Bank of Western Australia Ltd v Coppola

The Discretion to Permit Withdrawal of an Admission 21UCP rule 17.3 provides: (1) The requesting party may, by a notice served on the admitting party (the requesting party's notice), require the admitting party to admit, for the purposes of the proceedings only, the facts specified in the notice. (2) If, as to any facts specified in the requesting party's notice, the admitting party does not, within 14 days after service on the admitting party of the requesting party's notice, serve on the requesting party a notice disputing that fact, that fact is, for the purposes of the proceedings only, taken to have been admitted by the admitting party in favour of the requesting party only. (3) The admitting party may, with the leave of the court, withdraw any such admission. 22There must be proper grounds for the exercise of the discretion. The circumstances in which an admission was made must be examined. There is usually a need for the applicant to explain the circumstances in which the admission was made and satisfy the Court a grant of leave will not prejudice an opponent's right to a fair trial: Maile v Rafiq [2005] NSWCA 410 at [42] (per Tobias JA with whose reasons Brownie AJA agreed). It has also been said that where leave to withdraw an admission is sought, a court will require an explanation for the making of the admission. The explanation must be a sensible one, based on evidence of a solid and substantial character: Langdale v Danby [1982] 3 All ER 129; Hollis v Burton [1892] 3 Ch 226 and Crumper v Pothecary [1941] 2 KB 58 at 70; Celestino v Celestino [1990] FCA 299 at [12]; Jeans v Commonwealth Bank of Australia Ltd [2003] FCAFC 309; (2003) 204 ALR 327 at [17]-[19]. In For The Good Times Pty Ltd v Coltern Pty Ltd [2007] NSWSC 108 at [4] Young J (as he then was) said: "[3] ... Essentially, the court is after the truth. The pleadings are the principal method of defining the issues to enable the court more easily to get to the truth. Thus, in principle, an erroneous admission should be able to be withdrawn unless other factors outweigh. The principal factor that might outweigh is that there is such great prejudice to the other party, because of the way in which that party has prepared his or her case on the basis of the admission, that the leave should not be given. [4] What I have just said is a gross over simplification and the cases show there has to be a distinction between an admission deliberately made, an admission which is key to the way in which the parties have prepared their case, and more peripheral facts. There must be some evidence as to how the admission was made and there must be some material to show that it was erroneous ." (My emphases) 23Although here the admission was in a Rule 17 Notice, the authorities treat such admissions in the same way as admissions in pleadings: Celestino (pre litigation admission of liability in correspondence); Rigato Farms Pty Ltd v Ridolfi [2000] QCA 292; [2001] 2 Qd R 455 (failure to respond to notice to admit facts).

An Evidence Issue 24There have been other proceedings in this court in which the first defendant and the second defendant and the plaintiff were also parties, and in which the same power of attorney came under scrutiny. In those proceedings, heard by Slattery J, claims were made for money lent by a company called Fast Funds Pty Limited. His Honour gave judgement on 14 May 2010: Fast Funds Pty Ltd v Coppola [2010] NSWSC 470. There, the plaintiff alleged the first defendant's daughter, Vanessa, had signed relevant loan documents under the power of attorney. On 10 December 2009 the first defendant swore an affidavit in those proceedings. Paragraphs 32 and 33 said: "32. In about mid 2007 Vanessa said to me words to the effect of: "Dad I'm having trouble managing your properties on your behalf. Although I am your daughter it is difficult for me to get information because I am not the owner. I've spoken to our lawyer and he suggests that I obtain a power of attorney. That would allow me to manage your properties." 33. Some time shortly after the statements made to me by Vanessa as set out in paragraph 32 above I was presented with a document called power of attorney. Vanessa said to me words to the effect of: "Dad this is the document that we were talking about. It allows me to manage your properties." ... I signed a power of attorney on 26 June 2007. My signature was witnessed by my youngest daughter's then boyfriend Mohamad Harmouche. Annexed hereto and marked "A" is a copy of that power of attorney dated 26 June 2007." 25In the course of the trial before Slattery J, counsel then appearing for the first defendant read his affidavit of 10 December 2009. At paragraphs 45 and 46 of his judgement, Slattery J said: "45. Shortly afterwards Vanessa presented a form of a power of attorney to Elio, identifying it to him as the document "that we were talking about" that is, as a document allowing her to manage his properties. Elio Coppola trusted Vanessa's description and signed the document as she requested. He signed the power of attorney on 26 June 2007.... Mr Mohamad Harmouche then the boyfriend (and later the husband) of Elio's youngest daughter, Laura, witnessed the execution of the power of attorney... 46. Elio Coppola did not obtain legal advice concerning his entry into this power of attorney. I accept that he relied upon what Vanessa said to him about the way it would be used". 26At paragraph 220 Slattery J said: "Elio Coppola claims that he should not be bound by the transaction documents constituting the first loan. He did not execute any of those documents personally. Vanessa Coppola executed the letter of offer, the declaration of loan purpose and the associated mortgage to the first loan as his attorney pursuant to the power of attorney dated 26 June 2007. Elio's only act of assent to the first loan is through his execution of the power of attorney on 26 June 2007. I find that he understood that the power of attorney would only be used for a more limited purpose than executing mortgages over the title to November 9." 27Before me, Mr Newton tendered the first defendant's affidavit of 10 December 2011 from the proceedings before Slattery J. Mr Martin opposed that course. I reserved my decision on the admissibility of the evidence and said I would rule on it when giving judgement. Both counsel than addressed me on the alternative possibilities, that I would allow it in and that I would not.

Should that evidence be admitted? 28Ms Webster submitted that I should admit the first defendant's affidavit of 10 December 2009 as it provides a clear statement adopting the power of attorney in unmistakable terms in precisely the same effect as the words in the pleading the first defendant verified here. 29Mr Martin conceded before me that the power of attorney which was the subject of evidence before Slattery J, was the same power of attorney as is in question here. 30But, relying on Cleary v Jeans [2006] NSWCA 9; (2006) 65 NSWLR 355, he argued that an admission in other proceedings cannot and should not operate to prevent his client from litigating a fact in issue in existing proceedings which was not a fact in issue in other proceedings, even where there was a privity of parties; Slattery J, he argued, was not called on to decide whether the first defendant had in fact signed the power of attorney: any opinion expressed by him concerning the power of attorney would be obiter. He put to me that section 91, Evidence Act 1995 (NSW) prevents the admission into evidence of a finding of fact to prove the existence of a fact in issue in those same proceedings; if the judgment of Slattery J were admitted for a non-hearsay purpose, he argued, section 91(2) operates to negative the operation of section 60 Evidence Act . He also put to me that if I allow in the affidavit, it would constitute, at the trial, at best for the plaintiff, a prior inconsistent statement: it does not prevent him from running the case in his proposed new pleadings. 31Affidavits or documents which a party uses knowingly in judicial proceedings are capable of being evidence against that party in other proceedings to prove the same fact: British Thomson-Houston Co Ltd v British Insulated and Helsby Cables Ltd [1924] 2 Ch 160 at 164-165, 170-171. Mr Martin did not dispute the principle. 32Counsel did not in argument refer me to Uniform Civil Procedure rule 31.9 which provides: "(1) In any proceedings, evidence taken, or an affidavit filed, in other proceedings may not be used as evidence, saving all just exceptions and unless the court orders otherwise. (2) Leave may not be granted under sub rule (1) except to allow the evidence taken, or affidavit filed, in the other proceedings to be used in relation to the proof of particular facts." After I had reserved my judgment, I asked for and received, from Mr Martin and Mr Newton, submissions on the part to be played by rule 31.9 in this dispute. Both counsel gave me helpful written submissions.

Consideration on admissibility issue 33The evidence tendered is the affidavit, not the judgment of Slattery J. I propose to give leave to allow it in. It was apparently prepared by the first defendant's former solicitor, Mr Moloney, who witnessed it. On its face it says it was translated to the first defendant from English to Italian before he swore it. It is I think relevant to an issue on this application, namely whether what is contained in the admission is erroneous. It is important evidence in the plaintiff's case (s 192 Evidence Act ). 34I do not accept Mr Martin's submission that the issue is to be determined by reference to Cleary . Cleary went to a different issue, namely whether an issue which arises but is not decided in one case may be raised in another. This is not such a case. The affidavit is simply sworn evidence put forward by the first defendant in other proceedings. The plaintiff is not attempting to rely on an issue decided by Slattery J. It is true his honour made a finding that the first defendant had signed the power of attorney. But it is not the finding which the plaintiff wants to rely on. So section 91 Evidence Act has no relevance. 35The admission is far more than, as submitted by Mr Martin, a prior inconsistent statement, but clear and unequivocal admissions that he signed the power of attorney and that the power of attorney is genuine.

Other Evidence 36In the course of his address Mr Martin sought leave to reopen, to rely on the verified proposed amended defence and cross claim served on behalf of the first defendant with his motion for leave to file those pleadings. The pleadings were verified by affidavit of 19 July 2011. Among other things the first defendant in his affidavit swore to he said: "In answer to the relief sought in the further amended Statement of Claim the First Defendant:

1. says that it is not his signature, nor did he authorise his signature to be placed, on any of the Plaintiff's loan documentation or mortgages;
2. further says that it is not his signature on the document headed "Power of Attorney" and said to be dated 26 June 2007 ..." 37Mr Newton opposed leave to re-open and submitted that the affidavit ought not be formally read unless the first defendant was made available for cross examination. Mr Martin then said he no longer relied on the affidavit: merely the fact that there were pleadings which had emanated from the first defendant's current solicitor. He asked me to infer that they represented the current instructions of the first defendant. I admitted the proposed pleadings for that purpose, and I infer they do represent his current instructions. 38Although the defendant in his existing pleading asserted his signatures on the mortgage and loan documents were forgeries, Mr Martin said that that pleading did not adequately put the position, which is really this: all mortgage and loan documents were executed under the power of attorney. Thus, Mr Martin submitted, the only factual issue on a hearing would be whether his client, Mr Coppola, had executed the power of attorney: on the cross-claim, the only evidence will be that of a forensic document examiner. As the proposed pleading deletes Vanessa Coppola as a party, the allegations against her of fraud will not be pursued. As to lay evidence, he said Mr Coppola would "perhaps" put on an affidavit saying "it is not my signature". Further, no allegations of fraud would be ventilated, since the fraud claim against the first defendant's daughter would not be proceeding.

Should I permit withdrawal? 39At this reasonably early stage in the proceedings, an application to withdraw admissions should usually face a lower hurdle than would an application at trial, or, especially, on appeal. There are reasons for allowing the first defendant to withdraw the admissions. Thus I take into account: (a)Although the proceedings have been on foot for more than two years they have not been set down for trial: in Jeans on the other hand, as Mr Martin submitted, the application to withdraw the admission was made very late, on the third day of the trial, where permitting withdrawal would have opened up new and quite different issues from those presented already. I am satisfied this application was made promptly, once the first defendant's current solicitor became aware of the admissions; (b)There is no evidence put forward by the plaintiff of having changed its position by reason of the admissions, although it would, if the amended pleadings were permitted, be required to replead to the cross-claim and, possibly, file a reply; (c)The first defendant has provided what could be described as an explanation for the application and proposed change of defence: he says (and was not challenged on this) the admissions in the response to the Rule 17 notice were made without instructions. Mr Martin submitted that paragraphs five and six of the first defendant's affidavit of 12 August 2011 are sufficient material to provide an explanation, showing why the admission was originally made; (d)Although there was no evidence from the solicitor on this issue, and no explanation for the affidavit which verified the defence in which the first defendant admitted he had executed the power of attorney, Mr Martin submitted that the plaintiff, had it chosen, could have subpoenaed the solicitor, Mr Moloney, but had chosen not to; (e)I see some merit in Mr Martin's argument that if his client is permitted to withdraw the admission and replead, issues at trial will be narrower; and that if proceedings against Vanessa cease, that would reduce costs and court time consumed; (f)What I infer to be his current instructions that he did not sign the power of attorney; (g)Apart from a costs perspective, if I were to accede to the application of the first defendant, there would be no real prejudice to the plaintiff in having a fair trial: Maile v Rafiq at [42].

Consideration on whether or not to give leave to withdraw 40I say at once that I have not ignored what was said in Cropper v Smith (1884) 26 Ch D 700 at 710-711: "[T]he object of courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases... I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party... [A]s soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected, if it can be done without injustice, as anything else in the case is a matter of right..." See also Clough and Rogers v Frog (1974) 48 ALJR 481. 41However, I consider that I should refuse leave to withdraw the admissions. These are my reasons: (a)Although there is uncontradicted evidence from the first defendant that the Rule 17 notice admissions were not made on instructions, he did not assert in his affidavit that what is contained in the admissions was erroneous. He did not deny having signed the power of attorney. On the whole of the evidence (apart from what I infer to be his current instructions) there is no dispute factually that he signed the power of attorney; putting aside the admissions, there are his verified defence in these proceedings, and his affidavit in the other proceedings. (b)The admissions in the Rule 17 notice are completely consistent with the undisputed evidence showing he signed the power of attorney. (c)I accept Mr Newton's submission that the fact that Mr Moloney was not called by the plaintiff, is irrelevant: he was available to all parties: no inference against the plaintiff should be drawn from his absence. (d)No explanation was provided for the verified admission in the pleading, although its contents are completely consistent with the admissions in the Rule 17 notice and totally contrary to the case he how wishes to put; although the first defendant asserted Mr Moloney had made the Rule 17 admissions without instructions, he made no such complaint about Mr Ulbrick, who acted for him when the verified pleading was prepared and filed on 16 January 2011. (e)Although this is an interlocutory application, and there is uncontradicted evidence concerning the lack of instructions to his former solicitor concerning the making of the Rule 17 admissions, I consider the first defendant should have gone further than he did, and given positive evidence, consistently with the defence he now wishes to file, that what was contained in the admissions was incorrect; at best for him, the affidavit leaves his evidence in support of the orders as equivocal. (f)I accept Mr Newton's submission that it would be futile to allow withdrawal. 42I take account of the public interest in facilitating in civil disputes just, quick and cheap resolution of the real issues in dispute: s 56 Civil Procedure Act 2005. I also take account of the principles reflected in sections 58 and 64 of that Act. I accept the logic of Mr Martin's submission that if his application were to succeed there would be a narrowing of issues: and there would be one less party, and none of the complications which might arise with the late service of the second cross defendant. But on the present state of the matter, if the plaintiff makes a summary judgement application, that can also bring the matter to a speedy conclusion. If it succeeds, as a practical matter, it is unlikely, I think, that the cross claims will proceed further. 43Mr Martin urged me to infer that although his client had not given sworn evidence that he had not signed the power of attorney, "there is at least a possibility, however small, that the verified pleading in which that admission is said to be made was done on a similar basis", that is, that it was done without instructions. However, as Ms Webster and Mr Newton put to me, Mr Moloney was his solicitor when the Rule 17 notice was served, whereas a different solicitor, from a different firm, (Mr Graeme Ulbrick of G & D Lawyers) was acting for him when the defence was verified. So, each of them submitted, that submission is just not available: indeed, the fact that two different solicitors in two different firms on two different occasions, almost a year apart, apparently prepared documents containing the same admissions, highlights the gap in the first defendant's evidence. 44I do not accept Mr Martin's submission that determination of factual issues concerning the power of attorney may be simply done. In my view there may be much more required than obtaining a forensic document examiner's report. The various solicitors who have acted for the first defendant along the way would no doubt give evidence, as would Mr Hamouche, who apparently witnessed the signature on the power of attorney. 45I have considered Mr Martin's argument that costs orders, including on an indemnity basis, may be made against the first defendant if the case in the proposed pleading is ultimately found to be false: but there is no evidence that the first defendant could satisfy such costs orders, and, as Mr Martin conceded, costs orders do not necessarily assist a successful party. 46I accept Mr Martin's submission that refusal of his application is tantamount to an invitation to the plaintiff to make a successful summary judgement application. But that is the consequence of what I am satisfied is a lack of evidence to support the application. 47I have observed that although foreshadowing an application to withdraw the admission in the affidavit verifying the defence, Mr Martin made no formal application. Any such application however would have been doomed to fail. There was no evidence at all to explain how he came to make that admission. There was no evidence (apart from what I infer are his current instructions) to show it is wrong. That evidence is, I consider, of very slight weight. 48Orders (1)The amended notice of motion is dismissed. (2)The first defendant is to pay the costs of the plaintiff and the third cross defendant. (3)Adjourn the matter for directions to the Registrar's list on 14 November 2011.

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