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Crime barrister Jeremy Newland Bioletti, who represented Barry Hart in his fight against bankruptcy, has himself just been adjudicated bankrupt at Auckland High Court.
Inland Revenue wanted Mr Bioletti bankrupted over a tax debt of close to $550,000
Mr Bioletti's lawyer Paul Chambers said Mr Bioletti had offered to tackle the debt with a lump sum of $180,000, provided by his mother, and to repay the balance through annual payments of $37,000 over four years, with interest payments expected to be about $2000 a month.
Mr Bioletti, who is said to specialise in serious fraud cases, is expected to earn $130,000, after business expenses, over the next year, and expected to have personal expenses of $54,000. the court heard.
Mr Chambers said there was "room to move" within that budget because Mr Bioletti, who is self-employed, could reduce business expenses by working from home.
Mr Chambers said Mr Bioletti's position was a result of some clients not paying their legal fees, which led to his failure to pay tax returns between 2006 and 2008.
The position was made worse when his legal aid work was curtailed as a result of the Public Defence Service removing counsel of choice from fraud cases.
It's understood Mr Bioletti got into further tax strife when provisions to pay his tax debt over the last six months were used to pay his wife's tax.
Genuine efforts had been made to reduce Mr Bioletti's tax problem. Because he works for himself, Mr Bioletti would be out of a job if he was adjudicated bankrupt.
Mr Chambers said a law firm would only employ him on the basis he could register as a fraud barrister through legal aid and there was a "quagmire of uncertainty" around that.
"There's very few lawyers I know of who are not in the same situation because of the situation with legal aid," Mr Chambers said.
"IRD need to be seen to be fair and reasonable, and it is not fair an reasonable to bankrupt a solicitor because he can't generate the income to pay the debt.
Before he delivered his decision at noon, Justice Graham Lang said Mr Bioletti would be working to a very tight budget to make the repayments.
"If he is not adjudicated bankrupt the debt just keeps rising," the judge said.
"All I see is a bigger hole being dug and a bigger mountain of tax debt.
"I understand Mr Bioletti's desire to remain in practice but his long-term financial future with the existing debt seems pretty bleak."
"It's a pity to see anybody's skills go to waste but he has built up a mountain of tax debt over a period of time," Justice Lang said.
Mr Bioletti appeared in court for Barry Hart several times, helping him appeal a summary finding he owed ANZ Bank $20 million in March and, earlier, play for time to keep working as a lawyer while he appealed against being struck-off as a lawyer.
Mr Hart was adjudicated bankrupt in the Auckland High Court on December 17. ANZ bank, originally owed more than $30 million by Mr Hart, made the application over an unpaid damages claim of $34,000.
Another lawyer who appeared for Mr Hart in his long-running dispute with ANZ, Davina Murray, is also bankrupt.
Mr Hart was struck off last year after a lawyers' disciplinary tribunal found him guilty of professional misconduct by grossly overcharging some of his clients.
Counsel of choice was the 'king hit' - Bioletti
Speaking to NBR ONLINE outside the court after he was adjudicated bankrupt, Mr Bioletti said his financial woes got worse when the Public Defence Service removed rights to counsel of choice from category one and two complex fraud cases in 2011.
Mr Bioletti, who wore a pin striped suit and dollar sign cuff links to his bankruptcy hearing, got a lot of work from legal aid.
He used to get calls from clients asking him to defend them and, if they qualified for legal aid, he could take them on.
Now, with rights to counsel of choice removed, defendants on legal aid are assigned a lawyer at random off a roster.
“Once that change came in it hit me, then it was too long before I realised there was a back door exception for the situation,” Mr Bioletti said, referring to the fact exceptions are now made for lawyers with specific experience in a field.
Removal of counsel of choice had been a “king hit” and had put “heaps” of lawyers in the same boat as him.
“I’m sure there will be further casualties.”
When the UK proposed removing counsel of choice, all the barristers went on strike and the government backed down on it, Mr Bioletti said.
“But here there was nothing. You were on your own.”
Times have also been tough for legal aid since the Ministry of Justice put all legal aid lawyers on to fixed fee structure.
“$120 an hour on legal aid is just not enough. You do it because it is what you like to do and what you’re trained to do.”
Mr Bioletti said he hoped the Official Assignee would let him keep working while he is bankrupt.