Petition of PE LTD and another for orders under Section 1 of the Administration Justice (Scotland) Act 1972 (Court of Session)

Factual and Procedural Background

The petitioners, Company A and another, sought and obtained an order under section 1 of the Administration of Justice (Scotland) Act 1972 on 20 May 2025. The order appointed commissioners with broad powers to enter specified residential premises of two individuals, the respondents, and to search for and take possession of material identified in a schedule to the petition. The respondents were obligated to permit entry, provide information, and not interfere with the material. The order also authorised solicitors from the petitioners' legal representatives to assist the commissioners. The order was executed with materials recovered, including full copies of computer materials. Subsequently, the respondents enrolled a motion seeking recall of the order, return of materials, destruction of copies, dismissal of the petition, and expenses in their favour. The petitioners opposed the motion. The matter was heard on 25 and 26 June 2025.

The petition broadly alleged that the respondents infringed copyright and breached confidentiality duties by uploading proprietary computer code of the petitioners to a public website and setting up a competing business using confidential information. The respondents contested that the petitioners failed to disclose material facts when seeking the order and argued for its recall or refusal if reconsidered de novo.

Legal Issues Presented

1. Whether the petitioners breached their duty of full and candid disclosure in seeking an ex parte order under section 1 of the Administration of Justice (Scotland) Act 1972.
2. Whether the order obtained on 20 May 2025 should be recalled due to alleged non-disclosure of material facts.
3. Whether, if considered de novo, the petitioners met the test for granting the section 1 order.
4. Whether the respondents are entitled to the return of materials seized and destruction of copies made under the order.
5. Whether expenses should be awarded in favour of the respondents.

Arguments of the Parties

Respondents' Arguments

• The petitioners failed to disclose eight material matters relevant to the court's decision, including the first respondent's prior grievance against the petitioners and candid admissions regarding possession of petitioners' material.
• The petitioners misleadingly claimed "functional identity" between their source code and the code posted by the first respondent, when in fact there were significant differences.
• The petitioners inaccurately asserted that comments in the two code sets were identical, despite differences and evolving positions in affidavits.
• The petitioners did not disclose the existence of academic papers from which both code sets may have been derived, which could undermine the claim of copying.
• The petitioners failed to disclose publicly available North Sea data sources relevant to the respondents' software demonstration.
• The petitioners misrepresented the culture of confidentiality within their organisation.
• The petitioners wrongly described the software demonstrated by the second respondent as a "facsimile" of their product.
• Concerns were raised about the conduct of personnel from a firm assisting the commissioners, suggesting possible improper knowledge of evidential significance.
• If considered de novo, the respondents contended the order should not have been granted due to lack of justification, weak case against the second respondent, lack of title by the second petitioner, and presumption of respondents' honest conduct.

Petitioners' Arguments

• The petitioners submitted that the Lord Ordinary had the petition, affidavits, and productions before granting the order, including comparisons of code comments and product features.
• The petitioners maintained that their case was that the respondents copied proprietary code, implicitly accepted by the first respondent's affidavit.
• The petitioners argued the non-disclosures raised by respondents were either irrelevant, disputed facts, or not material to the court's decision on the order.
• The petitioners explained the term "functionally identical" as meaning that although coding languages differed, the function of each line was identical, clarifying it was not a retraction but a clarification.
• The petitioners contended that differences in comments did not undermine the inference of copying as comments served as an aide memoire and were sufficiently similar.
• The petitioners denied that academic papers undermined their claim, asserting the similarity in code structure and expression went beyond shared academic sources.
• The petitioners accepted "facsimile" was an imprecise term but argued it was not relied upon as a core claim and the judge had been shown relevant productions highlighting similarities.
• The petitioners denied any improper conduct by experts assisting the commissioners, noting lack of evidence beyond a single overheard comment.
• They maintained that the second petitioner had title to sue and the case against both respondents was strong.
• The petitioners asserted that even if considered de novo, the order would be justified given the circumstances and ongoing proceedings for copyright infringement and breach of confidentiality.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the fundamental duty of full and candid disclosure when seeking an ex parte order, particularly where the order intrudes on privacy rights. It stressed that all material facts, favorable or unfavorable, must be disclosed to ensure fairness and proper balancing of interests. The court noted that while urgency may exist, it does not excuse non-disclosure.

Upon examination of the petition and affidavits, the court identified three key areas of inadequate disclosure: the claim that the petitioners' code and the GitHub code are "functionally identical," the assertion that comments in both codes are identical, and the description of the software demonstrated by the second respondent as a "facsimile" of the petitioners' product. The court found that these statements created misleading impressions that were not sufficiently qualified or disclosed at the time the order was granted.

The court observed that the term "functionally identical" was used in a manner likely to mislead the judge into believing the codes were the same except for programming language, whereas later affidavits clarified significant differences existed. The court held that it was not appropriate for the petitioners to withhold this qualification and rely on their own assessment that the differences were irrelevant. Similarly, the assertion of identical comments was undermined by later admissions that many comments differed in wording, which was material given that identical comments support the inference of copying.

The use of the word "facsimile" was found to create an incorrect impression of exact replication of software, which should have been clearly disclosed as imprecise. The court emphasised that the cumulative effect of these non-disclosures undermined a core element of the petitioners' case and the inferences drawn against the respondents.

While some other non-disclosures were considered either immaterial or involved disputes of fact, the court was concerned that the petitioners made a deliberate decision to withhold certain material facts, which is particularly serious given the intrusive nature of the order.

The court rejected the petitioners' invitation to consider the matter de novo and grant the order afresh, noting that the scope of the order sought was very wide and not supported by averments in the petition. The court also noted the principle that a party should not benefit from their wrongdoing and that the importance of full disclosure must be upheld.

Regarding the conduct of experts assisting the commissioners, the court found the evidence insufficient to form a concluded view.

Holding and Implications

The court RECALLED the order granted on 20 May 2025. It directed the petitioners and commissioners to:

• Secure the immediate return of the respondents' property and documents;
• Destroy permanently any copies made of the same;
• Certify to the court clerk that these steps have been taken.

The court dismissed the petition and awarded expenses in favour of the respondents on a party/party basis. It found no grounds for an agent/client expenses award against the petitioners, as their conduct was not unreasonable or incompetent.

The decision directly affects the parties by nullifying the intrusive order and returning seized materials to the respondents. No new legal precedent was established; rather, the ruling reinforces established principles regarding the duty of full disclosure in ex parte applications and the balancing of privacy rights against urgent enforcement measures.