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divergent approaches by the courts in New Zealand on the issue of remedies are viewed
as being unpredictable and inconsistent with the legislation. 62 This is because the
statutory provisions lack any formula to assess damages and the courts have wide
discretion to determine the quantum of damages. 63
The different interpretations made by the court also raise the question of the effectiveness
of the provisions as a tool to compensate creditors. The UK wrongful trading, for instance
attempts to serve both the private and public functions although the current judicial
developments make it clear that the provisions are achieving neither function. 64 There is a
tendency by the courts to ignore statutory provisions, particularly in cases relating to
preferences, and the decisions often indicate different results from those envisaged by the
legislation.
In the area of remedies available to creditors, consequent to breach of duty by directors,
most articles focus on shareholders and literature which deals with creditors‟ remedies
only discusses the effect of breaching provisions of wrongful/insolvent /reckless trading.
In relating to Malaysian law, discussions on fraudulent and insolvent trading in company
law books have been very brief and no attempt was made to discuss the remedies in detail.
Hence, there is the need to examine the area and analyses of other jurisdictions are
necessary in order to find the best reforms in Malaysia.
In addition to compensating creditors who have suffered losses as a result of a director‟s
action, disqualification injects an element of public deterrent. Farrar and Tennent explore
the question of the level of directors‟ unfitness that justifies imposing disqualification and
Directors and a Remedy for Creditors: The Special Case of Corporate Insolvency” (1999) 20 Co Law 80;
Andrew Hicks “Advising on Wrongful Trading: Part 1” (1993) 14 Co Law 16; Andrew Hicks “Advising
on Wrongful Trading: Part 2” (1993) 14 Co Law 55; Rebecca Parry “The Destination of Proceeds of
Insolvency Litigation” (2002) 23 Co Law 49.
62 Noonan and Watson above n61.
63 Ibid.
64 Parry above n61.
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