Supreme Court New South Wales Medium Neutral Citation: H & D Retail Pty Ltd v TransMS Pty Ltd [2021] NSWSC 87 Hearing dates: 12 February 2021 Date of orders: 12 February 2021 Decision date: 12 February 2021 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Leave granted to withdraw admission Catchwords: PRACTICE AND PROCEDURE – application to withdraw admission - admission by defendant in Commercial List Response as to constituents of a contract – whether adequate explanation given for making admission - where admission made as result of lack of sufficient attention by defendant's legal advisers – whether justice of case requires that leave be granted Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Cumper v Pothecary [1941] 2 KB 58 Drabsch v Switzerland General Insurance Co Limited (Unrep, 16 October 1996) Hollis v Burton [1892] 3 Ch 226 Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309 Langdale v Danby [1982] 1 WLR 1123 MindShare Communications Ltd v Orleans Investments Pty Ltd t/as Orleans Media Consultancy [2007] NSWSC 637 Category: Procedural rulings Parties: H & D Retail Pty Ltd (Plaintiff) TransMS Pty Ltd (Defendant) Representation: Counsel: Mr J Burnett (Plaintiff) Mr A Fernon SC (Defendant) Solicitors: Foteades Freeman Cohen (Plaintiff) Yates Beaggi Lawyers (Defendant) File Number(s): 2018/201075 EX TEMPORE Judgment (REVISED) 1. The plaintiff (H & D) operates a toy store business under the name of "Toymate". 2. By a contract made in May 2016 or May 2017 (the parties disagree about this) the defendant (TMS) contracted to provide warehouse and logistic services to H & D. 3. H & D claims that TMS has overcharged it for those services and that TMS lost some goods provided to it for storage. 4. In its Commercial List Statement, H & D claims that the relevant contract was partly express and partly implied and, to the extent that it was express, partly in writing and partly oral. 5. In its Commercial List Response, TMS has made admissions concerning those matters. 6. Indeed, in its Commercial List Cross-Claim Statement, TMS alleged, consistently with H & D's contentions, that the agreement was partly express and partly implied, and to the extent express, partly in writing and partly oral. 7. Now, by notice of motion filed on 30 October 2020, TMS seeks leave under the Uniform Civil Procedure Rules 2005, rule 12.6(1), to withdraw those admissions. The principal basis upon which that leave is sought is what is said to be TMS' legal advisers' recent and belated attention to an "only terms" and an "entire agreement" clauses of TMS' General Terms and Conditions. 8. Those clauses are contained in 2(b) and 2(o) of those terms and conditions and are in the following form: 2(b) "These Terms are the only terms by which the Supplier's Goods will be sold or the service provided by or through the Supplier to the Customer"; 2(o) "This Agreement constitutes the entire agreement between the parties and supersedes all prior representations and agreements". 1. The allegations made in the Commercial List Response and the proposed amendments withdrawing the admissions are summarised in the attached table. See: Annexure H&D v TransMS (93419, pdf) 2. It is accepted that proper grounds must be shown to withdraw an admission, especially one made formally in a pleading. 3. However, in each case, the enquiry is fact specific. Ultimately it is based on whether it would be in the interests of justice, and as between the parties, and generally, for the granting of leave to withdraw the admission. [1] 4. As it can be seen from the table, the admissions made relate to matters of law, namely, whether, as TMS wishes to assert, the contract between the parties is entirely in writing or whether, as H & D contends, and as TMS to date has admitted and indeed asserted, the contract is partly express, partly implied and, to the extent it is express, partly oral and partly in writing. 5. The primary basis upon which H & D opposes leave being granted to withdraw the admissions, is that an adequate explanation had not been proffered on behalf of TMS for the making of the admissions in the first place. 6. It is well established that such an explanation must be "a sensible one based on evidence of a solid and substantial character". [2] 7. Mr Burnett, who appeared for H & D, submitted that no such explanation had been offered and that officers of TMS had given TMS' legal advisers "clear instructions to admit" a number of matters. 8. Mr Burnett drew my attention to emails between TMS' solicitors and officers of TMS, being, first, Mr Mercuri, the NSW Branch Manager of TMS, and a Mr Kassaby. Mr Mercuri has sworn a lengthy affidavit on behalf of TMS. 9. In those emails, Mr Mercuri and Mr Kassaby were asked: "Can you spend some time on going through each paragraph of the attached claim and responding whether you agree/disagree/don't know, and the reasons why and send back to me on email. This will help us form up the defence." 1. Both Mr Mercuri and Mr Kassaby sent responses stating that they agreed with the allegations in the relevant paragraphs of the List Statement. However, in relation to paragraph 3, in which the key allegation concerning the constituents of the contract are made, both appear to have directed their attention in particular to the terms of the conversation there alleged between Mr Mercuri and Mr Bloom of H & D. 2. In effect, however, both Mr Mercuri and Mr Kassaby were signifying their agreement to what amount to propositions of law, namely, the constituents of the contract. I think it unlikely that either had in mind the "only terms" and "entire agreement" clauses in TMS' General Terms and Conditions. 3. The explanation given by TMS' solicitor, Mr Amirbeaggi, for the making of the admissions was: "At the time of preparing the Commercial List Response, the Defendant and its legal representatives did not sufficiently investigate or turn their mind to the accuracy of the terms of the conversation alleged, the effect of the allegation upon the substantive dispute nor the juxtaposition of the alleged terms to the effect of certain provisions of the "Service Agreement – General Terms and Conditions", in particular clauses 2(b) and 2(o) of the "Service Agreement – General Terms and Conditions", which provide that the General Terms and Conditions are the only terms by which the Defendant's services would be provided to the Plaintiff and that the "Service Agreement – General Terms and Conditions" constitutes the entire agreement between the parties and supersedes all prior representations and agreements." 1. In his submissions, Mr Fernon SC, who appears for TMS, accepted that, "[t]he Response was drafted without sufficient attention to the written terms of the Agreement between the parties or the true scope of conversations that occurred". 2. This explanation, although candidly given, is less than satisfactory. However, I accept that the fault of that is of TMS' legal advisers, rather than TMS itself. 3. There is authority that it may be appropriate to grant leave to withdraw an admission in circumstances which show that the admission was made inadvertently or without due consideration of material matters. [3] 4. I am persuaded this is such a matter. 5. Were I to refuse leave to withdraw the admissions, TMS would be deprived of the opportunity to mount the legal argument that the "only terms" and "entire agreement" clauses have effect according to their terms. 6. I express no view about the merits of such argument but have concluded that the interests of justice require that TMS not be shut out from making the argument. 7. It is hard to see what substantial prejudice would be visited on TMS were leave to be granted. 8. It is not as if a hearing date is imminent. 9. The proceedings have been on foot since 2018. They have only reached the stage where evidence is complete, save for H & D's evidence in reply. Indeed, discovery categories have only just been agreed. 10. No hearing date is set and it is unlikely to be heard this year. 11. Further, as Mr Fernon submitted, to withdraw the admissions will not affect H & D's ability to prosecute its contentions as to the nature of the contract. 12. It may be that H & D will need to review the evidence it has adduced to date and supplement it with evidence to fill such gap as may exist by reason of TMS' admissions to date. 13. In those circumstances, it would be appropriate for H & D to include such evidence in its evidence in reply, notwithstanding that such evidence would strictly be in evidence in chief. TMS could hardly be heard, in the circumstances, to complain about H & D splitting its case. 14. Such prejudice as was thereby suffered can be met by an order that TMS pay the costs thrown away by the withdrawal of the admissions, and granting H & D liberty to apply for a gross sum costs order under s 98(4) of the Civil Procedure Act 2005 payable forthwith, in the event that it incurs such costs. 15. And H & D should get the costs of this application. 16. I make these orders: 1. I make orders in accordance with paragraphs 1 to 4 of the defendant's notice of motion of 30 October 2020. 2. I order that the defendant pay the plaintiff's costs of that notice of motion and the costs thrown away by the withdrawal of the admissions referred to in the notice of motion. 3. I grant liberty to the plaintiff to apply for a gross sum costs order under s 98(4) of the Civil Procedure Act 2005 in relation to such costs. ********** Endnotes 1. Eg Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309 at [18] – [19] (Hill, Madgwick and Conti JJ) ("Jeans v CBA"). 2. MindShare Communications Ltd v Orleans Investments Pty Ltd t/as Orleans Media Consultancy [2007] NSWSC 637 at [2], referring to Langdale v Danby [1982] 1 WLR 1123 at 1134; Hollis v Burton [1892] 3 Ch 226; and Cumper v Pothecary [1941] 2 All ER 516; 2 KB 58 at 70. 3. Drabsch v Switzerland General Insurance Co Limited (Unreported, 16 October 1996, Santow J) (cited with approval in Jeans v CBA at [18]). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 February 2021