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e made to English cases as well as Australian cases whenever necessary in order to
determine how courts may interpret the sections. Despite judges‘ tendency to adopt
in verbatim the English and Australian decisions, it is important to bear in mind that
these decisions are not binding on the Malaysian courts, but have merely persuasive
value. The examination of New Zealand‘s section 301 will cover both reckless
trading and the duty relating to obligations.
11.3.7.1 Court’s Order
Once the court has determined that a director is liable under relevant provisions, the
next task is to decide what order should be granted against such director. The courts
have been given wide discretion by statutes to decide on what order should be made.
With the exception of Australia, which specifies the extent of compensation that can
be recovered from directors, 133 the other statutes merely state that directors are
‗liable to contribute.‘ 134 Courts in the UK, New Zealand and Malaysia are given wide
discretion to fix the amount as ‗they think just.‘ 135 New Zealand‘s section
301(1)(b)(ii) mentions that contribution is by way of compensation while the other
two statutes are silent as to the purpose. Based on these provisions, courts are
expected to decide on what orders should be made.
In the past, courts in the UK have always associated fraudulent trading with punitive
orders. This can be seen in the judgments of the courts dealing with the matter. In Re
William C Leitch Brothers Ltd, 136 Maugham J was inclined towards the view that the
breach of section 275 137 was punitive in nature. The court therefore may exercise its
133 See sections 588J, 588K, 588M of the Australian Corporations Act 2001.
134 See sections 214 and 213 of the UK Insolvency Act 1986; 301(1)(b)(i) of the New Zealand
Companies Act 1993 and sections 304(1) and 304(2) of the Malaysian Companies Act 1965.
135 See sections 214 and 213 of the UK Insolvency Act 1986; 301(1)(b)(i) of the New Zealand
Companies Act 1993 and sections 304(1) and 304(2) of the Malaysian Companies Act 1965.
136 (1932) 2 Ch71 at 79-80.
137 The then fraudulent trading provision in the UK Companies Act 1929.
340