SL Claimants v Tesco Plc

Permission to withdraw an admission is discretionary. The court must consider all the circumstances, including the matters identified in the relevant Practice Direction, and must give each factor appropriate weight. The factors are not cumulative or hierarchical.

A late change of position based on reappraisal rather than new evidence may be refused where it would disrupt proceedings, cause prejudice, or undermine the administration of justice. A party that has publicly accepted that a statement was false or misleading may not introduce a concluding plea that contradicts that position, even if a narrower construction argument might technically be available.

Tesco sought permission to withdraw admissions made in two substantial claims brought by investors concerning its August 2014 trading update. Tesco wished to argue that an expected trading profit of £1.024 billion was still in the region of £1.1 billion and that the statement was therefore not itself untrue or misleading.

The claimants relied on Tesco’s prior admissions, its public acceptance of findings in regulatory and criminal proceedings, the lateness of the application, prejudice, and the applicable criteria for withdrawing admissions. The central issues were whether the proposed plea was inconsistent with Tesco’s previous position and whether permission should be granted under the Civil Procedure Rules.

1. Application refused. Tesco was not permitted to withdraw its admission that the August Trading Update was false and/or misleading. It was required to stand by the defence as originally conceived.
2. The court distinguished between Tesco’s proposed narrow construction and its intended conclusion. On a strictly literal reading, arguing that £1.024 billion was in the region of £1.1 billion might not, without more, have been legally inconsistent with the regulatory and criminal materials Tesco had accepted. However, the proposed concluding plea that the August Trading Update was not an untrue or misleading statement plainly contradicted, or at least cut across, Tesco’s previous public position.
3. Under CPR 14.1(5) and paragraph 7.2 of the Practice Direction, the discretion must be exercised by considering all the circumstances, including the grounds for withdrawal, the parties’ conduct, prejudice, the stage of proceedings, prospects of success, and the interests of the administration of justice. These factors are analytical guides rather than cumulative requirements and have no fixed hierarchy. The court applied the approach described in Kojima v HSBC Bank plc and Woodland v Stopford.
4. Tesco relied on a reappraisal of matters known for nearly three years, not new evidence or a change of circumstances. Although the application was made further from trial than in Aldersgate Investments Ltd v Bank of Scotland Plc, the late change of position would probably generate further pleadings, disclosure and expert evidence and destabilise trial preparation.
5. The balance of prejudice favoured the claimants. Tesco’s proposed construction had frail prospects. A £76 million shortfall represented approximately 6.9 per cent of the stated figure, and the suggestion that the past profit was still in the region of £1.1 billion was considered counter-intuitive. The administration of justice did not require Tesco to raise a disruptive technical point inconsistent with its earlier stance.
6. Costs were expected to follow the event, subject to agreement or further determination on paper.