Claimant wanted to use draft ruling to extract settlement

Cavanagh: Request offends against the principle of open justice

A High Court judge has deprecated a claimant’s request for a third party to review a draft judgment so that it could have the chance to pay money to suppress publication.

Mr Justice Cavanagh said such a move was “wrong in principle”.

New York Laser Clinic Ltd v Naturastudios Ltd [2019] EWHC 2892 (QB) was a successful claim for damages for breach of collateral warranty arising out of statements made on behalf of the defendant which induced the claimant to take delivery of six laser diode devices, called Magma Lasers, to use in its aesthetic laser hair removal business.

The claimant contended that the lasers did not live up to the assertions made about their performance and benefits, and had to be withdrawn from service. The judge awarded damages of nearly £3.9m.

In a postscript to his ruling, Cavanagh J said claimant counsel Juliette Levy had asked him to widen the usual group that could see the draft judgment so as to enable the claimant to supply a copy to Formatk, the manufacturers of the Magma Lasers.

He explained: “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.”

This was against the background of concerns about whether the defendant would be willing and able to pay the damages awarded.

The judge refused, on several grounds. “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…

“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.”

Cavanagh J recounted that the purpose of circulating draft judgments, as said by the Court of Appeal in the 2000 case of Prudential Assurance Company Limited v McBains Cooper and others, was to introduce an orderly procedure for the delivery of reserved judgments.

It also provided that, where an action was settled after a draft judgment has been circulated, the judge has a discretion whether or not to publish it to avoid powerful defendants picking and choosing which judgments they were happy to see published, or because it 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.”

The judge also observed that the request was “in stark contrast” to what was said in opening, when Ms Levy said the claimant wanted a judgment on the merits, rather than a strike-out, because it wanted other people to know the dangers that these machines posed.

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