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director put his own interests ahead of creditors by unreasonably putting the
company at risk through its expansion programme. Likewise, in Nippon Express
(New Zealand) Ltd v Woodward, 193 it was stated that the relevant debt was
attributable to the defendants‘ fault which connotes the degree of culpability on the
part of the director.
In the UK, culpability is also an element which the court takes into consideration
when making decisions. This can be seen from the case of Re Produce Marketing
Consortium (No 2) 194 where the court took into consideration whether wrongful
trading was caused by the director‘s failure to appreciate the warning signs or
whether it was a deliberate wrongdoing.
In addition, the court looks at whether directors have been given any warning
regarding the impending collapse, whether their conduct has shown proper regard to
accuracy, as well as their involvement in the management, their reliance on others or
their lack of experience. From these it can be presumed that the court is gauging the
extent of fault which should be attached to the director in order to ascertain the
contribution to be imposed. 195
In Australia, culpability is only relevant in respect of a civil penalty order which has
the aim of protecting the public from unscrupulous directors. 196 For compensation
orders under different statutory provisions, the nexus is between the loss suffered and
the company‘s insolvency. Therefore, a director‘s blameworthiness is immaterial
because compensation depends on the damage which is not recoverable through
distribution made by the liquidator.
193 (1998) 8 NZCLC 261,765 at 261,777.
194 [1989] BCLC 520 at 553-554.
195 See also Re Brian D Pierson [2001] BCLC 275.
196 Section 588J and section 1317H of the Australian Corporations Act 2001.
354