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.

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.

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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