from 1 January 2003'; as we have earlier recorded, notice of intention to exercise the buy-back options the subject of each Option Deed was not subsequently given by BP until 19 June 2003, in relation of course to each of the BP Lansvale, BP Silverwater and BP Auburn sites; we interpolate to record that the original five year term of each POSA would nevertheless have been unexpired as at that latter date, and would not have expired until the following year, were it not for BP's termination of the POSAs with effect from 1 January 2003;
(iii) if it were the case, as was said to be evident when the parties entered into each POSA and Option Deed, that it was part of the intended operation of each Option Deed that it should stand as security for the dealer's performance of the POSA, and be exercisable on termination for breach of the POSA by the dealer, 'that particular aspect of the operation of the option would constitute a penalty if BP were to exercise the option in circumstances where by its own act (termination) it [had] discharged the dealer from performance of the POSA'; in those circumstances, so the appellants' submissions continued, there was nothing to secure in favour of BP, since there could be no valid security for what the appellants described as a 'non-obligation'; and
(iv) as at the time of the making of the contractual arrangements, so the appellants' submissions further emphasised, 'any utilisation of the option predictably would operate as a penalty in the event of its exercise after its purpose as security for the dealer's compliance with the trade tie had ceased to exist by reason of the termination of the POSA'.
104 The submission the subject of the previous paragraph does not appear to have been raised in the proceedings below. There is no provision of the POSA that explicitly throws light on the issue (see again [44]-[48] above). No express reservation of any continuing right to exercise any of the options to purchase conferred by the Option Deeds was made at the time of BP's termination of the POSAs. It will be recalled that the period of time for exercise of the option the subject of each Option Deed was five years and three months, the commencement of that latter component of three months being geared to coincide with the expiration of the POSA for the property to which the Option Deed was to relate (see again clause 1.2(a) of each Option Deed).
105 In our opinion, the appellant's submission should not be sustained. The only stipulation of the Option Deed as to the lapsing thereof was in the following terms:
'1.3 The option will lapse on the date being 5 years and 3 months after the date of this Deed.'
It is readily apparent that the contents of the Option Deed had been settled with consideration care and legal expertise, extending as the Option Deed does over seven pages, and geared as it is to provisions of the POSA.
106 Other provisions of the Option Deed conceivably bearing upon the operation of the Option Deed are as follows:
'1.2 The Option may only be exercised by the Grantee if:
(a) the agreement titled BP Branded Privately Owned Sites Agreement ("POSA") entered into between the Grantor and the Grantee is terminated, and is not replaced by a further POSA which may or may not be called POSA, or becomes unenforceable or of no force or effect from whatever cause;
(b) any BP automotive fuels sold from the Property as at the date of this Deed cease to be sold from the Property;
(c) the Grantor leases the Property to a third party without the Grantee's prior written consent;
(d) at any time an application is made by the Grantor or any other party (other than the Grantee) for the removal or discharge of the mortgage referred to in clause 5, by the Registrar of Titles;
(e) in the period 5 years and 3 months following the completion date an application is made by the Grantor or any other party (other than the Grantee) for the removal or withdrawal of the caveat referred to in clause 6, by the Registrar of Titles;
(f) the Grantor during the currency of this Option serves the Grantee with a Notice of Sale pursuant to clause 7.1 , provided that the Grantee exercises the Option within the period of 14 days following the service of the Notice of Sale on the Grantee by the Grantor; or
(g) any financier of the Grantor purports to exercise a power of sale in respect of the property.
In this case "automotive fuels" mean motor spirits of any kind and grade including but not limited to leaded, premium and unleaded motor spirits, automotive diesel fuel, liquefied petroleum gas for automotive use and two stroke fuel.
1.3 The Option will lapse on the date being 5 years and 3 months after the date of this Deed.'
107 The care and detail apparent from the above extracted provisions, and indeed the various other terms and conditions of the Option Deed, evince the input of considerable thought by the draftsman, and purport implicitly in our view to set out the whole of the intended terms and conditions. In particular, clause 1.2 did not set any limit upon the time for exercise, whether by reference to termination of the collateral POSA, or otherwise. Given the nature and extent of the terms and conditions of the Option Deed, we do not think that there is room for an implication to the effect that the option to purchase in favour of BP the subject of any of the subject Option Deeds lapsed upon BP's termination of each of POSAs. Particularly should that conclusion follow, in circumstances where a POSA would have been terminated by BP on the basis of default by the dealer thereunder, bearing in mind that exercise of the option the subject of each Option Deed was an important aspect of BP's rights and remedies arising in the situations set out in clause 1.2 thereof.
108 We would therefore reject the submission that the availability or operation of the Option Deed came to an end on BP's terminations of the POSAs, and that therefore BP's exercise of the options the subject of each Option Deed was of no force or effect.