Last chance for Amirbeaggi negligence claim

CYNICS might see irony in a solicitor complaining about the "anxiety, distraction and disruption that litigation causes". Facilitating the workings of justice provides plenty of scope for misery to be visited upon those caught in the cogs of the law - and sufferers are almost invariably the legal profession's clients.

This time though Sydney solicitor Farshad Amirbeaggi is the one enmeshed, thanks to a professional negligence action launched by an aggrieved developer.

The main problem is that whilst the $2.7 million claim was launched in February this year, the plaintiff has since provided little in the way of propulsion.

Six deadlines have passed without the promised or ordered amended statement of claim materialising. The plaintiff - who has the misfortune to be one of the parties mired in the Joe & Joe Developments imbroglio - complains he has insufficient funds to advance the action. Amirbeaggi, who is vexed by the claim and its attendant publicity, wants the proceedings dismissed.

In a judgment published on Tuesday Supreme Court Justice Ian Harrison quoted Amirbeaggi's complaint about the "anxiety, distraction and disruption" in ruling that while it would not be appropriate to dismiss the claim, the plaintiffs should pay Amirbeaggi's costs, which the judge observed were not at this stage onerous. He also expressed a  degree of skepticism about the plaintiff's avowed poverty as the reason for the action's sluggish progress.

"There can be no doubt that the plaintiffs have disregarded orders with which they would have been expected to comply," Justice Harrison said.

"I am less certain that their failure to do so is the result of financial considerations that have disrupted their ability to secure appropriate legal assistance. The evidence about that is unsatisfactory as the defendants have emphasised," Justice Harrison said.

Joe & Joe solicitor sued for $2.9 million

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.

Albarran and Pleash repay mystery $16k

ONE consequence of Justice Ashley Black's recent judgement in the matter of Joe & Joe Developments has been the repayment of a curious and unexplained invoice that Joe & Joe's deed administrator Richard Albarran authorised be paid on June 16, 2009.

The invoice came from Shalton Consulting, an entity associated with Dinimus Capital's principal and founder, Oliver Trajcevski. Hall Chadwick partner Blair Pleash told a recent court hearing that his colleague Albarran authorised payment of the invoice in the sum of $16,855.91.

The hearing was a consequence of one of Joe & Joe's shareholders suing Pleash and Albarran for allegedly handling the company's affairs in a manner prejudicial to the interests of its members and shareholders. In Justice Black's judgement, the Shalton payment came in for special attention.

"In my view, a proper basis has been established for an order that Messrs Albarran and Pleash should repay the amount of the payment to Shalton Investments to the Company (Joe & Joe), leaving them to any rights that they may in turn have against Shalton Investments."

What is interesting about the judge's order is the reference to Shalton Investments. According to the deed administrator's cash book, the payment was made to Shalton Consulting.

Albarran and Pleash 'prejudicial' unintentionally: Black

Richard Albarran and Blair Pleash must justify authorising more than half a million dollars in legal fees paid to their former solicitors after the NSW Supreme Court's Justice Ashley Black yesterday ruled the Hall Chadwick partners had failed to adequately review the solicitor's invoices.

In handing down judgement in the matter of Joe & Joe Developments (Subject to a Deed of Company Arrangement). Justice Black found the lack of scrutiny unintentional but "significant".

"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.

"I am also satisfied that the matter is of significance, given the extent of the potential issues arising on the face of the former solicitors' invoices and the extent of the deficiency in the deed administration, and that the Court should properly make an order under that section to seek to address the issue."

The judge's findings represent a partial win for plaintiff Tony Elias, a director and shareholder of Joe & Joe Developments. The building firm has been subject to the terms of a DoCA executed on March 31, 2009 after Tony Elias and co-shareholder Joseph Kossaifi fell out in 2008 over the best way to distribute the profits from their mixed commercial and residential development at North Narrabeen.

Albarran and Pleash, neither of whom responded to multiple requests for comment, were appointed voluntary administrators on February 9, 2009. Their former solicitors, who Justice Black chose not to identify, were engaged to undertake the legal work on behalf of the VAs.

The parties then executed the DoCA and the former solicitors continued to act for Albarran and Pleash in their capacity as deed administrators.

But feuding between the shareholders impeded the DoCA's progress, a fact Justice Black acknowledged.

"The development of the commercial and retail units on that land took place between November 2005 and March 2007. Differences between Mr Elias and Mr Kossaifi as to what should be done in respect of the completed development emerged from early 2007 and had grown to a substantial dispute by 2008. It seems to be common ground, and was amply demonstrated by the evidence, that at least Mr Kossaifi and Mr Elias were no longer willing or able to work together by that time," Justice Black said.

He was also reluctant to accept some of the more vociferous pleadings about the legal fees paid to the former solicitors, which stand between $500,000 and $800,000 depending on which side you listen to.

"The Plaintiffs submit that, had a costs agreement been entered into for each piece of work of matter that the solicitors were acting on, it would have been clear what their instructions were, what the scope of the work was to be and what was to be charged.

"It seems to me that submission has, first, the difficulty that it would not have been practicable for a costs agreement to have been entered into for each segment of work, although it may have been open to plan or budget segments of the work in a manner that was not done; but, more fundamentally, there is little likelihood that that course would have reduced the costs which arose from the complexity of the administration, the non­-compliance by the shareholders with the terms of the DOCA and the numerous disputes which arose as to the respective parties' obligations to which I have referred."

The judge in fact goes into great detail about how shareholder dysfunction frustrated the efforts of Albarran and Pleash to effectuate the terms of the DoCA and while finding that they had fallen short of the standard expected in terms of adequately monitoring the lawyer's invoices, said "a failure of process is not the same as indifference".

Albarran cries foul as barrister invokes old ghosts

Richard Albarran has denounced as
 "scandalous, unsubstantiated and unsourced"
allegations raised in the NSW Supreme Court
involving Terra Cresta Business Solutions
Photo: Hall Chadwick 

IT was during a recent hearing in the NSW Supreme Court that the ghosts of Terra Cresta were invoked.

The hearing - held in August - tested allegations that Hall Chadwick partners Richard Albarran and Blair Pleash had managed the affairs of building firm Joe & Joe Developments Pty Ltd in a manner prejudicial to the company's creditors.

One of Joe & Joe's shareholders - the Elias Family - alleges that Albarran and Pleash have as deed administrators of Joe & Joe, allowed Etienne Lawyers to grossly overcharge for work on the Joe & Joe administration, now in its fifth year.

Etienne chairman Steven Brown - who is not a party to the proceedings - has handled much of the legal work involved with Joe & Joe's complex deed of company arrangement (DoCA) since its execution in March 2009. He told SiN it would be inappropriate to comment for this story.

Following the hearing, Presiding judge Justice Ashley Black reserved his judgement on the matter. In the interim Brown continues to act for Pleash and Albarran, who remain deed administrators of Joe & Joe's DoCA pending judgement. For their part, Pleash and Albarran utterly deny the plaintiff's allegations.

They argue that Etienne's legal fees are consistent with a job of such complexity, duration and disputation; that animosity between Joe & Joe's two shareholder families has fatally delayed the DoCA's effectuation and that contrary to the claims of the plaintiff, pressing tax debts warranted their appointment as voluntary administrators. Also in dispute is the much-criticised share-buyback mechanism included in the DoCA with each side saying it was first proposed by the other.

As Albarran did not submit an affidavit in the Joe & Joe proceedings and did not take to the witness box to rebut the allegations made by the Elias family, he wasn't present to counter the allegations about Terra Cresta.

However in a letter from his lawyers he described the allegations that his decision to appoint Etienne Lawyers to handle the legal work on Joe & Joe was influenced by losses Etienne sustained years before on the Terra Cresta job as: "scandalous, unsubstantiated and unsourced".

The Terra Cresta allegations came on the second last day of the hearing when barrister Roger Marshall for the plaintiffs - and ironically one who helped lay the apparition to rest - unexpectedly invoked the ghost, discomfiting Blair Pleash who occupied the witness box at the time.

Marshall: "Etienne Lawyers were first engaged for the company (Joe & Joe) by Mr Albarran, is that correct?

Pleash: "That's right.

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.

Judge says question could "incriminate" Pleash

Hall Chadwick partner Blair Pleash

HALL Chadwick partner Blair Pleash may decline to answer questions when he returns to the witness box tomorrow after Supreme Court Justice Ashley Black raised the possibility that imminent questioning could "expose the witness to a potential offense or penalty".

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.

Court hears of "disturbing" mystery payment

Oliver Trajcevski - invoiced
Richard Albarran for mystery
$16,000

DAY one of the hearing into the conduct of Richard Albarran and Blair Pleash as deed administrators of Joe & Joe Developments began yesterday with counsel for the plaintiffs asking how the company’s surplus become a shortfall.

It’s a fair question. When Joe & Joe was brought to the Hall Chadwick duo in early 2009 the only problem that appeared unsolvable was the dispute between the company’s two shareholders, the Kossaifi and Elias families.

Financially, Joe & Joe virtually creaked under the weight of its assets, which comprised a largely completed mixed residential and commercial development at North Narrabeen. By comparison, its liabilities represented a wafer of total value.

Sick of the bickering the Koassaifis asked their laywer, Farshad Amirbeaggi, to find someone who could undertake a voluntary liquidation. Neither they or the Elias family had any sense that their company was insolvent, or likely to become so.

The Koassaifi plan was to liquidate the assets, pay out the creditors and distribute the surplus – estimated at one point at more than $2 million – between the two families. Liquidation however posed a problem for the Elias family’s builder’s license. On February 9, 2009 the company was placed into voluntary administration. Pleash and Albarran were appointed joint VAs.

Since their appointment as voluntary administrators and then as administrators of a Deed of Company Arrangement (DoCA) on March 31, 2009, Hall Chadwick and its lawfirm Etienne Lawyers have allegedly billed Joe & Joe more than $1.5 million in fees and disbursements. The administrators, who argue it is significantly less, blame the families for preventing them from achieving a resolution.

Well before the fees reached this level though the Elias family lashed out, suing Pleash and Albarran for handling the DoCA in a way that was prejudicial to the interests of the company’s creditors and members. The Elias family want Albarran and Pleash removed as deed administrators and they want the court to rule that the fees are excessive. The defendants, Pleash and Albarran, reject the allegations.

Setback for Albarran and Pleash on eve of hearing

LESS than 24 hours before today's Supreme Court hearing into their conduct as the deed administrators of Joe & Joe Developments, Richard Albarran and Blair Pleash received unfortunate news. The shareholders of Joe & Joe who weren't suing the Hall Chadwick duo were sounding like they had changed their minds.

In a letter obtained by Sydney Insolvency News, lawyer David Sweeney outlines a litany of complaints Joe & Joe shareholder the Kossaifi family has with Albarran and Pleash's handling of Joe & Joe's lengthy and expensive administration under a Deed of Company Arrangement (DoCA).

The pair accepted the appointment in February 2009 following an approach from the Kossaifi's then lawyer, Farshad Amirbeaggi. According to the letter, the Kossaifis are now in dispute with Amirbeaggi.

Today, Supreme Court Justice Ashley Black will begin a six day hearing of an application by Joe & Joe's other shareholder, the Elias family, which is seeking a declaration that the deed administrators managed Joe & Joe in a way prejudicial to the interests of the company's members and creditors. Albarran and Pleash reject the allegations, arguing that the repeated failure of Joe & Joe's shareholders to resolve their differences has drawn out this sorry affair. 

Among the matters complained of by the Kossaifis in their August 4 letter is that Albarran and Pleash may not have been  validly appointed; that Albarran and Pleash had no reason to put the company into administration when liquidation would've sufficed; that the fees and disbursements incurred so far - $1.508 million including $770,796 to Etienne Lawyers - are excessive; that they failed to tell the Kossaifis that costs of the administration would blow-out so much - the Kossaifis claim that in their March, 2009 Report to Creditors Albarran and Pleash estimated that implementing a Deed of Company Arrangement would cost $92,000; and that Albarran and Pleash have used Joe & Joe company funds to defend the proceedings brought against them by the Elias family. 

Presumably, given many of the Kossaifi's concerns mirror those that form the basis of the allegations to be aired in the Elias proceedings, Albarran and Pleash also reject the Kossaifi's complaints on the basis that the costs have been a direct consequence of the failure of Joe & Joe's shareholders to resolve their differences. 

See also: Albarran and Pleash prepare to defend DoCA allegations

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Albarran and Pleash prepare to defend DoCA allegations

Richard Albarran
Photo: Hall Chadwick

WHEN insolvency practitioners recommend a Deed of Company Arrangement (DoCA), it's generally based on their expectation that applying the oil of deed administration will facilitate a troubled company's passage to resolution.

For Blair Pleash and Richard Albarran however, no amount of commercial and accounting acumen has been sufficient to free up seized property developer Joe & Joe Developments.

Since the Hall Chadwick partners were appointed voluntary administrators to Joe & Joe on February 9, 2009, they and their solicitors have generated about $1.4 million in fees administering the company, which remains subject to the terms of a DoCA designed to achieve what the company’s owners couldn’t - concluding on mutually agreeable terms - their commercial and residential property development at Narrabeen on Sydney’s northern beaches.

Blair Pleash
Photo: Hall Chadwick

Pleash and Albarran became Joe & Joe’s deed administrators on March 31, 2009 but the company’s two shareholder families were locking horns as early as 2008. 

Those frustrations came to a head when one family – the Kossaifis – initiated winding-up proceedings in the NSW Supreme Court.

Liquidation posed a threat to the livelihood of members of the other shareholder – the Elias family – who are builders, and following attempts at mediation the matter was brought to Hall Chadwick in early 2009.

More than five years on, the families remain at loggerheads, Joe & Joe is still subject to the terms of its DoCA  and the mounting costs have so enraged the Elias family that it is suing Pleash and Albarran in the NSW Supreme Court, alleging the two have managed the affairs of Joe & Joe in a way prejudicial to the company’s creditors and its members. The Hall Chadwick duo reject the allegations.

Brown and Albarran parted by conflict concerns

Etienne Lawyers' chairman Steven Brown

Etienne Lawyers chairman Steven Brown has ceded representation of regular clients Richard Albarran and Blair Pleash to a rival firm. 

A change of solicitor notice filed in the NSW Supreme Court shows that the Hall Chadwick insolvency duo are now relying on Hicksons Lawyers to defend them in a stoush with a disgruntled creditor.

In a statement of claim filed in October 2012, Albarran and Pleash are accused of managing the affairs of a company subject to a Deed of Company Arrangement (DoCA) in a manner prejudicial to creditors.

Among other things, the plaintiffs claim Albarran and Pleash breached their fiduciary duty by allowing Etienne - the deed administrators' legal advisers - to amass $790,000 in legal fees.

Albarran and Pleash - and Etienne for that matter - reject the allegations, arguing the more than $1.4 million in combined legal, administrator and other fees incurred over a three year period result from the failure of the company's warring creditors to agree to a solution.

The matter is set down for directions in August and when the time comes, Albarran and Pleash will have to get used to having a newcomer in their corner.

Brown has had Albarran’s back in some tight spots in the past. In 2009 he saved the Hall Chadwick high-flyer from bankruptcy, convincing a judge to allow Albarran to pay a $1.6 million judgement debt in instalments.

The final payment – owed to Hellier Capital’s Graham Hellier - was reportedly due in February this year.

But with Etienne’s fees at the heart of this latest row, Brown has chosen to eliminate the possibility of a conflict or perception of conflict by relinquishing the gig.

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Pleash and Albarran dodge Suncoast bullet

Blair Pleash
Photo: Hall Chadwick

Blair Pleash and Richard Albarran have avoided censure after a Federal Court judge ruled they had acted honestly when selling four cars and a property they weren't entitled to.

In his April 18 judgement, Federal Court justice John Reeves said that while the Hall Chadwick partners had breached Corporations and Trust law statutes in the disposal of assets of Suncoast Restoration Pty Ltd, they had done so unknowingly.

Not only that, the judge lay the blame for the mistake with the insolvency operator's former solicitors and lauded the unwittingly erring pair for moving swiftly to rectify the situation as soon as they learned there was a problem. Read the judgement here.

Pleash and Albarran were appointed joint administrators of Suncoast Resoration Pty Ltd in February, 2012. At that time Suncoast Restoration was sole trustee of a superannuation fund called the Allen's Asphalt Staff Superannuation Fund.

Unbeknownst to them, the appointment of administrators or the passing of a resolution to wind the company up in liquidation automatically disqualified Suncoast Restoration from its role as sole trustee of the super fund under a clause contained in the fund's trust deed.