In three recent decisions the courts have examined the limits on a liquidator’s ability to obtain court orders compelling third parties to provide documents held by them, as well as deciding on the recoverability of costs incurred by third parties complying with production orders that are made against them.
First, In the matter of Primeo Fund (In Liquidation) (Unreported, CICA No. 08 of 2016, 18 November 2016), the Cayman Islands Court of Appeal determined that a Cayman liquidator cannot use the letter of request process to compel a foreign bank to deliver up documents for the purpose of allowing the liquidators to give discovery in litigation to which that foreign bank was not a party. Amongst other reasons for a overturning a direction from the Grand Court that the JOLs’ issue a letter of request seeking documents from the foreign bank, the Court of Appeal confirmed that the liquidator’s statutory powers to compel the delivery up of certain documents cannot be used by the liquidator for the purposes of litigation to which the liquidator is a party, in circumstances where the documents do not serve any purpose in relation to the liquidation of the company.
Second, In the matter of Primeo Fund (In Liquidation) (Unreported, Cause No. FSD 30 of 2010, 21 November 2016), the Grand Court dismissed the liquidators’ application for orders compelling Primeo’s auditor, Ernst & Young (Cayman) to use “its best endeavours” to obtain documents held by Ernst & Young (Luxembourg). The liquidators’ application failed on numerous grounds, but most importantly the application pursuant to section 138 of the Law (by which the Court can require any person to deliver to a liquidator property or documents to which the company appears to be entitled) was dismissed on the basis that section 138 of the Law is not a mechanism which may be used for the purposes of discovery in litigation. Furthermore, the Court found the liquidators had failed to prove that EY Cayman was entitled, by way of agency or otherwise, to any documents in EY Luxembourg’s possession. Separately, the liquidators’ application pursuant to section 103 of the Companies Law (the power to compel co-operation with the liquidator) failed because EY Cayman did not fall into one of the categories of persons or entities which can be compelled to co-operate as EY Cayman was not a “professional service provider” as it had not contracted “to provide general managerial or administrative services to [Primeo]”.
Finally, in PricewaterhouseCoopers v SAAD Investments Company Limited (In Official Liquidation) & Anor  UKPC 33, the Privy Council rejected PWC’s claim for recovery of its preparatory costs of complying with production orders obtained against them by Bermudian liquidators, which orders had been subsequently set aside. Obiter comments had been made in the initial judgment to the effect that PWC would be entitled to such costs, and the liquidators’ failure to make provision for, or to give an undertaking in respect of these costs counted against them in that decision. However, the absence of undertakings (which the Privy Council held were not mandatory, nor implied) proved decisive in the final judgment on the point, as the Privy Council (by majority) failed to find any basis upon which PWC were entitled to recover their preparatory costs.