FEDERAL COURT OF AUSTRALIA Hingston v Westpac Banking Corporation [2012] FCAFC 41 Citation: Hingston v Westpac Banking Corporation [2012] FCAFC 41 Appeal from: Westpac Banking Corporation v Hingston (No 2) [2010] FCA 1116 Parties: GUY RICHARD HINGSTON v WESTPAC BANKING CORPORATION File number(s): NSD 1519 of 2010 Judges: GREENWOOD, MCKERRACHER AND NICHOLAS JJ Date of judgment: 23 March 2012 Catchwords: BANKRUPTCY AND INSOLVENCY – consideration of an appeal by the bankrupt to set aside orders of the primary judge setting aside a composition made between the bankrupt and his creditors under Division 6 of Part IV of the Bankruptcy Act 1966 (Cth) – consideration of the grounds set out in s 222(1)(d) and s 222(5)(e)(i) of the Bankruptcy Act in setting aside the composition made by the bankrupt with his creditors under Division 6 of Part IV – consideration of the construction to be attributed to s 222(5)(e)(i) and s 76B in applying the grounds contained in that subsection to a composition under Division 6 of Part IV – consideration of the construction to be attributed to s 222(5)(e)(i) and s 76B in circumstances where the omission of a material matter from the debtor's statement of affairs concerns a statement of affairs presented to the Official Receiver under s 55 of the Act rather than a debtor's statement of affairs for the purposes of s 188(2C) or (2D) of the Bankruptcy Act – consideration of the factors informing the exercise of the discretion to set aside a composition made between the bankrupt and his creditors under Division 6 of Part IV in the context of s 222(1)(d) and s 222(5)(e)(i) as applied to a composition by s 76B of the Bankruptcy Act BANKRUPTCY AND INSOLVENCY – consideration of the scope of consequential orders to be made consequent upon setting aside a composition under s 222(1)(d) and s 222(5)(e)(i) and s 30(1) of the Bankruptcy Act 1966 (Cth) – consideration of the relationship between s 74(5) of the Bankruptcy Act and the power of the Court to make remedial orders that put the parties in their pre-composition position Legislation: Bankruptcy Act 1966 (Cth) – ss 6A, 27, 30, 55, 73(1), 73(2), 73(2A), 73C(2), 74(5), 75(1), 76B, 115(1), 115(1B), 149, 149B, 187(1), 188(1), 188(2B), 188(2C), 188(2D), 188(2E), 188A, 222(1), 222(5), 222(7), 222(8), 222(10), 222(11), 232(1) Cases cited: Westpac Banking Corporation v Hingston [2010] FCA 1116 – cited and quoted Re Richards: Ex parte Beneficial Finance Corporation Ltd [1986] FCA 74 - cited Re Brennan: Ex parte Stokes (Australasia) Ltd (unreported FCA 31 May 1988) - cited Re Codrington: Ex parte Don McKay Tourist and Charter Pty Ltd [1989] FCA 349- cited Re Palazzolo: Ex parte Discusso [1991] FCA 408- cited NZI Capital Corporation Limited v Lancaster (1991) 30 FCR 441- cited Re Lockett: Ex parte Northern Equity Ltd and Others [1992] FCA 142 – cited Labocus Precious Metals Pty Ltd v Thomas [2007] FCA 1154 – cited and quoted Bropho v Western Australia (1990) 171 CLR 1 - cited CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 - cited Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 - cited Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 – cited and quoted Minister for Immigration & Citizenship v SZJGV; Minister for Immigration & Citizenship v SZJXO (2009) 238 CLR 642 - cited Ross v R (1979) 141 CLR 432 – cited Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 – cited K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 – cited Talacko and Others v Talacko [2010] FCAFC 54; (2010) 183 FCR 311 - cited Vale v Sutherland (2009) 237 CLR 638 - cited Coyle v Cassimatis (Court of Appeal, Supreme Court of Queensland) BC 9303327, 1 November 1993, unreported - cited and quoted Theissbacher v MacGregor Garrick & Co (1993) 2 Qd R 223 - cited Re Hudson; Ex parte Australian and New Zealand Banking Group Ltd v Bird (1994) 50 FCR 281 - cited Worrell v Westpac Banking Corporation (1994) 51 FCR 304 - cited Re Coyle (1993) 42 FCR 72 - cited Union Club v Lord Battenberg (2006) 66 NSWLR 1 – cited Date of hearing: 23 May 2011 Date of last submissions: 2 March 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 135 Counsel for the Appellant: Mr J T Johnson Solicitor for the Appellant: Beazley Singleton Lawyers Counsel for the Respondent: Mr D McLure Solicitor for the Respondent: Henry Davis York IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1519 of 2010 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: GUY RICHARD HINGSTON Appellant AND: WESTPAC BANKING CORPORATION Respondent JUDGES: GREENWOOD, MCKERRACHER AND NICHOLAS JJ DATE OF ORDER: 23 MARCH 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be allowed in part. 2. Order 1 of the orders of the primary judge made on 15 October 2010 be varied in the following terms: 1. Pursuant to the provisions of the Bankruptcy Act 1966 (Cth) and, in particular, section 222(1)(d) and section 222(5)(e)(i) of that Act as applied by section 76B of that Act to a composition under Division 6 of Part IV of the Bankruptcy Act, the composition made between Guy Richard Hingston and his creditors under Division 6 of Part IV of that Act on 2 October 2009 is set aside. 3. Order 2 of the orders of the primary judge is set aside and in its place the following order is made: 2. Consequent upon Order 1 of the orders of the primary judge as varied by these orders, Guy Richard Hingston ("Hingston") and the creditors of Hingston are restored to the positions they were in before the making by Hingston, and subsequent acceptance by his creditors by special resolution on 2 October 2009 of Hingston's composition proposal under s 73 of the Bankruptcy Act, such that Hingston, on the one hand, is and has been bankrupt on and from 4 August 2009 pursuant to the acceptance by the Official Receiver under s 55 of the Bankruptcy Act on 4 August 2009 of Hingston's debtor's petition presented under s 55 of that Act, and the creditors of Hingston, on the other hand, are and have been on and from 4 August 2009 creditors of the bankrupt estate of Hingston. 4. Otherwise the appeal be dismissed. 5. The costs of the respondent of and incidental to the appeal be taxed and paid from the estate of Guy Richard Hingston in accordance with the provisions of the Bankruptcy Act 1966 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1519 of 2010 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: GUY RICHARD HINGSTON Appellant AND: WESTPAC BANKING CORPORATION Respondent JUDGES: GREENWOOD, MCKERRACHER AND NICHOLAS JJ DATE: 23 MARCH 2012 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT: 1 In these proceedings Dr Guy Richard Hingston appeals from orders of the primary judge setting aside a composition made with Dr Hingston's creditors on 2 October 2009 in satisfaction of his debts; a sequestration order against Dr Hingston's estate with effect from 4 August 2009; and a costs order: Westpac Banking Corporation v Hingston [2010] FCA 1116 per Cowdroy J. These orders were made on the application of one of Dr Hingston's creditors, Westpac Banking Corporation ("Westpac"), in reliance upon grounds contained within s 222(1) and s 222(5) of the Bankruptcy Act 1966 (Cth) (the "Bankruptcy Act") as to the setting aside of the composition, and s 222(10) in relation to the making of the sequestration order. Background 2 The background matters are these. 3 Dr Hingston is a surgeon. He also has a commercial interest in aviation and pursued that interest through his association with a number of companies mentioned later in these reasons. On 27 July 2009, Dr Hingston prepared and signed a Debtor's Petition and an accompanying Statement of Affairs for presentation to the Official Receiver under s 55(1) of the Bankruptcy Act. The Statement of Affairs, in the case of a person seeking to present a Debtor's Petition, is required to be presented by s 55(2) of the Bankruptcy Act. 4 The Debtor's Petition was accepted by the Official Receiver under s 55(4) of the Bankruptcy Act on 4 August 2009 and on that date Mr Andrew Wily (the second respondent in the principal proceeding) was appointed Trustee of the bankrupt estate. Dr Hingston by operation of s 55(4A) of the Bankruptcy Act became a bankrupt by force of s 55 on 4 August 2009. 5 On 30 August 2009, Mr Wily issued a report to creditors under s 19(1) of the Bankruptcy Act. In that report, the Trustee notified the creditors of Dr Hingston's bankruptcy; notified creditors of the filing of a Statement of Affairs on 4 August 2009; advised creditors that Dr Hingston appeared not to be the registered proprietor of any real property in New South Wales or New Zealand; advised creditors of the transfer of Dr Hingston's residential property at Port Macquarie on 24 March 2009 to a related party for an amount of $507,338.00; advised the creditors of the possibility of a dividend subject to the results of the Trustee's "further investigations"; and, advised creditors of total unsecured creditors' claims of $10,751,406.03 with a deficiency of assets to liabilities of $10,676,049.75. 6 On 30 August 2009, the Trustee also issued an income contribution assessment to Dr Hingston under s 139W of the Bankruptcy Act for the 12 month period from 4 August 2009 to 3 August 2010 of $25,805.40 (having regard to Trustee's assessment of Dr Hingston's income as a surgeon) and required Dr Hingston, under s 139ZG of the Bankruptcy Act to pay the assessed amount by way of 12 monthly instalments of $2,150 commencing on 4 August 2009 (AB, Vol 1, p 129). The Statement of Affairs 7 In the Statement of Affairs which Dr Hingston declared on 27 July 2009 to be correct, he answered "No" to Question 33 of Part C (headed "Your Assets") which asked: Have you sold, transferred or given away any assets worth more than $1000 in the last five years? As to the requirements for a Statement of Affairs, see s 6A of the Bankruptcy Act. On 15 September 2009, Dr Hingston sent an email (AB, Part B, Vol 1, p 140) to staff of the Trustee saying: Hello Fleur & Tim, Please accept my apology for not informing you of the sale of my house to my wife back in March this year. I am not sure how I omitted to mention this in the declaration, as David Leigh, the Administrator up here in Port Macquarie, brokered a deal between the NAB and myself allowing the release of the mortgage on the house so that my wife Helen Hingston could purchase the house off me and fully repay the mortgage on this. This is because it was determined at the time that there was no equity in the house, particularly given the state of the property market at the time. To help you with the documentation required here, please find enclosed a copy of the transfer statement for the sale from me to Helen for $507,338.95, as well as a copy of the NAB bank statement showing the closing of the home loan account for $506,988.95. The settlement funds were obtained by Helen from CBA who took a mortgage over the property, and paid out $506,988.95 to the NAB for the release. I received no personal consideration for the transfer, as all the funds went to the NAB. I hope that this is helpful to you. Please contact me if you need any further information. Kind regards, Guy H 8 The property at Port Macquarie was transferred to Dr Hingston's wife in an amount ($507,338.95) sufficient to discharge a mortgage to the National Australia Bank Ltd ("NAB") ($506,988.95) plus some associated fees. Mrs Hingston granted a mortgage to the Commonwealth Bank of Australia Ltd ("CBA") as security for the advance of the settlement monies in the transaction. The reference in the email to Mr David Leigh is a reference to the person then in control of seven companies, as liquidator, with which Dr Hingston had been associated and administrator of three others under Deeds of Company Arrangement. 9 At [55] of the principal judgment, the primary judge observed: Dr Hingston denied that he had any motive to defeat the interest of his creditors. Rather, he frankly acknowledged that his sole purpose in arranging the sale was to ensure that his wife and five children would continue to reside in the property without interruption in the event that he became a bankrupt. 10 Although it will be necessary to examine later in these reasons the context within which the primary judge made findings about this issue, it is sufficient for present purposes to note the observations at [58] and [59] of the principal judgment: 58. Based upon the evidence of the value of the property at $600,000 and the consideration paid, the Court concludes that the transfer was effected at undervalue. The Court does not accept the submission of Dr Hingston that it was pure coincidence that the purchase price of the property was identical to the amount of the indebtedness then owing to the NAB together with associated settlement and discharge mortgage fees and stamp duty for the purchase by Helen Hingston. 59. The Court finds that the transfer of the property occurred within five years of Dr Hingston's bankruptcy and was for a value less than market value. Accordingly, such transfer is void against the Trustee. Further, given Dr Hingston's own evidence that the transfer was effected so as to provide stability for his family in the event of his bankruptcy, the Court is satisfied that the transfer was made to prevent the property becoming divisible among the creditors within the meaning of s 121(1)(b) or the Bankruptcy Act. Accordingly, Westpac has established its claim with regard to the property. 11 The reference at [58] to the evidence of value of the property at $600,000 is a reference to the "best evidence" of value (at [56]) from the "records of the CBA" of a qualified valuer for the CBA that "in March 2009 the property had a value of $600,000". 12 In Part E (headed "Business Details") of the Statement of Affairs, Dr Hingston identified 10 companies (in part reflecting his aviation interests) with which he had had an association as a former director having resigned from that position on 15 January 2009 concerning eight of those companies and on 30 June 2009 in respect of the other two. The precise title of each company is not presently relevant and it is sufficient to identify them simply as Coastjet, Coastjet Aircraft Maintenance, Coastjet Aircraft, Arena Coastjet, Lund International, Johnson Aviation, Fly Air Diamond, Fly Airgold, Hingston Holdings as Trustee of the Hingston Family Trust and North Coast Breast Centre. Dr Hingston identified, in the Statement of Affairs, his position as a beneficiary in the Hingston Family Discretionary Trust although the Trust was said to own no assets. 13 Dr Hingston, however, failed to disclose in the Statement of Affairs his interest as a beneficiary in a New Zealand trust. Dr Hingston gave evidence before the primary judge that he believed that he was only required to identify in his Statement of Affairs those assets or interests as "a unit holder in or beneficiary of a trust in the last 5 years" (Question 44 of the Statement of Affairs) concerning assets or interests, in Australia. Dr Hingston acknowledged before the primary judge (at [106]) that he had failed to acknowledge his association with three New Zealand companies, namely, HDL Limited, HDL Publishing Limited and CoastJet (NZ) Limited; he had failed to disclose the existence of the Hingston Family Trust based in New Zealand (the "NZ trust"), his position as a beneficiary (together with his wife and children) of the NZ trust and the trust's ownership of all of the shares in the undisclosed New Zealand companies; and, he had failed to disclose that HDL Limited was the owner of 17 properties (recorded as assets of that company in its financial report for the year ended 31 March 2009 ([103] of the principal judgment)). At [102] and [103] of the principal judgment, the primary judge notes that the trustee of the NZ trust is a New Zealand solicitor, Mr Graeme Keith Marshall, and the financial records of the NZ trust for the financial year ended 31 March 2009 record current trust assets of NZ$385,385.00. Since the shares in the New Zealand companies are trust assets (including the shares in HDL Limited) the value of the "current assets" presumably reflects the net value of the shares in the New Zealand companies (among other assets) including the net value of the shares in the property holding entity. 14 Apart from Dr Hingston's articulated belief at the time of completing the Statement of Affairs (and his declaration) on 27 July 2009 that non-Australian assets or interests were not susceptible of disclosure in a properly completed Statement of Affairs for the purposes of the Bankruptcy Act, Dr Hingston contended before the primary judge that, in any event, he had resigned as a director of the New Zealand companies; the NZ trust is a discretionary trust; Mr Marshall is the sole trustee and Dr Hingston has no control over him in the exercise of his powers as trustee of the NZ trust; Dr Hingston has no vested interest in any of the assets of the NZ trust; and Dr Hingston has received no income from the New Zealand companies ([107] of the principal judgment). 15 At [101] and [104] of the principal judgment, the primary judge notes that Dr Hingston had been a sole director of another New Zealand company called Hingston Surgical Limited ("HSL") (also not disclosed in the Statement of Affairs). The financial statements for HSL for the year ended 31 March 2009 revealed no current assets; a net loss of NZ$963.00; and the sale to Mrs Hingston of an asset, a Porsche motor vehicle, on 1 September 2008. The primary judge notes at [104] that the cost price of vehicle is shown in those financial statements (although the date of acquisition is not mentioned) as NZ$284,641.00. The primary judge observed at [104] that evidence established that the vehicle was sold to Mrs Hingston for approximately AUD$45,000. 16 At [109] of the principal judgment, the primary judge notes that in support of an application to NAB for finance on 30 August 2005, Dr Hingston included the assets of the NZ trust (including the trust properties, a Porsche motor vehicle and an aircraft) as assets of his own, and NAB provided finance on that footing. The composition proposal 17 On 17 September 2009, Dr Hingston submitted to his Trustee under s 73(1) of the Bankruptcy Act, a proposal for a composition with his creditors in full and final satisfaction of his debts. 18 The essential terms of that composition were that upon acceptance of the proposal by a special resolution of a meeting of creditors, Dr Hingston would pay "an amount of $50,000 in full and final satisfaction of all outstanding debts of my estate" payable as to $25,000 immediately upon acceptance and $25,000 payable by 1 December 2009. The reference in the proposal to an amount of $20,000 payable on 1 December 2009 must be taken to be a mistake. The composition contemplated a total payment of $50,000 to be paid (and in fact paid by 30 November 2009) to the Composition Trustee (and Mr Wily was also appointed Trustee of the composition), in anticipation of the implementation of the composition through a Proof of Debt procedure, the determination of the proofs (acceptance or rejection), the declaration of a dividend and the distribution of the dividend to each participating creditor thus discharging all obligations created by the composition. Ground 4 of the appeal 19 It is convenient at this point to mention one of the grounds of appeal the appellant elected not to press during the course of oral argument. The appellant contended (by ground 4 of the Notice of Appeal) that the terms of the composition as approved by the creditors on 2 October 2009 had been satisfied in full by Dr Hingston's payment by 30 November 2009 (funded by Mrs Hingston but for $1,500 paid by Dr Hingston on 30 November 2009 (see AB, Part B, Vol 1, p 313)) of the full amount of the composition fund to the Trustee of the composition. It followed, it was said, that notwithstanding whatever else might be said about the scope and application of s 222(5) of the Bankruptcy Act as conferring a power to set aside a composition on the application of a creditor (Westpac) on the grounds identified in that sub-section, the Court could not make an order under s 222(5) as the application had not been made "before all the obligations that the [composition] created [had] been discharged". The application was filed on 11 March 2010, heard on 6 September 2010 and orders were made on 15 October 2010 (all occurring after 30 November 2009). Section 222(7) provides that the Court must not make an order under s 222(5) unless the application for the order is made before all the obligations created by the [composition] have been discharged. 20 Payment of the composition fund to the Trustee by Dr Hingston is, plainly enough, one such obligation. Others include the implementation and completion of the Proof of Debt procedure, the determination of the dividend to be paid having regard to claims admitted to proof, and payment of the dividend to the participating creditors so admitted. None of these other obligations had been discharged prior to the making of the application by Westpac. The composition remained executory. Since s 222(7) was not engaged, the prohibition upon the Court making an order under s 222(5) did not arise. Section 232(1) (if relevantly applicable to a composition) provides that if the trustee of the composition is satisfied that all of the obligations created by the composition have been discharged, the trustee must, on written request by the debtor, give the debtor a certificate signed by the trustee to that effect. Dr Hingston has such a letter from the Composition Trustee dated 24 August 2010 (see [31] of the principal judgment). Section 232(2) provides that a certificate issued under s 232(1) is prima facie evidence of the facts stated in it. The Composition Trustee's letter cannot be determinative of the question of whether all of the obligations created by the composition have been discharged. That question is to be determined as a matter of construction of the terms of the composition. The terms of the composition gave rise to the continuing other obligations as already mentioned. 21 Counsel for the appellant elected, rightly, not to press ground 4 before the Full Court in the course of oral argument. There is no merit in the contention on the facts of this case. Other aspects of the composition proposal 22 Other important terms of the composition were that the composition fund would be applied in payment (in addition to provable debts) of the costs, remuneration and expenses of the Composition Trustee as determined by the Bankruptcy Act as if the Composition Trustee were acting as a Trustee of a bankrupt estate; any unpaid remuneration and expenses of the Trustee of Dr Hingston's bankrupt estate would also be paid out of the composition fund; and, four creditors (supporting the composition) representing claims of $4.8m (approx) had agreed, upon the composition proposal being approved, to forego their claims and not participate in any distribution. The second report to creditors 23 In the report to creditors of 21 September 2009 (for the meeting on 2 October 2009) under s 73(2) of the Bankruptcy Act concerning the composition proposal, the Trustee of the bankrupt estate calculated that under the composition proposal the estimated return to unsecured creditors would be $0.001 cents in each dollar and the estimated return under an administration of Dr Hingston's estate in bankruptcy would be $0.002 cents in each dollar. Those estimated returns assumed total unsecured creditor claims of $26,244,501.00 made up of known claims (disclosed by Dr Hingston) of $11.2m (approx) and a potential insolvent trading claim of between $12m and $15m said to arise out of Dr Hingston's contended conduct in the administration of seven companies. The estimated distribution under the composition proposal assumed non-participating creditor claims of $4,847,976.00 made up of claims said to be due to Helen Hingston, Lydia Pursell, Bryan Singh and Bruno Loppreato. 24 Dr Hingston submitted the composition proposal to the Trustee under s 73(1) on 17 September 2009. The Trustee called a meeting of creditors under s 73(2) for 2 October 2009 by notice dated 21 September 2009. With that notice, the Trustee issued the further report to creditors (AB, Part B, Vol 1, pp 143 ff) as required by s 73(2), also dated 21 September 2009. By s 73(2A) of the Bankruptcy Act, the Trustee "must indicate whether the proposal would benefit the bankrupt's creditors generally". Accordingly, the Act treats the opinion of the Trustee on that question as at least material to the deliberations of the creditors on the composition proposal. By s 73C(2), the Trustee is required to table a copy of the bankrupt's Statement of Affairs at the meeting of creditors. The Bankruptcy Act treats the tabling of the Statement of Affairs completed by the bankrupt as a matter also material to the consideration of the composition proposal. 25 In the report to creditors of 21 September 2009, the Trustee made these observations. 26 First, investigations had not revealed any divisible assets available to the bankrupt estate. 27 Second, Mr David Leigh, described as the liquidator of seven companies (North Coast Breast Centre; Fly Airgold; Coastjet Aircraft; Fly Air Diamond; Hingston Holdings (as trustee); Johnson Aviation; and Arena Coastjet) of which Dr Hingston had been a director (resigning at dates between 5 March 2009 and 6 July 2009) had on 3 September 2009 advised the Trustee that the liquidator may have a claim (on behalf of those companies) against Dr Hingston for contraventions of the Corporations Act 2001 (Cth) (that is, contended insolvent trading and contended breaches of directors' duties; ss 588G, 180, 181, 182, 183 and possibly s 588FDA) in an amount of $12m to $15m. Three companies, Lund International, Arena International Aviation and Arena Aircraft Maintenance were described as having entered into a Deed of Company Arrangement. 28 Third, the Port Macquarie property had been transferred to Dr Hingston's wife on 24 March 2009 for $507,338.95 and although Dr Hingston contended that the market value of the property was in the range of $490,000 to $510,000, the Trustee had requested a further market appraisal of the value of the property at the transfer date. The Trustee advised that since the market appraisal was not then available, the Trustee was of the view that "further investigation is still required [in] order to determine whether the property was sold for proper market consideration". 29 Fourth, the Trustee had assessed the income contribution Dr Hingston was required to make to the bankrupt estate for the first 12 months of bankruptcy as $25,805.40. The Trustee expressed this view: Accordingly, it is anticipated that should the debtor remain bankrupt for the full period of three years, he may be liable to make total income contributions of $77,146.20. This calculation is based on the assumption that the debtor's income remains at an amount of $158,579.98 per annum. Creditors should also bear in mind that if he ceases to be employed and he is unable to gain employment, he may not be liable to make any income contributions to his estate. 30 Fifth, the acknowledged creditor claims amounted to $11.2m (approx); further claims might be $12m to $15m; and non-participating claims would amount to $4.8m should the composition proposal be accepted. 31 Sixth, in the period 4 August 2009 to 21 September 2009, no receipts or payments had been received on behalf of the bankrupt estate. Thus, it follows, that Dr Hingston had failed to pay the periodic amounts due monthly on 4 August 2009 and 4 September 2009 of $2,150.00 in each case. See the Trustee's letter of 30 August 2009 at AB, Part B, Vol 1, p 129. 32 Seventh, the Trustee made this recommendation to creditors: It is my opinion that creditors do not accept the Section 73 composition proposed by the Bankrupt. I am of the view that substantial further investigation is still required to be undertaken in respect to the transfer of the Bankrupt's property and into the Bankrupt's affairs, accordingly, it is my opinion that creditors should not accept the Section 73 Composition as proposed. Accordingly, as the Bankrupt is obliged to make income contributions I am of the opinion that the return to creditors, could be greater in a bankruptcy scenario, should the Bankrupt remain bankrupt for the full three year period of bankruptcy. [emphasis added] 33 Attachment C to the report sets out the estimated return to creditors under either an administration in bankruptcy ($0.002 cents in the dollar) or under the composition ($0.001 cents in the dollar) if accepted. 34 On 21 September 2009, the Trustee received a letter from Mr David Leigh enclosing a report under s 439A of the Corporations Act and notification of the execution of a Deed of Company Arrangement on behalf of Coastjet, Coastjet Aircraft Maintenance and Lund International. In that report, there is no longer any reference to the entity described as Fly Airgold and all other companies apart from those the subject of Deeds of Company Arrangement are described as companies with an administrator (Mr Leigh) appointed. The report, dated 24 March 2009, made in accordance with s 439A(4) of the Corporations Act seems to be a report to the creditors of the Coastjet Group of companies for the purposes of the consideration by creditors of the Deed of Company Arrangement proposal for the three companies mentioned above. 35 Although the claims acknowledged by Dr Hingston amounted to approximately $11.2m, the meeting on 2 October 2009 was attended by creditors (in person or by proxy) to the value of $4,429,844.00. Of that value, $4,270,986.00 (96.41%) was represented by claims made by persons who would be non-participating creditors should the composition proposal be accepted (and who reserved the right to vote on the proposal). They were described variously as Helen Hingston, Lydia Pursell, Bryan Singh and Bruno Loppreato. The only other creditors represented at the meeting were American Express ($83,858.00) and Mrs Anne Johnston ($75,000), constituting 3.59% of the represented value at the meeting. The motion that Dr Hingston's proposal under s 73(1) of payment of $50,000 in full and final satisfaction of all debts due and payable be accepted, was carried by the above 96.41% voting in favour and the above 3.59% voting against the proposal. 36 A resolution was also passed appointing Mr Wily as trustee of the composition. 37 Westpac did not attend the meeting. 38 Westpac received the 21 September 2009 notice on 24 September 2009 at its Service Centre at Concord in New South Wales. The notice was then sent to Westpac's Business Recoveries Team in Adelaide on 29 September 2009. The notice was sent from there to a Sydney bank officer on 7 October 2009 five days after the meeting had been held. Although the copy of the document in the Appeal Book is a little difficult to read, Westpac's claims as disclosed in the trustee's second report to creditors concerning the composition proposal seems to be $2,383,006.72 in the aggregate. By the Points of Claim (Point 3), Westpac contended that Doctor Hingston was indebted to the bank at the date of bankruptcy in an amount of $2,416,364.42 being the balance outstanding pursuant to a guarantee and indemnity given by Doctor Hingston of facilities provided to Fly Air Diamond Pty Ltd. Had Westpac attended the meeting and cast its vote against the proposal, the outcome (assuming the lesser debt figure) would have been as follows: total creditor value represented at the meeting $6,812,850; creditors in favour of the motion $4,270,986 (62.69%); and, creditors against the motion $2,541,864 (37.30%). Thus, the motion would not have been carried as a special resolution (that is, by a majority in number and at least 75% of those creditors present and voting). 39 However, Westpac did not attend the properly convened meeting (due to some breakdown in its own internal protocols) and the vote was carried by a majority in number and 96.41% of those creditors in value attending the meeting. 40 Upon the passing of the special resolution at the s 73 meeting the bankruptcy was, by operation of s 74(5), annulled on 2 October 2009. By operation of s 75(1), the composition once accepted in accordance with Division 6 of Part IV of the Bankruptcy Act, became binding on all creditors of Dr Hingston so far as relates to all provable debts due to them from the bankrupt. The proceedings before the Primary Judge 41 Westpac applied to set aside the composition in reliance upon s 222(1)(d) of the Bankruptcy Act and s 222(5). Section 222(1) confers power on the Court to make an order setting aside a "personal insolvency agreement" on the application of a creditor if the Court is satisfied that the terms of the agreement are "unreasonable or are not calculated to benefit the creditors generally" (s 222(1)(d)) or, if "for any other reason, the agreement ought to be set aside" (s 222(1)(e)). Section 222(5) confers, relevantly, power on the Court to make an order setting aside a personal insolvency agreement if the Court is satisfied that the debtor has "omitted a material particular from the statement of the debtor's affairs given under subsection 188(2C) or (2D)" (s 222(5)(e)(i)) [emphasis added]. 42 Section 76B provides, relevantly, that s 222 applies with such modifications (if any) as are prescribed by regulations, in relation to a composition under Division 6 of Part IV of the Bankruptcy Act as if the composition were a personal insolvency agreement executed by the debtor, and the trustee of the composition were the trustee of the personal insolvency agreement. Section 76B operates, in effect, as an application of laws provision so as to confer power on the Court to make orders in relation to compositions on the same grounds upon which orders might be made in setting aside a personal insolvency agreement. However, s 222 applies by force of s 76B to compositions under Division 6 of Part IV "with such modifications (if any) as are prescribed by the regulations". [emphasis added] 43 At the threshold, the appellant contends in this appeal that to the extent that Westpac relies upon contended omissions in the debtor's statement of affairs accompanying the debtor's petition presented to the Official Receiver under s 55 of the Bankruptcy Act, s 222(5)(e)(i) can have no application to a composition under Division 6 of Part IV as no regulations have been put in place modifying s 222(5)(e)(i) so as to make that subsection applicable to a statement of affairs presented under s 55 rather than subsection 188(2C) or (2D). The appellant contends that since the debtor's statement of affairs was not presented to the Official Receiver under either s 188(2C) or (2D) of Part X and no regulations have been adopted modifying s 222(5)(e)(i) so as to make the subsection applicable to an omission of a material particular from a statement of a debtor's affairs presented under s 55, the Court has no power to set aside the composition under s 222(5)(e)(i). 44 This contention was not agitated before the primary judge. 45 The appellant's contention in this regard is confined to the application of s 222(5)(e)(i) having regard to s 76B. The appellant does not contend that s 222(1)(d) has no application by operation of s 76B. 46 Before examining the construction question arising out of the appellant's contentions concerning the inter-relationship between s 76B and s 222(5)(e)(i) of the Bankruptcy Act, it is important to set out the findings of the primary judge on the questions in issue. 47 Westpac contended before the primary judge that the terms of the composition were unreasonable or not calculated to benefit Dr Hingston's creditors generally for the purposes of s 222(1): see Point 7 of the Points of Claim; [45] and [68] of the principal judgment (although the reference to s 222(1)(a) at [68] ought to have been a reference to s 222(1)(d)), on 3 grounds. 48 First, Dr Hingston, approximately four months before the commencement of the bankruptcy on 4 August 2009, had transferred the Port Macquarie property to his wife at an undervalue for the primary purpose of removing the real property from the divisible property available to the unsecured creditors after discharge of the mortgage. That transfer was said to have occurred in circumstances where the transfer would have been void against the Trustee under s 121 of the Bankruptcy Act. Alternatively, Westpac contended that the composition was made at a time when the Trustee had insufficient time to investigate whether the transfer on 24 March 2009 ought to be set aside under ss 120, 121 or 122 of the Bankruptcy Act (see Point 7(c) of the Points of Claim). 49 Second, having regard to total admitted debts of $11,244,501.91; Dr Hingston's annual income as a surgeon; the income contribution determination made by the Trustee for the first twelve months of the bankruptcy; and, the amount of $50,000.00 proposed as the composition fund in full and final satisfaction of all provable debts, the proposed distribution of $0.001 cents in each dollar to unsecured creditors was inadequate and less than might be realised should the bankrupt estate continue to be administered in bankruptcy. 50 Third, the composition was made at a time when the Trustee had insufficient time to investigate whether there were any other assets forming part of Dr Hingston's estate and whether there were any other transactions entered into by Dr Hingston which might be set aside under ss 120, 121 or 122 of the Bankruptcy Act. 51 Each of these three grounds are directed to the two limbs of s 222(1)(d) of unreasonableness of the terms or, terms not calculated to benefit the creditors generally. No reliance was placed on s 222(1)(e) (that is, "any other reason"). 52 As to s 222(5)(e)(i), Westpac contended that the debtor's statement of affairs omitted material particulars concerning his role as a director in the five years preceding the making of his declaration on 27 July 2009, as to the three New Zealand companies earlier mentioned; the NZ trust; the trust assets; and, the real properties owned by HDL Limited. Westpac contended that it was in the interests of the creditors generally that the composition be set aside and the Trustee in bankruptcy conduct an investigation into the affairs of Dr Hingston consistent with the recommendation contained in the second report to creditors of 21 September 2009. The findings of the primary judge 53 As to the transfer of the Port Macquarie property, the primary judge made the findings at [58] and [59] (set out at [10] of these reasons) concluding that the transfer was effected at an undervalue, on the evidence before him, and that the transfer was made to prevent the property (after discharge of the NAB mortgage) becoming divisible among the creditors within the meaning of the "main purposes" described in s 121(1)(b) of the Bankruptcy Act. Although Westpac contended before the primary judge that the transfer "would have been void" as against the Trustee by reason of s 121(1), it did so in the context of a contention that the composition ought to be set aside as being unreasonable or not calculated to serve the interests of the creditors generally. The remedial order sought was the setting aside of the composition in reliance on both limbs of s 222(1)(d) as applied as grounds of challenge to a composition by s 76B, in the court's exercise of the jurisdiction conferred by ss 27 and 30 of the Bankruptcy Act. The principal proceeding did not involve a claim for a remedial order that the transfer be declared void under s 121(1) of the Bankruptcy Act together with consequential orders. 54 Questions concerning the transfer were agitated in the context of whether, by reason of s 222(1)(d), the composition ought to be set aside and further investigations by the Trustee in bankruptcy conducted in the general interests of creditors. 55 As to the inadequacy of the amount payable to creditors under the composition, the primary judge concluded at [83] that the general principles derived from a consideration of s 239(2), repealed by s 3 and Item 156 of Schedule 1 of the Bankruptcy Legislation Amendment Act 2004 (Cth) (the "2004 Act") continue to apply in determining applications under s 222(1)(d) and (e) of the Bankruptcy Act, having regard to the substance of each section. 56 Section 239(2) formerly provided that if on the application of a creditor, the Court considers that the terms of the composition are unreasonable or are not calculated to benefit the creditors generally or, for any other reason, the composition ought to be set aside, the Court may make an order setting aside the composition and may forthwith make a sequestration order. Divisions 4, 5 and 6 (within which s 239 fell) of Part X were repealed by the 2004 Act which introduced a change to "a single type of generic Part X agreement [a personal insolvency agreement] which would, by agreement between the debtor and creditors incorporate elements of the three types currently found in Part X", namely, compositions, deeds of arrangement and deeds of assignment: Explanatory Memorandum, House of Representatives, Bankruptcy Legislation Amendment Bill 2004 (Cth), (the "2004 Bill") para 112. 57 Sections 222(1)(d) and (e) address the same grounds for setting aside the agreement in the context, however, of the new single personal insolvency agreement. 58 As to those principles, the primary judge considered that in assessing whether the composition is unreasonable, or not calculated to benefit creditors generally, the Court has regard to the amount of the composition as compared with the debts owing by the debtor (at [68]); in making that comparison the relativity between the amount of the debts incurred and the proposed composition might suggest that the proposal is so trivial or so disproportionate (as, for all practical purposes, the creditors are receiving nothing or a negligible amount) that the administration of the estate is "better dealt with by way of bankruptcy" (Re Richards) with an investigation by the Trustee in bankruptcy exercising relevant powers: Re Richards: Ex parte Beneficial Finance Corporation Ltd [1986] FCA 74; Re Brennan: Ex parte Stokes (Australasia) Ltd (unreported FCA 31 May 1988, per Morling J); Re Codrington: Ex parte Don McKay Tourist and Charter Pty Ltd [1989] FCA 349; Palazzolo v Ex parte Discusso [1991] FCA 317; NZI Capital Corporation Limited v Lancaster (1991) 30 FCR 441 (see [69] to [74] of the principal judgment); the relativity of the amount of the debts owing, to the proposal made, is relevant but not determinative: Re Lockett: Ex parte Northern Equity Ltd and Others [1992] FCA 142; whether any payments have been made to creditors or to the Trustee of the bankrupt estate is also relevant (at [77]); and, the nature of the relationship between the debtor and those creditors who voted in favour of the composition is relevant (at [77]). 59 The primary judge set aside the composition having regard to these considerations applicable to s 222(1)(d). 60 First, the Trustee had recommended against accepting the proposal as substantial further investigations were required into the transfer of the Port Macquarie property and the affairs of the bankrupt, and the Trustee was of the opinion that the return to creditors could be greater in a bankruptcy scenario: at [84]. 61 Second, aspects of the administration of the Coastjet group of companies, the liabilities of Fly Air Diamond (of which Dr Hingston was a guarantor of one facility) and the transfer of one asset (an aircraft) from one of the Coastjet companies to Mrs Hingston for no consideration suggested, prima facie, that there were issues revealed by the second report of Mr Leigh that "could be relevant to a bankruptcy examination" of Dr Hingston (at [92]) and "no opportunity has been available for this to occur" (at [92]) as the Trustee's notice of 21 September 2009 to creditors was sent on the same day the Trustee received Mr Leigh's report. 62 Third, the primary judge was satisfied of some "apparent … personal or business relationship" between Dr Hingston and those creditors who voted for the composition proposal at the meeting (Mrs Hingston, Purcell, Singh and Loppreato): at [95]. The primary judge observed that apart from Mrs Hingston, the debts owed to the other three supporting creditors were said to arise out of guarantees and indemnities given in business transactions involving Dr Hingston and each Proof of Debt in Dr Hingston's bankruptcy had been lodged by each of them dated 1 October 2009. The primary judge did not otherwise explain the nature or basis of the apparent relationship. 63 Fourth, although Westpac failed to attend the creditors' meeting on 2 October 2009, as a legacy of its own internal protocols, the substantial nature of the debt owed to it (said to be approximately $2.4m) remained, at least a relevant consideration, in assessing whether the interests of creditors generally were served by the composition. 64 Fifth, the benefit provided to the unsecured creditors under the composition was negligible and represented a composition fund of $50,000.00 in the context of admitted debts owing by Dr Hingston of $11,244,501.91, with an estimated dividend of $0.001 cent in each dollar. 65 Sixth, in a rolled up way, the primary judge expressed this conclusion at [98]: Given the lack of time to investigate, Westpac's inadvertent absence from the creditors' meeting, the recommendation of the Trustee against acceptance of the composition, the contents of the Coastjet Administrator's report, the fact that prima facie the creditors stood to receive $25,000 more under a Bankruptcy arrangement and finally the circumstances surrounding the favourable creditors, the Court is satisfied that compelling additional factors exist sufficient to set aside the composition. 66 At [83] the primary Judge observes that these matters described at [60] to [65] (of these reasons) are the reasons for concluding that Westpac is entitled to "relief under s 222(1)" which is necessarily a reference to s 222(1)(d) as only those matters recited at s 222(1)(d) were relied upon as the basis for relief (Point 7; [45] and [68] of the principal judgment). Immediately before that observation, the primary Judge concluded at [83] that the principles governing the approach to s 239(2), which aggregated the considerations subsequently disaggregated into the new subsections s 222(1)(d) and (e), also governed the approach to those new subsections. In identifying the reasons for concluding that the composition ought to be set aside "under s 222(1)" the primary Judge isolated the matters referable to that part of s 222(1) relied upon by Westpac, namely the two s 222(1)(d) factors. The primary Judge ought not to be understood as suggesting that an unarticulated further basis for relief was made out under s 222(1)(e) or that by reason of the remarks about the applicability of the earlier s 239(2) principles to both s 222(1)(d) and (e) that the primary Judge proceeded to accept that relief ought to be granted under s 222(1)(e). The relief, so far as it related to s 222(1), was based upon the s 222(1)(d) factors made applicable to compositions by s 76B. 67 As to s 222(5)(e)(i), the primary judge, relying, in part at least, on findings made by the Administrative Appeals Tribunal (in a review of an importation decision concerning the Porsche motor vehicle) as to Dr Hingston's degree of control exercised over decision-making by the trustee of the NZ trust (at [108]), and evidence of Dr Hingston having described NZ trust assets as "his own" for the purposes of a finance application (at [109]), found that Dr Hingston "retains control over these assets" through the vehicle of a trust (at [109]). At [110], the primary judge found that Mr Marshall, the trustee of the NZ trust, "takes instructions from Dr Hingston in relation to the NZ trust" and that "Dr Hingston retains ultimate control of the assets of the NZ trust through Mr Marshall". At [113], the primary judge found that Dr Hingston by "failing to disclose his interest in entities located in New Zealand, omitted a material particular [from] his Statement of Affairs" presented under s 55(2) of the Bankruptcy Act. By reason of the omission, the primary judge concluded, in addition to the grounds made out under s 222(1)(d), that the composition be set aside under s 222(5)(e)(i). 68 As to the sequestration order, the primary judge concluded at [116] to [118] that as the composition (which effected, by operation of s 74(5) of Bankruptcy Act, an annulment of the bankruptcy on the passing of the special resolution) was to be set aside, a sequestration order ought to be made taking effect from the date of acceptance by the Official Receiver of the debtor's petition (4 August 2009), and so ordered. Grounds of Appeal Grounds 1 2 and 3 69 By grounds 1, 2 and 3, the appellant contends that the Court did not have jurisdiction to entertain Westpac's application under s 222(1) or s 222(5) of the Bankruptcy Act and neither subsection confers power to set aside the composition made on 2 October 2009. The appellant contends that jurisdiction could only have arisen under s 76B and to the extent that the orders entered on 19 October 2010 recite s 222 as the source of the power, the orders are beyond power. Apart from the jurisdictional point, Order 2 as entered incorrectly recites s 222(1) as the basis of the sequestration order rather than s 222(10) of the Bankruptcy Act. 70 Apart also from the particular construction question concerning the intersection between s 222(5)(e)(i) and s 76B having regard to s 188(2C) and (2D) and s 55 (addressed shortly), s 76B applies s 222 with such modifications (if any) as prescribed by the regulations, in relation to a composition made under Division 6 of Part IV as if the composition were a personal insolvency agreement executed by the debtor, and the Trustee of the composition were the Trustee of the personal insolvency agreement. Thus, s 222 provides the content of the grounds on which a composition might be set aside (as if it were a personal insolvency agreement) in the exercise of the power conferred on the Court by s 222 as applied to a composition by s 76B. In the absence of s 76B, s 222 would have no application to a composition under Division 6 of Part IV. The jurisdiction "in bankruptcy" is conferred on the Federal Court of Australia by s 27 and the exercise of the power conferred on the Court, so far as a composition is concerned, arising under s 222 as applied by s 76B, is conferred by s 30 of the Bankruptcy Act. 71 The Court exercised a conferred power within jurisdiction on 15 October 2009 to set aside the composition. The orders were expressed in terms which did not recite the application of laws provision, s 73B and, as to order 2, did not adopt the terms of the order as made on 15 October 2009. However, the orders need only express the exercise of the power to set aside the composition. The power to make the relevant order either subsists within a conferred jurisdiction or not. References to the source of the power (whether correctly expressed or not) neither add to nor detract from the grant or limits of the power conferred. It is, of course, not uncommon to recite in orders of the Court, the statutory source of the power to make the particular order. The orders made by the primary Judge (as to s 222(1)) were plainly within power although the explanatory parts of the order (as distinct from the operative parts of the order) might have been phrased differently. Ground 4 72 Ground 4 concerning the relationship between s 222(5) and s 222(7) has already been addressed at [19] to [21] of these reasons. Grounds 5 6 and 7 73 By ground 5, the appellant contends that the primary judge failed to give "adequate reasons for the making of orders founded upon … s 222(1)(d) … as [applied] by [s 76B]". 74 By ground 6, the appellant contends that the primary judge erred in determining that the transfer of the Port Macquarie property was at an undervalue within s 120 or was undertaken for one of the main purposes within s 121(1)(b), as the issue was not in controversy before him; no proper regard was given to s 120(4) or s 121(5); and in making the transfer findings, the primary judge failed to address the real question in issue, namely the application of the two limbs of s 222(1)(d) (by reason of s 76B) to the facts in issue. 75 By ground 7, the appellant contends that the primary judge erred in concluding that the terms of the composition were unreasonable or not calculated to benefit the creditors generally, because, no proper regard was given to the paramountcy of the vote of creditors attending the meeting on 2 October 2009 (and voting in person or by proxy) in support of the acceptance resolution; Westpac failed to attend the meeting or submit a proof or proxy; the return to creditors was likely to be greater under the composition once costs savings, as compared with an administration in bankruptcy, were taken into account; and, the primary judge misdirected himself as to the quantum of the benefits to creditors in the administration. 76 As to the quantum of the benefits under either path, the Trustee had assessed the estimated return to unsecured creditors in a bankruptcy administration, assuming estate revenue of $77,415.00 (being the contributed income by Dr Hingston), of $0.002 cents in each dollar and an estimated return under the composition of $0.001 cents in each dollar. If an assumption is made that only those creditors accepted as creditors at the date of the meeting, participate in a distribution in bankruptcy, an amount of $49,295.02 would be available for distribution over a three year period to participating creditors to the value of $11,244,501.91 resulting in an estimated return of $0.00438 ($0.004 cents in the dollar). In a composition in which non-participating creditors of $4,270,986.00 are excluded and the composition fund is $50,000.00 (with a net fund of $30,840.54 after administration costs and expenses (see AB, Part B, Vol 1, p 158)), the net fund would be distributed to a creditor pool of $6,973,515.00 resulting in a dividend of $0.00442 ($0.004 cents in the dollar). 77 The appellant contends that the Trustee in bankruptcy would incur further costs over three years; the creditors under the composition would receive the distribution immediately; further investigation of Dr Hingston's affairs and any recovery of property would require one of the creditors to fund the investigation or give an indemnity to the Trustee; and, there was no evidence before the primary judge of any "tangible benefit" available to the estate should the bankruptcy continue, and no evidence of detriment to the creditors should the composition proceed. 78 Although the appellant concedes that the "benefit under the composition was negligible (in a monetary sense)" (see para 33 of the appellant's submissions) so too, it is said, was the prospective distribution to participating unsecured creditors over the life of the bankruptcy. 79 Additionally, the appellant emphasises these two considerations which caused the primary judge, it is said, to fall into error. First, in applying s 222(1)(d), the primary judge became distracted by the transfer question as the issue was not the subject of relief sought; Mrs Hingston was not a party; no finding was made of the "true market value" of the property; and, no consideration was given to questions relevant to ss 120(3) and (6) and s 121(4) and (8). Second, the primary judge failed to give proper weight to the wish of the meeting of creditors reflected in the 96.41% (in value) voting either in person or by proxy in favour of accepting the composition proposal, and a majority in number so voting. 80 As to the transfer question (ground 6), the primary judge examined the transaction, as put in issue by Westpac by Point 7 of the Points of Claim, arising out of the non-disclosure of the transfer in the debtor's statement of affairs and the recommendation of the Trustee on 21 September 2009 that "substantial further investigation" was "required to be undertaken in respect of the transfer", so as to determine whether the evidence suggested a basis for concern that a transfer to a related party at an undervalue had occurred for a relevant statutory purpose. Properly understood, that question was examined to determine whether the composition ought to be set aside on the footing that the extinguishment terms were unreasonable, or not calculated to benefit the creditors generally, when substantial further investigations into a matter of substance had not occurred. The primary judge was satisfied that a transfer at an undervalue for the relevant statutory purpose had occurred, for the purpose of determining whether the transfer, as suggested by the Trustee's recommendation, required substantial examination. The question was examined in the context of the relief sought based on the s 222(1)(d) integers, not as a remedial determination of rights and obligations arising under ss 120 or 121. 81 Moreover, inferences might also arise relevant to questions of the unreasonableness of the extinguishment terms or whether those terms were not calculated to benefit creditors, arising out of Dr Hingston's conduct. Although Dr Hingston told the Trustee's staff that he was "not sure how [he] omitted to mention [the transfer] in [his] declaration" (see [7] of these reasons), one reason might be that he transferred the property four months before the commencement of the bankruptcy to his wife at an undervalue to remove the differential market based increment (beyond the mortgage discharge amount) from the unsecured creditors, and the compromise with its extinguishment terms, had the effect of preventing any further examination or investigation, substantial or otherwise, of the transfer circumstances. 82 It is inconceivable that Dr Hingston simply forgot about the transfer transaction when completing his declaration in support of the statement of affairs. The failure to disclose the transfer suggests a proper concern that the transfer value was not determined at arm's length. If the transfer value had been effected at an arm's length market value, presumably Dr Hingston would have had no difficulty in disclosing the transaction in the statement of affairs and the basis for it. Dr Hingston's election to conceal the disclosure of the transfer and thus obfuscate the facts, suggests, as the Trustee thought, that the transfer required substantial further investigation. 83 All of these matters are relevant to the questions arising under s 222(1)(d), that is, whether a composition that discharges finally all due debts in payment of the projected dividend and releases the debtor is unreasonable or not calculated to benefit the creditors generally, when a transfer of property has occurred to a related party in circumstances that warrant substantial further investigation of apparent undervalue and the particular purpose in question. 84 The primary judge did not fall into error in considering the transfer matters nor in the method of treatment of those matters. 85 As to grounds 5 and 7, the primary judge provided exposed reasons for the findings reliant on s 222(1)(d). The primary judge did not fall into error in isolating the principles described at [54] to [57] (of these reasons). The primary judge correctly identified, as the appellant concedes, that the monetary benefit of the composition to unsecured creditors is negligible. In the context of $11.2m of debts, the composition proposal is, in any practical sense, so trivial as to amount to nothing with the result that the administration of the estate would be better dealt with by way of bankruptcy. The primary judge correctly took into account the chronology of the making of the composition proposal, the notice to creditors of 21 September 2009 and the meeting of 2 October 2009, with the limited time thus available to the Trustee to properly examine aspects of the transfer transaction and, more broadly, the affairs of Dr Hingston. 86 The primary judge properly took into account the Trustee's recommendation. 87 The primary judge also properly took into account the circumstance that the debt to Westpac is a significant amount and that Westpac failed to attend the meeting out of inadvertence. That factor is, of course, not determinative of either matter arising under s 222(1)(d). However, the debt due to Westpac and an explanation on the facts as to the failure to attend the meeting is, at least, a relevant matter properly taken into account by the primary judge. 88 In addition, the primary judge properly took into account the circumstance that the four creditors (in number and by value) put forward as non-participating creditors, should the composition proposal be accepted, determined the outcome of the special resolution to accept the composition proposal. Although the primary judge identified some features of an apparent relationship between those creditors and Dr Hingston, the circumstance that the non-participating creditors determined the acceptance of the composition proposal was a relevant matter to be taken into account. 89 The primary judge did not err in weighing all of these factors in the balance in exercising the discretion to set aside the composition on the footing that the terms of the composition were unreasonable or not calculated to benefit the creditors generally. 90 It is true that by reason of the amendments to the Bankruptcy Act in 1992 reflected in s 74(5) which effects an annulment of the bankruptcy upon the passing of a special resolution of a meeting of creditors convened under s 73(4), particular emphasis is given to the determination of the creditors reached in a properly convened meeting. Creditors are not required to act judicially or quasi-judicially in exercising a vote at the meeting. The Trustee is required to adopt a "businesslike approach" by informing the creditors of relevant information leaving the decision, as far as possible, to be made by creditors, as practical people of business. As Allsop J observed in Labocus Precious Metals Pty Ltd v Thomas [2007] FCA 1154 at [54], the Court should not take any narrow or pedantic view of the structure of the Bankruptcy Act concerning compliance with processes which enable creditors convened under s 73(4) to vote on a composition proposal. The procedure is to be followed against the background of the need to inform creditors of relevant matters and then allow the creditors to make up their own minds as to what they wish to do. 91 However, equally clearly, a composition might be set aside by the Court in circumstances where the terms of the composition are unreasonable or not calculated to benefit the creditors generally. As Allsop J also observed in Labocus at [55], it goes without saying that the Court should view the relevant procedures from the perspective of the interests of all creditors. Thus, a calculus of factors must be taken into account including such matters as those taken into account by the primary judge, namely, whether, from the perspective of all creditors substantial further investigation was required of a particular transaction or the affairs of the debtor more generally; whether some particular creditors may have dominated the vote in circumstances where there may be questions about the relationship between the debtor and those creditors; whether the composition proposal is properly regarded as trivial resulting in a negligible distribution to unsecured creditors; the relativity between the positions under an administration in bankruptcy and a distribution under the composition proposal; and the other matters already mentioned and taken into account by the primary judge. 92 Thus, the vote of the creditors is not paramount in an absolute sense. Great respect will be given to the views of practical people of business who have come together to make a decision on the composition proposal in a properly informed way. However, a discretion is conferred on the Court to set aside the composition (and the annulment of the bankruptcy) in the circumstances, relevantly, for present purposes, of s 222(1)(d). 93 The primary judge had proper regard to the principles governing the exercise of the discretion and properly applied those principles to the evidence before him. Ground 8 94 By ground 8, the appellant contends that the primary judge set aside the composition in reliance upon s 222(1)(e) without giving any or any adequate reasons for granting the relief on that ground. There is no substance to the contention. The matter has been addressed at [66]. The interrelationship between s 222(5)(e)(i) and s 76B 95 As noted at [41] to [43] the appellant contends that as no regulations have been adopted modifying the application of s 222(5)(e)(i) so as to make reference to a statement of affairs presented under s 55 of the Bankruptcy Act rather than s 188(2C) or (2D) of Part X, any order setting aside the composition in reliance upon an omission from the debtor's statement of affairs presented under s 55, is an order made beyond power. 96 By the 2004 Act, amendments were introduced into the Bankruptcy Act to "enhance the integrity of the Part X processes" (Explanatory Memorandum ("EM"), 2004 Bill, para 15) and to "introduce greater simplicity and flexibility" to the Part X process by introducing a single generic personal insolvency agreement (EM, 2004 Bill, para 16). By the 2004 Act, the heading to Part X became described as "Personal Insolvency Agreements" and by amendments to s 187 of the Act, the definitional references to the redundant terms "composition", "deed of arrangement", and "deed of assignment", for the purposes of Part X, were repealed. 97 Division 2 of Part X contemplates a circumstance where a debtor might authorise a registered trustee, a solicitor or the Official Trustee to call a meeting of the debtor's creditors to take control of the debtor's property without sequestration (s 188 of the Bankruptcy Act). If the person authorised is a registered trustee or solicitor, the authority signed by the debtor under s 188 is not effective for the purposes of Part X unless, before the person authorised consents to exercise the powers conferred by the authority, the debtor gives the person a statement of the debtor's affairs, and a proposal for dealing with them under Part X (s 188(2C)). Similarly, if the person authorised is the Official Trustee, the debtor must give to the Official Receiver a statement of the debtor's affairs and a proposal for dealing with those affairs (s 188(2D)). 98 The proposal contemplated by s 188(2C) and (2D) must include a draft personal insolvency agreement (s 188(2E)) which is a deed expressed to be entered under Part X and which complies with all of the elements set out in s 188A(2). The statement of affairs contemplated by s 188(2C) and (2D) must comply with the requirements for a statement of affairs set out in s 6A of the Bankruptcy Act. 99 Accordingly, Part X contemplates an authority given by a debtor to a relevant person predicated upon a compliant statement of affairs together with a proposal which must include a compliant personal insolvency agreement. 100 Item 142 of Schedule 1 of the 2004 Bill proposed new provisions for dealing with the Court's power to set aside or terminate a personal insolvency agreement. Item 142 of the 2004 Act introduced s 222 into the Bankruptcy Act. Section 222 was designed to "bring together a range of existing provisions relating to setting aside and terminating deeds and compositions" (EM, 2004 Bill, para 90). Also, at para 90, the EM explains the purpose and object of the amendment in these terms: Although [bringing together in one form the pre-existing provisions for setting aside deeds and compositions] is required because the existing provisions apply individually to deeds of arrangement, deeds of assignment and compositions, it is also aimed at providing a single and simpler regime detailing the circumstances in which an agreement should be capable of being set aside or terminated. 101 Section 222 introduced subsection 222(5) which, relevantly for present purposes, provides as follows: 222(5) Setting aside on grounds of false or misleading information etc. If a personal insolvency agreement is in force, the Court may, on application by: … (c) a creditor; make an order setting the agreement aside if the Court is satisfied that: … (e) the debtor has: (i) omitted a material particular from the statement of the debtor's affairs given under subsection 188(2C) or (2D); or … 102 Section 222(5) "deals with setting aside an agreement on the grounds of false or misleading information [which] … could also be established where the debtor has omitted a material particular in any of these situations", [one of which is], "the debtor's statement of affairs" (EM, 2004 Bill, para 93). With the introduction of s 222, consequential changes were made by Item 156 of the 2004 Act which repealed Divisions 4, 5 and 6 of Part X. Those Divisions contained provisions specific to each of the redundant types of Part X arrangements including s 239 of Division 6 which dealt with the grounds upon which a composition might be set aside, as earlier discussed. The repeal of these Divisions was made necessary having regard to the change to the single form of personal insolvency agreement. Schedule 2 to the 2004 Act provides for amendments relating to compositions and schemes of arrangement. The EM to the 2004 Bill explains the purpose and object of these consequential amendments, in part, in these terms: 125 Division 6 of Part IV of the [Bankruptcy Act] provides a mechanism for bankrupts to propose a composition or scheme of arrangement for dealing with their debts. If the creditors accept the bankrupt's proposal, the bankruptcy is annulled. 126 Many of the concerns which will be addressed by the proposed amendments to Part X … also arise in relation to post-bankruptcy compositions and arrangements. Therefore it is proposed to make some amendments to the provisions of Division 6 of Part IV to address these concerns. 103 Item 8 of Schedule 2 to the 2004 Act introduced s 76B in these terms: 76B SETTING ASIDE AND TERMINATION OF A COMPOSITION OR SCHEME OF ARRANGEMENT 76B Sections 222 to 222D, 224 and 224A apply, with such modifications (if any) as are prescribed by the regulations, in relation to a composition or scheme of arrangement under this Division as if: (a) the composition or scheme were a personal insolvency agreement executed by the debtor; and (b) the trustee of the composition or scheme were the trustee of the personal insolvency agreement. 104 Para 132 of the EM for the 2004 Bill explains that Item 8 proposes the insertion of a new s 76B into the Bankruptcy Act "dealing with setting aside and termination of a composition [or] scheme of arrangement" and the "proposed new section will incorporate into Division 6 of Part IV of the new sections 222 to 222D, 224 and 224A proposed in the amendments to Part X" which, "will mean that the process for setting aside or terminating a post-bankruptcy composition or scheme of arrangement will mirror those applying to personal insolvency agreements" [emphasis added]. 105 It seems that the purpose or object of s 76B is, by force of the section itself, to mirror for compositions, precisely the same grounds reflected in s 222 as the grounds for setting aside a personal insolvency agreement. Since s 222(5)(e)(i) is concerned with an omission from the debtor's statement of affairs upon which a personal insolvency agreement depends (if the authority under Part X is to be effective), the like document upon which the efficacy of a debtor's petition rests for the purposes of Division 6 of Part IV is a statement of affairs compliant with s 6A and presented under s 55 of the Bankruptcy Act. Accordingly, to give expression to the purpose and object of s 76B, s 222(5)(e)(i) as applied by s 76B ought to be read as referring to a statement of affairs presented by the debtor to the Official Receiver under s 55 of the Bankruptcy Act. It seems to us that this is the clear contextual intention of the amendments introduced by the 2004 Act having regard to the consequential changes and the statement of the purpose and object of the amendments by reference to the EM for the 2004 Bill. This construction is consistent with the observations of their Honours in Bropho v Western Australia (1990) 171 CLR 1 at 20; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 99 and at 112-113; Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] – [71] and [78]; Minister for Immigration & Citizenship v SZJGV; Minister for Immigration & Citizenship v SZJXO (2009) 238 CLR 642 at [8], [9] and [47] and [48]. 106 Importantly, the primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute (Project Blue Sky at [69]). In construing s 222 as applied to compositions under Division 6 of Part IV, the prima facie assumption is that the provisions are intended to give effect to harmonious goals (Ross v R (1979) 141 CLR 432 at 440). Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the provisions so as to achieve the result which will best give effect to the purpose and language of the provisions while maintaining the unity of the statutory provisions (Project Blue Sky at [70]). In Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397, Dixon CJ observed that the process of construction must always begin by examining the context of the provision being construed, as context, general purpose, consistency and fairness are "surer guides" to meaning than the logic itself with which provisions might be constructed. That view is, in part at least, reflected in the observations of Mason J in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315 where his Honour observed that the "modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise". 107 It may be that regulations might be adopted which would have the effect of modifying, so far as compositions are concerned, aspects of ss 222 to 222D, 224 or 224A but any such prospect does not alter the immediacy of the operation of s 76B in providing, so far as compositions are concerned, mirrored grounds for setting aside a composition reflecting the grounds contained in s 222. 108 As to the omission, the primary judge rightly regarded the failure by Dr Hingston to make any reference in his statement of affairs to the NZ trust, the trust assets, the relevant companies and, in particular, the property interests held by HDL Limited (the shares in which are a trust asset of the NZ trust) as a material omission. Notwithstanding that the trust is a discretionary trust, the primary judge rightly took into account Dr Hingston's position as a beneficiary of the trust, the assets of the trust and apparently inconsistent positions taken by Dr Hingston in terms of his assertions in previous documents of ownership of or a capacity to exercise control over assets of the NZ trust. Moreover, the primary judge concluded and found that Dr Hingston gave instructions to the trustee of the NZ trust in a practical sense. 109 The primary judge did not fall into error in setting aside the composition in reliance upon s 222(5)(e)(i) as applied to compositions by s 76B of the Bankruptcy Act. Ground 9 The position of the parties reflected in the principal submissions 110 The appellant contends that the primary judge failed to have regard to s 115(1B) of the Bankruptcy Act in making a sequestration order on 15 October 2010 that took effect from 4 August 2009. The respondent (in its capacity as one creditor of the estate) accepts that the primary judge failed to have regard to s 115 and by its principal submissions Westpac accepts that upon the making of the sequestration order on 15 October 2010, the bankruptcy, by operation of s 115(1), is taken to have commenced on the day the sequestration order was made, namely, 15 October 2010, rather than the earlier date of 4 August 2009. 111 The sequestration order was made by the primary judge in reliance upon s 222(10) of the Bankruptcy Act. That subsection provides, relevantly, that a creditor may include in an application for an order setting aside a personal insolvency agreement (under s 222(1) or s 222(5)), an application for a sequestration order against the estate of the debtor, and if the Court makes an order under either or both of those subsections, the Court "may, if it thinks fit, immediately make the sequestration order sought". By s 222(11), the making of such a consequential application for a sequestration order by a creditor, "is taken, for the purposes of this Act, to be equivalent to the presentation of a creditor's petition against the debtor" [emphasis added]. 112 As already mentioned, s 76B applies s 222 in relation to a composition under Division 6 of Part IV as if the composition were a personal insolvency agreement, and the trustee of the composition were the trustee of the personal insolvency agreement. 113 Section 115(1) provides that if a person becomes a bankrupt on a creditor's petition (which for present purposes will be assumed to include an application under s 222(10) as applied to compositions, taken to be equivalent to a creditor's petition by s 222(11)), and s 115(1A) does not apply, then "the bankruptcy is taken to have relation back to, and to have commenced at, the time of the commission of the earliest act of bankruptcy committed by the person within the period of 6 months immediately before the date on which the creditor's petition was presented" or, on the basis of the above assumption, on the date of making the application for the sequestration order. 114 Section 115(1A) does not apply in the circumstances of the present case. 115 Section 115(1B) contemplates a circumstance where a person "becomes a bankrupt because of a sequestration order made under Division 6 of Part IV or under Part X". In that case, the bankruptcy is also taken to have relation back to, and to have commenced at, the time of the commission of the earliest act of bankruptcy committed by the person within a period of six months immediately before the date on which the application for the sequestration order was made. It may be that s 115(1) only operates in circumstances where a person becomes a bankrupt on a creditor's petition notwithstanding the notion of equivalence in s 222(11) as s 115(1B) seems to expressly contemplate the commencement of a bankruptcy due to a sequestration order made under the provisions of Division 6 of Part IV or under Part X. In either case, the bankruptcy is taken to have relation back to and to have commenced at the time of the commission of the earliest act of bankruptcy committed by the person within the period of six months immediately before the presentation of the petition or the date on which the application for the sequestration order was made. 116 The appellant contends and Westpac accepts that the application for the sequestration order was made on 11 March 2010. Although "the date of the bankruptcy" is the date on which the primary judge made the sequestration order on 15 October 2010 (not 19 October 2010 as the appellant suggests in submissions), an earliest act of bankruptcy must be identified in the period of six months immediately before 11 March 2010, that is, in the period 11 September 2009 to 11 March 2010 in order to determine the commencement date of the bankruptcy by force of the sequestration order. The appellant contended in his principal submissions (and Westpac did not resist the contention) that there is no act of bankruptcy in that period but that an act of bankruptcy occurred by operation of s 40(1)(n)(i) of the Bankruptcy Act upon the Court setting aside the composition on 15 October 2010. The parties accepted in the principal submissions that under s 222(10) the Court has power to make a sequestration order upon setting aside the composition (subject to the argument concerning the application of s 222(5)(e)(i)) and any such consequential order would take effect on and from 15 October 2010 being the moment when the act of bankruptcy occurred under s 40(1)(n)(i). 117 However, it seems to us that the interests of the creditors are not served by making a sequestration order under s 222(10) as Dr Hingston became bankrupt by force of s 55(4A) of the Bankruptcy Act upon the acceptance on 4 August 2009 by the Official Receiver under s 55(4) of Dr Hingston's debtor's petition. Upon the passing of the special resolution on 2 October 2009 at the s 73 meeting, the bankruptcy was annulled by operation of s 74(5) and by operation of s 75(1), the composition became binding on all creditors of Dr Hingston so far as relates to all provable debts due to them from the bankrupt. 118 Section 76B which applies s 222 in relation to a composition bears the heading in part "setting aside … a composition". The notion inherent in s 76B and s 222 in providing for the setting aside of a composition is that Dr Hingston, on the one hand, will be restored to his pre-composition position as a bankrupt, and the creditors, on the other hand, will be restored to their position as creditors of the bankrupt estate of the debtor. An order under s 222(8) as applied by s 76B, together with s 30(1)(b), that properly reflects the restoration of the pre-composition position (when a composition has been set aside in the circumstances prevailing in Dr Hingston's case), serves to protect the interests of the creditors by enabling the trustee to examine the conduct of the bankrupt (in terms of an examination of whether any voidable dispositions have occurred for the purposes of the Bankruptcy Act or other conduct) by reference to the date on which the debtor became bankrupt on his own petition arising out of the Official Receiver's acceptance of the petition and supporting Statement of Affairs, on 4 August 2009, rather than a postponed date much later in time (15 October 2010) which would apply as the commencement of the bankruptcy, on the making of a sequestration order under s 222(10). The supplementary submissions 119 Having regard to these considerations, the Court invited the parties to make further submissions on particular questions. The Court wrote to the parties in these terms: The presiding judge in the above appeal has requested me to raise the following matter with the parties. In the event the Full Court concludes that the order of the primary judge setting aside the composition made between Dr Hingston and his creditors on 2 October 2009 is not to be disturbed (subject to the contention that the order fails to reflect the s 76B point), the appellant contends and the respondent accepts that the primary judge erred in making a Sequestration Order effective from 4 August 2009, and each party contends that the bankruptcy of Dr Hingston is taken by s 115(1) of the Bankruptcy Act 1966 (Cth) to have commenced on the making of the Sequestration Order on 15 October 2010. The parties ought not to assume that the Full Court will adopt that view of the matter. The parties are requested to provide further written submissions directed to these questions: 1. If a ground under s 222(1)(d) or s 222(5)(e)(i) is made out for "setting aside" the composition, do ss 27, 30 and 222(8) confer power (having regard to any other provisions of the Bankruptcy Act thought to be relevant) to make an order that Dr Hingston (as the presenter of a Debtor's Petition) and his creditors be restored to their respective pre-composition positions of bankrupt on the one hand and creditors of the bankrupt estate of Dr Hingston on the other? 2. If so, is there any reason why an order ought not be made that Dr Hingston's bankruptcy commenced on the day on which the Official Receiver accepted the Debtor's Petition presented under s 55 of the Bankruptcy Act? 3. Is s 74(5) of the Bankruptcy Act to be contextually construed as operating upon an assumption that the setting aside of the composition by the Court on the identified grounds effects a setting aside of the passing of the special resolution, or alternatively (or both), an assumption that the setting aside of the composition operates to set aside the annulment arising out of the acceptance of the composition, subsequently set aside? The parties are requested to provide written submissions (if any) within 14 days and written submissions in reply (if any) within a further five days thereafter. 120 Supplementary submissions have been filed and served by the parties. In his supplementary submissions the appellant supports the position adopted in the principal submissions and contends that there is nothing in s 76B, s 222(1) or s 222(5) which, when read together with s 115(1B), would confer upon the Court the power to make orders inconsistent with the operation of the specific provisions of the Bankruptcy Act that determine the commencement of Dr Hingston's bankruptcy under the sequestration order made by the primary judge. 121 Westpac contends that an order setting aside the composition has the effect of annulling the annulment arising under s 74(5) upon the passing of the special resolution of the creditors at the s 73 meeting, and s 222(8) and s 30(1) confer power to make an order restoring the parties to their pre-composition and pre-annulment positions. 122 Section 30 of the Bankruptcy Act is in these terms: 30. GENERAL POWERS OF COURTS IN BANKRUPTCY (1) The Court: (a) has full power to decide all questions, whether of law or of fact, in any case of bankruptcy or any matter under Part IX, X or XI coming within the cognizance of the Court; and (b) may make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter. [emphasis added] 123 Section 222(8) is in these terms: Ancillary orders (8) If the Court makes an order under subsection (1), (2) or (5), the Court may make such other orders as the Court thinks fit. [emphasis added] 124 Paragraph 94 of the EM for the 2004 Bill which led to the 2004 Act and the introduction of s 222 and s 76B into the Bankruptcy Act provides an explanation of the statutory purpose of s 222(8), in these terms: Where the Court makes an order setting aside a personal insolvency agreement, proposed subsection 222(8) would also allow the Court to make such other orders as it thinks fit. This is intended to allow the Court to make any orders necessary to place the parties in the position in which they would have been had they not entered into the agreement. … [emphasis added] 125 The statutory purpose of s 222(8) as applied by s 76B to compositions is to confer power on the Court to restore the relevant participants, consequent upon, relevantly here, an order under s 222(1) or s 222(5) to the position they would have been in had the composition not been accepted by special resolution and had the consequent annulment of the bankruptcy not occurred. Apart from the power conferred under s 222(8) to make such order as the Court thinks fit so as to give consequential effect in a remedial sense to the setting aside of the composition, s 30 confers a broadly-based facultative power in the Court to make such orders as the Court considers necessary for the purposes of carrying out or giving effect to the Bankruptcy Act in any particular case or matter: Talacko and Others v Talacko [2010] FCAFC 54; (2010) 183 FCR 311 at [18] and [19]; Vale v Sutherland (2009) 237 CLR 638 at [19]. 126 The acceptance of the composition proposal by the passing of the special resolution on 2 October 2009 at the s 73 meeting of creditors effected by s 74(5) an annulment of Dr Hingston's bankruptcy by operation of the Bankruptcy Act. The annulment of the bankruptcy on 2 October 2009 by operation of s 74(5) is understood as having operated "retrospectively … to annihilate the … bankruptcy and its consequences except as otherwise provided by the Act, notably subs 74(6)" [deemed validity of acts of the Trustee before annulment] (Coyle v Cassimatis (Court of Appeal, Supreme Court of Queensland) BC 9303327, 1 November 1993, unreported, per Fitzgerald P, Thomas J and MacKenzie J; Theissbacher v MacGregor Garrick & Co (1993) 2 Qd R 223 per Pincus JA and White J), or as having put the bankrupt back in the position he would have been in if the bankruptcy had never occurred: Re Hudson; Ex parte Australian and New Zealand Banking Group Ltd v Bird (1994) 50 FCR 281; Worrell v Westpac Banking Corporation (1994) 51 FCR 304; Re Coyle (1993) 42 FCR 72; Union Club v Lord Battenberg (2006) 66 NSWLR 1 at [59] to [80] per Giles JA. 127 Since the annulment arising by operation of the Bankruptcy Act itself puts the bankrupt in a position as if the bankruptcy had never occurred, the subsequent setting aside of the composition on 15 October 2010 might be thought to put Dr Hingston and the creditors in a relationship of simply debtor (that is, not a bankrupt) on the one hand, and creditors of the debtor, on the other hand, on the footing that a remedial order cannot alter an annulment arising by operation of the Act itself. 128 Such a construction of s 222(8) and s 30(1) would bring about an absurd result. 129 The annulment effected by s 74(5) operates subject to remedial orders serving the purpose of the Bankruptcy Act made within power as conferred by s 222(8) and s 30(1) in the exercise of the Court's jurisdiction in bankruptcy under s 27. Section 222 contemplates by s 222(1) and s 222(5) the setting aside of the composition which involves setting aside the constituent elements of the particular composition, namely, the making of the proposal for compromise put to the meeting under s 73 and the acceptance of the proposal by the special resolution of the creditors on 2 October 2009 under s 73(4). Since the annulment of the bankruptcy takes effect by force of s 74(5) upon the passing of the special resolution, an order setting aside the composition comprising the proposal and its acceptance, sets aside the statutory event upon which the annulment depends, namely, acceptance by special resolution. It follows that upon setting aside the composition, the parties are to be restored to their pre-composition positions as bankrupt on the one hand, and creditors of the bankrupt on the other. 130 Accordingly, Order 2 of the orders of the primary judge is to be set aside and in its place the following order will be made under s 222(8) and s 30(1) of the Bankruptcy Act: Consequent upon Order 1 of the orders of the primary judge as varied by these orders, Guy Richard Hingston ("Hingston") and the creditors of Hingston are restored to the positions they were in before the making by Hingston, and subsequent acceptance by his creditors by special resolution on 2 October 2009 of Hingston's composition proposal under s 73 of the Bankruptcy Act, such that Hingston, on the one hand, is and has been bankrupt on and from 4 August 2009 pursuant to the acceptance by the Official Receiver under s 55 of the Bankruptcy Act on 4 August 2009 of Hingston's debtor's petition presented under s 55 of that Act, and the creditors of Hingston, on the other hand, are and have been on and from 4 August 2009 creditors of the bankrupt estate of Hingston. 131 The respondent submitted that the Court should also make an order extending the period of Mr Hingston's bankruptcy. It submitted that if the bankruptcy commenced on 4 August 2009, Mr Hingston will be automatically discharged on 4 August 2012 by operation of s 149(4) unless the trustee files an objection under s 149B. 132 It is not appropriate for this Court to make the additional order sought by the respondent. It will be for the trustee to decide whether to lodge an objection to discharge with the Official Receiver under s 149B. An objection lodged by the trustee under s 149B will have the legal consequences provided for in Part VII, Division 2, Subdivision B of the Act. Further, the trustee's decision to lodge any such objection will then be open to review in accordance with the provisions of Part VII, Division 2, Subdivision C of the Act. 133 We do not express any view one way or the other as to whether the trustee would be justified in lodging an objection under s 149B in the circumstances of this case. 134 As to the costs, the costs of the respondent of and incidental to the appeal are to be taxed and paid from the estate of Guy Richard Hingston in accordance with the provisions of the Bankruptcy Act. 135 The orders of the Court will be these: 1. The appeal be allowed in part. 2. Order 1 of the orders of the primary judge made on 15 October 2010 be varied in the following terms: 1. Pursuant to the provisions of the Bankruptcy Act 1966 (Cth) and, in particular, section 222(1)(d) and section 222(5)(e)(i) of that Act as applied by section 76B of that Act to a composition under Division 6 of Part IV of the Bankruptcy Act, the composition made between Guy Richard Hingston and his creditors under Division 6 of Part IV of that Act on 2 October 2009 is set aside. 3. Order 2 of the orders of the primary judge is set aside and in its place the following order is made: 2. Consequent upon Order 1 of the orders of the primary judge as varied by these orders, Guy Richard Hingston ("Hingston") and the creditors of Hingston are restored to the positions they were in before the making by Hingston, and subsequent acceptance by his creditors by special resolution on 2 October 2009 of Hingston's composition proposal under s 73 of the Bankruptcy Act, such that Hingston, on the one hand, is and has been bankrupt on and from 4 August 2009 pursuant to the acceptance by the Official Receiver under s 55 of the Bankruptcy Act on 4 August 2009 of Hingston's debtor's petition presented under s 55 of that Act, and the creditors of Hingston, on the other hand, are and have been on and from 4 August 2009 creditors of the bankrupt estate of Hingston. 4. Otherwise the appeal is dismissed. 5. The costs of the respondent of and incidental to the appeal be taxed and paid from the estate of Guy Richard Hingston in accordance with the provisions of the Bankruptcy Act 1966 (Cth). I certify that the preceding one hundred and thirty five (135) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Greenwood, McKerracher and Nicholas Associate: Dated: 23 March 2012