Metalore critical of judge’s ruling

An appeal by Metalore Resources (TSE) of the 1990 decision that awarded the Brookbank gold property near Beardmore, Ont., to Ontex Resources (ASE) began recently in Toronto.

In a harsh opening statement in front of three judges at the Court of Appeal of Ontario, Metalore counsel Burton Tait outlined what in his opinion were seven errors the trial judge, Justice Montgomery, had made in his ruling of more than two years ago.

The “most insidious and pervasive” of those, according to Tait, was the trial judge’s belief that Metalore had a fiduciary duty with Ontex after it signed option agreements on the property.

“The judge’s statement . . . that he had disposed of the issues on other than fiduciary grounds is the best evidence that he was unconscious of how extensively he had allowed misplaced judiciary concepts to dominate his entire analysis,” said Tait.

The appeal, which started Jan. 11, was expected to last five days. The schedule gave Metalore two days to present its case, Ontex two days to respond and Metalore a half-day to conclude.

Tait also criticized Justice Montgomery’s alleged “misuse of expert evidence,” “misunderstanding of the law of fraud” and “numerous errors of law in granting relief to Ontex.”

In December, 1990, Justice Montgomery rescinded two agreements between Ontex and Metalore on the basis of fundamental breach of contract and fraud. Montgomery ruled that Metalore intentionally provided misleading facts and withheld vital information from Ontex.

He returned the key 18-claim property, which hosts preliminary reserves of 1.4 million tons grading 0.26 oz. per ton, to Ontex. The 471 claims that Metalore staked around the deposit on the basis of drill results it withheld from its partner were put in a “constructive trust” for Ontex. But Tait argues that the ruling was unjust because the parties were dealing with each other at arm’s length and as independent contractors. “Neither surrendered its right to pursue its own self-interest within the parameters of their contractual arrangement,” he told the appeal court. Both stocks were relatively volatile during the first two days of the trial, with Metalore in a $4.80-5.13-per-share range and Ontex in a $1.80-2-per-share range.