Ambrose (Trustee) v Poumako (No 3) - [2013] FCA 22

FEDERAL COURT OF AUSTRALIA
Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako (No 3) [2013] FCA 22

Citation: Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako (No 3) [2013] FCA 22

Parties: COLIN LOUIS AMBROSE AS TRUSTEE OF THE BANKRUPT ESTATE OF ROBIN BRIAN POUMAKO v ROBIN BRIAN POUMAKO, JACQUELINE STELLA POUMAKO, TUHI AGNES CASSIDY and JANICE HEATHER POUMAKO

File number: SAD 322 of 2011

Judge: MANSFIELD J

Date of judgment: 29 January 2013

Catchwords:
BANKRUPTCY – undervalued transactions void against trustee in bankruptcy of transferor – final orders – whether trustee must accept liability for mortgages granted by transferor over properties the subject of impugned transfers

BANKRUPTCY – undervalued transactions void against trustee in bankruptcy of transferor – final orders – where trustee must repay to transferees part consideration paid to transferor (bankrupt) – where transferee mortgaged property and used funds from mortgagee to pay part consideration – whether trustee may satisfy obligation to repay consideration paid by making payment to mortgagee in reduction of indebtedness – whether trustee has right of indemnity from transferee to extent of any additional mortgage funds which trustee must satisfy under s 120(6)

Legislation: Bankruptcy Act 1966 (Cth) ss 120(1), 120(4) and 120(6)

Cases cited:
Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako [2012] FCA 889 referred to
Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost (No 2) [2011] FCA 686 referred to
Frost v Sheahan as Trustee of the Bankrupt Estate of Allan Gordon Frost [2012] FCAFC 46 cited
Frost v Sheahan as Trustee of the Bankrupt Estate of Allan Gordon Frost [2012] HCASL 196 cited
Trustee of the Property of O’Halloran; in the matter of O’Halloran v O’Halloran [2002] FCA 1305 referred to
Tyler v Thomas [2006] FCAFC 6 applied
In Re Mouat; Kingston Cotton Mills Co v Mouat [1899] 1 Ch 831 approved
Verge v Devere Holdings Pty Ltd (No 5) [2010] FCA 1452 approved
Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372 considered
Lumsden v Snelson [2001] FCA 83 cited
Johnson v Royal Mail Steam Packet Company (1867) LR 3 CP 38 followed
Noyes v Ellis (1877) 3 VLR (L) 307
Abigroup Ltd v Abignano (1992) 39 FCR 74 applied
Mahoney v McManus (1981) 180 CLR 370 applied

Date of hearing: 12 December 2012

Date of last submissions: 13 December 2012

Place: Adelaide

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 34

Counsel for the Applicant: G Gretsas

Solicitor for the Applicant: Gretsas & Associates, Lawyers

Counsel for the Respondents: The respondents appeared in person, through the First Respondent

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

SAD 322 of 2011

BETWEEN:
COLIN LOUIS AMBROSE AS TRUSTEE OF THE BANKRUPT ESTATE OF ROBIN BRIAN POUMAKO
Applicant

AND:
ROBIN BRIAN POUMAKO
First Respondent

JACQUELINE STELLA POUMAKO
Second Respondent

TUHI AGNES CASSIDY
Third Respondent

JANICE HEATHER POUMAKO
Fourth Respondent

JUDGE:

MANSFIELD J

DATE OF ORDER:

29 JANUARY 2013

WHERE MADE:

ADELAIDE

THE COURT DECLARES THAT:
1. The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] FCA 22
Decision Date

CaseChat Overview and Summary

This case involved an application by Colin Ambrose, as trustee of the bankrupt estate of Robin Poumako, for directions concerning the sale of two properties transferred by Robin Poumako prior to his bankruptcy. The respondents were Robin Poumako, Jacqueline Poumako, Tuhi Agnes Cassidy, and Janice Heather Poumako. The central legal issues were whether the trustee must accept liability for mortgages granted by the bankrupt over the properties, and whether he could satisfy his obligation to repay consideration paid by the transferees by making payment to the mortgagee in reduction of the indebtedness. The court had to determine how to reconcile the trustee's obligation to repay the consideration with his obligation to assume the transferees' liabilities under the mortgages. The court found that the transfers of the properties were void against the trustee under s 120 of the Bankruptcy Act 1966 (Cth). The court ruled that the trustee could discharge his obligation to repay the consideration by paying the mortgagee on behalf of the transferee, which would reduce their indebtedness. This approach was justified under principles of recoupment in equity. The court also made detailed orders for the sale of the properties, and for costs, taking into account the outcome of the case and the negotiations between the parties. The orders allowed for a private sale if agreed, and otherwise provided a timetable and process for the sale to be conducted by a licensed land agent. The court divided the costs between the parties based on the outcome of the case and the involvement of each party.

Orders