Court orders contempt proceedings to be brought regarding possible embargo breach
In Wright v McCormack  EWHC 3343 (KB), the High Court decided of its own initiative to issue contempt proceedings in relation to messages posted by the litigant on the instant messaging programme Slack.
The claimant, Dr Wright, claims to be Satoshi Nakamoto (Satoshi), the inventor of Bitcoin. Mr McCormack, the defendant, tweeted and said in a recorded discussion that Dr Wright is 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 they were made.
However, Dr Wright has not established that he is Satoshi. 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. While Mr McCormack initially put forward a defence that what he said about Dr Wright was true (amongst other defences) he later abandoned that defence (and others). His explanation for doing so was that the cost of a trial on this issue would be too expensive for him.
Ordinarily, a claimant in these circumstances would be awarded substantial damages. However, the court awarded Dr Wright nominal damages of £1. The court ruled that, in an attempt to establish that Mr McCormack’s publications had caused serious harm to his reputation, Dr Wright had submitted a deliberately false case until shortly before trial. When the falsity was exposed, he changed his case and said that he had made inadvertent errors. However, the Court rejected that explanation as untrue.
Breach of the embargo
A draft judgment was sent to the lawyers acting for the parties on 26 July 2022, a few days before it became public. At this stage, it was subject to the usual embargo not to make the judgment public before the judge hands it down. The draft judgment included the usual warning:
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…”
On 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. 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 established by MetaNet ICU Ltd, a company established to promote industry education in relation to Bitcoin Satoshi Vision (BSV), a cryptocurrency product which Dr Wright was promoting. The “#bitcoin-general” Slack channel had 290 members.
Dr Wright’s messages 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)"
The only thing that matters is crushing other side"
I would spend 4 million to make an enemy pay 1."
Dr Wright said that the purpose of the post was not to give any indication of the draft judgment. Rather, it was to encourage debate amongst the members of the Slack channel and to give an indication of Dr Wright’s dogged approach to his opponents in the digital assets sphere more generally. Dr Wright also stated that he did not recall ever mentioning to members of the Slack channel that the usual practice of the Court is to circulate a draft version of the judgment to the parties in confidence before it becomes public, and he did not believe that this would be common knowledge to the Slack channel members.
The Court evaluated Dr Wright’s explanation in light of three important contextual matters:
- Anyone who had been following the litigation would know that Dr Wright’s own estimate of his costs was close to £4 million.
- The case had attracted considerable publicity among those with an interest in cryptocurrency in general and BSV in particular.
- The members of the Slack channel on which Dr Wright’s posts appeared would have all been people with an interest in cryptocurrency. Any such person, with even a passing knowledge of how High Court litigation in England works, would know that generally the parties to a judgment are sent an embargoed copy of the judgment in advance of its being handed down.
Against that background, the Court was unable to accept, without further investigation, Dr Wright’s explanation that the purpose of his Slack posts was to “encourage debate”. The Court 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 clear terms of the embargo.
The importance of keeping draft judgments confidential was recently emphasised by Sir Geoffrey Vos in R (Counsel General for Wales) v Secretary of State for Business, Energy and Industrial Strategy  EWCA Civ 181,  1 WLR 1915. He made clear that in the future those who break embargo can expect to be subject to contempt proceedings. For more info.
In the Wright v McCormack case, the Judge (Chamberlain J) said:
“The practice of issuing judgments under embargo is an unusual feature of litigation in this jurisdiction. It has many benefits, which can only be achieved if parties abide scrupulously by the terms of the embargo. The Court of Appeal has signalled that breaches are likely to result in contempt proceedings. In my judgment, it would not be appropriate to take no further action in this case, where there is evidence showing that a litigant in High Court proceedings may have acted in deliberate breach of the embargo”.
Therefore, this judgment is a timely reminder that it is important to advise clients to be cautious and avoid any communications that may be seen to refer to an embargoed judgment. Even if a client does not explicitly refer to the judgment, they may still fall foul of the embargo and contempt proceedings may be issued against.