Pantzer v Wenkart

Case [2006] FCAFC 140

FEDERAL COURT OF AUSTRALIA

Pantzer v Wenkart [2006] FCAFC 140

BANKRUPTCY – entitlements of trustee – certificates of taxation relating to remuneration, costs, charges and expenses claimed by former trustee set aside – where work undertaken after bankruptcy annulled – where remuneration and costs claimed in relation to litigation – where primary judge found litigation undertaken for the former trustee’s own benefit – whether litigation undertaken for former trustee’s own benefit was not for the purpose of the administration of the estate

Adsett v Berlouis (1992) 37 FCR 201 considered

Wenkart v Pantzer [2003] FCA 315 referred to
Wenkart v Pantzer [2003] FCA 364 referred to
Wenkart v Pantzer [2003] FCA 432 referred to
Wenkart v Pantzer [2003] FCA 456 referred to
Wenkart v Pantzer [2003] FCA 471 referred to
Wenkart v Pantzer [2003] FCAFC 210; (2003) 132 FCR 204 referred to
Wenkart v Pantzer (No 6) [2003] FCA 1210 referred to
Wenkart v Pantzer [2003] FCA 1211; (2003) 132 FCR 273 referred to
Wenkart v Pantzer (No 8) [2004] FCA 280; Wenkart v Pantzer (No 3) (2004) 135 FCR 422 referred to
Wenkart v Pantzer [2005] FCA 1572 reversed

WARREN PANTZER v THOMAS RICHARD WENKART, ANN SEXTON AND INSPECTOR GENERAL IN BANKRUPTCY
NSD 2457 OF 2005

WARREN PANTZER v THOMAS RICHARD WENKART, ANN SEXTON AND INSPECTOR GENERAL IN BANKRUPTCY
NSD 2459 OF 2005

BLACK CJ, RYAN AND MOORE JJ
28 SEPTEMBER 2006
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

     NSD 2457 OF 2005

NEW SOUTH WALES DISTRICT REGISTRY
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

WARREN PANTZER
Appellant

AND:

THOMAS RICHARD WENKART
First Respondent

ANN SEXTON
Second Respondent

INSPECTOR GENERAL IN BANKRUPTCY
Third Respondent

JUDGES:

BLACK CJ, RYAN AND MOORE JJ

DATE OF ORDER:

28 SEPTEMBER 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.        The appeal be allowed.

2.The orders made by the primary judge on 6 December 2005 be set aside and in lieu thereof the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 be dismissed.

3.The first respondent pay the appellant’s costs of the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 and of the appeal to this Full Court, such costs to be taxed in default of agreement.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NSD 2459 OF 2005

NEW SOUTH WALES DISTRICT REGISTRY
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

WARREN PANTZER
Appellant

AND:

THOMAS RICHARD WENKART
First Respondent

ANN SEXTON
Second Respondent

INSPECTOR GENERAL IN BANKRUPTCY
Third Respondent

JUDGES:

BLACK CJ, RYAN AND MOORE JJ

DATE OF ORDER:

28 SEPTEMBER 2006

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.        The appeal be allowed.

2.The orders made by the primary judge on 6 December 2005 be set aside and in lieu thereof the appeal against the decision of the…

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Pantzer v Wenkart [2006] FCAFC 140
Case
[2006] FCAFC 140
Decision Date

CaseChat Overview and Summary

This case involves an appeal against a decision of the Federal Court of Australia which had set aside two certificates of taxation issued by a taxing officer. The certificates related to the claimed remuneration, costs, charges, and expenses of Mr Pantzer for work performed and activities undertaken after 15 March 2002. The certificates were challenged by Dr Wenkart, primarily on the basis that the taxing officer had allowed claims relating to remuneration, disbursements, and expenses incurred after his bankruptcy had been annulled, to which Mr Pantzer was not entitled as trustee under consent orders made by Beaumont J on 11 March 2002. The primary judge determined that the litigation in which the remuneration, disbursements, and expenses were incurred had been undertaken by Mr Pantzer to obtain the benefit of rights vested in him by the consent orders and that the litigation had been undertaken for his own benefit rather than for the purpose of administering the estate. The primary judge concluded that the certificates allowed Mr Pantzer remuneration or disbursements and expenses to which he was not entitled under the Act and ordered that the certificates in each proceeding be set aside.

The legal issues raised in the appeal included the interpretation of the expression "remuneration, costs, charges and expenses to which [Mr Pantzer] is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart" in order 1 of the consent orders and Mr Pantzer’s entitlements under the Act and the costs, charges and expenses in respect of which he is entitled to be indemnified. The appeal also considered whether the effect of the orders made by Lindgren J on 21 October 2003 limited the amount that Mr Pantzer may claim in reliance on order 1 of the consent orders. Finally, the appeal considered whether, by reason of matters pleaded in matter NSD 7051 of 2002, upon a true and proper accounting neither Mr Pantzer, nor any person who provided services to him in relation to the bankrupt estate of Dr Wenkart, had any present legal entitlement to payment or reimbursement, as the case may be, in respect of the administration of the bankrupt estate.

The Full Court of the Federal Court of Australia found that the primary judge had erred in setting aside the certificates of taxation. The Full Court held that the primary judge had misinterpreted the expression "remuneration, costs, charges and expenses to which [Mr Pantzer] is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart" in order 1 of the consent orders. The Full Court found that the expression referred to remuneration and expenses incurred in the administration of the estate, and that Mr Pantzer was entitled to claim such remuneration and expenses under the Act. The Full Court also found that the orders made by Lindgren J on 21 October 2003 did not limit the amount that Mr Pantzer could claim in reliance on order 1 of the consent orders. Finally, the Full Court found that, upon a true and proper accounting, Mr Pantzer and any person who provided services to him in relation to the bankrupt estate of Dr Wenkart had a present legal entitlement to payment or reimbursement, as the case may be, in respect of the administration of the bankrupt estate.

The appeal was allowed, and the orders made by the primary judge on 6 December 2005 were set aside. The appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 was dismissed, and the appeal against the decision of the taxing officer in proceeding No NSD 181 of 2005 was also dismissed. The first respondent was ordered to pay the appellant's costs of the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 and of the appeal to this Full Court, such costs to be taxed in default of agreement. The first respondent was also ordered to pay the appellant's costs of the appeal against the decision of the taxing officer in proceeding No NSD 181 of 2005 and of the appeal to this Full Court, such costs to be taxed in default of agreement.

Orders

Orders of the court

1. The appeal be allowed.

2. The orders made by the primary judge on 6 December 2005 be set aside and in lieu thereof the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 be dismissed.

3. The first respondent pay the appellant’s costs of the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 and of the appeal to this Full Court, such costs to be taxed in default of agreement.

1. The appeal be allowed.

2. The orders made by the primary judge on 6 December 2005 be set aside and in lieu thereof the appeal against the decision of the taxing officer in proceeding No NSD 181 of 2005 be dismissed.

3. The first respondent pay the appellant’s costs of the appeal against the decision of the taxing officer in proceeding No NSD 181 of 2005 and of the appeal to this Full Court, such costs to be taxed in default of agreement.

Background

Background to the litigation

These are appeals from a judgment of a judge of the Court setting aside two certificates of taxation issued by a taxing officer relating to the claimed remuneration, costs, charges and expenses of Mr Pantzer for work performed and activities undertaken after 15 March 2002 (Wenkart v Pantzer [2005] FCA 1572). The certificates were challenged by Dr Wenkart principally on the basis that the taxing officer allowed claims relating to remuneration, disbursements and expenses incurred after his bankruptcy had been annulled and to which Mr Pantzer was not entitled as trustee under consent orders made by Beaumont J on 11 March 2002 in matter No NSD 7051 of 2002. The primary judge determined, amongst other things, that the litigation in which the remuneration, disbursements and expenses were incurred had been undertaken by Mr Pantzer to obtain the benefit of rights vested in him by the consent orders and that the litigation had been undertaken for his own benefit rather than for the purpose of administering the estate. The judge determined that the certificate of taxation in each proceeding allowed Mr Pantzer remuneration or disbursements and expenses to which he was not entitled under the Act and, for that reason, ordered that the certificates in each proceeding be set aside.BACKGROUND TO THE PRESENT DISPUTE As noted by the primary judge, there is a “considerable overlap” between the issues raised for consideration in the proceedings before the judge and the issues raised for determination in matter No NSD 7051 of 2002. Accordingly, it is desirable to say something about the history of that other proceeding. Aspects of that history are detailed in a judgment of Lindgren J (Wenkart v Pantzer (No 8) [2004] FCA 280; Wenkart v Pantzer (No 3) (2004) 135 FCR 422 at [8] and onwards) which is one of many judgments given in those proceedings. On 28 October 1999, an order was made sequestrating the estate of Dr Wenkart. Mr Pantzer was appointed the trustee of the estate. In the months that followed, Dr Wenkart sought to extricate himself from the bankruptcy. On 15 February 2002, Dr Wenkart sent a document entitled “application” by facsimile to Beaumont J, purportedly in a proceeding with the matter number N 7752 of 2000. The matter so identified related to an application made in 2000 by a creditor seeking orders against Mr Pantzer to admit the whole of a proof of debt. In response to the facsimile, Beaumont J directed that a new file be opened dealing with the “application” and it was given the matter number NSD 7051 of 2002. Pursuant to orders of Lindgren J made on 31 March 2004, this document was deemed to be an application; that is to say, it was deemed to be the originating process in NSD 7051 of 2002. In NSD 7051 of 2002, applications were made by both Dr Wenkart and Mr Pantzer. Judgments were given by Beaumont and Lindgren JJ (the successive docket judges) on several separate questions. There have been eight judgments given by single judges of this Court, three of which have been challenged on appeal to a Full Court. There was one application for special leave to appeal to the High Court. The costs (in the most general sense) incurred in this litigation are central to this appeal.THE COURSE OF LITIGATION IN NSD 7051 OF 2002

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BLACK CJ, RYAN AND MOORE JJ
On 12 January 2005, Ms Sexton issued another certificate, this one allowing a total of $33,295.95. The amount of $2,289.70 was allowed for the solicitor/client costs of Sally Nash & Co for work in relation to an application for special leave to appeal from the judgment of the Full Court of this Court Wenkart v Pantzer reported at (2003) 132 FCR 204, to the High Court (S517 of 2003). The certificate also allowed eleven memoranda of fees from barristers retained at various times to represent Mr Pantzer.THE JUDGMENT APPEALED FROM The primary judge treated the appeals from the decisions of the taxing officer as raising five issues. These were as follows (at [23]-[27]):1.The meaning of the expression “remuneration, costs, charges and expenses to which [Mr Pantzer] is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart” in order 1 of the consent orders and Mr Pantzer’s entitlements under the Act and the costs, charges and expenses in respect of which he is entitled to be indemnified.2.Whether the effect of the orders made by Lindgren J on 21 October 2003 was to limit the amount that Mr Pantzer may claim in reliance on order 1 of the consent orders.3.The validity of the appointments of Ms Sexton.4.Whether the form of the bill of costs submitted by Mr Pantzer to Ms Sexton satisfied the requirements of the Regulations.5.Whether, “by reason of matters pleaded in matter NSD 7051 of 2002, upon a true and proper accounting neither Mr Pantzer, nor any person who provided services to him in relation to the bankrupt estate of Dr Wenkart, has any present legal entitlement to payment or reimbursement, as the case may be, in respect of the administration of the bankrupt estate” (at [27]). In this appeal, the contentious parts of the primary judge’s judgment were identified as largely confined to issues 1, 2 and 5. As to the first issue, the primary judge concluded that order 1, properly construed, had two elements. The first was the remuneration to which Mr Pantzer was then entitled, or would thereafter become entitled, in respect of work properly undertaken in carrying out his duties under the Act. The second was the costs, charges and expenses in respect of which Mr Pantzer, in his capacity as trustee or former trustee of Dr Wenkart’s estate, was then entitled to be indemnified, or would thereafter become entitled to be indemnified. As to the first element, the primary judge considered what Mr Pantzer’s entitlements were under the Act, both generally and in relation to:·work done after the annulment of Dr Wenkart’s bankruptcy;·work undertaken in relation to taxation of costs; and·work undertaken in relation to litigation and work performed by others. As to work post-annulment, the judge concluded that the performance by a trustee of statutory duties which the Act requires, or allows, to be performed by a trustee after the annulment of the bankruptcy, are performed by the trustee while acting in that capacity. The judge had earlier referred to the Full Court judgment in Adsett v Berlouis (1992) 37 FCR 201 where, at 212, the Full Court described work properly undertaken by a trustee as work reasonably and bona fide undertaken for the purpose of administering the estate or performing any public duty imposed by the Act, conformably with the trustee’s duty to perform the work with reasonable care and skill and in an efficient and economical way.

Ratio Decidendi

Legal Principle Established

Established by: BLACK CJ, RYAN AND MOORE JJ

On 13 December 2004, Ms Sexton issued a certificate in the following form:“Certificate of TaxationI do hereby certify that I have taxed and allowed the remuneration, disbursements and expenses claimed by Warren Pantzer, the former trustee of the estate of Thomas Richard Wenkart (NSW5988/99/0) in the amount of $169,955.94 for the period 15 March 2002 to 21 October 2003, comprised of the following amounts:-1. Claim for remuneration of Warren Pantzer(Items 1-822 inclusive in the claim) ‑ $83,219.822. Claim for disbursements and expenses (items 823‑907 inclusive) ‑ $2,562.023. Solicitor/client bill of costs of Sally Nash & Co for work undertaken on behalf of Warren Pantzer in Federal Court proceeding N7501 of 2002 ‑ $57,613.094 .Solicitor/client bill of costs of Sally Nash & Co for work undertaken on behalf of Warren Pantzer in Federal Court proceedings (appeal) N633 of 2003 ‑ $26,561.01Date: 13‑12‑04 [signed] ANN SEXTON TAXING OFFICER” On 12 January 2005, Ms Sexton issued another certificate, this one allowing a total of $33,295.95. The amount of $2,289.70 was allowed for the solicitor/client costs of Sally Nash & Co for work in relation to an application for special leave to appeal from the judgment of the Full Court of this Court Wenkart v Pantzer reported at (2003) 132 FCR 204, to the High Court (S517 of 2003). The certificate also allowed eleven memoranda of fees from barristers retained at various times to represent Mr Pantzer.THE JUDGMENT APPEALED FROM The primary judge treated the appeals from the decisions of the taxing officer as raising five issues. These were as follows (at [23]-[27]):1.The meaning of the expression “remuneration, costs, charges and expenses to which [Mr Pantzer] is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart” in order 1 of the consent orders and Mr Pantzer’s entitlements under the Act and the costs, charges and expenses in respect of which he is entitled to be indemnified.2.Whether the effect of the orders made by Lindgren J on 21 October 2003 was to limit the amount that Mr Pantzer may claim in reliance on order 1 of the consent orders.3.The validity of the appointments of Ms Sexton.4.Whether the form of the bill of costs submitted by Mr Pantzer to Ms Sexton satisfied the requirements of the Regulations.5.Whether, “by reason of matters pleaded in matter NSD 7051 of 2002, upon a true and proper accounting neither Mr Pantzer, nor any person who provided services to him in relation to the bankrupt estate of Dr Wenkart, has any present legal entitlement to payment or reimbursement, as the case may be, in respect of the administration of the bankrupt estate” (at [27]). In this appeal, the contentious parts of the primary judge’s judgment were identified as largely confined to issues 1, 2 and 5. As to the first issue, the primary judge concluded that order 1, properly construed, had two elements. The first was the remuneration to which Mr Pantzer was then entitled, or would thereafter become entitled, in respect of work properly undertaken in carrying out his duties under the Act. The second was the costs, charges and expenses in respect of which Mr Pantzer, in his capacity as trustee or former trustee of Dr Wenkart’s estate, was then entitled to be indemnified, or would thereafter become entitled to be indemnified.