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11.3.7.2.3 Duration
The court also considers the length of time the company continues trading from the
date it should have ceased, and the amount of the contribution will increase the
longer the director waits. 197 Therefore, it is crucial for the court to determine the date
the company should stop trading and warnings from professionals would be relevant
to assist the court.
11.3.8 The Effects of the Court’s Order
In order for the law to be effective, it must provide an avenue for the aggrieved party
to take action against the wrongdoer or else the legal duty would be deemed as
nonsense. 198 The liability provision must be clear and assessable to the person who
wishes to bring action under the law. The law must not be cumbersome and difficult
to enforce which may deter the aggrieved party from bringing the action. Imposing
liability alone is not sufficient to make an effective law if it is not backed up by
adequate remedies. To have an adequate remedy means it must reach the person
intended to benefit from it and if there is any failure to comply with the contribution
order, the law must then provide an avenue to enforce the judgment.
The aim of enacting the fraudulent and wrongful trading provisions in the UK is
mainly to give remedies to creditors who have suffered losses or damages as a result
of the director‘s action. The Cork Committee, in its report, was also concerned with
the action of charge holders who would enforce their rights under the debenture at
the slightest hint of insolvency at the expense of the unsecured creditors. 199 The
197 Lower v Traveller [2005] 3 NZLR 479 at 499.
198 See Len Sealy ――Wider‖ Responsibility: Problems Conceptual, Practical and Procedural‖ (1987)
13 Monash Uni LR 164 at 177 ―A supposed legal duty which is not matched by a remedy is
nonsense.‖
199 Cork Report above n115 at [497-498].
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