Contested sale by the receiver of Dianor’s Ontario mining claims free of royalty rights held by a third party

This receivership proceeding involved a contested sale by the receiver (our client) of Dianor’s Ontario mining claims free of royalty rights held by a third party. The royalty holder opposed court-approval of the sale, primarily on the basis that the court has no jurisdiction to vest mining claims free of existing royalty rights (effectively terminating the royalty). The lower court found that it had the requisite jurisdiction and vested the mining claims in the purchaser free of the royalty. The royalty holder has appealed to the Ontario Court of Appeal (OCA). We have argued the appeal and are presently awaiting the OCA’s judgment. The matter is important because it involved a novel legal issue. The lower court’s decision was the first in Ontario to find that the court in receivership proceedings can vest mining claims free of royalty rights. Lawyers and clients in the insolvency and mining space are closely watching the Dianor matter for guidance on the sanctity of royalty rights. The Ontario Court of Appeal decision, when released, will be highest authority in Canada on the point.