American Reliable Insurance Company & Ors v Willis Ltd

Permission to withdraw an admission is discretionary and must be determined by applying the factors in paragraph 7.2 of the practice direction to Civil Procedure Rules 1998 Part 14, together with all the circumstances and the overriding objective.

Where important and prejudicial admissions were made after full consideration, a party seeking to withdraw them should provide a full, frank and particularised explanation. A change of mind based on a re-examination of the existing material, without new evidence or a positive evidential challenge, may create a formidable threshold difficulty. The court must balance the prejudice caused by withdrawal against the prejudice caused by refusal, taking account of the stage of the proceedings, prospects of success and the administration of justice. Different admissions may properly produce different outcomes.

Willis applied in the ARIC proceedings for permission to withdraw admissions concerning Mr Durling’s knowledge and intention, Mr Johnson’s honesty, and broad market issues. The admissions had been made in the original defence after consideration of findings in earlier Sphere Drake proceedings.

The ARIC action was ordered to proceed concurrently with a separate CNA action. Some of the proposed withdrawals affected issues arising in both actions, creating a possible risk of inconsistent findings. The central questions were whether Willis had established sufficient grounds for withdrawal under paragraph 7.2 of the practice direction to Civil Procedure Rules 1998 Part 14, and whether the applications should be treated differently according to the subject matter of each admission.

The application was allowed in part.

1. Under paragraph 7.2 of the practice direction to Civil Procedure Rules 1998 Part 14, the court had to consider the grounds for withdrawal, including whether new evidence had emerged, the parties’ conduct, prejudice if withdrawal were permitted or refused, the stage reached in the proceedings, prospects of success and the interests of the administration of justice. Those factors had to be assessed against the underlying objective.

2. There was no new evidence. Willis had merely re-examined material already available during the earlier proceedings and had not identified the evidence or documents said to undermine the earlier findings. The explanation that Willis had felt constrained to make the admissions was unpersuasive, particularly because the admissions had followed careful consideration and Willis had selectively adopted findings. Any mistake was Willis’s own.

3. Withdrawal of the market admissions would substantially enlarge the ARIC proceedings, requiring further review of documents, statements and transcripts and potentially expert evidence. It would increase the cost and length of the trial. By contrast, refusal was unlikely to cause material prejudice because Willis proposed no positive evidential challenge and had produced no new evidence. The court was also entitled to consider the administration of justice, including the undesirability of repeating the work of a substantial earlier trial from which no appeal had been pursued.

4. Willis was refused permission to withdraw the admissions concerning the nature of the market and Mr Durling’s knowledge and intention.

5. Permission was granted to withdraw the admission concerning Mr Johnson’s honesty, but only on condition that Willis particularise the materials said to demonstrate that the earlier finding was unfounded. The issue was also live in the CNA action, Mr Johnson would give evidence, and fairness required that he and his principals have a full opportunity to address the allegation.

6. The possible disparity between the two actions was not presently a sufficient reason to permit the other withdrawals. If the distinction became unmanageable, the actions could be separated again.