Business and Corporations Law Assignment Semester 2 2011 Assignment Big Oil Ltd is a wholly owned subsidiary of the Really Big Oil Group of Companies. In 1993 it entered into a deal with the Victorian Government to build an oil refinery in a region near Portland in Western Victoria in the council district of Portland. The agreement was therefore between Big Oil Ltd and the Victorian Government. One term of this contract was that Big Oil was entitled to transfer its interest in the refinery to any company in which it held 40% of the shares. In addition the Victorian Government agreed to lift planning restrictions against this type of development on this occasion, as the community benefit was seen to override any other considerations. On the strength of this agreement (but as a completely separate contract) Big Oil Ltd entered into a separate contract with the Council of Portland. As part of the deal the following term wasBusiness and Corporations Law Assignment Semester 2 2011

Assignment
Big Oil Ltd is a wholly owned subsidiary of the Really Big Oil Group of Companies. In 1993 it entered into a deal with the Victorian Government to build an oil refinery in a region near Portland in Western Victoria in the council district of Portland. The agreement was therefore between Big Oil Ltd and the Victorian Government. One term of this contract was that Big Oil was entitled to transfer its interest in the refinery to any company in which it held 40% of the shares. In addition the Victorian Government agreed to lift planning restrictions against this type of development on this occasion, as the community benefit was seen to override any other considerations.
On the strength of this agreement (but as a completely separate contract) Big Oil Ltd entered into a separate contract with the Council of Portland.
As part of the deal the following term was included in the contract with Portland Council:
• Big Oil Ltd will gain a concession on Portland Council rates of 50% for the period of 50 years from the date of the agreement. The concession was an acknowledgement of the economic benefits the facility will bring to the region and to defray some of the costs of setting up.
The refinery was built and the arrangement with both the Portland Council and the Victorian Government proceeded with no difficulty. In 2004 as a result of internal changes within the Big Oil Group of Companies it was arranged for Big Oil Ltd to transfer its ownership of the refinery to an associated company within the Group, Best Oil Ltd. The CEO of Best Oil Ltd, Barry Backwater was shocked to receive a rates notice from the Portland Council with the full rates payable being the rate applicable without the 50% discount. He contacted the council to complain but they refused to change their position. Barry was outraged and claimed there was an implied term within the contract with the council that the same concessional rate would apply to the new owners provided that the original owners retained a 40% stake in the new owner by way of shareholding. Barry made clear that Big Oil Ltd still retained 40% shareholding in Best Oil Ltd, but despite this the council refused to back down. Barry further advised the council that the current arrangements must be considered within the context of the separate agreement the Really Big Oil Group of Companies had with the Victorian Government. The Portland Council took the opposite position and stated that there was an implied term that in the event of the property being sold the original rate agreement came to an end with or without that level of shareholding.
Barry urgently seeks your advice and wishes to know who is correct. That is whether Best Oil Ltd is correct who says there is an implied term that the rating concession continues even if there is a new owner provided the original owners still retain at least a 40% shareholding in the new owner. Or is it the Portland Council who maintains there is an implied term that the rating concession comes to an end in the event that the original owners sell the property whether or not the original owners retain a 40% shareholding in the new entity. Also consider whether Barry could try to argue promissory estoppel as an additional argument to support his position.
In your answer ensure that you make reference to case law. Also ensure you give full explanations and reasons for your conclusions. (20 marks)

Instructions:
How to answer:
Issue: Identify the legal issue and the facts relevant to this issue
Rule: Identify and describe the relevant legal principle (relevant case and relate to the problem)
Application: apply the rule to the facts and argue whether it applies to the facts
Conclusion: Come to and state your conclusion
Word limit is 1500 words, students can submit with less if the assignment is properly completed.
Reference all sources of material.
Ensure that there is a comprehensive bibliography at the end of your assignment.