FEDERAL COURT OF AUSTRALIA

Wenkart v Pantzer (No 2) [2010] FCA 1408

THE COURT ORDERS THAT:

1.    The proceeding is stood over to 24 December 2010 at 9.30 am with a view to then making orders to finalise this proceeding.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    On 13 August 2010 reasons for decision were published in a judgment intended to bring all issues outstanding between the parties to final resolution: Wenkart v Pantzer [2010] FCA 866, 269 ALR 641. Those reasons expressly acknowledged that there may nevertheless remain some residual issues that that judgment did not resolve. Liberty was reserved to the parties to identify any such issues which remained to be resolved.

2    Written submissions were filed on behalf of Mr Pantzer on 10 September 2010 which annexed a form of proposed orders, including declaratory relief. Written submissions in reply were also filed by Mr Pantzer on 27 October 2010.

3    Written submissions filed on behalf of Dr Wenkart on 15 October 2010 contended that there were indeed a number of residual issues which remained to be addressed or further addressed, namely:

    the relevance of a material change in circumstances said to have taken place since the decision of the Full Court in September 2006 in Pantzer v Wenkart [2006] FCAFC 140, 153 FCR 466;

    the need to give effect to what were described as “sanctions”;

    the need to deny Mr Pantzer a right to remuneration at least prior to an entitlement being reached;

    the need to avoid conferring upon Mr Pantzer what was described as a “windfall”;

    the need to address what has been characterised as “an error in the understanding of the arithmetic in [53] of the August 2010 Judgment”;

    the need to now resolve the date from which and the manner in which interest should run and be calculated;

    the manner in which the Court is to quantify costs and the related question of whether an order should be made for costs in a “gross sum”;

    the form of any declaratory relief to be granted; and

    the form of the order for sale of what has been described as “the Paddington property” in the event of a default in payment.

Supplementary written submissions were filed on behalf of Dr Wenkart on 27 October 2010. An Additional Note was also filed on behalf of Dr Wenkart on 8 November 2010.

4    The question of whether an order should be made for the payment of costs in a fixed sum became the subject of a separate hearing and is to be dealt with in a separate judgment to be delivered tomorrow.

5    Senior Counsel on behalf of Mr Pantzer rightly contended that leave to re-open (or at least leave to make further submissions) was necessary in respect to those issues which had previously been the subject of submissions and decision in the August 2010 judgment. Such leave as was necessary was opposed. In different circumstances, that opposition would have had considerable force. However, given the desirability of ensuring that all submissions that the parties wished to advance were in fact advanced, oral submissions proceeded upon the basis that leave had in fact been granted.

6    Written submissions dated 27 October 2010 were also filed on behalf of Hapday Holdings Pty Ltd (“Hapday Holdings”).

7    The resolution of these residual issues which Dr Wenkart wished to canvass proceeded on 28 October 2010. Due to the late service of evidence relevant to the question as to whether a fixed costs order should be made, submissions on that issue were heard briefly on 18 November 2010 and then more fully on 23 November 2010.

8    The very multiplicity of issues said to be outstanding is a reflection (at the very least) of both the need to resolve once and for all the issues dividing the parties and the undesirable complexity that litigation extending over a protracted period – and over a number of different docket Judges – can generate.

A Material Change in Circumstances?

9    The “material change in circumstances” relied upon by Dr Wenkart really starts with the decision of Branson J in Wenkart v Pantzer [2005] FCA 1572, 223 ALR 384. Her Honour there allowed an appeal by Dr Wenkart in two different proceedings which also involved Dr Wenkart and Mr Pantzer in respect to his challenge to two certificates of taxation issued by a taxing officer (Ms Sexton) relating to the claimed remuneration, costs, charges and expenses of Mr Pantzer. The certificates were set aside by Her Honour.

10    An appeal from this decision was, however, allowed by the Full Court in Pantzer v Wenkart [2006] FCAFC 140, 153 FCR 466. The principal ground of appeal was that it was said that the primary Judge erred in determining that Mr Pantzer undertook litigation for his own benefit. In allowing the appeal, Black CJ, Ryan and Moore JJ reasoned:

[43] It may be accepted that a trustee’s right to remuneration is restricted to work reasonably and bona fide undertaken for the purpose of administering the estate or performing a statutory public duty with reasonable care and skill and in an efficient and economical way … In the present matter however, the litigation in which Mr Pantzer became involved after Dr Wenkart’s bankruptcy had been annulled was to defend, successfully, in the face of sustained opposition from Dr Wenkart, the remuneration, costs, charges and expenses he had claimed at the time of the annulment. From Mr Pantzer’s viewpoint, such a course was unavoidable, in a practical sense, if he was to maintain and realise his entitlements.

[44] It was in his capacity as a former trustee that Mr Pantzer was drawn into the litigation to assert a right to be paid a claimed amount which Dr Wenkart had not challenged by seeking taxation in the way provided for by the Regulations, and to exercise an implied right of sale arising from the consent orders and the failure of Dr Wenkart to comply with them. It is true, in a sense, that the litigation was undertaken by Mr Pantzer for his benefit, as the primary judge observed. In the same sense, any litigation into which a trustee might be drawn concerning remuneration, disbursements and expenses is litigation for the trustee’s benefit. But to characterise it this way does not necessarily answer the question whether the trustee (or former trustee) has been properly involved in the litigation as an incident of having acted as a trustee charged with the responsibility of administering the bankrupt’s estate. In our view, the facts in the present case compel the conclusion that the remuneration, costs, charges and expenses incurred after the annulment of the bankruptcy were so incurred for the purpose of giving practical effect to the 11 March 2002 consent orders and, more generally, administering the estate. Consequently, Mr Pantzer was “lawfully entitled” to them within the terms of the consent orders.

11    The “material change of circumstances” now relied upon by Dr Wenkart is the difference in circumstances between those that emerged subsequent to the decision of the Full Court in 2006 and those that were found by Branson J in 2008.

12    On behalf of Dr Wenkart it is now contended in his written submissions that the “facts which had been assumed at the time of the 2006 Full Court Proceedings were not those which came to be actually found by Branson J in 2008”. In Wenkart v Pantzer [2008] FCA 478, Her Honour relevantly found as follows:

[88] As I have already mentioned, on 24 April 2002 (ie earlier than the filing of the cross-claim) Hunt & Hunt formally requested that the costs of Cutler Hughes & Harris be taxed and Ms Sexton was appointed Taxing Officer on 6 August 2002. However, as at 31 October 2003 Ms Sexton had not completed her taxation. For the reasons given above, it seems to me that on 21 October 2003, if not before, Mr Pantzer effectively conceded that he had filed his cross-claim before the quantum of the amount of the costs to which he was legally entitled from Dr Wenkart in respect of the costs of Cutler Hughes & Harris had been determined. Indeed, it appears that a significant portion of the costs of Cutler Hughes & Harris have not been taxed even today. The dates of taxation of the bills of costs of Mr Johnson, Sally Nash & Co and Mr Walsh respectively are also later than the date on which the cross-claim was filed.

[89] If the amounts shown by Mr Pantzer’s schedule to have been paid to Cutler Hughes & Harris are disregarded, the schedule does not suggest that Dr Wenkart’s bankrupt estate was in deficit on 31 October 2002. If the amounts paid to Mr Johnson, Sally Nash & Co and Mr Walsh are also disregarded the position is even clearer. I conclude that Mr Pantzer has not established that as at 31 October 2002 the quantum of the remuneration, costs, charges and expenses to which he was lawfully entitled had been determined in an amount in excess of the amount of his receipts as trustee of Dr Wenkart’s bankrupt estate (see [9] above).

13    The fact of immediate relevance now seized upon by Dr Wenkart is that Mr Pantzer had filed his Cross-Claim prematurely and before he had a legal entitlement to the monies claimed. That fact had not been determined as at the date of the Full Court decision in 2006. His written submissions go on to contend that “to the extent to which the Full Court in 2006 sought to cut short the issues in these proceedings, those pronouncements of entitlements were (at most) merely interlocutory and were hypothetical”. It was submitted that “the procedural complexities arising” in the present proceeding should be “recognised as one of the issues to be reconsidered”.

14    The sequence of prior decisions was, however, one of the matters taken into account in the previous reasons for decision in August 2010. The fact that Dr Wenkart had been successful in establishing the premature filing of the Cross-Claim was a matter repeatedly referred to in submissions during the course of the previous hearing. It was a matter previously considered and resolved as part of the “mix” taken into account when fixing the percentage of costs to which Mr Pantzer has been held to be entitled.

15    The material change in circumstances now relied upon has previously been taken into account. However, the submissions presently advanced and the issues therein have been considered afresh. It is considered that no variation in the decisions previously reached is warranted – even if such variation is permissible.

16    It is unnecessary to resolve the manner in which Senior Counsel on behalf of Mr Pantzer characterised any relevant “change in circumstances”. If there was any such “change in circumstances”, it was her submission that the relevant change had to be between the date of the earlier hearing in June 2010 (preceding the August judgment) and the date of the present hearing. All other “circumstances” had, on this approach, been canvassed by the then Senior Counsel appearing on behalf of Dr Wenkart. There was no relevant “change in circumstances”, in her submission, between the date of those submissions and the present hearing.

17    However the competing submissions of the parties are to be approached, there is to be no departure from the previous conclusions reached in August 2010.

Sanctions

18    On behalf of Dr Wenkart it is now contended “that the Court has not yet considered sanctions which ought to apply, independently of the issue of material change of circumstances”.

19    The reference to “sanctions” is a reference to that term said by Counsel for Dr Wenkart to have been used by Branson J during the course of a hearing in (possibly) January or July 2008. The fact that a review of those transcripts does not reveal that term having been used by Her Honour may be left to one side. A review of the January 2008 transcript, however, does record Her Honour saying to Counsel for Dr Wenkart:

“… the matter is going to have to be resolved some time … [I]t’s a public scandal that it is still going now so we really have to find a way of wrapping it up …”

The “public scandal” continues and is still not resolved nearly three years after Her Honour’s comment. It is reassuring – but disturbing nevertheless – to note that at least one other Judge of this Court (now a former Judge) has expressed the same sentiment as to the manner in which the proceeding has been conducted.

20    Of more immediate relevance, however, is Dr Wenkart’s contention that the “sanctions” he now seeks include:

    an award of legal costs in favour of Dr Wenkart; and

    an order that Mr Pantzer should be deprived of his right to any further remuneration as a trustee after 23 October 2003 until 10 January 2005.

It is also now contended that such legal costs – including remuneration – claimed by Mr Pantzer:

    are “manifestly disproportionate”; and

    in large part relate to remuneration and costs incurred after the commencement of the proceeding.

21    On behalf of Dr Wenkart it is contended that the “consideration of … sanctions, at least in relation to costs, is now a statutory requirement by virtue of the operation of sub-sections 37M(3) and 37N(4) … of the Federal Court of Australia Act 1976”. These sections were inserted by way of amendment by the Access to Justice (Civil Litigation Reforms) Amendment Act 2009 (Cth).

22    The commencement of the present proceeding, however, well pre-dates the introduction of those provisions – but that difficulty may also presently be left to one side.

23    In respect to the legal costs now claimed by Dr Wenkart, the submission was that he should be entitled to an order for legal costs in his favour up to 10 January 2005. That date was the date calculated by the Deputy District Registrar when issuing her certificate as being the date 28 days after the determination of the quantum of an amount to which Mr Pantzer is lawfully entitled: cf. Wenkart v Pantzer [2009] FCA 1086 at [30].

24    The October date after which time Dr Wenkart submits no further remuneration should be recoverable was understood to be referable to the decision of Lindgren J in Wenkart v Pantzer (No 7) [2003] FCA 1211, 132 FCR 273.

25    In support of his contention that costs and remuneration orders of the kind proposed would be “manifestly disproportionate”, Dr Wenkart contended that there had been delay at various stages of the proceeding over the last decade attributable to:

    the conduct of Mr Pantzer; and

    the Court.

Delay on his own part was denied.

26    The unqualified submission that there had been no delay attributable to Dr Wenkart was surprising. Rather than being free from criticism, serious criticism can in fact be properly directed at his conduct. Even if the attempts presently being made to re-visit conclusions reached as recently as August 2010 are disregarded, as well as the delay occasioned by the filing of evidence leading to a yet further hearing on 23 November 2010, the following observations of Branson J in Wenkart v Pantzer [2008] FCA 1387 when addressing the Cross-Claim should be recalled, namely:

[18] … I indicated in my reasons for judgment of 11 April 2008 at [92] why I regarded the option of simply dismissing Mr Pantzer’s cross-claim on the basis that it had been instituted prematurely to be undesirable. It seemed to me to be a course likely to result in the institution of yet further litigation between the parties. This did not seem to me to be in the public interest or in the interests of the parties, particularly having regard to the Court’s wide powers to formulate orders for costs. It may be that I would have taken a different view had Dr Wenkart, at an early stage in this regrettable litigious saga, identified, perhaps as a preliminary point for the Court’s determination, his claim that Mr Pantzer’s cross-claim was bound to fail as it had been filed prematurely. He did not do so. Rather, as it seems to me, he utilised the proceeding as a vehicle to obtain judicial review of virtually every aspect of Mr Pantzer’s claim for remuneration as trustee of his estate.

The submission that no delay can be attributed to the manner in which Dr Wenkart has conducted the present litigation over the course of the best part of a decade is rejected.

27    Insofar as Dr Wenkart seeks to attribute some of the delay that has taken place at the feet of the Court itself, and to thereafter contend that such delay has contributed in part to the “manifestly disproportionate” relief that is now claimed, the submission is rejected. The conduct of protracted litigation extending over nearly a decade has occasioned the successive allocation of the proceeding to four Judges of this Court. And each Judge presumably has taken some considerable time both during the course of proceedings in Court and in Chambers to become familiar with prior events. Even if it were appropriate to take into account such delay, no instance of delay on the part of the Court can be discerned such as to found any variation of orders otherwise appropriate.

28    It should, perhaps, be noted that no party should feel inhibition in advancing such a submission. The Courts must remain accountable to the public and to litigants. In the present proceeding it is nevertheless considered that the submission is without substance. The time has now come when their competing rights have been finally resolved – at least at first instance.

29    It is not considered that any orders should be made of the kind now submitted on behalf of Dr Wenkart – be they orders imposed by way of “sanction” or otherwise. The manner in which the present proceeding has progressed through the Court and the manner in which both parties have pursued their competing claims is a matter that has been taken into account when concluding that Mr Pantzer should be entitled to 90% of his costs: Wenkart v Pantzer [2010] FCA 866 at [134] to [152]. Reference was there expressly made to consideration being given to the consequences that should follow from the premature filing of the Cross-Claim: at [138]. Consideration was also there given to whether there should be any order for costs on an indemnity basis: at [152]. The conclusion that no costs should be ordered on an indemnity basis was part of the more general decision to assess Mr Pantzer’s entitlement at 90%.

30    Each of the matters now raised by Dr Wenkart have nevertheless again been considered. Each of the matters now relied upon by Dr Wenkart, it is concluded, have been adequately taken into account in considering the final relief to be awarded.

A Windfall?

31    The next submission separately advanced on behalf of Dr Wenkart has at its core the concern that an initial claim for $98,095.16 has been productive of what he contends is “disproportionate” relief.

32    So much has previously been recognised. In August 2010 “exasperation” was then expressed as to how and why such a comparatively small claim had become the subject of such protracted dispute. The view was then expressed that the failure to either pay the amount claimed or to compromise the claim was “scandalous”: Wenkart v Pantzer [2010] FCA 866 at [5] to [6], 269 ALR 641 at 642 to 643.

33    It may readily be accepted that the issues between the parties could have been, and should have been, resolved at a far earlier date had both parties adopted a more commercial (or pragmatic) approach. But that has not happened. Pragmatism does not dictate that claims to lawful entitlements should be abandoned or compromised in an uncommercial manner. Common sense, nevertheless, has a large part to play in any litigation.

34    If common sense and commercial pragmatism do not prevail, a party who ultimately loses the dispute must inevitably confront the consequences of his own conduct. Such a party cannot thereafter complain that the litigation in which he has been an active protagonist should not visit upon him consequences perhaps unforeseen at the beginning.

35    The principal foundation for Dr Wenkart’s present submission that orders as now claimed by Mr Pantzer would confer upon him a “windfall” is again the premature filing of the Notice of Motion on 31 October 2002. It was that Notice of Motion which was to later become known as Mr Pantzer’s “Cross-Claim”.

36    Whether or not the premature filing of the Cross-Claim has had an effect on the final outcome may well be doubted. The view was previously expressed that it was “unlikely that many of the legal costs that have been incurred would have been avoided even if the ‘cross-claim’ had not been filed prematurely”: [2010] FCA 866 at [142], 269 ALR 641 at 671. But the fact that the Cross-Claim was filed prematurely cannot now be disputed; nor can it be disputed that the premature filing has been productive of much legal argument.

37    It may nevertheless be doubted whether the final orders as now sought by Mr Pantzer can properly be described as conferring upon him a “windfall”. Mr Pantzer was entitled to pursue his claims and to have them resolved; as was Dr Wenkart entitled to resolution of his contentions.

38    The concern presently advanced by Dr Wenkart is that unless an order is made “denying Mr Pantzer remuneration as well as his costs, it effectively insulates Mr Pantzer from the risks any other litigant faces”. The concern is that “Mr Pantzer obtains a windfall by reason of the period of time he has taken in qualifying for some entitlement, and the nature of the amounts he claims which bring him ‘over the line’ thereby gradually eliminating the ‘moneys that were available’”. It is suggested on his behalf that a “way in which the windfall might be avoided is for this Court to make an order which offsets the amount of the certificates referable to activity incurred prior to becoming entitled”.

39    This present submission overlaps and echoes – at least in part – the submissions previously advanced in respect to the need, as perceived by Dr Wenkart, to impose “sanctions”.

40    It is not considered that orders giving effect to the previous reasons for decision and the present reasons for decision would confer any “windfall” upon Mr Pantzer.

A Mathematical Error?

41    The submission in this respect on behalf of Dr Wenkart was that there had been “an error in the understanding of the arithmetic in [53] of the August 2010 Judgment, which affects the availability of the conclusion at [72] and [75] that there were outstanding claims unsatisfied …”.

42    Paragraph [53] of the previous reasons for decision set forth the “table of receipts and payments” prepared by the Deputy District Registrar in May 2009. An issue previously addressed was that that table relevantly disclosed that:

    as at 15 March 2002 there was a “balance” of $240,352.20;

and that:

    it was on 13 December 2004 that the amounts claimed exceeded the “balance”.

A further issue previously addressed (but not in the table) was that:

    the Report to Creditors dated 11 March 2002 disclosed outstanding claims for remuneration, costs and expenses totalling $467,337.03.

It was on 15 March 2002 that the bankruptcy of Dr Wenkart was annulled.

43    Paragraphs [55] to [80] of the previous reasons for decision attempt to resolve the submissions previously made as to the application of the rule in Cherry v Boultbee (1839) 4 My& Cr 442, 41 ER 171. Those submissions focussed attention upon whether as at 15 March 2002 there was what Dr Wenkart described as a “surplus” of $240,352.20.

44    It has been concluded that Dr Wenkart’s reliance upon the rule in Cherry v Boultbee is misplaced. Three reasons were given for that conclusion. Any “error in … understanding” of the kind now contended, even if there be any such error, would lead to no different conclusion.

45    The “error in … understanding” now relied upon focuses attention upon the first and second of the three reasons previously given.

46    Essentially two matters are now relied upon by Dr Wenkart to contend that there has been an “error in … understanding”, namely:

    the fact that as at 28 March 2000 the table disclosed a “balance” of $548,447.36 and that the reduction of that amount by $467,337.03 nevertheless disclosed a “surplus” as at annulment of $81,110.33

and the fact that:

    the two amounts disclosed in the table – namely, “outstanding remuneration” as at 15 March 2002 ($98,095.16) and “Cutler Hughes and Harris unpaid legal fees” as at 17 February 2003 ($163,477.54) – were the only lawful entitlements prior to 13 December 2004.

The “mathematics” behind the “table of receipts and payments” have, however, previously been the subject of detailed submissions. The submissions have been resolved. With great respect to Counsel for Dr Wenkart, this is perhaps a further instance where he should now seek to advance any such further submissions as he may wish to advance to a Full Court (if he so wishes) and not this Court.

47    Notwithstanding the conclusion that Dr Wenkart is again seeking to re-agitate submissions previously ventilated, his further submissions have again been considered. Those further submissions, it is respectfully considered, do not warrant any departure from the conclusion previously expressed as to the application of the rule in Cherry v Boultbee to the facts. In particular, it is not considered that there should be any departure from the conclusions reached at paragraphs [73] and [75]. The former conclusion was that the agreement as noted by Beaumont J in March 2002 “left no room for any suggestion that Mr Pantzer would first have to account for any ‘surplus’ that he may receive before being able to recoup from any such ‘surplus’ the amounts to which he was entitled or may become entitled”: [2010] FCA 866 at [73]. The latter conclusion was that it was “a mistake to characterise the ‘balance’ recorded in the table as a ‘surplus’. It remained moneys that were available to meet the claims being made by Mr Pantzer”: [2010] FCA 866 at [75].

48    Although appreciation is expressed for the careful submission of Counsel on behalf of Dr Wenkart in this respect, there is not considered to be any reason to now change any of the reasons previously given to reject the submission that placed reliance upon “the rule in Cherry v Boultbee”.

The Date from which Interest Should Run

49    The reasons for decision previously given concluded that there should be an order for interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) but left for future resolution:

    the time from which interest was to run; and

    the quantum of the calculation as to interest.

It was anticipated that both matters were to be the subject of agreement between the parties: [2010] FCA 866 at [132]. There has been no agreement.

50    The written submissions filed on behalf of Mr Pantzer seek interest in respect to the sum of $173,079.71, namely the amount to which it has been concluded that he has a lawful entitlement: [2010] FCA 866 at [101] to [116]. Those reasons for decision trace the computation of that amount from the amounts paid during the course of the bankruptcy and through the subsequent entitlements as determined by Her Honour Justice Branson. Those judgments of Her Honour were those published in 2007 and 2008.

51    The quantum of interest now claimed on behalf of Mr Pantzer is the sum of $93,963.67 calculated as follows:

INTEREST SCHEDULE

Interest on $173,079.71 from 10 January 2005 to 20 August 2010 at the rates specified in Practice Note CM16

52    It is there apparent that interest is claimed as from 10 January 2005 up to 20 August 2010. Section 51A(1)(a) of the Federal Court of Australia Act confers power upon the Court to make an order for interest to be paid “in any proceedings for the recovery of any money” and permits an order to be “on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered …”.

53    Although there is no certainty in the fixing of any particular date, it is considered that interest should be ordered on the sum of $173,079.71 for only “part of the period”, that period commencing on 16 September 2008. That was the date of judgment of Branson J resolving an application made by Dr Wenkart to reconsider part of Her Honour’s reasons for decision published in April 2008 and the date when Her Honour resolved an application by Mr Pantzer that she withdraw and reconsider part of those same April 2008 reasons: Wenkart v Pantzer, in the matter of Wenkart [2008] FCA 1387. Interest from that date, it is considered, affects an exercise of discretion having regard to two fundamental factors, namely:

    the fact that there has been a long-running dispute as to the entitlement of Mr Pantzer to monies and the time taken to resolve those claims; and

    the fact that the resolution of the claims in the present proceeding has not been free of difficulty.

Also taken into account is a third factor, namely:

    the fact that the Cross-Claim was filed prematurely.

Declaratory Relief

54    The previous reasons for decision concluded that Mr Pantzer was entitled to declaratory relief in respect to two sums, namely $159,192.82 and $302,682.97: [2010] FCA 866 at [125]. Mr Pantzer now seeks declaratory relief in respect to other amounts.

55    The form of proposed orders submitted on behalf of Mr Pantzer now seeks a number of other declarations. Using the numbering in the proposed orders, declarations are sought that:

1.    [T]he first respondent is lawfully entitled to be paid the sum of $173,079.71 by the applicant.

2.    [T]he first respondent is entitled to interest of $93,963.67 on the sum of $173,079.71 as set out in the attached schedule of interest.

…

6.    [U]pon the issue of a certificate of taxation by a taxing officer under section 167 of the Bankruptcy Act 1966 and/or Bankruptcy Regulation 8.09 in respect of any claim for remuneration in relation to the estate in bankruptcy of the applicant for the period after 21 October 2003, the first respondent will be lawfully entitled to payment of such amounts.

7.    [U]pon the issue of a certificate of taxation by a taxing officer under section 167 of the Bankruptcy Act 1966 and/or Bankruptcy Regulation 8.09 in respect of legal services provided by Cutler Hughes & Harris to the first respondent in relation to the estate in bankruptcy of the applicant (such legal services not being the subject of the certificate of taxation issued on 17 February 2003), the first respondent will be lawfully entitled to payment of such amounts.

8.    [U]pon the issue of a certificate of taxation by a taxing officer under section 167 of the Bankruptcy Act 1966 and/or Bankruptcy Regulation 8.09 in respect of legal costs and other expenses incurred by the first respondent in relation to the estate in bankruptcy of the applicant since 21 October 2003 not covered by order 4 above, the first respondent will be lawfully entitled to payment of such amounts.

56    The first declaration is intended to give effect to the conclusion previously reached that Mr Pantzer has made out an entitlement to $173,079.71: [2010] FCA 866 at [116]. The making of this declaration is opposed upon the basis that it serves no purpose. This submission is rejected. A declaration in the form proposed serves the not inconsiderable purpose of making apparent the conclusion of the Court that Mr Pantzer is entitled to that amount. It separates out that amount from the quantum of the overall judgment in a monetary sum that is to be entered against Dr Wenkart.

57    It is not considered that a declaration should be made as to an entitlement to interest or a declaration that Mr Pantzer is entitled to interest in a set amount. An order that an amount is to be paid, including interest, is a sufficient remedy.

58    In other proceedings it may well be doubted whether declarations 6, 7 and 8 would have been made. Declaration 6, of course, focusses upon an entitlement to remuneration to be calculated in accordance with bankruptcy legislation; declaration 7 focuses upon legal expenses. Given the myriad of matters that have previously been agitated and disputed between the protagonists in the present litigation, there is considerable merit in the submission advanced by Senior Counsel on behalf of Mr Pantzer that there is a desirability in making as certain as possible all matters that have been the subject of submissions so that the same disputes do not arise again in the future. Declarations 6, 7 and 8 will also be made.

Order for Sale

59    The form of proposed orders sought on behalf of Mr Pantzer seeks orders in respect to the sale of the Paddington property. Both Hapday Holdings and Dr Wenkart oppose parts of these orders.

60    Hapday Holdings has been involved in the proceeding from the outset. Although principal attention has been given to the agreement as noted by Beaumont J on 11 March 2002, it is of relevance to recall that His Honour also on that occasion noted that:

Hapday Holdings Pty Ltd ACN 001 185 253 hereby postpones mortgage [XX] over the land in paragraph 2 in favour of Warren Pantzer pursuant to the charge in paragraph 2.

The circumstances in which the company came to be joined as a party to the proceeding were thereafter summarised as follows by Branson J in Wenkart v Pantzer [2007] FCA 1589:

[86] Hapday Holdings is a party interested in Mr Pantzer’s application by way of cross-claim for an order that he be appointed as trustee for sale of the Paddington property. It was not originally named as a cross-respondent to the cross-claim. However, on 21 January 2005 I ordered that Hapday Holdings be joined as a cross-respondent with effect from that day. Thereafter Hapday Holdings has participated in the hearing of the cross-claim and has had the opportunity to make submissions concerning Mr Pantzer’s entitlement to the relief claimed by the cross-claim.

[87] No prejudice to Hapday Holdings flowing from its late joinder as a party to the cross-claim has been identified. I do not regard the late joinder as a reason to deny Mr Pantzer the right to enforce the equitable charge given to him by Dr Wenkart. Nor do I regard the failure to give notice to the occupiers of the Paddington premises as an impediment to the way of enforcement of the charge. All necessary notices will be able to be given by any trustee for sale appointed by the Court.

61    The relevant orders which are sought by Mr Pantzer are as follows:

9.    Orders pursued to Order 37 of the Federal Court Rules and Section 30 of the Bankruptcy Act, 1966, as amended, in aid of the order and agreement made on 11 March 2002 in these proceedings, that if the judgment entered pursuant to the order in paragraph 5 of these orders is not satisfied within 28 days of entry;

    9.1    David Young, official liquidator be appointed as trustee (“the trustee”) for sale of the whole of the land and improvements in certificate of title folio identifier [XX] known as [XX] Street, Paddington (“the property”) for the purpose of realising the property to enable payment to the first respondent of the amounts to which the first respondent is lawfully entitled to payment or becomes lawfully entitled on the issue of certificates of taxation.

    9.2    Directs that the second respondent and the applicant forthwith deliver to the trustee for the purpose of the sale of the property certificate of title folio identifier [XX] and a discharge of mortgage [XX] in registrable form.

    9.3    Orders that the applicant forthwith give the trustee vacant possession of the property.

    9.4    Orders that a writ of possession of the property issue 28 days after the date of this order.

    9.5    Orders that the trustee have the following powers:-

(a)    To sell the property by public auction after marketing it for not less than 4 weeks in a manner recommended by a real estate agent retained by the trustee to procure the sale of the property.

(b)    To set a reserve.

(c)    To negotiate with the two highest bidders if the property is passed in at the public auction.

(d)    To sell by private treaty (or public auction again) if the property is passed in and there is no negotiated sale.

(e)    To act and do all things in a manner appropriate to a trustee for sale in the marketing and sale of the property.

(f)    To sign a transfer and all other documents required to convey good title to the property.

(g)    To forthwith deduct and pay from the proceeds of sale:-

(i)    the commission and other expense of any real estate agent retained by the trustee to procure the sale of the property;

(ii)    the legal expenses of the trustee in respect of the sale of the property;

(iii)    the other costs, expenses and outgoings (including rates and taxes charged on the property) of transferring the property to the purchaser;

(iv)    the remuneration and expenses of the trustee and his employees incurred in relation to the sale of the property;

(v)    charges payable by the first respondent under the Bankruptcy Realisation (Estate Charges) Act, 1997 to the Inspector General in Bankruptcy, if any, in relation to the sale of the property; and

(vi)    the amount of the judgment entered pursuant to the order in paragraph 5 of these orders, and if then calculated any amount payable to the first respondent in accordance with the declarations in paragraphs 6, 7 and 8 of these orders.

    9.6    Directs that the trustee hold in trust the balance of the proceeds of sale of the property pending determination in accordance with the declarations in paragraphs 6, 7 and 8 of these orders of the remuneration, legal costs and other amounts to which the first respondent is lawfully entitled for the purposes of order 1 made by Beaumont J on 11 March 2002, in these proceedings which have not been determined at the date of completion of the sale of the property by the trustee.

    9.7    Directs that the trustee pay any surplus to the second respondent after he has accounted for all of the monies referred to in these orders.

    9.8    Directs that the trustee file with the Court and serve on the applicant and the second respondent an affidavit deposing to his receipts and payments as trustee for sale of the property on or before the later of 60 days from completion of the sale of the property and the date of payment of the surplus pursuant to the direction in paragraph 9.7 of these orders.

10    Orders that if the amounts to which the first respondent is or will be lawfully entitled to payment exceed the proceeds of sale of the property after deduction of the amounts set out in order 9.5(g)(i) to (vi) the first respondent will be entitled to judgment against the applicant for the shortfall upon the filing of an affidavit of debt setting out the amount due to him and unpaid by the applicant.

62    Hapday Holdings now contends that no order for sale should be made unless and until the final amount said to be owing by Dr Wenkart is calculated. The written submissions filed on behalf of the company point out such differences as exist between its own interests and those of Dr Wenkart but otherwise notes that the company supports the primary submissions made on behalf of Dr Wenkart. Proposed order 9, it will be noted, is expressly sought only in the event that proposed order 5 is not satisfied. Again, in the interests of bringing all matters dividing Dr Wenkart and Mr Pantzer to conclusion, and in order to avoid the prospect of yet a further proceeding being instituted some time in the future seeking an order for sale, it is considered appropriate in the circumstances to now make such an order.

63    Counsel on behalf of Dr Wenkart takes issue (in particular) with proposed orders 9.5(g)(v), 9.5(g)(vi) and 9.6.

64    The starting point in respect to any order that may be made in respect to the sale of the Paddington property is the agreement made at the outset between the parties and as noted in the consent orders made on 11 March 2002. Those consent orders provided in part 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 at such other time as the parties may agree.

2.    Thomas Richard Wenkart forthwith charges the land and improvements in folio identifier [XX] and known as [XX] Street, Paddington in favour of Warren Pantzer to secure the amount in paragraph 1.

Despite the fact that the Court noted the agreement, emphasis is placed on behalf of Dr Wenkart upon the essential contractual nature of the agreement he had then reached with Mr Pantzer.

65    In reliance upon that contractual nature of the agreement, it is correctly submitted that proposed order 9.5(g)(vi) should not be made.

66    Order 9.5(g)(v) it is further contended should not be made as it is inconsistent with the conclusion reached by Lindgren J in Wenkart v Pantzer (No 7) [2003] FCA 1211, 132 FCR 273. That submission, it is concluded, is correct and proposed order 9.5(g)(v) should not be made.

67    In opposing proposed order 9.6, Counsel on behalf of Dr Wenkart submitted that a consequence of such an order could be that Dr Wenkart is held out of the proceeds of sale for an indeterminate period possibly whilst any further taxation is sought. For that reason, no such order is now made.

68    Nor is it considered that order 10 should be made. The remaining orders, it is concluded, adequately protect the interests of Mr Pantzer.

Conclusions

69    In very summary form, it follows that:

    a declaration should be made as to the entitlement of Mr Pantzer to be paid the sum of $173,079.71 and that further declaratory relief should now be granted;

    an order should be made for the payment of interest on that sum as from 16 September 2008 and an order made that that interest is calculated in a particular amount;

    judgment should be entered in favour of Mr Pantzer in a sum yet to be calculated; and

    orders in accordance with the orders proposed by Mr Pantzer should be made in respect to the sale of the Paddington property, but not orders 9.5(g)(v) or (vi), 9.6 or order 10.

70    It is not expected that any difficulty will be experienced in drafting orders to give effect to these reasons. Indeed, the only real matter that now requires the cooperation of the parties is the calculation of interest pursuant to s 51A.

71    Judgment is to be delivered tomorrow in respect to the outstanding matter of costs and, especially, whether costs should be ordered to be paid in a “fixed sum” pursuant to Order 62 rule 4(2)(c). These matters were the subject of two separate Notices of Motion before the Court.

ORDERS

72    The Orders of the Court are:

1.    The proceeding is stood over to 24 December 2010 at 9.30 am with a view to then making orders to finalise this proceeding.

Associate:

Dated:    16 December 2010