Ambrose (Trustee) v Poumako (No 3)

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.