diff --git a/ui/desktop/openapi.json b/ui/desktop/openapi.json
index ffd9dca2..cae67212 100644
--- a/ui/desktop/openapi.json
+++ b/ui/desktop/openapi.json
@@ -10,7 +10,7 @@
     "license": {
       "name": "Apache-2.0"
     },
-    "version": "1.0.27"
+    "version": "1.0.28"
   },
   "paths": {
     "/agent/tools": {
diff --git a/ui/desktop/src/components/GoosehintsModal.tsx b/ui/desktop/src/components/GoosehintsModal.tsx
index f7cab002..b8d66628 100644
--- a/ui/desktop/src/components/GoosehintsModal.tsx
+++ b/ui/desktop/src/components/GoosehintsModal.tsx
@@ -106,9 +106,12 @@ export const GoosehintsModal = ({ directory, setIsGoosehintsModalOpen }: Goosehi
         const { file, error, found } = await getGoosehintsFile(goosehintsFilePath);
         setGoosehintsFile(file);
         setGoosehintsFileFound(found);
-        setGoosehintsFileReadError(error || '');
+        // Only set error if file was found but there was an actual read error
+        // If file is not found, treat it as creating a new file (no error)
+        setGoosehintsFileReadError(found && error ? error : '');
       } catch (error) {
         console.error('Error fetching .goosehints file:', error);
+        setGoosehintsFileReadError('Failed to access .goosehints file');
       }
     };
     if (directory) fetchGoosehintsFile();