White v Greensand Homes Ltd & Ors

Withdrawal of a pleaded admission requires permission under CPR 17.1(2)(b). The court must consider the CPR 14.1 practice, all the circumstances, the overriding objective, the justification for the application and relative prejudice. A pre-action admission outside the limited scope of CPR 14.1A is not governed by the permission requirement in CPR 14.1(5). The court must instead ask whether allowing the contrary pleaded case would be an abuse of process or likely to obstruct the just disposal of proceedings. Fairness may require an admission to stand where reliance caused material detriment. Where detriment is insubstantial, the real issues should normally be tried. Alleged prejudice must be examined critically. A serious risk of trial on a false basis may outweigh speculative loss.

Insurers sued BSF Consulting Engineers Ltd and Greensand Homes Ltd for the cost of repairing structural damage to a house. BSF admitted in a pre-action response and in its defence that it had designed the foundations, but later sought to amend its defence to say that KWE Designs Ltd had done so. The Technology and Construction Court refused permission, holding that withdrawal would cause substantial prejudice because limitation might bar claims against KWE Designs Ltd or Mr Elliott. The appeal concerned the correct approach to withdrawing a pre-action admission repeated in a pleading, including the significance of limitation, the dissolution of KWE Designs Ltd and the balance of prejudice. The lower decision was reported at [2007] EWHC 1053 (TCC).

Lord Justice Chadwick gave the judgment, with Lord Justices Thomas and Latham agreeing. The appeal was allowed. BSF was permitted to amend its defence to withdraw the admission that it had designed the foundations, but paragraph 2.5, seeking to strike out the claim as disclosing no reasonable cause of action, was excluded.

1. An appellate court should not substitute its own view merely because it would have exercised the discretion differently. It must intervene where the discretion was exercised on a legally flawed basis, including by taking account of an irrelevant matter or failing to consider a material fact. The judge had failed to assess properly the significance of KWE Designs Ltd’s dissolution, its lack of assets, the possibility of restoration to the register and the uncertain value of any alternative claim.
2. For an admission contained in a statement of case, permission to amend is required under CPR 17.1(2)(b). The court must have regard to CPR 14.1, the supplemental Practice Direction, all the circumstances, the overriding objective, the justification for withdrawal and the relative prejudice to each party.
3. Following [2005] EWCA Civ 1610, a pre-action admission outside the scope of CPR 14.1A is not subject to the permission requirement in CPR 14.1(5). In such a case the court must consider whether allowing the contrary pleaded case would constitute an abuse of process or be likely to obstruct the just disposal of the proceedings under CPR 3.4(2)(b).
4. Relative prejudice remains material. Fairness may require an admission to stand where it led the other party to act to his detriment. Where the detriment is insubstantial, fairness will normally favour determination of the real issues in dispute.
5. The judge was right to consider the pre-action admission when assessing prejudice, but the alleged loss of a claim against KWE Designs Ltd or Mr Elliott was speculative. The common-law claims were not shown to be time-barred, and there was no evidence that the alternative claims had value or relevant insurance. Refusing amendment would expose BSF to a serious risk of trial on a wholly false basis. The balance therefore firmly favoured withdrawal.

1. Court of Appeal (Civil Division): Allowed BSF’s appeal and permitted amendment of the defence, subject to excluding paragraph 2.5.
2. Technology and Construction Court: His Honour Judge Toulmin CMG QC refused permission to withdraw the admission and amend the defence in [2007] EWHC 1053 (TCC), at [39]–[40].