Consideration
11 Pursuant to r 22.06 FCR, the defendant has applied for leave to withdraw the admissions which have been attributed to it by its failure to respond to the Notice to Admit. It is required to take that step because, once a Notice to Admit has been validly served, r 22.04 FCR provides that, at the expiration of 14 days after service, the served party is taken to admit the facts set out in the Notice.
12 The defendant submitted that the relevant principles were explained by Santow J in Drabsch v Switzerland General Insurance Co Ltd (unreported, Supreme Court, NSW, 16 October 1996) and that those principles have subsequently been adopted and applied on numerous occasions in this Court (as to which see Deangrove Pty Ltd v Commonwealth Bank of Australia [2003] FCA 268 at [28]-[35]; Turner and Townsend Pty Ltd v Berry [2012] FCA 111 at 14; and Chyb v Commonwealth Scientific and Industrial Research Organisation [2012] FCA 872 at [17]). In Drabsch, Santow J said:
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…
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…
3. Where a court is satisfied that admissions have been made after consideration and advice such as from the parties' expert and after full opportunity to consider its case and whether the admission should be made, admissions so made with deliberateness and formality would ordinarily not be permitted to be withdrawn…
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…
5. Following Cohen v McWilliam & 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.
13 Counsel for the defendant then made the following submissions in support of his application.
14 First, he said that the admissions had not been made deliberately after due consideration by the defendant itself, nor had they been made with the benefit of legal advice.
15 Second, he submitted that the circumstances in which the deemed admissions arose were explained by Mr Griffiths in his affidavits. He submitted that the present case is clearly a case of inadvertence, rather than the result of a deliberate decision, let alone a deliberate decision on the part of the defendant itself.
16 Third, he submitted that the defendant had acted promptly once the consequences of its legal representative's inadvertence had been revealed.
17 Fourth, he submitted that there was no suggestion that the plaintiffs had acted upon the admissions in some way which could not now be reversed.
18 Fifth, he submitted there was no prejudice to the plaintiffs.
19 Finally, he submitted that the deemed admissions are inconsistent with the defendant's pleading. This is put on the question of liability rather than quantum.
20 Counsel for the plaintiffs relied upon a number of other authorities (Cox v Cox [2013] VSC 318 at [14]-[25] per Derham J; Rigato Farms Pty Ltd v Ridolfi (2001) 2 Qd R 455 at 458-459 [19]-[23] per de Jersey CJ; at 459 [27] per McPherson JA; and at 461 [32] per Williams J; and Permanent Trustee Company Ltd v Gulf Import and Export Company [2006] VSC 110 at [10] per Harper J). However, having looked at those cases, I do not think that they are authority for any different guiding principle but rather stand for essentially the same principle as was explained by Santow J in Drabsch.
21 Counsel for the plaintiffs submitted that I should not be satisfied with the explanation given on behalf of the defendant as to why the Notice to Admit was not properly addressed because Mr Rodgers himself has not given any explanation of his role in the matter. I have already addressed Mr Rodgers' position at [4] above. Counsel also submitted that it was incumbent upon the defendant to provide detailed particulars of the issue or issues which it would raise at trial, if the admissions are withdrawn, so that the Court can understand the implications of allowing the withdrawal of the admissions at this stage. He may have even gone so far as to suggest that those particulars needed to be provided on oath but I do not think that the authorities go quite that far.
22 It seems to me that, in the circumstances of the present case, the defendant needs to demonstrate that the admissions were made as a result of some error or mistake. I think that, on the evidence, the defendant has discharged that obligation. Whilst it is most unsatisfactory that the person having the care and carriage of the matter in the office of the solicitor for the defendant paid no attention to an important email coming from the other side, nonetheless, it is the reason why nothing was done in relation to the Notice to Admit. It is not a case of the admissions having been made advisedly after due consultation with the client and after due consideration by the lawyers of the consequences of making the admissions.
23 Second, it seems to me that it is incumbent upon the parties to explain to the Court the implications of the withdrawal of the admissions on the proceedings in the future and, in particular, at trial. Counsel for the plaintiffs submitted that the admissions gave his clients an advantage, which they should not lose by the Court now granting leave to the defendant to withdraw the admissions. However, I have difficulty accepting that the admissions achieve very much at all in assisting the plaintiffs to prove their case.
24 As I have mentioned, when looking at the pleadings, it seems to me that it is part of the plaintiffs' case (and an essential part of the plaintiffs' case as pleaded) that the plaintiffs prove the value of the relevant goods at the times when the particular transactions relied upon by the defendant as sale transactions took place.
25 Sooner or later, the plaintiffs will have to decide exactly how they wish to put their case. However, whatever decisions are made in this regard in due course, one thing is clear: They will need to prove the value of the goods. The admissions, as presently drafted, do not do that. They certainly do not do it on their own and it is difficult to see how, even if taken with other relevant evidence, the admissions would satisfy the plaintiffs' needs in terms of proof of value. The case is not yet ready for hearing. It is difficult to see what prejudice the plaintiffs will suffer if the admissions are permitted to be withdrawn.
26 I think that the appropriate course is for the Court to allow the admissions to be withdrawn and I propose to do so. However, I am concerned that the plaintiffs may encounter difficulties at trial if the goods themselves are not made available to the plaintiffs for the purpose of having the goods inspected and valued. I do not know the whereabouts of the goods at the moment. The transactions relied upon by the defendant suggest that the goods never left the possession of the company although it appears that, at least at the present time, the goods may be in the possession, custody or control of the defendant or possibly some third party.
27 I think that the plaintiffs are entitled to know what the defendant's case is in respect of the movement and location of the goods at all times after the alleged transactions took place in 2009 and 2010. In particular, if the defendant contends that the goods are now in its possession, or at least at some stage came into its possession, the plaintiffs are entitled to know where the goods are now and how they got there.
28 In my judgment, it would be an appropriate exercise of the Court's discretion, as a condition for allowing the admissions to be withdrawn, to require the defendant, by affidavit sworn or affirmed by its managing director, to file an affidavit within 14 days of today's date in which the defendant specifies with particularity:
(a) Whether any of the goods identified in paragraph 9 of the Statement of Claim filed herein ever came into the possession, custody or control of the defendant and, if so, precisely which of those goods came into the possession, custody or control of the defendant and when in the case of each item that occurred.
(b) Insofar as any goods came into the possession, custody or control of the defendant, whether any of those goods subsequently left the possession, custody or control of the defendant and, if so, when in the case of each item that occurred and the circumstances in which that occurred.
(c) Insofar as goods came into the possession, custody or control of the defendant which remain in the possession, custody or control of the defendant, which of those goods are still in the possession, custody or control of the defendant and what is the location of them.
(d) Insofar as the defendant asserts that payment was made for any of the goods specified in paragraph 9 of the Statement of Claim, when was payment made, by whom, to whom and by what means.
29 I propose to order that the costs of the Interlocutory Application be the plaintiffs' costs in the proceeding. I do that because, although the defendant always needed to obtain an order from the Court to be relieved of the consequences of its failure to dispute the Notice to Admit, the plaintiffs could have made its task easier by consenting to the order. Rather than doing that, the plaintiffs opposed the indulgence sought by the defendant. That opposition was not unreasonable but, in light of the decision, turned out to be unjustified.
30 It seems to me that it would be unduly harsh on the defendant to visit all of the costs of the Interlocutory Application on the defendant. On the other hand, the defendant should not have any costs associated with the Interlocutory Application.
31 There will be orders accordingly.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.