DATE: 20001109

DOCKET: C32370

COURT OF APPEAL FOR ONTARIO

RE: KINBAURI GOLD CORPORATION (Plaintiff/Respondent)

v. IAMGOLD INTERNATIONAL AFRICAN MINING GOLD

CORPORATION (Defendant/Appellant)

BEFORE: FINLAYSON, LABROSSE and WEILER JJ.A.

COUNSEL: Sheila R. Block and Peter R. Balasubramanian,

for the appellant

Paull N. Leamen and Graham E. S. Jones,

for the respondent

HEARD: November 2, 2000

On appeal from the judgment of Justice Gordon G. Sedgwick dated May 28, 1999

E N D O R S E M E N T

[1] Iamgold International African Mining Gold Corporation appeals the May 28, 1999 judgment of Sedgwick J. The factual basis for the appeal is an intended amalgamation of the parties involving a reverse takeover transaction. The purpose of the amalgamation was to meet the business goals of both parties. For the respondent Kinbauri Gold Corporation it was a business arrangement that would benefit its shareholders and for the appellant the amalgamation would allow it to be listed on a recognized Canadian stock exchange, namely, the Alberta Stock Exchange (“ASE”).

[2] The trial judge found that the contract between the parties, dated February 21, 1990, was binding and enforceable against the appellant. The documentary evidence and the conduct of the parties, over the course of more than one year, amply supports this finding. We adopt the trial judge’s analysis in arriving at this conclusion.

[3] The trial judge found that, except for the public float issue, the amalgamation would likely have been approved by the ASE. The appellant attempts to characterize the requirement as a condition precedent. It is not. The objective of the contract was to obtain the desired listing and for the parties to use their best efforts to bring about that result. The trial judge made two crucial findings, based on credibility. First, several principals of the appellant were aware of the public float requirement at the time the contract was signed. Second, compliance with the public float requirement was not a difficult problem and the appellant could have done so in a number of possible ways.

[4] The trial judge further found that the appellant made no effort to satisfy its contractual obligation and that by its own actions (the Shareholders Agreement and the Management Group Agreement which it failed to disclose) the appellant made compliance with the public float requirement impossible.

[5] We see no merit in the appellant’s argument that there was no contract until the shareholders’ approval had been given. The directors controlled 98% of the shares. In the end, the trial judge concluded that the appellant was not justified in unilaterally terminating the contract which, for other business reasons, was no longer in its corporate interests. The appellant had acted towards the respondent in questionable good faith.

[6] Finally, we note that the appellant ignored legal opinions which indicated that it was not entitled to terminate the contract and would incur damages if it did so.

[7] In our view, the findings and conclusions of the trial judge are based on the evidence and on proper legal principles. There is no basis for interfering with them.

[8] The appeal is dismissed with costs.

[9] As to the appeal of the trial judge’s order for costs dated January 17, 2000, we are advised that an offer to settle has been made. In the circumstances, we are of the view that it would be preferable that the issue of costs be disposed of on the final disposition of the action.

(signed) “G. D. Finlayson J.A.”

(signed) “J. M. Labrosse J.A.”

(signed) “K. M. Weiler J.A.”