Harrington & Charles Trading Company Limited (In Liquidation) & Ors v Mehta & Ors

Permission is required to withdraw a clear admission, but the court must first determine whether the pleading contains an admission at all. Pleadings must be read as a whole, particularly where the opposing case has changed and the alleged admission is expressed conditionally or alongside non-admissions.

Where withdrawal is required, the factors in CPR 14.5 must be assessed in the context of the overriding objective. The late stage of proceedings is important, but it is not determinative. Expert evidence, the evolution of the pleadings, the parties’ understanding of the issues, prejudice, prospects of success and the interests of justice may justify permitting withdrawal close to trial.

The claimants alleged that the defendants were involved in a fraud involving gold supplied under Precious Metals Facilities and that the proceeds were laundered through corporate entities, ultimately including payments made by Emirates Gold to Al Mufied.

The defendants served a Re-Amended Defence and Counterclaim shortly before a case management conference. The claimants applied under CPR 3.4 and the court’s inherent jurisdiction to strike out amendments said to withdraw admissions without permission under CPR 14.5. The central issues were whether the challenged pleading paragraphs contained admissions and, if so, whether withdrawal should be permitted.

1. Application dismissed. The challenged paragraphs were not struck out. Permission was granted, insofar as necessary, for the Re-Amended Defence and Counterclaim to stand in the form served.
2. The court must first identify whether the matter said to have been withdrawn was actually an admission. A pleading that documents appear consistent with a state of affairs is not necessarily a clear admission. The pleading must be read as a whole, rather than by isolating individual passages.
3. The defendants’ position had consistently left open important issues concerning the mechanics of the alleged fraud and whether payments received by Al Mufied from Emirates Gold were traceable to gold drawn down under the Precious Metals Facilities. The agreed list of issues showed that those matters remained live for trial. The defendants had therefore not clearly admitted the matters alleged by the claimants.
4. The court nevertheless considered the alternative position that permission was required. Applying the factors in CPR 14.5(a) to (g), withdrawal would have been permitted. The claimants’ case had changed over time. The defendants had obtained a forensic accounting report supporting the amendments and had reserved their position pending that evidence.
5. The defendants had not delayed in raising the new case. Although the proceedings were close to trial, the claimants did not suggest that they could not prepare for trial or respond through their own expert evidence. Any additional work and prejudice did not outweigh the prejudice to the defendants of being prevented from advancing their expert-supported case.
6. The claimants’ prospects were not materially damaged because they had accepted that the initial tracing exercise had never been admitted. It was also open to them to address at trial any contention that the defendants’ revised case was unsustainable.
7. In the interests of justice and the overriding objective, it would have been unjust to prevent the defendants from advancing their case at trial.