Supreme Court rejects Bula appeal

Marathon litigation against the State and others over the failure of the Bula mining venture in Co Meath ended yesterday with a Supreme Court decision representing defeat for Bula and a legal bill which could run to millions of pounds.

After the decision, Mr Michael Wymes, a director of Bula Limited (in receivership), said he would make no comment as legal action is under way against a number of banks associated with the venture.

In the Supreme Court yesterday, Mr Justice Keane dismissed an appeal taken by Bula Limited, Bula Holdings, and two directors of Bula Limited, Mr Wymes, of Bective House, Navan, Co Meath, and Mr Richard Wood, of Carrigrohan, Co Cork, against a High Court finding that the Minister for Energy and Tara Mines Limited were not responsible for the failure of the Bula mine.

The Chief Justice, Mr Justice Hamilton, and Mr Justice Barrington, agreed with Mr Justice Keane's conclusions. The court awarded costs against the appellants.

The litigation stems from the discovery, nearly 30 years ago, of rich deposits of lead and zinc in the Nevinstown area of Co Meath by the Tara Exploration and Development Company Ltd. One sixth of the orebody was underneath a 120-acre farm owned by Mr Patrick Wright, who entered into arrangements with Mr Wymes and Mr Wood for development of the minerals under his land and for that purpose, Bula Ltd was formed. A compulsory purchase order made by the Minister for Energy in 1971 in respect of the minerals owned by Mr Wright was eventually overturned by the Supreme Court.

An agreement in principle was reached between the Minister, Bula Ltd, Mr Wymes, Mr Wood and Mr Wright which gave the State less than half of the issued shares in Bula Ltd. Tara Mines Ltd, later controlled by the Finnish company Outokumpu, got planning permission for an underground mine which went into production in June 1977.

Bula sought planning permission for an open cast mine on the Wright lands but encountered problems and the Bula mine never went into production. A receiver was appointed to Bula Ltd in 1985 and the company initiated litigation against Tara, Outokumpu, the Minister for Energy and others in November 1986.

In his High Court judgment of February 1997, Mr Justice Lynch rejected Bula's claims. Bula and its directors had alleged that, in spite of a provision in the lease of the neighbouring Tara mining company that it should co-operate with Bula, Tara had wrongfully conspired and sought to inflict economic loss and damage to Bula to such an extent as to ruin Bula.

Bula also claimed the Minister and his representative on the Bula board (the State holds a 49 per cent stake in the Bula company) had failed to prevent Tara and its personnel from acting as alleged and had assisted Tara in so acting. These claims were rejected by the High Court judge.

Delivering the court's judgment yesterday, Mr Justice Keane said two grounds of appeal were advanced.

In the first instance, the appellants contended Tara Mines, in the years 1984/85, wrongfully put forward a proposal for the takeover of Bula Ltd (which proposal and/or its completion required the consent of Tara's Canadian bankers, which consent had not been sought or obtained) and that implementation of the proposal required Tara to have available adequate funds which it was free to dispose.

They further claimed the State, or Tara, in 1986 had breached their obligations under Clause (f) of the Tara State Mining Lease of September 19th, 1975. That clause set out an undertaking by Tara to co-operate with the Minister for Energy to ensure the most efficient exploitation of minerals at Nevinstown, with consequent benefit to all concerned, and to act reasonably in all negotiations to achieve that.

The clause also stated that the Minister agreed, so far as it was within his power, to ensure that the operators of any privately-owned minerals at Nevinstown would act reasonably in all such negotiations.

In relation to the first ground, Mr Justice Keane said documents discovered in the case which he had read reflected a willingness by Tara's bankers to put in place the necessary arrangements to finance the proposed takeover of Bula. He dismissed that ground.

On the second ground, Mr Justice Keane said the appellants claimed Tara had breached its obligations under Clause (f) by refusing to enter into negotiations with Mr Wymes concerning a tolling arrangement and they were entitled to recover damages from Tara. It was also claimed that the alleged breach by Tara under Clause (f) had led to a breach by the Minister of his obligations under an Inter Party Agreement regarding the Bula mine and that the Minister was guilty of unlawfully interfering with Bula's economic interests.

The judge rejected those claims. He said there could not be the least doubt that the attitude of the State was that it would be in the public interest for the entire orebody to be developed by one operator. However, it was also clear that the appellants were equally insistent from the beginning on the Bula mine being developed independently and emphatically rejected any suggestion it should be jointly developed. Mr Wymes had referred to that policy as "sacrosanct" and it was only years later he adopted a different position. In those circumstances, the judge said it followed that when Clause (f) was inserted in the State Mining Lease, it could not have been envisaged by either Tara or the Minister that it would oblige Tara to enter into any form of joint development of the Bula mine with its owners. Under no circumstances could the Minister have required Bula Ltd to operate other than as an independent production unit, thus excluding a joint development in the form of the tolling arrangement which Mr Wymes sought to negotiate. The judge said he was satisfied Clause (f) was intended to do no more than require Tara to co-operate with the operators of the Bula mine so as to ensure the two mines, although independently owned and operated, were developed as safely and efficiently as possible.