cfe & chm, page-2

Good outcome for Chameleon.

Leonie Lamont
March 16, 2011

WITH a board flanked by former rugby league star Benny Elias and Perth Glory owner Tony Sage, there should be high-fives and hugs all round at Chameleon Mining NL following its success in fighting off a multimillion-dollar claim from its one-time litigation funder.

Yesterday's judgment by the New South Wales Court of Appeal is likely to be closely studied by overseas funders, as the Chameleon case determined that the litigation funding fell under the definition of a ''financial product''.

The Court of Appeal said that as International Litigation Partners, incorporated in Singapore, at no stage was licensed to deal with financial products in Australia, it was open to Chameleon to rescind its agreement.

Chameleon did not have to pay either the $9 million termination fee in the funding agreement, or any share of any successful court action that the litigation funder may have bankrolled. But it has to reimburse the legal expenses the litigation funder paid.

ILP had agreed to fund Chameleon's Federal Court action against Murchison Metals in October 2008, but its agreement with Chameleon was rescinded in August 2010, just months before the company was largely successful in its Federal Court case. Murchison and Chameleon have announced they are appealing against the Federal Court decision, which relates to the Jack Hills iron ore project in Western Australia.

Justice Peter Young criticised the ''obscure and convoluted drafting'' of chapter 7 of the Corporations Act, which deals with financial products, and the licensing and regulation of financial service providers.

''I know it is our job to make plain what is obscure, and I know that commercial lawyers are thought by the legislature to be so able to find loopholes that every possible eventuality must be thought of or covered,'' he said. ''However, the main aim is to protect the investing public and the investing public gain little comfort from obscure legislation.''

http://www.smh.com.au/business/good-outcome-for-chameleon-20110315-1bvws.html