View/Open - Research Commons - The University of Waikato

ecause the court considered that it was unlikely for it to receive anything in winding
up. The quantum recoverable from the directors by ASIC or the liquidator who
initiated proceedings is therefore the loss or damage suffered by all unsecured
creditors in relation to their debts as a result of the insolvency.
As such, it is not necessary to consider whether there is a need for a creditor to
mitigate his or her loss. 180 In Official Trustee in Bankruptcy v CS & GJ Handby Pty
Ltd, 181 a claim under section 566 of the Companies (Tasmania) Code 1981, a
predecessor to section 588G, the court interpreted the provision strictly and held that
it was not a claim for damages at large. It should be noted, however, that the
provision in section 566 allows for ―recovery for a debt" while the compensation
under section 588M allows for ―loss or damage.‖ Section 588M gives a right to a
liquidator or creditor to recover for loss or damage arising from the company‘s
insolvency though the question of quantum remains unclear. 182 In Powell v Fryer, 183
the court concluded that the loss or damage would normally be quantum of the
relevant unpaid debts.
11.3.7.2.2 Culpability
Courts have discretion to apportion liability to contribute depending on the
culpability of its directors. This factor requires the court to examine the
blameworthiness of a director‘s conduct ranging from blind faith at one end to plain
dishonesty at the other end. 184 Hence, from the evidence available before it, the court
180 Austin and Ramsay above n22 at [20.150].
181 (1989) 87 ALR 734.
182 Niall F Coburn “Insolvent Trading in Australia: The Legal Principles‖ in Ian Ramsay (Ed.)
Company Directors’ Liability for Insolvent Trading (CCH Australia Centre for Corporate Law
and Securities Regulation, University of Melbourne,2000) 73 at 119.
183 [2000] SASC 97.
184 Lower v Traveller [2005] 3 NZLR 479 at 498; see also Thompson v Innes (1985) 2 NZCLC
99,463.
351