Court orders contempt proceedings to be brought in respect of possible breaches of embargo on draft judgment

The High Court has decided on its own initiative to issue contempt proceedings on the basis that certain posts on the Slack messaging platform and the forwarding of an email may have disclosed the substance of a judgment while it was still under embargo: Wright v McCormack [2022] EWHC 3343 (KB).

Where a court is to hand down a reserved judgment, the usual practice is to provide a copy of the judgment to the parties and their legal representatives a few days in advance on confidential terms. This is usually referred to as providing a judgment under embargo.

The courts have become concerned that violations of the embargo are becoming more frequent, and Sir Geoffrey Vos MR in R (on the application of Counsel General for Wales) v Secretary of State for Business, Energy and Industrial Strategy [2022] EWCA Civ 181 made clear that, in future, embargo breakers could expect to be the subject of contempt proceedings (see this recent post on Practical Law’s Dispute Resolution blog).

This decision underlines the need for caution in making any communications which may be seen as relating to a draft judgment, before it is handed down, even if the communication is phrased as a hypothetical and the case and/or judgment are not referred to expressly.

Background

The underlying claim concerned libel proceedings. The claimant, Dr Wright, claims to be Satoshi Nakamoto ("Satoshi"), the inventor of Bitcoin. The defendant, Mr McCormack tweeted and said in a recorded discussion that Dr Wright was not Satoshi and that his claims to be Satoshi are fraudulent. Dr Wright brought a claim for libel against Mr McCormack. Dr Wright established at trial that some of Mr McCormack's publications were defamatory and caused serious harm to his reputation at the time when they were made.

Dr Wright did not establish in the proceedings that he is Satoshi. He did not have to because, once a claimant shows that a publication is defamatory and has caused serious harm to his reputation, it is for the defendant to establish that the publication is true. Mr McCormack initially advanced a defence that what he said about Dr Wright was true (among other defences), but later abandoned that defence (and others). The reason he gave for doing so was that the cost of a trial on that issue would be prohibitive for him.

Ordinarily, a claimant in Dr Wright's position would be entitled to substantial damages. In this case, however, the Judge (Chamberlain J) decided that Dr Wright should have only nominal damages of £1. The reason was that, in an attempt to establish that Mr McCormack's publications had caused serious harm to his reputation, Dr Wright had, the Judge found, advanced a deliberately false case until shortly before trial. When the falsity was exposed, he changed his case, explaining that he had made inadvertent errors. The Judge rejected that explanation as untrue.

Embargo

Chamberlain J provided his judgment in the libel proceedings in draft to counsel under embargo on 26 July 2022, a few days before it was due to be handed down. The embargo was in the usual form and provided:

"IN CONFIDENCE

This is a judgment to which the Practice Direction supplementing CPR Part 40 applies. It will be handed down on 1 August 2022 at 12.00 noon. This draft is confidential to the parties and their legal representatives and accordingly neither the draft itself nor its substance may be disclosed to any other person or used in the public domain. The parties must take all reasonable steps to ensure that its confidentiality is preserved. No action is to be taken (other than internally) in response to the draft before judgment has been formally pronounced. A breach of any of these obligations may be treated as a contempt of court…"

Slack posts

During the evening of 26 July 2022, Dr Wright posted three messages on the "#bitcoin-general" channel of the MetaNet workspace of the Slack messaging platform. As explained by the judge, Slack is a platform designed for business use on which members can establish "workspaces" on which to communicate. Each workspace has "channels" dedicated to particular topics on which members can have conversations. The MetaNet workspace was set up by a company established to promote industry education in relation to Bitcoin Satoshi Vision ("BSV"), a product which Dr Wright and his business partner together promote. It has 340 active members. The "#bitcoin-general" channel has 290 members.

Dr Wright's posts were as follows:

"If a person would spend 4 million to receive a dollar plus and 2 million costs…

So the other side is bankrupt…

What would you think? (edited)"

"Ie.

The only thing that matters is crushing other side"

"Well.

I would spend 4 million to make an enemy pay 1."

Dr Wright argued that the purpose of the Slack posts was to encourage debate among members of the Slack channel and give an indication of his dogged approach to his opponents. He said that he did not recall ever mentioning to members of the channel that the usual practice was to provide parties with a draft judgment in advance of it becoming public and he did not believe that that practice would be common knowledge to them.

Email

On 28 July, a member of Dr Wright's legal team sent an email to him about other litigation. It was sent as a reply to an email containing a summary of the judgment. Dr Wright replied to the email copying in 5 other people who were not entitled to know the substance of the judgment.

Dr Wright said that he did not realise when copying others in that there was a summary of the judgment at the bottom of the email chain

Decision

Chamberlain J held that contempt proceedings should be commenced on the court's own initiative against Dr Wright and listed before another judge for directions and hearing.

Slack posts

The court was unable to accept, without further investigation, Dr Wright's explanation that the purpose of the Slack posts was "not to give any indication as to the outcome set out in the Draft Judgment", but merely to "encourage debate". It considered that there was a real prospect that a court might find that, by posting those messages, Dr Wright was disclosing, and intending to disclose, the substance of the judgment contrary to the terms of the embargo, which had been explained to him. Three contextual matters were important in reaching that conclusion:

• Dr Wright's own estimate of his costs was close to £4 million and anyone with a close interest in the litigation would be likely to know about it.
• The case had attracted considerable publicity among those with an interest in cryptocurrency.
• The 290 members of the Slack channel would all have been people with an interest in cryptocurrency in general and BSV in particular. Anyone with a passing knowledge of how High Court litigation works would know that parties are usually sent an embargoed copy of the judgment in advance of it being handed down, regardless of whether they had been told this by Dr Wright.

Email

Copying the email to other recipients appeared to be a further breach of the embargo by Dr Wright, which may amount to a further contempt of court, depending on the view the court takes as to his state of mind when he forwarded the relevant email.

Note: In a subsequent judgment in this case, reported on Westlaw at [2023] 4 WLUK 54, a Divisional Court (Warby LJ and Nicklin J) held that it was no longer in the public interest to pursue the contempt proceedings against Dr Wright. Although it considered that there was still a case to answer, more complex legal issues had since arisen since the proceedings were initiated. The claimant had apologised for his actions and it was unlikely that he would breach any further embargo, and therefore it was likely that any sanction imposed for contempt would be limited. In those circumstances, the cost of the process outweighed any tangible benefit to the interests of justice.