Attn: D Mott
Special Counsel

Level 60
Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000

Fax (02) 9269 3999

Thursday, 12 April 2001

Dear Sir,

Re: Integral Energy

I acknowledge your letter dated 12 April 2001, received by fax at 3:59 PM on 12 April 2001.

I note your client has not responded to the questions in my letter of April 2 sent to you. You acknowledged receipt of this letter by fax dated 3:56 PM on 3 April 2001. Until such time as these questions are resolved, it is impossible to jump further hoops at your clients demand. There are no more hoops other than to surrender our bodies and souls.

However, I will respond to your allegations of "unreasonableness" claimed against me and I have made a suggestion, I believe this is the seventh suggestion of it’s type, to you and your client.

Background on your clients definition of "reasonable"

I note that your first letter to me required that I remove a web site the same afternoon to which your letter was incorrectly addressed and attempted delivery. So your client has the ability to respond within short periods of time. The web site was produced and launched at 12 PM on the Tuesday and your client had you correspond and deliver by courier to me a letter demanding withdrawal and signing of an extremely unreasonable an unenforceable undertaking by 2 PM the following day. I feel the action by your client not to call me first and discuss the matter was unreasonable. The fact the letter and delivery was incorrect was also unreasonable. The fact your client wished to remove my complaint for a public forum was also unreasonable. The fact that your client demanded an undertaking was also unreasonable.

I note that on 1 February the PBX provides the following record:

01-02-2001 13:09:23 Extension #1 : dial 131081

This was the service call placed to your client requesting the Ripple Receiver be checked for fault. I note that your client was able to dispatch staff by 16:25 that same day. A period of a little over 3 hours.

On 2 February 2001, I spoke with Mr. Walker and Mr. Draper several times. At an early conversation with Mr. Walker (before Midday) he asked if he could attend the premises for an inspection. I indicated he should be on-site by 4 PM that day. He said that was unreasonable. A period of more than 4 hours was offered.

Strangely on 22 February at 11:33 AM, without any notice an Integral Technician arrived on the premises to gain access to the Meter Box. He was sent away. The request for this access was made the same day. So clearly Integral can arrange for attendance within what I term a reasonable time period. A period of, (lets assume the request was made at 8:30 AM,) around 3 hours.

What seems reasonable to your client seems to be very discretionary in their own mind. What seems unreasonable to your client is anything myself, as a victim of your clients negligence and incompetence, asks.

So I think I’ve been reasonable to not refer this matter to legal proceedings at this time or any time prior. And I think I’m being very reasonable allowing yet another well documented opportunity for a settlement. I guess fairly soon we’ll see how reasonable the courts feel I have been.

I note on 23 February I offered to settle and indemnify your client of all actions and costs for a sum of $10,000. Certainly by reading the Walsh report, it seems your client will find themselves far deeper than $10,000 once the matter is finally resolved.

You will note that I have responded to all correspondence generally within the same day. I presume your client finds this unreasonable too? I note your client has not responded to my letter via you of 2 April. I note it has taken 10 days for your client to respond to my letter of 2 April.

You claim that on a recent occasion I rejected the involvement of Emerson Claims Consultant. This is factually incorrect.

I spoke with Les Emerson when he called me on Wednesday 5 April at 11:46 AM. This was prompted by my sixth offer of settlement in a telephone conversation with Draper shortly before. I rescinded my requirement for pre-payment of my consultancy and staffing fees, which is my normal commercial practise in order to yet again offer your client a further bending of my principals and standards and let they accumulate more bad debt on my books.

Mr. Emerson suggested several people would be required to attend the premises to make the assessment. I asked for the names of the several people. He replied offering the expert services of a person, Pattison, whom we technically rejected in February as his expertise is in producing Multimedia CD’s on archaeology and not the technical assessment of a Server Farm and network resource. His background seems to be mostly related to programming in languages whilst in the UK over ten years ago, knowledge that is worthless today, thus his venture into burning CD’s.

In a letter to your client dated 5 February 2001, I offered the names of four competent people who are well respected in the Telecommunications Industry, in fact one has just recently won a matter in the Federal Court of Australia against the Australian Communications Authority. I certainly feel this person alone is more than suitable and independent.

Your client has never acknowledged nor responded to this letter. I consider this not only unreasonable but extremely arrogant and uncooperative of your client. Note that the letter was sent two days prior to my lodgement of a complaint to the Energy Ombudsman on 7 February.

I recommend if your client finds my time frames unreasonable, then your client had better reassess their meaning of reasonable and learn the meaning of negotiate. Although I feel it negotiates quiet well. Do it their way or nothing happens. Because to date, your client hasn’t even entertained any of my requests or even tried to resolve this matter, reasonably.

There is no basis of law for the making of demands that I accept the integrity of any person your client so wishes to select as an Assessor. In fact I have every right to continue to reject any Assessor they submit on the basis that the Assessor may not in fact be independent. I seriously question the independence of a loss assessor who is titled in your second paragraph as "it’s loss assessor" and as such request that your client consent to my random selection from the Yellow Pages of a Loss Assessor.

The deadline provided to Mr. Emerson was not unreasonable on consideration that he put forward the name of Pattison in that call. I explained why Pattison was rejected from my notes of February 5. Mr. Emerson said he would submit to me a list of names of others who he would be willing to work with by 5 PM Friday 6 April.

It is now Thursday 12 April and still no fax. Clearly when your client and it’s assigns fail to meet a deadline they don’t bother to attempt to establish any further negotiation. This is very unreasonable of your client.

Your fair reading of the EWON report by Dr. Walsh isn’t very fair at all. Your interpretation of a 32 page document into a small number of points lessening the factual findings surprises me. However, it’s typical in an adversarial situation to find the weaker points and focus upon them in hope that no one will notice the factual strong points. I have reviewed the report and can not find the wording of the points you raise, in particular the quoted comments. It appears everyone is working from different revisions of the documents and this was confirmed to me today by EWON.

I offer you reference in the Walsh report that I fell you neglected to review:

• Page 16, line 237 through 240 where the technician tripped the ELCB

• Page 17, line 240 through 244 and page 18 where it indicates a second trip of the ELCB and the fact that the fuses are at opposite ends.

• Page 21 details a fair significant action by the Technician

In particular I draw your attention to page 23 and I quote "How the second interruption could then occur defies logical explanation as the IE technician would by then be aware of the ELCB and the danger of using his test lamps." Further "At that point he ought to have been taking extra care not to use a circuit on the ELCB."

I further draw your attention to the conclusion Dr. Walsh draws, in lines 72 through 74 on page 5:

"I thus conclude that whilst the facts regarding causation are from an engineering view straightforward, the issues involved in determining any quantum in settlement between IE and the complainant are far from clear at this time."

This clearly and without doubt places full liability upon your client. I agree that quantum is yet to be determined, and have opened my offer yet again, for the eighth time.

I note in your letter you attempt to use contributory negligence to affect. I find this amusing in that over 15 years, I’ve never had any equipment damaged in the ordinary course of operation (or power fail.) The report does not state I failed to take proper care. It states that I am well aware of the risks and chose to take those risks. The potential of third party negligence is not something that surge protectors would protect against. Further Dr. Walsh also states that the negligence by your client would have caused damage to any equipment on the circuits. That includes UPS resources. Your client should be grateful a $20,000 UPS is not on the premises as it too would require replacement.

One normally uses a UPS to provide power beyond that of a failure, generally for a longish period of time. Again any said UPS would have had it’s input damaged by the transients caused and at this time the costs claims against your client are mostly for it’s inability to resolve the matter in a short period of time causing extensive engineering resources to be activated. The cost of replacing equipment is minimal in relation to the cost of your clients further negligence to resolve the dispute. I’d even consider voiding any claim for equipment costs in lieu of full settlement of engineering costs!

I also note that Dr. Walsh states that even though surge protectors were not deployed, they would have been of no effect in this instance. The immediate damage wasn’t caused surge, but by failure. Ongoing damage has been caused by transition and no household or small business would be protected against such transitions without going to extreme expense. One has to question why one needs to protect against someone else negligence! The fact is your client’s actions should never have happened.

It may surprise your client that power fail is in fact a benefit to operations at least once every 12 months.

It provides the opportunity for down time, equipment upgrades, memory upgrades, new hard drives to be added, new cabling to be put in place, servers to be moved to better or more permanent locations, refreshing of memory on servers and machines that never have down time under normal operation and much more. In fact during the January Storms that saw power down to most of Sydney for more than 8 hours, we completely re-cabled the entire office and server farm environment.

In fact only two machines within the server farm actually restart during a brownout. The remainder continues to operate as if there was no interruption to typical voltage. Strangely these were the two machines that suffered the least damage on 1 February.

These rare outages provide a huge benefit in that it doesn’t reduce the uptime periods in contracts with our clients. We are also known for shutting all services down right back to mains power during an outage so that should supply return, resources are brought back up and on-line one at a time. This avoids back surges from switch mode power supplies on the mains side. So as you can see, there is no contributory negligence at all. But do feel free to argue such. In a court, I’d be happy to call any and all technical and other staff who have attended the site during power outage to re-deploy resources or swap boxes.

General power fail tends not to be negligent, it tends to be unavoidable. In this instance, your client was negligent and the engineer himself contributed to the negligence after the first outage. There was no time in this instance for me or anyone else to shut services down during the repetitive incompetence of the Technician. The report may show only two, based on what the technician provided to Dr. Walsh, however people on premises were well aware of more than two transitions.

I have offered to meet with your client on the premises on more than six occasions. Your client has rejected each offer. I have offered to settle for varying amounts from $10,000 to $50,000 prior to 29 March 2001. Your client has on each of these six occasions rejected the offers.

I extended an uninhibited, open invitation for a loss Assessor to attend the site, who claimed it will take a full working day of my time and interruption to our business to assess the matter, plus his requirement of several other people. I asked for the names and backgrounds of those people. I don’t tolerate idiots or people who are clueless today as easily as I have in years past.

This is no longer funny. Nor is it amusing. Your client was informed as were it’s assigns that until it resolves the matter it will be held liable for all costs, losses and damages. I have done everything reasonable within my power and ability other than to hire a limousine and pay your client and it’s assigns to do it’s job.

I wish to put on record that prior to 1 February I had intended taking my family away for a long well deserved Easter Holiday. However under the situation that we are operating on a stand-by basis, this holiday has been cancelled and as such we hold your client responsible for taking more than 3 months to resolve what is in essence a very simple matter.

I note your last paragraph states "It appears in absence of reasonable co-operation on your part there is little Integral Energy can do to satisfy your demands."

The only problem is, your client has at not time entertained any of my demands, let alone tried to negotiate a settlement on any demand I’ve made. I have always had to submit to the demands of your client. For example, after stating I required a pre-payment on my time to spend with your clients assessor, not an unreasonable demand, I rescinded that demand in a conversation with Mr. Draper.

I certainly do not see it as unreasonable to request my time be paid for in advance, which is what I expect and do with every one of my commercial transactions. Do you feel it unreasonable to pay someone for a day of their time at YOUR request so you can assess YOUR liability? I certainly don’t. At any rate, it’s a mute point, as the requirement was rescinded and your client still failed to resolve the matter. I have since charged to your client a full days work as I allocated a day for the Assessor who didn’t turn up or make further contact. I can not continue to be put out and held on tentative impressions until your client decides it will do something.

I am at a loss as to what to do next other than to take the documents now drafted into the Supreme Court and file them.

I make this, the eighth suggestion. Perhaps you could make an agenda that you feel would be reasonable detailing dates and times and names of people required to complete this activity and submit that to me urgently. I’ll for the eighth time now, hold of from taking the matter into the Court system.

Be aware that your client will be liable for all interruptions and the cost of additional staff for any inspections to be held. This will be added to the claim and is not negotiable. I note your client has had three months to research and prepare a list of possibly mutually acceptable Assessors and technical experts and it has failed to do anything.

A reasonable period for said submission of suggested agenda would be by Close of Business 19 March 2001. I will provide a response by Midday on 20 April 2001. This is a period of 7 days from today.

Is this unreasonable?