Again, I wasn’t there today, but this is a summary from someone that was.
This needs to be read in conjunction with yesterday’s arguments. While MB argued back on all of GDs defences, MBs arguments were nowhere near as solid and were often questionable, and indeed, questioned by the judge. KDR still came off in front.
GD spent the morning drilling further into the defences raised the previous day so not much to add here. There was discussion about how anyone who subscribed to the Aug 16 $21m KDR capital raising would be prejudiced if the Lithium rights were now granted to MZN because the KDR subscribers knew nothing of the alleged agreement with MZN. It was also noted that MZN raised money without mention of the lithium rights so impact on their shareholders too.
GD alleged MZN abused the court process by serving the letter of demand (11 Nov) and announcing it (14 Nov) after sending a text with the threat that unless KDR agreed to positive proposal, the announcement would be made regarding the legal action i.e using the court process to force the negotiations along. The “name and shame” attempt with the journalist was also mentioned again - it only didn’t happen because the journalist didn’t want to do it. These issues were brought up in relation to “unclean hands”.
MB started his comments just before lunch. Someone else has summarised this part in detail.
After lunch he returned to make his closing comments and he now seemed in fighting form. For each of GD’s defence points he had a “legalese” argument to oppose it however on many occasions the judge questioned his arguments – this rarely happened when GD was presenting – in fact, often the judge seemed to be heartily agreeing with GD. While MB was presenting his counter arguments the KDR legal team were often smiling, softly laughing, or had puzzled and disbelieving expressions on their faces ... Theatre? .
The main takeaways were that the judge made comments along lines as follows:
· If the parties, as corporations with responsibilities and obligations to shareholders, choose to properly and understandably SIGN a confidentiality agreement (CA) prior to negotiating, and if that is their modus operandi for a CA, then it would be incongruous to use a regime of prudence and formality for a CA and then not use a SIGNED formal agreement when dealing with something as significant as a mineral rights transaction. MB argued the CA was just a simple pro forma doc. Judge replied “yes but its professional and what you would expect
· He can’t look at “what people thought”. He can only look objectively at what was done.
· When looking at precedent cases you can’t just apply the decision. Each case relies on bespoken facts – you can only draw principals from the precedent cases.
· The judge again referred to being jilted at the altar (laughter ensued).
· When KDR told other parties that “a deal had been done” the judge said that that merely related to exclusivity of dealing with MZN. It just meant “Go away, I’m committed to MZN and we are too advanced with MZN to progress with you” – it didn’t mean that KDR and MZN had finalised the agreement.
· There was discussion about the urgency of getting the HoA done, so an announcement could be made. The judge asked “why was it urgent to have the HoA if the deal was allegedly already completed? He self answere: “It’s because you don’t announce until you have a HoA – that’s the point at which you have an agreement”
· MB argued that MZN did not do anything between Apr and Oct because MZN were led to believe, as a result of the “Curveball text” and promises by KDR, that KDR would come back and do “a deal” with them. This explained their april-oct silence. The judge specifically asked “what deal” are you referring to there? MB continued to argue MZN still had “the deal” because they had an assurance from KDR of continuing prospectivity of those matters. Judge went on to say, that also means that there was no deal at that point but there might be one in the future.
There is no doubt that KDR pulled out of negotiations just short of finalising the drafts and signing the HoA.
When MB was asked why MZN didn’t announce the “agreement” on 4 April when it was allegedly formed he said that it wasn’t material. MB argued that KDR also didn’t have to announce the alleged agreement because it was merely, in their words, a “beer money” transaction for them i.e. also immaterial. The judge then asked, well why was it worthy of being announced on 14 November. MB said the work done on the tenements made it more significant.
MB asserted that KDR had a earlier Non Binding HoA (with someone else), with less than detailed information so why was it necessary in this KDR-MZN agreement for everything be detailed and certain? The judge said “because the prior agreement was Non Binding” although he did consider this and let MB continue.
MB argued that “at a high level” means the “essential elements” – judge repeated from yesterday that he took it to mean “remote” or a “helicopter view”.
With regard to the prejudiced shareholders who participated in 21m cap raise believing the Li was owned by KDR, MB argued that the prospectus for the cap raise referred to the funds being used for li, gold and working capital (and another commodity I can’t remember) and only 1.8m had been spent on Li exploration by KDR between Apr and Nov, thereby diminishing the prejudice as the funds raised weren’t just for Li exploration.
As it wasn’t covered in cross examination, MB claimed that MZN did not know KDR was having their AGM on the day they announced the legal action. He questioned “why would MZN be keeping abreast of KDR’s announcements?”.
MB also argued:
· Attempting a 2nd agreement doesn’t negate the first one
· Having an NSR on a resource (considered nonsensical by GD) would simply result in zero royalty so no big deal there.
· Doesn’t matter that other commodities weren’t covered. They’ll just do agreements as further minerals arise
· Just because the parties both want a HoA doesn’t mean the first agreement is suspended. MB argued that the HoA is merely a record of what had already been agreed
· MD never said to MZN that anything was subject to Board Approval, so why should they expect it to be?
· MB argued that MD only wanted a binding HoA so that he could make an announcement, get the cash and avoid a cash crisis.
· MB argued that with regard to Unclean hands, if you consider MZNs actions then you should also consider the broken promises of KDR
· MB brought up MD’s curveball text that blamed the lawyer and largest shareholder for not moving ahead on the HoA. The judge said “ he’s just letting MZN down gently”
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