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.

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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