FEDERAL COURT OF AUSTRALIA

Wenkart v Pantzer [2003] FCA 364

BANKRUPTCY – trustee’s remuneration and costs – annulment of bankruptcy – effect of consent orders upon the application of statutory provisions allowing for taxation of costs.

Bankruptcy Act 1966 (Cth)

THOMAS RICHARD WENKART V WARREN PANTZER (FORMER TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART)

N 7051 OF 2002

BEAUMONT J

14 APRIL 2003

SYDNEY

THE COURT ORDERS THAT:

1.                  The separate question ordered today, 14 April 2003, be answered as follows:

Q.                Having regard to the provisions of the consent order made herein on 11 March 2002 and to the annulment of the applicant’s bankruptcy on 15 March 2002, do the provisions of s 167 of the Bankruptcy Act continue to apply in accordance with their terms?

A.        Yes.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT (NO. 2)

BEAUMONT J:

Introduction

1                     In my reasons published on 9 April 2003 I outlined some of the background of this matter, which I need not repeat.  At the end of those reasons, having dealt with the separate question then ordered, I indicated that I will hear further argument today on the way in which the matter should now be managed.  A number of matters have been argued before me this morning but they include one question of law which, in my opinion, arises as a preliminary question and I propose to order that it be dealt with as a separate question raising, as it does, a question which is not only separate, but preliminary to the further consideration of the matter generally.

2                     The question which I now order to be determined, as a separate question, is this.  Whether, having regard to the provisions of the consent order made herein on 11 March 2002 and to the annulment of the applicant’s bankruptcy on 15 March 2002, the provisions of s 167 of the Bankruptcy Act 1966 (Cth) (“the Act”) continue to apply in accordance with their terms. 

3                     Section 167 of the Act deals with taxation of costs.  It provides a machinery for the taxation of costs for services provided by a person in relation to the administration of the estate.  By s 167(1), it is provided that the trustee may require such a bill of costs for services so provided to be taxed by a taxing officer and the trustee may make that “requirement on the trustee’s own initiative or at the request of the bankrupt or a creditor”.

4                     The detail of the subsequent provisions of the Act need not be mentioned for present purposes, save to note that, by s 167(8), a person interested may appeal to the Court from a decision of the taxing officer in allowing or disallowing a bill of cost or bill of charges or an item in such a bill.  On behalf of the applicant, it is submitted that once his bankruptcy was annulled, the provisions of s 167 had no application, at least so far as he was concerned.  It was accepted in argument, I think, that s 167 may have bound the third party who supplied the services concerned, but it was emphasised that the effect of the annulment under s 74(5) was that the applicant, as a former bankrupt, was no longer bound by the taxation procedure prescribed by s 167.

5                     It will be recalled that par 1 of the consent order made on 11 March 2002 provided specifically that the respondent, as trustee of the applicant’s bankrupt estate, “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”.  There was no other provision made in the consent order for the laying down of any procedural mechanism for the determination of the quantum.  At the same time, as I indicated in my judgment on 9 April 2003, the inference should be drawn, as I mentioned in par 20 of that judgment, that the parties had agreed to defer the resolution of any dispute as to the amount of the respondent’s entitlement, but upon terms that the respondent would receive security for that amount.

6                     In my opinion, the provisions of the consent order should be interpreted as “holding” or preserving the status quo regime.  That is to say, in order to expedite the processing of the annulment procedure that was then contemplated, the applicant and the respondent, not at that stage being in agreement on the amount of the respondent’s entitlement, deferred the implementation of any process in that area, in the absence of any agreement by way of ultimate determination.  It would, in my opinion, be quite perverse to attribute to either the applicant or the respondent, in the framing of the terms of the consent order, any objective of eliminating any of the machinery provisions that would have been available for the determination of the respondent’s entitlement.  Such machinery was, of course, plainly available during the course of administration of the bankrupt estate.

7                     Essentially, for the reasons I gave in the judgment published on 9 April 2003, and in particular, having regard to the provisions of s 74(6), I am of the view that, so far only as the matters mentioned in par 1 of the consent order made on 11 March 2002, the machinery provisions of the Act, in all their relevant application, remained in force so as to protect all parties concerned;  that is to say, relevantly, both the applicant and the respondent.  Those machinery provisions must, in my view, clearly include s 167 and for those reasons I answer the separate question.

Associate:

Dated:              29 April 2003