Thursday, 2 July 2015

Joe & Joe solicitor sued for $2.9 million

Solicitor Farshad Amirbeaggi (L)
Image courtesy: gcvip.com.au
ONE of the shareholders in beleaguered builder Joe & Joe Developments is suing solicitor Farshad Amirbeaggi for alleged professional negligence, six years after the company was placed into voluntary administration in a bid to resolve a rancorous dispute between its members.

When contacted, Amirbeaggi rejected the basis of the $2.9 million complaint and told SiN his lawyers believe the claim, which was filed in the NSW Supreme Court on February 6, 2015, is statute-barred given the time elapsed. 


If the Court disagrees and allows the matter to proceed, his professional indemnity insurer may in turn launch action against Hall Chadwick partners Blair Pleash and Richard Albarran and possibly their law firm, Etienne Lawyers.

The plaintiffs are Joseph and Dolly Kossaifi, co-owners of Joe & Joe Developments, which has been subject to a deed of company arrangement (DoCA) since March 31, 2009.

In a decision handed down last year by Justice Ashley Black Joe & Joe Developments (Subject to a Deed of Company Arrangement) Pleash and Albarran were found to have acted in a manner prejudicial to Joe & Joe's creditors by failing to adequately monitor the invoicing of Etienne, which had acted for the pair in their capacity as Joe & Joe's deed administrators.

"I am satisfied, for the purposes of s 447E of the Corporations Act, that Messrs Albarran and Pleash have managed the Company's business in a way that is prejudicial to the interests of its creditors or members, or have made an omission that is prejudicial, by reason of their failure to undertake appropriate review of the invoices which they had received from their former solicitors, and thereby to supervise the work undertaken by those former solicitors," Justice Black said at paragraph 184 of his 111 page judgement. 


Black qualified his finding by describing Pleash and Albarran's failure as "significant" but "unintentional". He also made multiple references to the difficulties the deed administrators had had in their dealings with the company's shareholders. The action before Black was initiated in October, 2012 by Joe & Joe's other shareholder, the Elias family.

As part of his judgement Black ordered that Pleash and Albarran produce a Scotts Schedule of the work undertaken by Etienne. Once concluded, their reviewed estimates then have to be admitted, reduced or denied by the Elias and Kossaifi families and their advisors.

The Scott's Schedule is yet to be completed. It will ultimately guide the court on ruling how much relief Joe & Joe's shareholders will be entitled to from as much as $770,000 paid to Etienne. In the meantime, the Kossaifis appear to have decided that Amirbeaggi bears some responsibility for their predicament.


It was back in July 2008 that the Kossaifis applied to have Joe & Joe Developments wound up and a liquidator appointed after failing to resolve a long running dispute with the Elias family.

Essentially the company's directors - Joseph Kossaifi and Tony Elias - had been unable to agree on how to distribute the proceeds of a residential and commercial development completed on Sydney's Northern beaches in 2007. The Kossaifis wanted a provisional liquidator appointed to pay creditors and return surplus funds to Joe & Joe's shareholders so they could go their separate ways.

On July 7, 2008, John Vouris and Brad Tonks of Lawler Partners signed consents to act as joint liquidators of Joe & Joe Developments. That's as far as they went. Many months passed.

According to the Affidavit of George Elias - filed in support of the Elias family's claim against the deed administrators - on January 30, 2009 Amirbeaggi emailed the Elias's solicitors, Marsdens, proposing that Nick Crouch be appointed liquidator of Joe & Joe. Documents supporting the affidavit show that Nick Crouch estimated costs of the liquidation at anywhere between $15,000 and $50,000.

Crouch is co-principal with Shabnam Amirbeaggi in the firm Crouch Amirbeaggi. Shabnam is Farshad's sister. According to George Elias, the Elias Family was wary of the firm given it was co-owned by the sister of the lawyer representing the Kossaifis. 


On February 5, 2009 Mark Marlow, on behalf of Jones Partners co-principal Bruce Gleeson, was quoting between $25,000 and $40,000 to wind up Joe & Joe, depending on the complexities that might attach to selling the remaining Narrabeen properties.

Then, at 1:56pm on February 6, Amirbeaggi advised Marsdens' Grant Butterfield by email that "We will have our side execute this afternoon and deliver to Blair and if you could do likewise, he may then convene the meeting for Monday at 9.00am."

Amirbeaggi had minutes earlier emailed Hall Chadwick manager Jovan Singh, advising that the appointment documents in relation to Joe & Joe Developments were attached. At this stage, George Elias claims, the proposal was for a creditors voluntary liquidation. And Hall Chadwick was suddenly frontrunner.

According to his affidavit George Elias attended the meeting on Monday, February 9, 2009 at Hall Chadwick's offices alone. After being met by manager Tim Cook, who has since defected to Mackay Goodwin, he was ushered into a room. Joseph Kossaifi was already there.

George Elias claimed they argued until Albarran entered. Shortly afterwards, the proposal to liquidate Joe & Joe was replaced with a decision to appoint voluntary administrators, partly because liquidation would have potentially rendered Joseph Kossaifi builder's license invalid. 


On the same day, the Kossaifi's original winding application was stood over for approximately a month, giving the parties time to formulate a DoCA.

Unfortunately for all, the subsequent arrangement has failed to resolve the differences and the fallout of that has seen as much as $1.4 million in fees and costs generated by the deed administrators and their lawyers, much of which is now the basis of the dispute ruled on by Black.

With any recovery from the deed administrators dependant on the outcome of the somewhat Dickensian Scott's Schedule exercise, the Kossaifi's have decided to seek redress elsewhere. 


They've been ordered to serve a proposed amended statement of claim on Farshad Amirbeaggi and his company, formerly named Yates Beaggi Lawyers Pty Limited, Trust Master No. 1 Pty Limited by July 22. 

Amirbeaggi, who is being advised by solicitor Tim Price of Yeldham Price O'Brien Lusk, will be hoping the court rules that the six year statute on professional negligence applies in this case. And he won't be the only one so hoping.

Further reading:


Albarran and Pleash prejudicial 'unintentionally' says Justice Black 

Albarran and Pleash prepare to defend DoCA allegations

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