Novawest Resources Ltd. v. Anglo American Exploration (Canada) Ltd. and Hudson Bay Exploration and Development Company et al | Experience

Client

This recent British Columbia case dealt with the use of confidentiality agreements and areas of interest in the mining industry in the post – Lac Minerals era and the need for a party receiving confidential information under such an agreement to be able to rely on its terms in knowing any limitations on its activities.The decision of the Supreme Court of British Columbia has important implications for the use of confidentiality agreements in the mining context and elsewhere in its consideration of the relationship between confidentiality agreements and the common law duty of confidence.

The facts leading to the action involved a dispute over whether the Defendants had used allegedly confidential information belonging to the Plaintiff in staking a large claims block in May of 2002 in the Cape Smith Belt of northern Québec as part of their nickel exploration project.

In February of 2002, the Plaintiff Novawest Resources Ltd. ("Novawest") and the Defendant Anglo American Exploration (Canada) Ltd. ("AAEC") had entered into a confidentiality agreement under which the Plaintiff agreed to disclose confidential information regarding its claims in the Cape Smith Belt to AAEC. The agreement provided that the only restriction on AAEC's activities was that it was not permitted to stake ground within a one kilometre radius of the Plaintiff's mineral claims. No joint venture was ultimately entered into, and AAEC staked its own claims in May of 2002, the closest being three kilometres west of the Novawest claims. In its 2003 drilling program, AAEC intersected zones of high-grade nickel on its property.

In April of 2004, Novawest commenced a claim against the Defendants alleging breach of confidence and conspiracy, seeking a constructive trust with respect to the area staked by AAEC or damages. The Plaintiff's central allegation was that it had provided confidential information to the Defendants pertaining to the AAEC claims and outside the scope of the confidentiality agreement, which the Defendants had used without authorization in deciding to stake AAEC claims. The Defendants denied the use of confidentail information and also claimed that the confidentiality agreement governed all information disclosed and specifically allowed it to stake the ground they did.

In April of 2006, the Defendants brought an 18A application for summary judgment, seeking a dismissal of the Plaintiff's claims in their entirety on the basis that the confidentiality agreement signed by the Plaintiff and AAEC provided a complete answer to the Plaintiff's claim.

In Reasons for Judgment released on May 14, 2006, the Trial Judge granted the Defendants' application and dismissed the Plaintiff's claims in their entirety. The Trial Judge found that the confidentiality agreement supplanted any common law duty of confidentiality that AAEC owed the Plaintiff relating to land outside the area of influence designated in the confidentiality agreement, and permitted AAEC to stake the ground it did, even assuming the information received was confidential. No appeal was taken from the summary judgment.

At the summary trial the Defendants were represented by Geoffrey Cowper, Q.C., David Wotherspoon and Mark Fancourt-Smith of Fasken Martineau in Vancouver.