My initial response was to sue for defamation of character, but then I realized that I had no character.

- Charles Barkley
 

No reply was ever received to this letter.  Indeed, no further response has been received from the Manager's legal counsel to date about any matter.

240 BROADWAY AVENUE PO BOX 1945

DX PP80001 PALMERSTON NORTH NZ

PHONE 06 – 358 6123  FAX 06 – 356 4345

Lawyers OFFICES AT Palmerston North & Feilding

12 June 2000

Gilbert Swan

Solicitors

DX SP20504

WELLINGTON

Attention: Susan Peacock

FLAT ROCK FORESTS TRUST

YOUR REF: SIM027/1

You letter dated 31 May 2000 is acknowledged.  We understand you act for one client however your letter refers to more than one.  Please explain.  The first comment that we would make is that it is not possible for you to define the scope of the investigation.  The scope of the investigation will be determined by the Court, if and when any question arises as to scope.  Second, your statement in paragraph 24 is wrong.  What we said was that if there was any concern on the part of the manager or its directors about the costs associated with compliance with the investigation, then an application can always be made for further directions.  Our clients and my junior colleague confirm that that is what was said.  Third, you make comments in relation to the causes of the demise of FRFT that are questions now peculiarly within the province of the inspector to determine.

One of the issues that you have raised concerns the entitlement of the manager, its directors and officers, to receive profits arising from transactions with the Trust.  Your legal arguments are interesting.  At this stage we do not wish to comment on them other than to say that they appear to be a surprising statement of the law.  Nevertheless, you acknowledge that officers and directors of the manager have obtained personal benefits from transactions with the trust.  It is plain from your letter dated 31 May 2000 that your client is willing to make disclosure in response to questions asked by the unitholders.  Accordingly, we require you to disclose all transactions with FRFT in which officers or directors of NZTIL received a direct or indirect pecuniary benefit other than remuneration in their capacity as director or offices of the manager.  We request that information within fourteen days.  If you require access to any additional documentation, then this letter records our consent for you to have access to the files held by the Serious Fraud Office.  In the event that you do not comply with this request, then our clients may give us instructions to make a further application to the Court requiring disclosure of this information.  Also, would you please remind your client that accuracy in all respects is required.

Yours faithfully

COOPER RAPLEY

JW Maassen

Partner

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