Comments on the Recent High Court Judgement of Mr
Justice Field re Companhia Mineira de Naburi
1. Decision to walk away from the UK
proceedings
On 19 October 2012, the day of the recent UK judgement
by the Honourable Mr Justice Field, Pathfinder Minerals plc issued a press
release which included the statement that General Jacinto Veloso and Dr Diogo
Cavaco’s
“defence had been struck out as
a result of the Defendants having "flagrantly
refused" to comply with English High Court orders”
This statement is untrue – the Defendants’ defence
was struck out because they decided not to continue with proceedings in the
English Courts because:
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the Court in Maputo has
granted them an injunction preventing IM Minerals Limited (“IMM”) bringing any
action in the English court until the matter has been decided upon in the court
in Mozambique. This injunction remains in place and to continue to defend proceedings
in England would be in breach of the terms of that injunction.
-
The Defendants have received
unequivocal advice that the correct jurisdiction to hear this case is and
remains Mozambique, not least because it concerns shares of a Mozambique
company, claims regarding a Mozambique asset, ownership by Mozambique nationals
and a company Companhia Mineira de Naburi (“CMdN”) which is governed by the
Mozambique Civil Code.
-
The proceedings in England
therefore serve no useful or lawful purpose.
2. Jurisdiction
In asserting jurisdiction in the English court the
Judge repeated the Claimants contention that on 3 May 2012 Judge Monjane of the
court in Mozambique stated that the Injunction obtained by General Veloso and
Diogo Cavaco did not apply to existing proceedings and that she had not been
made aware of these proceedings.
This Claimants assertions in this respect are also
untrue. Judge Monjane was explicitly made aware of the English proceedings in the
Defendants written application to the Maputo court (see paragraph 108 et al).
The Claimants have a copy of this application.
More importantly the Mozambique
Injunction applies to both existing and any future actions by the Claimants and
remains in force.
The Claimants have not produced to the English
court any official Mozambique Court document amending the Mozambique Injunction
in any respect.
3. The Share Option Agreement 2006
We are pleased that Mr Justice Field confirmed
our case that the agreement to acquire shares of CMdN was indeed a Share Option
Agreement NOT a sale and purchase agreement:
“..the language used compels the conclusion
that the scheme of the agreement was the grant of an option in consideration of
the Option Purchase Price with title in the shares only passing on when the
option was exercised by paying the balance of US$9,900,000.”
In addition the Claimants have not met any of
their material obligations set out in the Memorandum of Understanding dated
November 2005 (the basis on which General Veloso and Dr Cavaco entered into the
Share Option Agreement), including the obligation to raise $100m of finance
within nine months of signature;
The Judge in England has however repeated the
Claimants’ contention that, despite all the clear and explicit evidence to the
contrary, the Option Purchase Price of US$100,000 was in fact “an Initial Amount
by way of purchase and sale” (Initial Amount being a term invented by the
Claimants lawyers Travers Smith and not used in any of the original contracts) and
that “the Defendants are estopped from denying this”. This is a total
contradiction of his own construction of the Share Option Agreement.
In fact the option contract is exactly what it
is stated to be:
1. The
agreement entered into on 10 February 2006 was called “Share Option Agreement”
2. The
first line of the agreement states “This share option agreement is made on the
10th February 2006”
3. Under
the heading “Option Purchase Price” the agreement states ““Party B” agrees to
sell to “Party A” this option for a consideration of $100,000.”
4. Under
the heading “Delivery of Option” it states “In exchange for the payment of the
“option purchase price”… Party B undertakes to deliver share certificates and
share transfer forms to the lawyers of Party A” (pending payment of the
purchase price). In fact the share transfer forms were never delivered nor have
the Claimants proved that these shares were transferred to them.
5. The
final clause of the agreement states “This agreement will become null and void,
with the exception of the obligation to hold Party A harmless during the
licence period, on the event of the payment in full of the Purchase Price.”
It
remains the case that the Purchase Price for the shares of CMdN has never been
paid by the Claimants and therefore under the terms of the Share Option Agreement
they cannot own the shares of CMdN. We
are confident that the Mozambique Court will reject the English Court’s concept
that the Claimants have somehow acquired the shares of CMdN without ever paying
the purchase price agreed for those shares.
4. Cancellation of CMdN shares
Mr Justice Field ordered the Defendants, inter
alia, not to “interfere in IMMs rights of ownership of CMdN shares…”.
The Honourable Mr Justice Field and the
Honourable Mr Justice Blair should have been made aware by the Claimants that the
Defendants wrote to the Directors of IMM on 25 November 2011 to request the
return of the bearer shares owned by General Veloso and Diogo Cavaco. These shares were supposed to be held by
Pathfinder Minerals’ lawyers Penningtons pending payment of the CMdN share
purchase price of US$9.9m. IMM did not
reply to this request. Accordingly these
bearer shares were cancelled and reissued to General Veloso and Diogo Cavaco,
the owners, in accordance with Mozambique law and the Mozambique Civil Code.
All of this was made known to the Directors of
Pathfinder Minerals before they applied for their original Injunction on 19
December 2012.
5. The Claimants behaviour
Pathfinder Minerals plc has quoted in its Press
Release the Judge’s opinion that the Claimants “had no fraudulent intent” and
“honestly and genuinely believed” that they had legally acquired the shares in
CMdN. He went on to make the assertion
that this must be the case because of his own finding that the shares of CMdN
had been legally acquired.
If the Claimants honestly and genuinely
believed this it might be asked why, when General Veloso informed Pathfinder
Minerals plc in writing on 21 October 2012 of his resignation from the Board, Mr
Nick Trew flew to Maputo and on behalf of Pathfinder Minerals plc offered to
pay General Veloso $9.9m and to transfer to General Veloso shares from Nick
Trew, Gordon Dickie, Tim Baldwin and John McKeon to return him to 15% ownership
of Pathfinder Minerals. This offer was
conditional upon General Veloso signing a confidentiality agreement with Pathfinder
Minerals plc. This proposal was of
course rejected. General Veloso took the
entirely appropriate step of reporting this action (which he considered an
attempted bribe) by the Directors of a UK publicly listed company to the UK
regulatory authorities and the Serious Fraud Office.
General Jacinto Soares Veloso
Dr Diogo Henriques Cavaco
Maputo - 29 October 2012
