A recently reported judgment of the Outer House of the Court of Session has underscored the importance of compliance with the duty of full and frank disclosure (often referred to as the duty of candour) in ex parte hearings.
In May 2025, PE Limited and others (the petitioners) obtained an order under section 1 of the Administration of Justice (Scotland) Act 1972, allowing them to take possession of a code which had been published by two former employees (the respondents) on GitHub, a public software sharing platform. The petitioners were concerned that the respondents were setting up a competitor business and using the petitioners’ source code for it, purportedly infringing intellectual property rights and breaching contractual duties of confidentiality in the process.
Upon enrolling a motion for recall of the order, however, the respondents argued that the petitioners had failed to disclose eight material factors in their motion and during the course of the ex parte
hearing thereon. Lord Lake recalled the section 1 order, requiring the petitioners to return the code and destroy all the copies that they had taken possession of.
Why was this the outcome?
The fact that a party seeking an order ex parte has duty of candour was not in dispute. Lord Lake put the rationale for this shortly: parties should be able to fully participate in judicial proceedings, except where there is compelling reasons for this not to be so, such as urgency or where harm is sought to be prevented. Where there is an exception, the court should be furnished with all relevant legal, factual and procedural material (including any points of dispute) to ensure the interests of the absent party are sufficiently protected. This requirement may be enhanced where the absent party’s rights, such as their right to privacy, are at risk of infringement where the order sought is indeed granted.
In this case, Lord Lake decided that the duty incumbent upon the petitioners had not been fulfilled in relation to three of the matters highlighted by the respondents:
- The code published on GitHub had been inaccurately described by the petitioners as “functionally identical” to the petitioner’s source code;
- The petitioners had inaccurately described the comments in the code published on GitHub as being identical to the petitioner’s source code; and
- The petitioners had inaccurately described the software demonstrated by one of the respondents in an online video presentation as a “facsimile” of the petitioners’.
Lord Lake emphasised that where there exists an evidential dispute of which a party is aware, or where a party has an opinion which is central to a case at large, but which could be disputed or is a matter for judgment by the court, the existence of the dispute or the potential for dispute must be disclosed. This had not been done by the petitioners in relation to the first two points. Regarding the word “facsimile”, the Lord Ordinary found its use by the petitioners to have been positively misleading. The foregoing justified recall of the section 1 order.
Why does this matter?
Ultimately, the judgment is a reminder of the importance of fulfilling the duty of candour where orders are sought ex parte. The Lord Ordinary refused to consider the matter de novo, citing the reason that a party should not benefit from their wrongdoing nor should the court undermine the importance of disclosure in these circumstances. The case comes in quick succession to two Outer House judgments reported in 2024 where orders made ex parte were challenged on the basis of non-disclosure: Mex Group Worldwide Limited v Ford [2024] SLT 901 and McAllister, Petitioner [2024] CSOH 97. In the latter case, Lord Braid recalled an order appointing an interim judicial factor to a family business, on the basis that the duty had not been fulfilled. Similarly, he refused to consider the matter de novo.
Key Takeaways
- The duty of candour is the direct corollary of the loss of a party’s right to be heard in ex parte hearings;
- The duty of candour, where it arises, is absolute – it cannot be overridden by circumstances such as urgency;
- The duty requires disclosure of any matter which is reasonably capable of affecting the decision to be made – the scope of the duty is, therefore, broad;
- Where it is found that the duty has not been fulfilled, the court has discretion as to whether it recalls any order, and where it does so, whether to consider the matter de novo. In relation to the latter, the court will have regard to whether the non-disclosure was deliberate or reckless, or was merely careless or inadvertent;
- The duty requires a party to make proper inquiries regarding the matters put in issue in an ex parte
application – it is not a defence to non-disclosure that the party did not know something that they ought to know;
- Lord Lake suggested in his postscript that it may be advantageous to record ex parte hearings to avoid a situation arising in which there is a possibility for dispute about the standard of disclosure during an ex parte hearing. Whether this suggestion will be adopted by the Court of Session remains to be seen, but could improve transparency if so.
The case reaffirmed the importance of obtaining specialist commercial litigation advice where court orders are urgently sought. Expert consideration of what could be material and therefore caught by the duty is required, lest risking any order obtained ex parte being recalled and potentially, opportunity lost for its consideration afresh.
