Appeal court favors Seabright

The Nova Scotia Court of Appeal has upheld the decision in the lawsuit between Westminer Canada and the former directors of Seabright Resources.

The three judges rejected all seven grounds of the Westminer appeal and added interest to a portion of the almost $10 million of costs and damages previously awarded to the seven Seabright directors.

Westminer had been seeking $62 million in compensation for its ill-fated Christmas, 1987, takeover of Seabright, a gold exploration company in Nova Scotia. The Australian gold mining giant alleged Seabright failed to disclose a material change on ore reserves prior to the takeover. In the 1993 decision, the province’s Supreme Court exonerated the Seabright directors. Seabright’s lawyers maintained that the role of the appeal court was not to retry the original decision but to decide if the trial judge had erred in law. The Westminer side portrayed the dispute as a test of what constitutes a material change in the affairs of a mining company with regard to publicized estimates of reserves. The appeal court added little to case law on material change; the issue was dealt with briefly within three lines of the 106-page decision.

It is unclear whether the unsuccessful appeal ends the 5-year legal saga of the Seabright directors. The original action was filed by Westminer in 1988 in Ontario but was later transferred to Nova Scotia. The Ontario action technically remains unresolved, but the Nova Scotia trial heard essentially the same issues.

The conclusion of the lawsuit should boost Nova Scotia’s mining sector.