GENERAL RESPONSE IN A REPLY DOES NOT AMOUNT TO AN ADMISSION: HIGH COURT DECISION

In Berkeley Square Holdings Ltd & Ors v Lancer Property Assets Management Ltd & Ors (Claimant amendment application) (Rev 1) [2021] EWHC 750 (Ch) Mr Robin Vos (sitting as a judge of the Chancery Division) rejected an argument that a failure to specifically plead a denial in a Reply amounted to an admission.

“… if a claimant does not deal with a matter in their reply, they are to be taken as requiring that matter to be proved. It seems to me that these clear words cannot somehow be overridden by the provisions of CPR rule 16.5, which is stated to apply to defences and not to replies. Whilst the provisions of the Commercial Court Guide of course reflect best practice it cannot affect the consequences of the CPR.”

THE CASE

The claimant was seeking permission to amend a defence and a reply.  The defendant objected to some of the amendments – those that put the authenticity of certain documents in issue.  The defendants argued that the claimant had admitted the authenticity of one of the documents and the court needed to consider whether the claimant required permission to withdraw from an admission.

THE JUDGMENT ON THIS ISSUE

The judge rejected the defendant’ arguments that the authenticity of the document had been admitted by reason of the claimant’s failure to particularise that denial in a reply.

Withdrawing admissions

1. 1. Mr. Marshall accepts that in respect of one of the documents, the authenticity of which the claimants say the defendants should prove, the authenticity has previously been admitted by the claimants. This is based on the fact that it was the claimants who first produced the document and the statements made about it by the claimants in their pleadings.

1. 1. The parties agree that, in relation to this amendment, the court must also consider whether to allow that admission to be withdrawn. This requires the court to consider the factors set out in Practice Direction 14, paragraph 7.2. However, the only real difference between these factors and the factors which the court should consider in deciding whether to allow a pleading to be amended is the examination of the reason why the applicants now seek to withdraw their admission and, in particular, whether or not new evidence has come to light which was not available at the time that the admission was made. Mr. Beltrami suggested, and I agree, that this should be a particular focus in relation to an application to withdraw an admission.

Should the amendments be allowed?

1. 1. With this background in mind, I turn to consider the proposed amendments. I need to consider the amendments relating to each of the two documents separately given that the circumstances in which they have been produced are different and the fact that it is accepted that the 2012 approval has previously been admitted. I will start with the Becker authority.

The Becker authority

1. 1. This was referred to in the defendants’ initial defence. It became clear from the claimants’ subsequent request for information that it had been provided to the claimants as part of the defendants’ initial disclosure. The document is said to be signed by Sheikh Khalifa and is put forward as evidence of his knowledge and approval of the arrangements giving rise to the payments to Becker.

1. 1. Mr. Marshall submits that the claimants have never admitted the authenticity of this document. He points out that the claimants’ reply contains the usual statement that “save as expressly admitted below the claimants join issue with the terms of the re-amended defence and in respect of such matters the defendants are required to prove them”. This, he says, is consistent with CPR rule 16.7(2), which provides that:

“(2) A claimant who –

(a) files a reply to a defence; but.

(b) fails to deal with a matter raised in the defence,

shall be taken to require that matter to be proved.”

1. 1. Mr. Beltrami, however, suggests that the claimants have implicitly admitted the authenticity of the Becker authority. This is based on the fact that, although in their reply they do not expressly admit the authenticity of the document, they plead to it in the sense of denying that it authorises the relevant actions or payments. Coupled with the fact that they do not expressly deny the authenticity of the Becker authority, he submits that the claimants should be taken to have admitted the authenticity of the document.

1. 1. In support of this he refers to CPR rules 16.5(2) and (5). These rules require a party to state their own version of events if they intend to put forward a different version of events from that given by the other party and that a defendant who fails to deal with an allegation should be taken to have admitted it. Although CPR rule 16.5 relates to a defence rather than a reply, Mr. Beltrami submits that the same principles should be applied to any responsive pleading.

1. 1. Mr. Beltrami also referred to paragraph C1.3(a) of the Commercial Court Guide which states that:

“Particulars of claim, the defence and also any reply must comply with the provisions of rule 16.4 and 16.5”.

1. 1. The underlying principle which Mr. Beltrami identifies is that, in accordance with the overriding objective, it is not acceptable for a party to fail to plead a positive case in respect of a matter which is within their own knowledge; that would be contrary to the principle that a party should not be taken by surprise.

1. 1. I do not accept Mr. Beltrami’s submissions, attractive though they are. CPR rule 16.7(2) is clear that, if a claimant does not deal with a matter in their reply, they are to be taken as requiring that matter to be proved. It seems to me that these clear words cannot somehow be overridden by the provisions of CPR rule 16.5, which is stated to apply to defences and not to replies. Whilst the provisions of the Commercial Court Guide of course reflect best practice it cannot affect the consequences of the CPR.

1. 1. As Mr. Marshall has pointed out, this is reinforced by the fact that a reply is voluntary and that CPR rule 16.7(1) specifically provides that a claimant who does not file a reply to the defence shall not be taken to admit the matters raised in the defence.

1. 1. Another consequence of the terms of CPR 16.7 is that any admission must be an express admission. The claimants have clearly not made any express admission as to the authenticity of the Becker authority. Even if an implied admission were enough, the content of the claimants’ pleadings does not, in my view, amount to an implied admission in relation to the authenticity of the Becker authority. The fact that the pleadings contain statements relating to the contents of the Becker authority cannot be taken to be an implied admission that the document itself is authentic, even though the claimants might have been able to establish the authenticity of the Becker authority by making appropriate enquiries of Sheikh Khalifa.

1. 1. I am fortified in this conclusion by the existence of CPR 32.19, which provides that the authenticity of a document produced to a party is deemed to be admitted unless that party serves a notice that he wishes the document to be proved at trial. Such a notice must be served by the latest date for serving witness statements or within seven days of disclosure of the document, whichever is later.

1. 1. I should make it clear that I have not been asked to determine whether it is still open to the claimants to give such a notice and I do not do so. However, the existence of this mechanism for establishing the authenticity of documents or for challenging them, in my view, means that a court should be less ready to imply that the authenticity of a document has been admitted as a result of pleadings in relation to the document, unless that implication is clear.

1. 1. The need for an admission to be clear was highlighted by Mr. Marshall by reference to the observation of Green LJ in Ash v Hutchinson [1936] Ch.489 [at 503], that:

“A plaintiff who relies for the proof of a substantial part of his case upon admissions in the defence must, in my judgment, show that the matters in question are clearly pleaded and as clearly admitted. He is not entitled to ask the court to read meanings into his pleading which upon a fair construction do not clearly appear in order to fix the defendants with an admission.”

1. 1. My conclusion is that the claimants have not admitted the authenticity of the Becker authority.

1. I therefore need to decide whether the amendments relating to the Becker authority should be allowed but not whether any admission needs to be withdrawn.