THE COURT WOULD NOT EXTEND THE EMBARGO ON A DRAFT JUDGMENT TO ALLOW CLAIMANT TO SEEK TO RECOVER SUMS FROM A THIRD PARTY

The interesting thing about writing a blog on civil procedure is that – despite the apparent narrowness of the subject –  new issues come up all the time.  You can never say you have “seen it all”.  I was reading the judgment of Mr Justice Cavanagh in New York Laser Clinic Ltd v Naturastudios Ltd [2019] EWHC 2892 (QB) (which has some interesting sections on witness evidence) when I was surprised by the “postscript”.  The claimant applied for an extension of the general “embargo” on draft judgments, the judge was not impressed…

“It is wrong in principle to give a third party the opportunity to review a judgment in order to give it the opportunity to pay money to suppress the judgment”

THE CASE

The claimant obtained a substantial damages award against the defendant in relation to defects in laser machines that the defendant had supplied. The defendant did not attend trial.  A reasoned judgment on damages was given.

THE APPLICATION

The Postscript records an an application to extend the “embargo” on disclosure of the judgment.

 

POSTSCRIPT: THE EMBARGO ON THE DRAFT JUDGMENT
  1. At the conclusion of her closing submissions, Ms Levy asked me to vary the normal embargo which is imposed when a draft judgment is circulated. Ordinarily, of course, when a draft judgment is circulated so that counsel can review it for typos etc, the draft is confidential to the parties and their legal representatives. The parties and their legal teams are not permitted to show the draft to anyone else, or to tell anyone else of the outcome, in advance of the formal handing down of the judgment some days later. The parties are not permitted to take any action in response to the draft judgment until it has been formally handed down. All of this is consistent with CPD PD 40E. The parties and their legal advisers are warned that, if they breach the embargo, this may be treated as contempt of Court.
  2. The Court has a discretion to vary the normal embargo. This is sometimes done if there is a third party which is not a party to the proceedings but which has a direct interest in the proceedings. In my experience this has been done, for example, where a public authority that is the nominal Defendant in a test case is really acting on behalf of a Government Department, or where a trade union has brought a claim via a test case claimant. In such cases, permission might be given for the draft to be shown in advance to the Government Department or the trade union because they are, in substance if not in law, parties to the litigation, or there is a public interest in the third party being able to respond as soon as the judgment is handed down.
  3. The request which Ms Levy made on behalf of the Claimant is of an entirely different character. She sought my agreement to widen the embargo group so as to enable the Claimant to supply a copy of the draft judgment to Formatk, the manufacturers of the Magma Lasers. The only reason for such a course of action would be the hope that Formatk might be prepared to pay a sum of money to the Claimant to settle the proceedings, so as to avoid the embarrassment and potential commercial disadvantages resulting from a published final judgment which has negative things to say about the performance of, and results that can be obtained from, one of Formatk’s products.
  4. The background to this, of course, is that there are concerns about whether the Defendant itself will be willing and able to pay the damages that have been awarded to the Claimant.
  5. I am not prepared to widen the embargo group in this way. I accept that I have a general discretion to decide that the embargo group should be wider than the parties to the litigation and their legal advisers. There are sometimes good reasons why this should be done. However, for a number of connected reasons, I am not prepared to exercise such a discretion in the present case.
  6. The first reason is that, in my view, this offends against the principle of open justice. I think that is wrong in principle that a party which has been successful in obtaining a ruling in its favour from the Court should be enabled to make use to the draft judgment in order to seek to persuade a third party, which is likely to be unhappy with the judgment, to offer to make a payment to the party in return for the party’s co-operation in seeking to ensure that the judgment never sees the light of day.
  7. As for the present case, the basis for the Claimant’s claim has been that the Magma Lasers were not fit for purpose. The Claimant’s case is that they were, effectively, useless. There has been a public hearing in the High Court in which the Claimant has advanced a great deal of evidence in support of its contention that the Magma Lasers were not effective and, in some circumstances, could be dangerous. The Court has agreed with the Claimant’s contentions. Having put its case on that basis, and having been successful, the Claimant now asks the Court to assist the Claimant with an attempt to do a deal with Formatk which would have effect that the ruling of the Court, available in draft, would not be made public. In my judgment, it would be wrong for the Court to be complicit with a party to put pressure on a third party in this way. It would be wholly inconsistent with the spirit and purpose of CPD PD 40E, and with the purposes for which a draft judgment is supplied to the parties and their legal advisers. In Prudential Assurance Company Limited v McBains Cooper and others [2000] 1 WLR 2000, the Court of Appeal said that there was no indication in the practice statement that was the predecessor to CPR PD 40E that its purpose is to allow the parties to have more material available to them to help them settle their dispute. Rather, the Court said that its purpose is to introduce an orderly procedure for the delivery of reserved judgments, whereby the parties’ lawyers can have time to consider and agree the terms of any consequential order they may invite the Court to make and the process of delivering judgment can be abbreviated by avoiding the need for the judge to read the judgment orally in court (see page 2008). I would add that the other purpose is to enable the legal teams to draw the court’s attention to any typos or obvious errors in advance of the judgment being finalised.
  8. Even where, after a draft judgment has been sent to the parties, the parties compromise an action, the judge has a discretion whether or not to publish the draft judgment (see the Prudential Assurance case). In that case, Brooke LJ said that this discretion arose as a matter of public policy, because otherwise, “powerful defendants like insurance companies could pick and choose which judgments they were happy to see published and which judgments they were willing to pay money to suppress.“(page 2009). The same public policy consideration applies to the Claimant’s application in the present case. It is wrong in principle to give a third party the opportunity to review a judgment in order to give it the opportunity to pay money to suppress the judgment. Moreover, in the Prudential Assurance case, the Court of Appeal recognised that it may be appropriate to proceed to hand down the final judgment, in the public interest, where the case had been compromised after the parties had been given a draft judgment, if the judgment dealt with a point of general importance. In the present case, the consideration of the requirements for collateral warranties, and of the question as to whether loss of profits damages are available for breach in such cases, may be of general interest.
  9. The position is different where cases are compromised after the hearing is over but before the draft judgment is circulated: in such cases, it is generally inappropriate for the judge to hand down the final judgment. However, that is not this case: in the present case, the Claimant wants to review the draft judgment and then consider whether to take a step which would, as the Court of Appeal put it in the Prudential Assurance case, “suppress” the judgment.
  10. Furthermore, Formatk is not a party to the proceedings. Even if the Claimant were able to reach an accommodation with Formatk, I think that it would be necessary for a compromise to be reached with the Defendant before the possibility of avoiding a formal hand-down of the judgment would arise. I have no idea whether the Defendant has been consulted about this, or whether it would be prepared to do so.
  11. In any event, however, for the reasons already given, I do not think that this is an appropriate case for the Court to exercise its discretion to broaden the group that is given access to the draft judgment, simply in the hope that the Claimant might thereby be able to extract a settlement from the manufacturer.
  12. Finally, the position taken by the Claimant in closing is in stark contrast to what was said in opening. In opening, Ms Levy said that the Claimant wanted a judgment on the merits, rather than a strike-out, because the Claimant wanted other people to know the dangers that these machines pose.