ERON MORTGAGE INFORMATION WEBSITE
THE ERON LENDER COMMITTEE

MINUTES OF MEETING - January 5, 1999

Joint ELC Project Leaders Meeting
Royal Canadian Canadian Legion #148, Burnaby


1. Tindle opened the meeting at 7:05pm, welcoming the unusually large crowd of attendees, and introduced Sasha Angus, the Chief Litigation Officer of the British Columbia Securities Commission. Mr. Angus spoke and answered questions for about 50 minutes. Among the salient points he made are the following. On April 12, 1999, the B.C.S.C. will begin an Administrative Hearing into the conduct of Slobogian and Biller. Were the Commissioners who hear the testimonies to find sufficient evidence of improprieties, then they can administer sanctions and fines pursuant to the B.C. Securities Act. If fines were ordered, and were they collectable, none of the funds would go to Eron lenders; instead, they would go to other B.C. Government uses. Maximal sanctions, were they ordered, could include a lifetime ban preventing the individuals from acting as Officers or Directors of publicly traded companies listed on the VSE.


2. Craig Bushell spoke at length about discretionary administrative allowances that Revenue Canada has agreed to for Eron lenders under the Fair Treatment provisions of the Canadian Income Tax Act. These include a waiving of the statute of limitations re. refiling dates, and matters pertaining to lenders' holdings in RRIF, RRSP, and cash accounts. PWC will be developing the details of this complex set of solutions with Revenue Canada, and will ask David Craig, C.A., and ex oficio member of the ELC; to assist the ELC in preparation of the communications of certain technical aspects of the election options that will be presented to all Eron lenders in the coming months.

- Bushell estimates the total savings to Eron lenders may amount to about $40M, which includes interest paid to lenders on the amount of their income tax payments made in previous years.

- Bushell noted that for the years 1993 and 1994 Eron Mortgage Corporation issued no T5's to lenders receiving interest income. Had a lender forgotten to record that income on their income tax returns for those years, then [understandably!] no refunds could be claimed on a refiling.

- The implications of all these tax matters discussed, Bushell noted, are subject, furthermore, to the Court's eventual rulings on distribution questions, to be heard Feb.4-5. Justice Tysoe will be notified prior the hearing about the developing arrangements with Revenue Canada.

- Bushell emphasized that for now lenders are not to contact Revenue Canada, or PWC, or the ELC. Once Revenue Canada and PWC have settled the procedures required for this massive re-valuation process, then all lenders will be notified. Amongst other details, each lender must be sure that PWC has on file that person's Social Insurance Number.

- Lenders are expected to file their 1998 Income Tax returns as they normally would. No T5s' will be issued by PWC for 1998.

- Bushell briefly mentioned that PWC's litigation research continues, and more writs may be issued before long.


3. Dave Church of Camp Church & Associates discussed at length new developments in the class action lawsuit, and answered numerous questions. Amongst the salient points he. made are the following. Beginning March 29, and for the following 3-5 days the B. C. Supreme Court will hear the certification application. The judge hearing the application may be Justice Tysoe, who has also acted as the Case Manager. There is a possibility Justice Tysoe may also be designated the Trial Judge, were certification granted. The B.C. Government has issued a 3rd Party Notice, re-directing the liability for the Eron disaster onto the named parties. Camp Church has asked for certain documents that the B.C. Government's lawyers claim is "privileged", and therefore is deemed by them as unavailable to Camp Church. This and a host of other legal technical exchanges will continue through the next 3 months in preparation for the certification hearing. If and when certification is granted, a trial date thereafter might be obtained within 2 years. During the course of preparation for such a trial there might be reasons why either or both parties might conclude a negotiated settlement would be the reasonable manner in which to end the matter. A change in the political party governing B.C. would not alter the litigation process. In the event of certification, and thereafter some sort of favorable outcome, Church's fees would be ultimately determined by the Court. . Meanwhile, Church has become "another Eron investor, awaiting developments and accumulating bills".


4. Tindle announced that, henceforth, the monthly meeting at the Legion Hall would be open to all lenders, not just Project leaders and Project committee members. He encouraged lenders to come to the meetings to keep informed, and to rekindle their spirits for the battles ahead.


5. Tindle announced that Don Smith had resigned from the ELC, and the ELC now is inviting lenders to consider applying for the open position on the committee.


6. Tindle announced the date of February 4-5 for the Court's hearing of the Distribution Issues (pooling vs. non-pooling of assets). Tindle stressed the importance of lenders coming to the Court to show their continuing concern with the matters before Justice Tysoe. [Note: Lenders will not be allowed to speak extemporaneously at the Hearing, but may submit properly drawn affidavits for submission to the Court before the Hearing.]


7. Tindle announced the date of the Class Action Certification Hearing, March 29, 1999, and again stressed the importance of a good turn out of lenders to the courtroom at 800 Smithe Street.


8. Ripley referred to the newsletter and mentioned several clarifications. He noted that the Project leaders and their committees might be required to extensively help in the communications effort dealing with tax matters. More information on this will be provided in the coming month.

Ian Wragge asked if an accounting had ever been given to Ripley about the cost of Eron lenders using the PWC website. Ripley replied that he has not received such an accounting, but he had asked C. Palmer at PWC on several occasions about the matter. Her replies had been that the costs are negligible given the relatively small amount of material that goes on the website for Eron compared to all the other work that the PWC webmaster does for the PWC generally, and given the fact that PWC had decided - with the Court's concurrence- that it would maintain an Eron website in any case. Palmer noted, therefore, it probably wasn't worth the cost required to obtain a detailed statement. For the present, Ripley said, he had left the matter as described, without insisting on such an accounting.


9. Tindle discussed the possibility that individual lenders may wish to initiate their own criminal lawsuits against Eron principals and related parties. He strongly advised against it at this time, pointing out that one of the results of such an action would be to place certain constraints and distractions on the RCMP's timing and maneuvering in its own litigation planning.


10. Tindle announced the ELC has decided to terminate its engagement of Ladner Downs as its legal counsel.


11. At the close of the meeting, lender T. McGuinness offered thanks to the new ELC for its energy and directions, which evoked applause from the audience.


At 9:30pm the meeting was adjourned by Tindle. The Minutes were recorded and written by S. Ripley (222-1646).




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