In Pearce, in the matter of Bandiera Holdings Pty Ltd (Receiver Appointed) (in liquidation) v Bandiera Holdings Pty Ltd [2022] FCA 876, the Federal Court of Australia considered when a summons for the examination can require the production of any professional indemnity insurance policy against which the company might have a claim, even in circumstances where the examinee asserts that any potential claims against it were weak.

The Court usefully reaffirmed that liquidators only need to produce sufficient evidence to demonstrate the possibility of a cause of action against a third party in order to support a summons for examination for the production of documents related to that claim, such as potentially corresponding insurance policies. It is a relatively low bar to obtain an examination summons and it is not necessary to prove that the company has a good cause of action.

Further, the Court indicated that commercial sensitivity of documents without more is not a ground to refuse issuing a summons. Confidentiality concerns may be addressed by appropriate undertakings that allow a liquidator to use the material and give the examinee some comfort.

Useful further guidance was also provided by the Court about when an examinee may recover costs of compliance with a summons. The Court noted that it may make orders to reimburse an examinee for the costs of searching for and producing documents to comply with a summons (which is generally very limited). However, for an examinee to claim costs of compliance with a summons, it must produce clear and precise evidence as to the nature of the work undertaken and the time involved. Internal work-in-progress documents alone may not be sufficient.

Read the original article: It's a matter of policy: production of insurance policies and liquidators