FEDERAL COURT OF AUSTRALIA Pantzer v Wenkart [2006] FCAFC 140 BANKRUPTCY – entitlements of trustee – certificates of taxation relating to remuneration, costs, charges and expenses claimed by former trustee set aside – where work undertaken after bankruptcy annulled – where remuneration and costs claimed in relation to litigation – where primary judge found litigation undertaken for the former trustee's own benefit – whether litigation undertaken for former trustee's own benefit was not for the purpose of the administration of the estate Adsett v Berlouis (1992) 37 FCR 201 considered Wenkart v Pantzer [2003] FCA 315referred to Wenkart v Pantzer [2003] FCA 364referred to Wenkart v Pantzer [2003] FCA 432referred to Wenkart v Pantzer [2003] FCA 456referred to Wenkart v Pantzer [2003] FCA 471referred to Wenkart v Pantzer [2003] FCAFC 210; (2003) 132 FCR 204referred to Wenkart v Pantzer (No 6) [2003] FCA 1210referred to Wenkart v Pantzer [2003] FCA 1211; (2003) 132 FCR 273referred to Wenkart v Pantzer (No 8) [2004] FCA 280; Wenkart v Pantzer (No 3) (2004) 135 FCR 422referred to Wenkart v Pantzer [2005] FCA 1572 reversed WARREN PANTZER v THOMAS RICHARD WENKART, ANN SEXTON AND INSPECTOR GENERAL IN BANKRUPTCY NSD 2457 OF 2005 WARREN PANTZER v THOMAS RICHARD WENKART, ANN SEXTON AND INSPECTOR GENERAL IN BANKRUPTCY NSD 2459 OF 2005 BLACK CJ, RYAN AND MOORE JJ 28 SEPTEMBER 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NSD 2457 OF 2005 NEW SOUTH WALES DISTRICT REGISTRY ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: WARREN PANTZER Appellant AND: THOMAS RICHARD WENKART First Respondent ANN SEXTON Second Respondent INSPECTOR GENERAL IN BANKRUPTCY Third Respondent JUDGES: BLACK CJ, RYAN AND MOORE JJ DATE OF ORDER: 28 SEPTEMBER 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The orders made by the primary judge on 6 December 2005 be set aside and in lieu thereof the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 be dismissed. 3. The first respondent pay the appellant's costs of the appeal against the decision of the taxing officer in proceeding No NSD 1973 of 2004 and of the appeal to this Full Court, such costs to be taxed in default of agreement. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NSD 2459 OF 2005 NEW SOUTH WALES DISTRICT REGISTRY ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: WARREN PANTZER Appellant AND: THOMAS RICHARD WENKART First Respondent ANN SEXTON Second Respondent INSPECTOR GENERAL IN BANKRUPTCY Third Respondent JUDGES: BLACK CJ, RYAN AND MOORE JJ DATE OF ORDER: 28 september 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The orders made by the primary judge on 6 December 2005 be set aside and in lieu thereof the appeal against the decision of the taxing officer in proceeding No NSD 181 of 2005 be dismissed. 3. The first respondent pay the appellant's costs of the appeal against the decision of the taxing officer in proceeding No NSD 181 of 2005 and of the appeal to this Full Court, such costs to be taxed in default of agreement. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NSD 2457 OF 2005 NEW SOUTH WALES DISTRICT REGISTRY NSD 2459 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: WARREN PANTZER Appellant AND: THOMAS RICHARD WENKART First Respondent ANN SEXTON Second Respondent INSPECTOR GENERAL IN BANKRUPTCY Third Respondent JUDGES: BLACK CJ, RYAN AND MOORE JJ DATE: 28 SEPTEMBER 2006 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT: 1 A fundamental feature of Australian bankruptcy law is that the estate of the bankrupt vests in a trustee. The trustee must administer the estate and deal with the bankrupt's real and personal property in accordance with the provisions of the Bankruptcy Act 1966 (Cth) ('the Act') and do so for the benefit of the creditors of the bankrupt and the bankrupt. The trustee must be a suitably qualified accountant. Some estates are simple to administer, others are not. Often, property is marshalled and sold by the trustee and the proceeds used to pay creditors, though creditors can be paid from funds realised by other means. The trustee must be involved in the process. The costs of administering the estate are paid out of the estate. Those costs will include the professional fees of the trustee as well as expenses and legal costs. Sometimes there are sufficient funds in the estate to meet the trustee's remuneration, disbursements and expenses. On other occasions there are not and the trustee bears the loss. 2 The present case arises from a dispute between the formerly bankrupt Dr Wenkart, and his former trustee, Mr Pantzer, about whether certain claimed remuneration, disbursements and expenses are attributable to the administration of his estate and whether they were payable out of the estate. Generally, the claimed remuneration, costs, charges and expenses were associated with litigation between the former bankrupt and his former trustee following the annulment of the bankruptcy on 15 March 2002. 3 These are appeals from a judgment of a judge of the Court setting aside two certificates of taxation issued by a taxing officer relating to the claimed remuneration, costs, charges and expenses of Mr Pantzer for work performed and activities undertaken after 15 March 2002 (Wenkart v Pantzer [2005] FCA 1572). The certificates were challenged by Dr Wenkart principally on the basis that the taxing officer allowed claims relating to remuneration, disbursements and expenses incurred after his bankruptcy had been annulled and to which Mr Pantzer was not entitled as trustee under consent orders made by Beaumont J on 11 March 2002 in matter No NSD 7051 of 2002. The primary judge determined, amongst other things, that the litigation in which the remuneration, disbursements and expenses were incurred had been undertaken by Mr Pantzer to obtain the benefit of rights vested in him by the consent orders and that the litigation had been undertaken for his own benefit rather than for the purpose of administering the estate. The judge determined that the certificate of taxation in each proceeding allowed Mr Pantzer remuneration or disbursements and expenses to which he was not entitled under the Act and, for that reason, ordered that the certificates in each proceeding be set aside. Background to the present dispute 4 As noted by the primary judge, there is a "considerable overlap" between the issues raised for consideration in the proceedings before the judge and the issues raised for determination in matter No NSD 7051 of 2002. Accordingly, it is desirable to say something about the history of that other proceeding. Aspects of that history are detailed in a judgment of Lindgren J (Wenkart v Pantzer (No 8) [2004] FCA 280; Wenkart v Pantzer (No 3) (2004) 135 FCR 422 at [8] and onwards) which is one of many judgments given in those proceedings. 5 On 28 October 1999, an order was made sequestrating the estate of Dr Wenkart. Mr Pantzer was appointed the trustee of the estate. In the months that followed, Dr Wenkart sought to extricate himself from the bankruptcy. 6 On 15 February 2002, Dr Wenkart sent a document entitled "application" by facsimile to Beaumont J, purportedly in a proceeding with the matter number N 7752 of 2000. The matter so identified related to an application made in 2000 by a creditor seeking orders against Mr Pantzer to admit the whole of a proof of debt. In response to the facsimile, Beaumont J directed that a new file be opened dealing with the "application" and it was given the matter number NSD 7051 of 2002. Pursuant to orders of Lindgren J made on 31 March 2004, this document was deemed to be an application; that is to say, it was deemed to be the originating process in NSD 7051 of 2002. 7 In NSD 7051 of 2002, applications were made by both Dr Wenkart and Mr Pantzer. Judgments were given by Beaumont and Lindgren JJ (the successive docket judges) on several separate questions. There have been eight judgments given by single judges of this Court, three of which have been challenged on appeal to a Full Court. There was one application for special leave to appeal to the High Court. The costs (in the most general sense) incurred in this litigation are central to this appeal. The course of litigation in nsd 7051 of 2002 8 By the deemed application of 15 February 2002, Dr Wenkart sought an order that Mr Pantzer call a meeting of creditors pursuant to s 73(2) of the Act. The day before Dr Wenkart made this "application", in proceeding N 7752 of 2000, Beaumont J had proposed to make an order reserving liberty to Dr Wenkart to make such an application. His Honour made this order on 21 February 2002, in proceeding N 7752 of 2000. 9 On 11 March 2002 Mr Pantzer filed a notice of motion in NSD 7051 of 2002, seeking orders protecting his position in relation to his remuneration on the basis that he had a right to be indemnified out of Dr Wenkart's estate in respect of the costs, charges and expenses properly incurred by him as trustee of the estate. 10 A meeting of creditors took place on 15 March 2002, at which Dr Wenkart's bankruptcy was annulled by operation of s 74(5). In anticipation of this outcome, Beaumont J had made consent orders on 11 March 2002 in the following terms: "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 G/33817 and known at 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." 11 On 6 May 2002 Cutler, Hughes & Harris, the solicitors who had acted in the administration of the estate for Mr Pantzer, filed a bill of costs of the trustee's legal expenses. 12 On 31 October 2002, Sally Nash & Co, the solicitors then acting for Mr Pantzer, filed a notice of motion, later deemed by the orders of Lindgren J referred to at [6] to be a cross-claim. The notice was in the following terms: "The Respondent will at 9:45am on 5 day [sic] of November 2002, move the Court for the following orders:- 1. That the Court make an order in aid of its order made 11 March 2002 by appointing Warren Pantzer as Trustee for Sale of folio identifier G/33817 known as 47 Union Street, Paddington ("the property") pursuant to security granted on 11 March 2002 for the purpose of realising that property to enable payment to the Respondent of items in paragraph 2 together with payment of any charge payable by the Respondent pursuant to the Bankruptcy Estate Realisation Charges Act, 1997. 2. That the Respondent be given power of sale of the property at auction or by private treaty and the said Trustee be empowered to deduct from the proceeds of sale: (a) The Trustee's remuneration of $98,095.16; (b) Charges payable by the Respondent under the Bankruptcy Estate Realisation Charges Act, 1997 (c) legal fees due to Cutler Hughes & Harris with respect to a Federal Court taxation of costs relevant to the bankrupt estate of Richard Thomas Wenkart and secured by order of the Federal Court made in these proceedings on 11 March 2002 which are being taxed; (d) The Trustee's remuneration costs, fees and expenses of finalising the bankrupt estate of the Applicant and of determining these proceedings; (e) the commission and other expenses of any real estate agent employed by the Trustees; (f) the legal expenses of the Trustee in respect of the sale; (g) the legal expenses of transferring the land to the purchaser; (h) the legal expenses of this motion; (i) the Trustee's remuneration of acting on the sale; (j) the balance to Thomas Richard Wenkart. 3. That the Applicant give the Respondent as Trustee for Sale vacant possession of the property. 4. That a Writ of Possession of 47 Union Street, Paddington being folio identifier G/33817 issue 28 days after the date of this order. 5. The Applicant pay the Respondent's costs of this Motion on an indemnity basis. 6. Such further or other order as the Court deems fit." 13 On 19 November 2002 Dr Wenkart filed a document entitled "Notice of Intention to Oppose Application", articulating a variety of reasons why Mr Pantzer was not entitled to claim or receive his remuneration, disbursements or expenses from Dr Wenkart's property after the bankruptcy had been annulled. On 12 December 2002, Hunt & Hunt, the solicitors then acting for Dr Wenkart, filed a motion seeking orders restraining Mr Pantzer from selling the property and declaring that Mr Pantzer was not lawfully entitled to claim any remuneration, costs, charges and expenses from Dr Wenkart. 14 Aspects of the "Notice of Intention to Oppose Application" were addressed in a judgment of Beaumont J (Wenkart v Pantzer [2003] FCA 315). His Honour concluded that particular matters articulated in Dr Wenkart's "Notice" did not constitute an answer or purport to make an answer to Mr Pantzer's 31 October 2002 application (the cross-claim). His Honour also noted that the Federal Court had jurisdiction to determine issues "tendered by" the cross-claim (at [13]) and that order 2 of the consent orders of 11 March 2002 vested a charge in Mr Pantzer (at [21]). 15 Less than a week later, Beaumont J gave another judgment in the same proceedings (Wenkart v Pantzer [2003] FCA 364). After hearing argument by the parties on how the matter should be managed more generally, his Honour decided first to deal separately with a preliminary question. His Honour found that the provisions of s 167 of the Act (dealing with taxation of costs for services in administering the estate) continued to apply, having regard to the provisions of the consent orders made on 11 March 2002 and to the annulment of Dr Wenkart's bankruptcy. That judgment was the subject of an unsuccessful appeal by Dr Wenkart to a Full Court (Wenkart v Pantzer [2003] FCAFC 210; (2003) 132 FCR 204). 16 On 28 April 2003, Dr Wenkart filed a document entitled "Amended Notice of Intention to Oppose" which was the subject of Beaumont J's judgment in Wenkart v Pantzer [2003] FCA 432. The amended document asserted that, by refusing to call a creditors' meeting on receipt of the proposal of Dr Wenkart on 9 March 2000 for a composition of creditors pursuant to s 73, Mr Pantzer thereafter was not entitled to remuneration, costs, charges and expenses for any further work done. Beaumont J found, and made an order to the effect that, the facts and matters relevantly pleaded in the amended document did not constitute an answer to Mr Pantzer's cross-claim. An appeal by Dr Wenkart to the same Full Court noted at [15] was unsuccessful (Wenkart v Pantzer [2003] FCAFC 210; (2003) 132 FCR 204). 17 The Full Court was also required to consider the issue of when Dr Wenkart had become aware of Mr Pantzer's claim for remuneration. On behalf of Mr Pantzer, it was submitted that Dr Wenkart had become aware of Mr Pantzer's claim for remuneration at the creditors' meeting on 15 March 2002, a claim made pursuant to reg 8.08 of the Bankruptcy Regulations 1996 ('the Regulations'). This contention was resisted by Dr Wenkart in his "Amended Notice of Intention to Oppose" and had been the subject of a separate judgment of Beaumont J (Wenkart v Pantzer [2003] FCA 456) in Dr Wenkart's favour. However, the Full Court accepted Mr Pantzer's submissions (by way of cross-appeal) on this point. The finding by the Full Court that Dr Wenkart had been made aware of the amount claimed by Mr Pantzer at the creditors' meeting is of some significance in this appeal. 18 In his "Amended Respondent's Points of Claim", filed on 28 February 2003, Mr Pantzer sought orders that certain amounts be deducted from the proceeds of sale of the property to be sold at auction. These included charges under the Bankruptcy (Estate Charges) Act 1997 (Cth) payable by Mr Pantzer and legal fees due to Cutler, Hughes & Harris, in relation to the taxation of costs, secured by the consent orders of 11 March 2002. On 6 May 2003, Beaumont J ruled that Mr Pantzer was lawfully entitled to disbursements claimed by Cutler, Hughes & Harris and to be reimbursed for expenses incurred under the Bankruptcy (Estate Charges) Act 1997 (Cth) (Wenkart v Pantzer [2003] FCA 471). 19 On 29 August 2003, the Full Court handed down its reasons for judgment in the appeals and cross-appeal mentioned at [15], [16] and [17]. As a result of Mr Pantzer's successful cross-appeal from Beaumont J's decision of 5 May 2003 (Wenkart v Pantzer [2003] FCA 456), (see [17]), it was necessary for the Court to determine whether to extend the time for requesting taxation of a trustee's remuneration and costs pursuant to reg 8.09(1) of the Regulations. Lindgren J refused this application (Wenkart v Pantzer (No 6) [2003] FCA 1210). The certificates of taxation 20 On 21 October 2003, Lindgren J ordered that Mr Pantzer require any person who had provided services with respect to the estate in bankruptcy, either before or after the annulment, to provide, by 22 October 2003, a bill of costs, and that Mr Pantzer notify Dr Wenkart in writing by 23 October 2003 of his claim for remuneration in respect of services provided after the annulment of the bankruptcy. By letter dated 21 October 2003, Mr Pantzer wrote to Dr Wenkart claiming $127,460.25 for outstanding remuneration and disbursements (excluding legal costs) from 16 March 2002 up to and including 21 October 2003. 21 On 30 October 2003 Lindgren J decided two separate questions pursuant to O 29 r 2 of the Federal Court Rules (Wenkart v Pantzer [2003] FCA 1211; (2003) 132 FCR 273). The first concerned whether s 6(1)(a) of the Bankruptcy (Estate Charges) Act 1997 (Cth) imposed a charge in respect of amounts of the remuneration, costs, charges and expenses of Mr Pantzer, after the annulment of the bankruptcy, being amounts to which Mr Pantzer "was or is lawfully entitled" by reason of circumstances, all of which occurred prior to the annulment. Lindgren J answered this question in the negative. The second question was the same but where some or all of the circumstances had occurred after the annulment. This question was also answered in the negative. 22 On 18 November 2003, Dr Wenkart filed an objection to jurisdiction, claiming that the Court lacked jurisdiction to entertain the notice of motion filed by Mr Pantzer on 31 October 2002 (which, as noted at [12], would subsequently be deemed by Lindgren J to be a cross-claim). Dealing with that motion (Wenkart v Pantzer (No 8) [2004] FCA 280; Wenkart v Pantzer (No 3) (2004) 135 FCR 422), Lindgren J noted procedural irregularities in the proceeding, namely that the originating process was not in conformity with this Court's rules and that, while the proceeding had not been "otherwise dismissed" in the consent orders, "there has not been pending since that date, at least in form, any application for final relief in the proceeding" (at [39]). His Honour suggested that orders should be made regularising the position when the matter was next before the Court. 23 His Honour found that the Court had jurisdiction to enforce the charge granted by Dr Wenkart in favour of Mr Pantzer by the consent orders of 11 March 2002 and that it had power to do so by appointing a trustee for sale of the property. Accordingly, his Honour dismissed, with costs, Dr Wenkart's objection to jurisdiction. 24 In response to Mr Pantzer's claim for remuneration (see [20]), Dr Wenkart notified the Insolvency and Trustee Service of Australia pursuant to reg 8.09(1) that he was dissatisfied with the amount of the claim and requested that it be taxed, although he disputed in any event that the claim had been validly made. Ms Sexton was appointed taxing officer for the bill of costs of Mr Pantzer in respect of his remuneration and expenses and the bill of costs of Sally Nash & Co relating to work undertaken "in the High Court proceedings on behalf of [Mr Pantzer]" and the fees of counsel pursuant to s 167 of the Act. 25 On 13 December 2004, Ms Sexton issued a certificate in the following form: "Certificate of Taxation I do hereby certify that I have taxed and allowed the remuneration, disbursements and expenses claimed by Warren Pantzer, the former trustee of the estate of Thomas Richard Wenkart (NSW5988/99/0) in the amount of $169,955.94 for the period 15 March 2002 to 21 October 2003, comprised of the following amounts:- 1. Claim for remuneration of Warren Pantzer (Items 1-822 inclusive in the claim) ‑ $83,219.82 2. Claim for disbursements and expenses (items 823‑907 inclusive) ‑ $2,562.02 3. Solicitor/client bill of costs of Sally Nash & Co for work undertaken on behalf of Warren Pantzer in Federal Court proceeding N7501 of 2002 ‑ $57,613.09 4 .Solicitor/client bill of costs of Sally Nash & Co for work undertaken on behalf of Warren Pantzer in Federal Court proceedings (appeal) N633 of 2003 ‑ $26,561.01 Date: 13‑12‑04 [signed] ANN SEXTON TAXING OFFICER" 26 On 12 January 2005, Ms Sexton issued another certificate, this one allowing a total of $33,295.95. The amount of $2,289.70 was allowed for the solicitor/client costs of Sally Nash & Co for work in relation to an application for special leave to appeal from the judgment of the Full Court of this Court Wenkart v Pantzer reported at (2003) 132 FCR 204, to the High Court (S517 of 2003). The certificate also allowed eleven memoranda of fees from barristers retained at various times to represent Mr Pantzer. The Judgment appealed from 27 The primary judge treated the appeals from the decisions of the taxing officer as raising five issues. These were as follows (at [23]-[27]): 1. The meaning of the expression "remuneration, costs, charges and expenses to which [Mr Pantzer] is lawfully entitled or may become lawfully entitled from Thomas Richard Wenkart" in order 1 of the consent orders and Mr Pantzer's entitlements under the Act and the costs, charges and expenses in respect of which he is entitled to be indemnified. 2. Whether the effect of the orders made by Lindgren J on 21 October 2003 was to limit the amount that Mr Pantzer may claim in reliance on order 1 of the consent orders. 3. The validity of the appointments of Ms Sexton. 4. Whether the form of the bill of costs submitted by Mr Pantzer to Ms Sexton satisfied the requirements of the Regulations. 5. Whether, "by reason of matters pleaded in matter NSD 7051 of 2002, upon a true and proper accounting neither Mr Pantzer, nor any person who provided services to him in relation to the bankrupt estate of Dr Wenkart, has any present legal entitlement to payment or reimbursement, as the case may be, in respect of the administration of the bankrupt estate" (at [27]). 28 In this appeal, the contentious parts of the primary judge's judgment were identified as largely confined to issues 1, 2 and 5. 29 As to the first issue, the primary judge concluded that order 1, properly construed, had two elements. The first was the remuneration to which Mr Pantzer was then entitled, or would thereafter become entitled, in respect of work properly undertaken in carrying out his duties under the Act. The second was the costs, charges and expenses in respect of which Mr Pantzer, in his capacity as trustee or former trustee of Dr Wenkart's estate, was then entitled to be indemnified, or would thereafter become entitled to be indemnified. 30 As to the first element, the primary judge considered what Mr Pantzer's entitlements were under the Act, both generally and in relation to: · work done after the annulment of Dr Wenkart's bankruptcy; · work undertaken in relation to taxation of costs; and · work undertaken in relation to litigation and work performed by others. 31 As to work post-annulment, the judge concluded that the performance by a trustee of statutory duties which the Act requires, or allows, to be performed by a trustee after the annulment of the bankruptcy, are performed by the trustee while acting in that capacity. The judge had earlier referred to the Full Court judgment in Adsett v Berlouis (1992) 37 FCR 201 where, at 212, the Full Court described work properly undertaken by a trustee as work reasonably and bona fide undertaken for the purpose of administering the estate or performing any public duty imposed by the Act, conformably with the trustee's duty to perform the work with reasonable care and skill and in an efficient and economical way. 32 The contentious work by Mr Pantzer in relation to taxation of costs and expenses had been undertaken in response to a notice from the taxing officer under reg 8.09(2) of the Regulations requiring the trustee to lodge a detailed bill of costs. The judge concluded that a trustee is entitled, under the Act, to recover remuneration and costs in respect of work properly undertaken by him or her in relation to the taxation, including the preparation of a detailed bill of costs (provided that the taxation did not result in reduction of at least 15% in the amount of the trustee's claim for remuneration). 33 The primary judge then turned to the work undertaken in relation to litigation and accepted that a trustee is not entitled to receive remuneration under the Act in respect of litigation undertaken for his or her own benefit rather than for the purpose of administering the estate of the bankrupt. However, as the judge observed, the question whether any particular litigation has been undertaken for a trustee's personal benefit and not for the purpose of administering the bankrupt estate will not always be easy to answer. In the present case, the judge addressed elements of the litigation as it unfolded. In relation to work undertaken by Mr Pantzer in response to the informal application dated 15 February 2002 and before 11 March 2002, he was lawfully entitled to remuneration in respect of that work. As the judge pointed out, for Dr Wenkart's proposal to have been properly considered by his creditors at the creditors' meeting, it was necessary for them to know the extent, if any, of the trustee's right to claim remuneration and costs from Dr Wenkart's estate. 34 Work undertaken by Mr Pantzer after 11 March 2002 was work characterised by the primary judge as principally, if not entirely, referable to the notice of motion deemed by Lindgren J to constitute a cross-claim in the proceeding. The judge described it as the litigation vehicle by which Mr Pantzer had sought to obtain the benefit of the rights vested in him by the consent orders of 11 March 2002. The judge viewed it as litigation undertaken for his own benefit rather than for the purpose of administering the estate of Dr Wenkart for the following reasons (at [63]-[66]): "It seems to me that the above view finds some support in Symes v Holbrook [2005] FCAFC 219 at [57]‑[59]. In that case the respondent, the former trustee in bankruptcy of the appellant's estate, had instituted proceedings in the Federal Magistrates Court seeking payment of such costs, charges and expenses as were recoverable by him as trustee of the bankrupt estate, whether incurred before or after the annulment of the bankruptcy, and an order for the sale of the appellant's home with the proceeds to be applied to pay the amounts due to the respondent. In allowing an appeal from an order made in the Federal Magistrates Court striking out the appellant's points of defence and counter claim, the Full Court ordered the respondent personally to pay the appellant's costs of the appeal and of the proceeding below. I infer that this costs order was made in reliance on s 43 of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act') and O 62 of the Federal Court Rules. Reliance on s 43 and O 62 of the Federal Court Rules, rather than the Act, suggests that the Full Court did not regard the respondent's conduct in respect of the appeal and the proceeding at first instance as conduct undertaken in his capacity as trustee. Further support for the above view is, I consider, found in the costs orders made by the Full Court in Wenkart v Pantzer (2003) 132 FCR 204, by Beaumont J in Wenkart v Pantzer [2003] FCA 315, and by Lindgren J in Wenkart v Pantzer (No 6) [2003] FCA 1210 and Wenkart v Pantzer (No 3) (2004) 135 FCR 422. These costs orders were made against Dr Wenkart personally again in apparent reliance on s 43 of the Federal Court Act and O 62 of the Federal Court Rules. They constitute judgment debts arising after the annulment of Dr Wenkart's bankruptcy. No order was made, or it seems sought, that Mr Pantzer's costs be treated as costs in Dr Wenkart's bankruptcy or otherwise as costs payable to Mr Pantzer as trustee of Dr Wenkart's estate. Under the costs orders referred to above Mr Pantzer is entitled to his 'taxed costs' within the meaning of O 62 r 4 of the Federal Court Rules. A taxing officer appointed for the purposes of s 167 of the Act is not by that appointment authorised to conduct a taxation under O 62 of the Federal Court Rules. Unless the Court otherwise orders, Mr Pantzer is not entitled to tax his bills of costs in respect of interlocutory proceedings in matter NSD 7051 of 2002 until the principal proceeding is concluded (O 62 r 3(3)). The parties' conduct in relation to High Court proceeding S 517 of 2003 similarly supports the view that the litigation undertaken by Mr Pantzer to enforce the rights vested in him by the consent orders of 11 March 2002 was pursued for his own benefit and not in his capacity as trustee administering Dr Wenkart's estate. In a letter dated 1 September 2004, following Dr Wenkart's discontinuance of the application for special leave to appeal, the solicitors for Mr Pantzer sought costs pursuant to O 69A r 12(1) of the then operative High Court Rules. Mr Pantzer's recourse to his entitlement to costs under the High Court Rules, rather than to his entitlement to be indemnified for costs properly incurred in his capacity as trustee, suggests acceptance of the position that the work undertaken by him in relation to the High Court litigation was work undertaken for his own benefit." 35 The primary judge concluded that Mr Pantzer was entitled to claim remuneration where the ordinary duties required by the Act to be performed by the trustee were performed by a person acting on his behalf under his supervision and control. 36 The judge then turned to the second element of the remuneration, costs, charges and expenses to which Mr Pantzer claimed to be lawfully entitled, namely costs, charges and expenses to which he was, in his capacity of trustee (or former trustee), entitled to be indemnified. In substance, the judge concluded that those rights were coextensive with Mr Pantzer's rights to be remunerated in respect of his own work in respect of the same matters. That is, the right of indemnity had arisen only in the limited circumstances discussed already and, in particular, not in relation to the litigation after 11 March 2002. 37 Conformably with those reasons, the primary judge on 6 December 2005, made two orders. The first, in proceedings numbered NSD 1973 of 2004 was directed to the certificate of taxation by Ms Sexton dated 13 December 2004 which is reproduced at [25] above and was in the following terms: "1. The Certificate of Taxation dated 13 December 2004 issued by Ann Sexton is set aside. 2. The bill of costs, the subject of the Certificate of Taxation be remitted to Ann Sexton, the Second Respondent, for taxation in accordance with the reasons for judgment published in these proceedings on 8 November 2005. 3. The First Respondent to pay 80% of the Applicant's costs. 4. If within 21 days the First Respondent files an Appeal from this decision, order 2 be stayed until the hearing and determination or other resolution of that appeal." 38 The primary judge's second order of 6 December 2005, made in proceedings numbered NSD 181 of 2005, was directed to Ms Sexton's certificate of taxation of 12 January 2005. Save for the fact that paragraph 1 referred to the later certificate of taxation, the second order was identical in terms to that reproduced at [37] above. Grounds of appeal 39 Mr Pantzer appeals on a number of grounds. The principal ground of appeal is that the primary judge: · erred in determining that Mr Pantzer undertook litigation for his own benefit. The other grounds are that the primary judge: · erred in determining that particular costs orders made in previous judgments in proceedings No NSD 7051 2002 precluded, within the terms of the orders made by Lindgren J on 21 October 2003, the recovery of all reasonable and proper costs of, and incidental to, each of the proceedings by the appellant; · failed to give adequate reasons for setting aside each certificate of taxation; and · erred in assessing the costs of the first respondent at 80%. Reasoning 40 In our opinion, the remuneration, costs, charges and expenses claimed by Mr Pantzer after 11 March 2002 and, in particular, those associated with the litigation that flowed from Mr Pantzer's application of 31 October 2002 and for which each taxation certificate issued, were comprehended by order 1 of the consent orders of 11 March 2002. The application on 31 October 2002 was for an order appointing Mr Pantzer as trustee for sale of the property secured by the charge that had been agreed to and embodied in the orders of 11 March 2002. The 31 October 2002 application was instituted to give practical effect to a benefit that flowed naturally and directly to Mr Pantzer from the orders of 11 March 2002. 41 The litigation resulting from Mr Pantzer's application of 31 October 2002 and Dr Wenkart's defence, resolved several important issues. It established that: · Order 2 of 11 March 2002 created a valid charge in favour of Mr Pantzer (Beaumont J: 9 April 2003, [2003] FCA 315 at [21]); · Section 167 (the machinery for the taxation of costs) continued to operate in relation to the costs which were the subject of the orders of 11 March 2002 (Beaumont J: 14 April 2003, [2003] FCA 364 at [7] confirmed on appeal by the Full Court for different reasons - (Heerey, Finn and Finkelstein JJ: 29 August 2003, [2003] FCAFC 210: 132 FCR 204 at [8])); · Mr Pantzer had not lost his entitlement to remuneration, costs, charges and expenses for work done after 9 March 2000, the date of Dr Wenkart's first s 73 proposal (a proposal that requires a trustee to call a meeting of creditors) (Beaumont J: 1 May 2003, [2003] FCA 432 at [38]); and · Dr Wenkart had in fact been given notice of the amount of the remuneration claimed by Mr Pantzer at the creditors' meeting of 15 March 2002 and the time for Dr Wenkart to seek to have the claim taxed under reg 8.09(1) had passed (Heerey, Finn and Finkelstein JJ: 29 August 2003, [2003] FCAFC 210: 132 FCR 204 at [16], reversing Beaumont J: 5 May 2003, [2003] FCA 456). Each of these issues had to be determined because Dr Wenkart contested the entitlement of Mr Pantzer to the remuneration, costs, charges and expenses which he had claimed and of which Dr Wenkart had been given notice at the creditors' meeting on 15 March 2002. Thereafter, Dr Wenkart had refused to pay, challenging Mr Pantzer's right to payment and his right to secure payment by exercising a power of sale. 42 The finding of the Full Court that Dr Wenkart had, in fact, been given notice is significant. That is because, while Mr Pantzer was entitled to make the claim, Dr Wenkart had had a right to have the claimed remuneration, costs, charges and expenses taxed within a specified time of being given notice, but had not exercised the right within time. Thereafter, it had always been open for Dr Wenkart to seek an extension of that time by Court order, but an application to that effect was not made until December 2002, and it was not successful. 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: see Adsett v Berlouis (1992) 37 FCR 201. 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. 45 The conclusion of the primary judge (in the passage set out at [34] above) was based, in part, on the reasoning of the Full Court in Symes v Holbrook [2005] FCAFC 219. However, in our view, it was the very fact that the costs order in that matter had been made, not against the former bankrupt, but against the former trustee personally, which made it unnecessary for the Full Court to consider whether liability for those costs had been incurred in the capacity of a trustee or former trustee. Ex hypothesi there was no fund or asset other than his own personal resources to which the former trustee could have had recourse in order to pay the costs. Nor does it appear that, in making any of the earlier costs orders against Dr Wenkart, this Court was called on to consider the capacity in which the former trustee was to receive those costs. 46 The question of capacity was irrelevant, as was whether the costs orders had been made under s 43 of the Federal Court of Australia Act 1976 (Cth) and O 62 of the rules of this Court rather than the Act. The same observation can be made about the fact that the former trustee's solicitors sought costs under O 69A r 12(1) of the High Court Rules then in force in respect of the former bankrupt's discontinued application for special leave to appeal. Reliance on that means of quantifying the former trustee's costs of that proceeding does not suggest, as the primary judge thought (at [66]), that "acceptance of the position that the work undertaken by him in relation to the High Court litigation was work undertaken for his own benefit" and, by implication, not in his capacity as trustee. 47 There is no substance in the ground of appeal at the third dot point in [39] and it is unnecessary to consider the ground of appeal at the fourth dot point. 48 Each appeal should be allowed with costs. That will have the effect of restoring the full force of the respective certificates of taxation of 13 December 2004 and 12 January 2005. The former trustee should also have his costs of the appeals to the primary judge against each of those certificates. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate: Dated: 27 September 2006 Counsel for the Appellant: BA Coles QC and J Johnson Solicitor for the Appellant: Sally Nash & Co Counsel for the First Respondent: M Green Solicitor for the First Respondent: Bruce Stewart Dimarco Solicitors Solicitor for the Second Respondent: Australian Government Solicitor (submitting appearance) Solicitor for the Third Respondent: Australian Government Solicitor Date of Hearing: 1 May 2006 Date of Judgment: 28 September 2006