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 lien.

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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