|Hall Chadwick partner Blair Pleash|
The judge's comments came late last Friday as Pleash was being cross-examined in relation to his role as deed administrator of Joe & Joe Developments Pty Limited (Joe & Joe). The building firm has been subject to a Deed of Company Arrangement (DoCA) since March 31, 2009.
One of Joe & Joe's shareholders - the Elias Family - is suing Pleash and joint-deed administrator (DA) Richard Albarran in the NSW Supreme Court, alleging the pair have administered the company in a way prejudicial to the interests of its members and creditors.
The Elias Family accuses Pleash and Albarran of allowing law firm Etienne Lawyers to charge excessively. At time of writing Etienne's fees on the Joe & Joe matter allegedly exceeded $770,000. Albarran and Pleash, who were initially appointed voluntary administrators on February 9, 2009, insist the fees are around $509,000. Etienne Lawyers however is not a party to the proceedings and no wrongdoing is asserted against the firm.
The Hall Chadwick pair reject the Elias's allegations, arguing that disputes between the Elias Family and the company's other shareholder - the Kossaifi Family - have prevented completion of the DoCA and contributed directly to the escalating costs.
Justice Black's remarks came late in the Friday afternoon session as the Elias's barrister, Roger Marshall, prepared to question Pleash about a letter sent to the Elias Family on December 9, 2009.
Invoking Section 132 of the Evidence Act Justice Black asked Pleash to step out of the court before informing the defendants' barrister, Andrew Smith, that the questions Marshall was to ask might expose Pleash to a potential breach of Section 181 or 182 of the Corporations Law.
The letter - authored by Etienne - refers to negotiations the deed administrators were conducting to sell a unit from the Joe & Joe development to the Elias family for $211,000.
Sydney Insolvency News understands that the letter requires the Elias Family to provide a deed of release to the DAs.
Section 181 of the Corporations Law covers the responsibilities of directors and other officers of companies - including deed administrators - to deploy their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose.
Section 182 deals with the improper use of position by directors and other officers of the company in regards to gaining advantage for themselves or some other person or causing detriment to the corporation.
The judge told Smith he was entitled to object to the questioning on behalf of his client on the basis that if Pleash were to answer he would put himself at risk of self-incrimination. Pleash then returned to the witness box and was spoken to by Justice Black.
"You are being asked some questions about a letter dated 9 December 2009 sent by solicitors acting for the deed administrators, who I understand to be Mr Albarran and yourself at this time," the judge explained.
"I should indicate to you that in some circumstances you would have a right to object to answering a question on the basis that the question might incriminate you or expose you to a penalty.
"If you are concerned that your answer to a question might either indicate or tend to prove that you have committed an offence or are liable to a penalty, you should indicate your concern.
"In those circumstances the court may take further steps so that the evidence you give is not admissible in a proceeding against you to seek to establish liability for an offence or a penalty," Justice Black concluded.
The judge then offered Smith and Pleash a short adjournment to confer. As it was almost 4.00pm it was then decided to adjourn for the weekend.
Justice Black's remarks are likely to be examined closely by Hall Chadwick staffers Tim Cook and Jovandeep Singh. Neither is a defendant in the proceedings but both worked on the Joe & Joe job and both have provided affidavits for the defense. Both are also due to give evidence later this week.
Richard Albarran, who is a defendant and was the lead appointee to Joe & Joe, is not scheduled to appear.
Pleash did not return calls or respond to an email offering an opportunity to comment. The hearing resumes tomorrow at 10.00pm.
See also: Albarran and Pleash prepare to defend DoCA allegations