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In New Zealand, misfeasance is governed by the same section, namely section 301,
which also deals with remedy for sections 135 and 136. The section provides for two
circumstances where courts can make an order. The first circumstance relates to a
director who has misapplied, or retained, or become liable or accountable for, money
or property of the company. 355 The second situation refers to a director who has
breached his duties to the company and caused loss to the company generally. 356 In
respect of circumstance one, the court may make an order to ‗repay or restore the
money or property or any part of it with interest.‘ 357 The court also has the power to
order to contribute ‗such sum to the assets of the company' under section
301(1)(b)(ii) for the breach falls under circumstance two. Consistent with the law on
misfeasance in other jurisdictions, an order made under circumstance one could be
made directly to the creditor who has made the application as opposed to being made
to the company for distribution according to pari passu. 358
The Australian misfeasance proceeding is governed by section 598 of the
Corporations Act which replaces the old section 305 in the Uniform Companies Act
(UCA) 1961. 359 It covers various liabilities such as fraud, negligence, default, breach
355 Section 301 (1) of the New Zealand Companies Act 1993.
356 Section 301 (1) of the New Zealand Companies Act 1993 states: "… or has been guilty of
negligence, default, or breach of duty or trust in relation to the Company, the court may….‖
357 Section 301(1)(b)(i) of the New Zealand Companies Act 1993.
358 See Mitchell v Haskell (1998) 8 NZCLC 216,559. The High Court made a distinction between the
two circumstances and stated at page 261,662, ―The irresistible inference is the reference to ‗the
money or property' (in section 301(1)(c) is a reference back to the money or property identified in
the first circumstance in the main body of section 301(1) and repeated in section 301(1)(b)(i). No
provision is made in section 301(1)(c) for the Court to order a payment by the directors to the
creditor of any part of the general damages sum that may otherwise be ordered under section
301(1)(b)(ii).‖
359
Section 598 (2) states: ― Subject to subsection (3), where, on application by an eligible
applicant, the Court is satisfied that:
(a) a person is guilty of fraud, negligence, default, breach of trust or breach of duty in relation to a
corporation; and
(b) the corporation has suffered, or is likely to suffer, loss or damage as a result of the fraud,
negligence, default, breach of trust or breach of duty;
the Court may make such order or orders as it thinks appropriate against or in relation to the person
(including either or both of the orders specified in subsection (4)) and may so make an order against
396