Inglis v English Language Company Australia Pty Ltd

Supreme Court of NSW|2022-11-08|Before: Chen J

Solicitors: Carter Capner Law (Plaintiff) H & H Lawyers (Defendant) File Number(s): 19/019254

Introduction

This is an application by the defendant, by Notice of Motion filed 10 June 2022, for leave under rule 12.6(2) of the Uniform Civil Procedure Rules 2005 (the 'UCPR'), to withdraw a number of admissions contained within the Amended Defence that it filed on 3 September 2020.
The plaintiff opposes leave being granted.

Legal principles: leave to withdraw admissions

Rule 12.6(1) and (2) of the UCPR provides: (1) A party raising any matter in a defence … 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.
The legal principles applicable when a party seeks leave to withdraw an admission under this rule are not contentious, and there was no debate about them before me. They were summarised by Santow J in Drabsch v Switzerland General Insurance Co Ltd (SC., unreported, 16 October 1996, pp 7-8) 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 (full Supreme Court of Victoria, 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 Ltd v O'Neill (above), 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 (above) 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 (above), in that respect not doubted. 5. Following Cohen v Mc William 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 costs 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.
These guiding principles have been consistently followed and endorsed - albeit that regard must be had to ss 56-58 and 64 of the Civil Procedure Act 2005 (NSW) ('the CPA'): see, for example, The Nominal Defendant v Gabriel (2007) 71 NSWLR 150; [2007] NSWCA 52 at [112]; New South Wales Land and Housing Corporation v Reilly [2012] NSWCA 286 at [52]. As to the need to read Santow J's point 5 in light of the provisions of the CPA and the High Court decision in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27, see Candy v GIO General Limited [2013] NSWSC 810 at [59]-[60] (Campbell J) ('Candy'); National Australia Bank Ltd v Swed [2014] NSWSC 811 at [9] (Davies J) ('Swed').

The admissions sought to be withdrawn

The allegations which were admitted in whole or in part in the ASOC Defence, which the defendant seeks to withdraw and now deny, are as follows: 1. Paragraph 1(b)(ii) of the ASOC: in that paragraph the allegation is that the Defendant "was engaged in the marketing of teaching internships inter alia in Vietnam to recruit persons such as the Plaintiff to teach English to students there". This allegation was previously admitted by the defendant: ASOC Defence, par 1(b)(i). It had also been admitted in the defence to the SOC filed on 30 April 2019: see par 1(b)(i). 2. Paragraph 1(b)(iv) of the ASOC: in that paragraph the allegation is that the Defendant "placed TEFL qualified English language teachers to whom it supplied such internships, in schools to teach English to students inter alia in Vietnam for a fee of USD$750 per teacher with such payment being received by TTV Enterprises Limited ('TTV')". This allegation was previously admitted - in part - by the defendant: ASOC Defence, par 1(b)(ii). There it was admitted that "it arranged for the placement of English language teachers in schools in, inter alia, Vietnam, for a commission…", but otherwise did not admit the paragraph. This matter was not admitted in the defence to the SOC filed on 30 April 2019: see par 1 (b)(ii). 3. Paragraph 1(b)(v) of the ASOC: in that paragraph the allegation is that the defendant "provided training and instruction to such TEFL qualified English language [teachers] in health, safety, transport and cultural features of living and working in Vietnam and the risks in relation thereto that they may encounter". This allegation was previously admitted by the defendant: ASOC Defence, paragraph 1(b)(i). This matter was not admitted in the defence to the SOC filed on 30 April 2019: see par 1 (b)(ii).
Thus, to recap, the following matters of fact were admitted in the ASOC Defence: 1. That the defendant was engaged in marketing teaching internships in Vietnam and to recruit persons such as the plaintiff: ASOC, par 1(b)(ii); ASOC Defence, par 1(b)(i). 2. That the defendant arranged for the placement of English language teachers in schools in, inter alia, Vietnam, for a commission: ASOC, par 1(b)(iv); ASOC Defence, par 1(b)(ii). 3. That the defendant "provided training and instruction to such TEFL qualified English language [teachers] in health, safety, transport and cultural features of living and working in Vietnam and the risks in relation thereto that they may encounter": ASOC, par 1(b)(v); ASOC Defence, par 1(b)(i).
It is clear - and neither party submitted to the contrary - that the matters that were admitted are within r 12.6 of the UCPR, and I have approached the matter on that basis.
Shortly stated, the evidence that explains the position that the defendant now wishes to adopt is as follows.
In around mid-2011, Mr Scott and his wife, Lynn Scott, decided to launch an English language teaching program (described as the Teach and Travel Vietnam program) in Vietnam - where newly qualified English teachers could work for six months teaching English to Vietnamese primary and high school aged children: statement of David Scott dated 11 August 2021, par 5. TTV was established in 2011 for that purpose, but later deregistered in 2016: statement of David Scott dated 11 August 2021, par 6. Mr Scott was its sole shareholder and director, and its business involved recruiting English teachers and introducing them to Vietnamese schools (and other international schools) in return for which TTV would receive a recruitment fee from the school concerned: statement of David Scott dated 11 August 2021, pars 6-7. The evidence from Lyn Scott is broadly to the same effect: statement of Lyn Scott dated 11 August 2021, pars 6-8.
Put simply, the business - being the English language teaching program in Vietnam - although conducted by Mr and Mrs Scott, was operated through a different corporate vehicle, being TTV.

The basis for the grant of leave

The parties argued the application by reference to three considerations: first, the nature of the explanation advanced for making the admission; secondly, the nature of the evidence adduced to support the case the defendant seeks to maintain at trial; and, thirdly, questions of prejudice.

The explanation

The defendant relies upon evidence from David Scott, and from its solicitor, Tin-Lok Shea to explain how the admissions were made, and why leave should be given to withdraw them. That evidence establishes the following: 1. That Mr Scott was personally involved in the day to day operation of both TTV and the defendant: statement of David Scott dated 11 August 2021, pars 6 and 18. 2. That in preparing the initial defence, Mr Scott did not turn his mind to which entity - TTV or the defendant - had been involved in connection with the program in Vietnam, and he did not distinguish between the two entities when providing his instructions: affidavit of David Scott affirmed 23 June 2022, pars 6-8. 3. That it was only in the process of preparing his evidentiary statement dated 11 August 2021, that it became apparent to Mr Scott that "it was TTV which had provided services in relation to the Vietnam teaching internship program": affidavit of David Scott affirmed 23 June 2022, par 9. 4. When preparing the amended defence, the solicitors for the defendant failed to review each of the traversed allegations that had been addressed by the defendant's previous solicitors (who had prepared that defence), but instead "concentrated on the allegations that arose out of the amended statement of claim": affidavit of Tin-Lok Shea sworn 10 June 2022, par 8. I add: Mr Scott is not suggested to have been involved at this time. Further the 'inconsistency' between the ASOC defence, and the evidentiary statement of David Scott dated 11 August 2021, only became apparent to the solicitor in the course of preparing for the mediation in May 2022: affidavit of Tin-Lok Shea sworn 10 June 2022, pars 11-12.
I accept that this explains the circumstances giving rise to the admissions, and demonstrates that it was not tactical or forensic, but the product of inattention and inadvertence.
To the extent that the plaintiff submitted that it was not until the defendant served the notice of motion on the plaintiff's solicitors "that the plaintiff was aware that TTV was alleged to be the proper defendant who was responsible for the matters that had been admitted" (submissions at [8]), I do not accept the submission. It is clear that, following the service of the evidentiary statement of David Scott dated 11 August 2021 (the statement was served on or around 18 August 2021), the plaintiff must have known at that time of the true case that the defendant wished to advance.

The nature of the evidence

In simple terms, the case for the defendant is that the matters that were admitted were performed by TTV, and not by itself. The evidence to support that central contention has been referred to above.
The authorities have recognised that a significant matter in determining where the interests of justice lie in an application for leave to withdraw an admission, is whether the facts admitted are contrary to the evidence or the actual facts: Drabsch summary point 4; For The Good Times Pty Ltd v Coltern Pty Ltd [2007] NSWSC 108 at [4] ('For The Good Times'); Candy at [61]; Swed at [10]. The rationale that underpins this guiding principle has been variously expressed, and includes because "the court is after the truth" (For The Good Times at [3]) and its concern to avoid a "case being determined on a false premise" (Hill End Gold Ltd v First Tiffany Resource Corp [2008] NSWSC 866 at [59]).
The nature of the evidence is important because it demonstrates, and I accept, that the admissions are inconsistent with the evidence filed in the proceedings and, thus, contrary to the actual facts or, at a minimum, would involve the case being determined on a false basis, in the sense described in the authorities. In my view, this is a significant factor that favours the grant of leave.

Prejudice

The plaintiff argued that if leave were granted to withdraw the admissions, it would suffer prejudice - which stood against a grant of leave.
The plaintiff first argued that it has "relied upon [the] admissions in paragraph 1(b) since the filing of the original defence" (submissions at [17] and [19]). However, as the analysis at [16], above, demonstrates, that could not be so: only one matter within that subparagraph of the SOC was admitted in the defence that was filed on 30 April 2019. The remaining admissions were made on 3 September 2020 and the evidence from Mr and Mrs Scott directed to those matters was served on or around 18 August 2021.
The plaintiff also argued that prejudice arose - a matter that told against the grant of leave - because it was "unlikely at this late stage that any action could be brought against TTV" (submissions at [9]). It was argued that, if the jurisdiction of the British Virgin Islands applied (the place of registration of TTV), then a six-year limitation period would apply, which has since expired.
In my view, the involvement of TTV (and any alleged prejudice) should not be overstated for the following reasons. 1. First, the plaintiff's primary case is one based in contract against the defendant: see [6]-[7] and [10], above, and to a large degree, would be documentary - extending to the contract documents, and surrounding evidence, as well as related promotional and program material. That case remains unaffected by any admissions sought to be withdrawn. 2. Secondly, on this application, the plaintiff argued that "the only branding for the program related to the [defendant]", and that the evidence of Lyn Scott, who conducted the business with her husband, accepted that "there was little distinction made between TTV and ELCA in the operation and marketing of the programs", and that "ELCA was the brand that was used" (submissions at [10], [25]-[26]). Further, during the course of submissions, reference was made to a considerable number of documents that went to proving that the defendant in fact provided the services and entered into the agreement with the plaintiff. Put simply, the plaintiff's case is still very much that the work (ie the provision of services in Vietnam) was performed by the defendant. 3. Thirdly, having regard to the fact that the plaintiff has a claim in contract against the defendant, the only substantive claim that the plaintiff might have had against TTV (assuming and applying domestic law) is one in negligence, or potentially one under the ACL. For choice of law purposes, Australia has, in connection with tort claims, a single 'actionability' rule, that is, it applies, and adopts, the substantive law of the lex loci delicti. In Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10 at [75], the High Court held that, consistent with its earlier decision in John Pfeiffer Pty Limited v Rogerson (2000) 203 CLR 503; [2000] HCA 36 at [80], [87] and [102], the lex loci delicti should be applied by courts in Australia as the law governing questions of substance to be determined in proceedings arising from a foreign tort. The assumption therefore made by the plaintiff - that the lex loci delicti was the British Virgin Islands - is inconsistent with that authority: it would be Vietnam. 4. Fourthly, I do not, respectfully, accept the submission that the plaintiff "could have … commenced proceedings against TTV by reregistering the company with access to its insurer within the limitation period" (submissions at [19]). It seems to me that the prospect of attempts being made to reregister TTV (it was deregistered in 2016) in the British Virgin Islands was highly remote. There is no suggestion, for example, that any attempt was made to explore the utility of taking such a step (bearing in mind its insurance status was unknown) prior to the filing of the amended defence. That is, prior to the time that at least two of the three admissions (those now sought to be withdrawn) had not been made, no steps had been taken to explore the possible joinder of TTV.
The plaintiff next argued that it has lost "its ability to gather appropriate evidence and witnesses relating to TTV and to contest the defendant's proposed denials" (submissions at [20]). It is not easy to identify the nature of this evidence and in any event why it still should not be available. None was specifically identified during submissions; in fact, as I have noted earlier, a considerable part of submissions involved close examination of the documents that tended to showcase the role of the defendant in relation to the plaintiff's activities in Vietnam. Further, it was conceded by the defendant that there was no written agreement between the defendant and TTV and I infer - based on the fact that neither Mr Scott nor Mrs Scott appreciated or observed the practical difference between the two companies - that very little would exist. Furthermore, as was pointed out during argument by the plaintiff, there is some evidence from others connected to the overall operation (Gordon Matthie, a director of TTG) that supports a different complexion to the arrangements to the ones given by Mr and Mrs Scott.
The plaintiff also argued that it was simply "too late" to permit the amendment, because the matter has been fixed for hearing in July 2023 (submissions at [18]). Part of this submission included an argument that the plaintiff had "relied" upon the admissions since the filing of the defence in April 2019. I do not accept this part of the submission, for the reasons earlier given - namely, only one matter was admitted at that time: see [16], above. To the extent: (a) that the submission relied upon observations made in connection with an application for security for costs, that there was an arguable case, I do not consider those observations to be relevant; (b) that the submission relied upon the fact that an application for security for costs had been made, and determined, based upon the pleadings at that time, again I do not consider that to be relevant.
It is important to place the admissions in context - and, in particular, have regard to what was not admitted in the ASOC defence. The following matters were put in issue or not admitted in the ASOC defence: 1. That the defendant "supplied such internships to persons such as the plaintiff": ASOC, par 1(b)(iii). This was not admitted. 2. That the defendant "provided accommodation and daily transport to and from … the schools in which such TEFL qualified English language teachers taught": ASOC, par 1(b)(vi). This was denied. 3. That the defendant "held itself out" as conducting matters including matters that were admitted (such as the training and instruction the subject of the admission in ASOC, par 1(b)(v)): ASOC, par 1(b)(vii). This was denied. 4. The defendant did not admit any of the agreements alleged by the plaintiff, and specifically denied that there was one formed with it: ASOC, pars 2-7: pars 2-6 were not admitted, and paragraph 7 (which alleged that there was a contract between the plaintiff and defendant) was denied.
Thus, there remained similar issues on the pleadings to the ones that were admitted which related to the particular role - and involvement - of the defendant in providing the services to the plaintiff in Vietnam.
I do not consider that case management or efficiency considerations point the other way or materially bear on the issue. There is no question about the hearing date being vacated, or compromised, and the evidence of each side has been served.
In my view the dictates of justice, and consideration of the matters in ss 56-58 (particularly the overriding purpose in s 56(1)) of the CPA, support the leave sought.

Orders

For the above reasons, I make the following orders: 1. Grant leave to the defendant, pursuant to r 12.6 of the UCPR for leave to withdraw the admissions which relate to the specific facts in paragraphs 1(b)(ii), 1(b)(iv) and 1(b)(v) of the Amended Statement of Claim. 2. Grant leave to the defendant, pursuant to s 64 of the CPA, to file the defence in the form that is annexure "A" to the affidavit of Tin-Lok Shea sworn 10 June 2022, with such defence to be filed and served by 15 November 2022, 5 pm. 3. Order the defendant to pay the plaintiff's costs of and incidental to the notice of motion, and any costs thrown away in consequence of the withdrawal of admissions.

Amendments 14 November 2022 - Format 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: 14 November 2022

Australian Consumer Law Civil Procedure Act 2005(NSW)

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