Orders for production and recovery of documentation in anticipation of litigation are a particularly useful tool for Pursuers when preparing their case for litigation. When these orders are sought ex parte, only the Pursuer’s argument is considered by the Court. Accordingly, the Pursuer has a duty of full and frank disclosure. That duty is explored, and the impact of any breach considered and contrasted with the position in England, in the undernoted decision.
Note by David Archer in Petition of Petroceltic Resources Limited
The Noter sought recall of an ex parte order, granted in favour of the Petitioner. He and three other members of his immediate family were the Respondents in the Petition. They held positions of responsibility with the Petitioner and their subsidiary companies. The Petitioner alleged that the Respondents had unlawfully diverted and extracted funds.
Following the grant and execution of the order, it came to light that the Petitioner had not disclosed a number of relevant matters. The Noter submitted that this non-disclosure was misleading, as it presented the Court with an incomplete picture. It was further submitted that the non-disclosure was egregious. The matters were known about by the Petitioner at the time the order was sought. The Noter moved for recall of the order.
The Petitioner accepted that the matters should have been disclosed. They submitted that the failure to give full disclosure was caused by miscommunication and not deliberate. Attention was drawn to the voluntary disclosure of the failure once discovered. Further, the Petitioner queried the utility of recalling the order, as the documentation had been recovered and knowledge gained by the Petitioner.
Lady Wolfe found that though in Scots law there is a duty of full and frank disclosure, non-disclosure did not inevitably require recall of the order granted, unlike in England. The Court retained a discretion. Lady Wolffe accepted that the non-disclosure was non-deliberate and the legal advisers and counsel acted responsibly in bringing the breach of duty to the attention of the Court promptly. Given this, Lady Wolfe determined that it would be “too narrow a focus” to reconsider the order granted on the hypothetical scenario that the non-disclosed matters had been before the Court when the order was sought. Other factors required to be considered;
• the circumstances resulting in non-disclosure (and degree of culpability),
• subsequent use of documentation recovered,
• passage of time,
• subsequent conduct of parties, and
• progress of related litigation.
Considering the above factors, Lady Wolfe determined that a recall of the order “in total” would not be in the interests of justice.
This decision is a salutary reminder to those Solicitors and Counsel acting for parties seeking ex parte orders that they have a “stringent professional obligation” to disclose all relevant factors, favourable or unfavourable.
The consequences of non-disclosure in Scotland may not be as ‘absolutist’ as in England. The Scottish Courts will weigh up the above factors when determining any application for recall, to ensure the integrity of the orders pronounced and to prevent a party benefiting from a breach of their duty of full, fair and accurate disclosure of material information.
On February 26, 2019