Wenkart v Pantzer (No 3)

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FEDERAL COURT OF AUSTRALIA

Wenkart v Pantzer (No 8) [2004] FCA 280

PRACTICE AND PROCEDURE – objection to jurisdiction – bankrupt applies for order compelling trustee in bankruptcy to call meeting of creditors to consider proposal by bankrupt under s 73 of the Bankruptcy Act 1966 (Cth) – if proposal accepted by special resolution of creditors, bankruptcy would be annulled by operation of s 74(5) of Act – question of protection of trustee’s entitlement to remuneration – question of Court’s power under s 74(6) to impose terms and conditions on reverter of title of ‘property of the bankrupt’ to bankrupt on annulment – whether Court could make part of that property subject to a charge in favour of trustee as security for his remuneration – bankrupt and trustee compromise proceeding – as part of compromise bankrupt charges a particular property in favour of trustee as security for trustee’s entitlement – meeting called, creditors pass special resolution accepting proposal, bankruptcy annulled – subsequent disputes between former bankrupt and former trustee – former trustee applies by motion in the proceeding for appointment of trustee for sale of the property charged – whether Court has jurisdiction to enforce the charge – whether it can do so by appointing trustee for sale.

BANKRUPTCY – objection to jurisdiction – bankrupt applies for order compelling trustee in bankruptcy to call meeting of creditors to consider proposal by bankrupt under s 73 of the Bankruptcy Act 1966 (Cth) – if proposal accepted by special resolution of creditors, bankruptcy would be annulled by operation of s 74(5) of Act – question of protection of trustee’s entitlement to remuneration – question of Court’s power under s 74(6) to impose terms and conditions on reverter of title of ‘property of the bankrupt’ to bankrupt on annulment – whether Court could make part of that property subject to a charge in favour of trustee as security for his remuneration – bankrupt and trustee compromise proceeding – as part of compromise bankrupt charges a particular property in favour of trustee as security for trustee’s entitlement – meeting called, creditors pass special resolution accepting proposal, bankruptcy annulled – subsequent disputes between former bankrupt and former trustee – former trustee applies by motion in the proceeding for appointment of trustee for sale of the property charged – whether Court has jurisdiction to enforce the charge – whether it can do so by appointing trustee for sale.

FEDERAL COURTS – objection to jurisdiction – bankrupt applies for order compelling trustee in bankruptcy to call meeting of creditors to consider proposal by bankrupt under s 73 of the Bankruptcy Act 1966 (Cth) – if proposal accepted by special resolution of creditors, bankruptcy would be annulled by operation of s 74(5) of Act – question of protection of trustee’s entitlement to remuneration – question of Court’s power under s 74(6) to impose terms and conditions on reverter of title of ‘property of the bankrupt’ to bankrupt on annulment – whether Court could make part of that property…

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Details
Case
[2004] FCA 280
Decision Date

CaseChat Overview and Summary

The matter before the court was a dispute between Dr Wenkart, a bankrupt, and Mr Pantzer, the trustee of his estate, over the fees payable to Mr Pantzer for his services as trustee in bankruptcy. The dispute arose after Dr Wenkart made a proposal to his creditors under section 73 of the Bankruptcy Act 1966 (Cth) and requested Mr Pantzer to call a meeting of creditors to consider the proposal. The court was required to determine whether it had jurisdiction to hear and determine Mr Pantzer's motion, which sought an order enforcing a charge against Dr Wenkart's property to pay his fees.

The court found that enforcing the charge by the appointment of a trustee for sale fell within section 22 of the Federal Court of Australia Act 1976 (Cth) and section 79 of the Judiciary Act 1903 (Cth). Therefore, the court had jurisdiction to hear and determine Mr Pantzer's motion. The court also found that Dr Wenkart's objection to jurisdiction was without merit and should be dismissed with costs.

In light of the court's decision, Dr Wenkart's objection to jurisdiction was dismissed, and he was ordered to pay Mr Pantzer's costs of the objection. The court's decision upheld Mr Pantzer's entitlement to fees for his services as trustee in bankruptcy and confirmed the court's jurisdiction to enforce the charge against Dr Wenkart's property to pay those fees.

Orders

Orders of the court

1. The applicant’s objection to the Court’s jurisdiction to hear and determine the first respondent’s motion brought by notice of motion filed on 31 October 2002 be dismissed.

2. The applicant pay the first respondent’s costs of the applicant’s objection to jurisdiction.

Background

Background to the litigation

The immediate background to the making of the 11 March 2002 orders is as follows:(a)When Dr Wenkart was still a bankrupt and Mr Pantzer was still the trustee of his estate in bankruptcy, Dr Wenkart desired to make a proposal to his creditors under s 73(1) of the Act, and he provided to Mr Pantzer a proposal in writing with a request that Mr Pantzer call a meeting of creditors to consider the proposal;(b)Subsection 73(2) of the Act obliged Mr Pantzer to call a meeting of creditors to consider the proposal;(c)Subsection 74(5) of the Act provided that ‘upon the passing of a special resolution at the meeting of creditors’ accepting the proposal, Dr Wenkart’s bankruptcy would be annulled by force of s 74(5) on the date ‘on which the special resolution was passed’;(d)Subsection 74(6) of the Act (set out in full at [63] below) provided that in default of any order of the Court providing for a vesting in some other person, any property of the bankrupt still vested in the trustee in bankruptcy was to revert to the bankrupt for all his estate or interest in it, ‘on such terms, and subject to such conditions (if any) as the Court order[ed]’;(e)There was a problem: the question of provision for the fees payable to Mr Pantzer for his services as trustee in bankruptcy.(f)The parties reached the accommodation expressed in the 11 March 2002 orders.(g)This accommodation enabled the meeting of creditors to proceed on 15 March 2002, as contemplated in para 4 of the 11 March 2002 orders.(h)Unfortunately, the parties have remained in dispute over the question of Mr Pantzer’s entitlement to fees ever since.BACKGROUND FACTS On 28 October 1999, in proceeding NG 8467 of 1998, a sequestration order was made against Dr Wenkart’s estate and the Court appointed Mr Pantzer as trustee of the estate. Between the making of the sequestration order and early March 2003, several proceedings, which I need not identify or discuss, were brought arising out of the bankruptcy. The present proceeding arose directly out of one of those proceedings, N 7752 of 2000, in which Alan Pitman, as applicant, sought an order that Mr Pantzer admit the whole of Mr Pitman’s proof of debt dated 31 January 2000 for $3,743,900.27 (‘the Pitman proceeding’). Mr Pitman’s application eventually became an application for an order under s 104 of the Act reversing a decision by Mr Pantzer on 28 July 2000 to reject Mr Pitman’s proof of debt. Throvena Pty Ltd (‘Throvena’), Hapday Holdings Pty Ltd (‘Hapday’) and Macquarie Health Corporation Ltd (‘Macquarie’) (together ‘the Intervenors’), companies associated in various ways with Dr Wenkart, were added as intervenors in the Pitman proceeding. On or about 18 January 2001, Dr Wenkart lodged with Mr Pantzer a proposal under s 73(1) of the Act. One matter which this provided for was the delivery by Dr Wenkart to Mr Pantzer of several bank cheques drawn in favour of creditors for specified amounts to be held by Mr Pantzer subject to acceptance of the proposal by creditors. In addition, there were to be bank cheques for $105,000 in favour of Mr Pantzer for his fees as trustee ‘up to the conclusion of the Section 73 meeting and its implementation’, and for $105,000, less an amount already held by Mr Pantzer, in favour of Cutler, Hughes and Harris, Mr Pantzer’s solicitors, for their fees ‘up to the date and conclusion of the Section 73 meeting and its implementation’.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

LINDGREN J
Enforcing the charge by the appointment of a trustee for sale falls within s 22 of the FCA Act and s 79 of the Judiciary Act.CONCLUSION Dr Wenkart’s objection to jurisdiction should be dismissed with costs.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN J

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