Wenkart v Pantzer

Case [2005] FCA 1572

FEDERAL COURT OF AUSTRALIA

Wenkart v Pantzer [2005] FCA 1572

BANKRUPTCY – trustee’s entitlement to remuneration and costs – taxation – appeals from decision of taxing officer – where work undertaken post-annulment of bankruptcy – where work undertaken in relation to taxation of costs – where work undertaken in relation to litigation – where work performed by persons other than trustee – whether taxing officer validly appointed – whether form of bills of costs complied with Bankruptcy Regulations 1996.

Bankruptcy Act 1966 (Cth) ss 73, 74, 162 and 167
Federal Court of Australia Act 1976 (Cth) s 43

Bankruptcy Regulations 1996 regs 8.09, 8.10, 8.11 and 8.11A
Federal Court Rules O 62

RP Meagher and WMC Gummow, Jacob’s Law of Trusts in Australia, 6th edn, Butterworths, 1997

Adsett v Berlouis (1992) 37 FCR 201 followed
Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 followed
Doolan v Dare [2005] FCAFC 69 cited
Ide v Ide (2004) 184 FLR 44 referred to
Re Ladyman (1981) 38 ALR 631 cited
Schweppes’ Ltd v Archer (1934) 34 SR (NSW) 178 followed
Symes v Holbrook [2005] FCAFC 219 referred to
Wenkart v Pantzer (2003) 132 FCR 204 cited
Wenkart v Pantzer (No 3) (2004) 135 FCR 422 referred to
Wenkart v Pantzer (No 6) [2003] FCA 1210 referred to
Wenkart v Pantzer [2003] FCA 315 referred to
Wenkart v Pantzer [2003] FCA 471 referred to
Wily v Fitz-Gibbon [1998] FCA 121 cited

THOMAS RICHARD WENKART v WARREN PANTZER, ANN SEXTON AND INSPECTOR GENERAL IN BANKRUPTCY

NSD 1973 of 2004
NSD 181 of 2005

BRANSON J
8 NOVEMBER 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1973 of 2004
NSD 181 of 2005

BETWEEN:

THOMAS RICHARD WENKART
APPLICANT

AND:

WARREN PANTZER
FIRST RESPONDENT

ANN SEXTON
SECOND RESPONDENT

INSPECTOR GENERAL IN BANKRUPTCY
THIRD RESPONDENT

JUDGE:

BRANSON J

DATE:

8 NOVEMBER 2005

PLACE:

SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

  1. These two proceedings were heard together with evidence in one proceeding being evidence in the other. They each involve a challenge to a certificate of taxation issued by the second respondent (‘Ms Sexton’). Although in each case the challenge is made on several bases, the principal objection to the certificates of taxation is that they allow claims relating to work undertaken after the bankruptcy of the applicant (‘Dr Wenkart’) had been annulled by operation of subs 74(5) of the Bankruptcy Act 1966 (Cth) (‘the Act’). Ms Sexton submitted to the orders of the Court. The third respondent (‘the Inspector General’) assisted the Court with submissions touching on the proper construction of the Act and the Bankruptcy Regulations 1996 (‘the Regulations’).

  2. For the reasons set out below I have concluded that each of the certificates of taxation should be set aside. 

    BACKGROUND

  3. Dr Wenkart became bankrupt when his estate was sequestrated by an order made on 28 October 1999. The first respondent (‘Mr Pantzer’) was appointed the trustee in bankruptcy. Dr Wenkart’s bankruptcy was annulled by force of…

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Wenkart v Pantzer [2005] FCA 1572
Case
[2005] FCA 1572
Decision Date

CaseChat Overview and Summary

In the case of Wenkart v Pantzer, the respondent, Mr Warren Pantzer, was the trustee in bankruptcy of the applicant, Dr Thomas Richard Wenkart. The dispute involved the validity of certain certificates of taxation issued to Mr Pantzer for his remuneration and costs as trustee. The case was heard and determined by the Federal Court of Australia. The central legal issue was whether Mr Pantzer was entitled to the remuneration and costs that were certified by the taxing officer under the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 1996 (Cth). Specifically, the Court had to determine whether the certificates of taxation correctly assessed the amounts claimed by Mr Pantzer, and if any of those amounts exceeded what was legally permissible under the governing legislation and regulations.

The Court examined the statutory provisions and the relevant regulations concerning the taxation of a trustee's remuneration and costs. The Court found that the certificates of taxation had allowed Mr Pantzer remuneration and costs to which he was not entitled under the applicable laws. The Court concluded that the consent orders made in an earlier proceeding did not confer upon Mr Pantzer the right to the amounts certified. As a result, the Court set aside the certificates of taxation, finding them to be invalid. The Court indicated that it would delay making formal orders until the parties could further address the implications of these findings and potentially supplement their submissions.

The Court's decision highlights the importance of adhering to statutory provisions and regulations when determining the remuneration and costs of a trustee in bankruptcy. The Court's reasoning underscores the necessity for trustees to comply strictly with legal requirements to avoid having their claims for remuneration and costs deemed invalid.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

For the reasons set out below I have concluded that each of the certificates of taxation should be set aside. BACKGROUND Dr Wenkart became bankrupt when his estate was sequestrated by an order made on 28 October 1999. The first respondent (‘Mr Pantzer’) was appointed the trustee in bankruptcy. Dr Wenkart’s bankruptcy was annulled by force of subs 74(5) of the Act on 15 March 2002. On that day Dr Wenkart’s creditors, by special resolution, accepted a proposal made to them pursuant to s 73 of the Act by Dr Wenkart. Dr Wenkart’s bankruptcy has given rise to considerable litigation. Various disputes between Dr Wenkart and Mr Pantzer concerning Mr Pantzer’s entitlements to remuneration, costs, charges and expenses have been litigated in matter NSD 7051 of 2002. Final judgment in matter NSD 7051 of 2002 is presently reserved before me, having been heard, in part, together with these appeals. Various interlocutory orders made in matter NSD 7051 of 2002 are relevant to these appeals. In particular, anticipating the creditors’ possible acceptance of the proposal made to them pursuant to s 73 of the Act by Dr Wenkart, Beaumont J, on 11 March 2002, made the following orders by consent in matter NSD 7051 of 2002:‘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 in favour of Warren Pantzer to secure the amount in paragraph 1.3.Hapday Holdings Pty Ltd ACN 001 185 253 hereby postpones mortgage 3965299 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.’ 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 amount of the respondent’s remuneration, but upon terms that the respondent would receive security for that amount. The Court sanctioned that arrangement in the form of an order made under the reservation reserved by the concluding words of s 74(6) – “reverts ... on such terms and subject to such conditions ... as the Court orders”.Given that conclusion, it must follow, in my opinion, that the consent orders were within power and operated to vest in the respondent the charge created by par 2 thereof.’

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BRANSON J
As mentioned above, final judgment in matter NSD 7051 of 2002 is presently reserved before me. The applications in these proceedings place reliance on matters pleaded in that proceeding. It is not clear to me that the making of orders in these proceedings need await the determination of that proceeding. However, as mentioned above, the parties will be given an opportunity to make further submissions on that issue.CONCLUSION I conclude that in each proceeding the appeal from the decision of the taxing officer should be allowed. The certificate of taxation in each proceeding allowed Mr Pantzer either remuneration or costs and expenses to which, for the reasons I have outlined above, he is not entitled under the Act. The certificate in each proceeding should therefore be set aside. In the ordinary course, the bills of costs would be remitted to the taxing officer for reconsideration. I am not presently persuaded that Dr Wenkart is entitled to any of the additional relief sought by him. However, as I have already mentioned, I propose to delay making formal orders in these matters until the parties have the opportunity to consider these reasons for judgment and, if appropriate, supplement their submissions to the Court.

Ratio Decidendi

Legal Principle Established

Established by: BRANSON J

Regulations 8.09, 8.10 and 8.11A of the Regulations are concerned with the taxation of a trustee’s remuneration and costs. They provide:‘8.09 Taxation of trustee’s remuneration and costs — preliminary(1)Where the 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 28 days of being notified in writing or becoming aware of the amount of the claim, request a taxing officer to tax the claim.(2)The taxing officer must, promptly after receiving a request in accordance with subregulation (1), give notice in writing to the trustee to lodge a detailed bill of costs, in accordance with regulation 8.10, with the taxing officer within 28 days or such further period as the taxing officer may, in writing, allow.(3)On receiving the bill of costs, the taxing officer must give notice in writing of the date, time and place for the taxation, at least 5 days before the taxation, to the trustee and the person requesting the taxation.(4)Subject to subregulation (5), if the trustee fails to comply with a notice given under subregulation (2):(a)the trustee forfeits his or her right to disbursements and expenses; and(b)any amount that, apart from this subregulation, would have been applied as the trustee’s remuneration is to be applied for the benefit of the creditors.(5)A trustee who is aggrieved by the operation of subregulation (4) in respect of his or her claim, or intended claim, for costs may apply to the Court for relief, and the Court may:(a)grant such relief; and(b)grant the relief on such terms, if any;as it thinks fit.8.10 Bill of costs(1)A bill of costs required under subsection 167(1) of the Act or regulation 8.09 must:(a)be typed or printed on only one side of each sheet of paper; and(b)have a margin on the left-hand side of each sheet of paper; and(c)show separately the trustee’s:(i)professional fees; and(ii)disbursements and expenses; and(d)in the case of a detailed bill of costs:(i)number each item consecutively; and(ii)in respect of each item — specify the date or dates on which the work referred to in the item was done, or the disbursement or expenditure referred to in the item was made, as the case may require.(2)If a bill of costs complies substantially, but not strictly, with subregulation (1), it is taken, for the purposes of subregulation (1), to be duly lodged. However, the taxing officer may require trustee to rectify the bill of costs in accordance with any direction that the taxing officer thinks fit, and if the trustee defaults the bill ceases to be so taken.…8.11ACosts of taxation(1)If taxation under regulation 8.09 results in a reduction of at least 15% in the amount of a claim for remuneration, the trustee must meet the costs of the taxation.(2)Except in a case mentioned in subregulation (1), the person who asks for the taxation under regulation 8.09 must meet the costs of the taxation.’GOVERNING PRINCIPLES