Archon sued by Fipke over Ekati legal fees
2015-02-03 11:24 ET - Street Wire
by Mike Caswell
Archon Minerals Ltd. and its president, Stewart Blusson, are defendants in a lawsuit filed Friday in the Supreme Court of British Columbia by Mr. Blusson's long-time associate, Charles Fipke. The suit complains that Mr. Fipke paid the entire bill for a court case the men jointly pursued against BHP Diamonds Inc. in 2013. The case ended up costing $803,512 in legal and other fees, but Mr. Blusson and Archon did not pay their half of the bill, Mr. Fipke says. He is seeking a court-ordered payment.
The allegations are contained in a notice of claim that Mr. Fipke, a Kelowna geologist, filed at the Vancouver courthouse on Jan. 30, 2015. The history to the lawsuit is somewhat lengthy, going back about 25 years to when Mr. Blusson and Mr. Fipke were jointly searching for diamonds in the Northwest Territories. In 1991, they found a diamond deposit 300 kilometres from Yellowknife that became the Ekati mine. They entered a joint venture with BHP to develop the project in 1997, and the site eventually became Canada's first diamond producer. (It remains active, and its present owner, Dominion Diamond Corp., reported $399-million worth of revenue from the mine in the year ended Jan. 31, 2014.)
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As part of the BHP joint venture, Mr. Fipke, Mr. Blusson and Archon maintained smaller interests in the mine, but their participation became a source of some friction. In November, 2011, BHP informed Mr. Fipke and Mr. Blusson that it intended to sell its interest in the mine to Harry Winston Diamond Corp. The sale was subject to Mr. Fipke and Mr. Blusson accepting it, as they held a right of first refusal over BHP's interest. Mr. Fipke and Mr. Blusson attempted to exercise that right, but they were unable to do so and, according to Mr. Fipke's lawsuit, they blamed BHP and Harry Winston. They said that the two companies had taken steps to prevent them from raising enough money to buy BHP's interest.
As with many disputes over valuable assets, the matter ended up before the courts. In a lawsuit they filed in the Ontario Superior Court of Justice on Jan. 16, 2013, Mr. Fipke and Mr. Blusson sought damages stemming from their inability to exercise the right of first refusal. According to Mr. Fipke, he and Mr. Blusson agreed at that time that they would share the legal bills they incurred to sue BHP and Harry Winston.
The Ontario case was fairly brief. Just weeks after it began, BHP and Harry Winston agreed to settle the matter. As part of that settlement, Mr. Blusson and Archon received $1,025,000, Mr. Fipke says. Despite that, they refused to pay their share of the legal bill, he claims. Mr. Fipke says that the joint expenses from November, 2011, to the date of the settlement, including lawyers' fees, amounted to $803,512. According to his lawsuit, Mr. Fipke demanded that Mr. Blusson and Archon pay their share many times, but the only payments they made amounted to $50,607.
Mr. Fipke is seeking damages for the outstanding amount of $423,975, plus interest and court costs. He is pursuing the lawsuit through his private holding company, C. Fipke Holdings Ltd. Vancouver lawyer Seva Batkin of Fraser Litigation Group filed the notice of claim on behalf of that company.
Archon and Mr. Blusson have not yet filed a response. Archon closed at $1.30 Monday, unchanged.
*There must be more to this story! Hard to believe that the Blussons would welch on Chuck!