THE LEGAL PRACTITIONERS ACT 1981 (SA) RE RODERIC JASON LINDQUIST - [2009] SASC 93

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
THE LEGAL PRACTITIONERS ACT 1981 (SA) RE RODERIC JASON LINDQUIST
[2009] SASC 93
Reasons for Decision of The Honourable Justice Gray
6 April 2009
PROFESSIONS AND TRADES - LAWYERS - PRACTISING CERTIFICATES
Application pursuant to section 49 of the Legal Practitioners Act 1981 (SA) for authority to practise as a legal practitioner - practitioner entering into a Personal Insolvency Agreement - application granted subject to conditions.
Legal Practitioners Act 1981 (SA) s 49; Bankruptcy Act 1966 (Cth) Pt X, referred to.
Re Read [2006] SASC 35, considered.

THE LEGAL PRACTITIONERS ACT 1981 (SA) RE RODERIC JASON LINDQUIST
[2009] SASC 93
Civil
GRAY J:

This is an application for an authority pursuant to s 49(1)(a) of the Legal Practitioners Act 1981 (SA) permitting Roderic Jason Lindquist to practise as a legal practitioner.[1] The application was made for the purposes of the applicant proposing with his creditors a Personal Insolvency Arrangement under Part X of the Bankruptcy Act 1966 (Cth).[2]
[1] Section 49 provides:
(1)A legal practitioner—
(a)    who has become bankrupt or subject to a composition or deed of arrangement or assignment with or for the benefit of creditors; or
(b)    who is or has been a director of an incorporated legal practitioner during the winding up of the company for the benefit of creditors,
must not, without the authority of the Supreme Court, practise the profession of the law. $10 000.
(1a) Authority may be granted under this section on the application of a legal practitioner who is or is about to become bankrupt or subject to a composition or deed of arrangement or assignment with or for the benefit of creditors or who is or has been a director of an incorporated legal practitioner that is being or is about to be wound up for the benefit of creditors.
(2) The Supreme Court may grant an authority under this section on such conditions as it thinks fit.
(3) A legal practitioner must not contravene or fail to comply with any condition of an authority granted by the Supreme Court under this section. $10 000.
[2]    Bankruptcy Act 1966 (Cth) section 18.
The applicant practises as a solicitor, and is a principal in the firm Lindquist Partners. The applicant is 53 years of age and was admitted as a practitioner of this Court in 1979. He practised in a firm of solicitors until 1980, and became a partner of that firm in 1981. He has remained a partner in that firm since that time.
The papers before me at the hearing of the application included affidavits sworn by the applicant and his solicitor. I heard submissions from counsel for the applicant, counsel for the Law Society of South Australia and the Solicitor‑General for South Australia representing the Attorney-General, who has indicated a recent willingness to intervene in section 49 matters.[3] It was accepted that matters concerning the public interest arose with respect to the proper financial standing of members of the legal profession.
[3] Legal Practitioners Act 1981 (SA) section 49.
The applicant has encountered financial difficulty in recent years. It was submitted that the reasons for this situation were principally matrimonial and commercial, and were unrelated to the conduct of his legal practice. He stated in his affidavit that a breakdown in his matrimonial relationship required him in June 2008 to realise a number of assets jointly held with his wife and to clear a number of secured creditor claims associated with his home. He further stated that he had relied on unsecured credit card advances in order to meet his day-to-day expenses.
The applicant stated that he was unable to realise his family trust’s interest in a mercantile agency, Kemps Mercantile Agency, for an amount offered to all of the owners of that business prior to September 2008. He further stated that he had anticipating receiving funds in the order of $300,000 from the sale of the interest in the trust to sufficiently discharge liabilities, which would not have necessitated a Part X arrangement. A recent sale of his family trust’s interest in Kemps Mercantile Agency only realised an approximate net amount of $30,000.
The applicant stated that his only asset capable of current realisation is his interest in the firm Lindquist Partners. He estimates its value at approximately $150,000.00, although this valuation has been disputed by his partner in the firm, Marko Runjajic. He has no other property or assets as defined in the Bankruptcy Act.He has no superannuation.
The applicant stated in his affidavit that he separated from his estranged wife on 21 November 2008, with whom he has finalised a property settlement, which included the sale of the matrimonial home. The applicant stated that he received approximately $500,000 from the sale, which he used to pay the National Australia Bank and liabilities of Lindquist Partners. The settlement also included a provision that the applicant’s discretionary family trust realise its interest in Kemps Mercantile Agency and pay to his estranged wife the sum of $17,000 and to him the balance of the proceeds of sale, which were approximately $13,000, to meet their respective living expenses.
The applicant stated that his liabilities to creditors were in the order of $420,000. The applicant has liabilities to arm’s length credit providers in the order of $258,000.00, comprising loans advanced on credit cards over a period of four years and a sum of $120,000.00 advanced to him by friends and associates during the period March 2007 to February 2008. The applicant has a tax liability of approximately $40,000.00.
The applicant has lodged all current tax returns and business activity statements with the Australian Taxation Office.
The applicant has proposed to offer to his creditors in the Personal Insolvency Arrangement the realisation of his interest in Lindquist Partners.
The trust account of the applicant’s firm was audited by the Law Society and by the firm’s auditor in 2008. There are no outstanding matters with respect to the firm’s trust account. The applicant is not the subject of any current investigations by the Law Society or the Legal Practitioners’ Conduct Board. Moreover, the Law Society Executive considered Mr Lindquist’s application at its meeting on 23 March 2009, and its Executive Director, by way of letter indicated that it has no objection to the proposal set out in his affidavit. There are no issues with respect to his past practice as a legal practitioner or of dishonesty, which give rise to concerns about his personal ability to practise the law.
The applicant has not become a bankrupt. It was the view of Besanko J in Re Read [2006] SASC 35 that section 49 of the Legal Practitioners Act also applies to practitioners entering into arrangements for the benefit of creditors as well as those who have been declared a bankrupt. I respectfully agree. If the applicant’s proposal is not accepted by his creditors, he will be obliged, as a matter of law, to present a debtor’s position for his bankruptcy. The applicant has made an undertaking to the Court to present a debtor’s position in the event that his creditors do not accept a Personal Insolvency Arrangement.
During the hearing of the application counsel for the applicant invited me to consider draft orders setting out strict conditions with respect to the applicant’s legal practice. The orders included conditions drafted by legal officers of the Law Society’s Professional Standards Unit, and, the Solicitor-General, representing the Attorney-General, did not oppose the making of the orders.
I consider that it is appropriate to grant an authority to the applicant to practise under the conditions set out below. I have considered the importance of protecting the public and maintaining proper standards of conduct within the legal profession. The conditions include that the applicant’s right to practise be limited to that of an employed solicitor only, that he will advise the Law Society of his employment situation, that he will not deal with trust moneys or operate a trust account, that he will regularly report to the Law Society and the Attorney-General as to his compliance with the terms of the order.
In deciding to grant the applicant the authority to practise, I make the following orders:
1.That upon Roderic Jason Lindquist (“the Practitioner”) executing an authority pursuant to Part X of the Bankruptcy Act 1966, the Practitioner be authorised until further order to practise the profession of the law pursuant to Section 49(1a) of the Legal Practitioners Act 1981 (“the Act”) subject to the following conditions:
1.1     The Practitioner’s right of practice be limited to that of an employed solicitor only and under the supervision of a legal practitioner of this Court who has at least 10 years standing and as approved for this purpose by the Law Society of South Australia (“the Supervising Solicitor”);
1.2     The Practitioner will advise the Law Society of South Australia as soon as he commences or ceases to be employed by the Supervising Solicitor;
1.3     The Practitioner will not render any bill for professional fees other than practice taxation invoices for the legal practice of the practitioner who will be supervising him.
1.4     The Practitioner will not receive or deal with money paid by his employer’s clients;
1.5     The Practitioner will not establish or maintain a solicitor’s trust account in his own name;
1.6     The Practitioner will not operate any trust account of any other practitioner.
1.7     The Practitioner will ensure that his Supervising Solicitor provide regular reports to the Law Society of South Australia and the Attorney General as to the progress of the Practitioner as his or her employee and as to the compliance of the Practitioner with the terms of this Order such reports to be prepared and sent each quarter with the first to be prepared and sent by the 30 June 2009;
1.8 The Practitioner will comply with the reasonable directions of any trustee appointed pursuant to a Personal Insolvency Agreement pursuant to the provisions of the Bankruptcy Act 1966 (“PIA”) or a trustee in bankruptcy in the event that the Practitioner presents a debtor’s petition, and his statutory obligations under the Act.
1.9     That the Practitioner will retain Anthony Broome of Ashmans, Chartered Accountants, Hutt Street, Adelaide or any other accountant acceptable to the Law Society of South Australia until further order, to manage his financial affairs and to assist him in ensuring compliance with his financial and taxation obligations and the Practitioner will ensure that the accountant provides the Law Society of South Australia with a report of his compliance with his financial and taxation obligations on a quarterly basis, the first to be provided for the quarter ending 30 June 2009;
1.10   The Practitioner will comply with the preparation of tax returns and payment of money to the Australian Taxation Office as required by law;
1.11   The Practitioner will forthwith advise the Law Society of South Australia and the Attorney General should he cease to practise;
1.12 The Practitioner will request his trustee under the PIA or his bankruptcy, whichever shall apply, to provide the Society and the Attorney General on a quarterly basis reports regarding his compliance with the PIA or his bankrutpcy, the first report to be prepared for the quarter ending 30 June 2009;
1.13 The Practitioner will forthwith advise the Law Society of South Australia if his PIA is not accepted by his creditors and if he subsequently lodges a debtor’s petition.
2.A copy of the PIA is to be served on the Law Society of South Australia and the Attorney General within 48 hours of its execution.
3.That should the Practitioner fail to comply with any condition of this order, leave is reserved to the Law Society of South Australia and the Attorney General to apply at short notice for an order revoking paragraph 1.