In previous blogs, the case of Wright v. McCormack has been discussed (see here and here). The judgment addressed the application by Peter McCormack for a Worldwide Freezing Order (WFO) against Dr Craig Wright, amid an ongoing legal battle rooted in defamation and cryptocurrency controversies.
Background and context
Dr Craig Wright, a controversial figure in the cryptocurrency world who claims to be Satoshi Nakamoto, the creator of Bitcoin, sued Peter McCormack, a prominent podcaster, for defamation. The defamation claim centred around tweets and a YouTube video published by McCormack in 2019, which alleged that Wright had fraudulently claimed to be Satoshi Nakamoto.
The defamation trial took place between 23-25 May 2022, resulting in a judgment by Chamberlain J on 1 August 2022. Despite finding that Wright had established a cause of action in defamation, Chamberlain J awarded him only nominal damages of £1 due to Wright’s presentation of a deliberately false case of serious harm to his reputation. It is important to note that, whilst McCormack originally relied on the defence that his comments were substantially true, he had to drop that defence on the basis that he could not afford to fight it.
The judgment was therefore based entirely on McCormack’s defence that Wright had not suffered serious harm as a result of the comments made. As a result of Wright’s deliberate dishonesty in terms of his attempt to establish serious harm, the Court held that Wright should be liable for McCormack’s costs of the defamation action, less a number of previous costs orders made during the course of the proceedings in favour of Wright on interim procedural matters.
It is McCormack’s case that he should be entitled to set the interim costs orders made in Wright’s favour aside or, in the alternative, pursue a fresh action in fraud against Wright to recover those sums. The argument pursued by McCormack in this regard was based on a judgment in alternate proceedings that found that Wright was guilty of wholesale fraud in respect of his claim to be the inventor of Bitcoin (see our previous blog).
The application for a Worldwide Freezing Order
On July 2, 2024, McCormack applied for a WFO against Wright, seeking to secure a sum of £1.548 million to cover costs incurred in the defamation claim.
Principles and decision
Mr Justice Mellor determined that McCormack had a good arguable case for the recovery of costs, given Wright’s fraudulent conduct and the substantial legal costs McCormack had incurred.
Key points of the judgment included:
- Fraudulent conduct: The judge emphasised that Wright’s entire defamation claim was premised on the fraudulent assertion that he was Satoshi Nakamoto. The fraudulent nature of Wright’s case was critical in justifying the WFO and arguments about technicalities did not detract from the bigger picture that Wright had been found to be a fraudster.
- Risk of dissipation: The judge noted Wright’s pattern of behaviour in response to previous WFOs, where he paid sums into the Court Funds Office to avoid disclosure obligations. This behaviour indicated an intention to hide his assets and supported an argument that there was a real risk of dissipation of assets.
- Costs recovery: The judge found that McCormack had a strong case for recovering costs via multiple routes, including indemnity costs, alternate fraud proceedings, and the reversal of previous cost orders during detailed assessment proceedings.
Significance of the judgment
This judgment (in combination with the other judgments involving Dr Wright) demonstrates beyond doubt that the Courts will not assist an individual found to have been fraudulent and will find a way to ensure that justice is done in circumstances where there has been a miscarriage of justice, such as the finding of liability against a Defendant in circumstances where the Claimant is later found to be a fraud.
How can Nelsons help?
Kevin Modiri is a Partner in our expert Dispute Resolution team, specialising in civil disputes, insolvency, inheritance disputes, data breach claims and defamation claims.
If you have any questions concerning the subjects discussed in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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