Fuel station operator wins battle against BP

FUEL giant BP Namibia suffered a costly defeat in a long-running dispute with the operator of a filling station at Rehoboth in the Supreme Court last week.

A substantial claim for damages is set to be filed against BP Namibia in the wake of the Supreme Court judgement that was handed down on Thursday last week, the man who emerged as the victor from an almost three-year-long legal battle with the fuel company, lawyer and businessman Hennie Krüger, said yesterday.In a split decision, the Supreme Court ruled an eviction order that BP Namibia obtained against a close corporation of Krüger, Southline Retail Centre CC, which was operating a BP filling station at Rehoboth, should not have been granted. In its majority judgement the Supreme Court also ordered BP Namibia to pay Southline Retail Centre’s legal costs both in the Supreme Court and in earlier litigation in the High Court.The eviction order against Southline was issued in the High Court on March 13 2009, about six months before Southline’s lease of a filling station at Rehoboth would have come to an end.The filling station which Southline Retail Centre operated at Rehoboth was situated in a prime location next to the B1 road passing through the town. The filling station was Rehoboth’s busiest while Southline was running it – but was left abandoned after BP Namibia had succeeded in getting the close corporation booted from the premises.The close corporation and BP Namibia signed a lease agreement on August 31 2005. In terms of that agreement, Southline was to operate a fuel station on land leased from BP Namibia for a period of three years from September 1 2005 to August 31 2008.The relationship between the two parties during the period of the lease was not always amicable, with Southline having complained to BP Namibia about the quality of support it was receiving from the company.By August 18 2008, Southline referred a complaint to the Minister of Mines and Energy in terms of the Petroleum Products and Energy Act, claiming that the company was not providing it with adequate franchising support and was not honouring its obligations to provide fuel to the filling station.On August 28 2008, Southline’s lawyers wrote a letter to BP to inform the company that Southline was exercising an option in terms of the lease agreement to extend the lease by one year.About three weeks later BP Namibia launched an urgent application in the High Court in which it asked for an order to evict Southline from the filling station premises. The urgent application was struck from the court roll for a lack of urgency. BP then continued to pursue the case, and an eviction order was finally granted on March 13 2009.Southline fought on, and took the matter on appeal to the Supreme Court.Acting Judges of Appeal Johan Strydom and Kate O’Regan ruled in favour of the appeal. In a dissenting judgement, Acting Judge of Appeal Simpson Mtambanengwe disagreed with their ruling.Judge O’Regan, who wrote the majority judgement, found that the lease agreement contained a clause which gave Southline an option to renew the lease for one year at the end of the three-year period of the lease.She found that the High Court was incorrect when it found that this clause in the agreement had to be read subject to another clause which stated that BP Namibia had to give Southline written notice not less than one month before the lease period came to an end if BP Namibia was prepared to consider granting Southline a further lease.While the first clause contained an irrevocable offer to extend the lease for one year, the second clause merely stated that BP Namibia could decide to offer Southline a further lease contract at the end of the lease period, Judge O’Regan found.Judge Mtambanengwe however reasoned that the second clause regulated the option to renew the lease that the earlier clause provided for. In his judgement he concluded that there was no ‘irrevocable option’ in favour of Southline.Senior counsel Raymond Heathcote, assisted by Deon Obbes, represented Southline in the appeal. Cape Town senior counsel Peter Hodes, assisted by Jesse Schickerling, represented BP Namibia.