Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697628190221.pdf (Australia)
Trevor Burdon Monday, December 15, 2014 Kathleen Dermody Clerk of Economic Committee Senate Standing Committees on Economics PO Box 6100 Parliament House Canberra ACT 2600 +61 2 6277 3541 economics.sen@aph.gov.au Dear Committee, Re: Public Submission - Forestry Managed Investment Schemes Inquiry Please find an outline of my submission following.

Furthermore, I have unique experience as an individual, intervening party in the Liquidation of Gunns Plantations proceedings in the Supreme Court of Victoria.
I request to speak to my submission in the forthcoming hearing, Yours sincerely, Trevor Burdon MIS Grower Investor – Willmott Forests, Gunns Plantations Limited Trevor Burdon represents the thousands of growers for whom $5000 was a 20 year investment and not a daily fee.
Forestry managed investment schemesSubmission 187 Inquiry: Forestry managed investment schemes Details Respondent: Trevor Leslie BURDON, Status: Submit: Report: Public 4 September 2014 27 October 2014 Terms of Reference The structure and development of forestry managed investment schemes (MIS), including: (a) the motivation and drivers that established the framework for the schemes initially; (b) the role of governments in administering and regulating forestry MIS; (c) the current policy and regulatory framework of forestry MIS; (d) the role of some in the financial services industry in promoting and selling forestry MIS; (e) compensation arrangements for small investors in forestry MTS who have lost life savings and their homes in the face of the collapse of forestry MIS; (f) the burden on farmers and other agricultural producers who have been left with the uncertainty of timber plantations linked to forestry MIS on their land; (g) the options for reforming forestry MIS to protect investors and rural communities; and (h) any other related matters.
Forestry managed investment schemesSubmission 187 Submission Background I, TREVOR LESLIE BURDON of Project Manager, say as follows: 1.

I was a grower investor in Gunns Plantations, and either hold or once held the following beneficial interests in the following schemes (application cost): As an individual investor I own: Gunns Plantations Woodlot Project 2001 ($5,720 / 1 ha woodlot).

The Responsible Entity is now Primary Securities Ltd -1 lot of Option 1 – Eucalypt Pulpwood (+ rent & maint.)
-1 lot of Option 2 – Eucalypt Pulpwood/Veneer (+ $2,720 + rent & maint.)
As an individual investor I once owned: Wilmott Forests Project 2001 ($4,125 / 0.5 ha woodlot) -1 lot of Pinus Radiata Pulpwood/Clearwood Gunns Plantations Woodlot Project 2002 (1 ha per woodlot) -1 lot of Option 1 – Eucalypt Pulpwood ($4,435) -3 lots of Option 2 – Eucalypt Pulpwood/Veneer ($21,195) As a member of the Jujert Superannuation Fund, which once owned: Gunns Plantations Woodlot Project 2002 (1 ha per woodlot) - 2 lots of Option 2 – Eucalypt Pulpwood/Veneer ($21,500 transfer of ownership at market valuation 2011) 2.
On the 29 Jun 2011, The Federal Court approved the amendment of the Willmott Forests Constitutions to allow the procurement and sale of the forest estate.

3.

I am a committee member of the Primary Securities, Gunns 2000 and 2001 Growers Group.

4.

I filed a complaint against PPB Advisory lodged with ASIC complaint #89245571, filed 26th May 2014, in relation to poor and insufficient representation.

ASIC directed me to the Supreme Court.

5.


Representing myself and individual growers as an intervening contradictor, I have participated in the Supreme Court of Victoria, Liquidation of Gunns Plantations Proceeding S CI 2013 2095 as follows.

I.

Sale of Gunns Tasmanian Forestry Estate, Justice Judd, 16 Jul 2014 6.

I have affirmed affidavits on the 20th June 2014 (First Affidavit) and the 11th July 2014 (Second Affidavit), and 22 supporting Exhibits.
Despite significant participation over four days, the questions raised in submissions were only briefly addressed in his Honours findings.

See: S CI 2013 02095_SecondAffidavit_TBurdon_20140711_CourtCopy.pdf; TLB-00_ArgumentMap.pdf Forestry managed investment schemesSubmission 187 SCI 2013 2095_TLB_ClosingSubmission_20140722_MinorEdits.pdf; and; https://www.abl.com.au/gunns/gunns.htm II.

Costs Application, Associate Justice Derham, 26 Nov 2014 7.
I have a submission and 6 attachments handed up in the Court hearing.

The admissibility of my original affidavit was challenged by the plaintiff, and was revised to a submission.

I interjected the plaintiff’s submission but did not get to present mine.

See: S CI 2013 2095_Submission_TBurdon_20141205.pdf TLB-30_ArgumentMap.pdf; and; https://www.abl.com.au/gunns/gunns.htm III.

Allocation and Distribution Hearing, Justice Judd, 5 Dec 2014 8.

I have a submission handed up and presented.


As of 15 Dec 2014, his Honour has not released his findings and final order.

The purpose of my submission was “To ensure the Court is able to reflect upon the net performance of liquidation process from the grower’s perspective, and that the evidence to determine that is accessible on the public record.” The request was made that forestry industry experts URS not only provide proportionate valuations but absolute ones in their final distribution report.
See: S CI 2013 2095_Submission_TBurdon_20141126.pdf; and; https://www.abl.com.au/gunns/gunns.htm 9.

Despite Court assurances that I should see earlier URS valuations on the MIS freehold trees, the Liquidators, PPB Advisory and their lawyers ABL are presently withholding that information.

References 10.
References 10.

Primary Court references are cited above, all supporting evidence exhibits and attachments can be found on the public record here: https://www.abl.com.au/gunns/gunns.htm Forestry managed investment schemesSubmission 187 Submission per Terms of Reference This submission is centred on the Liquidation of Gunns Plantations in the Supreme Court of Victoria SCI 2013 2095, and draws mainly on the documents already submitted there.

The predominant point of view is that of the grower investor.
While the author is interested in all terms of reference set, cited below, time precludes a response together to address all of them (a) the motivation and drivers that established the framework for the schemes initially; 11.
As a grower investor and environmentalist, I invested to provide the forestry industry with alternative resource to heritage forest stocks in the Snowy Mountains and Tasmania, to promote local industry (especially in Tasmania), and to generate a return to support my independent retirement.

12.

The MIS scheme constitutions and managed arrangements I committed to recognised the need for independent management.

They were well structured, thorough and professionally drawn up.
Grower investors were to be protected by custodial intermediaries and non-liability clauses for RE and company failure and default.

13.

The schemes were well-intentioned, and provided a means to make long term investments attractive to retail investors, tax effectively, while promoting local industry aligned with national economic goals.

14.

Thankfully my environmental and industry goals have been largely satisfied.
The industry has substantially moved to FSC certified wood, and the current estate will provide employment and industry for generations subject to future market demand.

It is improving again now with improving terms of trade.

15.

However my investment goal remains unmet, not because of unviable product but because of highly questionable liquidation and receivership practices that will return at best a tenth of current value to me.
(b) the role of governments in administering and regulating forestry MIS; 16.

The primary role of ASIC and subsequent role of the Commercial Courts are insufficient to protect grower investors.

They fail core justice tests of providing fair and equitable outcomes.

17.

As a former grower investor in Willmott Forests 2000 I saw viable (official Poyroy report) pine wood assets disclaimed by PPB as Liquidators and sold at fire-sale for no net return to me.
The forestry experts initially used a 9% discount rate and then conservatively lifted it to 11%.

The Receivers imposed 15% reducing growers returns to zero.

18.

As a former grower investor in Gunns Plantations I saw six viable wood assets disclaimed by PPB as Liquidators and sold at fire-sale for a very poor return Forestry managed investment schemesSubmission 187 again.
Unencumbered by the Joint Sale Process conducted by the Liquidators, PPB Advisory, and the Receivers, KordaMentha, equivalent forest resource today is returning $15-$23 /Green Metric Tonne for pulpwood while the managed liquidation will return one tenth of that to growers.

Should pruned Option 2 timber ultimately prove viable, growers will have foregone $60-$90/GMT.

19.

My desktop valuations presented to the Court demonstrate that the Gunns Plantations MIS 2002 freehold estate is worth ~$40M on its own!
- the same as that achieved by the Liquidators for all years from 2002-2009 in the Joint Sale with the Receivers.

ASIC Inadequate Response 20.

The primary cause of my initial Notice of Appearance in the Court was the apparent malfeasance of the appointed Liquidators.
Despite my determined efforts to understand the Liquidator’s sale process, they repeatedly frustrated or delayed attempts to procure any information regarding the promotion of value-added Option 2 timber, and most recent sale prices achieved.

Furthermore the Liquidators have frustrated any attempt by growers to organise themselves to act in concert.

21.

On review of my complaint to them, ASIC re-directed me to the Court.

22.
22.

At the Supreme Court bar I have publicly stated that individuals cannot participate in that forum with representation unless they are exceptionally wealthy.

One day’s representation is approximately $70,000 /day (Senior Counsel $10,000, briefing solicitors $10,000, preparation $50,000 per wk/per court day).

23.

Individual growers can only participate on a very unequal footing with Senior Counsel.
I myself was challenged on evidentiary grounds and had to remind the Court that rather than prove points or propose viable alternatives, my purpose was to question the jurisprudence of the Court and its appointed officials.

24.

With ASIC as a sponsor, the 49,000 investors would’ve have been better served.

I am the only grower still in attendance in the proceedings.

Prior to that it was only myself and the Clayton Utz Partner’s Gunns Growers Group.
The Court believes that second group to be representative and have funded their contradiction.

It was not, however, because the individuals held hundreds of woodlots and no other growers were invited to join it.

The vast majority of growers held only one woodlot.

Supreme Court Inadequate Response 25.

That Receivers, by default, act to imperil assets immediately on every score conceivable is amoral.
Often without any legal determination but the threat of expensive action they standover contradicting parties with the constant refrain, repeated by the judiciary, that while growers face the risk of no return, the Court is justified in ordering the compulsory acquisition of their property and the commercially negotiated settlement proposed by the receivers.

Forestry managed investment schemesSubmission 187 26.
The growers in the vast majority do not owe the Receivers anything for if they have fallen into default they have already conceded full or partial lien over there forestry rights.

27.

As I have repeated in court every time “If I park my car in a carpark, and the carpark operator has not paid his mortgage to the bank, the bank cannot acquire my car”.
Furthermore, if due to some complicating circumstance its acquisition is necessary to facilitate the sale of that business, the full value of my car (or more for the right) would be returned to me.

28.

Yet in the MIS liquidation industry it has become the norm for the innocent investor to subsidise the RE Company’s loss and to pay for the liquidation as well.

‘Have you learned anything, Mr Burdon?’ “Yes your Honour.
If I crash my car into a banker’s I will pay the costs of damages, but if a banker crashes their car into mine, I will pay the costs of recovery and the damages.

“ (Courtroom silence) 29.

Throughout Receivers have threatened that the liabilities of Gunns will become the liability of not only Gunns Plantations but of any Responsible Entity acting for growers, thereby undermining the establishment of any alternative RE or the independent sale of the MIS estate.
In the opening proceedings the SC of Victoria emphasised the desirability of a new RE to protect grower interests, but the Receivers challenges and likely litigation costs sent the popular Macquarie bid scurrying.

The Liquidators did not assist with the development of this offer or promote the development of any other.

30.
In the Gunns Plantations liquidation the following remain incomplete:  The determination of where fault lies  The investigation of the whereabouts of the $84M of current assets showing as a loan from Gunns Plantations to Gunns in GPL’s 2011 audited accounts, which KPMG themselves suggest demands further investigation  The unexplained appearance of $88M of intercompany loans owed by Gunns Plantations in the S439A Administrators Report, which does not show in either the Gunns or Gunns Plantations audited accounts of 2011 (KPMG)  The date and definitive determination of Gunns Plantations insolvency  The culpability of Gunns and Gunns Plantations Directors for the unsecured loan of $84M from surplus grower receipts  The respect of the Constitutional and Management Agreements entered into by growers, especially with respect to liability.
31.
The Court and its approved Officers (Liquidators and Receivers) have failed to respond to the direct appeals I have mounted (see Appeal Emails):  the subsidisation of Gunns liabilities by the Gunns Plantations Joint Sale Process  actual sales achieved at much higher levels than negotiated  discrepancies in the S439A Administrators report  persistent, repeated behaviour by the Liquidators to withhold documents, especially those filed with the Court that include expert independent non Joint Forestry managed investment schemesSubmission 187 Sale Process valuations.
(I am party to the shared Confidentiality Undertaking.)

the obfuscation by the Liquidators in seeking to report valuations only on a proportionate basis and not an absolute one  (c) the current policy and regulatory framework of forestry MIS; 32.

The GPL MIS Constitutional and Management Agreements and grower safeguards cited therein appear properly drawn up and generally sufficient.

33.
33.

The failing from the growers perspective is not so much that the regulation is adequate but that it is not enforced in operational practice nor judicial practice.

34.

The regulatory controls need to be sufficient to direct behaviour, monitored frequently enough to confirm conformance, and strong enough to enforce responsible behaviours.

35.
35.

The judicial powers need to determine where fault lies, to respect the primary contracts of the thousands of individuals growers, before the contrived and querulous arguments of the bankers, and to break with poor precedent and adjudicate fairly when there is real residual value in the growers assets.

(d) the role of some in the financial services industry in promoting and selling forestry MIS; 36.
While it may only be some individuals in the financial services industry, with MIS schemes finance professionals have built out a vertically integrated industry of malpractice.

I believe this goes more to the character of individuals and corporations than any great deficiency in the adequacy of the MIS frameworks.

37.

Unfortunately, I have examples of grossly misleading and inappropriate behaviours across all contributing parties.
From the scheme developers and analysts, through scheme promoters, lenders, managers, maintenance providers and ultimately and worst of all the court-sanctioned behaviours of scheme liquidators and receivers.
(e) compensation arrangements for small investors in forestry MTS who have lost life savings and their homes in the face of the collapse of forestry MIS; (f) the burden on farmers and other agricultural producers who have been left with the uncertainty of timber plantations linked to forestry MIS on their land; (g) the options for reforming forestry MIS to protect investors and rural communities; and (h) any other related matters.
Forestry managed investment schemesSubmission 187 I make this submission of my own volition and attest to its truthfulness Trevor Burdon 15/12/14 Forestry managed investment schemesSubmission 187