Wenkart v Pantzer
[2010] FCA 866
•13 August 2010
FEDERAL COURT OF AUSTRALIA
Wenkart v Pantzer [2010] FCA 866
Citation: Wenkart v Pantzer [2010] FCA 866 Parties: THOMAS RICHARD WENKART v WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART, HAPDAY HOLDINGS PTY LTD (ACN 001 185 253), MACQUARIE HEALTH CORPORATION LIMITED (ACN 003 531 860) AND THROVENA PTY LIMITED (ACN 001 738 763); WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART v THOMAS RICHARD WENKART AND HAPDAY HOLDINGS PTY LTD (ACN 001 185 253) File number: NSD 7051 of 2002 Judge: FLICK J Date of judgment: 13 August 2010 Catchwords: PRACTICE AND PROCEDURE – costs – indemnity costs – interest up to judgment – inchoate cause of action
BANKRUPTCY – trustee’s right to remuneration – work reasonably undertaken – rule in Cherry v Boultbee – the decision in Baldry v Jackson
Legislation: Bankruptcy Act 1966 (Cth), ss 73 and 74
Bankruptcy (Estate Charges) Act1997 (Cth)
Bankruptcy Regulations1996 (Cth)
Federal Court of Australia Act1976 (Cth), s 22, s 37M, s 43, s 51ACases cited: Adsett v Berlouis (1992) 37 FCR 201, considered
Airservices Australia v Jeppesen Sanderson Inc [2006] FCA 906, cited
Ansett Australia Ltd v Travel Software Solutions Pty Ltd [2007] VSC 326, 214 FLR 203, cited
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, 258 ALR 14, cited
Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd (No 2) [2010] FCA 277, cited
Baldry v Jackson [1976] 2 NSWLR 415, considered
Barrett Property Group Ltd v Metricon Homes Pty Ltd (No 2) [2007] FCA 1823, cited
Boensch v Pascoe [2007] FCA 1977, 5 ABC(NS) 480, cited
Byrnes v Jokona Pty Ltd [2002] FCA 41, cited
Cherry v Boultbee (1839) 4 My & Cr 442, 41 ER 171, considered
Dias Aluminium Products Pty Ltd v Ullrich Aluminium Pty Ltd (No 2) [2005] FCA 1400, 225 ALR 569, cited
Donald Financial Enterprises Pty Ltd v APIR Systems Ltd (No 2) [2008] FCA 1269, cited
Freeman v Joiner [2005] FCAFC 149, 3 ABC(NS) 332, cited
Frost v Sheahan [2005] FCA 1014, 3 ABC(NS) 288, cited
Genocanna Nominees Pty Ltd v Thirsty Point Pty Ltd [2006] FCA 1268, followed
Gladstone Park Shopping Centre Pty Ltd v Ross Wills (1984) 6 FCR 496, cited
Gray v Gray [2004] NSWCA 408, 12 BPR 22,755, cited
Gray v Guardian Trust Australia Ltd [2002] NSWSC 1218, cited
Hanave Pty Ltd v LFOT Pty Ltd [2004] FCAFC 180, 136 FCR 566, followed
HK Frost Holdings Pty Ltd (in liq) v Darvall McCutcheon (a firm) [1999] FCA 795, applied
In Shoppe Pty Ltd v Smith (1976) 33 FLR 107, 6 ATR 242, cited
McKinnon v Pattison [2009] FCA 1421, cited
O’Keeffe v Hayes Knight GTO Pty Ltd [2005] FCA 389, 218 ALR 604, cited
Pantzer v Wenkart [2006] FCAFC 140, 153 FCR 466, discussed
Perpetual Trustees (WA) Ltd v Equus Corp Pty Ltd (Unreported, Supreme Court of New South Wales Equity Division, Young J, 5 March 1998), cited
Pollack v Retravision (NSW) Ltd (Unreported, Federal Court of Australia, Moore J, 23 December 1996), cited
Pyrenees Vineyard Management Ltd v Frajman [2008] VSC 552, cited
Ruddock v Vadarlis (No 2) [2001] FCA 1865, 115 FCR 229, cited
Seven Network Limited v News Limited [2007] FCA 1062, cited
Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228, 215 ALR 788, cited
SSSL Realisations (2002) Ltd v AIG Europe (UK) Ltd [2006] Ch 610, considered
Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 42 FLR 213, 28 ALR 201, cited
Vamuta Pty Ltd v Sogo Co Ltd (1996) 68 FCR 151, cited
Wenkart v Pantzer [2003] FCA 471, cited
Wenkart v Pantzer (No 8) [2004] FCA 280, 135 FCR 422, cited
Wenkart v Pantzer [2007] FCA 1589, 5 ABC(NS) 642, cited
Wenkart v Pantzer [2007] HCA Trans 99, cited
Wenkart v Pantzer [2008] FCA 1387, cited
Wenkart v Pantzer [2008] FCA 478, 6 ABC(NS) 37, cited
Wenkart v Pantzer [2009] FCA 1086, cited
Whitaker v Commissioner of Taxation (1998) 82 FCR 261, appliedAttorney-General’s Department, A Strategic Framework for Access to Justice in the Federal Civil Justice System, September 2009
Aitken, L ‘Recent applications of the rule in Cherry v Boultbee (or Jeffs v Wood)’ (2010) 84 Australian Law Journal 191
Meagher R, Heydon D and Leeming M, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (4th ed, 2002)
Young P W, Croft C and Smith M L, On Equity (2009)Date of hearing: 7 and 8 June 2010 Date of last submissions: 6 July 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 159 Counsel for the Applicant/ First Cross-Respondent: Mr M L D Einfeld QC and Mr M Green Solicitor for the Applicant/ First Cross-Respondent: Bruce Stewart Dimarco Counsel for the First Respondent/ Cross-Claimant: Ms E Collins Solicitor for the First Respondent/ Cross-Claimant: Bartier Perry Solicitor for the Second Respondents/ Second Cross-Respondent: S Moran & Co, Solicitors
IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY
GENERAL DIVISION
NSD 7051 of 2002
BETWEEN: THOMAS RICHARD WENKART
ApplicantAND: WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
First RespondentHAPDAY HOLDINGS PTY LTD (ACN 001 185 253), MACQUARIE HEALTH CORPORATION LIMITED (ACN 003 531 860) AND THROVENA PTY LIMITED (ACN 001 738 763)
Second RespondentsBETWEEN: WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
Cross-ClaimantAND: THOMAS RICHARD WENKART
First Cross-RespondentHAPDAY HOLDINGS PTY LTD (ACN 001 185 253)
Second Cross-Respondent
JUDGE:
FLICK J
DATE OF ORDER:
13 AUGUST 2010
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The proceeding is stood over to 9:30 am on 20 August 2010 for the purpose of making orders to give effect to these reasons.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY
GENERAL DIVISION
NSD 7051 of 2002
BETWEEN: THOMAS RICHARD WENKART
ApplicantAND: WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
First RespondentHAPDAY HOLDINGS PTY LTD (ACN 001 185 253), MACQUARIE HEALTH CORPORATION LIMITED (ACN 003 531 860) AND THROVENA PTY LIMITED (ACN 001 738 763)
Second RespondentsBETWEEN: WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
Cross-ClaimantAND: THOMAS RICHARD WENKART
First Cross-RespondentHAPDAY HOLDINGS PTY LTD (ACN 001 185 253)
Second Cross-Respondent
JUDGE:
FLICK J
DATE:
13 AUGUST 2010
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 25 September 2009 reasons for yet a further decision in this long-running dispute were published: Wenkart v Pantzer [2009] FCA 1086. It was then stated that that decision and reasons would “hopefully [be] one of the last to be resolved between the parties”.
There is now but little hope that this present decision will be the last. The issues dividing the parties may now be relatively clear – but the ability to resolve the issues, at least before a single Judge of this Court, remains questionable. One or other of the parties contends that some issues have been conclusively resolved by one or other of the many judgments that have to date been delivered, whilst at the same time seeking to unilaterally reserve unto themselves the ability to re-open so much of a judgment with which there is continuing disagreement.
Whether a course can be trodden between now resolving the issues outstanding – or whether some issues will necessarily have to be resolved by a Full Court – remains to be seen. Given the difficulties, however, the most prudent course is to attempt to resolve such issues as can be resolved by a single Judge whilst at the same time making such findings as may be of assistance to a Full Court. The time has well come when this litigation should be brought to a close – either in this judgment or on appeal.
As explained in the September 2009 reasons for decision, the dispute has its origins almost a decade earlier in October 1999. An order had been made sequestrating the estate of Dr Wenkart. Mr Pantzer was appointed the trustee in bankruptcy by an order of this Court on 28 October 1999. The bankruptcy was annulled on 15 March 2002. An overview of the history of the litigation may be found in a number of judgments: e.g., Wenkart v Pantzer (No 8) [2004] FCA 280 at [2] to [37], 135 FCR 422 per Lindgren J; Wenkart v Pantzer [2007] FCA 1589 at [1] to [35], 5 ABC(NS) 642 at 644 to 652 per Branson J.
The degree of exasperation that is now expressed is sufficiently explained by stating that as at March 2002 the outstanding claims then being advanced by Mr Pantzer fell far short of the amount now claimed. Written submissions filed on behalf of Mr Pantzer on 14 May 2010 in advance of a hearing in June 2010, for instance, contended that a claim once made for payment of $193,531.18 had, as at the date of the submissions, attracted interest in the sum of $476,938.01.
In the absence of explanation, the fact that the disputed sum has not been either paid or compromised is scandalous. The absence of agreement has necessarily occasioned numerous applications to this Court, both at first instance and on appeal. The costs to the parties – and the costs to the community in the continued and repeated provision of judicial services to resolve their dispute – is reminiscent of the infamous litigation in Jarndyce v Jarndyce immortalised in Charles Dickens’ Bleak House. Regrettably, whilst the Dickens tale may have been partly fiction; the present tale is all fact.
The present chapter in this sorry tale opens with a hearing on 23 March 2010. No certainty then prevailed that the issues to be resolved were the entirety of all outstanding issues. In order to ensure as far as possible that this would be the last forensic stoush between the parties, as opposed to yet further forensic foreplay preceding yet further issues to be later identified, directions were then made that the parties were to exchange a draft statement of what they each perceived to be the outstanding issues to be determined by the Court. The draft was intended to be of assistance to the later provision of an identified set of issues for final resolution. The task of preparing a draft, and then a final version, was intended to minimise the prospect of further “wriggle room” during the course of oral submissions. Such delay as was necessarily occasioned by such an exercise was considered preferable to a course which had the potential to only resolve some – but not all – of the issues dividing the parties. Such a course is also now expressly sanctioned by s 37M of the Federal Court of Australia Act1976 (Cth) and the stated purpose of resolving disputes “as quickly, inexpensively and efficiently as possible”.
Short Minutes of Orders giving effect to these directions were made on 24 March 2010.
To unravel the outstanding dispute it is perhaps not surprising that it is, regrettably, necessary to revisit many of the earlier decisions given by other Judges of this Court. Indeed, the occasion to revisit those decisions is becoming an exercise in legal history. Reproduction of extracts from those earlier judgments may, however, make the task of those who will inevitably be invited to review the present reasons for decision less cumbersome than may otherwise be the case. All three of the former Judges to whom this proceeding has been docketed – namely, Justices Beaumont, Lindgren and Branson – are no longer Judges of this Court.
THE ISSUES TO BE RESOLVED
Given the protracted history of this proceeding to date, it is prudent to record the statement of those issues which Dr Wenkart and Mr Pantzer now want resolved.
These issues, it is now agreed between the two of them, exhaustively state all of the outstanding issues which they each wish to have resolved before the proceeding can finally be concluded.
On the part of Dr Wenkart, his written statement of issues dated 6 May 2010 provides as follows:
Dr Wenkart contends that the following issues remain for the Court’s determination at the hearing listed for 7 and 8 June 2010.
1.Whether, Mr Pantzer having had no claim to relief when these proceedings commenced on 31 October 2002 (as held by Branson J on 11 April 2008), is nevertheless entitled to relief in respect of matters occurring after 31 October 2002.
2.Whether the commencement and conduct by Mr Pantzer of the proceedings has not been reasonable in the circumstances upon the principles stated in Adsett v Berlouis (1992) 37 FCR 201.
3.Whether Mr Pantzer may receive moneys from Dr Wenkart without first paying to Dr Wenkart moneys owing to Dr. Wenkart as at 15 March 2002 (annulment of the bankruptcy) together with interest.
4.Whether Dr Wenkart is entitled to interest on the moneys payable by Mr Pantzer to him as the annulment of the bankruptcy.
5.Costs.
Dr Wenkart seeks an order that Mr Pantzer pay him the sum of $240,352.20.
On the part of Mr Pantzer, the written Outline of Submissions as filed on his behalf on 14 May 2010 provide as follows (without alteration):
Those issues are as follows:
(a)the proper construction of the orders by Beaumont J on 11 March 2002;
(b)whether Mr Pantzer was liable as at the date of annulment of Dr Wenkart’s bankruptcy to pay monies to Dr Wenkart;
(c)whether Mr Pantzer was lawfully entitled or may become lawfully entitled as at 31 October 2002 to recover from Dr Wenkart any remuneration, costs, charges and expenses;
(d)whether Mr Pantzer is presently lawfully entitled to recover from Dr Wenkart any remuneration, costs, charge and expenses;
(e)whether Mr Pantzer is entitled to declaratory relief in respect of remuneration, costs, charges and expenses which he may become lawfully entitled to recover from Dr Wenkart;
(f)what is the proper exercise of the Court’s discretion in relation to the costs of these proceedings;
(g)whether any party to the proceedings has an entitlement to interest.
In contrast to the orders sought by Dr Wenkart, and perhaps not surprisingly, Mr Pantzer, in his written submissions dated 14 May 2010, seeks (inter alia) an order that Dr Wenkart is to pay him the sum of $193,531.18 plus interest in the amount of $476,938.01.
As the statements of issues make readily apparent, the essence of the dispute may be simply stated as being whether Mr Pantzer owes Dr Wenkart moneys or whether it is Dr Wenkart who owes Mr Pantzer moneys.
Following the hearing held on 7 and 8 June 2010, the final written submissions filed on behalf of Dr Wenkart were filed with the Court on 6 July 2010.
A convenient starting point for the resolution of the competing positions is:
·the events of March 2002.
Thereafter, it is convenient to then consider:
·the effect of the agreement recorded in the March 2002 orders;
·the filing of the “cross-claim” by Mr Pantzer in October 2002 and the identification of the relief then claimed;
·the ambit of the disputes to be resolved;
·the table which was prepared by a Deputy District Registrar of this Court in May 2009 recording the receipts and payments made by Mr Pantzer;
·whether there was a “surplus” of moneys in the hands of Mr Pantzer as at 15 March 2002 such as to preclude Mr Pantzer making any claim without first accounting for that “surplus”;
·whether the “inchoate” nature of the “cross-claim” as at October 2002 precludes the granting of relief;
·the reasonableness of the course pursued by Mr Pantzer;
·the manner in which Mr Pantzer claims an entitlement to $193,531.18; and
·the entitlement of Mr Pantzer to further declaratory relief.
There then remains the necessity to consider:
·whether any order should be made as to the payment of interest pursuant to s 51A of the Federal Court of Australia Act1976 (Cth); and
·the appropriate order to be made as to costs, including submissions in respect to the award of indemnity costs.
THE EVENTS IN MARCH 2002
The events in March 2002 assume importance for either of two reasons, namely:
·it was on 11 March 2002 that Beaumont J made consent orders recording an agreement between Dr Wenkart and Mr Pantzer. The terms of that agreement and the orders then made were to prove to have continuing significance until the present day; and
·it was on 15 March 2002 that there was a meeting of creditors and a composition accepted pursuant to s 73 of the Bankruptcy Act1966 (Cth).
Section 73 of the Bankruptcy Act1966 (Cth) contemplates that a bankrupt may put a proposal to his creditors for a composition or a scheme of arrangement. Upon the acceptance of the proposal by a special resolution of the creditors, the bankruptcy is annulled: Bankruptcy Act 1966 (Cth), s 74.
In the present proceeding, Dr Wenkart sought on a number of occasions to put to his creditors a proposal to secure the annulment of his bankruptcy.
The proposal that ultimately was put to the creditors followed orders made by Beaumont J on 1 and 11 March 2002. On 1 March 2002 consent orders were made requiring the convening of a meeting pursuant to s 73 within 14 days. On the latter occasion His Honour made further consent orders. Those orders were as follows:
BY CONSENT THE COURT ORDERS AND NOTES THE AGREEMENT OF THE PARTIES AS FOLLOWS:-
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 [XX] and known as [XX] Street, Paddington in favour of Warren Pantzer to secure the amount in paragraph 1.
3.Hapday Holdings Pty Ltd ACN 001 185 253 hereby postpones mortgage [XX] over the land in paragraph 2 in favour of the interest of Warren Pantzer pursuant to the charge in paragraph 2.
4.The orders and agreement in paragraphs 1, 2 and 3 are only to have effect if the bankruptcy of Thomas Richard Wenkart is annulled pursuant to s74 of the Bankruptcy Act on 15 March 2002.
5.Thomas Richard Wenkart consents to Warren Pantzer lodging a Caveat over the property in paragraph 2 for the purpose of securing the charge in paragraph 2 and Warren Pantzer will upon payment of the remuneration, costs, charges and expenses in paragraph 1 provide a Withdrawal of Caveat forthwith.
The first of the issues raised on behalf of Mr Pantzer – namely the correct construction of these orders – was ultimately not contentious. What was contentious was the effect of or the consequences of the agreement recorded in those orders.
If any question as to the date upon which Mr Pantzer may have become “lawfully entitled” is presently left to one side, it is clear that the orders made by Beaumont J embraced:
·not only the amounts to which Mr Pantzer was lawfully entitled as at 11 March 2002
but also
·those amounts to which he “may become lawfully entitled” thereafter.
That construction of the orders, it is considered:
·flows naturally from the terms of Order 1 itself;
·is not contrary to any conclusion previously expressed by any other Judge of this Court; and
·is supported by the construction given to the orders when the matter came before the Full Court in Pantzer v Wenkart [2006] FCAFC 140 at [44], 153 FCR 466 at 477.
So much was accepted by Senior Counsel on behalf of Dr Wenkart during the course of oral submissions. That concession was properly made. The question as to when Mr Pantzer became “lawfully entitled” was resolved by Branson J as being “an agreement to pay within 28 days of the determination of the quantum of ‘the same’”: Wenkart v Pantzer [2008] FCA 478 at [85], 6 ABC(NS) 37 at 58 to 59.
An event that also took place on 11 March 2002 was the sending to creditors of a Notice of Meeting. The Report to Creditors dated the same date referred to orders made by consent on 1 March 2002 by Beaumont J that two bank cheques each in the sum of $105,000 be delivered to Mr Pantzer prior to the meeting and further stated in part as follows:
The following remuneration, costs and expenses remain outstanding and unpaid as at the date of this report (figures include GST):
Warren Pantzer, Trustee (as at 4 March 2002)
$70,830.76
Lawler Partners (as at 4 March 2002)
$136,506.27
Cutler Hughes & Harris (approx amount as at 27 February 2002)
$260,000.00
The meeting was held on 15 March 2002 as planned. At that meeting:
·a resolution was put and carried that $105,000 be paid to Mr Pantzer as trustee;
·a further resolution was put (but not carried) that Mr Pantzer be paid an additional sum of $115,406.07;
·the trustee’s representative advised that 85% of the sum of $115,406.07 would be claimed by the trustee pursuant to s 162(4) of the Bankruptcy Act1966 (Cth) and Regulation 8.08; and
·the representative for Cutler Hughes & Harris advised that the sum of approximately $337,301.72 was owing by the trustee to Cutler Hughes & Harris but that a payment of $105,000 pursuant to Dr Wenkart’s proposal would reduce that amount.
A motion was then put that “the Bankrupt’s proposal for a Composition dated 18 January 2001 as amended be accepted pursuant to Section 73 of the Bankruptcy Act 1966”. That motion was carried and the bankruptcy was thereby annulled.
THE EFFECT OF THE AGREEMENT
At the forefront of the oral submissions advanced by Senior Counsel on behalf of Dr Wenkart was a deceptively simple proposition – i.e., the terms of the agreement recorded in the orders of Beaumont J of 11 March 2002 were such that Dr Wenkart agreed to provide his Paddington property as security for the payment to Mr Pantzer of both his existing claims and his future claims and to pay those amounts within 28 days of the quantum of those claims being determined. Dr Wenkart says there has never been any determination of the quantum of those claims and, accordingly, no liability to pay the amounts which have from time to time been claimed by Mr Pantzer.
The effect of the agreement, so Dr Wenkart contends, is to confine Mr Pantzer to recourse against the Paddington property.
Notwithstanding the fact that the submission is not one without considerable merit, the construction of the agreement advanced on behalf of Dr Wenkart is nevertheless rejected.
At the time of the agreement, the claims which were envisaged were those outlined in the Report to Creditors. The agreement, it is considered, cannot be construed as a constraint upon Mr Pantzer seeking such other avenues of legal redress as were or are now open to him should Dr Wenkart continue to resist all claims for payment.
A submission repeated on Dr Wenkart’s behalf that it would be fundamentally unjust to now allow Mr Pantzer to seek to impose personal liability on Dr Wenkart – as opposed to recourse exclusively to the Paddington property – is also rejected. There is simply no evidentiary basis upon which any view could be formed that the value of the Paddington property would still not exceed the amount now claimed.
OCTOBER 2002
The attempts by Mr Pantzer to recover moneys claimed after the meeting of creditors commenced in April 2002.
On 22 April 2002 Mr Pantzer requested payment of the 85% within 28 days. It was not paid. Dr Wenkart complained to the Insolvency and Trustee Service Australia claiming that the amount was excessive. That body responded on 28 June 2002 stating that it had “recently inspected Mr Pantzer’s file in relation to your bankruptcy, from cover to cover as part of the routine inspection program carried out by this office. It appeared that remuneration was properly approved and I do not consider that work has been carried out unnecessarily …”.
The moneys remained unpaid.
It was on 31 October 2002 that Mr Pantzer filed a Notice of Motion seeking orders permitting him to sell the Paddington property. The Motion sought “an order in aid of [the] order made 11 March 2002”. This Motion was subsequently characterised as a “cross-claim”.
The Motion sought an order (inter alia) that Mr Pantzer “be given power of sale of the property” at Paddington and power to deduct from the proceeds of sale various amounts.
But the difficulty then confronting Mr Pantzer in recovering the amount claimed of $193,531.18 is the fact that as at 31 October 2002 he was not then entitled to “orders in aid” of the order made on 11 March 2002. So much was the conclusion of Branson J in her April 2008 judgment: Wenkart v Pantzer [2008] FCA 478, 6 ABC(NS) 37. Her Honour there relevantly concluded:
Position as at 31 October 2002
[84] … the significance of the date 31 October 2002 is that it is the date of the filing of Mr Pantzer’s deemed cross-claim seeking “an order in aid of [the Court’s] order made on 11 March 2002 by appointing Warren Pantzer as Trustee for Sale of the [Paddington property]” (see [2007] FCA 1589 at [17]).
[85] …[I]t is, I think, uncontroversial that Dr Wenkart’s agreements to pay the remuneration, costs, charges and expenses to which Mr Pantzer is “lawfully entitled” from him is an agreement to pay within 28 days of the determination of the quantum of “the same”. The charge over the Paddington property secures the payments by him of the relevant amount within that period of time. That is, Mr Pantzer is not entitled to exercise rights under the charge created by order 2 of the consent orders until Dr Wenkart defaults on his agreement to pay. By filing his cross-claim Mr Pantzer sought to exercise rights in reliance on that charge.
Her Honour then went on to conclude:
Conclusion on cross-claim
[90] As already mentioned, order 1 of the consent orders of 11 March 2002 recorded that Dr Wenkart relevantly agreed to pay the remuneration, costs, charges and expenses to which Mr Pantzer was lawfully entitled or may become lawfully entitled “within 28 days of determination of the quantum of the same”. Having regard to the approach of the Full Court in Pantzer v Wenkart (2006) 153 FCR 466 … , it seems that order 1 must be understood distributively; that is, as recording an agreement that upon the quantum of any claim by Mr Pantzer for remuneration, costs, charges and expenses being determined, Dr Wenkart agreed to pay the same within 28 days.
[91] I conclude that as at the date that the cross-claim was filed, Mr Pantzer, in his capacity as trustee of Dr Wenkart’s bankrupt estate, had received a larger amount by way of receipts than the determined quantum of the remuneration, costs, charges and expenses to which he was lawfully entitled. Mr Pantzer has therefore failed to demonstrate that, as at the date of the filing of his cross-claim, he was entitled to “orders in aid” of the consent orders made on 11 March 2002.
Her Honour, however, also went on to further address how the outstanding claims of Mr Pantzer were to be resolved as follows:
[92] Nonetheless, I do not accept the submission of Dr Wenkart that it would be appropriate simply to dismiss the cross-claim with costs. Were this course adopted Mr Pantzer could simply institute a fresh application seeking to enforce the charge over the Paddington property. The regrettably long and complex history of this matter renders such an outcome even more undesirable than might ordinarily be the case. The appropriate way to deal with the premature filing of Mr Pantzer’s cross-claim is, in my view, by the making of appropriate costs orders. This will require, as a first step, the identification of the date, if any, on which 28 days had passed from the determination of the quantum of an amount by way of remuneration, costs, charges and expenses to which Mr Pantzer is lawfully entitled that resulted in the aggregate of such determinations exceeding $769,191.66 (ie the total amount received by Mr Pantzer as trustee of Dr Wenkart’s estate). If the parties are unable to reach agreement on this question, I propose to make an order for the making of an inquiry by a Registrar (O 39, rr 2 and 9 of the Federal Court Rules 1979 Cth).
It was this proposed order, later made on 16 September 2008, that led to the Deputy District Registrar holding an inquiry and certifying that “the date, if any, on which 28 days had passed from the determination of the quantum of an amount by way of remuneration, costs, charges and expenses to which Mr. Pantzer is lawfully entitled from Dr. Wenkart … is 10 January 2005”. A hearing to resolve an “objection” to that certificate was heard and resolved in September 2009: Wenkart v Pantzer [2009] FCA 1086.
It should be noted that, after the April 2008 judgment, both Dr Wenkart and Mr Pantzer applied unsuccessfully to have various paragraphs of the judgment “reconsidered” or “withdrawn”. Her Honour published further reasons for so deciding in a decision published on 16 September 2008: Wenkart v Pantzer [2008] FCA 1387. In doing so, Her Honour referred to an exchange between then Senior Counsel for Dr Wenkart and the Court and continued:
[18] The above exchange caused me to believe that Dr Wenkart accepted that, in determining Mr Pantzer’s cross-claim, the Court could take into account amounts to which Mr Pantzer became “legally entitled” from Dr Wenkart within the meaning of the consent orders made by Beaumont J on 11 March 2002 after the date on which the cross-claim was filed — albeit that he contended that the preferable course would be not to do so. I indicated in my reasons for judgment of 11 April 2008 at [92] why I regarded the option of simply dismissing Mr Pantzer’s cross-claim on the basis that it had been instituted prematurely to be undesirable. It seemed to me to be a course likely to result in the institution of yet further litigation between the parties. This did not seem to me to be in the public interest or in the interests of the parties, particularly having regard to the Court’s wide powers to formulate orders for costs. It may be that I would have taken a different view had Dr Wenkart, at an early stage in this regrettable litigious saga, identified, perhaps as a preliminary point for the Court’s determination, his claim that Mr Pantzer’s cross-claim was bound to fail as it had been filed prematurely. He did not do so. Rather, as it seems to me, he utilised the proceeding as a vehicle to obtain judicial review of virtually every aspect of Mr Pantzer’s claim for remuneration as trustee of his estate.
But whatever the date may have been as to when “28 days had passed”, there is no doubt that the remuneration, costs, charges and expenses being claimed by Mr Pantzer otherwise fell within Order 1 of the 11 March 2002 orders. That was the conclusion of the Full Court in Pantzer v Wenkart [2006] FCAFC 140, 153 FCR 466. Black CJ, Ryan and Moore JJ there concluded:
[40] In our opinion, the remuneration, costs, charges and expenses claimed by Mr Pantzer after 11 March 2002 and, in particular, those associated with the litigation that flowed from Mr Pantzer’s application of 31 October 2002 and for which each taxation certificate issued, were comprehended by order 1 of the consent orders of 11 March 2002. The application on 31 October 2002 was for an order appointing Mr Pantzer as trustee for sale of the property secured by the charge that had been agreed to and embodied in the orders of 11 March 2002. The 31 October 2002 application was instituted to give practical effect to a benefit that flowed naturally and directly to Mr Pantzer from the orders of 11 March 2002.
THE CONFINED AMBIT OF THE DISPUTES TO BE RESOLVED?
Senior Counsel on behalf of Dr Wenkart placed at the forefront of his submissions the proposition that the only matter presently before the Court involved the claims for relief as set forth in the Notice of Motion filed on 31 October 2002.
Given the reliance placed by Senior Counsel on that Notice of Motion, its terms should be set forth. It is as follows:
The Respondent will at 9:45am on 5 day of November 2002, move the Court for the following orders:-
1.That the Court make an order in aid of its order made 11 March 2002 by appointing Warren Pantzer as Trustee for Sale of folio identifier [XX] known as [XX] Street, Paddington (‘the property’) pursuant to security granted on 11 March 2002 for the purpose of realising that property to enable payment to the Respondent of items in paragraph 2 together with payment of any charge payable by the Respondent pursuant to the Bankruptcy Estate Realisation Charges Act, 1997.
2.That the Respondent be given power of sale of the property at auction or by private treaty and the said Trustee be empowered to deduct from the proceeds of sale:
(a) The Trustee’s remuneration of $98,095.16;
(b) Charges payable by the Respondent under the Bankruptcy Estate Realisation Charges Act, 1997
(c) legal fees due to Cutler Hughes & Harris with respect to a Federal Court taxation of costs relevant to the bankrupt estate of Richard Thomas Wenkart and secured by order of the Federal Court made in these proceedings on 11 March 2002 which are being taxed;
(d) The Trustee’s remuneration costs, fees and expenses of finalising the bankrupt estate of the Applicant and of determining these proceedings;
(e) the commission and other expenses of any real estate agent employed by the Trustees;
(f) the legal expenses of the Trustee in respect of the sale;
(g) the legal expenses of transferring the land to the purchaser;
(h) the legal expenses of this motion;
(i) the Trustee’s remuneration of acting on the sale;
(j) the balance to Thomas Richard Wenkart.
3.That the Applicant give the Respondent as Trustee for Sale vacant possession of the property.
4.That a Writ of Possession of [XX] Street, Paddington being folio identifier [XX] issue 28 days after the date of this order.
5.The Applicant pay the Respondent’s costs of this Motion on an indemnity basis.
6.Such further or other order as the Court deems fit.
The Notice of Motion as filed on 31 October 2002, it should be noted, was later amended by the filing of a Further Amended Notice of Motion on 8 February 2005 and the filing of a Cross-Claim on 23 February 2005. Both of those amendments confined relief to “an order in aid” of the March 2002 orders.
The focus of that Notice of Motion, so it was contended by counsel for Dr Wenkart, was confined to seeking an order “in aid of [the] order made on 11 March 2002 by appointing Warren Pantzer as Trustee for Sale …”. And the orders made in March 2002 themselves embraced an agreement to pay the amount to which Mr Pantzer was “lawfully entitled - or may become lawfully entitled … within 28 days of determination of the quantum of the same …”.
Given the conclusion of Branson J in Wenkart v Pantzer [2008] FCA 478, and the subsequent comments made in Wenkart v Pantzer [2009] FCA 1086, it is simply said that no further claim for relief may now be advanced.
Construed according to its terms, it is submitted that Branson J made orders to facilitate the identification of that date and the Certificate of the Deputy District Registrar issued in May 2009 identifies the date “on which 28 days had passed” as being 10 January 2005.
Orders should now be made, so it is contended on behalf of Dr Wenkart, that give effect to this decision and no further claim to relief should be entertained.
Such a confined ambit of the issues to be resolved is rejected for a number of reasons.
First, the Notice of Motion as filed on 31 October 2002 was not confined in its terms to merely seeking an order “in aid” of those previously made by Beaumont J. It expressly sought “[s]uch further or other order as the Court deems fit”. Although Motions frequently claim such relief, and although in the vast majority of applications made it may never be necessary to rely upon such a claim to relief, Motions are so drafted not as a mere matter of form.
Second, both the agreement embraced within Order 1 as made by Beaumont J in March 2002 and the Notice of Motion as filed in October 2002 (and in particular paragraph 2) contemplated the payment of moneys which were not then capable of quantification or determination. Order 1 thus referred to amounts to which Mr Pantzer “may become lawfully entitled”. And paragraph 2 of the Motion, for example, sought an order that authorised Mr Pantzer to deduct from the proceeds of sale of the property an amount for the “Trustee’s remuneration costs, fees and expenses of finalising the bankrupt estate …”. Importantly, however, it is not considered that the October 2002 Motion can be construed as any attempt to confine or vary the agreement which had previously been reached and recorded by Beaumont J. That Motion may well have been intended as a means whereby the entirety of then outstanding claims could be brought to finality; but it cannot be construed as a constraint or limitation upon the agreement.
Thirdly, irrespective of whether the 31 October 2002 Notice of Motion had been prematurely filed, there remained to be resolved the quantification of the outstanding claims being advanced by Mr Pantzer.
Finally, if at all possible, a Court should grant such relief as best resolves “as far as possible, all matters in controversy between the parties”: Federal Court of Australia Act1976 (Cth), s 22. And s 23 confers power upon the Court to “make orders of such kinds … as the Court thinks appropriate.” Given the constant claims being advanced by Mr Pantzer, and the identification of those claims at various stages during the course of this proceeding before various Judges, it is not considered that either party can claim at this stage of their protracted litigation that they have been denied an adequate opportunity to address the merits of those claims.
Nor is it considered that the decision of Branson J in April 2008 confines the relief which can now be claimed.
THE TABLE OF RECEIPTS AND PAYMENTS
The dispute which has engulfed the parties inevitably made it necessary at some point of time to try and unravel the amount of money that had come into the control of Mr Pantzer and the amounts that had been paid by Mr Pantzer and the amounts to which he was entitled to receive as remuneration.
In September 2008 Branson J thus made orders, including an order that a Registrar “conduct an inquiry to determine the date, if any, on which 28 days had passed from the determination of the quantum of an amount by way of remuneration, costs, charges and expenses to which Mr Pantzer is lawfully entitled from Dr Wenkart that resulted in the aggregate of such determinations exceeding $769,191.66”: Wenkart v Pantzer [2008] FCA 1387.
A Deputy District Registrar conducted the inquiry as ordered. In May 2009 a certificate was issued which stated as follows:
Certificate pursuant to Order 39 Rule 10 of the Federal Court Rules.
I, Paddy Hannigan, a Deputy District Registrar of the Federal Court of Australia certify that the date, if any, on which 28 days had passed from the determination of the quantum of an amount by way of remuneration, costs, charges and expenses to which Mr Pantzer is lawfully entitled from Dr Wenkart that resulted in the aggregate of such determinations exceeding $769,191.66 is 10 January 2005.
The judgment previously delivered on 25 September 2009 was a “hearing” pursuant to O 39 r 10(3) of the Federal Court Rules to resolve an “objection” to that Certificate.
For the purposes of preparing her Certificate, the Deputy District Registrar compiled the following “table of receipts and payments”:
Date
Description
Amount
Balance
Payments received by the Trustee (Receipts)
$769,191.66
$769,191.66
Less Payments made
10.12.1999
Trustees remuneration
$60,744.30
$708,447.36
10.12.1999
Future trustee remuneration
$80,000.00
$628,447.36
28.3.2000
Trustee remuneration
$11,811.40
$616,635.96
28.3.2000
Future Trustee remuneration
$68,188.60
$548,447.36
15.3.2002
Trustee remuneration at annulment meeting
$105,000.00
$443,447.36
15.3.2002
Cutler Hughes and Harris at annulment meeting
$105,000.00
$338,447.36
Amounts to which the trustee is lawfully entitled
15.3.2002
Outstanding remuneration
$98,095.16
$240,352.20
17.2.2003
Cutler Hughes and Harris unpaid legal fees
$163,477.54
$76,874.66
13.12.2004
Taxing Officer Certificate for trustee remuneration
$83,219.82
($6,345.16)
13.12.2004
Certificate of Taxation
$86,736.12
($93,081.28)
12.01.2005
Certificate of Taxation
$33,295.95
($126,377.23)
10.06.2005
Bankruptcy Estate Charge
$20,000.00
($146,377.23)
17.01.2007
Letter notifying remuneration and costs to 31 December 2006
$159,192.82
($305,570.05)
19.01.2007
Letter notifying unpaid legal fees
$302,682.97
($608,253.02)
The decision of Branson J in September 2008 and the table prepared by the Deputy District Registrar are a convenient starting point to resolve two of the submissions now advanced on behalf of Dr Wenkart, namely:
·whether Mr Pantzer may receive moneys from Dr Wenkart without first paying Dr Wenkart the balance of $240,352.20 outstanding as at 15 March 2002. This submission invoked “the rule in Cherry v Boultbee”; and
·whether as at 31 October 2002 Mr Panzter had any cause of action when he filed his Notice of Motion. This submission invoked the New South Wales Court of Appeal decision in Baldry v Jackson [1976] NSWLR 415.
If neither of these submissions precludes Mr Pantzer now seeking the relief claimed, there remains to be resolved:
·the entitlement of Mr Pantzer to the sum of $193,531.18 and his entitlement to declaratory relief.
The first two submissions are rejected. The remaining matter therefore arises for resolution.
CHERRY v BOULTBEE
The reliance placed by Dr Wenkart upon “the rule in Cherry v Boultbee” starts from an assumption that as at 15 March 2002 funds totalling $769,191.66 had been received by Mr Pantzer as trustee and the further assumption that as at that date there remained a balance of $240,352.20 payable by Mr Pantzer to Dr Wenkart.
Both of those factual assumptions, contends Dr Wenkart, follow from the acceptance of the “table of receipts and payments” prepared by the Deputy District Registrar in her inquiry of May 2009. The sum of $240,352.20 is characterised on behalf of Dr Wenkart as a “surplus”.
The submission on behalf of Dr Wenkart thereafter asserts that as at 15 March 2002, the date of annulment, Mr Pantzer was thereafter not entitled to receive further payment from Dr Wenkart without first paying to him the sum of $240,352.20.
The rule in Cherry v Boultbee (1839) 4 My & Cr 442, 41 ER 171 has been described as a “commonsense rule of fairness”: Aitken, ‘Recent applications of the rule in Cherry v Boultbee (or Jeffs v Wood)’ (2010) 84 Australian Law Journal 191 at 191.
The manner in which the rule operates has recently been summarised as follows by Chadwick LJ in SSSL Realisations (2002) Ltd v AIG Europe (UK) Ltd [2006] Ch 610:
[12] The rule in Cherry v Boultbee is applied in equity to the distribution of a fund. Put very shortly (at this stage) equity requires that a person cannot share in a fund in relation to which he is also a debtor without first contributing to the whole by paying his debt. The operation of the rule may be illustrated by an example. Suppose A is indebted to B in the sum of £1,000. B dies leaving his residuary estate to be shared equally amongst four beneficiaries, of which A is one. After the payment of B’s debts, administration expenses and specific legacies (but before A has paid the £1,000) the amount of the residuary estate in the hands of B’s executors is £10,000. A must bring his debt into account before he can receive his share. So the amount which he will receive will be £1,750 (1/4 of {£10,000 + £1,000} - £1,000). The other three beneficiaries will each receive £2,750. It can be seen that, if A’s debt were greater than his aliquot share of the whole, he would receive nothing in the distribution. ({1/n (x+y) - y} < 0, if x/(n-1) < y).
In Pyrenees Vineyard Management Ltd v Frajman [2008] VSC 552, Judd J described the operation of the rule as follows:
[39] The principle underlying the rule in Cherry v Boultbee is that the person controlling a fund, whether as trustee, liquidator or in some other capacity, may deduct from the entitlement of a beneficiary any amount the beneficiary is obliged to contribute to the fund. The person administering the fund may invoke the rule to protect the fund from claims to a distribution by beneficiaries with an unsatisfied obligation to the fund. …
The rule is not confined to situations where “debts at law are owing by ‘A’ to ‘B’ and ‘B’ to ‘A’”. The “equity illustrated by Cherry v Boultbee is applicable in situations where one of the parties is only entitled in equity or beneficially to money and there is a common law debt owing on the other side”: Perpetual Trustees (WA) Ltd v Equus Corp Pty Ltd (Unreported, Supreme Court of New South Wales Equity Division, Young J, 5 March 1998). Young J there went on to conclude:
… There is no reason why a Court of Equity should not apply the equity illustrated in Cherry v Boultbee where one person merely has an equitable title …
The rationale of the equity is that if a person has to contribute to a fund he or she should not be able to have the fund dissipated by collecting from it before he or she has made contribution; that equity will not apply where it is contrary to statute or where it is contrary to the agreement of the parties, or otherwise the circumstances show that it would not be in accordance with conscience that it should apply.
In Gray v Guardian Trust Australia Ltd [2002] NSWSC 1218, Austin J summarised the principles as follows:
The rule in Cherry v Boultbee
[108] There was no real dispute as to the applicable legal principles concerning the rule in Cherry v Boultbee. The following propositions appear to me to be pertinent:(1)where a person is entitled to participate in a fund, but is also bound to make a contribution into that fund, he cannot be allowed so to participate unless he has fulfilled his duty to contribute: …;
(2)this principle applies in respect of a beneficiary of the estate of a deceased person who has an obligation to contribute to the estate (for example, where the beneficiary is indebted to the estate);
(3)the principle applies to a beneficiary who is indebted to an estate even where the debt is statute barred: …;
(4)the same principle applies whether the obligation be to pay the principal alone, or to pay principal and interest: … [citations omitted]
There was an appeal from this decision but the appellant only achieved “small success”: Gray v Gray [2004] NSWCA 408 at [103], 12 BPR 22,755. There was no disagreement with Austin J’s summary of the principles. And, where the rule applies, “not only the debt but also interest due on the debt is able to be set against the legacy due to the debtor”: [2004] NSWCA 408 at [94] per Young CJ in Eq. Sheller and Bryson JJA agreed. The Chief Judge there further observed that “the general equitable principle is not confined to the Cherry v Boultbee situation, but applied whenever a person seeks equity but owes money in a case where the creditor is able to claim repayment of the debt without having to bring an action to recover it, at least where the relevant limitation acts bars only the remedy”: at [97]. See also: Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies at [37-125] to [37-190] (4th ed., 2002).
The application of the rule in Cherry v Boultbee in the present proceeding, it is respectfully considered, has to accept the conclusiveness of the “table of receipts and payments”.
The order was made by Branson J in September 2008 for an inquiry to be held by a Registrar. That inquiry was held and, in Wenkart v Pantzer [2009] FCA 1086, it was concluded that:
[59] For the purposes of O 39 r 10(4) of the Federal Court Rules, it is thus concluded that the “weight” to be given to the Certificate of the Deputy Registrar dated 28 May 2009 is such that a finding should be made, consistent with the terms of the order for referral, that the date on which 28 days has passed from the determination of the quantum of an amount by way of remuneration, costs and charges and expenses to which Mr Pantzer is lawfully entitled that resulted in the aggregate of such determinations exceeding $769,191.66 is 10 January 2005.
That decision regrettably – with the benefit of hindsight – did not resolve the submission previously advanced as to the application of the rule in Cherry v Boultbee: [2009] FCA 1086 at [57]. The decision, however, clearly contemplated as follows the ambit of the orders to be made:
[61] Orders should now be made (if necessary) which give effect to the prior decisions of Her Honour Justice Branson, the Certificate as issued by the Deputy District Registrar on 28 May 2009 and the present reasons for decision. As previously contemplated by Her Honour in her reasons for decision as published in September 2008, it is appropriate that the parties have a further opportunity to make submissions as to the appropriate orders to be made — should that be necessary.
The course of the hearing then conducted to determine the weight to be given to the Certificate is set forth in those reasons for decision – including the reliance placed upon earlier decisions supporting each of the amounts set forth in the table and the limited additional factual material sought to be relied upon. The table, upon analysis, was really no more than an arithmetical presentation chronologically setting forth findings which had previously been made by Branson J. Whatever the table did and however it may have been prepared and presented, the “weight” to be given to the Certificate has now been resolved by the September 2009 judgment.
Notwithstanding the order made by Branson J in September 2008 for such an inquiry to be conducted, and the conclusion expressed in the decision giving effect to the inquiry thereafter conducted, it must further be recalled that the September 2008 orders were preceded by Her Honour’s decision in April 2008 wherein Her Honour:
·concluded that as at 31 October 2002 Mr Pantzer was not entitled to “orders in aid” of the 11 March 2002 consent orders made by Beaumont J;
·declined to dismiss the cross-claim, as Her Honour was then invited to do by Dr Wenkart as “Mr Pantzer could simply institute a fresh application seeking to enforce the charge over the Paddington property” ([2008] FCA 478 at [92]); and
·proposed the ordering of the inquiry “as a first step” in the “making of appropriate costs orders” to deal with the premature filing of the cross-claim.
That was the purpose to be served by later ordering the inquiry to be held. It is also to be recalled that in her subsequent decision in September 2008, Branson J:
·expressed a belief that Dr Wenkart accepted that in determining the cross-claim filed by Mr Pantzer “the Court could take into account amounts … after the date on which the cross-claim was filed” ([2008] FCA 1387 at [18]); and
·again adverted to her earlier disinclination to simply dismiss the cross-claim because such a course would be “likely to result in the institution of yet further litigation between the parties” and because this “did not seem … to be in the public interest or in the interests of the parties, particularly having regard to the Court’s wide powers to formulate orders for costs”.
Rejected is a submission advanced by Counsel on behalf of Mr Pantzer that as at 15 March 2002 there was in fact no “surplus”. The “table of receipts and payments”, it was submitted, did not conclusively resolve whether or not there was in fact a “surplus” as at 15 March 2002. The table, it was understood from the submission, may have been conclusive as to the date at which the 28 day period had expired – so as to inform Branson J as to a fact relevant to a future exercise of a discretion as to costs – but it was not conclusive as to the state of receipts over payments as at 15 March 2002.
But it is now considered to be far too late for Counsel on behalf of Mr Pantzer to seek to advance any factual material or submission seeking to challenge any of the factual findings set forth in the “table of receipts and payments”.
Although the focus of earlier decisions may have been, for whatever reason, upon when a period of 28 days had expired when amounts exceeded $769,191.66, the fact is that the dates upon which payments were made by Mr Pantzer have received repeated attention in:
·the decision of Branson J in April 2008;
·the decision of Branson J in September 2008 when Her Honour declined to “reconsider” or “withdraw” paragraphs of her earlier decision;
and in:
·the inquiry conducted by the Deputy District Registrar.
Moreover, little constraint was imposed upon the litigants when:
·the hearing was held to resolve objections which were taken to the Certificate of the Deputy District Registrar – that hearing being a “rehearing” ([2009] FCA 1086 at [23]).
It is thus concluded that it is not now open for Mr Pantzer to seek to place reliance upon factual material seeking to question the factual account now set forth in the table.
But the significance that is to be given to the “table of receipts and payments”, and what the table identifies as a “balance” of $240,352.20 as at 15 March 2002, does not have the consequence that Mr Pantzer must first account to Dr Wenkart for this amount before being entitled to claim any further moneys that may be payable to him.
Prior to 15 March 2002 Mr Pantzer had been the trustee of Dr Wenkart’s bankrupt estate. As at that date it was expressly contemplated that Mr Pantzer was both obliged to pay expenses which had not as at that date been paid and recognised that he was also entitled to claim further expenses. The entitlement to “recover his remuneration, costs, charges and expenses to which he … may become lawfully entitled” was expressly embraced within the consent orders made by Beaumont J in March 2002.
There are at least three reasons for reaching this conclusion.
First, the orders as made by Beaumont J in March 2002 provided that Dr Wenkart was to pay Mr Pantzer’s “remuneration, costs, charges and expenses to which he is entitled or may become lawfully entitled” and further recorded an agreement on the part of Dr Wenkart “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”.
As at that point of time, and even prior to the “table of receipts and payments” being prepared, the amounts which were then within the contemplation of the parties as remaining to be paid were set forth in the Report to Creditors dated 11 March 2002. That Report disclosed outstanding claims for remuneration, costs and expenses being:
Warren Pantzer, Trustee (as at 4 March 2002)
$70,830.76
Lawler Partners (as at 4 March 2002)
$136,506.27
Cutler Hughes & Harris (approx amount as at 27 February 2002)
$260,000.00
Senior Counsel for Dr Wenkart was not able to point to any authority in which Cherry v Boultbee had been applied in such circumstances.
The agreement which was in place left no room for any suggestion that Mr Pantzer would first have to account for any “surplus” that he may receive before being able to recoup from any such “surplus” the amounts to which he was entitled or may become entitled.
Second, the “table of receipts and payments” merely confirmed the liability on the part of Dr Wenkart to pay the amounts set forth in that table. Even if it be accepted that as at 15 March 2002 there was an outstanding “balance” of $240,352.20, it is not considered that Mr Pantzer had to “contribute” that amount into the fund or that he was “bound to make a contribution into that fund” as expressed in Perpetual Trustees and Gray.
It is, with respect, a mistake to characterise the “balance” recorded in the table as a “surplus”. It remained moneys that were available to meet the claims being made by Mr Pantzer.
The third and final reason for rejecting the present submission being advanced on behalf of Dr Wenkart is that the rule in Cherry v Boultbee is not a rule without exceptions. In Young, Croft and Smith On Equity (2009) the authors there state:
Exceptions to the rule
[15.600] The rule will not apply where it is contrary to statute or the agreement of the parties or the terms of the relevant will, or in circumstances where it would not be in accordance with conscience that it should apply Perpetual Trustees (WA) Ltd v Equus Corp Pty Ltd. The rule does not apply where the legatee becomes bankrupt in the testator’s lifetime and the debt is released on his or her discharge: R v Akerman.
If the creditor decides not to deduct the debt from the legacy but elects to pursue some other remedy (for example, by proving the insolvent estate of the debtor), the equity will not apply: see Re Hurburgh; Stammers v Elliott; White v Sewell; and compare Otis Elevator Co Pty Ltd v Guide Rails Pty Ltd (election not established). [footnotes omitted]
Whatever may be the reasons in fairness for requiring (for example) a beneficiary to first contribute to a fund before he may participate in its distribution, such reasons seem to have little application to a trustee in bankruptcy recuperating his remuneration. The functions of a trustee are those prescribed by law and a trustee is bound to administer an estate in accordance with the Bankruptcy Act1966 (Cth) and the Bankruptcy Regulations 1996, including the duty to make payments in accordance with s 109 of that Act. In Freeman v Joiner [2005] FCAFC 149, 3 ABC(NS) 332 Spender, Kiefel and Dowsett JJ at [16] referred to the dual functions of a trustee as being “to administer the estate in the interests of the creditors and the bankrupt; and to exercise the powers given and duties imposed by the Act as a public duty and for the public welfare”. He is properly to be regarded as an officer of the Court: Adsett v Berlouis (1992) 37 FCR 201 at 208; Frost v Sheahan [2005] FCA 1014 at [106], 3 ABC(NS) 288 at 300 per Lander J.
It would seem an odd conclusion to impose upon a trustee – or, now, the former trustee – the same obligation as is imposed upon a beneficiary by the rule in Cherry v Boultbee.
In the absence of explanation advanced on behalf of Dr Wenkart, it is difficult to conclude that there was any “fund” to which Mr Pantzer had to contribute before he could equitably claim the remuneration to which he was otherwise entitled: cf. Ansett Australia Ltd v Travel Software Solutions Pty Ltd [2007] VSC 326 at [101] to [108], 214 FLR 203 at 225 to 226 per Hargrave J.
To invoke the words of Young J in Perpetual Trustees (WA) Ltd v Equus Corp Pty Ltd, supra, it is considered that “it would not be in accordance with conscience that [the rule] should apply”.
BALDRY v JACKSON: THE CROSS-CLAIM
It was on 31 October 2002 that Mr Pantzer filed his Notice of Motion seeking orders permitting him to sell the Paddington property. The Motion sought “an order in aid of [the] order made 11 March 2002”. This Motion was subsequently characterised as a “cross-claim”.
And, as at 31 October 2002, Branson J has concluded that Mr Pantzer was not then entitled to “orders in aid” of the order made on 11 March 2002: Wenkart v Pantzer [2008] FCA 478 at [91].
The argument now sought to be advanced on behalf of Dr Wenkart is that Her Honour Justice Branson has “held that Mr Pantzer had no entitlement to relief when he first brought his Cross-Claim on 31 October 2002” and that “the Court has definitively determined that Mr Pantzer had no entitlement to relief (and thus, in essence no ‘cause of action’) when his proceeding commenced”. Relying upon the decision in Baldry v Jackson [1976] 2 NSWLR 415, the submission is that “where there was no extant cause of action at the date of commencement of the proceedings, it is not open to a claimant to support those proceedings by recourse to after-occurring events or entitlements”.
The decision in Baldry v Jackson had its origins in a motor vehicle collision in Queensland. The issue which was resolved by the New South Wales Court of Appeal centred upon the correct application of Part 15 r 16 of the Supreme Court Rules which provided as follows:
A party may plead any matter notwithstanding that the matter has arisen after the commencement of the proceedings.
In concluding that the rule did not permit an amendment to be made to rely upon a cause of action that had not arisen as at the date of commencement of the proceeding, Samuels JA held at 419:
In my view, therefore, “matter” in Pt. 15, r. 16 does not include “cause of action”. There is, however, perhaps a simpler way of meeting the appellant’s argument. The rule looks to events which have occurred after the commencement of the proceedings and thus, where the proceedings have been commenced by statement of claim, after the statement of claim has been filed. It primarily contemplates a party pleading matter which has arisen after the statement of claim has been filed, but before the time comes to file the pleading in which the matter is to be included. No doubt all this can be done by amendment after the relevant pleading has been filed. But an amendment, duly made, takes effect, not from the date when the amendment is made, but from the date of the original document which it amends; …. There is nothing in the rules to displace this principle …
It seems to me, therefore, impossible to permit an amendment to this statement of claim which would have the effect of introducing into it a cause of action based upon facts which had not arisen when the statement of claim was filed. The situation becomes even more curious when one considers that these new facts would be wholly in substitution for the facts already pleaded which do not, of course, disclose any cause of action. I cannot see how a plaintiff can commence proceedings by a statement of claim dated 5th November, 1975 (and that date would remain after amendment) which pleads facts which did not occur until the 1st December, 1975: there is nothing in r. 16 to authorize such a course. [citations omitted]
Moffitt P and Glass JA agreed.
Concern as to the disproportionate legal costs that may be incurred in the resolution of a proceeding, and concern as to the costs also incurred by the community in providing access to the judicial process, has nevertheless been expressed in other proceedings: e.g., Seven Network Limited v News Limited [2007] FCA 1062 at [17] to [18] per Sackville J. And concern is not confined to a mere consideration of legal costs incurred by the parties. Protracted litigation – and, on one view of it, unnecessary litigation – may have the consequence that other litigants are delayed access to the Courts. Increasing reference is thus being given to the fact that Courts are a “publicly funded resource” and the need to “maintain public confidence in the judicial system”: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 at [5], 258 ALR 14 at 17 per French CJ.
In the absence of authority, it is nevertheless not considered that the term “costs” should be extended beyond its presently accepted meaning. To do so could well have the consequence of placing yet a further obstacle in the path of litigants seeking access to justice and an impermissible incentive upon litigants to accept perhaps less than their legal entitlements. The policy considerations involved in the conferral of such a power, and the manner in which such a power should be exercised, would truly attract complex and conflicting considerations. Access to justice remains, however, a matter of continuing concern and is of course addressed in the Attorney-General’s Report provided in September 2009: A Strategic Framework for Access to Justice in the Federal Civil Justice System.
Litigants are obviously entitled to access the Courts for the purposes of resolving their disputes.
But, once having gained access, legitimate questions arise as to whether they should be permitted to thereafter use the publicly funded resources of the Courts as some private colosseum in which to wage a totally uncommercial piece of litigation fought by their gladiatorial Counsel.
But such matters may presently be left to one side.
One final matter which should be addressed is whether or not an order should be made pursuant to O 62 r 4(2)(c) of the Federal Court Rules. The power conferred is particularly suited to complex litigation – although the power is not confined to cases of that type: Sony Entertainment (Australia) Ltd v Smith [2005] FCA 228 at [189], 215 ALR 788 at 812 per Jacobson J. The making of such an order in the present case may avoid the potential for further dispute. Submissions as to whether such an order should be made and the quantum of any such order may be made at that point of time when final orders are sought to give effect to these reasons.
In assessing that percentage, consideration has been given to whether any separate order should be made for costs on an indemnity basis for any part or parts of the proceeding. Ultimately it is not considered that any such order should be made. The 90% assessment is a fair and proper accommodation of all of the competing considerations relevant to the exercise of the discretion.
CONCLUSIONS
The present proceeding, it is recognised, exposes a potential tension that may emerge in litigation that proceeds before a number of different Judges and over the space of nearly a decade between:
·the need for finality in litigation, such that litigants are not afforded an endless opportunity to re-canvass arguments that should have been advanced on the one occasion rather than sequentially;
·the need for a single Judge to accept the conclusiveness of a decision that has previously been made by another Judge of the Court and to leave it for a dissatisfied litigant to seek redress on appeal before a Full Court; and
·the need to resolve in as expeditious a manner as possible, and in a manner which exposes no litigant to prejudice or unfairness, all issues that divide the litigants.
Indeed, some may say that each of these matters is separate and discrete from the others and that there is in practice no tension at all. Whatever may be the reach or impact of s 37M of the Federal Court of Australia Act1976 (Cth), neither that provision nor s 22 can be construed as simply a licence to resolve all issues free of long-established constraints upon the powers and discretions of a Judge at first instance.
However the dividing line may be drawn between these issues, it is hoped that there has been no impermissible transgression. It is no answer to such tension as may exist to recognise the possibility – if not the certainty – that the present decision will be appealed to a Full Court.
For the reasons expressed, it is thus considered that the issues as formulated by Dr Wenkart may in summary form be answered as follows:
1.Yes;
2.The commencement and conduct of the proceeding by Mr Pantzer has been reasonable in all the circumstances;
3.Yes;
4.The question does not arise; and
5.Dr Wenkart should pay 90% of the costs of Mr Pantzer.
The issues as formulated on behalf of Mr Pantzer are not as readily susceptible of answers being provided in the same format, but for the reasons expressed above, it is considered that:
(a)The consent orders as made by Beaumont J on 11 March 2002 are to be construed in the manner indicated by the Full Court in Pantzer v Wenkart [2006] FCAFC 140 at [40], 153 FCR 466 at 476;
(b)No;
(c)Yes;
(d)Yes;
(e)Yes;
(f)Mr Pantzer is entitled to an order that Dr Wenkart pay 90% of his costs;
(g)Mr Pantzer is entitled to an order for interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth).
The parties are to prepare Short Minutes of Orders which give effect to these reasons and conclusions. Should it be necessary to address any further outstanding issue still dividing the parties, a short note identifying any such issue should be exchanged between the parties and forwarded to Chambers.
When preparing those Short Minutes the parties should also extract from those documents which have presently been simply “Marked for Identification” the documents to which reference was made during the course of the hearing. The extracted documents will then be marked as an exhibit.
ORDERS
The Orders of the Court are:
1.The proceeding is stood over to 9:30 am on 20 August 2010 for the purpose of making orders to give effect to these reasons.
I certify that the preceding one hundred and fifty-nine (159) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. Associate:
Dated: 13 August 2010
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