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Wenkart v Pantzer

Wenkart v Pantzer

Case [2003] FCA 315 9 April 2003

Annulment of Bankruptcy

Remuneration

Costs and Charges

Trustee Rights

Statutory Interpretation

Insolvency Law

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FEDERAL COURT OF AUSTRALIA
Wenkart v Pantzer [2003] FCA 315
BANKRUPTCY – trustee’s remuneration and costs – annulment of bankruptcy – effect of consent orders vesting in trustee a charge over property.
Bankruptcy Act 1966 (Cth) s74
National Trustees Executors and Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268
Re Macks; Ex parte Saint (2000) 204 CLR 158
Harvey v Phillips (1956) 95 CLR 235
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537
THOMAS RICHARD WENKART V WARREN PANTZER
NO. N 7051 OF 2002
BEAUMONT J
9 APRIL 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7051 OF 2002

BETWEEN:

THOMAS RICHARD WENKART
APPLICANT

AND:

WARREN PANTZER
RESPONDENT

JUDGE:

BEAUMONT J

DATE OF ORDER:

9 APRIL 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The separate question ordered on 27 March 2003 be answered as follows:
Q:Do the matters relied upon by the applicant in pars 1 – 20 of his notice of intention to oppose the respondent’s application made by his notice of motion filed on 31 October 2002, constitute an answer to the respondent’s application?
A:The matters stated in pars 1 – 17 of the applicant’s notice of intention to oppose do not constitute any such answer; and the matters stated in pars 18 – 20 do not purport to make such answer.

2. The applicant pay the respondent’s costs of the separate question.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7051 OF 2002

BETWEEN:

THOMAS RICHARD WENKART
APPLICANT

AND:

WARREN PANTZER
RESPONDENT

JUDGE:

BEAUMONT J

DATE:

9 APRIL 2003

PLACE:

SYDNEY

REASONS FOR JUDGMENT
(ON THE EFFECT OF THE ANNULMENT OF THE BANKRUPTCY UPON SECURITY PROVIDED TO SECURE THE TRUSTEE’S REMUNERATION)
BEAUMONT J:
INTRODUCTION

The applicant’s estate was sequestrated by order made on 28 October 1999. The respondent was appointed the Trustee in bankruptcy. By force of the provisions of s 74(5) of the Bankruptcy Act 1966 (“the Act”), the bankruptcy was annulled on 15 March 2002, upon the passing of a special resolution at a meeting of creditors. (Section 74(5) provides that upon the passing of such a resolution, “the bankruptcy is annulled, by force of [s 74(5)], on the date on which the special resolution was passed”).
On 11 March 2002, that is, shortly before this resolution was passed, the Court made orders in these terms:
“1.Warren Pantzer as Trustee of the estate of Thomas Richard Wenkart may recover his remuneration, costs, charges and expenses to which he is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart and Thomas Richard Wenkart agrees to pay the same within 28 days of determination of the quantum of the same or at such other time as the parties may agree.
2.Thomas Richard Wenkart forthwith charges the land and improvements in folio identifier G/33817 and known as 47 Union Street, Paddington…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Wenkart v Pantzer

Details

AGLC: Wenkart v Pantzer [2003] FCA 315
Case: [2003] FCA 315
Decision Date: 9 APRIL 2003

CaseChat Overview and Summary

The case of Wenkart v Pantzer involved a dispute between a bankrupt and a trustee in bankruptcy over the entitlement of the trustee to remuneration and expenses following the annulment of the bankruptcy. The dispute was heard by the Federal Court of Australia. The central legal issue was whether the annulment of the bankruptcy under section 74(5) of the Bankruptcy Act 1966 precluded the trustee from claiming remuneration and expenses from the bankrupt. The applicant, Wenkart, argued that the annulment of his bankruptcy retrospectively nullified the bankruptcy, thus eliminating any right of the trustee, Pantzer, to remuneration and expenses.

The court examined the statutory framework and concluded that the annulment of bankruptcy under section 74(5) of the Act effectively erased the bankruptcy and its consequences unless specified otherwise by the Act. Given this, the court found that there was no trust estate from which the trustee could be indemnified for any remuneration, costs, charges, or expenses. The statutory provisions and regulations concerning a trustee's remuneration, found in section 162 and regulations 8.08 and 8.09 of the Bankruptcy Regulations, did not apply post-annulment. Consequently, the court held that the trustee had no lawful entitlement to claim remuneration, costs, charges, or expenses from the bankrupt under the Act or at common law. Any potential right to such claims was contingent on orders made by the Court on 11 March 2002, not the Act or the Regulations. Therefore, the court ruled that the applicant’s arguments did not constitute an answer to the trustee’s application for remuneration and expenses.

Orders

Orders of the court

1. The separate question ordered on 27 March 2003 be answered as follows:

Q: Do the matters relied upon by the applicant in pars 1 – 20 of his notice of intention to oppose the respondent’s application made by his notice of motion filed on 31 October 2002, constitute an answer to the respondent’s application?

A: The matters stated in pars 1 – 17 of the applicant’s notice of intention to oppose do not constitute any such answer; and the matters stated in pars 18 – 20 do not purport to make such answer.

2. The applicant pay the respondent’s costs of the separate question.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BEAUMONT J

As mentioned, for present purposes, the applicant relies upon the following grounds in his notice filed on 18 November 2002.“1.On 15 March 2002, the creditors of the Applicant passed a special resolution accepting a proposal by the Applicant pursuant to section 73(4) of the Bankruptcy Act, 1966 (“the Act”).2.By virtue of the matters pleaded in paragraph 1 above, pursuant to section 74(5) of the Act, the bankruptcy of the Applicant was annulled upon the passing of the aforesaid special resolution.3.By virtue of section 74(6) of the Act, the property of the Applicant which was formerly vested in the Respondent reverted to the Applicant subject to the terms and conditions of any order of the Court.4.By virtue of the aforesaid, the annulment of the bankruptcy of the Applicant pursuant to section 74(5) on 15 March 2002 was retrospectively effective to annihilate the Applicant’s bankruptcy and its consequences except as otherwise provided by the Act, notably section 74(6) referred to above and prima facie, therefore, the Applicant was, in law, never bankrupt. 5.Therefore as and from 15 March, 2002, the Respondent was not a trustee under the Act, there was no trust estate of the Applicant under the Act, there was no trust estate out of which the Respondent might be indemnified for any remuneration, costs, charges and expenses and there was no bankruptcy under the Act. 6.The annulment of the bankruptcy of the Applicant under section 74(5) of the Act was made under Part IV Division 6 of the Act and not Part VII Division 5 of the Act and therefore section 154 of the Act has no application to the annulment of the bankruptcy of the Applicant.7.As distinct from Part VII Division 5 of the Act, there is no provision in Division 2 of Part IV of the Act that enables or entitles a trustee in bankruptcy or former trustee in bankruptcy to receive payment of or recover remuneration, costs, charges and expenses of the administration of the bankruptcy from the property of the bankrupt or former bankrupt once an annulment occurs under section 74(5) of the Act. 8.By virtue of the matters pleaded above, there is no means within the provisions of the Act that gives a right to or to otherwise entitles the Respondent to claim any remuneration, costs, charges and expenses from the Applicant after the annulment of the bankruptcy pursuant to section 74(5) of the Act. 9.Further or in the alternative to paragraph 8 above, the Act confers no right on a trustee of an estate of a bankrupt to be reimbursed in respect of costs, charges or expenses incurred in the administration of the estate but such right is that provided under general law namely the right to a full indemnity out of the trust estate. 10.Therefore the right of the Respondent to be reimbursed in respect of costs, charges or expenses under the general law ceased upon the annulment of the bankruptcy of the Applicant pursuant to section 74(5) of the Act because upon such annulment there was no trust estate out of which an indemnity could arise. 11.Further or in the alternative to paragraph 8 above, the remuneration as a trustee of an estate of a bankrupt is determined by the Act because a trustee has no common law right to claim for remuneration and in addition, the right of a trustee to recover remuneration is only against the estate of the bankrupt in the due course of administration save where otherwise provided by the Act. 12.The Act does not otherwise provide a means for payment of any remuneration of a former trustee of a former bankrupt in the case of an annulment under section 74(5) of the Act as distinct from an annulment under Division 5 of Part VII of the Act. 13.Therefore the right of the Respondent to be paid remuneration under the Act ceased upon the annulment of the bankruptcy of the Applicant pursuant to section 74(5) of the Act because upon such annulment there was no trust estate out of which the Respondent could be indemnified for such remuneration and the Act makes no other provision for payment of such remuneration upon such annulment under section 74(5) of the Act. 14.By virtue of the matters pleaded above, the Respondent has no right under the Act or at common law to be paid or recover from the Applicant any remuneration, costs, charges and expenses. 15.Therefore the Respondent’s reliance upon section 162 of the Act and regulations 8.08 and 8.09 of the Bankruptcy Regulations (‘the Regulations’) to determine the quantum of any remuneration, costs, charges and expenses is misconceived because the Act and Regulations have no application after the annulment of the bankruptcy of the Applicant pursuant to section 74(5) of the Act. 16.Further by virtue of the annulment, the Court does not have any jurisdiction to deal with the Motion under the Act and in particular section 30 of the Act. 17.Further by virtue of the aforesaid the Respondent is not lawfully entitled to any remuneration, costs, charges and expenses under the Act or the Regulations. 18.The Respondent’s right to remuneration, costs, charges and expenses, if any, is founded in the orders made by this Honourable Court on 11 March 2002 (‘the Orders’) and not in the Act and Regulations. 19.Pursuant to order 1 of the Orders the Respondent is only entitled to recover remuneration, costs, charges and expenses to which he is lawfully entitled or may become lawfully entitled from the Applicant. 20.Unless and until the Respondent is lawfully entitled to recover remuneration, costs, charges and expenses he therefore cannot recover any such remuneration, costs, charges and expenses from the Applicant.”CONCLUSIONS ON THE SEPARATE QUESTION

Ratio Decidendi

Legal Principle Established

Established by: BEAUMONT J

Section 74(6), which is central to the applicant’s argument here, relevantly provides:“(6)Where a bankruptcy is annulled under [s 74], all ... dispositions of property ... by the trustee ... or the Court before the annulment shall be deemed to have been validly made ... but ... the property of the bankrupt still vested in the trustee vests in such person as the Court appoints or, in default of such an appointment, reverts to the bankrupt for all his ... estate or interest in it, on such terms and subject to such conditions (if any) as the Court orders.”THE STATUTORY SCHEME FOR A TRUSTEE’S REMUNERATION Where (as here) the trustee’s remuneration is not fixed by the creditors or the committee of inspection, the trustee is to be remunerated as prescribed by the regulations (s 162(4)). For the purposes of s 162(4) remuneration is to be (a) in accordance with the scale of charges that is (i) set out in the IPAA Guide; and (ii) applicable to the work to be remunerated; and (b) at the level of 85 per cent thereof (reg 8.08). (The statutory scheme should be viewed against the background of the general law that, as a rule, a trustee is entitled to be reimbursed out of trust property for expenses incurred in the execution of the trust (see National Trustees Executors and Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268 at 274, 277).)THE GROUNDS OF THE APPLICANT’S OBJECTION As mentioned, for present purposes, the applicant relies upon the following grounds in his notice filed on 18 November 2002.“1.On 15 March 2002, the creditors of the Applicant passed a special resolution accepting a proposal by the Applicant pursuant to section 73(4) of the Bankruptcy Act, 1966 (“the Act”).2.By virtue of the matters pleaded in paragraph 1 above, pursuant to section 74(5) of the Act, the bankruptcy of the Applicant was annulled upon the passing of the aforesaid special resolution.3.By virtue of section 74(6) of the Act, the property of the Applicant which was formerly vested in the Respondent reverted to the Applicant subject to the terms and conditions of any order of the Court.4.By virtue of the aforesaid, the annulment of the bankruptcy of the Applicant pursuant to section 74(5) on 15 March 2002 was retrospectively effective to annihilate the Applicant’s bankruptcy and its consequences except as otherwise provided by the Act, notably section 74(6) referred to above and prima facie, therefore, the Applicant was, in law, never bankrupt. 5.Therefore as and from 15 March, 2002, the Respondent was not a trustee under the Act, there was no trust estate of the Applicant under the Act, there was no trust estate out of which the Respondent might be indemnified for any remuneration, costs, charges and expenses and there was no bankruptcy under the Act. 6.The annulment of the bankruptcy of the Applicant under section 74(5) of the Act was made under Part IV Division 6 of the Act and not Part VII Division 5 of the Act and therefore section 154 of the Act has no application to the annulment of the bankruptcy of the Applicant.7.As distinct from Part VII Division 5 of the Act, there is no provision in Division 2 of Part IV of the Act that enables or entitles a trustee in bankruptcy or former trustee in bankruptcy to receive payment of or recover remuneration, costs, charges and expenses of the administration of the bankruptcy from the property of the bankrupt or former bankrupt once an annulment occurs under section 74(5) of the Act. 8.By virtue of the matters pleaded above, there is no means within the provisions of the Act that gives a right to or to otherwise entitles the Respondent to claim any remuneration, costs, charges and expenses from the Applicant after the annulment of the bankruptcy pursuant to section 74(5) of the Act. 9.Further or in the alternative to paragraph 8 above, the Act confers no right on a trustee of an estate of a bankrupt to be reimbursed in respect of costs, charges or expenses incurred in the administration of the estate but such right is that provided under general law namely the right to a full indemnity out of the trust estate. 10.Therefore the right of the Respondent to be reimbursed in respect of costs, charges or expenses under the general law ceased upon the annulment of the bankruptcy of the Applicant pursuant to section 74(5) of the Act because upon such annulment there was no trust estate out of which an indemnity could arise. 11.Further or in the alternative to paragraph 8 above, the remuneration as a trustee of an estate of a bankrupt is determined by the Act because a trustee has no common law right to claim for remuneration and in addition, the right of a trustee to recover remuneration is only against the estate of the bankrupt in the due course of administration save where otherwise provided by the Act. 12.The Act does not otherwise provide a means for payment of any remuneration of a former trustee of a former bankrupt in the case of an annulment under section 74(5) of the Act as distinct from an annulment under Division 5 of Part VII of the Act. 13.Therefore the right of the Respondent to be paid remuneration under the Act ceased upon the annulment of the bankruptcy of the Applicant pursuant to section 74(5) of the Act because upon such annulment there was no trust estate out of which the Respondent could be indemnified for such remuneration and the Act makes no other provision for payment of such remuneration upon such annulment under section 74(5) of the Act. 14.By virtue of the matters pleaded above, the Respondent has no right under the Act or at common law to be paid or recover from the Applicant any remuneration, costs, charges and expenses. 15.Therefore the Respondent’s reliance upon section 162 of the Act and regulations 8.08 and 8.09 of the Bankruptcy Regulations (‘the Regulations’) to determine the quantum of any remuneration, costs, charges and expenses is misconceived because the Act and Regulations have no application after the annulment of the bankruptcy of the Applicant pursuant to section 74(5) of the Act. 16.Further by virtue of the annulment, the Court does not have any jurisdiction to deal with the Motion under the Act and in particular section 30 of the Act. 17.Further by virtue of the aforesaid the Respondent is not lawfully entitled to any remuneration, costs, charges and expenses under the Act or the Regulations. 18.The Respondent’s right to remuneration, costs, charges and expenses, if any, is founded in the orders made by this Honourable Court on 11 March 2002 (‘the Orders’) and not in the Act and Regulations. 19.Pursuant to order 1 of the Orders the Respondent is only entitled to recover remuneration, costs, charges and expenses to which he is lawfully entitled or may become lawfully entitled from the Applicant. 20.Unless and until the Respondent is lawfully entitled to recover remuneration, costs, charges and expenses he therefore cannot recover any such remuneration, costs, charges and expenses from the Applicant.”CONCLUSIONS ON THE SEPARATE QUESTION

Citations

AGLC Citation

Wenkart v Pantzer [2003] FCA 315

Most Recent Citation

Wenkart v Pantzer (No 3) [2004] FCA 280

Cases citing this decision · 6 of 6 shown

Cashman v Sydney Water Corporation
[2014] FCCA 1957 Para 9

…In Heinrich v Commonwealth Bank of Australia [2003] FCA 315 at [20], the Full Court of the Federal Court of Australia stated: “The Court must first consider whether the Sequestration Order ought not to have been made. If it so finds, then the Court must consider whether, in the exercise of its discretion, the ban…
Robertson v Ure
[2013] FCCA 812 Para 3

…made. Later evidence of previously unknown facts may disclose matters which show that the sequestration order ought not to have been made. [20] [19] [2003] FCA 315 [20] Per Carr, Finn & Sundberg JJ at [20]…
Wenkart v Pantzer
[2007] FCA 1589 Para 3

…Eight first instance interlocutory judgments were published in this proceeding before it was allocated to my docket in late 2004: Wenkart v Pantzer [2003] FCA 315; Wenkart v Pantzer [2003] FCA 364; Wenkart v Pantzer [2003] FCA 432; Wenkart v Pantzer [2003] FCA 456; Wenkart v Pantzer [2003] FCA 471; Wenkart v Pant…
Pantzer v Wenkart
[2006] FCAFC 140 Para 14

…Aspects of the “Notice of Intention to Oppose Application” were addressed in a judgment of Beaumont J ( Wenkart v Pantzer [2003] FCA 315). His Honour concluded that particular matters articulated in Dr Wenkart’s “Notice” did not constitute an answer or purport to make an answer to Mr Pantzer’s 31 October 2002 app…
Wenkart v Pantzer
[2005] FCA 1572 Para 6

…In Wenkart v Pantzer [2003] FCA 315, published on 9 April 2003, Beaumont J at [20]‑[21] gave consideration to the above orders and held: ‘The effect of the consent orders (doubtless made with a view to achieving acceptance of the applicant’s s 73 proposal) was to defer the resolution of any dispute as to the amou…
Wenkart v Pantzer (No 3)
[2004] FCA 280 Para 6

…on relating to Dr Wenkart’s notice of his intention to oppose the making of the ‘orders in aid’ sought by Mr Pantzer ( Wenkart v Pantzer (No 1) [2003] FCA 315). The question and his Honour’s answer to it were as follows: ‘Q: Do the matters relied upon by the applicant in pars 1 – 20 of his notice of intention to…

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Cases cited in this decision · 7 of 7 shown

Re Macks; Ex parte Saint
[2000] HCA 62 Para 16

…n agreement between the parties. Viewed as an order, the consent orders are to be regarded as valid, unless set aside (see Re Macks; Ex parte Saint (2000) 204 CLR 158 at 177). Viewed as a contract (the orders having been duly entered) the question whether the compromise is to be set aside by a court “depends upon the…
Perri v Coolangatta Investments Pty Ltd
[1982] HCA 29 Para 18

…evidenced in par 2 (specifically) conditional upon annulment on 15 March 2002; and, as Brennan J observed in Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 at 565 – 566: “Though the stipulation specified the event upon the occurrence of which the obligations to complete cease to be contingent, the stipul…
Brown v Heffer
[1967] HCA 40 Para 18

…5 CLR 521] ) neither party is entitled to a decree of specific performance of their respective obligations to complete the sale ( Brown v Heffer [(1967) 116 CLR 344] ) and the purchases have no equitable interest in the property which is the subject of the contract ( McWilliam v. McWilliams Wines Pty. Ltd. [(1964) 11…
McWilliam v McWilliams Wines Pty Ltd
[1964] HCA 6 Para 18

…4] ) and the purchases have no equitable interest in the property which is the subject of the contract ( McWilliam v. McWilliams Wines Pty. Ltd. [(1964) 114 CLR 656] ).”…
Kennedy v Vercoe
[1960] HCA 64 Para 18

…contains no promise that the event will occur. Until the event occurs or the purchasers waive the benefit of the stipulation ( Gange v Sullivan [(1960) 105 CLR 521] ) neither party is entitled to a decree of specific performance of their respective obligations to complete the sale ( Brown v Heffer [(1967) 116 CLR 34…
Harvey v Phillips
[1956] HCA 27 Para 16

…ch would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it ... .” ( Harvey v Phillips (1956) 95 CLR 235 at 243).…
National Trustees Executors & Agency Company of Australasia Ltd v Barnes
[1941] HCA 3 Para 11

…out of trust property for expenses incurred in the execution of the trust (see National Trustees Executors and Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268 at 274, 277).) THE GROUNDS OF THE APPLICANT’S OBJECTION…

Legislation cited in this decision · 1

Bankruptcy Act 1966 (Cth)
74 2 mentions (from Para 1)

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 7051 OF 2002

BETWEEN:	THOMAS RICHARD WENKART APPLICANT
AND:	WARREN PANTZER RESPONDENT
JUDGE:	BEAUMONT J
DATE OF ORDER:	9 APRIL 2003
WHERE MADE:	SYDNEY

JUDGE:	BEAUMONT J
DATE:	9 APRIL 2003
PLACE:	SYDNEY