Ursa Major scores in court battle (RTGAM)

Janet McFarland

A Toronto judge has labelled a court challenge in a proxy battle at Ursa Major Minerals Inc. “nasty, brutish and short” and has ordered the two companies that launched the battle to cover legal bills totalling $110,000.

Mr. Justice David Brown of the Ontario Superior Court issued a ruling Tuesday ordering Forbes & Manhattan Inc. and Inspiration Mining Corp. to pay Ursa Major’s $60,000 legal bill and pay a $50,000 bill incurred by large Ursa Major shareholder Wes Hall.

Forbes, a private merchant bank, and Inspiration, a mining company and large shareholder in Ursa Major, teamed up to launch a proxy battle to take control of Ursa Major’s board.

They filed a hasty court motion last week to seek a ruling on a voting dispute – arguing Mr. Hall’s votes should not count in the proxy battle -- but then withdrew the application two days later, just minutes before a hearing was set to begin.

Judge Brown said he was requiring Forbes and Inspiration to pay substantial legal costs because the last-minute legal maneuver qualified as “reprehensible conduct” as defined by Ontario’s Court of Appeal. In such cases, courts can award higher “indemnity” legal costs to the target company.

“The application brought before me simply marked another tactical skirmish by the applicants in their contest against the management and board of Ursa Major,” the judge wrote in his ruling.

“That the applicants withdrew their request for injunctive relief at the last possible minute underscored the tactical nature of their use of the courts.”

Mr. Hall was working as a proxy solicitor for Ursa Major in the board battle, which meant he was hired by the company to help bring in votes to support the company’s slate of directors instead of the alternative slate proposed by Forbes and Inspiration.

In an unusual move, Mr. Hall announced June 16 that his private investment company had purchased 8.4 per cent of Ursa Major’s shares, and had secured the right to vote most of them in the proxy vote last Thursday. The purchase price was $1.7-million.

Forbes and Inspiration objected to the votes being counted in the battle, arguing Mr. Hall only bought the shares to help sway the vote in favour of his clients. But Mr. Hall said in an interview last week he bought the shares to bolster an investment position in the company that he previously bought earlier this year.

The vote Thursday overwhelmingly supported the company’s slate, according to a release issued by Ursa Major, and the alternative slate proposed by Forbes and Inspiration was rejected.

Forbes and Inspiration argued in their court application that Mr. Hall’s purchase meant he was “acting jointly or in concert” with the company and its insiders, and that they collectively owned over 20 per cent of Ursa Major’s shares. At that threshold, the purchase should be considered a takeover bid, the court application argued.

Judge Brown said the application met several of the tests required to award higher “indemnity” costs, including the fact the applicants made serious allegations of misconduct by Ursa Major and Mr. Hall, that the court filing was “tactical,” and the application required hasty and complex legal work because there was short notice.

He noted it was the third court challenge filed by Forbes and Inspiration against Ursa Major in the last eight months.

“I find that the serious allegations of misconduct levelled by the applicants against the respondents, the lack of merit to those allegations, and the tactical use made by the applicants of this proceeding combine to place the litigation conduct of the applications in the category of ‘reprehensible conduct,’” Judge Brown wrote.