CATCHWORDS Bankruptcy - Part X Bankruptcy Act 1966 ~- Rearrangement of affairs relating to appellant's medical practice - Large sums owed to respondent - Meeting of creditors under Part X Bankruptcy Act 1966 - Respondent not consulted about proposed arrangement - Court's discretion to terminate deed under s. 236 and make a sequestration order - Omission of a material particular from statement of affairs - Whether termination of deed in interests of creditors. JOHN EMMANUEL CHIRAGAKIS v. DEPUTY COMMISSIONER OF TAXATION ACT G6 of 1986 FISHER, DAVIES and LOCKHART JJ. CANBERRA 11 JULY 1986 a IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. A.C.T. G6 of 1986 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN EMMANUEL CHIRAGAKIS Appellant AND: DEPUTY COMMISSIONER OF TAXATION Respondent MINUTE OF ORDER JUDGES MAKING ORDER: FISHER, DAVIES and LOCKHART JJ. DATE OF ORDER: 11 JULY 1986 WHERE ORDER MADE: CANBERRA THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the costs of the respondent of this appeal. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. A.C.T. G6 of 1986 DISTRICT REGISTRY ee ee eee GENERAL DIVISION ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN EMMANUEL CHIRAGAKIS Appellant AND: DEPUTY COMMISSIONER OF TAXATION Respondent CORAM: FISHER, DAVIES and LOCKHART JJ. 11 July 1986 REASONS FOR JUDGMENT FISHER J. I agree that this appeal must be dismissed for the reasons given by Lockhart J. I certify that this is a true copy of the Reasons for Judgment of his Honour Mr. Justice F.R. Fisher. Associate: ye Aamo Dated: Ht Fue 'GQ . IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. A.C.T. G6 of 1986 DISTRICT REGISTRY wee weer GENERAL DIVISION ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN EMMANUEL CHIRAGAKIS Appellant AND: DEPUTY COMMISSIONER OF TAXATION Respondent CORAM: FISHER, DAVIES and LOCKHART JJ. 11 July 1986 REASONS FOR JUDGMENT DAVIES J. I agree that this appeal must be dismissed for the reasons given by Lockhart J. I certify th that this amettre PAGe 'Ss preceding. pages-ere-a true copy of the | Reasons for Judgment herein of his Honour Mr. Justice J.B. Davies SRigheonouy Associate , Dated: |\ July \A8p IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. A.C.T. G6 of 1986 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: JOHN EMMANUEL CHIRAGAKIS Appellant AND: DEPUTY COMMISSIONER OF TAXATION Respondent CORAM: FISHER, DAVIES and LOCKHART JJ. 11 July 1986 REASONS FOR JUDGMENT LOCKHART J. This is an appeal from the judgment of a single judge of this Court (Neaves J.) ordering that a deed of arrangement executed by the appellant on 23 October 1985 be terminated and that a sequestration order be made against his estate. The appellant is a medical practitioner - a specialist obstetrician and gynaecologist. For some years before the year of income which commenced on 1 July 1980 he carried on a medical practice in his name and on his own account at Phillip in the Australian Capital Territory from premises which he leased, during earlier years, 2. from his wife Louise Chiragakis, and in later years from a company, Luristan Pty, Limited ("Luristan"). Luristan was incorporated in the Australian Capital Territory on 17 March 1976, its only shareholders and directors being the appellant and his wife. The appellant earned substantial fees from his practice. At 30 June 1980 a sum in excess of $285,000 was due and payable by him to the Commissioner of Taxation for income tax assessed under the Income Tax Assessment Act 1936 in respect of the financial years ended 30 June 1975 to 1979 inclusive. The appellant lodged objections against those assessments which were later disallowed and at his request referred to a Board of Review. The appellant later withdrew the objections and the assessments were confirmed on 12 July 1985. In mid-1980 the appellant ceased to carry on his practice in his own name and on his own account in circumstances which may be briefly stated. He became a salaried employee of a company, Ardgowan pty. Limited ("Ardgowan"), which changed its name to Plaza Clinic Pty. Limited ("Plaza Clinic") on 11 July 1980. That company was incorporated in the Australian Capital Territory on 31 August 1976. Its sole shareholders and directors at 30 June 1980 were the appellant's wife and a Mr. Clarke, a member of the firm of solicitors who at all material times acted for the appellant. The arrangements involved (a) the execution of a deed between Ardgowan and Luristan establishing the Clinic Unit Trust; (b) the execution of a deed between Mr. Clarke and Luristan establishing the T.M. Clarke settlement; and (c) the use of a trust known as the Cherry Trust which had been established by deed of 15 February 1976, the settlor being William Coyle and the trustee being Luristan. Luristan is and was at all relevant times the holder of all the issued units, Of which there were 10, in the Clinic Unit Trust. Evidence was given before the learned trial Judge by a Mr. Hollands that Luristan held those units as trustee for the T.M. Clarke Settlement. Ardgowan, now Plaza Clinic, is the trustee of the Clinic Unit Trust. Luristan is and was at all material times the trustee and the "nominator" of the T.M. Clarke settlement. The beneficiaries of that settlement are expressed in the deed to be the Smith Family, the New South Wales State Cancer Council, the Australian Red Cross, the appellant, any company of which the appellant is a shareholder, any trust of which the appellant is a beneficiary and such persons or limited liability companies (with immaterial exceptions) as the nominator selects. Clause 3 of the deed provides for the application of the income of the T.M. Clarke settlement in favour of the beneficiaries in the discretion of the trustee. Luristan is also given power under the deed to remove the trustee and appoint a new trustee and to vary or amend any of the provisions of the deed: clauses 19(a) and 25 respectively. Luristan is and was at all relevant times also the trustee of the Cherry Trust. The appellant is described as the "principal" in the relevant trust deed. The beneficiaries thereunder are the 4. appellant, his wife, and their three children. The trustee may pay or apply the whole or any part of the income of the trust fund for or towards the maintenance, education, advancement or benefit of all or such one or more of the beneficiaries to the exclusion of others and in such shares as the trustee in his absolute discretion may determine: clause 2. With the consent of the principal, the trustee may alter, modify or revoke any of the trusts and appoint such new trusts in such manner or form as the trustee shail in its absolute discretion think fit: clause 16(3). The principal may require the trustee to resign and may appoint a new trustee: clause 17(4). Since 1 July 1980 the medical practice has been carried on under the business name "Plaza Clinic", that business name having been registered in the name of Luristan on 18 June 1980 and transferred to Plaza Clinic on 30 June 1980. The practice has been carried on from the same premises as before, the appellant providing the same medical services and using the same patient records as before. The appellant became a salaried employee of Plaza Clinic. During each of the financial years ended 30 June 1981, 1982, 1983 and 1984 the fees derived from the treatment of patients by the appellant have been treated as having been paid to Plaza Clinic as trustee of the Clinic Unit Trust. Some details of the financial affairs of the Clinic Unit Trust in two of those years should be mentioned. For the year ended 30 June 1981 fees received totalled $214,892, and for the 1984 year the total was $326,141. 5. In each of the financial years 1981 to 1984 inclusive, the total net income of the Clinic Unit Trust was distributed to the T.M. Clarke settlement. The amounts received from the Clinic Unit Trust by the T.M. Clarke settlement in the financial years 1981 to 1984 inclusive were distributed as follows: In the 1981 year, the Cherry Trust received $94,147; in 1984 the Cherry Trust received $150,289. Nominal amounts of $100 were distributed to each of the Smith Family, the New South Wales State Cancer Council and the Australian Red Cross. Apart from the amounts received from the T.M. Clarke settlement, the Cherry Trust also received service fees from the Clinic Unit Trust. These totalled $33,453 in 1981 and $39,757 in 1984. In each of the years 1981 to 1984, the net income of the trust was distributed and it is sufficient for present purposes if I refer to the 1981 and 1984 years. In 1981, $10,849 was distributed to the appellant, $30,000 was distributed to each of the three children of the appellant and no distribution was made to Mrs. Chiragakis. In the 1984 year, $20,000 was distributed to the appellant, $24,120 to Mrs. Chiragakis, and $35,500 to each of the three children. The years 1982 and 1983 reflect substantially the same position as the year 1981. The amounts shown as having been distributed to the children were credited to their respective accounts in the trust, but only part thereof was in fact paid to them or for their benefit. The balance sheet of the Cherry Trust at 31 October 1984 shows very substantial liabilities, being unsecured loans to members of the Chiragakis family other than the appellant. The loans represent the amounts allocated but not paid over to the children. The balance sheet also shows as an 6. asset a substantial sum representing unsecured loans to related parties. That asset represents moneys lent back through the T.M. Clarke settlement to the Clinic Unit Trust. As at 31 October 1984, the assets of the Clinic Unit Trust included unsecured loans to the appellant of $50,554, and to his wife of $59,511, making a total of $110,065. On 18 September 1985 the appellant, pursuant to s. 188 of the Bankruptcy Act 1966 ("the Act"), signed an authority authorising Mr. Brian Henry Kahlefeldt, a registered trustee, to call a meeting of his creditors for the purposes of Part X of the Act and to take over control of his property. On 23 September 1985 Mr. Kahlefeldt consented in writing to exercise the powers conferred by the authority and, pursuant thereto, arrangements were made for the holding on 16 October 1985 of a meeting of the appellant's creditors. On 16 October 1985 the appellant made a statutory declaration in the prescribed form verifying an annexed statement of affairs. The appellant declared that the annexed statement contained, to the best of his knowledge and belief, a true and complete statement of his affairs as at 16 October 1985. The statement disclosed debts to four unsecured creditors totalling $489,882 and assets with an estimated value of $20,946, resulting in a deficiency of $468,936. The assets Gisclosed consisted of cash at bank, $720; household furniture and effects at 11 Torres Street, Red Hill, $13,000; and a share in E.E. Goldtraders Partnership, $7,226. The creditors disclosed and the amounts of their debts were: the Deputy Commissoner of Taxation, for 7. income tax, $437,139; Elringtons, for professional services, $1,513.80; Plaza Clinic Pty. Limited, loan, $50,505; Rolfe, Hall and Hollands, for professional services, $725; a total of $489,872.80. The meeting of creditors took place at 12 noon on 16 October 1985. Present were the appellant, Mr. Kahlefeldt, Mr. T.M. Clarke of the firm of Elringtons, solicitors, Mr. G.G.A. Hollands of the firm of Rolfe, Hall and Hollands, accountants, and Mrs. Chiragakis, the appellant's wife. According to the attendance sheet attached to the minutes of the meeting Mr. Clarke was present both in person and by proxy for partners of Elringtons; Mr. Hollands was present in person and by proxy for partners of Rolfe, Hall and Hollands; and Mrs. Chiragakis was present in person and by proxy for Plaza Clinic. The minutes record that resolutions, the terms of which are set out in the reasons for judgment of the learned trial Judge, were moved by Mr. Clarke, seconded by Mr. Hollands, and carried. In substance they were resolutions that the appellant be required to enter into a deed of arrangement identical to a precedent presented to the meeting with an additional clause (b) to which I shall refer later. The second resolution was that Mr. Kahlefeldt be appointed trustee of the deed of arrangement with provision for his remuneration. Certain property was by resolution of that meeting excepted from what was described in the resolution as the divisible property of the appellant. 8. The trial Judge noted that neither the precedent document referred to in the first of the resolutions nor a copy thereof was in evidence and that the minutes did not record who voted in favour of each of the resolutions. On 23 October 1985 the appellant executed a document described as a deed of arrangement and on 31 October 1985 it was executed by Mr. Kahlefeldt. The respondent, the Deputy Commissioner of Taxation, applied to this Court for an order that the deed of arrangement executed by the debtor on 23 October 1985 pursuant to Part X of the Act be declared void under s. 222 of the Act or be terminated under s. 236. The Deputy Commissioner also sought a summary sequestration order against the estate of the appellant pursuant to sub-s. 222(7) or 236(3) as the case may be. The grounds of the application were: (a) that there was a doubt whether the deed of arrangement was entered into in accordance with or complied with the requirements of Part X of the Act; (b) that the appellant omitted a material particular from the statement of his affairs required under s. 195; (c) that the deed of arrangement could not continue without injustice to the creditors; and (d) that there were "other reasons" within the meaning of that expression in para. 236(1)(c) of the Act why the deed of arrangment ought to be terminated. The trial Judge rejected an argument of the Deputy Commissioner that he was not given notice of the meeting of the appellant's creditors and that the meeting was not called in accordance with the requirements of s. 194 of the Act. His Honour accepted the evidence of witnesses called for the Deputy Commissioner that no trace could be found of the notice of meeting of the appellant's creditors. His Honour noted that to comply with sub-s. 194(2) of the Act it was only necessary that the notice be sent by post to the Deputy Commissioner and, notwithstanding that the evidence adduced on behalf of the appellant was not entirely satisfactory, his Honour was not prepared to find that the notice was not properly posted so as to comply with the requirements of sub-s. 194(2). His Honour said, however, that the fact that the notice was not received by the Deputy Commissioner was a matter proper to be taken into account in considering whether the deed should be terminated under S. 236. After reviewing the evidence of the circumstances in which the arrangements for the carrying on of the medical practice were changed at the end of the financial year ended 30 June 1980, particularly the circumstance that the arrangements involved the creation of the Clinic Unit Trust and the T.M. Clarke settlement at a time when the appellant was indebted to the Deputy Commissioner in a sum exceeding $285,000, and to the manner in which the fees generated by the medical practice had been dealt with under the new arrangements, his Honour said he was' satisfied that a full 10. investigation of all the circumstances was warranted and that this could only be done to any effect if the deed was set aside or terminated and a sequestration order made. His Honour also found that the circumstances disclosed by the evidence were such that a trustee in bankruptcy might well take the view that an application under sub-s. 131(2) of the Act should be made. That sub-section empowers the Court, upon the application of the trustee, to order that all or such part as the Court thinks fit of the income of the bankrupt be paid to the trustee for the benefit of the bankrupt's creditors. His Honour found that the evidence of the circumstances surrounding the meeting of the appellant's creditors on 16 October 1985 and the proceedings at the meeting revealed what he described as a most unsatisfactory state of affairs. In particular, his Honour said: "The minutes of the meeting are quite unsatisfactory in that they do not show that the resolution requiring the debtor to enter into the deed of arrangement was passed as aé_e special resolution as sub-section 204(1) of the Act requires. Mr. Kahlefeldt, however, gave oral evidence that Mr. Clarke, Mr. Hollands and Mrs. Chiragakis all voted in favour of that resolution. He said that Mrs. Chiragakis had voted as proxy for Plaza Clinic Pty. Limited though he was unable to produce the form of proxy duly executed by that company. Mrs. Chiragakis gave evidence that when she went to the meeting she handed in a document which she said had been prepared by the accountant and which she signed and to which she affixed the seal of Plaza Clinic Pty. Limited. She agreed, in cross-examination, that there had been no meeting of the directors of the company to authorise the affixing of the company's seal to any proxy document. ll. On the evidence I am satisfied that Mrs. Chiragakis was not entitled to vote at the meeting of creditors held on 16 October 1985. The consequence of this finding is that the resolution requiring the debtor to execute the deed of arrangment was passed on the votes of the debtor's solicitors and accountants whose debts totalled only $2,039 out of a total indebtedness of over $489,000. This is a most unsatisfactory state of affairs." The trial Judge concluded that the Deputy Commissioner had established the grounds under paras. 236(1)(b) and (c) of the Act for orders terminating the deed of arrangement, and he found that in accordance with para. 236(1)(c) he was satisfied that it would be in the interests of the creditors to terminate the deed. His Honour said that, although the Deputy Commissioner had also established a ground for declaring the deed void under para. 222(4)(b), he thought it was more appropriate in the circumstances of the case to proceed under s. 236 than s. 222. His Honour then made orders pursuant to s. 236. I have referred to the findings of his Honour, including his findings of fact, in some detail because, although the Court must be satisfied before making orders under either of the two statutory provisions with which this case 1s concerned that the requisite grounds have been established, ultimately it is for the Court in the exercise of its discretion to determine whether such orders should be made. The facts which I have mentioned relate to a number of questions, including the question of discretion, and they were so treated by the trial Judge. 12. Counsel for the appellant submitted before us that the trial Judge erred in certain respects. First, it was submitted that his Honour erred in concluding that the omission of the appellant to disclose in his statement of affairs that he was the owner of one share in Luristan Pty. Limited was the omission of a material particular within the meaning of para. 222(4)(b). It was argued that there was no evidence that this one share had any real value or that the vesting of it in the trustee of the appellant's estate would enable the trustee to benefit the creditors. It was also argued that the materiality of an omission from a statement of affairs must be determined by reference to the creditors who attended the meeting of creditors and no others. In my opinion the omission of the appellant to disclose in his statement of affairs that he was the owner of one share in Luristan was the omission of a material particular. The rearrangement of the appellant's affairs in 1980, bythe complex structure of the Clinic Unit Trust, the T.M. Clarke settlement, the Cherry Trust with Luristan as trustee of the Cherry Trust and of the T.M. Clarke settlement, is central to the appellant's affairs. The earlier recitation of facts demonstrates the significance of the role of Luristan. The failure, albeit inadvertent, as his Honour found it was, to disclose the appellant's shareholding in the statement of affairs must, in my view, be a relevant matter and one that would be likely to affect the making of the decision of creditors under sub-s. 214(1). See Re Morris; Ex parte Adams (1980) 48 F.L.R. 341 at 343. Beard v. Prestige Baking Industries Pty. Limited (1981) 36 A.L.R. 307 and Re Lane (1982) 45 A.L.R. 565 at 572. 13. The share held by the appellant is one of the two issued shares in Luristan's capital. The vesting of the appellant's share in the trustee of his estate would invest the trustee with the capacity to influence the destination of the income and property of the trusts and settlement and that is the important consideration. I reject the submission that the materiality of the omission is to be determined solely with reference to creditors who attended the meeting. Section 195, which is the relevant section, is in plain terms. It requires a debtor to submit to the creditors at the Part xX meeting a statement in writing, verified by a statutory declaration, of his affairs and it requires that the statement of the affairs shall specify the debtor's assets and liabilities and shall include certain particulars in respect of each asset and liability. That is a statutory obligation imposed upon a debtor to do precisely what the section requires. It is also a statutory requirement as to the contents of the statement of affairs and compliance is determined by objective considerations. It is not limited to the subjective question of its effect or likely effect upon creditors who happened to attend the meeting and no others. Secondly, the finding of the trial Judge that a trustee in bankruptcy might well take the view that an application under sub-s. 131(2) of the Act should be made was challenged before us. That sub-section empowers the Court, upon the application of the trustee, to order that all or part of the income of a bankrupt shall be paid to the trustee for the benefit of the bankrupt's creditors. 14. One has only to glance at the size of the appellant's income from his medical practice before the restructuring of his affairs in 1980 and the income since then of the Clinic Unit Trust to realise that the Court might well take the view that the appellant could make a greater contribution to his estate for the benefit of his creditors than the total sum of $30,000 payable over three years as provided for by the deed. That is a trivial payment, bearing in mind the income earned previously by the appellant and later derived by the Clinic Unit Trust and in the light of the ability of the appellant and his high income earning potential. The third respect in which his Honour is said to have erred is in holding that he was satisfied that it would be in the interests of the creditors to terminate the deed. It was submitted that the evidence did not disclose anything from which it could be concluded that there is a more reasonable prospect of some tangible benefit to creditors if a sequestration order is made than if the administration continues under Part X of the Act. The trial Judge did not agree with that and nor do I. The appellant has a high income earning capacity which is much higher than the income of which he has been in receipt since 1980 following the rearrangement of his affairs. Further, substantial income is now received by one of the instruments established by him in 1980. If the appellant's affairs are administered in bankruptcy the trustee will be able to apply to the Court, if he wishes, for an order under s. 131 of the Act for payment of income for the benefit of the creditors of the appellant. That 15. application, if made successfully, may result in tangible benefits to creditors. The circumstances surrounding the rearrangement of the appellant's affairs in 1980, when he owed the Deputy Commissioner a very large sum of money for income tax, at least excite one's interest and call for investigation. The only real prospect of that occurring is if a sequestration order is made because no creditor other than the Deputy Commissioner would be likely to have an interest in funding such an inquiry and the Deputy Commissioner is unhappy with the Part xX administration. It was said by counsel for the Deputy Commissioner that an application may be made to the Court under s. 121 (the section that relates to the setting aside of fraudulent preferences in a bankruptcy administration). If an application were to be made under that section 1t could not, of course, be made under a deed of arrangement. Part X of the Act is a useful mechanism for controlling the affairs of debtors outside formal bankruptcy administration but it does have limitations in some cases and this is one of them. I have, I must confess, a general feeling of disquiet about the appellant's affairs being continued under a Part X administration. The appellant is obviously a successful medical practitioner and has, doubtless through hard work, earned high fees; but the radical restructuring of his affairs in 1980 at a time when he owed the Deputy Commissioner a sum in excess of $285,000, the creation of an elaborate set of trusts and companies and the holding of the Part X meeting of creditors (in fact attended by his own solicitor and accountant, as creditors, and 16. his wife, without the attendance of the Deputy Commissioner who is by far the largest creditor), all point to the conclusion that this is a proper case for the exposure of the appellant's affairs to the processes of compulsory examination and other machinery of the Act in a formal bankruptcy administration. The trial Judge obviously held that view and I agree with him. The arrangement of the appellant's property and affairs under Part X 1s curious and unsatisfactory. The only creditors who attended the meeting were those whom I just mentioned. The Deputy Commissioner was served with the notice of meeting as required by sub-s. 194(2), but he was not consulted by the appellant, his legal advisers or the trustee about the proposed arrangement. The only matter discussed with the Deputy Commissioner was the possible bankruptcy of the appellant. It was a very odd arrangement, indeed, that was set in motion in this case. Proceedings in bankruptcy or under Part X involve the public interest as well as the direct financial interests of creditors. The events of 1980 and the affairs of the appellant do call for inquiry, especially as the appellant's own statement of affairs reveals very few assets of his own notwithstanding his large liabilities and considerable income earning capacity. The trial Judge rightly exercised his discretion in favour of terminating the deed and making a sequestration order. 1s Honour's finding that he was satisfied that it would be in the interests of the 17. creditors of the appellant to terminate the deed should not be disturbed. There is one last matter that I would mention, The resolution of the creditors at their meeting on 16 October 1985 and the terms of the deed executed by the appellant on 23 October 1985 are based on the assumption that the document is a deed of arrangement within the meaning of Part X of the Act. Yet it is questionable whether the document is a deed of assignment rather than a deed of arrangement. The deed provides in clause (a): "(a) the debtor conveys and assigns to the trustee all his divisible property within the meaning of Part X upon trust to deal with the same in accordance with that part for the benefit of the creditors of the debtor and contains other provisions relating to surplus of assets." The deed also contains clause (f) whereby the trustee accepted the appointment as trustee of the deed and the conveyance and assignment of property to him upon the trusts set out therein. So far the deed is cast precisely in the language of a deed of assignment as defined by sub-s. 187(1) of the Act, namely, a deed by which a debtor assigns all his divisible property for the benefit of his creditors. I note also sub-ss. 214(2) and 228(1), the former providing that a deed of assignment shall be substantially in accordance with the prescribed form. The prescribed form is Form 36A. The prescribed form is echoed by clauses (a) and (f) of the deed in this case, yet the deed adds clauses (b), (c), (d) and (e). 18. Clause (b) is a provision whereby the appellant agreed, over a period of three years, to pay to the trustee $30,000 by three annual instalments of $10,000 each. That is a provision appropriate to a deed of arrangement, though not perhaps necessarily inconsistent with a deed of assignment. Clause (c) provides: "(c) upon fulfilment of the provisions of this deed the debtor is to be released from all his debts." Sub-section 230(1) of the Act relevantly provides: "...- a deed of assignment that has become binding on the creditors of the debtor operates, unless declared void, to release the debtor from all proof of debts other than those (if any) that would not be released by his discharge from bankruptcy if he had become a bankrupt on the day which he executed the deed." Clause (c) of the deed is, in my view, inconsistent with the provisions of sub-s. 230(1). Clause (d) of the deed provides: "(d) this deed is binding on the creditors in accordance with Section 233 of the Bankruptcy Act." 19. Section 233 appears in the division of Part X relating to deeds of arrangement; hence clause (d) proceeds on the assumption that the document is a deed of arrangement, not one of assignment. A real guestion arises whether the document which is the foundation of this case is a deed of assignment or a deed of arrangement or neither, or whether it is void. On the whole, I think it is best described as a deed of arrangement. These considerations provide, in my view, a telling reason why the Court's power to terminate the deed under s. 236 should be exercised, as indeed it was. The trial Judge made other findings that were challenged in the amended notice of appeal but were not argued before us so I need not consider them. I would dismiss the appeal with costs. | certty { at i- s and the a4 peer, (18) a pes.crgys taco cory ef the pen ae -< 'rel 0 43 T'onour ban - i ive Per rs