MEX GROUP WORLDWIDE LTD AGAINST STEWART OWEN FORD AND OTHERS

Factual and Procedural Background

The petitioner, Company A, incorporated in Hong Kong, is the ultimate holding company of a group providing trading platforms for derivative trading investors, authorised in multiple jurisdictions but not in the United Kingdom. The respondents include several individuals and companies: Defendant 1, a businessman prohibited by the Financial Conduct Authority (FCA) from regulated activities; Defendant 2, closely connected to Defendant 1 and controlling several companies (Defendants 3 to 5) through which Defendant 1 allegedly conducts business contrary to the FCA prohibition; and Defendant 6, a Luxembourg-registered company nominally controlled by an individual but alleged to be a joint venture involving Defendant 1.

On 18 October 2023, the court granted an ex parte application by Company A under section 1 of the Administration of Justice (Scotland) Act 1972, authorising commissioners to enter the residences and business premises of the first five respondents to search for and seize specified documents. The seized materials are currently held by the court. The respondents moved to recall this order in April 2024.

The background involves a complex commercial dispute centered on an alleged unlawful means conspiracy by the respondents to injure Company A's interests. This conspiracy allegedly involved inducing a company, Mex Securities SARL, to renege on a lawful settlement agreement and consent order from the British Virgin Islands (BVI) courts dated December 2020. The petitioner claims substantial loss linked to this repudiation, including failed bond issues and reputational damage.

The respondents are also defenders in ongoing related actions involving multiple parties across jurisdictions including Scotland, Germany, Luxembourg, the BVI, and England and Wales. These proceedings concern disputes over investments, alleged fraud, and enforcement of settlement agreements.

Legal Issues Presented

1. Whether the section 1 order obtained by Company A was properly granted given the duty of full and frank disclosure required on an ex parte application.
2. Whether the petitioner had a prima facie case justifying the grant and maintenance of the section 1 order.
3. The appropriate response to alleged non-disclosure and misrepresentation by the petitioner in obtaining the section 1 order.
4. The scope and necessity of the section 1 order in relation to the alleged conspiracy and ongoing litigation.

Arguments of the Parties

Respondents' Arguments

• The section 1 order was obtained in material breach of the petitioner's duty of full and frank disclosure, warranting recall.
• The petitioner had no prima facie case against the respondents; allegations were speculative and unsupported.
• Non-disclosure included failure to reveal an FCA warning against the petitioner's group, the petitioner's principal's history of abusing court processes, prior knowledge of Defendant 1's FCA sanctions, misrepresentation regarding alleged bribes, incomplete disclosure of related BVI proceedings, and misleading information about the timing and urgency of proceedings.
• The order was overly broad in scope and unjustified given the true nature of the investment transactions involved.
• The alleged conspiracy was implausible, with legitimate business dealings explaining the communications and transactions cited by the petitioner.
• The claimed losses were unsubstantiated and likely advanced for strategic litigation purposes rather than genuine harm.

Petitioner's Arguments

• The section 1 order was properly granted ex parte as the documents sought were essential and at risk of destruction or concealment.
• The petitioner had a stateable and intelligible prima facie case, supported by the draft summons and underlying evidence.
• The alleged non-disclosures did not mislead the court, were either immaterial or related to matters that would require trial to resolve.
• The FCA warning did not apply directly to the petitioner as it was not authorised in the UK, and the warning was withdrawn in March 2024.
• The petitioner's principal's past litigation history was remote and had been disclosed in related proceedings.
• The petitioner was aware of Defendant 1's regulatory issues, and the case focused on undisclosed business relationships rather than regulatory history alone.
• The alleged bribe was a financial inducement in the form of investments, which the petitioner contended were fraudulent schemes; this was a matter for trial.
• The BVI proceedings were referenced in the draft summons and were not directly relevant to the section 1 order application.
• The petitioner maintained that the conspiracy involved inducing Mex Securities to breach the settlement and consent order, supported by communications and business relationships among the respondents.
• The petitioner disputed the respondents' characterisation of the investments and communications, asserting these supported the existence of a conspiracy.
• The petitioner's claim of loss was a factual matter for proof and did not undermine the prima facie case.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bell v Inkersall Investments Ltd [2006] CSIH 16, 2006 SC 507	Requirement of full and frank disclosure on ex parte applications; grounds for recall if non-disclosure is material.	Confirmed the importance of candour and the court's discretion in recalling orders obtained on false or incomplete disclosure.
JC Olsen v Forrest Estate Ltd (unreported, 1994)	Order for recovery of property obtained on false basis can be recalled to avoid abuse of process.	Supported recalling the section 1 order due to material non-disclosure.
Archer, Petr [2019] CSOH 15, 2019 SLT 267	Court's discretion in cases of non-disclosure; relevance of whether non-disclosure was innocent or deliberate.	Applied discretion in assessing the petitioner's candour and deciding on recall.
Brink's-Mat Ltd v Elcombe [1988] 1 WLR 1350	Consideration of non-disclosure and its consequences on court orders.	Referenced in assessing the nature of the petitioner's non-disclosure.
Lock International Plc v Beswick [1989] 1 WLR 1268	Recognition of the extreme intrusiveness of orders akin to Anton Piller orders.	Emphasized the need for careful scrutiny and full disclosure in granting intrusive orders.
Columbia Pictures Industries Inc v Robertson [1987] Ch 38	Impact and trauma caused by intrusive search orders.	Supported the requirement for full candour due to the seriousness of such orders.
Thermax Ltd v Schott Industrial Glass Ltd [1981] FSR 289	Paramount importance of full and frank disclosure in ex parte applications for search orders.	Reinforced the obligation on applicants to disclose all relevant facts.
Tugushev v Orlov [2019] EWHC 2031 (Comm)	English law on full and frank disclosure; penal approach to non-disclosure; limits on setting aside orders.	Guided the court's approach to non-disclosure and recall of the section 1 order.
Friel v Chief Constable of Strathclyde 1981 SC 1, 1981 SLT 113	No section 1 order should be granted without reasonable basis for proceedings.	Applied in assessing the petitioner's prima facie case.
Parks v Tayside RC 1989 SC 38, 1989 SLT 345	Section 1 orders require more than speculative or hopeful allegations.	Considered in evaluating the sufficiency of the petitioner's case.
Pearson v Educational Institute of Scotland 1997 SC 245, 1998 SLT 189	Requirement for an intelligible prima facie case for section 1 orders.	Set the standard for the petitioner's case, which was found satisfied.
Ted Jacob Engineering Group Inc v RMJM [2014] CSIH 18, 2014 SC 579	Clarified the standard of intelligibility for prima facie cases in section 1 applications.	Supported the court's acceptance of the petitioner's case at the application stage.
Moore v Greater Glasgow Health Board 1978 SC 123, 1979 SLT 42	Section 1 orders may be granted to specify pleadings more precisely; presumption that counsel have evidential basis for averments.	Applied to assume the petitioner's pleadings had proper evidential foundation.

Court's Reasoning and Analysis

The court began by reviewing the duty of full and frank disclosure incumbent on applicants for intrusive ex parte orders such as those under section 1 of the Administration of Justice (Scotland) Act 1972. It acknowledged the extreme nature of such orders, equating them to Anton Piller orders, and the resultant need for candour.

After detailed consideration, the court found that most alleged non-disclosures by the petitioner did not meet the threshold for materiality or deliberate misrepresentation. Specifically, the FCA warning regarding the petitioner’s group was not material as the petitioner was not regulated by the FCA and the warning had been withdrawn prior to the recall motion. Similarly, the petitioner's principal’s prior litigation history was remote and had limited relevance. The court was doubtful but not convinced that the petitioner deliberately misrepresented its knowledge of Defendant 1’s regulatory history.

The court also found that the alleged "bribe" was more accurately described as investments in bonds, which, while contested in their legitimacy by the petitioner, could not be treated as unlawful means at this stage without further evidence. The existence of ongoing proceedings in other jurisdictions was not highly relevant to the section 1 order application.

The court emphasized that matters of fact disputed on reasonable grounds should not be resolved at the recall stage, which is not a mini-trial, but rather the court must consider whether the application was misled by non-disclosure on a clear and summarily established basis.

Turning to the prima facie case requirement, the court applied the standard of intelligibility rather than a full merits assessment. It found that the petitioner had presented an intelligible case of an unlawful means conspiracy involving the respondents, particularly centered on the repudiation of a binding settlement and consent order by Mex Securities, and supported by communications and business relationships among the parties. The alleged conspiracy was difficult but not inherently unintelligible.

The court accepted that there was a risk of destruction or concealment of relevant material, a necessary condition for granting a section 1 order, and that the material sought related to matters likely to arise in the intended proceedings.

Accordingly, the court concluded that the petitioner's application for the section 1 order was properly made and that the order should not be recalled. It noted that even if the order were recalled, the petitioner could seek recovery of documents by other procedural means, but the tests for those differ and might not be met for all documents.

Holding and Implications

The court REFUSED the respondents' motion to recall the section 1 order granted on 18 October 2023.

The direct effect of this decision is that the section 1 order remains in force, and the documents seized pursuant to it remain in the custody of the court. The petitioner retains access to the seized material to pursue its commercial action. The court did not set any new precedent but reaffirmed the principles governing ex parte applications for intrusive orders, emphasizing the high threshold for recall based on non-disclosure and the relatively low threshold of intelligibility for a prima facie case in section 1 applications.