High Court Declines To Vary Embargo On Draft Judgment To Allow It To Be Shared With A Third Party

In a recent decision, the High Court took a dim view of the claimant's application to widen the embargo on a draft judgment awarding it substantial damages, where the claimant's aim was to seek to recover sums from a third party which was likely to be embarrassed by certain findings in the judgment: New York Laser Clinic Ltd v Naturastudios Ltd [2019] EWHC 2892 (QB).

The issue arose in the context of a claim for breach of collateral warranty relating to the supply of laser hair removal devices to be used in the claimant's business (see our blog post on the substantive aspects of the decision here). The claimant alleged that there were serious defects in the devices supplied by the defendant, which were manufactured by a third party called Formatk. The claimant asked the court to vary the usual embargo so that it could provide a copy of the draft judgment to Formatk, in the hope that Formatk might wish to provide money to settle the proceedings and avoid the embarrassment of the judgment being released.

The court's decision suggests that, although the court has a discretion to widen the terms of embargo relating to a draft judgment, it is unlikely to do so where the purpose of the request is to enable a party to put pressure on a third party to settle the dispute and avoid judgment being handed down. That will apply with even more force where the judgment addresses issues that may be of general importance, such as the court's conclusions in the present case on the requirements for a claim for breach of collateral warranty.

Ramyaa Veerabathran, an associate in our disputes team, considers the decision further below.

Background

Where the court reserves its judgment, the draft judgment will normally be circulated to the parties under “embargo”, ie on the basis that it is to remain confidential to the parties and their legal representatives. The purpose is so that they can review the draft for minor errors such as typos or obvious factual mistakes, and to allow them time to consider whether any consequential orders will need to be sought.

Practice Direction 40E of the Civil Procedure Rules (PD 40E) sets out the restrictions that apply where a draft judgment is provided under embargo. In summary, it forbids the parties and their legal representatives from: (a) disclosing the draft judgment or its substance, or using it in the public domain; or (b) taking any action in response to the judgment, other than internally, before it is handed down...