A six-year court case reached its end yesterday with East Perth-based North Australian Diamonds Ltd being awarded $3.3 million in damages, following a botched pro-rata offer with Australian Gold Fields NL.
In a decision handed down yesterday by Justice Eric Heenan, AGF was found to have breached an enforceable underwriting agreement with NADL. Setting-off loans from AGF to NADL totalling $2.3 million, NADL will be considered an unsecured creditor for the remaining $1 million in AGF's liquidation, which is currently underway.
NADL managing director Alan Campbell siad the decision would remove a contingent liability which had been hanging over the company since March 1998.
According to NADL announcement, AGF had an obligation to underwrite a pro-rata offer by the Company to raise a minimum amount of $7.5 million by prospectus, and when AGF did not proceed, the company lodged with AGF's liquidator a formal proof of debt claiming the sum of $11,566,621.
On 8th September 2000, the Company lodged an application in the Supreme Court of Western Australia seeking leave to commence proceedings against AGF. Following grant of leave, the Company filed and served a writ seeking:
(a) A Declaration that it has, by reason of the breach, alternatively repudiation of the Residual Underwriting Commitment, suffered loss and damage, as set out in the Company's Proof of Debt, of the amount of $11,566,621.
(b) A Declaration that in respect of any indebtedness on its part by reason of the receipt of funds from AGF, that the obligation to repay such amounts has been set off and fully extinguished against its damages claim, being amounts totalling $2,328,580.
(c) A Declaration that the liquidators of AGF accept the proof of debt of the Company having made due allowance for amount set off, being an amount of $9,238,041.
(d) Costs.
