The importance of confidentiality in ongoing court proceedings

In Rogers v Wills, the court addressed an inadvertent breach of an embargo on a draft judgment. This case does not break new ground, but it is a helpful demonstration of an important rule that the parties to litigation should be mindful of post-trial, when (as is often the case) a written judgment is provided in draft form, before being formally handed down in open court.

The Civil Procedure Rules (CPR) in England and Wales provide clear guidance on the handling of draft judgments, particularly concerning confidentiality and the prohibition on circulation to non-parties. CPR Practice Direction 40E stipulates that when a draft judgment is circulated to the parties’ legal representatives in advance of handing-down the judgment, the draft judgment must remain confidential.

The primary purpose of this practice is to allow legal teams to identify typographical errors and prepare for the formal handing down of the judgment. The draft judgment can be shared with the client, but nowhere, and to no-one, else. When sending the draft judgment to the client, the lawyer must advise the client about their duties to keep the draft judgment confidential. If the client is a corporate entity or similar, it must take reasonable steps to preserve the confidential nature of the draft judgment.

In Rogers v Wills, the claimant’s solicitor properly sent the embargoed draft to the claimant, but due to an automatic email forwarding rule set up in the claimant’s email inbox, the draft judgment was also received by the claimant’s husband. The claimant and her husband discussed the draft before its formal hand-down and the husband emailed the lawyers with his comments.

Upon discovering the issue, the claimant’s solicitors promptly informed the court and opposing counsel, offering apologies and assurances that steps were being taken to prevent recurrence. They acted entirely properly in response to becoming aware.

The judge accepted that the breach was unintentional but emphasised the seriousness of sharing embargoed judgments, even inadvertently. He noted that while the claimant did not deliberately forward the email, she should have questioned how her husband received it and sought legal advice. The claimant’s husband was criticised for failing to recognise the clear warning on the judgment stating it was “in confidence and subject to embargo” in bold, capitalised text. The Judge said that, despite the claimant’s husband’s education, he neither questioned his receipt of the document nor consulted the court or solicitors.

While the court found both parties’ conduct culpable, it acknowledged the lack of deliberate misconduct or broader disclosure. The judge declined to impose sanctions but stressed that breaches of embargoes are serious and could amount to contempt of court. He reminded parties that embargoes apply to all content within a judgment and exist to protect the integrity of the judicial process. Future breaches may not be treated so leniently.

Upholding the integrity of court processes requires strict adherence to procedural rules, and respecting the confidentiality of draft judgments is a fundamental aspect of this. Legal professionals must ensure that all members of their teams understand the restrictions and the reasons behind them. By doing so, they help preserve the administration of justice and the authority of the courts.

Artificial Intelligence: an aid, not a crutch

According to Lexis Nexis research, in 2024, 82% of lawyers were either using or planning to integrate artificial intelligence (AI) into their practices, which was up from 39% 2023. It is clear to see that AI is rapidly becoming a part of our daily lives in the legal profession.

However, in using this technology in litigation, solicitors must always have at the forefront of their minds their duties under The Code of Conduct of the Solicitors Regulation Authority, as was starkly highlighted in the judgment of Ayinde -v- London Borough of Haringey, and Al-Haroun.

This judgment involved two cases which contained actual or suspected use by lawyers of generative AI tools to produce written legal arguments or witness statements.

In the first case (Ayinde), a claim for a judicial review, the claimant’s barrister relied on and cited case authorities in support of the claim that did not exist.  The court made the following findings:

1. Although the barrister did not admit that AI was used, the court drew an inference that AI was likely used to produce the list of cases and / or to draft parts of the grounds of claim, on the basis that these cases were completely fictional. The court accordingly referred the barrister to the Bar Standards Board (the regulatory body for barristers)
2. Although the instructing solicitor did not prepare the grounds for judicial review, and made enquiries of the barrister when prompted by the defendant’s solicitor, the solicitor did not do anything to satisfy himself that the case authorities were, in fact, real. The court therefore referred the instructing solicitor to the Solicitors Regulation Authority (the regulatory body for solicitors)
3. The court did not, however, decide to hold either the barrister or the solicitor in contempt of court; notably, a power open to it.

The second case (Al-Haroun) concerned correspondence sent by the claimant to the court, and a the content of witness statement produced by the claimant, which contained reference to numerous case authorities which either did not exist, or did not contain the passages which were claimed to have been quoted from those authorities.

The claimant himself admitted to using publicly available AI, among other sources, to generate these authorities, which he subsequently used in his witness statement. His solicitor did not verify these authorities when reviewing the witness statement and instead relied on the legal research carried out by his client.

The court commented that it was “extraordinary that the lawyer was relying on the client for the accuracy of their legal research, rather than the other way around.” Although the claimant himself faced no repercussions from this, as the court did not believe he was deliberately misleading it, the court did refer the claimant’s solicitor to the Solicitors Regulation Authority.

It is clear from these two cases that the use of AI in creating legal documents can easily lead to legal professionals breaching their duties, and must be used only as an aid, not as a crutch.

Supreme Court clarifies broad liability under Insolvency Act

The Supreme Court in Bilta (UK) Ltd (in liquidation) and others v Tradition Financial Services Ltd [2025] has delivered a significant ruling on two important issues in corporate insolvency law: the scope of liability for fraudulent trading under section 213 of the Insolvency Act 1986, and the limitation periods in dishonest assistance claims involving dissolved and later restored companies.

Background

The case arose out of a large-scale VAT fraud involving several now-insolvent companies, including Bilta (UK) Ltd, Nathanael Eurl Ltd (“Nathanael”), and Inline Trading Ltd (“Inline”). These companies participated in a ‘missing trader intra-community’ fraud. VAT was collected on transactions, but was not paid to HMRC and was instead diverted to third parties.

Tradition Financial Services Ltd (“Tradition”), a brokerage firm, was alleged to have facilitated the fraudulent scheme by introducing counterparties and arranging trades. Although it was not a director or controller of the companies, the claimants alleged that Tradition knowingly participated in the fraud.

The court was required to consider two key issues:

1. Firstly, whether Tradition could be held liable under section 213 of the Insolvency Act 1986 for fraudulent trading; and
2. Secondly, whether the claim for dishonest assistance in breach of directors’ duties was time-barred, or whether the companies’ dissolution and subsequent restoration had the effect of prolonging the limitation period.

What happened?

The High Court ruled that, in principle, Tradition were capable of being held liable under section 213. However, it determined that the claims for dishonest assistance were time-barred. The Court of Appeal upheld this decision.

Both parties subsequently appealed to the Supreme Court, which unanimously dismissed both appeals on the following basis.

1. The Court held that s.213 applies to any person who knowingly participates in the carrying on of a fraudulent business, not just those involved in the management or control of the company. The wording of s.213(2) is broad and did not support a restrictive interpretation confined to directors or insiders. Routine participation in fraudulent transactions, with knowledge of the fraud, was sufficient to bring a third party within the scope of liability.

Accordingly, Tradition, who had knowledge of the fraudulent nature of the trades and the likely illegitimacy of companies such as Nathanael and Inline, fell within the scope of s.213.

2. The dishonest assistance claim was found to be time-barred.

The breaches of duty occurred between May and July 2009, and the companies were subsequently struck off and later restored: Nathanael in 2012 and Inline in 2015. The claim was issued in 2017 which was more than six years after the relevant events.

The claimants sought to rely on section 32 of the Limitation Act 1980, which delays the limitation period in cases of fraud until the claimant could reasonably have discovered the wrongdoing. They argued that discovery was not possible until the companies were restored and liquidators appointed.

However, the Supreme Court held that the burden of proof under s.32 lies with the claimant. While section 1032(1) of the Companies Act 2006 deems a restored company to have continued in existence, this does not imply that it had functioning directors or officers during its dissolution. The claimants had not provided sufficient evidence to show that discovery was impossible before 2011 and therefore, the claim remained time-barred.

What is the significance?

This judgment provides clarification on two previously uncertain areas of insolvency law:

1. The ruling confirms that liability for fraudulent trading is not confined to managers or those in control of an insolvency company. Brokers, agents, or other facilitators who knowingly assist in fraudulent business operations may now face exposure under this provision.
2. The decision sets clear limits on how s.32 of the Limitation Act interacts with company restoration. It highlights the need for claimants to provide factual evidence to justify the postponing of time, even where the company was dissolved at the relevant time.

Overall, the ruling strengthens the ability of liquidators to pursue third-party wrongdoers, while also clarifying the position on limitation.

If you have any questions about the topics raised in this article, our Commercial Litigation team would be happy to help.