Wenkart v Pantzer

Case [2008] FCA 478

FEDERAL COURT OF AUSTRALIA

In the matter of Thomas Richard Wenkart, Wenkart v Pantzer [2008] FCA 478

BANKRUPTCY – former trustee’s claims for remuneration and costs – where creditors’ resolutions alleged to be ineffective – whether minor irregularities invalidated trustee’s claims – ss 64U, 162 Bankruptcy Act 1966 (Cth) – relationship between trustee and those who assisted him – prospective approval of remuneration – calculation of legal costs owing

BANKRUPTCY – property charged by former bankrupt to secure payment of amount to which former trustee ‘legally entitled’ – payment to be made within 28 days of determination of the quantum of ‘the same’ – cross-claim for orders-in-aid – whether trustee entitled to relief at date of filing of cross-claim

Bankruptcy Act 1966 (Cth) ss 64U, 161B, 162, 165, 306

Federal Court Rules O 39 rr 2, 9
Bankruptcy Regulations 1996 (Cth) regs 8.08, 8.09

Doolan v Dare (2005) 142 FCR 287 considered
In Re Dare (1992) 38 FCR 356 cited
Korda, in the Matter of Stockford Limited (2004) 140 FCR 424 cited
Nilant v Macchia (2000) 104 FCR 238 cited
Pattison v Bellin (2000) 103 FCR 590 cited
Re Hurt, Ex parte Hurt (1988) 80 ALR 236 considered
Wenkart v Pantzer (2005) 223 ALR 384 cited
Wenkart v Pantzer (No 6) [2003] FCA 1210 cited
Wenkart v Pantzer [2007] FCA 1589 referred to

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, THOMAS RICHARD WENKART AND HAPDAY HOLDINGS PTY LTD (ACN 001 185 253)

NSD 7051 OF 2002

BRANSON J
11 APRIL 2008
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 7051 OF 2002

BETWEEN:

THOMAS RICHARD WENKART
Applicant

AND:

WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
First Respondent

HAPDAY HOLDINGS PTY LTD (ACN 001 185 253), MACQUARIE HEALTH CORPORATION LIMITED (ACN 003 531 860) AND THROVENA PTY LIMITED (ACN 001 738 763)
Second Respondents

WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
Cross Claimant

THOMAS RICHARD WENKART
First Cross Respondent

HAPDAY HOLDINGS PTY LTD (ACN 001 185 253)
Second Cross Respondent

JUDGE:

BRANSON J

DATE OF ORDER:

11 APRIL 2008

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT the proceeding be stood over to a date to be fixed for the purpose of the making of orders giving effect to these reasons, including orders as to costs.

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

NSD 7051 OF 2002

BETWEEN:

THOMAS RICHARD WENKART
Applicant

AND:

WARREN PANTZER AS FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART
First Respondent

HAPDAY HOLDINGS PTY LTD (ACN 001 185 253), MACQUARIE HEALTH CORPORATION LIMITED (ACN 003…

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Wenkart v Pantzer [2008] FCA 478
Case
[2008] FCA 478
Decision Date

CaseChat Overview and Summary

The case of Wenkart v Pantzer involved Dr Wenkart, the bankrupt, and Mr Pantzer, the trustee of Dr Wenkart's estate, in a dispute over the determination of the quantum of remuneration, costs, charges, and expenses to which Mr Pantzer was lawfully entitled. The matter was heard in the Federal Court of Australia. The court was tasked with determining whether Mr Pantzer had established that the quantum of his remuneration, costs, charges, and expenses had been determined in an amount in excess of his receipts as trustee of Dr Wenkart's estate as of 31 October 2002. Additionally, the court had to decide on the appropriateness of the cross-claim filed by Mr Pantzer and the appropriate costs orders to be made.

The court found that if the amounts paid to Cutler Hughes & Harris were disregarded, the schedule did not suggest that Dr Wenkart's estate was in deficit on 31 October 2002. Furthermore, if the amounts paid to Mr Johnson, Sally Nash & Co, and Mr Walsh were also disregarded, the position became even clearer. The court concluded that Mr Pantzer had not established that the quantum of his remuneration, costs, charges, and expenses had been determined in an amount in excess of his receipts as trustee of Dr Wenkart's estate. The court also found that Mr Pantzer had failed to demonstrate that he was entitled to "orders in aid" of the consent orders made on 11 March 2002. However, the court decided against dismissing the cross-claim with costs, considering the complex history of the matter. Instead, the court opted to make appropriate costs orders, including an inquiry by a Registrar if the parties could not agree on the relevant date.

The court further addressed the resolutions concerning the remuneration of Mr Pantzer. It was established that Mr Pantzer had proposed his remuneration at the first meeting of Dr Wenkart's creditors on 13 December 1999, which was approved unanimously. However, Mr Pantzer did not table the relevant guidelines and explanatory notes at this meeting, as required. The court noted that this oversight could have implications for the determination of Mr Pantzer's remuneration.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

BRANSON J
If the amounts shown by Mr Pantzer’s schedule to have been paid to Cutler Hughes & Harris are disregarded, the schedule does not suggest that Dr Wenkart’s bankrupt estate was in deficit on 31 October 2002. If the amounts paid to Mr Johnson, Sally Nash & Co and Mr Walsh are also disregarded the position is even clearer. I conclude that Mr Pantzer has not established that as at 31 October 2002 the quantum of the remuneration, costs, charges and expenses to which he was lawfully entitled had been determined in an amount in excess of the amount of his receipts as trustee of Dr Wenkart’s bankrupt estate (see [9] above). CONCLUSION ON CROSS-CLAIM 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. 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. 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 r 2 and r 9 of the Federal Court Rules). The proceeding will be stood over to a date to be fixed for the purpose of allowing the parties to make further submissions as to the orders appropriate to be made to give effect to these reasons, including orders for costs.

Ratio Decidendi

Legal Principle Established

Established by: BRANSON J

Earlier than 6 November 2002 regulation 8.09 of the Bankruptcy Regulations 1996 (Cth) (“the Regulations”) provided:Where a trustee of the estate of a bankrupt claims remuneration under section 162 of the Act, the bankrupt or a creditor who is dissatisfied with the amount of the claim may, by notice in writing lodged within 14 days of being notified in writing or becoming aware of the amount of the claim, request a taxing officer to tax the claim.From 6 November 2002 the period of “14 days” referred to in the regulation became “28 days”.RESOLUTIONS CONCERNING REMUNERATION OF MR PANTZER The first meeting of Dr Wenkart’s creditors was held on 13 December 1999. Mr Pantzer was appointed to preside at the meeting. The minutes record that Mr Pantzer stated that he wished to be remunerated on a time‑cost basis at the scale of fees recommended by the Insolvency Practitioners Association of Australia (“IPAA”) from time to time. They also record that:The current rates of the Trustee, his partners and staff who are assisting the Trustee in the performance of his duties were copied to creditors with the Report to Creditors and tabled at the meeting. Under cross-examination Mr Pantzer agreed that the document tabled by him at the first meeting of creditors was a single sheet headed “Guide to Fees – 1 July 1999 – Guide to Hourly Rates” published by the IPAA. This document, a copy of which was received in evidence, provides a guide to fees in various cities and regions of Australia for categories of fee earners including “Partners”, “Directors”, “Manager 1”, “Manager 2”, “Senior 1”, “Senior 2” through to “Clerk”, “Typist” and “Junior”. It contains a notation at the bottom which reads:This Guide to Hourly Rates should not be used or copied without specific reference to the attached Guidelines, Explanatory Notes and Experience Classifications.Mr Pantzer acknowledged that at the meeting he did not table the pages described in this notation. As no person present at the first meeting of creditors took up the invitation of Mr Pantzer to propose a motion that he be remunerated in accordance with his statement, Mr Pantzer proposed the following motions:That the Trustee’s remuneration and that of his partners and staff from 28 October 1999 to 10 December 1999 be hereby approved in the sum of $60,744.30…[and]That the further remuneration of the Trustee from 13 December 1999 be hereby fixed on a time basis at the scale of fees recommended by the Insolvency Practitioners Association of Australia from time to time to a limit of $80,000. Each of the above motions is recorded by the members as having been moved, seconded and carried unanimously on the voices. The minutes do not record Mr Pantzer stating the periods at which he proposed to withdraw funds from the bankrupt’s estate in respect of his remuneration. I infer that he did not. A second meeting of Dr Wenkart’s creditors was held on 2 February 2000. Mr Pantzer was again appointed to preside at the meeting. The minutes record that Mr Pantzer complied with a request to table his time costs but they do not record any motion approving his remuneration.