Bre-X suit should be tried in Texas: lawyers
By PAUL BAGNELL
Mining Reporter The Financial Post
U.S. case law shows a Texas court has jurisdiction over Canadians who lost money by investing in Bre-X Minerals Ltd., U.S. lawyers say in their rebuttal to arguments from defendants named in a U.S. class action lawsuit.
The defendants maintain the proceeding should be dismissed, but the Houston lawyers pursuing the case disagree.
"We're on the way. We're out of the blocks," said Windsor, Ont., lawyer Harvey Strosberg, who is seeking certification for a Canada-wide class action suit.
Among the supporting material supplied by the U.S. lawyers is an affidavit sworn by a former Ontario appeal court judge. The judge says Canada is not the best place for shareholders of Bre-X or its affiliate, Bresea Resources Ltd., to pursue their claims.
The U.S. action against Bre-X and others alleged to bear responsibility for the Indonesian gold fraud is led by Houston lawyers Paul Yetter and Lee Godfrey. An unrelated Canadian class action, headed by Windsor, Ont., lawyer Harvey Strosberg, has been filed in an Ontario court.
Several defendants in the U.S. action have formally asked the Texarkana court to dismiss the case. These include brokers J.P. Morgan & Co. and Lehman Brothers Inc., engineering consultant Kilborn Engineering Pacific Ltd. and its parent SNC-Lavalin Inc., and two former Bre-X directors, Hugh Lyons and John Thorpe.
J.P. Morgan and Lehman Brothers argued the case should be transferred to New York or Delaware if not dismissed outright.
In their opposing submission to the court, Yetter and Godfrey say U.S. federal legislation and a history of case law both give the Texarkana court jurisdiction over Canadian shareholders.
"[U.S.] courts have repeatedly exercised jurisdiction over federal securities claims of foreign investors," they say, citing 11 cases as evidence.
The lawyers also argue Canada is an inferior legal climate in which to pursue claims. They back the claim with an affidavit sworn by Lloyd Houlden, a former Ontario Court of Appeal judge.
"In my opinion, there are a number of reasons why Ontario would be an inadequate or inappropriate forum for the resolution of the claims asserted by the plaintiffs and the class in this proceeding," Houlden said in his six-page statement.
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