XL CATLIN INSURANCE COMPANY UK LIMITED v LINKHAM SERVICES LIMITED & Ors

Permission to withdraw admissions in a pleading is governed by Civil Procedure Rules 1998 CPR 14.1(5) and must be determined by weighing all the circumstances identified in Practice Direction 14, paragraph 7.2.

A party seeking withdrawal should ordinarily provide a full explanation of how the admission came to be made and why it is said to be erroneous. Privilege may properly be asserted, but the resulting inability to explain the admission is a consequence of the applicant’s choice. Costs alone will not necessarily cure the prejudice caused by withdrawal, particularly where the proposed defence is unsupported by evidence and follows an impending summary judgment application.

The claimant pursued contractual, trust and equitable claims concerning premium funds allegedly received by the first defendant and transferred to the seventh defendant. The seventh defendant’s original defence admitted receipt of £50,000 and included other admissions relevant to the claimant’s proprietary and knowing receipt claims.

The seventh defendant applied for permission to withdraw those admissions and amend its defence to deny receipt, knowledge and liability, asserting a new positive case. The application was made before a case management conference and ahead of a listed summary judgment application. The central issue was whether permission should be granted under CPR 14.1(5) and Practice Direction 14, paragraph 7.2.

1. Application dismissed. The seventh defendant failed to obtain permission to withdraw its admissions or amend its defence in the proposed terms.
2. Under CPR 14.1(5), permission is required to amend or withdraw an admission made after proceedings have commenced. Practice Direction 14, paragraph 7.2 requires consideration of 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.
3. The absence of any explanation for the admissions was a powerful factor. The applicant provided no evidence of new evidence, no explanation of how the admissions had been made, and no evidence supporting the merits of the proposed defence. The admissions were substantive and could not be treated as casual or clerical errors.
4. A party may assert legal professional privilege and the court must not draw adverse inferences merely from that assertion. However, if privilege prevents the party from explaining the admissions, the resulting evidential disadvantage remains a consequence of the party’s choice. The absence of an explanation affected the grounds for withdrawal, the parties’ conduct, the prejudice on refusal, the prospects of success and the administration of justice.
5. The fact that the application was made relatively early did not outweigh the other factors. Costs and interest would not necessarily compensate the claimant for the additional complexity, delay and resources required, particularly in litigation already approaching a summary judgment hearing. The proposed repayment of £50,000 to the first defendant’s administrators did not answer the claimant’s proprietary claim or alternative knowing receipt claim.
6. The seventh defendant was ordered to pay the claimant’s costs of and occasioned by the application on the indemnity basis. The costs were summarily assessed because the interlocutory application lasted less than a day and the sums claimed were below the level appropriate for detailed assessment. On an indemnity assessment, proportionality had no role; work had to be reasonably carried out and reasonable in amount, with doubts resolved in favour of the receiving party.