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extent a director should be required to contribute to the assets of the company. 218 At
this stage, the court should refer to section 301 and the degree of director‘s
culpability will be relevant. 219
It is important that the court‘s order should reflect the nature of liability of each duty
it intends to remedy. For insolvent trading, the essence of liability is to ensure
creditors would be able to claim as much as possible for the loss they have suffered.
Hence, it was apt that courts had stated that the amount of contribution should be the
net deficiencies between the date of liquidation and the date that trading should have
stopped. 220 By contributing to the assets of the company, it increases the pool of
assets for creditors‘ claims.
The case of Fatupaito v Bates 221 illustrates the same position when the High Court
held that the duty under section 135 is owed to the company rather than to any
particular creditor. 222 Cases have decided that the interests of the company are the
interests of the shareholders. 223 In this respect, it is essential to ascertain whether the
imposing of a duty to prevent insolvent trading or reckless trading when the
company is insolvent is in the interests of shareholders. Much literature has been
written on this subject which concludes that it would not be in the interests of
shareholders to stop trading when the company is insolvent because at this stage the
218 Peace and Glory Society Ltd (in liq) v Samsa [2010] 2 NZLR 57at [48] ;the same approach was
adopted in Mason v Lewis [2006] 3 NZLR 225.
219 Peace and Glory Society Ltd (in liq) v Samsa [2010] 2 NZLR 57at [64].
220 See Re Produce Marketing Consortium (No 2) [1989] BCLC 520; The decision in Lower v
Traveller [2005] 3 NZLR 479 and Mason v Lewis [2006]3 NZLR 225 also reveals the same
approach.
221 [2001] 3 NZLR 386.
222 See also section 169(3)(f) and (g) of the New Zealand Companies Act 1993 which states duty in
section 135 and section 136 are owed to the company and not shareholders.
223 Greenhalgh v Arderne Cinemas Ltd [1951] Ch 286 the duty is owed to general body of
shareholders and not to any particular shareholders. See Perceival v Wright [1902] 2 Ch 421.
However, in Coleman v Myers [1977] 2 NZLR 297, the court held where there are special
circumstances, the directors may owe duty to individual shareholder.
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