Wenkart v Pantzer

Federal Court of Australia|2003-10-29|Before: Lindgren J

REASONS FOR JUDGMENT (No 6) (Application for Extension of Time)

INTRODUCTION 1 These reasons for judgment relate to par 8 of a notice of motion filed on 12 December 2002 by the applicant ('Dr Wenkart'). The respondent ('Mr Pantzer') is the former trustee of the estate in bankruptcy of Dr Wenkart. Mr Pantzer claims remuneration, relevantly, in respect of services rendered by him as trustee in the period from 30 January 2001 to 15 March 2002. On the latter date, the bankruptcy of Dr Wenkart was annulled on the passing of a special resolution at a meeting of his creditors under subs 73(4) of the Bankruptcy Act 1966 (Cth) ('the Act'): subs 74(5) of the Act. Being dissatisfied with the amount of Mr Pantzer's claim, Dr Wenkart requested a taxing officer to tax the claim, but did so outside the 14-day period then allowed by reg 8.09(1) of the Bankruptcy Regulations 1996 (Cth) ('the Regulations'). 2 By par 8 of his notice of motion, Dr Wenkart seeks an order that the time allowed by reg 8.09(1) be extended to a period of 14 days from the making of the order granting the extension. 3 It is not in dispute that the Court has power under s 33(1)(c) of the Act to grant the extension: cf Bellin v Pattison (Trustee) [1999] FCA 51 ('Bellin'), esp at [27].

LEGISLATION 4 Section 162 of the Act provides for the fixing of the remuneration of a trustee of the estate of a bankrupt by resolution of the creditors, or, if they so resolve, by the creditors' committee of inspection. Subsection 162(4) provides: 'Where the remuneration of the trustee is not fixed by the creditors or the committee of inspection, the trustee is to be remunerated as prescribed by the regulations.' Regulation 8.08 of the Regulations prescribes as follows: 'For the purposes of subsection 162(4) of the Act, the remuneration of a trustee is to be: (a) in accordance with the scale of charges that is: (i) set out in the IPPA Guide to Hourly Rates published by the Insolvency Practitioners Association of Australia; and (ii) applicable to the work to be remunerated; and (b) at the level of 85 per cent of those charges.' 5 At the relevant time, sub-reg 8.09(1) provided as follows: '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 14 days of being notified in writing or becoming aware of the amount of the claim, request a taxing officer to tax the claim.' (my emphasis) (The period of 14 days was altered to 28 days on and from 6 November 2002 by the Bankruptcy Amendment Regulations 2002 (No 1) (SR 2002 No 255).)

CHRONOLOGICAL ACCOUNT OF BACKGROUND FACTS 6 On or about 28 October 1999, in proceeding NG 8467 of 1998, this Court made a sequestration order against Dr Wenkart's estate. As noted earlier, Mr Pantzer was the trustee. Mr Pantzer was paid amounts from time to time for his remuneration, but he has not been paid in respect of the period from 30 January 2001 to 15 March 2002. On the latter date he ceased to be trustee upon annulment of the bankruptcy. 7 Over a long period down to early 2002, there were communications between Dr Wenkart and Mr Pantzer and their respective solicitors in relation to a proposal by Dr Wenkart under s 73 of the Act. 8 On 8 January 2002 Dr Wenkart's then solicitors, Hunt & Hunt, wrote to Mr Pantzer's then solicitors, Cutler Hughes & Harris, pointing out that the creditors had not approved of Mr Pantzer's remuneration, and that 'therefore', in accordance with reg 8.08, his remuneration was 'to be fixed at 85 per cent of the charges set out in the IPAA Guide to Hourly Rates'. Later in the letter, Hunt & Hunt stated that once they received an itemised bill, the creditors would decide whether 'to proceed to a taxation of the Bill of Costs'. The letter shows that through his solicitors at the time, Dr Wenkart was aware that there was a régime laid down in the Regulations for taxation of a trustee's claim for remuneration. 9 On 11 March 2002, in this proceeding, the Court ordered 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 such other time as the parties may agree. 2. Thomas Richard Wenkart forthwith charges the land the 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 s 74 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.' 10 There was a meeting of Dr Wenkart's creditors on 15 March 2002. At the meeting, while Dr Wenkart was present, Ray Tolcher, a representative of Mr Pantzer, tabled a statement of Mr Pantzer's outstanding and unpaid remuneration as at 15 March 2002. The statement showed a total amount of $220,406.07 from which was deducted $105,000 'as per bankrupt's proposal', giving a balance outstanding of $115,406.07. It was moved that Mr Pantzer's remuneration be approved in the sum of $115,406.07. The motion was not carried. According to the minutes of the meeting, 'Mr Tolcher stated that the Trustee would therefore claim 85% of the IPAA Guide to Hourly Rates pursuant to section 162(4) and reg 8.08 of the Bankruptcy Act' (see [4] above). The minutes of the meeting were signed by Mr Tolcher who was chair of the meeting (in fact, according to the minutes, there were three successive chairmen: Dermot Maxwell, Geoff Holden and Mr Tolcher, the minutes being signed by the 'Minute Secretary', Sam Piscopo as well as by the last chairman, Mr Tolcher). The minutes were therefore prima facie evidence of the proceedings at the meeting: s 257 of the Act. 11 Under cover of a letter from Mr Pantzer dated 21 March 2002, a copy of the minutes of the creditors' meeting, including the statement of Mr Pantzer's outstanding and unpaid remuneration, was forwarded to Dr Wenkart. 12 There has been an issue in the proceeding whether, for the purposes of the commencement of the 14-day period referred to in subreg 8.09(1), Dr Wenkart was 'notified in writing or [became] aware of the amount of Mr Pantzer's claim' at the meeting on 15 March 2002. If he was so notified or did so become aware at the meeting (or, for that matter, upon receipt of the copy of the minutes on or about 21 March 2002), he did not request a taxing officer to tax Mr Pantzer's claim within the 14-day period allowed by subreg 8.09(1), not having done so until 24 April 2002 (see [17] below). 13 On 5 May 2003, in Wenkart v Pantzer [2003] FCA 456, Beaumont J held that at the meeting on 15 March 2002 Dr Wenkart 'was made aware of a formulaic claim, rather than a claim for an amount' at [16] and form of order). But in allowing Mr Pantzer's cross-appeal in Wenkart v Pantzer [2003] FCAFC 210, the Full Court found that Dr Wenkart was made aware at the meeting that the amount of Mr Pantzer's claim was 85 per cent of $115,406.07 and that this was an 'amount' for the purposes of subreg 8.09(1). On this basis, the 14-day period within which Dr Wenkart was entitled to request a taxing officer to tax the claim, ran from 15 March 2002 and expired on 29 March 2002. 14 On 22 April 2002 Mr Pantzer wrote to Dr Wenkart a letter reading as follows: 'I refer to previous communications. I enclose a copy of the fee reconciliation entitled "Outstanding Remuneration as at 15 March 2002" (with annexures) tabled at your Section 73 meeting held on 15 March 2002 showing my outstanding remuneration. I also attach a copy of the consent orders made on 11 March 2002 by the Federal Court by which you agreed to pay my remuneration, costs, charges and expenses to which I am lawfully entitled or may become lawfully entitled within 28 days of determination of the quantum. You have been sent a copy of the minutes of the Section 73 meeting. A motion was put at the Section 73 meeting to pay my outstanding remuneration in the amount of $115,406.07 (including GST) to 15 March 2002, which was additional to the amount of $105,000.00 provided by your proposal. That motion was not passed and Mr Tolcher, as my representative, claimed 85% of that amount pursuant to Section 162(4) and Reg 8.08 of the Bankruptcy Act. You are therefore required to pay me $98,095.16 (including GST) within 28 days of receipt of this letter, failing which I will proceed to enforce the charge I have over the Paddington property and reserve any rights I may have to claim full remuneration of $115,406.07 to 15 March 2002 (these amounts do not include the outstanding and unpaid legal costs of Cutler Hughes Harris which will be taxed). I will also then reserve any rights I may have to remuneration beyond 15 March 2002. Should you have any questions please contact Sam Piscopo of this office.' 15 As indicated in the letter, there was attached a copy of the statement of Mr Pantzer's claim for $115,406.07 which had been tabled at the meeting of creditors on 15 March 2002. 16 It will be noted that the letter did not leave Mr Pantzer's claim as one for 85 per cent of $115,406.07, but referred more specifically to $98,095.16. Before Beaumont J and the Full Court, Dr Wenkart argued that the reference at the earlier meeting of creditors to a per centage of an 'amount' was not itself an 'amount' for the purposes of subreg 8.09(1). Dr Wenkart's case has been that it was this letter of 22 April 2002 which, for the first time, made him aware of the 'amount' of Mr Pantzer's claim. Sitting as a single judge, I am bound by the Full Court's decision. It was of the essence of their Honours' reasoning in allowing Mr Pantzer's cross-appeal from Beaumont J's conclusion that on 15 March 2002 Dr Wenkart 'was made aware of a formulaic claim, rather than a claim for an amount', that they found that on that date he became aware of a claim for an amount. 17 By letter dated 24 April 2002, Hunt & Hunt, on behalf of Dr Wenkart, wrote to 'the Taxing Officer, Insolvency & Trustee Service' a letter reading as follows: 'We enclose a copy of a letter from the Trustee of the above Estate making a claim for remuneration. Pursuant to Regulation 8.09(1) of the Bankruptcy Regulations we give notice that the Bankrupt and Creditors, Throvena Pty Limited, Macquarie Health Corporation Limited and Hapday Holdings Pty Limited are dissatisfied with the amount claimed and request the Taxing Officer tax the claim.' Apparently, this letter was received by the Insolvency and Trustee Service Australia ('ITSA') on 3 May 2002. Mr Pantzer does not dispute that, for the purposes of subreg 8.09(1), this letter was a notice in writing requesting a taxation of the claim. It was, however, 26 days late, since a request would have had to be made by 29 March 2002 if it was to be lodged within 14 days of Dr Wenkart's becoming aware of the amount of the claim on 15 March 2002. 18 On 21 May 2002, Dr Wenkart wrote to ITSA complaining about the amount of remuneration claimed by Mr Pantzer. 19 On 14 June 2002 ITSA wrote to Dr Wenkart advising him that his request for taxation had been made outside the time allowed by reg 8.09. In substance the letter conveyed ITSA's view that Dr Wenkart had become aware of 'the amount' of Mr Pantzer's claim at the meeting of creditors on 15 March 2002, and that, in any event, a copy of the minutes of the meeting had been subsequently provided to Dr Wenkart under cover of Mr Pantzer's letter dated 21 March 2002 (see [11] above), so that Dr Wenkart was, in any event, 'notified in writing' of the amount of the claim on or about 21 March 2002. ITSA's letter contained the following paragraph: 'As there does not appear to be any provision for the taxing officer to extend the time, it appears that your only remedy is to make an application under s 33(1)(c) of the Bankruptcy Act for an extension of time to request the taxation of this remuneration claim.' (my emphasis) 20 On 28 June 2002 ITSA wrote to Dr Wenkart in response to a letter Dr Wenkart had sent to ITSA complaining that Mr Pantzer had incurred excessive costs. By the letter the writer of it (Mark Findlay, 'Bankruptcy Regulation') advised Dr Wenkart that he had recently inspected Mr Pantzer's file in relation to Dr Wenkart's bankruptcy 'from cover to cover as part of the routine inspection program carried out by [the Office of ITSA]', and that he (Mr Findlay) did 'not consider that work had been carried out unnecessarily, taking all factors into account'. The letter also advised Dr Wenkart: 'It may be appropriate for you to seek an extension of time under section 33(1)(c) of the Bankruptcy Act to request the taxation of the remuneration claim.' 21 It tells against Dr Wenkart's present application that he did not apply for an extension of time until he filed the present motion on 12 December 2002, notwithstanding his having been made aware of the possibility by ITSA's letters of 14 and 28 June 2002. 22 On 30 July 2002, Hunt & Hunt wrote to Mr Pantzer disputing that the claim for 85 per cent of the amount for which sought at the meeting on 15 March 2002, had been made at that meeting. Hunt & Hunt's letter asserted that the first occasion on which Mr Pantzer had claimed 85 per cent of $115,406.07 was on the occasion of the writing of Mr Pantzer's letter dated 22 April 2002. Accordingly, through his solicitors, Dr Wenkart was taking the position that his request for taxation made through his solicitors by their letter of 24 April 2002 was made in time, being within 14 days of Mr Pantzer's letter dated 22 April 2002. On this basis, of course, it was not necessary for Dr Wenkart to apply for an extension of time. 23 On 30 July 2002 Mr Pantzer replied to Hunt & Hunt disagreeing with the allegations made by Dr Wenkart, which, according to Mr Pantzer's letter, did not 'represent the facts'. 24 On 31 October 2002, Mr Pantzer filed in this proceeding a notice of motion seeking orders in aid of the enforcement of the orders of 11 March 2002. 25 As noted earlier, Dr Wenkart's application for an extension of time was made by para 8 of his notice of motion filed on 12 December 2002.

REASONING 26 At noted earlier, Dr Wenkart's request was out of time to the extent of 26 days, being the period from 29 March 2002 to 24 April 2002. 27 In par 21 of his affidavit of 13 December 2002 filed in support of the motion, Dr Wenkart described the reason for his delay in the following terms: '... to the best of my knowledge there was no formal application made by the Respondent for 85 per cent of the remuneration, costs, charges and expenses at the meeting of 15 March 2002 and I did not see or hear of any such claim at that meeting in which I was in attendance but the Respondent was not and therefore believed that the only bona fide application was made by the Respondent in the letter of 22 April 2002.' Counsel for Dr Wenkart points out that his client was not cross-examined before Beaumont J on this evidence. 28 The tentative, confused and general nature of Dr Wenkart's explanation is noteworthy. It can be analysed as consisting of three parts as follows: (a) Dr Wenkart first says that at the meeting: · 'to the best of [his] knowledge'; · there was no 'formal application'; · 'by Mr Pantzer'.

Dr Wenkart does not make clear what his mental processes were. The words 'to the best of my knowledge' suggest that he accepts the possibility that there was a formal application by Mr Pantzer, but insists that to the best of his recollection there was not. The words 'formal application' could be meant to signify various things. One is written, as distinct from oral, application. Another is clearly articulated application. The words 'by Mr Pantzer' could be intended to suggest that he did not regard a claim for remuneration made by Mr Pantzer's representative, Mr Tolcher, as being made by Mr Pantzer.

(b) Dr Wenkart secondly says that he did not hear or see a claim by Mr Pantzer for 85 per cent of $115,406.07, and adds that Mr Pantzer was not present. As to this statement, see [31]-[33] below.

(c) Thirdly, Dr Wenkart states that 'therefore' he believed that the only bona fide application by Mr Pantzer for remuneration was the one made in Mr Pantzer's letter of 22 April 2002. The word 'therefore' refers to the fact that Mr Pantzer was not personally present at the meeting of creditors on 15 March 2002. What now seems to emerge is that Dr Wenkart did hear Mr Tolcher refer to Mr Pantzer's claims of 85 per cent of $115,405.07, but thought that he could disregard it because Mr Pantzer did not make the claim in person. Alternatively, this third statement may be viewed as later rationalisation by Dr Wenkart as to why he did not request taxation until he received Mr Pantzer's letter of 22 April 2002.

29 Dr Wenkart's affidavit does not explain why he did not make his request promptly after receiving Mr Pantzer's letter of 21 March 2002 enclosing a copy of the minutes. Perhaps his explanation would be that he still regarded the minutes, or would still have regarded them if he had read them, as recording what Mr Tolcher said at the meeting and as not constituting a claim by Mr Pantzer although forwarded under cover of a letter signed by him. 30 In sum, the explanation offered by Dr Wenkart in some six lines within par 21 of his affidavit is unsatisfactory. 31 Even if the position were otherwise, the difficulty for Dr Wenkart is that the Full Court has found that he did become aware at the meeting of creditors on 15 March 2002 of the amount being claimed by Mr Pantzer for remuneration, that is to say, the amount of 85 per cent of $115,406.07. Dr Wenkart accepts that the Full Court so found; his acceptance that it did so is the basis on which he seeks the extension of time; an extension of time would not be necessary if he had become aware of the amount of Mr Pantzer's claim only on 22 April 2002. 32 It is therefore necessary, in my view, to disregard any suggestion that Dr Wenkart was not aware of the amount of Mr Pantzer's claim until any time after 15 March 2002, and to proceed entirely on the basis that he became aware of it on that date. 33 It is important to appreciate what the only explanation proffered by Dr Wenkart in his affidavit is and what it is not. It is not that Dr Wenkart did not know of the 14-day limit. It is not that he did not understand 85 per cent of $115,406.07 to be an 'amount' for the purposes of subreg 8.09(1). Rather, it is that he did not 'see or hear' a claim for 85 per cent of $115,406.07 made at the meeting. Thus, the only explanation offered is inconsistent, not only with the minutes of the meeting, but with the finding and decision of the Full Court. The only testimonial explanation proffered by Dr Wenkart must be rejected. 34 I do not think other more general considerations call for an extension of time either, and will now turn to them.

Through his then solicitors, at least, Dr Wenkart was aware at all relevant times of the régime found in the Regulations providing for taxation of a trustee in bankruptcy's claim for remuneration.

Dr Wenkart received a copy of the minutes of the meeting of creditors under cover of Mr Pantzer's letter dated 21 March 2002.

On 14 and 28 June 2002 ITSA drew Dr Wenkart's attention to the need to apply for an extension of time, but he did not do so until 12 December 2002 when the present notice of motion was filed and served. The delay is not satisfactorily explained. The explanation offered from the bar table is that Dr Wenkart believed that an extension of time would not be needed because an amount had not been claimed at the meeting on 15 March 2002, but this explanation falls away in light of the Full Court's finding.

There is no evidence that the amount of Mr Pantzer's claim is excessive (Kenny J took the absence of such evidence into account in refusing an extension of time in Bellin at [30]). Indeed, Mark Findlay of ITSA expressed the view in ITSA's letter of 28 June 2002 that Mr Pantzer's work had not been carried out unnecessarily, taking all factors into account (see [20] above).

It would be burdensome for Mr Pantzer now to have to prepare and lodge a detailed bill of costs covering the numerous events and documents involved, which occurred or came into existence over the period 30 January 2001 to 15 March 2002.

Dr Wenkart submits that the granting of an extension of time will not prejudice Mr Pantzer. Mr Pantzer has the benefit of the security referred to in par 2 of the orders of 11 March 2002, and on one view, the only 'prejudice' to Mr Pantzer is, in substance, the annoyance, inconvenience and disappointment of having to do now what he would have had to do in any event if Dr Wenkart had requested taxation only 19 days earlier. But subreg 8.09(1) does not say 'within 14 days unless the trustee in bankruptcy is not prejudiced'. The purpose of the time limit is to ensure that finality and certainty are brought to the quantification of a trustee's remuneration within a relatively short period of time. This is a benefit to a trustee in bankruptcy.

35 Dr Wenkart has not discharged the onus of persuading me that the time limit should not be allowed to operate in the ordinary way and with its ordinary effect in this case.

CONCLUSION 36 The motion, insofar as it is found in par 8 of Dr Wenkart's notice of motion filed 12 December 2002, should be dismissed with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Solicitor for the applicant: Bruce & Stewart Commercial

Dates of Hearing: 21 & 22 October 2003

Bankruptcy Act 1966(Cth)ss 33(1)(c), 162(4)

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