This decision serves as a reminder of the
importance of written agreements and documentary evidence for
establishing valid claims.
Golden Hill Ventures Limited Partnership (Golden Hill) filed a
$2.8-million claim of lien under the Yukon Miners Lien Act
(Act) against a mining property owned by Ross Mining Limited (Ross
Mining) southeast of Dawson City. Golden Hill had entered into a
consolidated loan agreement with Ross Mining, under which Ross
Mining agreed to borrow funds from Golden Hill for working capital
and other purposes. Golden Hill also provided work, services and
materials to Ross Mining for the operation of the placer gold mine,
although its work in that regard was not the subject of a written
agreement and invoices were never issued by Golden Hill. Both
Golden Hill and Ross Mining were owned and controlled by the same
person, Mr. Jon Rudolph.
Mr. Norman Ross, the original owner of Ross Mining who was owed
in excess of $3 million in connection with the sale of his shares,
and Mackenzie Petroleums Ltd., another creditor of Ross Mining who
had filed a claim of lien, disputed the validity of the Golden Hill
lien and sought to have it vacated. They were successful in doing
so. In 2011, the trial judge discharged and vacated Golden
Hill's claim of lien on the basis that an owner of a property
should not be permitted to lien his or her own property. The trial
judge supported his order on alternate grounds, including a finding
that the true relationship between Ross Mining and Golden Hill was
one of borrower and lender. A person is entitled to a lien under
the Act if the person provides services or materials to a mine, but
lending money to an owner of a mine does not constitute the
provision of services or materials for the purposes of a claim of
Golden Hill's appeal to the Yukon Court of Appeal (YKCA) was
dismissed. While the YKCA had reservations about the scope of the
principle relied upon by the trial judge, namely, that an owner of
property should not be permitted to lien his or her own property,
it found that the appeal should be dismissed on the basis that the
true relationship between Ross Mining and Golden Hill was one of
borrower and lender. Relevant facts in this regard are that there
was no written agreement for goods and services and no invoices for
goods or services were issued, and there was sufficient evidence to
support the inference that amounts owing to Golden Hill for goods
and services supplied had been paid with loan proceeds advanced
under the consolidated loan agreement.
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