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phrase "the court may disqualify a person…up to 7 years." The New Zealand and the
Malaysian provisions share the same period of disqualification, namely ‗not
exceeding 5 years,‘ as expressed in section 385(4) and section 130A respectively.
It can be seen from the period of disqualification a court can set on a person, that
Australia has the strictest provision in situations where a declaration has been made
for breach of a civil penalty provision including insolvent trading, which allows a
court to impose a lifetime disqualification. The UK provision on disqualification for
participation in wrongful trading in comparison only permits the maximum period of
15 years. Nevertheless, it is noted that the civil penalty provision in section 1317E
consists of various circumstances and is not confined to insolvent trading only.
The English Court of Appeal in Re Sevenoaks Stationers (Retails) Ltd, 319 laid down
guidelines or principles as to the length of disqualification, depending on the
seriousness of the director‘s act. The court provides that the minimum bracket of two
to five years should be reserved for cases which were relatively not serious. The top
bracket of 11 to 15 years should be reserved for serious cases and the middle bracket
of 6 to 10 years should apply to serious cases that did not deserve the maximum
sentence. 320
The Australian case of Commissioner for Corporate Affairs v Ekamper 321 indicated
that the same principles should be applied when determining the appropriate length
319 [1991] BCLC 325at 328
320 Dillon J in the case confirmed that non-payment of crown debts should not be treated as an
automatic ground for disqualification and is no more serious than failure to pay any other debts.
His Lordship thus reduced the period of disqualification from seven years to five years. The trial
judge had found against the director for failure to make annual returns in respect of all the five
insolvent companies when, in fact, only two companies were alleged to have failed to file such
documents. Further, the Court of Appeal found that a much more serious error on the part of the
trial judge was his failure to appreciate the allegation of failure to keep proper accounting records
in respect of one company.
321 (1987) 12 ACLR 519.
388