Case: Wenkart v Pantzer [2007] FCA 1589
Outcome: referred to
On 16 October 2007 I published reasons for judgment in this matter ( Wenkart v Pantzer [2007] FCA 1589]). On that day I stood the proceeding over to a date to be fixed for the purpose of making orders giving effect to those reasons. Having regard to the complex history of the matter I additionally invited the parties to draw to my attention any issues on which I had inadvertently failed to rule. 2 No agreement was reached between the parties as to the orders appropriate to be made to give effect to my reasons for judgment. Dr Wenkart took the view that my published reasons for judgment did not deal with all of the issues required to be resolved in this matter. 3 The proceeding was therefore relisted to allow the parties to make further submissions. On 12 November 2007 Mr Sheahan SC appeared with Mr Green for Dr Wenkart; Mr Creais, solicitor, appeared for Mr Pantzer and Mr Rea appeared for Hapday Holdings Pty Ltd. These reasons for judgment should be read together with those published on 16 October 2007. 33 Additionally, as I noted in [2007] FCA 1589 at [64] , Mr Pantzer's claim for 85% of the sum of $115,406.07 (ie $98,095.16) has been the subject of litigation in other proceedings. In Wenkart v Pantzer (No 6) [2003] FCA 1210 published on 29 October 2003, Lindgren J dismissed a motion by Dr Wenkart for an extension of time within which to request that this claim be taxed. On that day Mr Pantzer's claim to be lawfully entitled to that sum was rendered effectively beyond challenge. The date upon which he is to be regarded as becoming lawfully entitled to the sum is, in my view, 14 days after Dr Wenkart became aware of the amount of the claim, namely 29 March 2002 (reg 8.09(1) of the Bankruptcy Regulations 1996 as then in force). This amount is reflected in the second unpaid amount listed in Mr Pantzer's schedule. 57 The accuracy of Mr Pantzer's schedule so far as it concerns payments made to Cutler Hughes &amp; Harris is not challenged by Dr Wenkart. Payments by Mr Pantzer to Cutler Hughes &amp; Harris in the aggregate amount of $380,225 are evidenced by a list of cash payments ("the Cash Payments List") made during the period of the administration by Dr Wenkart's bankrupt estate provided to Dr Wenkart's then solicitors (Bruce &amp; Stewart) by Mr Pantzer's then solicitors (Sally Nash &amp; Co) under cover of a letter dated 7 October 2004 and placed in evidence by Dr Wenkart. At the heart of the dispute between Dr Wenkart and Mr Pantzer concerning the costs of Cutler Hughes &amp; Harris is the question of whether all of the bills of costs of Cutler Hughes &amp; Harris are required to be taxed to determine the total quantum of the costs that Mr Pantzer is entitled to recover from Dr Wenkart (see order 1 of the consent orders made on 11 March 2002 which are reproduced in [2007] FCA 1589 at [15] ). 58 Mr Pantzer's case is that there was no request for any of the amounts paid to Cutler Hughes &amp; Harris to be taxed under s 167 of the Act other than the amount of $105,000 paid on the date that Dr Wenkart's bankruptcy was annulled. Robert Gorczyca of Bruce &amp; Stewart, as the firm was then known, gave evidence that the first occasion on which he was provided with an accounting of the former bankrupt estate of Dr Wenkart was when he received the Cash Payments List (see [57] above). Before being retained by Dr Wenkart, Bruce &amp; Stewart acted for creditors of Dr Wenkart's bankrupt estate. The evidence suggests that the only advice given by Mr Pantzer to Dr Wenkart and the creditors of his estate during the course of Dr Wenkart's bankruptcy is that referred to in [22] and [24] above. I therefore accept the accuracy of Mr Gorczyca's evidence in this regard. 59 However, Dr Wenkart's primary submission concerning the costs of Cutler Hughes &amp; Harris is that this proceeding has been conducted on the basis of an agreement by Mr Pantzer to have the bills of costs of Cutler Hughes &amp; Harris taxed, and that this agreement is reflected in the orders made by Lindgren J on 21 October 2003. Those orders are reproduced in [2007] FCA 1589 at [22] . It is therefore necessary to review the history of the dealings between Mr Pantzer and Dr Wenkart so far as they touch on the legal costs of Cutler Hughes &amp; Harris. 60 The s 73 proposal put forward by Dr Wenkart by letter dated 18 January 2001 provided for certain bank cheques to be given to Mr Pantzer subject to the acceptance of the proposal by his creditors. One of the proposals was: the amount of $105,000.00 (in accordance with your letter of 7 December 2000) less the cash on hand you currently hold (as advised to be approximately $24,000) in the form of a bank cheque for your outstanding legal fees (including any associated with the current proceedings) due to Cutler Hughes &amp; Harris up to the date and conclusion of the Section 73 meeting and its implementation. 61 I infer that there had been communication between Dr Wenkart and Mr Pantzer before Dr Wenkart formulated his s 73 proposal. This appears to be confirmed by par 4 of an affidavit sworn by Mr Pantzer on 8 March 2002. That paragraph reads as follows: At the date of the Section 73 proposal being put to me by the bankrupt on 18 January 2001 I determined the amount of the Trustee's remuneration and costs and disbursements incurred in the administration of the bankrupt estate at that time. Those amounts were $105,000.00 payable to me as Trustee and $105,000.00 payable to Cutler Hughes &amp; Harris. In proceedings 7051 of 2002 my rights to recover remuneration, costs, charges and expenses were preserved. 78 The context in which Lindgren J came to make orders in this matter on 21 October 2003 was that the docket judge, who was then Beaumont J, was unwell. Lindgren J was thus more than usually dependent on information provided to him by the parties' respective legal representatives. On 11 March 2002 Beaumont J had made the consent orders that are set out in [2007] FCA 1589 at [15] . Those orders provided, in effect, that Dr Wenkart charged the Paddington property to secure the remuneration, costs, charges and expenses to which Mr Pantzer was, or might become, lawfully entitled as trustee of his bankrupt estate and recorded that Dr Wenkart "agreed 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". I observe, incidentally, that there is no suggestion that the parties have agreed another time. 79 The orders made by Lindgren J on 21 October 2003 (see [2007] FCA 1589 at [22] ), although made after the filing of the cross-claim, were intended to enable the amount to which Mr Pantzer was "lawfully entitled" as trustee of Dr Wenkart's estate to be quantified. Those orders in effect, obliged Mr Pantzer to require the persons who had provided services to him with respect to Dr Wenkart's bankrupt estate (other than Cutler Hughes &amp; Harris) to supply bills of costs pursuant to s 167 of the Bankruptcy Act and additionally obliged Mr Pantzer to notify Dr Wenkart of his claim for remuneration in respect of services provided after the annulment of Dr Wenkart's bankruptcy. I observe incidentally that the absence of any reference in the order to Mr Pantzer's entitlement to remuneration for services provided before the annulment of Dr Wenkart's bankruptcy supports my above conclusion that Mr Pantzer's entitlement in that regard had by that time been quantified. His Honour noted that Dr Wenkart conceded that upon completion of taxation of the claims for costs and remuneration referred to in the orders, the amount taxed would be amounts to which Mr Pantzer was lawfully entitled within the meaning of the orders made on 11 March 2002. 80 The explanation for Mr Pantzer not being obliged by the orders made on 21 October 2003 to require Cutler Hughes &amp; Harris to supply bills of costs can be found in the transcript of the hearing on that day before Lindgren J. On that day Mr Johnson of counsel appeared for Mr Pantzer. One of the matters debated before his Honour was a procedure for quantifying the amounts to which Mr Pantzer was "lawfully entitled" within the meaning of order 1 of the consent orders made on 11 March 2002. Mr Johnson told his Honour: The position that we would seek is orders that we are lawfully entitled to a quantified amount of remuneration and costs and, your Honour, either to give directions as to who that procedure [sic] is to be quantified and then that attached to the charge. Mr Johnson later observed: Well, if your Honour was then minded to consider a position of a regime for quantification, we would say there should be some conditions, because we're concerned about this matter dragging on. 81 Mr Johnson went on to advise his Honour that the judgment of Beaumont J of 6 May 2003 (ie Wenkart v Pantzer [2003] FCA 471) dealt with the amounts due to Cutler Hughes &amp; Harris. That judgment concerned Mr Pantzer's entitlement to the amount of Ms Sexton's certificate of taxation of 17 February 2003. Mr Johnson agreed with Lindgren J that, because Beaumont J had already determined the amount to which Mr Pantzer was entitled in respect of the costs of Cutler Hughes &amp; Harris, those costs should be an exception to the order obliging Mr Pantzer to require service providers to supply bills of costs. Shortly thereafter the transcript records the following exchange concerning the way in which the orders to be made by Lindgren J should be drafted: His Honour: ....We have excluded from that order legal services provided to Mr Pantzer by Cutler Hughes &amp; Harris. Now is that correct? That covers all legal services irrespective of when provided by Cutler Hughes &amp; Harris? Mr Johnson: I believe it does, your Honour. And I also believe it extends to their out of pocket expenses, including counsel fees ... His Honour: In other words, that is already subject to the existing taxation? Mr Johnson: Yes. Again, I will check Ms Sexton's taxation records on that, your Honour. It does not appear that Mr Johnson later qualified or withdrew his affirmative answer to the last of Lindgren J's above questions and his Honour thereafter made the orders dated 21 October 2003. 82 For the reasons given above, it appears that Mr Johnson's understanding on 21 October 2003 of the ambit of Ms Sexton's taxation was erroneous. However, I see no reason to conclude that Dr Wenkart's legal representatives were aware of Mr Johnson's error; Dr Wenkart's solicitors had requested a comprehensive taxation of the costs of Cutler Hughes &amp; Harris. I conclude that it is not now open to Mr Pantzer in this proceeding to adopt an approach that is inconsistent with the basis upon which Lindgren J was invited to make the orders dated 21 October 2003. 83 The transcript of the hearing before Lindgren J on 21 October 2003 also reveals that on that day Mr Johnson accepted that the orders that Lindgren J was being invited to make would extend to other legal services provided to Mr Pantzer, including by him and his instructing solicitors, Sally Nash &amp; Co. Nonetheless, Mr Pantzer now submits that the amounts paid by him to Mr Johnson, Sally Nash &amp; Co and Mr P Walsh of counsel are all amounts to which he is lawfully entitled from Dr Wenkart because Dr Wenkart made no request for the relevant bills of costs to be taxed pursuant to s 167 of the Act. Again, I take the view that it is not now open to Mr Pantzer in this proceeding to adopt an approach that is inconsistent with the basis upon which Lindgren J was invited to make the orders dated 21 October 2003. The bill of costs of Sally Nash &amp; Co was certified by a taxing officer on 13 December 2004. The respective bills of costs of Mr Johnson and Mr Walsh were certified by a taxing officer on 12 January 2005. The quantum of Mr Pantzer's costs in respect of the legal services provided by those legal representatives was determined within the meaning of order 1 of the orders of 11 March 2002 by the respective certificates of taxation. 84 As mentioned above, 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 As noted in [2007] FCA 1589 at [39] - [44] , the Full Court disagreed with the construction initially given by me to the orders made on 11 March 2002 and 21 October 2003. Nonetheless it 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. 86 There is no dispute between the parties that the total amount received by Mr Pantzer as trustee of Dr Wenkart's bankrupt estate was $769,191.66. It is the payments made by Mr Pantzer that are controversial or perhaps, more accurately, the identification of the date or dates upon which the quantum of the amount or amounts to which Mr Pantzer is lawfully entitled was determined. 87 As indicated above, I accept that the creditors of Dr Wenkart's bankrupt estate authorised Mr Pantzer's remuneration in an aggregate amount of $325,744.30. Mr Pantzer's schedule reveals that between 13 December 1999 and 10 March 2000 he paid himself 30 cents more than the creditors had authorised. This may be ignored on the de minimis principle. The total amount of authorised payments made by Mr Pantzer to himself by way of remuneration earlier than 31 October 2002 was thus $325,744.60.