26 September 2017

Mining: L&M Coal v. Bathurst Resources

Australian-listed miner Bathurst Resources is using a full-court press against L&M Coal Holdings’ demand for a performance payment of US$40 million allegedly due following its 2010 sale of Buller Coal Ltd.  It claims Bathurst is stalling on pre-trial disclosures.  Bathurst failed to have L&M Coal’s lawyers removed for conflict of interest, a move L&M Coal described as a tactical ploy to force it to start all over again with new lawyers and a consequent delay in getting to court.  
The 2010 sale saw Bathurst committed to payment in two tranches for its purchase of Buller Coal: US$40 million paid upfront and a further US$40 million due when 25,000 tonnes of coal had been shipped.  Bathurst says “shipped” means payment is triggered when 25,000 tonnes have been exported; domestic sales in New Zealand do not count.  It further says the $US40 million does not have to be paid while royalties are being paid.  L&M Coal says this is an open-ended option manufactured by Bathurst enabling it to game its assets and make the lowest possible payment.
Ownership of L&M Coal Holdings Ltd is opaque.  At the time of Buller Coal’s sale, ultimate ownership of L&M Coal was registered to an address in Belize.  L&M Coal complains Bathurst is stalling.  Justice Clark made multiple orders against Bathurst: to set out the results of internal email searches for relevant documents (this after Bathurst said it could find only one relevant email for a dispute ongoing since 2009); to disclose correspondence with its auditor (to assist in interpretation of when performance payments might be triggered); and to disclose operational plans and budgets for the Buller mine (in the face of an ongoing dispute over royalty payments and the question of Bathurst’s intentions to continue mining, or not).
Bathurst argued Chapman Tripp should be dismissed as solicitors acting for L&M Coal.  The law firm did work for Bathurst when buying Buller Coal.  For three years from 2011, Chapman Tripp billed Bathurst $2.4 million for legal work, the High Court was told.  Justice Dobson said most of this work was of an administrative, non-contentious nature.  Bathurst provided no evidence that Chapman Tripp had received any confidential information which might prove prejudicial in its dispute with L&M Coal.  Chapman Tripp said it had put information barriers in place to ensure its litigation staff could not access earlier Bathurst files.      
L & M Coal Holdings Ltd v. Bathurst Resources Ltd - High Court (25.09.17 & 26.09.17)

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