Court reserves judgment in Brookbank appeal case

After hearing submissions from both companies during the week of Jan 11-15, the Ontario Court of Appeal has reserved judgment on the appeal of Metalore Resources (TSE) of a 1990 decision that awarded the Brookbank gold deposit near Beardmore, Ont., to Ontex Resources (ASE).

The court gave no indication of when the decision would be handed down. Metalore’s appeal rejected the trial judge’s determination that two agreements signed by Metalore and Ontex in the early 1980s established a fiduciary

relationship between the two companies.

In his response, Ontex lawyer Bryan Finlay reflected on some of the main points that led to Justice Montgomery’s decision to award Ontex ownership of the 18-claim Brookbank property, including:

— Metalore’s failure to provide the “Winter report”, a 1982 evaluation of the property — a fundamental breach of the 1981 agreement and one which constituted fraud.

— Metalore’s attempt to buy out Ontex’s interest in 1984 without disclosure of a discovery on the property — a breach of the 1983 agreement — Information to be shared by both companies was used by Metalore to acquire new claims to the detriment of Ontex. As a result, putting those claims in constructive trust for Ontex was an appropriate remedy.

— The 1981 and 1983 agreements did establish a fiduciary relationship between the two companies.

Ontex Vice-President Ross McGroarty said funds to be raised through a previously announced private placement (T.N.M., Jan 11/93) will not be applied to exploration on the Brookbank property until the appeal decision is handed down.

Shares of Metalore jumped more than $4 during the trial, finishing the week at $9. Ontex closed at $1.50 on Jan. 15, down 24 cents from the previous week.