DEFENDANT REFUSED PERMISSION TO WITHDRAW FROM AN ADMISSION: COURT OF APPEAL UPHOLDS DECISION OF HIGH COURT JUDGE

July 20, 2021 · by · in Admissions, Appeals, Applications, Civil Procedure

In J v A South Wales Local Authority [2021] EWCA Civ 1102 the Court of Appeal upheld an earlier decision refusing a defendant permission to resile from an admission.

“There is no doubt that the checklist at paragraph 7.2 is a useful tool for any judge faced with an application to withdraw admissions. I consider that it worked well in this case: both judges used it fully, and nobody suggested that the checklist omitted anything important. But working through the list does not replace the need for the judge to stand back and consider the application in the round, as paragraph 7.2 expressly requires, “hav[ing] regard to all the circumstances of the case”.”

THE CASE

The claimant issued proceedings in 2012 alleging negligence on the defendant’s part in relation to his care.  The defendant made various admissions.    The defendant argued that an assessment of damages should not take place until the claimant was 16.

THE CONFLICT OF INTEREST

The situation here was unusual in that the defendant was, at that time, responsible for the claimant’s care (as well as being the defendant). It argued, in its defence, that a stay of proceedings was the best course of action for the claimant.

THE APPLICATION TO RESILE FROM THE ADMISSIONS

The defendant later relied on a change in the law and sought permission to resile from the admissions it had made. This was allowed by the Circuit Judge but the claimant was successful on appeal to Mr Justice Marcus Smith, in a decision discussed in detail here.

THE DEFENDANT’S UNSUCCESSFUL APPEAL TO THE COURT OF APPEAL

The defendant was equally unsuccessful when it appealed to the Court of Appeal.

THE RULES ABOUT ADMISSIONS

Lord Justice Lewison considered the rules about admissions in some detail. Including the difference between post-action and pre-action admissions.
The rules about admissions
    1. Admissions are dealt with by Part 14 of the CPR. CPR Part 14.1 deals with admissions made after the start of proceedings; and CPR Part 14.1A deals with admissions made before an action is begun. CPR Parts 14.1 (5) and 14.1A (3) provide for the withdrawal of admissions with the permission of the court.
    1. These rules are supplemented by paragraph 7 of PD 14 which provides:
“7.2 In deciding whether to give permission for an admission to be withdrawn, the court will have regard to all the circumstances of the case, including—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.”
The importance of admissions
    1. Professor Zuckerman sets out clearly the importance of admissions. In Civil Procedure (4th ed para 6.10) he writes:
“It is important to be clear at the outset about the purpose of CPR 14 admissions. The rule is designed to enable the party in receipt of an admission to proceed safe in the belief that the litigation is effectively over in respect of the subject matter of the admission, thereby relieving them of the need to invest any further effort and expense in preparation for a contest on the admitted case. Reasonable confidence that an admission has brought an end to the contest over the admitted case is therefore essential. If a CPR 14 admission did not provide such security, the recipient of an admission would be unable to confidently rely on it, would have to continue their preparations to prove their case in respect of it and no savings would be achieved; thereby defeating the purpose of the admission procedure.”
    1. On the question of withdrawing admissions he writes in the next paragraph:
“The rationale of the admission rule does not, however, require the admission to be irrevocable for all time because, like all obligations, the admission must be capable of being amended or revoked in certain circumstances. Accordingly, as already noted, CPR 14 confers on the court a jurisdiction to permit withdrawal of an admission. But the jurisdiction to permit withdrawal must not undermine the security that claimants may obtain from admissions. Otherwise admissions would be incapable of inspiring sufficient confidence to deliver the advantage that the admission rule is intended to produce. In sum, the purpose of the admission procedure is to provide closure subject to the availability of withdrawal on strictly limited grounds.”
    1. Nugee J said much the same thing in Lufthansa Technik AG v Astronics Advanced Electronic Systems [2020] EWHC 83 (Pat), [2020] FSR 18:
“[22] … I agree with Mr Cuddigan that the purpose of what the CPR says about admissions is that, if an admission is made, the opponent can proceed on the basis that that will not be something in issue. Whether it is an admission of fact or an admission of law, it will not be necessary to devote any resources or energy or thoughts to that part of a case, because it is not one of the matters that will be in issue. That, of course, is subject to the powers of the court to allow the admission to be withdrawn in rule 14.1(5), and everybody who faces an admission knows that there is always a possibility that an admission may be withdrawn.
[23] However, I agree with Mr Cuddigan that litigation should be capable of being conducted on the basis that admissions mean what they say and that, if a party whose case has been admitted by the other side is facing an application to withdraw the admission, it is relevant to consider whether they will now be put in a worse position—not in a worse position than they would have been had the admission not been made in the first place, but in a worse position than they are with the admission.”
    1. There is one potentially significant procedural difference between a pre-action admission and one which is made in the pleadings. CPR 14.1A (4) provides:
“(4) After commencement of proceedings–
(a) any party may apply for judgment on the pre-action admission; and
(b) the party who made the pre-action admission may apply to withdraw it.”
    1. That rule envisages an application to the court for the entry of judgment and (perhaps) a simultaneous application to withdraw the admission. The position in relation to admissions made in the pleadings is different. CPR 14.6 provides for an admission of liability where the only claim is for an unspecified amount of money (e.g. for unliquidated damages). CPR 14.1 (3) cross-refers to that rule. CPR 14.1 (4) then provides:
“(4) Where the defendant makes an admission as mentioned in paragraph (3), the claimant has a right to enter judgment except where–
(a) the defendant is a child or protected party; or
(b) the claimant is a child or protected party and the admission is made under rule 14.5 or 14.7.”
    1. Accordingly, whereas a claimant has the ability to apply to the court for judgment on a pre-action admission of liability, he has a right to enter judgment on an admission of liability made in the Defence. Entry of judgment in such circumstances is a purely administrative act, requiring no judicial input. It follows, in my judgment, that in considering whether an admission may be withdrawn, greater weight must be given to an admission made in a formal pleading than one made before an action has begun. That is not quite this case, however, because although the local authority admitted the breach of duty, and that but for the breach J would have been placed for adoption, paragraph 6 (j) of the Defence made no admission about causation of loss. Without an admission of causation of loss, the cause of action is not complete.
  1. Nevertheless, given the admission of (a) the existence of the duty (b) breach of duty and (c) the consequence of breach (i.e. that J would have been placed for adoption), J would have been in a strong position to have applied for summary judgment for damages to be assessed. Once summary judgment had been entered, J would also have been in a position to seek an interim payment on account of damages.

REASONS FOR NOT PERMITTING A WITHDRAWAL OF ADMISSION IN THE CURRENT CASE

    1. I confess that I do not entirely understand why N v Poole is said to have caused a sea change in the understanding of what (if any) duties a local authority owes a particular child under the Children Act 1989 or at common law, in circumstances where that child has not been taken into care. Put another way, it is not obvious (to me at least) why the local authority in the present case felt obliged to admit the existence of the alleged duty. As Lambert J put it in DFX v Coventry City Council [2021] EWHC 1382 (QB) at [169] Lord Reed “applied the orthodox common law approach and the established principles of law”. The admissions were not casually made. They were made in the form of two solicitors’ letters and in a Defence settled by counsel.
    1. Be that as it may, as Marcus Smith J pointed out, even if N v Poole was the trigger for the withdrawal of the admission of the existence of a duty, the withdrawal went far beyond that. Not only did the local authority apply to withdraw the legal admission, it also applied to withdraw the admission that if, contrary to its case, there was a duty, it had breached that duty and that the consequence of the breach was that J was not placed for adoption when he should have been. The local authority has still not pleaded to the facts alleged in the Particulars of Claim.
    1. I cannot see that HHJ Howells ever considered the extent of the admissions sought to be withdrawn. Even if N v Poole had changed the legal landscape, it had not changed the facts. It is, with respect, not easy to see why the judge was satisfied with an assurance that there was no indication of any difficulty with records, given that an investigation of the records was made unnecessary by the admission. There was no evidence before the judge of what investigations were made in order to enable counsel to give the judge that assurance. In fact, as Mr Ford QC clarified in the course of the hearing before us, his assurance was intended only to cover the records of children’s social services. Whether those files related to J alone or to J’s mother as well we do not know. There are potentially other records, such as those relating to the care proceedings; and, since J’s mother was affected by an adult placement, adult social services’ records too. Mr Havers QC told us that the records of the care proceedings are incomplete. In particular there is a judgment of the court (which is likely to have contained the judge’s crucial findings of fact leading to the making of the care order) which is missing. Nor, we were told, was there any witness statement, CAFCASS report or the like. But even on the assumption that the local authority’s records were intact, the judge did not take into account that the potential scale of the factual dispute had itself undergone a sea change. HHJ Howells expressed the view that the eventual trial would turn on the records. But the DFX case shows, not only that records may be voluminous, but also that oral evidence on the facts and expert evidence on the standard of care will be required. None of that would be necessary if the admissions were maintained.
    1. In addition, I do not detect that HHJ Howells ever considered the potential conflict of interest that the local authority faced. Marcus Smith J described it well. Referring to paragraph 6 of the Defence he said:
“[9] It is difficult to overstate the importance of this paragraph in the context of the present claim, because of the conflict of interest that it so clearly articulates. The local authority was, at one and the same time:
(1) the defendant to a claim brought by J. As such, the local authority was entitled to resist the claim, and put J to proof; and
(2) the entity having care of J pursuant to a care order made on 30 November 2007, with an obligation to act in J’s best interests.
[10] Of course, a defendant is perfectly entitled – as the local authority did – to put in issue causation and quantum, and to advocate for a delayed assessment of quantum. However, where the defendant – as here – also owes a duty to the claimant himself, it is incumbent upon the defendant to behave with extraordinary care given the conflict of interest that arises.
[11] In this case, the local authority chose to make a number of averments expressly on behalf of J: in particular, that it was not in J’s interests that the issue of quantum be determined in short order, which is the usual approach. The local authority, as the entity having care of J, was in a position effectively to enforce its view as to what was in J’s best interests even though it was the defendant to J’s claim. Paragraph (6) of the Defence makes very clear that even if J’s own advisers were of the view that the question of quantum ought to be resolved at once, that would be opposed by the local authority, advancing not its own interests but those of J.”
    1. This was, in my judgment, highly relevant to the question of conduct. One of the reasons why the claim had not proceeded to a conclusion was because of the local authority’s view (in its capacity as the body with parental responsibility for J under section 33 (3) (a) of the Children Act 1989) that it was not in J’s best interests to proceed.
    1. There is, therefore, in my judgment, considerable force in Mr Havers’ submission on behalf of J that had the parties been proceeding in a more adversarial manner, J would have been obliged to safeguard his position by entering judgment for damages to be assessed and driving the litigation forward to a conclusion. But in reliance on the local authority’s quasi-parental position, he did not do so. In my judgment, therefore, HHJ Howells’ description of conduct as “neutral” failed to take into account the special position of the local authority exercising parental responsibility for J. The withdrawal of the admission has undoubtedly put J in a worse position than he was with the admission.
    1. Coupled with this point is the point that HHJ Howells does not appear to have factored in, namely that the admission had stood for over seven years by the time that it came to be withdrawn. For the whole of that time, J’s perception would have been that there was no substantial impediment to his eventual receipt of compensatory damages. As a result of the admission having been withdrawn, that expectation will have been completely falsified.
    1. A further flaw in the judge’s judgment was her appreciation that J would be left with a judgment to which he was not entitled; and that the local authority had a strong case on the merits. N v Poole expressly recognised that a duty might arise out of an assumption of responsibility. The flaw in this reasoning is that the judge appears to have assumed that no duty could arise. But J had not pleaded the facts alleged to give rise to an assumption of responsibility. That is hardly surprising: since both the duty and the breach of duty were admitted before the proceedings began, there was no need to do so.
    1. In short, in my judgment, although HHJ Howells conscientiously went through each of the sub-paragraphs in paragraph 7.2 of the Practice Direction, she did not stand back and consider “all the circumstances of the case”.
    1. Accordingly, in my judgment, Marcus Smith J was entitled to conclude that the judge’s exercise of her case management discretion was liable to be set aside; and that he was entitled to exercise that discretion afresh. There is no independent criticism of the way in which he exercised his own discretion and, speaking for myself, I would have exercised the discretion in the same way.
Result
    1. I would dismiss the appeal.

THE JUDGMENT OF LORD JUSTICE COULSON

The short judgment of Lord Justice Coulson provides a useful summary of the appropriate approach, using paragraph 7.2 of Practice Direction 14. It is useful to look at that Practice Direction before this part of the judgment.

PARAGRAPH 7.2 OF PRACTICE DIRECTION 14

Withdrawing an admission
7.1 An admission made under Part 14 may be withdrawn with the court’s permission.
7.2 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.

THE JUDGMENT

Lord Justice Coulson:
    1. I agree that, for the reasons given by my Lord, Lord Justice Lewison, this appeal should be dismissed. I would wish to add just one point about paragraph 7.2 of Practice Direction 14.
    1. There is no doubt that the checklist at paragraph 7.2 is a useful tool for any judge faced with an application to withdraw admissions. I consider that it worked well in this case: both judges used it fully, and nobody suggested that the checklist omitted anything important. But working through the list does not replace the need for the judge to stand back and consider the application in the round, as paragraph 7.2 expressly requires, “hav[ing] regard to all the circumstances of the case”.
    1. Here, it seems clear to me that, had such an exercise been done, the following headline points would have been relevant. The only thing in favour of allowing the local authority to withdraw the admissions was the fact that N v Poole had developed the law in this area and justified at least a reappraisal of its position (although the Supreme Court had stressed that the outcome of claims like these is always fact-sensitive).
    1. On the other hand, there were a number of factors in favour of refusing permission to withdraw, including:
a) the wide-ranging admissions as to duty, breach and consequence of breach, made carefully and deliberately by the local authority in their pleaded Defence as long ago as 2012;
b) the clear and obvious prejudice to J if the local authority was allowed to resile from those admissions so late in the day, giving rise to the need to obtain evidence about events going back over 20 years and completely changing the nature of this litigation; and
c) the fact that, as a result of the non-adversarial approach evidenced by the long-standing admissions, J and his advisors repeatedly agreed that the proceedings should be stayed, and had not sought judgment or any interim payments, and had not even begun preparations for a trial. In more obviously adversarial litigation, some or all of those steps would probably have been taken.
  1. Having been through the checklist, HHJ Howells did not undertake this overall consideration of the circumstances of the case. In my view, had she done so, she would have concluded that, in this particular case and on these specific facts, the local authority had not established that it was fair, just and appropriate to allow it to resile from its admissions.
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