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Similar arguments were made by the court in Re Bank of Credit and Commerce
International SA (in liq) (No 15); Morris and others v Bank of India. 175 Patten J
concluded that the award can only be estimated for the damages to which the director
has contributed or caused. Despite the compensatory nature of the award, it is
essential for the court to assess the degree of the director‘s fault or culpability for the
purpose of calculating the quantum.
In Malaysia, debts which directors are held to be liable for are those incurred prior to
fraudulent trading, while in other jurisdictions, only loss suffered after the act is
considered. The fraudulent action was discovered while creditors were taking an
action or enforcing judgments which already existed against the company. The
creditors then brought an action under section 304(1) for a declaration of personal
liability. 176 The link in these cases is that, due to the fraudulent act, the company
could not pay for the existing claims or judgment sums.
In Australia, the statute requires the court to be satisfied that there is a link between
loss and insolvency before an order for compensation can be made. 177 The emphasis
on the company‘s insolvency in the Australian statute indicates that the amount of
award should be sums not recoverable from the company‘s pools of assets when it is
in liquidation. 178
This is illustrated in the decision of Metropolitan Fire Systems Pty Ltd v Miller 179 ,
where Metropolitan was able to recover the whole debt due to it from the director
175 [2004] 2 BCLC 279 at 356.
176 Siow Yoon Keong v H Rosen Engineering BV [2003] 4 MLJ 569; LMW Electronics Pte Ltd v Ang
Chuang Juay & Ors[2010] 1 MLJ 185.
177 See sections 588J(1)(c); 588K(b) (ii); 588M(1) (b) of the Australian Corporations Act 2001 ― the
person to whom the debt is owed has suffered loss or damage in relation to the debt because of the
company‘s insolvency‖.
178 Austin and Ramsay above n22 at [20.150].
179 (1997) 23 ACSR 699.
350