Ethical obtuseness, reprehensible behaviour and unreasonable attitudes. These are just some of the phrases used by a Federal Court judge last week in a damning assessment of an Australian Prudential Regulation Authority (APRA) investigation into a small insurance company facing a shortfall in its run-off claims.

Justice Nye Perram questioned the motives and methods of APRA officers in their pursuit of a computer hard drive belonging to Australian Family Assurance (Austfam) Chairman Ross Porter.

He awarded full reimbursement of Mr Porter’s costs of a court challenge to APRA and ordered a copy of his findings to be sent to APRA Chairman John Laker.

Australian Family Assurance has been in run-off since 2000, and in July was placed under the control of a judicial manager after the company appointed to manage the run-off account, Transpacific, went into liquidation, threatening a shortfall in the run-off claims funds [insuranceNEWS.com.au, August 3].

On August 3 APRA ordered Mr Porter’s solicitor, Fiona Shand, to produce his computer hard drive to their office within six hours and 10 minutes. The order – which carried criminal penalties for non-compliance – had originally provided two days for this to happen.

On August 13 APRA revoked the notice but ignored Ms Shand’s attempts to obtain a Federal Court order which would remove her exposure to a criminal charge.

Describing APRA officers’ attitude as a “lamentable posture… indicative of an ethical obtuseness”, Justice Perram made the unusual instruction of ordering APRA to pay Mr Porter’s court costs in full.

He said the plaintiff “was forced to commence proceedings to defend against particularly outrageous conduct”.

[Also see ANALYSIS].