The former chairman and chief executive of Bula Resources, Mr Jim Stanley, is to appeal to the Supreme Court the refusal of the High Court to allow a judicial review of a report by the Government-appointed inspector, Mr Lyndon MacCann.
He has also instructed his solicitors to investigate the possibility of a constitutional challenge to section 14 of the Companies Act 1990, which was used for Mr MacCann's appointment. The constitutional case could be initiated in the High Court if the Supreme Court appeal was unsuccessful.
Mr Justice Geoghegan ruled on Tuesday that Mr Stanley could not use the High Court as a court of appeal against the findings of the inspector. Mr MacCann concluded that Mr Stanley was the beneficial owner of Mir Oil Development Ltd, a British Virgin Islands company to which Bula transferred 101 million shares as part of a deal negotiated by Mr Stanley.
Mr MacCann's report is being used by Bula in a case in which it is suing Mr Stanley for damages. The company lost more than £12 million as a result of the Mir deal. It has been granted a worldwide freezing order on the assets of Mr Stanley who insists he was not the owner of Mir Oil at the time of the deal.
The inspector's conclusions are findings of fact for the purposes of court proceedings and form the main plank of the company's case against its former chairman. The value of the assets covered by the High Court freezing order increased significantly on Tuesday, with the rise in the price of Ovoca shares. Mr Stanley is said to own between 1.5 million and two million shares in Ovoca, and these are part of the freezing order. Ovoca shares closed at 49p yesterday, giving the stock allegedly held by Mr Stanley a value of between £735,000 and £980,000. At the end of November, Ovoca shares were worth only 12p.
The shares are held in the names of individuals and companies. Some of the individuals are members of Mr Stanley's family, while some of the companies are linked to the Jersey corporate services company, Chamonix Corporate Secretaries Ltd. Chamonix represents Mir Oil Development Ltd.
Yesterday Ovoca issued a statement saying it did not know why its share price has risen so sharply recently. The company is 18 months into a three-year exploration programme for zinc in blocks in counties Tipperary, Longford, Galway, Roscommon and Limerick. "When and if the company has significant information to announce to the market, it will do so immediately," the board said. In October the board distanced itself from comments made by its chairman, Mr Paul Smithwick, that the share price would reach £4 within a year on the back of a substantial find. The board said the prediction was "unjustifiable".
Mr Stanley's alleged shareholding in Ovoca constitutes about 8 per cent of the total share capital, and would have to be sold over time if the seller did not want to depress the share price. Apart from the shares in Ovoca, assets covered by the High Court freeze include Bula shares worth about £50,000, and Gaelic Resources shares worth about £16,000. The order is also understood to apply to a large home near Thomastown, Co Kilkenny.
The case by Bula against Mr Stanley is unlikely to be heard until late next year. Mr Stanley may ask for security of costs to be lodged in court, and intends to counter-sue Bula. Earlier this month Bula was unable to lodge a banker's guarantee in the High Court in London for £250,000, in relation to a case it is taking against a London firm of solicitors. The case was struck out and that decision is now being appealed by Bula.
