Ontario Superior Court rejects mining company’s breach of agreement and confidentiality claims

The dispute stemmed from an agreement to introduce defendants to business

Ontario Superior Court rejects mining company’s breach of agreement and confidentiality claims

The Ontario Superior Court of Justice dismissed a mining company’s claim that the defendants breached their agreement by engaging with another company without its consent, finding that the defendants and the other company had independent prior contact.

In Canadian Mining Exchange Co. v. Zhaojin Mining et al., 2024 ONSC 3191 Canada Mining Exchange Company Limited (CME) alleged that it had an agreement to introduce the defendants to business opportunities and that the defendants breached this agreement by engaging in a transaction with Sabina Gold & Silver Corp. (Sabina) without CME's consent.

The agreement also contained a confidentiality clause preventing the defendants from contacting companies introduced by CME without CME's consent. CME asserted that it introduced the defendants to Sabina and that the defendants proceeded with a transaction with Sabina without CME’s consent, thus owing the commission.

The Superior Court, however, found that the defendants and Sabina had already established contact independently before CME’s involvement. Evidence showed that the defendant company’s president had sent a letter to Sabina’s CEO, exploring potential business opportunities. Sabina’s CEO responded, suggesting further communication. CME’s first contact with Sabina occurred well after the defendants and Sabina had initiated their dialogue.

Furthermore, the court noted that the information CME provided to the defendants about Sabina was publicly available. Specifically, CME had forwarded Sabina’s NI-43-101 report, which is accessible on the SEDAR electronic filing portal and thus does not constitute confidential information under the agreement’s terms.

During the motion, CME's sole shareholder argued that the correspondence between the defendants and Sabina were forgeries designed to predate CME’s introduction. However, he admitted under cross-examination that he had no evidence to support this claim.

In its analysis, the court emphasized that for CME’s claim to succeed, CME needed to demonstrate it had both introduced Sabina to the defendants and provided confidential information about Sabina. Since neither condition was met, the court concluded no genuine issue required a trial.

The court also dismissed CME’s alternative claim for quantum meruit compensation, determining that the mere forwarding of a public document did not warrant any monetary value. The transaction between the defendants and Sabina involved independent advisors and was not influenced by CME.

Consequently, the court granted the defendants’ motion for summary judgment and dismissed the action against it.

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