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.

Monday 11 August 2014

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.

Wednesday 6 August 2014

Court hears of "disturbing" mystery payment

Oliver Trajcevski - invoiced
Richard Albarran for mystery
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.

Tuesday 5 August 2014

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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