IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN )

Transcription

1 IN THE COURT OF APPEAL IN THE SUPREME COURT OF VICTORIA AT MELBOURNE S APCI IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) BETWEEN WILLMOTTACTIONGROUP INC and Appellant (Intervener) WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS PERSONAL CAPACITY AND IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 AND 4 AND ORS ACCORDING TO SCHEDULE I First Respondent (First Plaintiff) AFFIDAVIT OF JANE CHALMERS SHERIDAN Date of document: Filed on behalf of: Prepared by: ARNOLD BLOCH LEIBLER Lawyers and Advisers Level Collins Street MELBOURNE August 2012 the Respondents Solicitor s Code: 54 DX Melbourne Tel: Fax: Ref: (Jane Sheridan - jsheridan'abl.com.au ) I, JANE CHALMERS SHERIDAN of Level 21, 333 Collins Street, Melbourne, VIC, Solicitor, MAKE OATH AND SAY that: I am a partner of Arnold Bloch Leibler (ABL), the solicitors for: (a) the Respondents to this appeal proceeding, being Willmott Forests Ltd (receivers and managers appointed) (in liquidation) (WFL), and its liquidators, Messrs Craig Crosbie and Ian Carson (Liquidators), and 1~-\& ABL/

2 (b) the Respondents to appeal proceeding no SAPCI , also being WFL and the Liquidators (together the WAG Appeal Proceedings). Together with my Partner, Justin Vaatstra, I have the care and conduct of the WAG Appeal Proceedings on behalf of the Respondents to the WAG Appeal Proceedings. 2 Except where I otherwise indicate, I make this affidavit from my own knowledge. Where I depose to matters from information and belief, I believe those matters to be true. 3 I refer to (a) the summons filed in this proceeding on 7 August 2012; and (b) the summons filed in proceeding S APCI on 7 August 2012 (together Summonses), seeking security from the WILLMOTTACTIONGROUP INC A L (WAG), the Appellant in each of the WAG Appeal Proceedings, for the Respondents costs and disbursements in the WAG Appeal Proceedings. 4 I refer to the affidavit Justin Taede Vaatstra sworn 7 August 2012 and filed in S APCI (First Vaatstra Affidavit) and adopt the definitions therein. Background 5 The Appellant appeals from the decision of Justice Davies in proceedings SCI and SCI (Advice Applications) in which her Honour provided the Liquidators with directions pursuant to s 511 of the Corporations Act 2001 (Cth) that they were justified in procuring WFL to perform the HVP Final Implementation Deed the Amended Main Sale Contracts. The Appellant intervened at the hearing of the Advice Applications and opposed the giving of judicial advice sought by the Respondents. The WAG did not enjoin the Respondents from completing the Main Sale Contracts and HVP Final Implementation Deed. Those agreements have now been completed and the proceeds received by the Liquidators and Receivers. 4 T7 2 11

3 Completion of the Main Sale Contracts and HVP Final implementation Deed 7 on 7 May 2012, I attended the offices of King & Wood Mailesons, the solicitors for HVP, for the implementation of the HVP Transaction. Representatives from Aliens, the solicitors for the WFL receivers and managers, and Michael Carmody of PPB Advisory, representing the Liquidators were also in attendance. implementation of the HVP Transaction occurred in accordance with the Implementation Deed and, among other things, the solicitors for HVP delivered a cheque to the solicitors for the WFL receivers and managers for the Receivers Consideration (as that term is defined in the HVP Implementation Deed) and a cheque to me for the Liquidator s Consideration (as that term is defined in the HVP implementation Deed). I gave the cheque for the Liquidator s Consideration to Mr Carmody. 8 On 22 May 2012, I caused Gia Can, solicitor from Arnold Bloch Leibler, to attend at the offices of Aliens in Melbourne and Krystal Bedggood and Liam Thomson, solicitors from Arnold Bloch Leibler, to attend at the offices of Aliens in Sydney for the completion of the GFP Transaction. I am informed by Ms Can, Ms Bedggood and Mr Thomson and believe that: (a) representatives of Minter Ellison, the solicitors for the Purchaser, and representatives of Aliens, the solicitors for the Receivers and Managers, were also in attendance in Melbourne and in Sydney; (b) (c) completion of the GFP transaction occurred in accordance with the Contracts of Sale; and among other things, the Purchaser provided cheques to Ms Bedggood in payment of the purchase price owing under the Contracts of Sale. 9 I am also informed by Ms Bedggood and believe that, in accordance with my instructions: (a) the cheque for the purchase price (as adjusted in accordance with the Contracts of Sale) payable to WFL, as the Vendor, was deposited into the trust account I had caused to be established for this purpose (Sale Proceeds Account); and 3f

4 (b) the cheque for the amount to be held in escrow in a retention account pursuant to the Contracts of Sale was deposited into the trust account I had caused to be established for this purpose. 10 Following notification of completion from Ms Bedggood, I caused the deposit which was held by Arnold Bloch Leibler in a trust account to be transferred to the Sales Proceeds Account. 11 In accordance with the instructions I have received from the Liquidators and the Receivers and Managers, I have subsequently caused amounts to have been paid from the Sales Proceeds Account to the Receivers and Managers and Liquidators as agreed by them to reflect their respective entitlements to the proceeds from the Contracts of Sale. 12 WFL consented to the payment of WAG s costs of the Advice Applications out of the proceeds of the Amended Main Sale Contracts and Final Implementation Deed on a solicitor and own client basis. 13 Now produced and shown to me and marked "JCS-1" is a copy of the Plaintiffs Outline of Submissions on Costs dated 9 May 2012 filed in the Advice Applications. Now further produced and shown to me and marked "JCS-2" is a copy of page 4 of the transcript of hearing of the Advice Applications dated 15 May Dispute as to costs 14 The WAG initially claimed $903, in respect of its costs incurred in the Advice Applications. Now produced and shown to me and marked "JCS-3" is a letter from Lloyd & Lloyd Solicitors to ABL dated 10 July ABL, on behalf of the liquidators, wrote to Lloyd & Lloyd Solicitors, amongst other things and disputed this initial claim on the basis that amounts were being claimed that the WAG was not entitled to. Now produced and shown to me and marked "JCS- 4" is a letter from ABL to Lloyd & Lloyd Solicitors dated 12 July In response to ABL s letter dated 12 July 2012, Lloyd & Lloyd Solicitors wrote to ABL on 24 July 2012 and reduced the WAG s claim for costs, claiming instead $892, Now produced and shown to me and marked "JCS-5" is a copy of a letter from Lloyd & Lloyd Solicitors to ABL dated 24 July

5 17 The parties have not resolved the question of the quantum of the WAG s costs of the Advice Applications, whether by agreement or taxation. Now produced and shown to me and marked JCS-6" is a letter from Arnold Bloch Leibler to Lloyd & Lloyd Solicitors dated 31 July Failure to comply with Court ordered timetable 18 The WAG has not complied with the Court ordered timetable for the preparation of the WAG Appeal Proceedings. 19 In accordance with the Orders made by the Court on 8 June 2012, the WAG was to provide a draft summary in each of the proceedings S APCI and S APC to the respondents by 27 July On 27 July 2012, Lloyd & Lloyd wrote to ABL stating that due to Counsel s unavailability, WFL could expect the draft summaries by 7 August Now produced and shown to me and marked "JCS-7" is a copy of the letter from Lloyd & Lloyd to ABL dated 27 July As at the date of swearing this affidavit, WAG has still not served the draft summaries as required under the orders made on 8 June Now produced and shown to me and marked JCS-8" is a copy of a letter from ABL to Lloyd & Lloyd dated 13 August No response has been received to this letter. SWORN at Melbourne ) in the State of Victoria ) by JANE CHALMERS SHERIDAN ) this 17 day of August 2012 ) Before me:... J(S11N TAEDE VMTSThA MMU Lebw Level 21, 333 COIS Stret An AusUailan Log& Practiboner MW to meaning of the Legal PtfeSSIOn Act

6 SCHEDULE I - PARTIES WILLMOTTACTIONGROUP INC Appellant (Intervener) and WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS PERSONAL CAPACITY AND IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 AND 4 First Respondent (First Plaintiff) and CRAIG DAVID CROSBIE IN HIS CAPACITY AS LIQUIDATOR OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) Second Respondent (Second Plaintiff) and IAN MENZIES CARSON IN HIS CAPACITY AS LIQUIDATOR OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) Third Respondent (Third Plaintiff)

7 SCHEDULE 2- REGISTERED MANAGED INVESTMENT SCHEMES 1 Willmott Forests Project (ARSN ) 2 Willmott Forests Project (ARSN ) 3 BioForest Dual Income Project 2006 (ARSN ) 4 BioForest Sustainable Timber and Biofuel Project 2007 (ARSN ) 5 Willmott Forests Premium Forestry Blend Project (ARSN ) 6 Willmott Forests Premium Forestry Blend Project Project (ARSN ) 7 Willmott Forests Premium Timberland Fund No. 1 (ARSN ) 7

8 SCHEDULE 3- UNREGISTERED MANAGED INVESTMENT SCHEMES: PROFESSIONAL INVESTOR SCHEMES 1 Willmott Forests - Professional Investor Project Information Memorandum 2 WiIImott Forests - Professional Investor Project Information Memorandum 3 WiIlmott Forests - Professional Investor Project Information Memorandum (2003) and 2003 Information Memorandum (2004) 4 Willmott Forests - Professional Investor Project Information Memorandum and 2004 Information Memorandum (2005) BioForest Wholesale Project No Wholesale Forestry Memorandum (Bioforest) 6 Willmott Forests - Professional Investor Project Information Memorandum E.

9 SCHEDULE 4- UNREGISTERED MANAGED INVESTMENT SCHEMES: CONTRACTUAL SCHEMES AND PARTNERSHIP SCHEMES Contractual Schemes (No Project) (No Project) (No Project) (No Project) (No Project) (No Project) (No Project) Interest Only Offer (No Project) 15 Sharp/Reed Plantation Project Information Memorandum (No Project) Partnership Schemes 17 McKenzie & Partners - Forestry Partnership No.1 (1993) 18 Grimsey & Associates Pty Ltd - Forestry Partnership No. 1 (1994) 19 Grimsey & Associates Pty Ltd - Forestry Partnership No. 2 (1994) 20 Grimsey & Associates Pty Ltd - Forestry Partnership No. 3 (1994) 21 McKenzie & Partners - Forestry Partnership No. 2 (1994) 1

10 IN THE COURT OF APPEAL IN THE SUPREME COURT OF VICTORIA AT MELBOURNE S APCI IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) BETWEEN WILLMOTTACTIONGROUP INC and Appellant (Intervener) WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS PERSONAL CAPACITY AND IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 AND 4 AND ORS ACCORDING TO SCHEDULE I First Respondent (First Plaintiff) CERTIFICATE IDENTIFYING EXHIBIT Date of document: Filed on behalf of: Prepared by: ARNOLD BLOCH LEIBLER Lawyers and Advisers Level Collins Street MELBOURNE August 2012 the Respondents Solicitor s Code: 54 DX Melbourne Tel: Fax: Ref: (Justin Vaatstra - jvaatstra@abl.com.au ) This is the exhibit marked "JCS-I" now produced and shown to JANE CHALMERS SHERIDAN at the time of swearing his affidavit on 17 August JUSTIN TAEDE VMITSTRA L&M 21, 333 COON 811W An Anafl Legal Pracdboner wlthi *ie meet*ig of the Legal Profession Act 3)04 Before me: Exhibit "JCS-l" Plaintiffs Outline of Submisions on Costs dated 9 May 2012 filed in SCI and SCI

11 IN THE SUPREME COURT OF VICTORIA AT MELBOURNE COMMERCIAL AND EQUITY DIVISION - COMMERCIAL COURT CORPORATIONS LIST S Cl SCI IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULE 3 Plaintiffs PLAINTIFFS OUTLINE OF SUBMISSIONS ON COSTS A INTRODUCTION On 4 April 2012, Davies J ordered inter a/ia that: (a) the Second and Third Plaintiffs (the Liquidators) were justified and otherwise acting properly and reasonably in procuring the First Plaintiff (WFL) as responsible entity or manager of Registered Managed Investment Schemes and Professional Investor Schemes 2 to terminate each of the Project Documents of those schemes and surrender the rights of the Growers in the Trees the subject of the Amended Sale Contracts, on the basis that the net proceeds of the trees were allocated and distributed in accordance with exhibit CDC-50, subject to the determination of any questions concerning the quantum and allocation of costs referrable to the schemes described in CDC-50; (b) the Liquidators were justified in procuring WFL, as responsible entity of the HVP Registered Schemes and as manager of the HVP Unregistered Schemes, to hold the Liquidators Consideration (less any expenses incurred by the Second and Third Plaintiffs in realising the HVP Assets) on trust until it could be pooled and distributed with the proceeds of sale from the realisation of other assets of the respective HVP Registered Schemes and the HVP Unregistered Schemes. 4 2 By this application, the Liquidators seek an order that they are justified and are otherwise acting properly and reasonably in deducting the costs identified in CDC-61 from the proceeds of the sale of the trees derived from the Amended Sale Contracts and from the Liquidators Consideration under the Final Implementation Deed. See Schedule 2. 2 See Schedule 3. Paragraph 3 of the orders made in SC on 4Apr Paragraph 3 of the orders made in SC I on 4 April ABLII v3

12 2 3 The Liquidators consent to the payment of the WAG and the WGG s costs of the proceedings out of the proceeds of sale of the Amended Sale Contracts and the HVP Final Implementation Deed, on a solicitor and own client basis. 4 The Liquidators rely upon the following: (a) affidavit of Craig David Crosbie sworn on 27 April 2012 (First Crosbie Costs Affidavit); and (b) affidavit of Craig David Crosbie sworn on 2 May 2012 (Second Crosble Costs Affidavit). 5 The First Crosbie Costs Affidavit exhibits five summaries 5 prepared from approximately nine lever arch folders of documents. 6 Those voluminous documents have been made available for inspection. 7 The Second Crosbie Costs Affidavit exhibits an additional summary prepared from voluminous bank statements, which will also be made available for inspection. B APPLICABLE PRINCIPLES 6 The Plaintiffs are entitled to the expenses identified in CDC-61 as expenses which were fairly and reasonably incurred in caring for, preserving and realising the Trees the subject of the Amended Sale Contracts and Final Implementation Deed. 7 In Re Universal Distributing Co Ltd (in liquidation) 10 Dixon J (as he then was) enunciated the "salvage principle" - that a person who works and incurs expenses to care for, preserve or realise property to create a fund is entitled to a charge against that the fund or the property in priority to any other claimant. 11 As Davies J held in Thackray 12 : "the underlying principle in reach case is that it would be inequitable for the person who has created or realised a valuable asset, in which others claim an interest, not to have his or her costs, expenses and fees incurred in producing the asset paid out of the fund or property created". 8 As a matter of principle, the fact that liquidators remuneration and expenses relate to the administration of more than one scheme does not disentitle the liquidators from recouping 13 that remuneration or its expenses from the proceeds of the sale of the Trees. However, First Crosbie Costs Affidavit, CDC-61 CDC-62, CDC-64, CDC-65 and CDC Second Crosbie Costs Affidavit at [7]. Second Crosbie Costs Affidavit at [61, and CDC Second Crosbie Costs Affidavit, CDC-69. Second Crosbie Costs Affidavit at [24]. 10 (1933) 48 CLR 171. At See In the Matter of Great Southern Managers Australia Limited: Thackray & Ors V Gunns Plantations Limited [2011] VSC 380 at [40]. 12 At [41]. Citing Shirlaw v Taylor (1991) 31 FCR 222, 228, Thackray at [47]. ABL/ v3

13 3 the Liquidators are required to apportion the remuneration and their expenses amongst the various schemes and ultimately the individual woodlots. 4 Furthermore, where expenditure has two or more purposes, one of which is for salvage purposes and one or more of which is not, an apportionment of the expenses will be necessary The WAG contend that the Liquidators cannot have recourse to the proceeds from the sale of the Trees to meet the costs incurred in relation to preservation, maintenance or realisation because the trees are not "scheme property" but instead the property of third party Growers. 16 However, this submission fails to recognise both the breadth of the principle identified in Re Universal Distributing and the fact that in selling the trees, WFL is dealing as agent, representative and attorney 17 of the Growers and would accordingly be entitled to an equitable lien over the fund to the extent necessary to meet the expenses incurred in generating the fund. 18 The position of WFL acting as agent and attorney is analogous to Re Berkely Applegate 19 where the issue was whether a liquidator was entitled to an order for the payment to him of remuneration, costs and expenses out of the assets of the company held on trust. Mr Nugee QC held that: 20 "[W]here a person seeks to enforce a claim to an equitable interest in property, the court has a discretion to require as a condition of giving effect to that equitable interest that an allowance be made for costs incurred and for skill and labour expended in connection with the administration of property. It is a discretion which will be sparingly exercised; but factors which will operate in favour of its being exercised include the fact that, if the work had not been done by the person to whom the allowance is sought to be made, it would have had to be done either by the person entitled to the equitable interest [citation omitted] or by a receiver appointed by the court whose fees would have been borne by the trust property [citation omitted]; and the fact that the work has been of substantial benefit to the trust property and to the persons interested in it in equity [citation omitted]. In my judgment this is a case in which the jurisdiction can properly be exercised. 14 Ibid. 15 Thackray at [44-[45j. See also 13 Coromandel Place Ply Ltd v C L Custodians Pty Ltd (in liq) Q999) 30 ACSR WAG Outline of Submissions dated 27 April 2012 at [11]. 17 See eg CB Al at [272], where clause 61A of the 2002 Professional Investor Deed relevantly states: "the Manager has irrevocable power as the agent, representative and attorney of the Grower and whether in the name of the Grower or the Manager or both to assign, terminate, surrender or otherwise deal with any Project Document and to surrender, relinquish, release or otherwise deal with any rights of the Growers in the Trees or arising from, under, or in connection with the Project Document" 18 See: Rolfe v Transworld Marine Agency Co NV (1998) 28 ACSR 117 at 131, together with the cases cited therein at ; Hewett v Court (1983) 149 CLR 639; Evans v McLean (No 2) (1985) 9 ACLR 796 at (1989) Ch. 32, ABL/l v3

14 4 C THE EXPENSES WERE FAIRLY AND REASONABLY INCURRED IN CARING FOR, PRESERVING AND REALISING THE TREES 10 The Liquidators submit that the amounts claimed in CDC-61 are fair and reasonable. The question of what is fair and reasonable" depends on the circumstances of each case. As Davies J held in Thackray. 21 "[T]here is no universal approach applicable in all circumstances by which the reasonableness of remuneration claimed or expenses incurred should be measured. The size, importance and complexity of the tasks performed are all factors to be taken into account. What is needed is sufficient information for the Court any objector to have a clear view about what was done so that an assessment can be made about the reasonableness of the claim." 11 At the time of the Liquidators appointment as administrators, WFL was the RE or manager of 44 Willmott Projects. 22 The scheme documentation in relation to each of the Wiltmott Projects is voluminous, and varies between each WiIlmott Project The process of preserving, maintaining and realising the Sale Assets was comprehensive The Liquidators have prepared detailed spreadsheets which identify, record and allocate their scheme-related costs on three alternate bases (the choice of which was dependant on the nature of the task performed), which have previously been approved by Federal Court of Australia :25 (a) (b) (C) Specific Costs - being the costs specifically referable to a particular WilImott Project; General Costs - being the costs which relate to work performed for the Willmott Projects; Mixed Costs - being costs which are referrable to both the Willmott Projects and the unsecured Creditors of the Willmott Group. 13 Each of the spreadsheets identifies the Liquidators remuneration (and expenses in the case of Mixed Costs) and provides a detailed explanation of the tasks performed by the Liquidators and the charges levied. Support for the reasonableness of Liquidators remuneration can be derived from the fact that the Committee of Inspection have approved those expenses for the period up to and including 31 March Furthermore, the Liquidators received approval for 95% of their claimed remuneration for the period up to and including 22 March 2011 by the Federal Court of Australia At [64], citing inter ella Conlan (as liquidator of Rowena Nominees Pty Ltd) v Adams (2008) 65 ACSR 521, at First Crosbie Costs Affidavit at [ First Crosbie Costs Affidavit at (13). 24 See for example the following paragraphs of the Seventh Crosbie Affidavit 118, 20, 22, 23, 24, 40,48, 51, 52, 53, 54, 79, 83, 84, 87, , 102, 104, 107, 111, 115, 118, 119, 147, First Crosbie Costs Affidavit at [22]-[23]. 26 Second Crosbie Costs Affidavit at [14]. 27 First Crosbie Costs Affidavit at [20]. ABL/l v3

15 14 The spreadsheets also identify and provide a detailed description for the costs incurred in retaining Arnold Bloch Leibler. As Mr Crosbie deposes, Arnold Bloch Leibler were the only "non-panel" law firm with identified managed investment scheme experience and resources to provide services in such a complex liquidation. 28 Having regard to the complexity of the issues involved in the sale process and the varying and voluminous constituent documents, it is submitted that the scheme-related expenses and disbursements referrable to Arnold Bloch Leibler are fair and reasonable. 15 Ultimately, the reasonableness of the expenses can also be gauged by assessing their effect on the net return to Growers, in the context of a sale process which has involved complex and varying scheme arrangements and numerous legal issues. The evidence discloses that scheme-related costs sought by the Liquidators constitute $2,691, However, because certain projects will not derive any revenue from the sale of trees and scheme-related costs referrable to one scheme are not claimed against another, the actual sum to be deducted from the gross revenue arising from the sale of the trees is significantly less. 29 Specific Costs 16 Specific costs are allocated directly to the specific scheme to which they relate. 30 The Specific Costs for each scheme are identified in exhibit CDC-62. The types of tasks which have been allocated as incurring Specific Costs include: (a) (b) (c) reviewing the scheme documentation of a particular Willmott Project; drafting scheme summaries; responses to Growers in particular schemes (see eg 2001 Professional Investor Scheme and Willmott Forests 2002 Project); (d) drafting amendments to the constitution (see eg Willmott Forests 1999 Prospectus); (e) liaising and negotiating with HVP in relation to the purchase of interests located on HVP Land (see eg Willmott Forests Project 2006 PDS); (f) reviewing notices of meetings (see 1994 Grimsey and Associates - Forestry Partnership No 1); and, (g) preparing correspondence to ASIC (eg 2005 Bioforest Wholesale Project No 2). 28 Second Crosbie Costs Affidavit at [11]. 29 Second Crosbie Costs Affidavit, =Confidential CDC-70. First Crosbie Costs Affidavit at [22] and [26]-[29]. 31 First Crosbie Costs Affidavit, CDC-62. ABL/ v3

16 Genera! Costs 17 General costs are those which relate to the Willmott Projects, but are not specifically referable to any one Willmott Project. 32 General Costs are allocated using one of two methodologies. (a) Method One - apportions costs equally across the Willmott Projects; 33 and, (b) Method Two - apportions costs between the Willmott Projects pro rata according to the number of Growers in each Willmott Project. 18 The Method One General Costs for each scheme are identified in exhibit CDC-64.. The types of tasks which have been allocated as Method One General Costs include: (a) ascertaining the viability of each scheme ( see eg, November 2010, CDC-64); (b) sending out expression of interest packs and liaising with potential bidders in relation to the replacement of WFL as RE (see eg, November 2010, CDC-64); (C) reviewing fire prevention, maintenance and other statutory obligations of WFL under relevant state laws (see eg, November 2010, CDC-64); (d) attending to expression of interest responses and further queries (see eg, January 2011, CDC-64); (e) reviewing first round, indicative, non-binding proposals (see eg, January 2011, CDC-64); (f) (g) evaluating bids and proposals (see eg, February 2011, CDC-64); liaising with Willmott Management regarding remaining interested party questions (February 2011, CDC-64); and, (h) meetings to discuss the sale of asset process for the Trees (see eg, June 2011). 19 The Method Two General Costs for each scheme are identified in exhibit CDC-65. Those costs have been allocated using Method Two as are generally correlative to the number 32 First Crosbie Costs Affidavit at [29]. First Crosbie Costs Affidavit at [29]. As noted at [34] and exhibit CDC-63 of the First Crosbie Costs Affidavit, the number of projects in which tasks were undertaken has changed from time to time. From the Liquidators appointment until 22 December 2011, General Costs were divided between 44 projects. After Primary Securities Ltd replaced WFL as RE of the scheme, General Costs were divided between 39 Projects during the period 23 December 2011 to 31 January After the determination of the separate question on 9 February 2012, General Costs were divided between the 23 Projects the subject of the Amended Sale Contracts. Exhibit CDC-64, First Crosbie Costs Affidavit at [36]. ABLII v3

17 7 of Growers in a Project - rather than the number of Projects The types of tasks which have been allocated as Method Two General Costs include: (a) dealing with Growers queries regarding estimated returns, status of insurance and the confirmation of Grower holdings (see eg, March 2012, CDC-65): (b) meeting with Marie Birmingham of the WAG to discuss the restructuring of the schemes (see eg January 2011, CDC-65); (c) preparing a memorandum outlining possible options to maximise returns to Growers (see eg, February 2011, CDC-65); (d) obtaining a viability report from Poyry (see eg February 2011, CDC-65); and, (e) discussions with Growers to update them on the sate process (see eg, October 2011, CDC-65). Mixed Costs 20 The Liquidators have incurred certain costs which are referrable to both the Willmott Schemes and the liquidation of the WilImott Group. Those "mixed" costs were incurred in continuing to operate the Willmott Schemes and Willmott Group until the future operation of WFL could be determined and the sale of the assets effected (once WFL s future was determined). 36 Incurring the mixed costs enabled the Liquidators to preserve and.37 maintain the Trees together with the unsecured land until sale Mixed costs have been allocated pail passu based upon the comparative return under the Amended Sale Contracts to unsecured land (68%) and Trees (32%).38 As the Mixed Costs have been apportioned by reference to the value of the Trees and the Trees themselves are valued on a per-hectare basis, Method 2 has been employed in allocating Mixed Costs as between the Projects. 21 Throughout the administration and liquidation of the Willmott Group, the type of tasks that have been allocated as Mixed Costs have included: (a) 32% of the staff costs - staff members were retained and performed the following services: 39 (i) liaising with Growers; (ii) obtaining and preparing information relating to insurance; Exhibit CDC-65, First Crosbie Costs Affidavit at [40]. First Crosbie Costs Affidavit at [42]. First Crosbie Costs Affidavit at [43]. Thackray at [45]. See also: 13 Coromandel Place Pty Ltd v C L Custodians Pty Ltd (in liq) (1999) 30 ACSR 377 at 386. See First Crosbie Costs Affidavit at [511 and exhibit CDC-66. ABL/ v3

18 (iii) maintaining plantations; (iv) overseeing thinning operations; and, (v) meeting interested parties. (b) 32% of the overhead costs - comprising: (I) rent for a head office from which two WFL employees worked and to which correspondence was sent; 40 (ii) utility costs for a Bombala office from which three WFL employees worked and which was used for the purpose of dealing with local authorities and hosting site visits during the Expression of Interest campaign ;41; (iii) (iv) lease and fuel costs for three motor vehicles retained by WFL for the purpose of visiting and inspecting plantations together with being on standby in the event of a fire outbreak; 42 mail out costs incurred in printing and mailing out communications with creditors and growers; 43 (c) 44%44 of the bank interest on $2.5 million borrowed by the Liquidators personally and used to pay: 45 (i) essential services, including electricity and communications; (ii) essential works (including slashing and removal of noxious weeds); (iii) some of the Liquidators remuneration; (iv) some legal fees and costs (ABL and Counsel); (v) certain other professional fees (including Poyry); (d) 32% of sale costs - comprising: 46 (i) seeking directions from the Federal Court of Australia that the Liquidators would be justified in undertaking the Sale Campaign; See First Crosbie Costs Affidavit at [52(a)] and exhibit CDC See First Crosbie Costs Affidavit at [52(b)] and exhibit CDC See First Crosbie Costs Affidavit at [52(c)] and exhibit CDC-66. See First Crosbie Costs Affidavit at [52(d)] and exhibit CDC-66. See First Crosbie Costs Affidavit at [55] and Second Crosbie Costs Affidavit, exhibit CDC-69. See First Crosbie Costs Affidavit at [54]. See First Crosbie Costs Affidavit at (59]. ABL/ v3

19 ri (ii) advertising the Sale Assets (see Seventh Crosbie Affidavit at [85]); (iii) preparing information relating to the Sale Assets, including drafting the information overview, information memorandum for each region, individual property summaries for each plantation and compiling the information packs (see Seventh Crosbie Affidavit at [891-[941); (iv) setting up and managing the online data room (see Seventh Crosbie Affidavit at [921-[98]); (v) conducting site visits, including travel, accommodation and hospitality expenses (see Seventh Crosbie Affidavit at [99]); (vi) negotiating with potential purchasers as well as with the Receivers and drafting the necessary contracts; (vii) seeking Court approval for the Amended Sale Contracts and the Final Implementation Deed in these proceedings. D CONCLUSION 22 As the foregoing analysis demonstrates, the process adopted by the Liquidators has fairly allocated: specific and general costs across the Projects; and, mixed costs between (and across) the Projects and the unsecured creditors. Moreover, the summary spreadsheets and accompanying affidavit evidence have provided the WAG and WGG with a clear view as to justification for and the reasonableness of, the claims made. Dated: 9 May 2012 PAUL ANASTASS1QU ROBERT G CRAIG ARNOLD BLOCH LEIBLER ABL/

20 IN THE COURT OF APPEAL IN THE SUPREME COURT OF VICTORIA AT MELBOURNE S APCI IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) BETWEEN WILLMOTTACTIONGROUP INC and Appellant (Intervener) WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS PERSONAL CAPACITY AND IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 AND 4 AND ORS ACCORDING TO SCHEDULE I First Respondent (First Plaintiff) CERTIFICATE IDENTIFYING EXHIBIT Date of document: Filed on behalf of: Prepared by: ARNOLD BLOCH LEIBLER Lawyers and Advisers Level Collins Street MELBOURNE August 2012 the Respondents Solicitor s Code: 54 DX Melbourne Tel: Fax: Ref: (Justin Vaatstra - jvaatstra@abl.com.au ) This is the exhibit marked "JCS-2" now produced and shown to SHERIDAN at the time of swearing his affidavit on 17 August JUSTIN TAEDE VAATSThA L_ Uwd 21, 333 COMM SUSO MeP* 3000 An /Waan Legal PrdIIansr vaft to meing of the Legal Profession Act 2004 Before me: JANE CHALMERS Exhibit "JCS-2" Page 4 of the Transcript of Heating in Proceedings SCI and SCI dated 15 May 2012

21 SUPREME COURT OF VICTORIA COMMERCIAL DIVISION S CI IN THE MATTER OF AN APPLICATION WILLMOTT FORESTS LIMITED (RECIEVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (IN IT S CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENTS SCHEMES LISTED (schedule in case log))& ORS ui S CI IN THE MATTER OF AN APPLICATION WILLMOTT FORESTS LIMITED (RECIEVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGEMENT INVESTMENTS SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 & ORS JUDGE: WHERE HELD: Davies J Melbourne DATE OF HEARING: 15 May 2012 APPEARANCES MR P. ANASTASSIOU SC with MR R.G. CRAIG appeared on behalf of the Plaintiff. MR D. H. DENTON RFD SC with MR A.P. DOWNIE appeared on behalf of Willmott Action Group. LEGAL TRANSCRIPTS PTY LTD Suite 18, 600 Lonsdale Street, Melbourne - Telephone

22 MR G. BIGMORE QC with MR KENNEDY appeared on behalf of Willmott Growers Group. MR H. AUSTIN appeared on behalf of the receivers. LEGAL TRANSCRIPTS PTY LTD Suite 18, 600 Lonsdale Street, Melbourne - Telephone

23 1 assets. That would result, Your Honour, if that approach 2 were taken, in the costs of the WGG and the WAG being 3 borne proportionate to the return to the three interests 4 that had benefited from the sale, namely the secured 5 creditors, the unsecured creditors and the growers. And 6 the percentages are that 68 per cent to the unsecured 7 creditors - sorry, I ve - it s 63 per cent to the secured 8 creditors, 24.6 per cent to the unsecured creditors and per cent to the growers. 10 And what the methodology in Paragraph 4 is intended 11 to achieve is the allocation in those proportions of the 12 WAG and the WGG s costs from the gross proceeds of the 13 sale and that, of course, involves treating as a matter 14 of principle the WAG and WGG s costs as captured by the 15 salvage principle. In other words, the argument is that 16 the WGG and WAG - I m going to get sick, Your Honour, of 17 reciting those acronyms. Perhaps I should just call them 18 the intervenors. The intervenors were necessary and 19 in - and an intrinsic part of the steps that were taken 20 to realise the assets and, in our submission, can 21 therefore be properly treated. 22 In a situation where there is a mixture of 23 assets - some of the assets being assets belonging to the 24 company and other assets not being assets of the company, 25 being assets of the growers - in those circumstances the 26 liquidator submits that that is a - an equitable way of 27 treating the interests that have benefited as a result of 28 the efforts that have been undertaken and importantly of 29 course, Your Honour, that approach could only be taken 30 with the consent of the receivers because the receivers 31 under the contracts that have been entered into have.mn:cw 15/05/12 FTR:1-10A 4 DISCUSSION Willmott Forests Limited

24 IN THE COURT OF APPEAL IN THE SUPREME COURT OF VICTORIA AT MELBOURNE S APCI IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) BETWEEN WILLMOTTACTIONGROUP INC and Appellant (Intervener) WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS PERSONAL CAPACITY AND IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 AND 4 AND ORS ACCORDING TO SCHEDULE I First Respondent (First Plaintiff) CERTIFICATE IDENTIFYING EXHIBIT Date of document: Filed on behalf of: Prepared by: ARNOLD BLOCH LEIBLER Lawyers and Advisers Level Collins Street MELBOURNE August 2012 the Respondents Solicitor s Code: 54 DX Melbourne Tel: Fax: Ref: (Justin Vaatstra - jvaatstra@abl.com.au ) This is the exhibit marked "JCS-3" now produced and shown to SHERIDAN at the time of swearing his affidavit on 17 August JANE CHALMERS JUSTIN TAEDE VAATSTRA Mm Level 21,333 Collins Sb mabourne 3000 An PaUan Legal Pvalboner wift lie meaning of the Legal Profession k* 2004 Before me Exhibit "JCS-3" Letter from Lloyd & Lloyd Solici rs to Arnold Bloch Leibler dated 10 July 2012

25 LLOYD & LLOYD SOLICITORS ESTABLISHED 1927 Level 5, 131 Clarence Street Sydney NSW 2000 Australia Telephone Facsimile Our Ref: PS:NR:10500 Your Ref: Meagan Grose 10 July 2012 Arnold Bloch Leibler Lawyers Level 21/333 ColIlins Street MELBOURNE VIC 3000 Dear Partners Without Piejudice except as to Costs Our Client: Willmott Action Group Inc (WAG) Supreme Court of Victoria Proceedings SCI and SCI in relation to costs We refer to the Orders made by Justice Davies dated 23 May The Orders provide that the Liquidators pay the costs, including reserved costs, of WAG of and incidental to the proceeding on a solicitor client basis, such costs to be taxed in default of agreement. Please find attached a schedule of costs of WAG and copies of invoices outlining the individual charges. On the attachedinvoices, we have redacted the entries in the Uoyd & Lloyd invoices so as not to display those items which are either unrelated to this claim and proceedings or are being claimed separately. The Barrister fees claimed are set out separately. Items of barrister work unrelated to this claim have been crossed through. We formally advise that WAG will accept the total amount as set out in the Schedule of $903, in full and final discharge of the Liquidators liability pursuant to the costs order. Please give us your response to this offer within 7 days of this letter. Liability limited by a scheme approved under Professional Standards Legislation

26 Arnold Bloch Leibler Lawyers 2 10 July 2012 If the Liquidators do not accept this offer and WAG commences proceedings for a taxation of its costs, in the event WAG achieves a costs award in its favour near to or exceeding the amount of WAG S offer, WAG will tender this letter of offer to the Court in support of an order that the Liquidators pay WAG S costs proceedings for taxation on an indemnity basis. Yours faithfully LLOYD & LLOYD SOLICITORS PATIICK SEE psee@lloyd-lloyd.com

27 IN THE COURT OF APPEAL IN THE SUPREME COURT OF VICTORIA AT MELBOURNE S APCI IN THE MATTER OF WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) BETWEEN WILLMOTTACTIONGROUP INC and Appellant (Intervener) WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN ) IN ITS PERSONAL CAPACITY AND IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 AND IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED SCHEMES LISTED IN SCHEDULES 3 AND 4 AND ORS ACCORDING TO SCHEDULE I First Respondent (First Plaintiff) CERTIFICATE IDENTIFYING EXHIBIT Date of document: Filed on behalf of: Prepared by: ARNOLD BLOCH LEIBLER Lawyers and Advisers Level Collins Street MELBOURNE August 2012 the Respondents Solicitor s Code: 54 DX Melbourne Tel: Fax: Ref: (Justin Vaatstra - jvaatstraabi.com.au ) This is the exhibit marked "JCS-4" now produced and shown to SHERIDAN at the time of swearing his affidavit on 17 August JANE CHALMERS JUSTIN TAEOE VMTSTRA AwdW Bloch LOM Co" Sbeea Wme ZOO An Miaen Legal Pmctltlon& n ft of Ihe L.egal PIVfeS&On Act 2004 Before me Exhibit "JCS-4" Letter from Arnold Bloch Leibler to Lloyd & Lloyd Solicitors dated 12 July 2012

28 Arnold Bloch Leibler Level 21 Lawyers and Advisers 333 Collins Street Melbourne Victoria 3000 Australia 12 July 2012 By Your Ref PS:NR:10500 Our Ref MLG JCS File No Patrick See Contact Partner Meagan Grose Direct LLoyd & Lloyd Solicitors Facsimile pseelloyd-lloyd.com mgroseabi.com.au Partner Jane Sheridan Direct jsheridan@abl.com.au DX38455 Melbourne Telephone Facsimile Dear Mr See Without Prejudice save as MELBOURNE to costs SYDNEY Partneri Mark MLAbAIAC eneydlarrer In the matter of Willmott Forests Ltd (recs and managers appt d) (in liq) Supreme Court of Victoria proceeding nos SCI and SCI 2011 Leon Zuler PlahpChezlar 6861 ("Proceedings") Ross A Paterson We refer to your letter dated 10 July 2012 and the attachments to that letter, which relate to the order of the Honourable Justice Davies in the Proceedings made on 23 May 2012 ("Order"). 2 We have conducted a preliminary perusal of your letter and the attachments to it and have identified a number of serious deficiencies with your client s claim. Stephen L Sharp Kererell A Grey Kevin FFraule hocheels Dodge JamCSae Leorae S Thorrrpenn Jonesrari N Wang Paul Sollolowahi Paul Ruhenslain Peer MStedel Alec Ilog Jolvillftball lassie Cordon BenMahoney Sam Dollied Ily Tall Henry Skene Mdnsw Stearbe,g LroaMelWweathor ne5,ae Mine, John litnt iolian Carolina Gntdden 3 In your letter, you state that the Order provides that "the Liquidators pay the costs, including reserved costs, of WAG of and incidental to the proceeding on a solicitor client basis, such costs to be taxed in default of MaMew Loos agreement". Your letter misrepresents the Order. Paragraph 1 of the Gerreniav, Jere" Lolwer Order provides that Willmott Forests Ltd (res and managers apptd) (in Rich Saxon liq) ("WFL") (as opposed to the Liquidators) is to pay your client s costs of the Proceedings on a solicitor client basis. 4 On the basis of the information provided to us under cover of your letter of 10 July 2012, it is apparent that your client s claim as set out in that letter and its attachments cannot form the basis of a claim for costs within the terms of paragraph 1 of the Order for, inter alia, the reasons set out below. Sexton JonalDanCan Clint Hard" James Shrrpson Sen ior Litigation Counsel Senior Anonciaten Sue Kee Jn,iaclethend Beriarnin Mershon KneTnuVerowy Teresa Ward Jason Blanklleld Chnisllne Floor NarcyCoens Discrepancy as to amount of legal costs Sueanna Ford Kkrtorloy MaSlay Carp Segal retaaylacae 5 The total amount of costs claimed by your client is unclear. clara Vargirose 6 In your letter, you state that "WAG will accept the total amount as set out in the Schedule of $903, in full and final discharge of the Liquidators liability pursuant to the costs order." This is at odds with the total figure set out in the schedule to the letter, which is $900, AB LJ Vi Andrea lawson Jernder CoRros UzaLane Dario] Mole DOVolSPAS5V Kate Log al Elizabeth Steer Alinto Bradley SheIla CurSoroct Darien Caddihy Dal" Snyder David Robbins Kryalid Bedggsed Geoffrey Kotminoky Jeremy Lancer Consultants Allan Polo Al)

29 Patrick See Arnold Bloch Leibler LLoyd & Lloyd Solicitors Page: 2 Date: 12 July 2012 Costs prior to the commencement of the proceeding 7 Proceeding no SC, was commenced on 13 December Proceeding no SCI was commenced on 14 December Under cover of Lloyd & Lloyd invoice no 1977, your client claims for costs from November and December 2011 prior to the commencement of either of the Proceedings. Such costs are not costs of the Proceedings". 9 Your client has also claimed for services rendered by David Smith in June 2011, some six months prior to the commencement of the Proceedings. These are not costs "of the Proceedings". Costs in relation to Supreme Court of Victoria proceeding no SC, It is evident that a number of costs claimed by your client are costs that do not relate to the Proceedings, but instead relate to Supreme Court of Victoria proceeding no SCI ("Hoddinott Application"). 11 Invoice no INVAPD46 of Mr Downie, which your client claims as a cost of the Proceedings, was rendered by Mr Downie in respect of the Hoddinott Application. 12 In addition, there are a number of line items in Lloyd & Lloyd invoice no 2050 that appear to directly relate to the Hoddinott Application. For example, 02/05/2012: "P See attending to telephone attendances with JWS lawyer re future of litigation generally and costs". 13 We understand references to JWS and Johnson Winter Slattery to be to the solicitors for Messrs Sheahan and Lock, the proposed receivers under the Hoddinott Application. 14 Similarly, the invoices of Eales & Mackenzie contain items which appear to relate directly to the Hoddinott Application. For example 22/3/2012: "Attendance at Supreme Court to file Originating Process". 15 We remind you that costs in respect of the Hoddinott Application are the subject of a separate order in that proceeding dated 27 June Costs in relation to Court of Appeal proceeding nos SAPCI and SAPCI ("WAG Appeals") 16 In addition, there appear to be a number of items claimed in respect of the WAG Appeals. 17 For example, in Lloyd & Lloyd invoice 2050, a number of costs are claimed in respect of the WAG Appeals. They include: (a) 02/05/2012: "letter to ABL re WAG appeals - costs security and consent to leave - P See occupied from 8.40 am to am". ABLI

30 Patrick See Arnold Bloch Leibler LLoyd & Lloyd Solicitors Page: 3 Date: 12 July 2012 (b) 10/05/2012: "P See.. correspondence from ABL re Leave to Appeal of WAG and advising re same (30 mins)" 18 Costs incurred by your client in respect of the WAG Appeals are not costs incurred in the Proceedings and, as such, are not claimable under the Order. Other unexplained items claimed 19 There are a number of references to Mr Glen Miller QC and Mr D Eardley (including the preparation of a brief to Mr Eardley and an invoice rendered by Mr Eardley). We are unaware of any work performed by Messrs Miller or Eardley in respect of either of the Proceedings. 20 Your client claims for services rendered by Smart Strategy, in respect of website and provision services. Those invoices cannot be considered to be legal costs of the Proceedings. In addition, the majority of those invoices relate to work prior to the commencement of the Proceedings, from as early as October Your client also claims for services rendered by White Dog Marketing, in respect of compilation of lists and mail outs. Again, these are not legal costs of the Proceedings. Costs claimed on an improper basis 22 As set out above, paragraph I of the Order provides for the payment of your client s costs of the Proceedings on a solicitor client basis. 23 Solicitor client costs are all those "reasonably incurred and of reasonable amount" (r 63.03, Supreme Court (Genera! Civil Procedure) Rules 2005 (Vic)). 24 From our preliminary perusal of the costs claimed by your client, it appears that it claims its costs of the Proceedings (and of other proceedings) on an indemnity basis. Future steps 25 We request that, if your client intends to seeks its costs of the Proceeding pursuant to paragraph I of the Order, it provide WFL with proper documentation to fulfil its obligation under that Order. 26 For the avoidance of doubt, those invoices should relate to costs: (a) (b) incurred only in respect of either of the Proceedings; on a solicitor client basis (that is, "reasonably incurred and of reasonable amount"). 27 Prior to the receipt of such documentation, WFL is not able to review your client s claim, let alone accept the "offer" set out in your letter of 10 July ABLI