Hartmann v Pilkington & Ors [2012] QSC 254

[2] Pursuant to a contract made on 20 October 2007 the plaintiffs purchased a property at Cedar Creek from the first defendants. They allege that the buildings and structures on the land lacked proper approvals and that certain structures encroached on to the adjoining landowners' property. They make various claims for damages against the first defendants, their solicitors (the second defendants), and the real estate agents (the third and fourth defendants).

[3] This proceeding was commenced on 20 October 2010. The plaintiffs filed a further amended statement of claim on 8 April 2011. The first defendants filed a notice of intention to defend and defence on 31 May 2011 ("the defence"). On 21 June 2011 the plaintiffs filed a reply to the first defendants' defence ("the reply").

[4] In the reply the plaintiffs adopted the admissions made by the first defendants in their defence, pleaded in response to certain paragraphs in the defence, and concluded -

"11. Save as set out above, the Plaintiff joins issue with each and every allegation contained in the Defence."

[5] The solicitors for the first defendants promptly wrote to the solicitors for the plaintiffs asserting that "quite an enormous number" of facts alleged in the defence, which they particularised by reference to paragraph numbers in the defence, had been admitted by virtue of r 166(1) of the UCPR. They asserted that there was no real prospect that the plaintiffs could succeed on their claim, and that their clients were entitled to judgment.

[6] By the time the application was heard, its scope was much reduced, as a result of negotiations between the parties and concession by the first defendants. Its scope was further reduced between the hearing and the delivery of further written submissions.

[7] So reduced, the application is for leave to withdraw the deemed admission of the allegations in paragraphs 7(b), 9(d), 11(c), 11(d), 14(a), 14(b), 28(c) and 29(a) of the defence.

[8] Rules 165, 166 and 168 of the UCPR provide -

(1) A party may, in response to a pleading, plead a denial, a nonadmission, an admission or another matter.

(2) A party who pleads a nonadmission may not give or call evidence in relation to a fact not admitted, unless the evidence relates to another part of the party's pleading.

(1) An allegation of fact made by a party in a pleading is taken to be admitted by an opposite party required to plead to the pleading unless -

(a) the allegation is denied or stated to be not admitted by the opposite party in a pleading; or

(b) rule 168 applies.

(2) However, there is no admission under subrule (1) because of a failure to plead by a party who is, or was at the time of the failure to plead, a person under a legal incapacity.

(a) the party has made inquiries to find out whether the allegation is true or untrue; and

(b) the inquiries for an allegation are reasonable having regard to the time limited for filing and serving the defence or other pleading in which the denial or nonadmission of the allegation is contained; and

(c) the party remains uncertain as to the truth or falsity of the allegation.

(4) A party's denial or nonadmission of an allegation of fact must be accompanied by a direct explanation for the party's belief that the allegation is untrue or can not be admitted.

(5) If a party's denial or nonadmission of an allegation does not comply with subrule (4), the party is taken to have admitted the allegation.

(6) A party making a nonadmission remains obliged to make any further inquiries that may become reasonable and, if the results of the inquiries make possible the admission or denial of an allegation, to amend the pleading appropriately.

(7) A denial contained in the same paragraph as other denials is sufficient if it is a specific denial of the allegation in response to which it is pleaded."

(1) Every allegation of fact made in the last pleading filed and served before the pleadings close is taken to be the subject of a nonadmission and rule 165(2) then applies.

(2) However, nothing in these rules prevents a party at any time admitting an allegation contained in a pleading."

[9] Withdrawal of an admission made in a pleading, including such a deemed admission,[1] requires the leave of the Court pursuant to r 188.

The circumstances in which the admissions were made

[10] The plaintiffs have sworn that they were unaware of the necessity to respond to the defence by filing a reply. I accept that that was so. The reply was drafted by a solicitor then in the employ of the solicitors for the plaintiffs. I accept that it was through her inadvertence that the requirements of r 166 were ignored.

[11] As Chesterman JA observed in Hanson Construction Materials Pty Ltd v Davey & another:[2]

"[15] It is no doubt true that the UCP Rules are meant to expedite litigation and to limit disputes to issues that are genuinely in contest, but it must, in my respectful opinion, remain the case that the rules do not operate so as to prevent the trial of issues that are genuinely in dispute.

[16] The first consideration, therefore, in an application to withdraw admissions must be whether the subject matter of the admission is truly contested. Often, if not always, that determination will be informed by the circumstances in which the admission was made. It is usually a good indication that a fact is not in dispute that the party against whom it is made admits it to be true. This, I apprehend, is why the cases emphasise the need for an explanation as to the making of the admission. If an applicant cannot demonstrate that there is a real dispute about the subject matter of the admission no other consideration need be examined."

[12] It follows from the necessity of demonstrating that there is a real dispute about the subject matter of the admission that an applicant for leave needs to show the response he or she would belatedly make to the allegation and to confirm that that response would accord with evidence available to be led at trial.[3]

[13] Counsel for the first defendants conceded that had the reply been properly pleaded, the plaintiffs would have been entitled to plead nonadmissions. But, he submitted, because they have fallen foul of r 166 and must now rely on r 188, they must point to a real dispute; it was not good enough for them to say that they do not know whether the matters pleaded are true or correct and that despite investigation they cannot find out whether they are true or correct. He submitted that in order to dispute something one must positively assert that the contrary position is true. He acknowledged that this could work an injustice, but submitted that it was the effect of the Court of Appeal decisions in Hanson and Ridolfi v Rigato Farms Pty Ltd.[4]

[15] In neither of those cases was the applicant wanting to plead a nonadmission in relation to a fact deemed to have been admitted. Ridolfi was concerned with deemed admissions by reason of non-response to a notice to admit.[5] Hanson was a case concerning deemed admissions in consequence of non-compliance with r 166, but there the applicant wished to deny, rather than not admit, the alleged facts.

[16] The rules acknowledge that a party's pleading may contain an allegation of fact which is outside the knowledge of the opposing party, and that even after reasonable inquiries the opposing party may still not know whether such fact is true or untrue. In such cases, they permit the opposing party to plead a nonadmission, so long as it is accompanied by a direct explanation for the opposing party's belief that it cannot be admitted.

[17] There is no warrant for restricting the circumstances in which leave to withdraw an admission may be granted to those in which the applicant wishes to plead a denial and can provide a "direct explanation" for his or her belief that the allegation is untrue.[6]

[18] There may be facts solely within the knowledge of the party who pleads them. Where, however, a party ("A") pleads a conversation between him or her and a third party ("X"), the opposing party ("B") will seldom be entitled to plead a nonadmission simply on the basis that he or she was not a party to the conversation and its contents are within the knowledge of A. In most cases it would be reasonable to expect B to make inquiries of X to ascertain the truth or untruth of what has been pleaded. Similarly, where A pleads facts about his or her own occupation or use of land, B will seldom be entitled to plead a nonadmission simply on the basis that those facts are within the knowledge of A. In most cases it would be reasonable to expect B to make inquiries to ascertain the truth or untruth of what A has pleaded about him or herself. Of course, such inquiries may not be fruitful, and thus B may be justified in pleading a nonadmission.

[19] Counsel for the plaintiffs cited several cases from other jurisdictions where parties were allowed to withdraw admissions in order simply to put the opposing parties to proof,[7] but in none of those cases were procedural rules such as UCPR r 166 considered.

[20] I consider that where a party wishes to withdraw an admission and instead to plead a nonadmission, he or she should not usually be given leave to do so in the absence of sworn evidence of inquiries made to find out whether the allegation is true or untrue, and the Court's being satisfied that those inquiries were reasonable in all the circumstances.

[21] Questions of delay in making an application for leave to withdraw an admission and prejudice to the opposing party if leave were granted can be relevant to the exercise of the Court's discretion. I did not understand counsel for the first defendants to rely on either delay or prejudice in the present application.

[22] Counsel for the plaintiffs prepared a very helpful schedule juxtaposing allegations in the statement of claim and the allegations in the defence responsive to them which the plaintiffs are deemed to have admitted. I shall take each deemed admission in turn, identifying it by the paragraph number in the defence.

(a) were orally informed by the Fourth Defendant that the vendor was a property developer by the name of Jeffrey Pilkington;

(b) observed, as was the fact, that the land was in a semi-rural estate:

(c) observed, as was the fact, that the land had no boundary fences;

(d) observed, as was the fact, that the boundaries of the land were marked by a number of pegs with blue tips on top ('the pegs') purportedly delineating the boundary of the land;

(e) observed, as was the fact, that the building works situated on the land appeared to be 100% complete;

(f) were orally informed by the Fourth Defendant that:

(i) the land was being sold with the building works fully completed; and

(ii) the vendor wanted a sale price of approximately $650,000.00 to $700,000.00.

7. As to paragraph 4 of the Statement of Claim, the First Defendants:

(b) Say that matters alleged to have been said by the Fourth Defendant in paragraph (4) of the Statement of Claim are incorrect because the seller of the land was the First Defendants and that:

(i) The Defendant Marcia Ngarie Pilkington is not a property developer;

(ii) The Defendant Jeffery Paul Pilkington has acted as director of corporations carrying out property development;

(iii) The land referred to in the proceedings was not land obtained or used in the course of development activities by the First Defendants but instead was obtained and used for residential and recreational purposes.

[24] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 7(b) of the defence.

[25] Counsel for the plaintiffs submitted that they are matters clearly within the knowledge of the first defendants. He submitted that the only inquiries that could reasonably be made were of the first defendants themselves. He submitted that whilst disclosure by the first defendants might affect the situation, it could not be asserted that the plaintiffs could, with greater effort, have placed evidence before the Court contradicting the matters pleaded.

[26] However, the plaintiffs have not sworn to what, if any, inquiries they have made to ascertain the truth or untruth of the facts pleaded in paragraph 7(b) of the defence. Counsel for the plaintiffs did not ask the Court to find that they had made any inquiries of the kind required by r 166 (3).

[27] In the circumstances, I refuse leave to withdraw the deemed admission of the facts in paragraph 7(b) of the defence.

"6. During the first inspection the first named Plaintiff had a conversation with the Fourth Defendant to the following effect:

(a) the first named Plaintiff informed the Fourth Defendant that he wanted to see all the approvals for the building works situated on the land and all associated architectural plans and drawings ('the approval documents'); and

(b) The Fourth Defendant replied to the effect 'absolutely no problems at all. I will contact the vendor and will get back to you'.

7. On or about the day following the first inspection, the first named Plaintiff received a telephone call from the Fourth Defendant during which the Fourth Defendant informed the first named Plaintiff to the effect that 'the vendor has all the documents with his architect and they will forward them to us in due course ('the first representation').

9. As for paragraphs 6 and 7 of the Statement of Claim, the First Defendants:

(d) Say that they did not inform the Fourth Defendant of any matter to the substance or effect of that pleaded in paragraph 7 of the Statement of Claim and instead when asked by the Fourth Defendant about the existence of a final inspection certificate informed the Fourth Defendant that there was no final inspection certificate."

[29] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 9(d) of the defence.

[30] Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

[31] The third and fourth defendants filed a notice of intention to defend and defence on 8 December 2011, which the plaintiffs read on the hearing of this application. In paragraph 8, they admitted that on or about the day following the first inspection, the fourth defendant telephoned the first named plaintiff and they had a conversation. They denied that the fourth defendant made any representation about the approval documents. They pleaded further that if the fourth defendant made the first representation (which they denied), he did so as agent for the first defendants and in reliance on information they provided to him.

[32] In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 9(d) of the defence. I give them leave to withdraw the deemed admission of those matters.

"13. At the time of entering into the contract of sale:

(a) The first named Plaintiff informed the Fourth Defendant to the effect that the Plaintiffs would not proceed with the purchase of the land until the Plaintiffs were provided with copies of the approval documents; and

(b) The Fourth Defendant informed the first named Plaintiff to the effect that he was obtaining the approval documents from the vendor ('the third representation').

1. As to paragraph 13 of the Statement of Claim, the First Defendants:

(c) Say that they were not informed that the Plaintiffs required the provision of approval documentation;

[34] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 11(c) of the defence.

[35] Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

[36] In paragraph 12 of their defence the third and fourth defendants admitted that a conversation took place between the first named plaintiff and the fourth defendants at the time the plaintiff entered into the contract. They denied that the first named plaintiff said words to the effect as alleged in paragraph 13(a) of the statement of claim and that the fourth defendant said words to the effect alleged in paragraph 13(b). They alleged that the fourth defendant told the first named plaintiff words to the effect "I have made enquiries with the vendors and they have informed me that they will be forwarding the documents to me. I have not yet seen them. If I receive them, I will provide them to you." They denied that the fourth defendant made any representation about the approval documents. They pleaded further that if the fourth defendant made the third representation (which they denied), he did so as agent for the first defendants and in reliance on information they provided to him.

[37] In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 11(c) of the defence. I give them leave to withdraw the deemed admissions of those matters.

"13. At the time of entering into the contract of sale:

(a) the first named Plaintiff informed the Fourth Defendant to the effect that the Plaintiffs would not proceed with the purchase of the land until the Plaintiffs were provided with copies of the approval documents; and

(b) The Fourth Defendant informed the first named Plaintiff to the effect that he was obtaining the approval documents from the vendor ('the third representation').

1. As to paragraph 13 of the Statement of Claim, the First Defendants:

(d) Say that they had not agreed to provide to the Fourth Defendant or to the Third Defendant any approval documentation;

[39] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 11(d) of the defence.

[40] Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

[41] The third and fourth defendants' response to paragraph 13 of the statement of claim refutes what the first defendants pleaded in paragraph 11(d) of the defence.

[42] In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 11(d) of the defence. I give them leave to withdraw the deemed admissions of those matters.

"30. Further, on the day of settlement, prior to the time for settlement, the first named Plaintiff had a telephone conversation with the Fourth Defendant wherein the Fourth Defendant represented to the first named Plaintiff to the effect that:

(a) he had spoken with the vendor and that the vendor had all the approval documentation;

(b) he would fax the approval documentation through to the first named Plaintiff when the approval documentation was received from the vendor;

(d) he promised the plans would be on the first named Plaintiffs fax machine the following morning;

(e) the Plaintiffs could proceed to settlement of the contract of sale comfortably as he had spoken to the vendor and that the vendor just had to finish his work for the day and deliver the approval documents; and

(f) all the approval documents were good; (collectively referred to as 'the fourth representation').

1. As to paragraph 30 of the Statement of Claim, the First Defendants:

(a) Say that neither of them had any discussion with the Fourth Defendant in which words to the effect alleged in paragraph 30(a), 30(b), 30(d), 30(e) and 30(f) were said;

[43] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 14(a) of the defence.

[44] In paragraph 14 of their defence the third and fourth defendants admitted that on the day of settlement, and prior to settlement, the first named plaintiff had a telephone conversation with the fourth defendant. They admitted that during the conversation the fourth defendant informed the first named plaintiff that he had made enquiries with the first defendants about the approval documents, the first defendants had informed him that the approval documents existed, and if the approval documents were provided to him by the first defendants he would fax them to the first named plaintiff. Otherwise they denied that words to the effect alleged were said and denied that the fourth defendant made any representation about the approval documents. They pleaded further that if the fourth defendant made the fourth representation (which they denied), he did so as agent for the first defendants and in reliance on information they provided to him.

[45] In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 14(a) of the defence. I give them leave to withdraw the deemed admission of those matters.

"30. Further, on the day of settlement, prior to the time for settlement, the first named Plaintiff had a telephone conversation with the Fourth Defendant wherein the Fourth Defendant represented to the first named Plaintiff to the effect that:

(a) he had spoken with the vendor and that the vendor had all the approval documentation;

(b) he would fax the approval documentation through to the first named Plaintiff when the approval documentation was received from the vendor;

(d) he promised the plans would be on the first named Plaintiffs fax machine the following morning;

(e) the Plaintiffs could proceed to settlement of the contract of sale comfortably as he had spoken to the vendor and that the vendor just had to finish his work for the day and deliver the approval documents to him; and

(f) all the approval documents were good; (collectively referred to as 'the fourth representation').

1. As to paragraph 30 of the Statement of Claim, the First Defendants:

(b) Say that neither of them authorised or permitted the Fourth Defendant to say to the Plaintiff (or either of them) words to the effect pleaded;

[47] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 14(b) of the defence.

[48] Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

[49] The third and fourth defendants' response to paragraph 30 of the statement of claim refutes what the first defendants pleaded in paragraph 14(b) of the defence.

[50] In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 14(b) of the defence. I give them leave to withdraw the deemed admission of those matters.

"48. The First Defendants were each a person involved in a contravention of sections 38, 40 and 40A of the FTA by the Third Defendant and the Fourth Defendant, within the meaning of section 5F thereof: in that:

(a) the First Defendants authorised the making of the building works representations, and each of them, and intended them to be made.

(b) The First Defendants knew that the building works representations had been, or would be, made.

(c) the First Defendants knew that the building works did not have such consents, permits and approvals or, alternatively, had no basis for any belief that the building works had such consents, permits and approvals;

(d) there were no reasonable grounds for making the building works representations; and

(f) the First Defendants intended that the building works representation be relied upon by the Plaintiffs to enter into, and complete, the contract of sale.

49. The Plaintiffs may recover the Plaintiffs loss and damage from the First Defendants, the Third Defendant or the Fourth Defendant, pursuant to section 99 and section 100 of the FTA.

50. The Fourth Defendant, and thereby also the Third Defendant, was a person involved in the contravention of sections 38, 40(e) and 40 (A)(1)(b) of the FTA in relation to the building works representations within the meaning of section 5F of the FTA and further, by virtue of section 94 of the FTA. is also liable for such contraventions.

51. Further, the First Defendants and the Third Defendant are each is vicariously liable for the building works representations made by the Fourth Defendant.

52. The building works representations were made initially and lastly by the use of the telephone and continued to operate and be reinforced in personal meetings such that subsection 6(3) of the TPA applies to those representations.

53. Further, in making the building works representations, the First Defendants by their agents, the Third Defendant (by its employee the Fourth Defendant), and the Third Defendant, by its employee the Fourth Defendant;

(b) engaged in conduct that was misleading or deceptive or likely to mislead or deceive within the meaning of section 52 of the TPA, particulars whereof appear in paragraph 42 hereof.

1. As to paragraph 48, 49, 50, 51, 52 and 53 of the Statement of Claim, the First Defendants:

(c) Say that if it is found that any of the building works representations were made, they were made without the authority, knowledge or consent of the First Defendants;

[52] Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 28(c) of the defence.

[53] In paragraph 40 of the statement of claim, the plaintiffs pleaded -

"40. The first, second, third and fourth representations each, or alternatively collectively, represented that the building works had all necessary consents, permits and approvals in compliance with all statutory requirements relevant to such works ('the building works representations')."

[54] In their defence the third and fourth defendants denied the allegations in paragraphs 40, 48 - 53 (inter alia) for the reasons set out in earlier paragraphs of their defence. Relevantly, their position seemed to be that if they made the building representations (which they denied), they did so as agent for the first defendants and in reliance on information they provided to them. This refutes what the first defendants pleaded in paragraph 28(c) of the defence.

[55] In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 28(c) of the defence. I give them leave to withdraw the deemed admission of those matters.

"54. Further, in making the building works representations, the First Defendant, by their agents, the Third Defendant (by its employee, the Fourth Defendant) and the Third Defendant, by its employee the Fourth Defendant in contravention of subsection 53(c) and 53A(1)(b) of the TPA, represented that services, being the interest in and rights in relation to the land to be acquired by the Plaintiffs from the First Defendants, had an approval which they did not have; in that,:

(a) the building works did not have all necessary consents, permits and approvals in compliance with the statutory requirements for such building works as appears in subparagraph 1(b) hereof; and

(b) there were no reasonable grounds for making the building works representations.

1. As to paragraph 54 of the Statement of Claim, the First Defendants:

(a) Say that the sale of the land by them to the Plaintiffs was not in the course of trade or commerce;

[57] In their affidavits the plaintiffs did not expressly address the allegation in paragraph 29(c) of the defence that the sale of the land was not in the course of trade or commerce, although they deposed to having no knowledge of the matters alleged in paragraph 7(b) of the defence - that the female first defendant is not a property developer, that the male first defendant has acted as director of corporations carrying out property development, and that the first defendants did not obtain or use the land in the course of development activities but instead for residential and recreational purposes.

[58] Counsel for the plaintiffs submitted that only the first defendants know the basis on which they sold the land, and that there is no evidence the plaintiffs could obtain to contradict the allegation in paragraph 29(a) of the defence that the sale was not in the course of trade or commerce.

[59] The plaintiffs have not sworn to what, if any, inquiries they have made to ascertain the truth or untruth of the facts pleaded in paragraph 29(a) of the defence. Counsel for the plaintiffs did not ask the Court to find that they had made any inquiries of the kind required by r 166 (3).

[60] In the circumstances, I refuse leave to withdraw the deemed admission of the allegation in paragraph 29(a) of the defence.

[61] I give the plaintiffs leave to withdraw the deemed admissions of the matters alleged in paragraphs 9(d), 11(c), 11(d), 14(a), 14(b) and 28(c) of the defence of the first defendants filed on 31 May 2011.

[62] I will hear the parties on the form of the order and on costs.

[1] Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209.

[2] [2010] QCA 246.

[3] Ridolfi v Rigato Farms Pty Ltd [2001] 2 Qd R 455 at [19] per de Jersey CJ.

[7] ACN 007 528 207 Pty Ltd (in liq) v Bird Cameron (Reg), BPM Pty Ltd CAN 008 787 219 [2003] SASC 429; Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd [2000] FCA 1732; Sands v Channel Seven Adelaide Pty Ltd [2009] SASC 215.