COURT REFUSES CLAIMANT PERMISSION TO WITHDRAW FROM ADMISSIONS: “THE WHOLE POINT OF THINGS BEING ADMITTED IS THAT PARTIES CAN MOVE ON AND NOT BE BOTHERED WITH INVESTIGATING SUCH MATTERS”

In Advinia Care Homes Ltd v (1) BUPA Care Homes Investments (Holdings) Ltd & Ors [2020] EWHC 1563 (Ch) Mr Michael Green QC (sitting as a High Court judge) refused a claimant’s application to withdraw from an admission.

The whole point of things being admitted is that parties can move on and not be bothered with investigating such matters. There have been nearly two years since the novation was admitted, and it is even longer back to when it must have been assumed by the Advinia Parties to have taken place. After such a length of time for such an admission to be withdrawn shortly before the trial is a very serious step indeed and not one which the court should indulge lightly.”

THE CASE

The claimant purchased certain care homes from the defendants.  In a Reply the claimant made points in agreement with the defendants’ position in relation to position of the First Defendant.  The matter is listed for a five day trial in mid-February 2021.  The claimant made an application to amend its Particulars of Claim and, its Reply.  The judge granted permission to amend parts of the claim but refused permission to amend those parts of the claimant’s pleadings that amounted to an admission.

WAS THIS AN ADMISSION?

The judge first considered whether this was an admission.

    1. Bupa was thereby confirming what Advinia had pleaded in paragraph 6, namely that the First Defendant had assumed or succeeded to BCH’s rights and obligations under the English BTA.
In other words, it was saying that there had been a novation of BCH’s rights and obligations under the English BTA to the First Defendant. Of course, at that stage, in December 2017, all relevant parties — the First Defendant, BCH, and Advinia — were all part of the Bupa group. All the information in relation to any such novation would therefore be solely contained within the Bupa group or the Defendants. Advinia says that because of that, it had no reason to doubt what had been said by the Defendants in their Defence and attested to by a statement of truth.
    1. In its reply to that case, Advinia pleaded as follows in paragraph 4:
“As averred in paragraph 17 [of Bupa’s defence], BCH Holdings, the First Defendant, has succeeded to BCH Limited’s rights and obligations under the English BTA. References hereafter to the First Defendant, BCH Holdings, include where relevant references to BCH Limited. [As read]”
    1. The Defendants say that this paragraph in the Reply amounts to an admission that the novation took place, and that therefore Advinia requires the permission of the court to withdraw it under CPR Rule 14. This descended into a rather unnecessary argument about whether this was an admission and whether, given that Advinia is only applying at this stage for permission to amend the Particulars of Claim, while recognising that the Reply will, in due course, have to be amended to withdraw that admission, the court can give some form of prospective permission to withdraw the admission in Reply should the Defendants maintain that the novation took place, and I should say that the Defendants do maintain that the novation took place.
  1. In my view, not only was this an admission by Advinia that the novation had taken place, but there was positive reliance on it having taken place in order to found the claim. It was relied upon for the purposes of the ex parte application to Mr Justice Nugee, and it was relied on in the summary judgment application that I heard. It was not Advinia just going along unthinkingly with an averment of the Defendants’. It was a crucial part of the way that it was putting its case. I therefore do think it is appropriate to consider the application as being in part an application to withdraw an admission, and I will come on to deal with the principles involved in such a case.
  2. Advinia has offered an explanation as to how they came to suspect that they might have wrongly admitted this. Ms Proctor explained in her witness statement that because there was some disclosure in September 2020 from the Defendants that suggested that the wet rooms issue had arisen earlier than the Defendants had previously pleaded it had, they began to suspect that other matters within the Defendants’ exclusive knowledge might not have been accurately pleaded or disclosed. I have to say that I find this a little far-fetched. These two issues are very far apart. But for whatever reason, at the beginning of October 2020 the Wordley Partnership started asking questions about the novation. I have described above the letters and the RFI that they sent. Mr Hubbard criticised the Defendants’ responses or lack of any helpful or meaningful response.

SHOULD THE CLAIMANT BE GIVEN PERMISSION TO WITHDRAW THAT ADMISSION?

The judge then considered whether permission should be given to withdraw the admission.

    1. The whole point of things being admitted is that parties can move on and not be bothered with investigating such matters. There have been nearly two years since the novation was admitted, and it is even longer back to when it must have been assumed by the Advinia Parties to have taken place. After such a length of time for such an admission to be withdrawn shortly before the trial is a very serious step indeed and not one which the court should indulge lightly.
    2. As I have said above, I consider that Advinia has admitted the truth of a part of the Defendants’ case in its reply, and that that is therefore within CPR Rule 14.1(1) and (2). That admission was consistent with its pleaded case in the Particulars of Claim that it now seeks to withdraw. Accordingly, the permission of the court is required under CPR Rule 14.1(5).
    3. The CPR Practice Direction to Rule 14 in paragraph 7.2 sets out the relevant applicable principles relating to a withdrawal of an admission. Paragraph 7.2 says as follows:
“In deciding whether to give permission for an admission to be withdrawn, the court will have regard to all the circumstances of the case, including:

(a) the grounds upon which the applicant seeks to withdraw the admission including whether or not new evidence has come to light which was not available at the time the admission was made;

(b) the conduct of the parties, including any conduct which led the party making the admission to do so;

(c) the prejudice that may be caused to any person if the admission is withdrawn;

(d) the prejudice that may be caused to any person if the application is refused;

(e) the stage in the proceedings at which the application to withdraw is made, in particular in relation to the date or period fixed for trial;

(f) the prospects of success (if the admission is withdrawn) of the claim or part of the claim in relation to which the admission was made; and

(g) the interests of the administration of justice.”

    1. Mr Justice Briggs, as he then was, in Kojima and HSBC Bank Plc [2011] EWHC 611 Ch paragraph 19 described these as:
“… a useful and uncontentious distillation of earlier authority as to the discretion to permit the withdrawal of admissions.”
    1. Obviously every application to withdraw an admission will turn on its own facts. Mr Cumming referred me to the helpful explanations of the principles by Mr Justice Popplewell, as he then was, in Bayerische Landesbank Anstal v Constantin Medien AG [2017] EWHC 131 (Comm), and he said at paragraph 55:
“If the evidence which the party seeking to withdraw an admission chooses to put forward in support of that application involves an explanation which is inadequate or unsatisfactory or in some way deficient, then that is a factor which the court will take into account. [As read]”
He more particularly relied upon paragraphs 67 and 75, in which Mr Justice Popplewell said as follows:
“All this must be seen against the background of the circumstances in which the admission was first made. It must have been the subject of the most careful consideration. It was contrary to the findings which had been made at the trial before Mr Justice Newey. It was made with the benefit of disclosure from that trial. It must have been made with the benefit of legal advice with the involvement of experienced solicitors and leading and junior counsel. One would have expected it to be informed by expert advice. There can be no doubt that there would have been close focus on the terms of Mr Justice Newey’s judgment which set out the evidence available to him, including written evidence which had emanated from members of the Formula 1 team. This is not, therefore, a case in which the admission could be said to have been made negligently, carelessly or casually. It must have been a careful and fully considered decision. That provides all the more reason for careful scrutiny of why it is said to be wrong. [As read]”
And at 75 he said:
“A further reason for refusing the amendment is that in my view it is the withdrawal of an admission for tactical forensic advantage rather than in order to define the true issues in the proceedings. [As read]”
    1. Mr Hubbard pointed me to two other paragraphs in the same case in order to distinguish it from our situation. In paragraph 454, Mr Justice Popplewell said that:
“Each case turns on its own facts and all the circumstances of the case must be taken into account and Rule 14.1(5) confers a wide discretion. [As read]”
And it is clear from paragraph 62 that the case that was under consideration by Mr Justice Popplewell was one in which the person applying to withdraw the admission was the person who was in a position to know the truth or otherwise of that which has been. So it was a different situation to this case, where the only information in relation to the novation lies within Bupa, not within Advinia, which is the party that is seeking to withdraw the admission.
    1. I take on board those distinctions with that case, but I think that all that Mr Justice Popplewell was actually doing was essentially working through the requirements of paragraph 7.2 of the Practice Direction, and that is the approach that I propose to take to this case.
    2. So taking each of the paragraphs of 7.2 in turn:
(a) this concerns whether new evidence has come to light. That is not the reason why this application is being made. There is no new evidence that has come to light since this admission was first made. Rather, Advinia merely now has a suspicion that the novation may not have happened in the way that it thought it might have happened.
(b) This concerns the conduct of Advinia in making the admission. Mr Cumming submitted that this must have been carefully thought through by the solicitors and leading and junior counsel who were then acting for Advinia at the time the admission was made. Furthermore, the claim itself was predicated on there having being a novation, and the Reply made averments on the basis of its having happened. Also, as I have said, I cannot understand why this would not have been clarified as part of the due diligence process prior to the takeover.
(c) As to the prejudice that will be suffered by the Defendants if the admission was allowed to be withdrawn, the Defendants submit that this would be substantial, and in particular, because of everything that would need to be done if the withdrawal is allowed, they say the trial date would be lost and it would be severely prejudicial to the Defendants. The Defendants say that they would have to conduct wide-ranging factual enquiries in order to re-plead and adduce further evidence in response. Mr Hubbard strongly criticised any such suggestion of wide-ranging factual enquiries being needed and says that this is all exaggerated. The further pleadings that may need to be made, amended in the light of this, may include (so Mr Cumming says) issues of estoppel, rectification and restitution, and the parties’ understanding and intentions at the time of the BTAs and the novation. It may be necessary even to seek to join BCH, which is outside the group.

I did not at first understand the reference to rectification, but Mr Cumming explained it is because of a small but potentially quite important difference between the Scottish and the English BTAs, the latter of which was confined to an indemnity to a particular Bupa entity, whereas the former had an indemnity to the Bupa group generally.

He said that there were over 40 drafts of the BTAs, so the preparation for an investigation into such a rectification argument would be incredibly burdensome at this critical time, shortly before the trial.

In relation to estoppel, this would not only be an estoppel arising during the course of these proceedings, but also going back to Advinia’s conduct and assumptions from prior to the takeover, and the restitution argument comes into play in terms of Advinia being liable to Bupa generally in respect of liabilities it has discharged on behalf of Advinia.

The availability of personnel who would need to be consulted at this time will not be good as it is Christmas in the middle of a worsening pandemic, and those personnel being heavily engaged on other matters to do with the pandemic and also Bupa’s end-of-year accounts. Mr Cumming also said there would be further disclosure required and the parameters of such disclosure would have to be finalised, probably at the pre-trial review, which is itself very close to the trial. He also said that further witness evidence would have to be prepared.

Advinia, of course, say that this is all exaggerated and they are probably correct to some extent that that is so. However, the suggestion that because Bupa plead the novation as part of its defence, that the basis for such a plea should be readily to hand is itself an exaggeration, in my view. Where such has not been an issue for nearly two years, the Defendants were entitled to assume that they did not need to prepare for such an issue. The withdrawal of an admission like this would give rise necessarily to other pleas such as estoppel and/or restitution if the Defendants were unable now to prove the novation.

(d) Turning to (d) in the Practice Direction, the prejudice to Advinia was said by Mr Hubbard to be extreme if it is not allowed to run the succession defence. It would mean, so he says, the court potentially proceeding on a false basis, namely that the novation took place, and that it would only be doing so because the Defendants have presented that false basis from early on in the proceedings, which Advinia was led to believe must have been the case.

However, I think this is exaggerated. Clearly the parties, both within these proceedings and before, assume that BCH’s rights and obligations had been novated to the First Defendant, and there is no question that the Defendants have incurred liabilities on Advinia’s behalf which it is liable to reimburse them for. All of Advinia’s arguments in relation to the Opening Balance Liabilities are still open to them without the amendments. The precise entity that is claiming is really neither here nor there.

What matters, as I have already said, is that there will be an accounting of the net financial position between the parties, and payment whichever way the balance lies. I do not think that Advinia is substantially prejudiced by not being able to run the Succession defence, and to the extent that it is, it is really its fault in raising the matter so late and so close to the trial, having admitted it for so long.

(e) the next matter is the stage at which the application is made. As is clear from what I have said, this is shortly before the trial and in my view that is a highly material factor.
(f) the prospects of success are impossible to say, except that I have questioned where it really gets Advinia if there has to be an accounting between the parties.
(g) This concerns the administration of justice, which will obviously not be well served by a late adjournment of the trial.
  1. So on the basis of the above factors, and my findings in respect of them, I am not prepared to grant permission to withdraw the admission in relation to the succession issue. For the same reasons, I would not have been prepared to grant permission to amend to plead the Succession Issue. That aspect of the application is therefore dismissed.