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Posted by: stock_drifter Date: Sunday, January 02, 2005 9:16:12 PM

In reply to: None Post # of 220

From another board

Milverton Capital Corporation

Suite 204 3970 E. Hastings Street

Burnaby, BC

V5C 6C1

Tel: (604) 419 0430

Fax: (604) 419 0431

August 3, 2004

Dear Sir or Madam:

RE: Hamilton Plant

The Hamilton Thermo Master Plant was opened in June 1995. The Hamilton Thermo
Master Plant operated continuously, expanded and profited until new management in
September 2001 shut down operations. When the Hamilton Thermo Master Plant opened
in June 1995, Ren J. Branconnier was the president and Chief Executive Office of Thermo
Tech Technologies Inc. (Thermo Tech), the Parent Company who controlled the Hamilton
Thermo Master Plant. Mr. Branconnier, in addition to being one of the inventors of the
patented Thermophilic process used in the Thermo Master Plant, was instrumental in
assisting in the design and layout and working with the engineers to ensure the Hamilton
Thermo Master Plant was a turn key operation. Mr. Branconnier financed through equity all
four of the commercial Thermo Master Plants built by Thermo Tech Technologies Inc. Mr.
Branconniers work is a success, and the Hamilton Thermo Master Plant was at the time
and remains today a showpiece of modern recycling.

The Hamilton Thermo Master Plant has undergone expansion in plant capacity, for both
input and output. By 1998, the initial capacity had grown from 100 tons per day of raw
material received to over 600 tons a day. Mr. Branconnier was the driving force behind the
success of the Company and remained committed to the process and recycling.

In late 1997, Wayne Hansen, a chartered accountant, joined Thermo Tech Technologies
Inc. as the Chief Financial Officer and together with Mr. Branconnier sold the benefits of the
Thermo Master Plant to the world.

Mr. Branconniers goal was always to commercialize the Thermo Master Plant and patented
thermophilic process and build the worlds largest recycling facility. By 1999, both these
goals and more had been accomplished. Mr. Branconnier wanted to step away from direct
leadership of the Company to allow him to be free to investigate and research the
commercialization of other recycling technologies and other businesses. In December
1999, Mr. Branconnier resigned. However, his belief in the technology continued and he
offered his consulting services to the Company as needed.

Mr. Hansen also left Thermo Tech Technologies Inc. and moved to Europe and began
European Thermo Technologys, PLC which purchased a license for Europe to market and
sell the patented thermophilic process.

Given these significant changes, the new management team decided to follow a new
direction and focused its resources on licensing new plants, instead of financing and
building. This direction required a reorganization of Thermo Tech Technologies Inc.

Following the resignations, Mr. Branconnier with the assistance of several of the
companies major creditors including Mr. Hansen, organized a General Security Agreement
(GSA), to allow operations of the Company to continue while securing the various parties
debts. This GSA proved to be very successful as it granted creditors security and allowed
Thermo Tech to complete all required expansions to the Hamilton Thermo Master Plant.
Milverton Capital Corporation (Milverton), headed by its president Mr. Branconnier, was also
a major creditor and became the sole owner of the GSA after he allowed all other parties to
be paid first, relying on his belief in the technology and his willingness to work with the new
management on repayment.

Early in 2000, a new group of consultants, with previous experience in Thermo Tech
Technologies Inc., formed a new company, Planet Earth Recycling Inc. (Planet Earth).
Planet Earth negotiated with Thermo Tech and set-up a consulting contracts with both
Thermo Tech Technologies Inc. and European Thermo Technologys, PLC to contract-out
services. In April 2000, a Master Services Agreement was reached for the Marketing,
Construction and Operation of Thermo Master Plants. The following service agreements
were signed, ensuring Thermo Tech Technologies Inc. solid operational support:

1) Turnkey Construction Agreement;

2) Commissioning and Training Agreement;

3) Maintenance Service Agreement;

4) Technical Services Agreement;

5) Waste Supply Agreement; and

6) End Product Purchase Agreement.

This change in structure and the contracting out of essential services freed Thermo Tech
Technologies Inc. to focus on marketing and selling new licensing agreements.

By September 2000, Planet Earth was operating the Hamilton Thermo Master Plant under
contract and was directing the phase II new expansion to bring the Hamilton Thermo
Master Plant capacity to over 1,200 tons per day.

In October of 2000, Thermo Tech agreed to a new South Asian License with a company to
build over 100 new Thermo Master Plants in the region. By December 2001, this new
licensee had blossomed into a company wishing to take over Thermo Tech Technologies
Inc. and a deal was finalized in January 2001.

Unfortunately, neither the new board of Thermo Tech, the existing board of Planet Earth,
nor Ren Branconnier President of Milverton Capital Corporation were able to work together,
resulting in several issues developing. Their disputes centered on the existing operating
contracts, unpaid amounts to Milverton and a new contract signed in March 2001 and the
responsibilities of each party for all matters. This dispute could not be resolved.

By August 2001 Planet Earth was redirecting all accounting and payment issues to Thermo
Tech and walked away from operations. In September 2001, Thermo Tech canceled all
contracts with Planet Earth and shut down the operations at the Hamilton Thermo Master
Plant until a plan to move forward was formulated. Litigation began shortly thereafter and
Thermo Tech Technologies Inc. only had two options to move forward with the plant. One,
start to operate the plant again itself without the benefit of Planet Earth, the operator the
new management was relying on for all know-how and operational experience, or two,
contract with a new operator.

An additional issue was raised, and Thermo Tech began to question the continued
acceptance of the end product. The end product of the plant had always been an animal
feed additive. The process was safe and approved by Agriculture Canada and provided a
very valuable commodity for Miracle Feed of Canada, whom purchased all the end product
produced. However, global market conditions were changing and continued acceptance of
the end product was no longer assured, given the BSE issues in Europe.

Given the various issues relating to the end product, the new management decided to lease
out the Hamilton Thermo Master Plant to a new operator that would operate as a fertilizer or
soil amendment operation. This approach had always been envisioned by Mr. Branconnier,
given the abundance of municipal sludge available. They arranged a new lease and
operator in May 2002.

The Hamilton Thermo Master Plant was moth balled, although the operator has kept the
plant in minimal operational mode without processing or receiving waste for safety and
permitting reasons.

During this period new management has not operated the facility but has obtained a new
sludge permit, in the name of and owned by the Hamilton Thermo Master Plant facility.

In January 2004, the outstanding litigation between Thermo Tech, Planet Earth and
Milverton was settled and as a result, Milverton obtained control of all the assets of Thermo
Tech including the Hamilton Thermo Master Plant.

Milverton, and its President Mr. Branconnier, are ready, have begun work to re-start the
Hamilton Thermo Master Plant and have put together a team with Thermo Master Plant,
know-how, operational experience, raw waste experience and end product knowledge. We
are using our wisdom and are working with Mr. Hansen of European Thermo Technologys,
PLC to further everyones goals.

Our team has the experience and record of accomplishment in operations from 1995 to
2000 to ensure another success in both the existing Hamilton Thermo Master Plant and all
new facility using this patented thermophilic technology.

Our team is ready to move this desperately needed solution forward to help save our world,
currently drowning in waste.

Copyright © Milverton Capital Corporation, All Rights Reserved

Here is a recent court case settlement that I found.

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:
664847 B.C. Ltd. v.
TT Land Development Inc. et al

2004 BCSC 356

Date: 20040316
Docket: L033482
Registry: Vancouver

Between:

664847 B.C. Ltd.

Petitioner

And

TT Land Development Inc., Milverton Capital Corporation and

Aarzen Blowers and Compressors of Canada Inc.

Respondents

Before: The Honourable Mr. Justice Groberman

Oral Reasons for Judgment

March 16, 2004

Counsel for Applicant, Milverton Capital Corporation

Robert B. Rogers

Counsel for Respondent, Aerzen Blowers and Compressors of Canada Inc.

Paul W. Schwartz

[1] THE COURT: The respondents Milverton Capital Corporation and Aerzen Blowers and
Compressors of Canada appear on this application to determine the priorities between
them in respect of the proceeds of the sale of land at 11611 Twigg Place, Richmond, B.C.

[2] While there are a number of procedural defects affecting the application, some of which
were initially the subject of objection by Aerzen, the parties have now agreed that, the
priorities issue having been fully argued, the court ought to determine the matter on this
application. I will accordingly treat this application as if it were an application for direction
as to which of the parties holds priority over the proceeds of sale.

[3] The factual background is somewhat complex. In the final analysis, however, the issue
is whether a crystallized floating charge over the land registered in the personal property
registry but not registered against title to the land takes priority over a judgment registered
against title.

Factual Background

[4] Thermo Tech Technologies Inc. is a company engaged in the development of innovative
processes to deal with waste. The corporate structure of Thermo Tech Technologies and its
subsidiaries is complex. For the purposes of this application it is sufficient to recognize that
Richmond Bio Conversions Inc. is a subsidiary of Thermo Tech and that TT Land
Development Inc. is a subsidiary of another related subsidiary of Thermo Tech.

[5] TT Land Development held title to land at 11611 Twigg Place. It is common ground
between the parties to this application that, while not indicated on title, the land was held
by TT Land Development in trust for Thermo Tech Technologies Inc. and Richmond Bio
Conversions Inc. It is not, for the purposes of this application, necessary to determine how
the beneficial interest was split as between the parent company and the subsidiary.

[6] Milverton Capital Corporation was the major financier of Thermo Tech. In March of 2000
it entered into general security agreements with Richmond Bio Conversions Inc. and
Thermo Tech Technologies Inc. These agreements gave Milverton a floating charge over all
of the companies' assets, including real property. The general security agreements were
registered in the personal property registry on March 17th, 2000.

[7] Milverton also held additional security over the subject land. It held a mortgage on
Richmond Bio Conversions' lease on the property and also held an assignment of rents and
an option to purchase. These three charges on the land were properly registered against
title. The principal amount of the mortgage of the lease was $13,170,475.49. The expiry
date of the lease was April 2005, although it was renewable.

[8] Aerzen supplied certain equipment to the Thermo Tech facility and in November of 2000
Aerzen registered a charge in respect of the equipment against Thermo Tech and
Richmond Bio Conversions in the personal property registry.

[9] In the fall of 2001 Thermo Tech became insolvent. It was unable to meet the demands
made upon it by, among others, Milverton. It is alleged by Milverton and not disputed by
Aerzen that the floating charges held by Milverton crystallized at that time. In December of
2001 Milverton commenced an action against Thermo Tech and Richmond Bio
Conversions, seeking to recover almost $8 million owed to it.

[10] In March of 2002 Aerzen commenced action against Thermo Tech and Richmond Bio
Conversions, having not been paid for the equipment and having found that the equipment
had vanished. Aerzen included TT Land Developments Inc. as a defendant, alleging that it
held property in trust for Thermo Tech and Richmond Bio Conversions. In October 2002, in
an unopposed summary trial, Aerzen obtained judgment against the three defendants in
the amount of $240,215 plus prejudgment interest in the amount of $44,716.20. It
registered the judgment against the subject property on March 20, 2003.

[11] In December 2003, the petitioner sought to purchase the subject property and
commenced its proceeding seeking approval of the sale. In February of this year Milverton
discharged its charges against the property, purportedly without prejudice to its rights
against the proceeds of sale.

[12] The sale went ahead. No attempt was made to allocate a specific amount of the
buy-out of Richmond Bio Conversions lease as opposed to the fee-simple interest. Aerzen
was not involved in the negotiations preceding the sale and at no time did it agree that
Milverton's charges against the land would be preserved against the proceeds of sale.

[13] Aerzen subsequently removed its judgment from title on the basis that proceeds of sale
equal to the amount of its judgment would be held in trust pending determination of the
priorities. I am advised that the net proceeds of sale are, in round numbers, about
$530,000.

Analysis

[14] I am satisfied that both Milverton and Aerzen have valid claims to the proceeds. The
general securities agreements that Milverton entered into with Thermo Tech and with
Richmond Bio Conversions clearly granted it a floating charge over real property and that
charge crystallized by late 2001. For its part, Aerzen obtained a judgment against Thermo
Tech and Richmond Bio Conversions, which judgment was registered against the subject
property in March of 2003, several months before the property was sold.

i. The Lease of the Mortgage

[15] In terms of title to the real property, Milverton argues that the registration of the
mortgage over the lease gives it priority over the subsequently registered judgment of
Aerzen. I cannot accept that proposition. The lease and the fee-simple remainder are
separate interests in land and Milverton's mortgage over the lease cannot be treated as if it
were a charge on the fee-simple. Only the portion of the purchase price attributable to the
lease can be said to be secured by the mortgage.

ii. Effect of Registration in the Personal Property Registry

[16] Milverton also argues that the registrations of the floating charges in the personal
property registry should be treated as if they were registrations against the title to the land.
In this regard it relies on Section 203 of the Land Title Act, R.S.B.C. 1996, c. 250, which
provides that the personal property registry established under the Personal Property
Security Act, R.S.B.C. 1996, c. 359 is the proper office for the registration of an
uncrystallized floating charge. Section 203(10) of the Land Title Act provides that "priority
between crystallized floating charges that charge the same parcel of land must be
determined by the date of registration [in the personal property registry]."

[17] In my respectful view, these sections do not assist Milverton. We are not here
concerned with priorities between two crystallized floating charges. Rather, we are
concerned with the priority between a crystallized floating charge and a judgment
registered against real property.

[18] Section 203(6) of the Land Title Act allows for the registration of a crystallized floating
charge in the Land Title Office. That registration is provided for precisely because
registration of the uncrystallized charge in the personal property registry does not result in
that charge’s priority over subsequent charges registered in the land title office. Section
44(7) of the Personal Property Security Act and section 29(3) of the Land Title Act make it
clear that, with the exception of priorities among crystallized floating charges, registration in
the personal property registry does not assist the holder of a floating charge in terms of
priority over other charges registered in the Land Title Office.

[19] I must treat this case, therefore, as one in which Milverton's security registered against
title to the property was limited to security against the leasehold interest. Aerzen's security
was registered against the fee simple interest.

Priority of a Registered Judgment as against Unregistered Charges

[20] Notwithstanding that Milverton did not register its crystallized floating charges against
the land, it is my view that those charges take priority over Aerzen's registered judgment.

[21] Counsel for Milverton cites the case of Andrekson v. Peerless Pipe and Equipment
(1982), 139 D.L.R.(3d) 556, a case in which our Court of Appeal held that a floating charge
took priority over a registered judgment even though it was assumed that the charge did not
crystallize until after the registration of the judgment. The court held that until a judgment
creditor takes steps to execute against land, its charge does not take priority over a
subsequently crystallized floating charge, even where the floating charge has not been
registered against the land.

[22] The case at bar is a stronger one than Andrekson in that the floating charge in this
case crystallized prior to the registration of the judgment. It would seem, therefore, that
Andrekson would be controlling.

[23] It must be recognized, however, that Andrekson concerned a judgment registered

under a system in place before the changes that occurred on October 31st, 1979. Under
the old system, judgments were registered in an alphabetical list in the Land Title Office
rather than against individual properties. Andrekson also predates, of course, the Personal
Property Security Act.

[24] In examining other cases, I am satisfied that an unregistered floating charge takes
priority over a registered judgment, at least where the floating charge has crystallized prior
to the registration of the judgment. In Yeulet v. Matthews (1982), 133 D.L.R. (3d) 399, Low
L.J.S.C. (as he then was) reviewed the issue of the priority of registered judgments over
chronologically prior unregistered charges. He undertook an extensive examination of the
jurisprudence on the matter in British Columbia. Citing Jellett v. Wilkie (1896), 26 SCR 282,
he noted that, despite the existence of a Torrens system, a judgment creditor can only sell
the land of a judgment debtor subject to all charges, liens and equities that the land is
subject to in the hands of the judgment debtor. The judgment creditor can take no greater
interest in the land than the judgment debtor holds. Low L.J.S.C. noted that section 20 of
the Land Title Act provides that an unregistered instrument is ineffective "except as against
the person making it."

[25] Section 20 of the Land Title Act preserves the effect of an unregistered instrument as
against the property owner. The judgment creditor, therefore, who can attach only the
interests of the judgment debtor, cannot take priority over an existing charge on the property
even if that charge is unregistered.

[26] Like the slightly later Andrekson case, Yeulet was concerned with a judgment
registered under the old system rather than a judgment registered as a charge against a
specific parcel of land.

[27] Shortly after Yeulet, however, in Woollends v. Woollends (1982), 41 BCLR 357,
Cowan, L.J.S.C. (as he then was) affirmed that a judgment registered against specific land
of a judgment debtor pursuant to the Court Order Enforcement Act attaches the interest of
the judgment debtor subject to all charges, liens and equities to which the land is Subject
in the hands of the judgment debtor. This will be so even if those charges, liens and
equities are unregistered.

[28] Woollends concerned a judgment registered against a specific parcel under what is
now Section 86 of the Court Order Enforcement Act, R.S.B.C. 1996, c. 78. Noting the
wording of what is now Section 86(3)(a) of the Act, which provides that judgment forms a
lien and charge on the land "to the extent of the judgment debtor's beneficial interest in the
land," Cowan L.J.S.C. held that the decision in Yeulet v. Matthews remained applicable to
judgments registered after October 30th, 1979.

[29] More recently the Court of Appeal reached a similar conclusion on somewhat different
facts in Martin Commercial Fueling Inc. v. Virtanen (1997), 144 D.L.R. (4th) 290.

[30] In the case at bar, Milverton's floating charges had crystallized prior to the registration
of Aerzen's judgment against the land. While the crystallized charges were not registered in
the Land Title Office, they were valid charges against the judgment debtor's interest in the
property and the registration of the judgment did not serve to give Aerzen any greater
interest in the land than the judgment debtor had. Accordingly, Milverton's security ranks
ahead of Aerzen's in attaching the proceeds of sale.

[31] It appears to be common ground that Milverton's crystallized floating charges secure
several million dollars worth of debt. In the circumstances it would appear that all the net
proceeds of sale will go to Milverton.

[32] Milverton will have the costs of this application on Scale 3.

“H.M. Groberman, J.”

The Honourable Mr. Justice H.M. Groberman

These Oral Reasons for Judgment were released on March 16, 2004 from the Vancouver
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