Tuesday, 19 August 2014

Pleash invokes privilege against self-incrimination

Blair Pleash
Photo: Hall Chadwick
IN the NSW Supreme Court last week Blair Pleash replied "I don't recall" when asked a question that moments earlier he had objected to on the basis that answering it could incriminate him.

The Hall Chadwick partner was being questioned about his role as a deed administrator of building firm Joe & Joe Developments

In late 2008 the company - which is owned by the Elias and Kossaifi families - was nearing completion of a multi-unit commercial and residential development at North Narrabeen on Sydney's northern beaches. 

The families however fell out over how to split the profits. In 2009 they executed a Deed of Company Arrangement (DoCA) supposedly to resolve the impasse. Pleash and colleague Richard Albarran were appointed joint deed administrators on March 31, 2009.

Unfortunately for the Hall Chadwick duo, the DoCA has not run smoothly. In 2012 one of the families commenced action against them. The Elias Family alleges Pleash and Albarran have managed the company in a manner prejudicial to the interests of its members.

Among the allegations are that the pair turned a blind eye to overcharging by law firm Etienne Lawyers, which has earned as much as $778,000 in fees and disbursements acting for the deed administrators. 

The plaintiffs also argue that there was never a need for a DoCA; that the deed administrators delayed settlement of the sale of a unit in the development in a bid to extract a deed of release; and that a share-buyback incorporated into the DoCA made the deed more complex and harder to effectuate. 

It should be noted that Etienne Lawyers is not a party to the proceedings and no wrongdoing is asserted against that firm. 

For their part, Pleash and Albarran reject the allegations. They argue that Etienne's legal fees are consistent with a job of such complexity, duration and disputation; that animosity between the shareholders has fatally delayed the DoCA's effectuation; that contrary to the claims of the plaintiff debts Joe & Joe owed to the tax office warranted their appointment as voluntary administrators; and that the much-criticized share-buyback mechanism included in the DoCA was first proposed by Joe & Joe's external accountant.

It was the deed of release however that caused Pleash difficulty in the witness box. There is no provision for a release in the DoCA, although the families ultimately agreed to it. The questions about it initially arose during the first week of the hearing (See: Judge says question could "incriminate" Pleash) and they relate to an email sent by Etienne chairman Steven Brown to Farshad Amirbeaggi and Grant Butterfield - former and current representatives of the Kossaifi and Elias Families respectively. Dated August 7, 2009, the email was also copied to Pleash. The email mentions a proposed general deed of release requiring the two shareholders of Joe & Joe to relinquish any and all causes of action. 

At the time, money for the DoCA's deed fund was being sourced through the sale of one of the units from the development and from cash paid in two tranches from both families. Both families bid to buy the unit. The Elias Family's offer of $211,000 was the highest but negotiations stalled. Barrister Roger Marshall for the plaintiffs asked Pleash if Brown was acting on instructions from the deed administrators when he sent the email containing the reference to a general release. Pleash said he objected to the question. Justice Ashley Black, who presided during the six day hearing, intervened.

"Mr Pleash, you have objected to answering a question and I understand you to be doing so on the basis of the privilege against self-incrimination to an offence or a penalty?

Pleash: "Yes.

Justice Black: "You have indicated that you have done so on the basis of the privilege against self-incrimination to an offence or a penalty. I am satisfied that there are reasonable grounds for your objection," the judge continued.

"You need not give evidence in answer to that question unless the Court requires you to do so. However, if you are prepared to give that evidence willingly, I am able to provide you with a certificate which has the consequence that the evidence which you give that any document or thing obtained as a direct or indirect consequence of your giving that evidence cannot be used against you in a proceeding in an Australian Court other than in a criminal proceeding if you were to give false evidence.

"Do you wish to answer the question you have been asked willingly on the basis that I would first provide you with a certificate which would afford you such protection in respect of that answer?

Pleash: "No".

After considerable discussion between Marshall, the judge and defense barrister Andrew Smith, Justice Black ordered that the Certificate be issued and directed Pleash to answer. 

When Marshall again asked Pleash if he knew whether Brown was acting on instructions from either of the deed administrators when he sent the August 7, 2009 email Pleash replied: "I don't recall".

The judge told the court that in the absence of any other evidence he would likely make an inference that Brown has been acting on instructions from Pleash and Albarran or that at the least, the deed administrators had provided no evidence to suggest Brown wasn't acting as their agent. Then Marshall suggested another possibility. 

He told the judge it was possible that by copying multiple addressees into the email, Brown had been "trailblazing".

Barrister for the defense Andrew Smith then raised an objection to Marshall's questioning on the grounds of relevance.

"As I understood what fell from my friend, he used the phrase 'trail blazing' on the part of the solicitor which implicit in that is directed at his solicitor acting outside the scope of his retainer and outside the instructions such that one would struggle, I would submit, to come inside the terms ..... where the allegations are one of commission not of omission from what I read."

Marshall then referred Pleash to a letter dated December 9, 2009 written by Brown of Etienne Lawyers and sent to the Elias Family.

Marshall: "Now we have a letter from Etienne Lawyers of 9 December 2009. Can you just read paragraphs 3 and 4 to yourself and let me know when you have finished?
Pleash: "Yes, I have read that.

Marshall: "Now did you give Mr Brown the instructions to write those paragraphs?

Pleash: "I can't recall.

Marshall: "Do you know if anybody else gave Mr Brown instructions to write those paragraphs?

Pleash: "I don't know.

Marshall: "Was your position that you would not allow the settlement or completion of the sale of the unit for $211,000 to the Elias' until a deed of release was given in full terms?

Pleash: "I can't recall."

Marshall asked Pleash if he was aware in 2009 that the DoCA did not provide for either himself or Albarran to be provided with releases. When Pleash said he couldn't recall, Marshall asked: "Sir, you read the Deed of Company Arrangement, didn't you"?

Pleash: "Some months prior".

And so it continued until Smith had the opportunity to cross-examine his client and the court heard defense evidence about why the Joe & Joe administration has been so costly.

Smith: "I understood from your evidence of Friday last week that you recalled the first invoice by Etienne Lawyers in respect of the administration of Joe and Joe Developments, is that correct?

Pleash: "That was my evidence, yes.

Smith: "When you saw the amount in the bill did that cause you to inquire about the reasonableness of the fees?

Pleash: "Not necessarily.

Smith: "Why not?

Pleash: "Because, well, I guess it covers a period of three months or thereabouts and you probably on an average you are looking $15,000 per month. There was a fair degree of controversy and to-ing and fro-ing.

"This was not simple, it included a deed of company arrangement and it included a degree of disputation with respect to the terms of the deed and the share buy-back, the mechanism of it and the provisions and there was a significant amount of correspondence which was generated by the legal advisers for both shareholders and in particular, I guess, the plaintiff," Pleash said.

Last Wednesday the six day public hearing wrapped up with oral submissions. While Justice Black has flagged that his judgement may take longer than he'd like, that's not the only decision Pleash and Albarran must await.

The Kossaifi Family recently indicated through their lawyer David Sweeney that it is also contemplating commencing litigation against Pleash and Albarran. (See: Setback for Albarran and Pleash on eve of hearing )

Among the declarations sought by the Elias Family is that Pleash and Albarran be replaced or that the DoCA be terminated and the company wound up. Murray Godfrey and David Ianuzzi of Veritas Advisory have provided consents to act as either deed administrators, official or provisional liquidators. Michael Jones and Bruce Gleeson of Jones Partners have also provided consents.

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