The recent decision of Mr Justice Sales in F&C Alternative Investments (Holdings) Ltd. v Barthelemy & Anor1 has sent a sharp reminder that the English courts perform a public service function which is not necessarily subservient to the mutual wishes of the parties in commercial litigation.
The application in issue arose from proceedings between various F&C group companies and two principals behind a fund of hedge funds which had been set up (as a limited partnership) in conjunction with F&C. The dispute was rancorous, with F&C making allegations of criminal conduct by the defendants to the FSA, and the defendants making serious allegations of conspiracy and dishonesty within F&C in the proceedings.
The decision related to an application made by the defendants, and supported by the claimants, well after trial of the underlying matter. In the usual manner, the judge had circulated his draft judgment to the parties on a confidential basis. This is standard practice in the English courts, allowing the parties an opportunity to correct any factual inaccuracies and typographical errors, and to seek to agree between themselves the wordings of any necessary consequential orders. The intention was the judgment would then be handed down in open court and thereby made public, as indeed was to be.
The judgment is not wholly complimentary about many of the parties involved in the litigation. The parties, having seen the draft judgment, reached an agreement to settle which was conditional on the judgment not being handed down, and so remaining confidential. The application in issue requested the judge to agree not to hand down the judgment in order that the settlement could take effect in accordance with the wishes of the parties.
The judge rejected this application. It was established in 2000 in the Court of Appeal case of Prudential Assurance Company Ltd v McBains Cooper2 that the judge retains a discretion to hand down a judgment which has been circulated in draft before the parties have reached a settlement. That case essentially held that the circulation of the judgment in draft and in confidence to the parties (then a relatively young practice) was part of the process of delivering judgment. Prior to circulation of the judgment in draft it was “elementary that parties to private litigation are at liberty to resolve their differences by a compromise, and that an unimpeached compromise represents the end of the dispute or disputes from which it arose”3. After the process of delivery of judgment was initiated by circulation of the draft, the parties no longer had such control, and were in the hands of the court. The parties in the F&C case recognised that risk in making their settlement conditional on the court agreeing not to hand down judgment.
The history of such applications is mixed. Prudential was a case in which the judgment was handed down, irrespective of the parties’ wishes that it should not be. In the 2001 case of Liverpool Roman Catholic Archdiocesan Trust Trustees v David Goldberg QC4, the judge acceded to the request on being told that a settlement had been reached which was conditional on the judgment not being handed down, but excepted (and published) one section from the judgment which dealt with a matter the judge deemed to be of public importance. In Durabella Limited v J. Jarvis & Sons Limited5, the judge again acceded in part, publishing certain sections of his judgment, but withholding others. In the last most recent (non) judgment, Renaissance Capital Ltd v ENRC Africa Holdings Ltd6, the judge acceded to the application in full, finding that there were no novel or contentious issues of law involved, and likewise that there were no findings of fact which had any wider public interest weighing in favour of publication. Accordingly, it was held that the private commercial interests of the parties to the litigation outweighed the residual public interest presumption in favour of publication.
To return to F&C Alternative Investments (Holdings) Ltd. v Barthelemy & Anor, the judge in that case refused to withhold publication of the draft judgment. He gave four reasons for so doing:
- The judgment involved a careful analysis of the conduct of regulated companies and individuals, who were the subject of a range of criticisms. There was a public interest in those criticisms being aired in public in order to assist the FSA in its regulatory function.
- Furthermore, it involved a detailed review of conduct which had been the subject of complaints made to the FSA. Again, there was a clear public interest in the FSA being made aware of the findings and analysis which had been reached by the courts. The parties had attempted to circumvent this issue by agreeing a joint statement to be passed to the FSA if the settlement went through, but the judge was not satisfied that this gave a full and clear picture of his findings of fact.
- The defendants, in pursuing allegations of conspiracy, had attacked the credibility and honesty of F&C’s witnesses. The judge had rejected the allegations of conspiracy and found “many of the F&C witnesses … to be completely honest and credible witnesses”. Those others who had come in for some criticism in the judgment had been exonerated of more serious accusations levelled against them at trial. As the allegations had been made in the public arena of trial, it was fair and just to make public the judgment clearing the witnesses of those allegations.
- The judgment dealt with several points of legal significance, which meant it would be a valuable addition to the universe of case law.
The judge held that those four points “strongly outweigh the private interests of the parties … in favour of suppressing the judgment in order to bring the litigation to an end” .
Of course, parties in substantial commercial litigation which has failed to settle before trial still have time to assess the position in the wake of the trial whilst judgment is being drafted (or waiting to be drafted).
The case underlines the imperative to do so where a judgment may present a significant enough reputational risk to justify settlement. Once the court passes its conclusions to the parties, control of the reputational consequences passes, in exchange, into the hands of the court.