Supreme Court New South Wales Medium Neutral Citation: A J Lucas Operations Pty Ltd v C.P.W Trailer Sales and Repairs Pty Ltd & Ors [2014] NSWSC 497 Hearing dates: 17 April 2014 Decision date: 17 April 2014 Before: Rothman J Decision: 1. Leave for the defendants, and each of them, to withdraw admissions made in the pleadings and within 14 days' hereof file further amended defences in or to the effect of that attached to the respective notices of motion. Save that each defendant is entitled to deny allegations proposed only to be "not admitted" in the said prospective pleading 2. The defendant shall pay the costs thrown away on an indemnity basis. The costs thrown away will be payable forthwith. 3. The defendants will pay the plaintiff's costs of the motion on the ordinary basis. 4. Liberty to apply on three days' notice. Catchwords: PRACTICE AND PROCEDURE - amendment to pleadings - withdrawal of admission - clarity of issue between parties Legislation Cited: Civil Procedure Act 2005 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 Drabsch v Switzerland General Insurance Company Ltd & Ors (unreported, 16 October 1996, NSWSC) Sangora Holdings Pty Ltd v Dunstan (unreported, Supreme Court of Western Australia, Full Court, 13 April 1999) SLE Worldwide v WGB & Anors [2005] NSWSC 816 Category: Interlocutory applications Parties: A J Lucas Operations Pty Ltd (Plaintiff) C.P.W. Trailer Sales and Repairs Pty Ltd (First Defendant) Coe Drilling Pty Ltd (Second Defendant) Stephen James Edward Coe (Third Defendant) Representation: Counsel: Luitingh (Plaintiff) AI James (First and Third Defendant) J Simpkins SC/J Oakley (Second Defendant) Solicitors: Truman Hoyle Lawyers (Plaintiff) Buchanan Legal (First and Third Defendant) Otto Martiens Lawyers (Second Defendant) File Number(s): 2011/00142924 Publication restriction: None Judgment 1HIS HONOUR: On 17 April 2014, the Court, as presently constituted, dealt with two motions on notice for the withdrawal of admissions made and the filing of Further Amended Defences. The Court issued ex tempore orders, reserving its reasons therefor. These are those reasons. Background 2In the substantive proceedings, the plaintiff A J Lucas Operations Pty Ltd (Lucas) seeks specific performance and damages arising from the unauthorised acquisition of horizontal directional drilling pipes (the pipes). Lucas claims that the pipes are (and/or were at the relevant time) in the possession of the defendants or one of them, but that the pipes were at all material times, and remain, the property of Lucas. 3The conduct arises out of the alleged formation and termination of a joint venture arrangement for the construction of the infrastructure forming part of the Regional Drought Strategy for South East Queensland, being a strategy of the State of Queensland, certain local councils and Western Corridor Recycled Water Pty Ltd (the Owner). This part of the strategy was the implementation of the Western Corridor Recycled Water Project. 4The parties to the joint venture were the Owner, Transfield Services (Australia) Pty Ltd (Transfield), Lucas, SunWater, and GHD Pty Ltd. 5By paragraph 1(c) of the Statement of Claim filed on or just after 2 May 2011, Lucas asserted ownership of the pipes and an entitlement to immediate possession or, alternatively, only entitlement to immediate possession. Lucas provided horizontal drilling services. 6The first, second and third defendants are competitors to Lucas. The first defendant, CPW Trailer Sales & Repairs Pty Ltd (CPW) owned or possessed equipment, which, by commercial relationships with horizontal drilling service providers, it arranged to be used in such construction work. 7Steven Coe (Coe), the third defendant, was, at relevant times, a director of CPW and of the second defendant, Coe Drilling Pty Ltd (Coe Drilling). Lucas alleges (paragraph [5] of the Statement of Claim) that its then employee, acting on behalf of another company, sold to Coe, acting on behalf of CPW, 203 pipes, which were the property of Lucas and which the employee was not authorised to sell. 8Lucas also alleges that Coe, and therefore CPW and Coe Drilling, were aware or ought to have been aware that the 203 pipes were Lucas' property and not the property of the putative vendor. The pipes were delivered to a site at which Coe Drilling was performing horizontal drilling services and into the possession of CPW. Lucas alleges that Coe Drilling and CPW have converted the 203 pipes. If Lucas succeeds in the litigation, the damages would be substantial. 9The first, second and third defendants filed a defence to the Statement of Claim on or after 22 June 2011. Since that time they have filed Amended Defences. The Amended Defences admitted that Lucas: "In the course of it business owned and/or was entitled to immediate possession of a quantity of...[pipes]"; and denied "that [Lucas] owned and/or was entitled to immediate possession of...[the pipes]...purchased by...[CPW]...in or about July 2008". 10On 21 February 2014, CPW and Coe (the first and third defendants) filed a notice of motion seeking leave to withdraw the admissions in [2] of the Amended Defence, being the foregoing admissions, and to file a Further Amended Defence. 11On 24 February 2014, Coe Drilling (the second defendant) filed a notice of motion seeking to withdraw the foregoing admission and seeking leave to file a Further Amended Defence (see annexure C to the affidavit of Mark Twycross of 19 February 2014). 12Each of the defendants first sought Lucas' consent to the withdrawal and the re-pleading. Such consent was not forthcoming and the defendants gave notice, as aforesaid, of the motions with which the Court has dealt. Principles Applicable to Withdrawal of Admissions 13The Uniform Civil Procedure Rules 2005 (UCPR) at r 12.6 deals with the question of withdrawals of admissions. The Rule is in the following terms: "r 12.6 Withdrawal of matter in defence or subsequent pleading (1) A party raising any matter in a defence or subsequent pleading may withdraw the matter at any time. (2) Despite subrule (1), a party may not withdraw any admission, or any other matter that operates for the benefit of another party, except with the consent of the other party or by leave of the court. (3) A withdrawal under this rule is to be made by filing a notice of withdrawal stating the extent of the withdrawal. (4) If the withdrawal is by consent, the notice under subrule (3) must be accompanied by a notice from each party whose consent is required by subrule (2) to the effect that the party consents to the admission or other matter being withdrawn in accordance with the notice of withdrawal." 14The courts power to grant leave to withdraw an admission is otherwise informed by the provisions of s 64 of the Civil Procedure Act 2005, which provides power to amend any document at any time in proceedings. s 64 of the Civil Procedure Act imports the criteria in ss 56, 57, 58 of that Act. Those sections are in the following terms: "s 56 Overriding purpose (1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. (3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court. (4) Each of the following persons must not, by their conduct, cause a party to civil proceedings to be put in breach of a duty identified in subsection (3): (a) any solicitor or barrister representing the party in the proceedings, (b) any person with a relevant interest in the proceedings commenced by the party. (5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs. (6) For the purposes of this section, a person has a relevant interest in civil proceedings if the person: (a) provides financial assistance or other assistance to any party to the proceedings, and (b) exercises any direct or indirect control, or any influence, over the conduct of the proceedings or the conduct of a party in respect of the proceedings. s 57 Objects of case management (1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects: (a) the just determination of the proceedings, (b) the efficient disposal of the business of the court, (c) the efficient use of available judicial and administrative resources, (d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties. (2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1). s 58 Court to follow dictates of justice (1) In deciding: (a) whether to make any order or direction for the management of proceedings, including: (i) any order for the amendment of a document, and (ii) any order granting an adjournment or stay of proceedings, and (iii) any other order of a procedural nature, and (iv) any direction under Division 2, and (b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice. (2) For the purpose of determining what are the dictates of justice in a particular case, the court: (a) must have regard to the provisions of sections 56 and 57, and (b) may have regard to the following matters to the extent to which it considers them relevant: (i) the degree of difficulty or complexity to which the issues in the proceedings give rise, (ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities, (iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties, (iv) the degree to which the respective parties have fulfilled their duties under section 56 (3), (v) the use that any party has made, or could have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings, (vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction, (vii) such other matters as the court considers relevant in the circumstances of the case. s 64 Amendment of documents generally (1) At any stage of proceedings, the court may order: (a) that any document in the proceedings be amended, or (b) that leave be granted to a party to amend any document in the proceedings. (2) Subject to section 58, all necessary amendments are to be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, correcting any defect or error in the proceedings and avoiding multiplicity of proceedings. (3) An order under this section may be made even if the amendment would have the effect of adding or substituting a cause of action that has arisen after the commencement of the proceedings but, in that case, the date of commencement of the proceedings, in relation to that cause of action, is, subject to section 65, taken to be the date on which the amendment is made. (4) If there has been a mistake in the name of a party, this section applies to the person intended to be made a party as if he or she were a party. (5) This section does not apply to the amendment of a judgment, order or certificate." 15There are a number of judgments that establish the principles which a court should apply in dealing with the withdrawal of admissions. The first proposition is that admissions made, formally and deliberately, by a party legally advised, should not be permitted to be withdrawn, unless the party seeking to withdraw them can point to an error when the admissions were made or a relevant change of circumstance: SLE Worldwide v WGB & Anors [2005] NSWSC 816, per White J. 16In the foregoing judgment, White J referred to and reiterated the comments by a Full Court of the Supreme Court of Western Australia in Sangora Holdings Pty Ltd v Dunstan (unreported, Supreme Court of Western Australia, Full Court, 13 April 1999) that a withdrawal of an admission in a pleading is a serious matter because of the effect of the admission when made, which causes parties to thereafter proceed on the basis of an assumption that the fact is no longer in issue. 17Fundamentally, the courts have indicated that the indulgence of granting leave to withdraw an admission may be granted when the applicant can show: (i)That the admission was made inadvertently; or (ii)That the admission was contrary to the established facts. 18The principles were summarised by Santow J in Drabsch v Switzerland General Insurance Company Ltd & Ors (unreported, 16 October 1996, Supreme Court of NSW), where his Honour said: "I set these principles out as follows: 1. Where a party under no apparent disability makes a clear and distinct admission, which is accepted by its opponent and acted upon, for reasons of policy and the due conduct of the business of the court, an application to withdraw the admission, especially at appeal, should not be freely granted; Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 per Rogers CJ Comm D, followed in IOL Petroleum Ltd v O'Neill per Young J (Young J, 17 November 1995, unreported) and Apex Pallett Hire Pty Ltd v Brambles Holdings Ltd (Supreme Court of Victoria, Full Court, 8 April 1988, unreported), and in that respect not following H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694 at 703. 2. The question is one for the reviewing judge to consider in the context of each particular appeal, with the general guideline being that the person seeking on a review to withdraw a concession made should provide some good reason why the judge should disturb what was previously common ground or conceded; IOL Petroleum Limited v O'Neill (supra), in the context of withdrawing a concession made before the Registrar. 3. Where a court is satisfied that admissions have been made after consideration and advice such as from the parties' expert and after a full opportunity to consider its case and whether the admissions should be made, admissions so made with deliberateness and formality would ordinarily not be permitted to be withdrawn; Coopers Brewery Ltd v Panfida Foods Ltd (supra) at 745 and 748. Thus a court will not lend its approval to the withdrawal of admissions where, by analogy with the making of amendments, this is actuated by purely tactical reasons; compare Devae Prufcoat Pty Ltd v Altex Industrial Paints Ltd (Cole J, 15 March 1989, unreported). 4. It will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts. Leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters. Irrespective of whether the admission has or has not been formally made, leave may be refused if the other party has changed its position in reliance upon the admission; H Clark (Doncaster) Ltd v Wilkinson (supra), in that respect not doubted. 5. Following Cohen v McWilliam and Anor (1995) 38 NSWLR 476, a court is not obliged to give decisive weight to court efficiency, such that a party who wishes to defend its claim is entitled to a hearing on the merits, with cost orders being available as a means of compensating the other party for any costs thereby unnecessarily incurred or not fairly visited on the other party." 19The foregoing principles need to be understood in the context of the Civil Procedure Act and the circumstance that his Honour was dealing with the issues before him on appeal, prior to delivery of the judgment of the High Court in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175, which confirmed the wider considerations of case management mandated by the provisions of the Civil Procedure Act in order to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 20Due consideration must be given to the public interest and the efficient management of court resources. 21Notwithstanding that the issues with which Santow J was dealing related to an appeal, the principles have, with the necessary changes, similar force in any consideration for the granting of leave to withdraw an admission. It is the foregoing principles that I apply to the issues before the Court, but particularly those provisions of the Civil Procedure Act. Conclusion 22The issues raised by the motions are slightly different to some more general circumstances relating to the withdrawal of admissions. The parties are to be congratulated on the manner in which the issues have been agitated. 23The underlying factual circumstances are not uncomplicated. They may ultimately relate to the proper interpretation of the joint venture agreement, which is before the Court. Nevertheless, the issue of the withdrawal of the admissions is less complicated. 24The starting point is a slight ambiguity in the Statement of Claim. I make no criticism of the draftsperson of the pleading. Nevertheless, the Statement of Claim alleges in [1] as earlier stated, that Lucas was entitled to immediate possession of "a quantity of" pipes for the purpose of providing horizontal directional drilling services which was its business (or part of its business). This was a general statement as to the nature of the business of Lucas and the fact that, as part of its business, Lucas owned pipes and was entitled to the immediate possession of them. 25At [5] of the Statement of Claim the allegation is somewhat different. The allegation at [5] is that a particular number (203) of pipes were the subject of an unauthorised sale. Thereafter the conversion and abuse of the defendants relates to the pipes that were the subject of the sale to which [5] of the Statement of Claim refers. 26The defendants (and each of them) have from the very first instance pleaded in relation to that Claim, as earlier stated, that they admitted that the plaintiff in the course of its business owned and/or was entitled to immediate possession of a quantity of pipes, but denied that the plaintiff owned or was entitled to the immediate possession of the pipes purchased by CPW, to which paragraph [5] refers. 27The Court must be concerned to ensure that the real issues between the parties are pleaded in a way that ensures that the Court (or whichever Judge must deal with the issue) and the parties are aware of that which is truly in issue. 28Such is the mandate in s 56 of the Civil Procedure Act. It is difficult to encourage or facilitate the expeditious determination of issues between the parties, unless those issues are the subject of clear and precise pleadings. 29It seems to me that the fundamental opposition by Lucas to the withdrawal of the admission and the filing of a Further Amended Defence is an opposition which misunderstands the nature of "the admission" already made. Properly construed, the admission of the first, second and third defendants is an admission only that Lucas carries on the business of providing horizontal drilling pipe services for which purpose it owns and is entitled to the immediate possession of a quantity of pipes. 30The pleading containing the foregoing "admission" does not admit, but denies, that the quantity of pipes sold, to which paragraph [5] of the Statement of Claim refers, were within that class, namely, were pipes which were owned by Lucas or to which Lucas was entitled to immediate exclusive possession. 31The real issues between the parties centres around the quantity of pipes to which paragraph [5] refers and it is, in my view, important for those real issues to be pleaded in a way that is clear. Any ambiguity between the admission in paragraph [2] of the Defence or Amended Defence and the denial in the same paragraph should be clarified. 32In my view, the withdrawal of the admission is the withdrawal of an admission which is not crucial in the proceedings in that it relates to the general ownership of pipes owned by Lucas for the purpose of carrying on its business, but not the pipes for which Lucas claims orders for specific performance and/or damages for their use. 33As discussed in the course of the agitation of the matters, the prejudice that may be suffered by Lucas is a prejudice, mostly, that should not qualify the need to clarify the issues between the parties. The "prejudice" is no more than a requirement that Lucas must deal with and prepare the case in a manner that it should have done in the first place, and, on my view of the proper construction of the Defence and Amended Defence, may have been required in any event. 34The "prejudice" is not irremediable and, on the evidence before the Court, does not appear to be significant. 35Nevertheless, the Court is concerned that a matter relating to specific performance and damages in a commercial operation has taken from 2011 to today's date and it is still at the pleading stage. The Court will grant leave to the parties, and each of them, to approach the Court on short notice for directions to manage the proceedings under special orders and to ensure its expeditious conclusion. 36It was for the foregoing reasons that the Court, on 17 April 2014, made the following orders: (1)Leave for the defendants, and each of them, to withdraw admissions made in the pleadings and within 14 days' hereof file further amended defences in or to the effect of that attached to the respective notices of motion. Save that each defendant is entitled to deny allegations proposed only to be "not admitted" in the said prospective pleading. (2)The defendant shall pay the costs thrown away on an indemnity basis. The costs thrown away will be payable forthwith. (3)The defendants will pay the plaintiff's costs of the motion on the ordinary basis. (4) Liberty to apply on three days' notice. ********** 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: 30 April 2014