Legal Matters

Hi Chris and others

I thought I'd start a new thread dealing with legal matters, so those interested can speculate a bit regarding the present legal action or post information on legal matters for others to access.

I've just finished reading the judgement in the dismissed appeal as to whether implied terms existed in the joint venture agreement giving the right to a party to inspect records of the other party.

Just some general observations first from my reading of that judgement.

It is my understanding (and long term holders would know) that the disagreements between Q/H and Alliance started in November 2008 when Alliance indicated that it had not been provided with a program or budget as required by the JVA.

The original JVA (under part of clause 12) intended that "the joint venturers shall proceed to document a comprehensive Mining Joint Venture Agreement, to be drafted by Heathgate, to incorporate such matters commonly found in agreements of like nature and, without limitation, such an agreement shall deal with the following matters."

It would seem from my reading that this comprehensive agreement was never entered into as the parties were already in dispute and heading for the courts.

As a consequence the nature of the relationship between Quasar, Heathgate and Alliance can only be judged on the narrow wording contained in the original JVA and variation made to it in Sept 2004, based on the interpretation of those contracts themselves.

The comprehensive outcome of this appeal was that Heathgate as Manager of the joint venture are not agents of Alliance, for the purpose of deciding whether or not Alliance is entitle to the records kept by Heathgate in respect of the joint venture. Seemed like a fair legal judgement to me. Probably morally unfair however.

The judgement does however make reference to two instances under which the judges seem to recognise that an express agreement for agency has been formed under the JVA between Alliance and Heathgate.

"These clauses may be contrasted with the provision made in cl 10.11 for the appointment by Alliance of Heathgate to market and sell “on its behalf” its share of minerals other than gold produced by the mining operation. This provision envisages the creation of an agency relationship for a specific purpose. It is one of the specific provisions contemplated in the exceptional category for which cl 13.6 allowed. Another is cl 4.4(d) which expressly authorised Heathgate during the Free Carry Period to apply for any substitute or successor title to the Tenement."

Not much is given away here about clause 10.11 other than "the appointment by Alliance of Heathgate to market and sell “on its behalf” its share of minerals other than gold produced by the mining operation."

Questions I suppose are:

Is this an enduring appointment?

Does Alliance have the right to terminate the appointment?

Does the appointment override Alliance's rights under cl 1 of the JVA, which includes in 1.3, the beneficial ownership as a tenant in common of an undivided share in that percentage of all property of the joint venture?

If I read the judgement properly. In the case of Alliance seeking the records, the judges determined that Alliance was not entitled to the records as the records where not the property of the joint venture and Heathgate were not Alliance's agents so would not be required to supply the records to Alliance.

If that logic can be reversed in a legal sense, then at least in this instance Alliance should most likely be entitled to any records that Heatthgate has on the sale and marketing arrangements as Heathgate are most likely considered Alliance's agents for legal purposes under clause 10.11 of the JVA. That would only be fair in my mind. But as they say the law is an ass.

These are just all my speculations and opinions, I'm not a lawyer, I have never had any legal training. Do not rely in any way on what I've said. Do your own research. Seek professional advice if you are unsure about any investment decisions and their suitability to your particular circumstances.

Eshmun