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1. Mr Horne was asked to confirm that that, where it is proven that the directors of the RE have acted illegally and negligently, they will not be entitled to be indemnified from the assets of the RE

2. Mr Horne was asked what interviews he had conducted with the management of the RE and what conclusions had he drawn as to management’s competency (or incompetency) and experience (or inexperience) in managing the Trust.

3. Mr Horne was asked whether he was aware that unitholders have been filing complaints against the RE for the last three years and that the RE has consistently failed to respond to, or even acknowledge, such complaints.

Response by Mr Horne to Issues Raised by Prime Trust Action Group

In response to the listing fee issue, Mr Horne advised that the RE received legal advice from Madgwicks and took action based on that advice. Mr Horne further advised that his lawyers, Cornwall Stodart, are examining the listing fee issue and he will provide a written response by the end of January 2011.

In response to all of the other issues raised by the Prime Trust Action Group, Mr Horne noted the issues and stated that he would investigate each matter. Mr Horne noted that some of the issues raised by the Action Group are potentially very serious matters. Furthermore, in relation to issues already conveyed to the administrator in writing by Clarendons Lawyers, representing the Prime Trust Action Group, Mr Horne said that he expected to be able to provide a written response by the end of January 2011.

Matters Raised by Other Unitholders

Apart from the issues raised by the Action Group, many unitholders also raised questions, including the following:

1. In response to a query as to whether any of the entities involved in the Trust had been trading whilst insolvent, Mr Horne said that he would examine this matter, and would pay particular attention to the RE and Brentwood Village.

2. In response to a query as to the indicative returns to unitholders, Mr Horne said that, although unitholders may be considered as creditors, it was unlikely for unitholders to be able to expect a substantial return. Mr Horne asked for unitholders to be patient whilst he completes his investigations over the next two to three months.

3. Mr Horne was asked why so many receivers had been appointed, rather than a single entity. Mr Horne responded that the appointment of receivers was under the control of the banks, as secured creditors, and that the banks were therefore free to make their own appointments in their own best interests.

4. Several unitholders requested to be considered as creditors of the Trust. Mr Horne stated that he would accept all such unitholders as contingent creditors once they had demonstrated their basis of claim, and noted that unitholders would simply need to submit evidence along the lines of that already submitted by unitholders such as Steve O’Reilly and Don Steel, both of whom have already been classed as contingent creditors.

5. Several unitholders urged the administrator to persuade the receivers not to sell the retirement villages, given that fair value was unlikely to be achieved at present and given the ongoing significant and unresolved issues in relation to the management rights.

6. Mr Horne was asked about his contact with the receivers. He responded along the lines that he is liaising with the receivers, has asked for regular updates and that the receivers are contributing to the costs of maintaining the RE’s office.

7. In response to a query about the Second Creditors Meeting in May 2011, Mr Horne indicated that the meeting would be held in Melbourne and also expected to be simultaneously broadcast to several other venues such as Brisbane, Sydney, Adelaide and Perth.

8. Unitholders queried the profitability of the retirement villages and Mr Horne responded that the Trust was presently unable to meet the interest bill of around $22 million per annum on its bank debt.

9. Several unitholders queried the position of Lend Lease Primelife and Mr Horne undertook to investigate further.

10. Several unitholders queried the performance of the Trust. Mr Horne responded that it was not possible to sue for bad management but noted that the performance of the Trust had been inferior to other property trusts.

11. A number of unitholders asked what investigations ASIC was undertaking in relation to the Trust and the Trust’s management. Mr Horne advised that ASIC is heavily involved in the matter and is also closely monitoring the actions of the administrator. Mr Horne also advised that ASIC staff were in attendance at some of the briefings.

12. One unitholder asked whether the directors of the RE had sold their units prior to the Trust entering administration. Mr Horne believed that there had been no such cases.

13. Some unitholders suggested that action should be taken to freeze the assets of certain parties. Mr Horne responded that no such action had been taken at present, that he would undertake his duties “without fear or favour” and that, if it became necessary to take legal action against directors, then he would do so.

14. One unitholder suggested that the Prime Trust Action Group make contact with Mr Graham Macaulay, the convenor of the Westpoint Action Group.

15. One unitholder queried whether the books of the Trust and the RE had been properly documented. Mr Horne advised that he believed the actions of the RE had been documented, but was uncertain whether sufficient documentation has been maintained.

16. One unitholder sought clarification as to Mr Horne’s appointment and suggested that the Court which validated Mr Horne’s appointment may have come to a different conclusion had it known about the serious issues of concern to unitholders. Mr Horne responded that, although he had been appointed by Daytree as a creditor of the Trust, he was accountable to all stakeholders, including unitholders.

17. Several unitholders queried the situation whereby Mr Lewski, whose role in the collapse of the Trust is to be investigated, also claims to be a substantial creditor of the Trust. Mr Horne indicated that, of the creditors claims on the Trust of $49 million, $11 million has been claimed by the RE, and of the creditor claims on the RE of $29 million, $28 million has been claimed by interests associated with Mr Lewski.

18. One unitholder asked what action had been taken by the RE’s Compliance Committee to prevent the various goings-on at the Trust, and asked what breaches had been reported by the Committee. Mr Horne commented that he was unaware of the role that the Compliance Committee had played (although the Action Group commented that Mr Lewski was a member of the Compliance Committee at the time that a number of the contentious transactions took place).

19. Clarendons Lawyers raised the issue as to whether the Compliance Plan Auditor had reported any matters to ASIC. Mr Horne stated that he was unaware of this issue and would make further enquiries.

20. Several unitholders commented that, in their opinion, there were a number of matters in relation to the Trust and the directors of the RE that should be handed over to the appropriate law enforcement authorities.

21. Some unitholders asked whether a Deed of Company Arrangement was likely to be proposed. Mr Horne stated that he considered it likely that such a Deed would be proposed but underlined that it would need to be satisfactory to all stakeholders.

At the conclusion of the briefings, Mr Horne provided the opportunity for the Action Group to make some final remarks, which are summarised below.

Closing Remarks by Prime Trust Action Group

• There are numerous examples where the Action Group believes the RE acted illegally.
• There are numerous examples where the Action Group believes the RE acted in its own interests to the very great detriment of unitholders.
• There are numerous examples where the Action Group believes the RE acted in a way designed to mislead and deceive investors and potential investors.
• Putting together all these cases of misconduct paints a picture whereby the Action Group believes, over a period of time, the RE deliberately, systematically and ruthlessly transferred unitholder wealth into the pockets of the RE and certain directors of the RE.
• The Action Group also believes that this process was aided and abetted by several parties, including the Trust’s auditors, legal advisers, corporate advisers and Compliance Committee.
• The Action Group has completed detailed investigations into many of the allegations against the RE.
• The Action Group stands ready to assist the administrator in their own investigations as required and is prepared to travel to Melbourne to work through the issues with the administrator, item by item, line by line if necessary, as well as provide supporting documentation for each and every claim that has been made.
• Looking at just some of the issues, the Action Group believes that it may be possible to put together a unitholder claim of several hundred million dollars, including the Listing Fee ($33m); Management Rights Sale ($60m), Reduction in Portfolio Value by Externalising Management Rights ($150m); 2nd Mortgage Development Loans ($50m), Reducing the Trust’s Share of Deferred Management Fees ($57m), plus interest on each item. The Action Group notes that, in addition to the above issues, it believes that it has identified several other cases of misconduct, the details of which have not been released as yet.
• To add insult to injury, the RE and parties associated with the RE have now submitted a creditors claim which, if accepted, would reduce the amount available for unitholders by a further $40 million.
• The Action Group believes that enough is enough, it is time for urgent action to be taken in order to make the RE and the directors of the RE accountable for their actions.
• It is time for the administrator to complete their investigations into the Trust as soon as possible and recover all funds and assets of the Trust which are found to have been misappropriated.
• It is time for ASIC to launch a formal investigation into the affairs of the Trust and prosecute, to the full extent of the law, all parties who are found to have acted illegally.
• It is time for legal action to be taken against all parties that are found to have contributed to the massive losses being faced by unitholders.

In closing, the Prime Trust Action Group recorded its appreciation to Mr Horne for allowing it to address each of the briefings, for allowing the Action Group to distribute information at the briefings and for providing ample time for issues of concern to be raised by unitholders.

Prime Trust Action Group
19 January 2011

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