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‘Grey divorce’ becoming
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PENSIONS

Foreign company may
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RECRUITING
Online profiles can hurt
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must also play safe
PAGE 20

CRISTIN SCHMITZ OTTAWA

A major commercial law ruling from Ontario holds useful lessons for the mining industry and other sectors that incorporate rights of first refusal into joint venture or shareholder agreements, counsel say.

The case pitted two Canadian mining giants, Barrick Gold Corp. of Toronto against Vancou-ver-based Goldcorp Inc. (and two other defendants), in a dispute over the ownership of one of South America’s largest gold and copper deposits. Barrick contended that Goldcorp illegally gained control of the Chilean mine that Barrick had conditionally purchased from co-defendant Xstrata Copper Chile S.A.

Superior Court Justice Herman
Wilton-Siegel’s 229-page ruling
dismissed all of Barrick’s claims
against the three defendants.
“Barrick’s principal claim for
breach of contract is dismissed
on the basis that the agreement
between Barrick Corp. and
Xstrata Chile S.A. terminated
upon the exercise of the right of
first refusal,” the judge wrote.

Mark Gelowitz of Osler in Toronto, who represents Goldcorp, said the judgment provides a useful overview of the rationale and principles that underlie rights of first refusal (ROFRs) and similar liquidity arrangements in shareholder agreements.

The mining sector has a num-
ber of projects involving joint
ventures, with senior and junior
partners, Gelowitz said. “I think
it’s safe to say that virtually all of
those arrangements have elabor-
ate contractual relationships that
govern them, and something like
the ROFR is a pretty important
part of those contracts.”
The ruling is instructive to
corporate commercial lawyers
dealing with ROFRs, joint ven-
tures, share transfer restrictions,
arbitration clauses, and choice of
law and forum clauses, agreed
David Hamer of McCarthy
Tetrault in Toronto, who repre-
sents co-defendant Xstrata.
Superior Court provides
guidance for rights of
first refusal agreements

Mark Gelowitz, at his downtown Toronto law office at Osler, successfully represented Goldcorp against Barrick Gold.

BRETT GUNDLOCK FOR THE LAWYERS WEEKLY

See Goldcorp Page 2

THE LAWYERS WEEKLY

Vol. 22, No. 27 NEWS FOR THE LEGAL PROFESSION December 6, 2002

THE LAWYERS WEEKLY

VOL. 22, NO. 27 NEWS FOR THE LEGAL PROFESSION DECEMBER 6, 2002

RETIREMENT

Ground rules set for indemnity costs

MICHAEL BENEDICT

An Ontario Court of Appeal
ruling affirming that a condomin-
ium corporation’s ground rules
trump the provisions in a unit
owner’s lease came with an inter-
esting twist—the decision also
sets ground rules on what lawyers
can claim in indemnity costs.

The case itself was fairly cut and dry: The condo developer rented ground floor units to a convenience store which displayed merchandise on the sidewalk, running afoul of the condo corporation’s declaration that it was a walkway only.

The court found in favour of
the corporation. It’s what came
out of the case that has raised
some legal eyebrows.
“This case produced a crazy
amount of legal fees for two small
fruit stands,” said commercial real
estate lawyer Wolfgang Kauf-
mann, representing Rabba Fine
Foods, whose lease allowed it to
put up food display carts in a
high-rise Toronto condo’s outside
common area.
Kaufmann, a senior litigation
partner at Daoust Vukovich in
Toronto, added: “How could the
condo board and unit owners allow
legal bills to reach $200,000?”
The Court of Appeal, in Toronto
Standard Condominium Corp. v.
Baghai Development Ltd. [2012]
O.J. No. 2746, sent the legal costs
issue back to Superior Court Jus-
tice Lois Roberts for a detailed
evaluation. Justice Roberts had
awarded the condominium cor-
poration $100,000 in legal fees,
accepting only half of what it had
claimed from the unit owner
found at fault. While the three-
member appeal panel said Justice
Roberts had failed to supply a
rationale for her assessment of
“fair and reasonable” costs, it
agreed that Ontario’s Condomin-
ium Act “does not give counsel
licence to spend the client’s money
with impunity.”
See Condo Page 23