Craig Wright v Peter McCormack

This judgment deals with matters ancillary to the judgment I handed down on 1 August 2022: [2022] EWHC 2068 (QB), [2023] EMLR 2. The background is set out there. The following short summary suffices for present purposes.

Craig Wright claims to be Satoshi Nakamoto (“Satoshi”), the inventor of Bitcoin. Peter McCormack 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 when they were made.

It is important to be clear that Dr Wright has not established that he is Satoshi. He did not have to, because in this jurisdiction, 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, I decided that he 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, an essential element of a defamation claim, Dr Wright had 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. I rejected that explanation as untrue.

As I noted in my judgment, this was not the first occasion on which Dr Wright’s evidence to a court has been found to be unreliable. I set out at [87]-[88] of my judgment some excerpts from the decisions of two United States federal judges, who came to the same conclusion. Since I gave judgment, my attention has been drawn to the observations of Butcher J, sitting in the Commercial Court in this jurisdiction, who found Dr Wright to be an unsatisfactory witness in many respects: Ang v Relantco Investments [2020] EWHC 3242 (Comm), at [49]. Subsequently, in proceedings between Dr Wright and Magnus Granath, District Court Judge Helen Engebrigtsen of the Oslo District Court in Norway held on 20 October 2022 that Mr Granath had “ample factual basis to claim that Wright had lied and cheated in his attempt to prove that he is Satoshi Nakamoto”.

Shortly after I gave judgment, RPC, the solicitors acting for the defendant, drew my attention to information which appeared to indicate a breach by Dr Wright of the embargo subject to which the draft judgment had been communicated to the parties.

There are, accordingly, four issues before me today:

I produced my judgment in draft a few days before it was handed down. It was sent to counsel under embargo at 3.06pm on Tuesday 26 July 2022 and had on its face the usual warning:

“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…”

The relevant Practice Direction supplementing CPR Part 40 is CPR 40E PD. It provides in material part as follows:

“2.4

A copy of the draft judgment may be supplied, in confidence, to the parties provided that –

(a)

neither the draft judgment nor its substance is disclosed to any other person or used in the public domain; and

(b)

no action is taken (other than internally) in response to the draft judgment, before the judgment is handed down.

…

2.8

Any breach of the obligations or restrictions under paragraph 2.4… may be treated as contempt of court.”

Later 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 product which Dr Wright and Calvin Ayre together promote. It has 340 active members. The “#bitcoin-general” channel has 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)”

“Ie.

The only thing that matters is crushing other side”

“Well.

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

Between 3.27pm on 29 July 2022 and 11.35am on 1 August 2022, Calvin Ayre (Dr Wright’s “mentor” and business partner) posted a number of tweets including one in the following terms:

“Just as Craig won in Satoshi trial in Florida and IEEE now accept he is Satoshi, he has won in UK also and many more will now come to this same fact based conclusion. the trolls of injustice are losing to truth”.

These matters were brought to the attention of Dr Wright’s solicitors, Ontier, by an email of 4 August 2022. They drew the matter to my attention on 5 August 2022 and filed a “report” on 11 August 2022. In the copy sent to Mr McCormack’s solicitors, parts of the report were redacted where reference was made to matters which Ontier considered to be privileged and/or confidential.

The report says this:

“17.

Dr Wright has informed us of the following:

17.1

The purpose of the post was not to give any indication as to the outcome set out in the Draft Judgment. The purpose of the post 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 generally; and

17.2.

Dr Wright does 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 does not believe that this practice would be common knowledge amongst members of the channel. As we explain below, there was nothing in Dr Wright’s message (or any other message posted at around that time) to indicate that a draft judgment was imminent or had been received.”

Attached to Ontier’s report were copies of the replies to his messages. Ontier say that these do not indicate that anyone thought Dr Wright was referring to this litigation or was in receipt of a draft judgment. That being so, Ontier say this:

“23… Dr Wright does not believe that his posts on the Slack Channel breached the Embargo and it was certainly not his intention to do so. However, to the extent that Dr Wright’s posts are or may be considered by the Court to be a breach of the Embargo, Dr Wright unreservedly apologises to the Court and wishes to emphasise that any such breach was entirely unintentional and inadvertent.”

As to Mr Ayre’s tweet, Ontier say this:

“28.

Mr Ayre has confirmed to us that:

28.1.

His view has always been that when Mr McCormack dropped his defence of truth, Dr Wright had proved that he had been defamed and had effectively won the litigation;

28.2.

He was not aware of the outcome of the litigation prior to the handing down of the Judgment at noon on Monday 1 August. This is notwithstanding the emails at paragraphs referred to at paragraphs 35 to 44 below. Given he did not know the outcome of the case, he could not have been in breach of the Embargo;

28.3.

His tweets were expressing his view that Dr Wright had already succeeded in the case when Mr McCormack dropped his defence of truth. Indeed, Mr Ayre had tweeted on various occasions prior to provision of the Draft Judgment that Dr Wright had been successful in the case. By way of example:

28.3.1.

Mr Ayre’s tweet of 19 May 2022 at 11:02 pm (BST), stated that the trial in these proceedings “…will be boring…Craig won already…this is only about how much money McCormack owes...”;

28.3.2.

Mr Ayre’s tweet of 24 May 2022 at 6:36 am (BST), stated that Dr Wright “…won this case as soon as McCormack dropped truth defense [sic] as this meand [sic] McCormack accepts Craig is not a fraud and is Satoshi. This trial is only how much Peter [McCormack] has to pay to Satoshi”; and

28.3.3.

Mr Ayre’s tweet of 15 July 2022 at 6:00 am (BST), stated that Dr Wright “won his case against McCormack, and Cobra and Kleiman and will win all others including the Antigua case with Ver”.

Paragraphs 35 to 44 of the Ontier report explain that, at 8.34pm on 28 July 2022, a member of the Ontier team sent an email to Dr Wright 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 five other people who were not entitled to know the substance of the judgment. He says that he did not realise that, at the bottom of the email chain, the email contained a summary of the judgment.

The importance of keeping confidential draft judgments circulated under the provisions of CPR 40E PD was recently emphasised by Sir Geoffrey Vos MR in R (Counsel General for Wales) v Secretary of State for Business, Energy and Industrial Strategy [2022] EWCA Civ 181, [2022] 1 WLR 1915. At [21], the Master of the Rolls said this:

“I should say that I have called this case into court because, amongst other reasons, the breaches that occurred here are not alone. I have become aware formally and informally of other breaches in other cases. It seems, anecdotally at least, that violations of the embargo on publicising either the content or the substance of draft judgments are becoming more frequent. The purpose of this judgment is not to castigate those whose inadvertent oversights gave rise to the breaches in this case, but to send a clear message to all those who receive embargoed judgments in advance of hand-down that the embargo must be respected. In future, those who break embargoes can expect to find themselves the subject of contempt proceedings as para 2.8 of CPR PD 40E envisages.”

CPR 81.6(1) provides as follows:

“If the court considers that a contempt of court (including a contempt in the face of the court) may have been committed, the court on its own initiative shall consider whether to proceed against the defendant in contempt proceedings.”

I have considered carefully the explanation given in para. 17 of Ontier’s report. However, it has to be evaluated in the light of three important contextual matters.

First, this case was one in which Dr Wright’s own estimate of the costs he would incur to trial (as given to Master Davison, who dealt with costs budgeting in March 2020) was close to £4 million. This fact was referred to in Mr McCormack’s evidence: see para. 12 of his Third Witness Statement. Anyone with a close interest in the litigation would be likely to know about it.

Second, although Dr Wright was engaged in a great deal of litigation worldwide, this case had attracted considerable publicity among those with an interest in cryptocurrency. Dr Wright embarked on this claim in order to establish that he is Satoshi (or, at least, to dissuade others from denying that proposition). He appears to have regarded those objects as important in part because of their impact on the success of Bitcoin Satoshi Vision (BSV), which he and Mr Ayre promote and in which they have a very significant financial interest.

Third, the 290 members of the channel on which Dr Wright’s posts appeared on 26 July 2022 would all have been people with an interest in cryptocurrency in general and BSV in particular. Whether they had been told this by Dr Wright or not, any such person with even a passing knowledge of how High Court litigation in England works would know that, usually, the parties to a judgment are sent an embargoed copy of the judgment in advance of its being handed down.

Against that background, I am unable to accept without further investigation Dr Wright’s explanation, as reported by Ontier, that the purpose of his posts on 26 July 2022 (hours after being informed of the substance of the judgment), was “not to give any indication as to the outcome set out in the Draft Judgment”, but merely to “encourage debate”. I consider that there is 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, which had been explained to him. The emails referred to at paragraphs 33-44 of Ontier’s report appear 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 emails.

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.

Pursuant to CPR 81.6(1), I will therefore issue a summons requiring Dr Wright to attend court for directions to be given. The matter will then be listed before another judge, nominated by the Judge in Charge of the Media and Communications List, who will give directions for the further conduct of the contempt proceedings.

I do not consider that the possible breaches by Mr Ayre require further investigation. His tweets were expressing a (false) view that he had expressed many times before – that Dr Wright had already won against Mr McCormack from the point when the latter abandoned his truth defence. They do not, therefore, provide a sufficient basis for concluding that he was disclosing the substance of the judgment. So, no further action will be taken in respect of Mr Ayre.

On 22 November 2020, on the eve of a hearing before Nicol J, RPC, Mr McCormack’s solicitors, wrote to the court explaining that Mr McCormack would not be represented because he had taken the decision not to defend the claim, for costs reasons. That letter repeated what had been said in letters to Dr Wright’s solicitors, namely that he undertook to the court not to repeat the words complained of or the same or similar words, subject to two “carve-outs” which “appear to be agreed by the Claimant”. The carve outs were:

“First, that this undertaking does not prevent our client (as a journalist focussing on Bitcoin) from reporting general findings or allegations that the Claimant has committed fraud, including notably the findings reached in ongoing legal proceedings in Florida in which Magistrate Judge Reinhart found on 27 August 2019 that the claimant had perjured himself in those proceedings and forged documents to support his case. A copy of Reinhart J’s judgment is attached – see in particular pages 19 to 21 which explain the Court’s findings that the Claimant forged documents and perjured himself in relation to matters connected with the subject matter of this claim. Those findings were upheld on appeal by a District Judge Bloom. It should be noted that 29 of these allegedly forged documents are relied on by the Claimant in these proceedings, including as his ‘primary’ evidence on the factual issue of whether or not he is ‘Satoshi Nakamoto’ (which were identified per para 2 of the Order of Master Dagnall dated 30 July 2020). Further, the alleged ‘final’ version of the Bitcoin White Paper referred to at paragraph 20 of the Amended Reply and produced to the Defendant on 23 January 2020 in response to a CPR 31.14 request contains self-evidently manipulated metadata in a similar fashion, purporting to show that the document was created on 24 March 2009 after the metadata also records the document was ‘last edited’ on 21 May 2008 (i.e. a logical impossibility) (see screenshot INSPECTION 0004 metadata attached). The Claimant and his solicitors have refused to discuss or explain why the metadata in this key document, which is absolutely central to his claim to being Satoshi Nakamoto, has had its metadata tampered with, apparently to suggest it was last edited before the Bitcoin White Paper was released by Satoshi Nakamoto in October 2008.

Second, that if the English Court finds that the Claimant’s claim to being Satoshi Nakamoto is fraudulent in separate proceedings, including in an almost identical and ongoing claim brought by the Claimant against Marcus Granath (claim no: QB-2019-002311), that our client is released from his undertaking.”

Nicol J said that these “carve-outs” were agreed on behalf of Dr Wright, but the undertakings were never recorded in a court order.

Catrin Evans KC, for Mr McCormack, has refined this undertaking into a simpler form, which takes into account that, since the hearing before Nicol J, there have been at least two further judgments relevant to these matters – mine and that of District Judge Engebrigtsen of the Oslo District Court. The undertaking now offered is as follows:

“The Defendant will not repeat the allegations complained of in these proceedings, save that the Defendant may refer to or report on any judicial finding by a court, tribunal or other judicial authority (in this jurisdiction or any other jurisdiction) concerning the Claimant.”

I raised with the parties whether there should be any undertaking or injunctive relief at all, given my findings that Dr Wright had advanced a deliberately false case on serious harm. Ms Evans, perhaps not surprisingly, was disposed to submit that there should not, while not withdrawing the offer to give an undertaking in the form I have mentioned if I considered it necessary.

Mr Callus, for Dr Wright, initially said that he was aware of no case in which a claimant had succeeded in establishing a cause of action in defamation but had been denied injunctive relief to prevent a repetition of the defamatory statements. However, in response to a question I asked of Ms Evans KC, she pointed out that this had occurred in FlyMeNow: see at [131]. Mr Callus argued that it was important for there to be finality in litigation and refusing to accept an undertaking or grant an injunctive remedy would leave the question of what Mr McCormack is entitled to say entirely at large.

As to the terms of the undertaking, Mr Callus submitted that Mr McCormack should not be permitted to refer to judgments or findings by courts in this or other jurisdictions insofar as the reference involved repetition of the words found to be defamatory. If Dr Wright were found not to be Satoshi in a judgment in this or any other jurisdiction, Mr McCormack could apply to discharge the undertaking or injunction. But for the time being, there was nothing inappropriate in his being subject to restrictions which do not apply to others commenting on judicial proceedings.

There was some confusion before me as to whether Mr McCormack has already given the undertaking I have set out at para. 28 above. Although he certainly offered such an undertaking, I do not think that undertaking was ever accepted. It is the almost invariable practice of this court to record an undertaking which it accepts in a formal order. Breach of an undertaking may give rise to a contempt of court. This makes it critical, not only that there should be no doubt as to the terms in which the undertaking is given, but also that a judge should satisfy himself or herself that the undertaking is framed in terms which are enforceable. A court considering whether to accept an undertaking should bear in mind that doing so might lead to further proceedings if it is alleged that the undertaking is breached. If the terms of the undertaking will give rise to serious difficulties of enforcement, that is a factor which may tell against accepting it in the first place.

In this case, there is no order accepting or recording the undertaking offered by Mr McCormack on 22 November 2020. Nor is there any other indication that Nicol J intended to accept the undertaking. It is very doubtful that it would have been appropriate to do so. The terms of the “carve outs” were so extensive that it would have been almost impossible to police. The undertaking amounted to saying: “I promise not to say that Dr Wright’s claim to be Satoshi is fraudulent, but I reserve my right to allege that he put fraudulent evidence before a court in support of that very claim”. Had such an undertaking been offered to me, my first thought would have been of the judge who might at some stage have to determine whether this undertaking had been breached. Courts are not required to, and generally should not, make rods for their own backs. I would not have accepted the undertaking. If, contrary to my view, Nicol J accepted it, I would discharge it now.

The undertaking now offered is superficially different. Its terms do not include whole paragraphs of argument. But on analysis, similar difficulties in enforcing it would be likely to arise. The caveat would allow Mr McCormack to report on “any judicial finding by a court, tribunal or other judicial authority (in this jurisdiction or any other jurisdiction) concerning the Claimant”. That would include the findings referred to in the original undertaking, as well as my findings and those of District Judge Engebrigtsen. I note that the latter include the finding that “Granath had ample factual basis to claim that Craig Wright is not Satoshi Nakamoto in March 2019”. The task of a judge called upon to determine whether the undertaking now offered had been breached would remain an unenviable one. I decline to accept the new undertaking.

The route suggested by Mr Callus through these difficulties is simple: grant an injunction restraining Mr McCormack from repeating the words complained of, or similar words, leaving it to him to apply to this court for the injunction to be discharged if it is established in future proceedings, in this or another jurisdiction, that Dr Wright is not Satoshi.

Persuasively though these submissions were advanced, I am unable to accept them, for five reasons.

First, an injunction is an equitable remedy. It is never available as of right, whether in libel proceedings or any other. One matter to be taken into account in deciding whether to grant it is the conduct of the claimant. Where, as here, a claimant has advanced a deliberately false case on an essential element of his claim, he should not expect the court to reward him with an injunction. To the extent that this results in him winning a Pyrrhic victory, that is the consequence of his own dishonest conduct.

Second, Mr Callus accepts that it would not be right to restrain Mr McCormack from reporting the terms of my judgment. He has to accept that, given that one of the remedies Dr Wright originally sought (though no longer seeks) was an order under s. 12 of the Defamation Act 2013 that Mr McCormack publish a summary of my judgment. Anyone fairly reporting the terms of my judgment would be entitled to say that Dr Wright had advanced a deliberately false case and given deliberately false evidence as part of his claim to have suffered serious harm. If it would not be right to restrain Mr McCormack from repeating what I said, it is difficult to see how it could be right to restrain him from repeating what District Judge Engebrigsten said. An injunction which forbade him from repeating the words complained of, or similar words, while allowing him to repeat what District Judge Engebrigsten said, would run into precisely the enforcement difficulties I have mentioned.

Third, it is apparent that there is a great deal of litigation concerning the subject matter of these proceedings, in various jurisdictions. It would not be desirable for the court to grant injunctive relief which might have to be varied or refined on a rolling basis as new judgments are handed down. Nor is there any good reason why the onus should be on Mr McCormack to begin further potentially costly proceedings to have the injunction discharged.

Fourth, insofar as Dr Wright is entitled to relief which marks the fact that he has been libelled and that Mr McCormack has been unable to establish the truth of the libel, my public judgment does that. (It is a separate question, to which I turn below, whether Dr Wright should have permission to appeal against my decision to award £1 only in damages.)

Fifth, complex decisions may have to be made about the extent to which my judgment gives rise to issue estoppels or is overtaken by subsequent developments. I am not convinced that injunctive relief is required to impress on Mr McCormack the importance of caution in taking these decisions. The costs he has already incurred in these proceedings will operate as a powerful reminder of the consequences of precipitate or ill-judged public statements.

Dr Wright’s application for permission to appeal was advanced on one ground only: that I erred in finding that Dr Wright’s dishonesty should serve to reduce damages to a nominal sum. The submissions on this point were advanced in an admirably clear document signed by Lord Wolfson KC, who did not appear at trial, as well as by Ms Walker-Parr, who did. Orally, they were advanced by Greg Callus.

Mr Callus explained that this ground of appeal does not seek to challenge my factual finding that he engaged in serious misconduct by advancing a deliberately false case, nor with the legal proposition that Joseph v Spiller [2012] EWHC 2958 (QB) (Tugendhat J) and FlyMeNow Ltd v Quick Air Jet Charter GmbH [2016] EWHC 3197 (QB) (Warby J) are authority for the proposition that any misconduct of the claimant may serve to reduce damages to a nominal sum. However, Mr Callus argued that this legal proposition comes solely from the decision of the Court of Appeal in Campbell v News Group Newspapers Ltd [2002] EWCA Civ 1143, [2002] EMLR 43 and that the Court of Appeal was “wrong… to conclude that such a principle of law exists”.

This argument was not made at trial. If it had been, I would have been obliged to reject it, because I am bound by the Court of Appeal’s decision in Campbell. That decision would also bind the Court of Appeal itself, save in the exceptional circumstances identified in Young v Bristol Aeroplane Ltd [1944] KB 718. None of those circumstances applies. Even without Campbell, I would have been required to follow Joseph v Spiller and FlyMeNow, both decisions of judges highly experienced in this area, unless convinced that they were clearly wrong. Far from being so convinced, I consider that they are correctly decided.

Damages in defamation serve three functions: “to act as a consolation to the claimant for the distress he or she suffers from the publication of the statement; to repair the harm to reputation…; and to act as a vindication of the claimant’s reputation”: Gatley on Libel and Slander (13^th ed., 2022), para. 10-004.

As to distress, I indicated at [143] of my judgment that, having found Dr Wright not to be a witness of truth, I would have rejected in its entirety his case as to the distress he claims to have suffered. As to compensation for injury to reputation and vindication of reputation, I found that Mr McCormack’s publications caused serious damage to Dr Wright’s reputation at the time when they were made. But any damages would have been awarded at the date of my judgment. By that time, Dr Wright had been shown in a public judgment to have advanced a deliberately false case on an essential part of his claim and to have given deliberately false evidence on oath about it. The question of what award of damages was necessary to “vindicate” his reputation fell to be assessed on that basis. I found that there would be no injustice if he were to receive only nominal damages.

The analogy with other torts is, in my judgment, not a good one. Dishonest exaggeration of a personal injury claim does not lead to a reduction in the damages payable (Ul-Haq v Shah [2009] EWCA Civ 542, [2010] 1 WLR 616), though in an extreme case it may entitle the defendant to strike out the claim, even after trial (Summers v Fairclough Homes Ltd [2012] UKSC 26, [2012] 1 WLR 2004). But damages in personal injury claims compensate for injury to interests which are unaffected by the dishonesty. The award needed to make good the injury suffered by a claimant with a broken leg is the same whether the claimant has been honest or dishonest. A libel claimant who has been found in a public judgment to have dishonestly advanced a deliberately false claim, on the other hand, may have so injured his own reputation that an award of substantial damages is no longer called for to vindicate it. Vindication has a moral element. If, as here, it would be unconscionable for a claimant to receive substantial damages, that is a good indication that damages are not required for the purpose of vindication.

The new point advanced in writing by Lord Wolfson and orally by Mr Callus has no real prospect of success in the Court of Appeal. There is no other compelling reason for an appeal to be heard. I refuse permission to appeal.