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compensatory. 163 Damages are assessed on a broad global approach and apportioned
to defendants based on the principle of just deserts. The method of assessing the
amount of contribution requires a broad global approach with the final sum
remaining at the discretion of the court. As such, the court held the defendants liable
to contribute to the assets of the company and considered this to be just deserts.
The court in Vinyl Processors (New Zealand) Ltd v Cant 164 made reference to Maloc
Construction Ltd v Chadwick Lovegrove and Burr 165 in a situation where the
company failed to keep proper financial reports which stated that in the event that
arithmetical assessment is impossible, the court should use the broad global method.
However, if detailed information as to the amount of deficiencies is available, the
court must still exercise its discretion and come to conclusions after careful
considerations of necessary factors.
In Australia, the statute clearly stated that the amount of compensation a court can
award the company is equal to the loss or damage suffered. 166 The loss or damage
suffered by creditors in this context, however, must be as a consequence of the
insolvent trading. In section 1317H, a civil penalty provision, the statute provides
guidelines to court when awarding damages. It is important to note that, unlike other
provisions in the Corporations Act, section 1317H specifies that damage must be a
result of the contravention, i.e. engaging in insolvent trading. 167 The court has to
take into consideration the amount of profits made by the person who contravenes
the insolvent trading provision when ascertaining the amount of damages suffered by
the corporation. This requirement is absent in section 588J which also provides for
163 See also Re Gellert Developments Ltd (in liq); McCullagh & Anor v Gellert & Anor (2002) 9
NZCLC 262,942.
164 (1990) 5 NZCLC 66,592.
165 (1986) 2 BCR 217.
166 See sections 588J, 588K, 588M; see also section 1317H of the Australian Corporations Act 2001.
167 Section 1317H(1)(b) of the Australian Corporations Act 2001.
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