Gunn & Anor (t/a Chipperfield Garden Machinery) v Taygroup Ltd

Withdrawal of a pre-action admission does not ordinarily constitute an abuse of process without bad faith. Where the withdrawal is said to obstruct the just disposal of proceedings, the claimant must show real prejudice affecting the fairness of the trial. Such prejudice must be supported by evidence and cannot simply be inferred from delay, uncertainty or the loss of the admission. The court must also apply the overriding objective and balance fairness to both parties, including the circumstances in which the admission was made and any substantial increase in the claim. Where the alleged prejudice can be cured by amendment or accommodated by revised directions, strike-out is inappropriate.

The claimants operated a garden-machinery business. A lorry driven by the defendant’s servant damaged overhead cables attached to their premises in May 2005.

The defendant’s representatives first made an ambiguous statement that the defendant was responsible. In September 2007 they expressly stated that liability was not in dispute. After proceedings were issued in February 2010, the defendant served a Defence denying liability and sought to withdraw the earlier admission. It also proposed an alternative factual case involving an employee or agent of the neighbouring business, Garden Scene.

The claimants applied under CPR Part 3.4(2)(a) and (b) to strike out the denials of liability and the withdrawal of the admission, alleging abuse of process and obstruction of the just disposal of the proceedings. The central issue was whether the withdrawal caused the prejudice required to justify strike-out.

1. The claimants’ strike-out application was dismissed. The proposed amendment application and the specific-disclosure issue were left for a separate hearing.

2. Under CPR Part 3.4(2)(b), withdrawal of a pre-action admission will ordinarily amount to an abuse of process only where the defendant has acted in bad faith. It may also justify strike-out where the withdrawal is otherwise likely to obstruct the just disposal of the proceedings and the claimant establishes prejudice affecting the fairness of the trial.

3. The court applied the approach stated in Stoke-on-Trent City Council v Walley [2006] EWCA Civ 1137. The claimants had not alleged bad faith. Their asserted prejudice consisted principally of possible deterioration or loss of evidence, but no evidence established that such prejudice had occurred or was likely to occur. The court declined to infer prejudice.

4. The conflict between the Defence and the Replies to the request for further information could be cured by amendment. Any delay caused by amendment or third-party proceedings could be managed within the Technology and Construction Court, although the defendant’s conduct and its advisers’ delay were criticised.

5. Fairness under the overriding objective required consideration of the context of the admission. The September 2007 admission was made when the claim was quantified at approximately £637,662, whereas the later claim exceeded £3.4 million. It was potentially unfair to hold the defendant to the admission where the increased claim materially altered the litigation and an arguable factual defence existed. The admission remained potentially relevant at trial.