By : Colm Nugent
What is the present state of the law concerning withdrawal of admissions previously made by defendants either in open correspondence or in the statement of case?
The need for withdrawal may arise because the value of the claim is in excess of that earlier anticipated so the insurance reserve no longer meets the potential claim. It may be that solicitors or counsel take a different approach to the merits of the action or are aware of a defence the insurance company was not aware of. It may be that new facts have come to light making the earlier admission untenable.
If acting for a defendant, you would be well advised to make a formal application to withdraw the admission as soon as the need arises. Whilst CPR 14.1(5) provides the rules enabling a party to withdraw an admission, it is not as a matter of right. It is an exercise of discretion, and this can only be exercised where there an application to withdraw is made, supported by evidence. If acting for a claimant, you should apply for judgement in reliance upon the admission, notwithstanding the retraction, on the basis that the defence has no real prospects of success.
There is some judicial support for seeking to argue a valid compromise on the basis of an admission. in Flinn v Wills (1/1/01 reported in Current Law) HHJ Overend (the relevant rules judge) determined that there had been a binding compromise reached by virtue of an admission, upon which the parties had relied and proceeded on that basis. Therefore, the defendants would not be permitted to resile from the compromise which had been reached - there was a concluded agreement. Whilst the Learned Judge may have adopted the correct approach in Flinn (and the facts of that case are not set out in detail in the Current Law report) a determination of compromise would appear to be in conflict with the discretion open to the court under the CPR 14.1 to allow a party to withdraw an admission. In a true compromise, the court has no such discretion.
Until recently, the leading authority in the area of admissions and their retraction was Gale v Superdrug  1 W.L.R. 1089, CA. I suggest the more recent Court of Appeal's decision in Sollit v Brady 23/2/00 CA is the present state of the law, preferring as it does the dissenting judgement of LJ Thorpe in Gale v Superdrug. In Sollitt, the Court of Appeal recognised that Gale was decided before pre-action protocols, before pre-disclosure and the before the effect of the CPR had made litigation more certain.
The effect of both Sollit and the dissenting judgment of Thorpe LJ in Gale is that the court is required to focus upon the reasons behind the withdrawal. A different (more favourable) interpretation of the merits by defendant solicitors or counsel is unlikely to be a persuasive factor. The emergence of new facts since the admission was made may be persuasive, but probably only if those facts and matters could not have been discovered with reasonable diligence beforehand.
The merits of the defendant's defence are unlikely to be persuasive. In Sollitt, the defendants had (it appears) a cast-iron defence, which they threw away by their admission. However, that fact of itself was not determinative to the decision of Bingham LJ who refused to permit the defendant to resile from its admission and dismissed the appeal.
Whereas previously prejudice to both sides was a determining and critical factor, I suggest that prejudice is now a secondary factor, and only comes into consideration if the defendant has provided a substantial and cogent explanation and justification for seeking to withdraw the admission. This is the first hurdle to be crossed, without success at this stage, prejudice is not relevant.
Although the rules do not require the claimant to assert or prove anything before relying upon the admission, the claimant's solicitors would be very well advised to put in its own evidence at any application in which it can specifically identify prejudice and reliance on the admission.
Prejudice to a claimant can take many forms. Typically, prejudice will be of the following nature:
- Taking no steps to investigate liability at all for a number of months;
- Making no attempt to interview witnesses;
- Not investigating the scene of the accident or the machinery/ car/whatever involved;
- Not trying to negotiate a settlement on the basis of a denial of liability;
- Not instructing any liability experts;
- Identifying, and possibly valuing, the impact in terms of costs and length of time before trial that the restoration of issues of liability will have on the litigation.
Bear in mind the words of Thorpe LJ in his Gale judgment where he expressly adopted the words of Sir George Waller in Bird v Birds Eye Walls Ltd The Times 24th July 1987:
"I find it very difficult to visualise any personal injury case where, if a formal admission of liability were withdrawn 18 months after it had been made, it would not prejudice the Plaintiff"
The failure by claimants and defendants to recognise the new regime heralded by Sollit has resulted in claimants continuing to litigate issues of liability when they could seek judgement in reliance on the defendant's admission. It has also led to defendant's failing to get permission to withdraw their early admissions because they have failed to identify the relevant criteria. Don't let it happen to you.