Hartmann v Pilkington[2012] QSC 254

SUPREME COURT OF QUEENSLAND

1. MARGARET WILSON J: The plaintiffs seek leave to deliver an amended reply or alternatively for leave to withdraw their deemed admission of certain allegations in the defence of the first defendants filed on 31 May 2011.

Background

2. Pursuant to a contract made on 20 October 2007 the plaintiffs purchased a property at Cedar Creek from the first defendants. They allege that the buildings and structures on the land lacked proper approvals and that certain structures encroached on to the adjoining landowners’ property. They make various claims for damages against the first defendants, their solicitors (the second defendants), and the real estate agents (the third and fourth defendants).

3. This proceeding was commenced on 20 October 2010. The plaintiffs filed a further amended statement of claim on 8 April 2011. The first defendants filed a notice of intention to defend and defence on 31 May 2011 (“the defence”). On 21 June 2011 the plaintiffs filed a reply to the first defendants’ defence (“the reply”).

4. In the reply the plaintiffs adopted the admissions made by the first defendants in their defence, pleaded in response to certain paragraphs in the defence, and concluded –

“11. Save as set out above, the Plaintiff joins issue with each and every allegation contained in the Defence.”

5. The solicitors for the first defendants promptly wrote to the solicitors for the plaintiffs asserting that “quite an enormous number” of facts alleged in the defence, which they particularised by reference to paragraph numbers in the defence, had been admitted by virtue of r 166(1) of the UCPR. They asserted that there was no real prospect that the plaintiffs could succeed on their claim, and that their clients were entitled to judgment.

6. By the time the application was heard, its scope was much reduced, as a result of negotiations between the parties and concession by the first defendants. Its scope was further reduced between the hearing and the delivery of further written submissions.

7. So reduced, the application is for leave to withdraw the deemed admission of the allegations in paragraphs 7(b), 9(d), 11(c), 11(d), 14(a), 14(b), 28(c) and 29(a) of the defence.

Applicable provisions of the UCPR

8. Rules 165, 166 and 168 of the UCPR provide –

“165    Answering pleadings

(1) A party may, in response to a pleading, plead a denial, a nonadmission, an admission or another matter.

(2) A party who pleads a nonadmission may not give or call evidence in relation to a fact not admitted, unless the evidence relates to another part of the party's pleading.

 166    Denials and nonadmissions

(1) An allegation of fact made by a party in a pleading is taken to be admitted by an opposite party required to plead to the pleading unless –

(a) the allegation is denied or stated to be not admitted by the opposite party in a pleading; or

(b) rule 168 applies.

(2)However, there is no admission under subrule (1) because of a failure to plead by a party who is, or was at the time of the failure to plead, a person under a legal incapacity.

(3) A party may plead a nonadmission only if –

(a) the party has made inquiries to find out whether the allegation is true or untrue; and

(b) the inquiries for an allegation are reasonable having regard to the time limited for filing and serving the defence or other pleading in which the denial or nonadmission of the allegation is contained; and

(c) the party remains uncertain as to the truth or falsity of the allegation.

(4) A party's denial or nonadmission of an allegation of fact must be accompanied by a direct explanation for the party's belief that the allegation is untrue or can not be admitted.

(5) If a party's denial or nonadmission of an allegation does not comply with subrule (4), the party is taken to have admitted the allegation.

(6) A party making a nonadmission remains obliged to make any further inquiries that may become reasonable and, if the results of the inquiries make possible the admission or denial of an allegation, to amend the pleading appropriately.

(7) A denial contained in the same paragraph as other denials is sufficient if it is a specific denial of the allegation in response to which it is pleaded.”

…

“168   Implied nonadmission

(1) Every allegation of fact made in the last pleading filed and served before the pleadings close is taken to be the subject of a nonadmission and rule 165(2) then applies.

(2) However, nothing in these rules prevents a party at any time admitting an allegation contained in a pleading.”

9. Withdrawal of an admission made in a pleading, including such a deemed admission,^[1] requires the leave of the Court pursuant to r 188.

The circumstances in which the admissions were made

10. The plaintiffs have sworn that they were unaware of the necessity to respond to the defence by filing a reply. I accept that that was so. The reply was drafted by a solicitor then in the employ of the solicitors for the plaintiffs. I accept that it was through her inadvertence that the requirements of r 166 were ignored.

Principles

11. As Chesterman JA observed in Hanson Construction Materials Pty Ltd v Davey & another:^[2]

“[15]It is no doubt true that the UCP Rules are meant to expedite litigation and to limit disputes to issues that are genuinely in contest, but it must, in my respectful opinion, remain the case that the rules do not operate so as to prevent the trial of issues that are genuinely in dispute.

[16]The first consideration, therefore, in an application to withdraw admissions must be whether the subject matter of the admission is truly contested. Often, if not always, that determination will be informed by the circumstances in which the admission was made. It is usually a good indication that a fact is not in dispute that the party against whom it is made admits it to be true. This, I apprehend, is why the cases emphasise the need for an explanation as to the making of the admission. If an applicant cannot demonstrate that there is a real dispute about the subject matter of the admission no other consideration need be examined.”

12. It follows from the necessity of demonstrating that there is a real dispute about the subject matter of the admission that an applicant for leave needs to show the response he or she would belatedly make to the allegation and to confirm that that response would accord with evidence available to be led at trial.^[3]

13. Counsel for the first defendants conceded that had the reply been properly pleaded, the plaintiffs would have been entitled to plead nonadmissions. But, he submitted, because they have fallen foul of r 166 and must now rely on r 188, they must point to a real dispute; it was not good enough for them to say that they do not know whether the matters pleaded are true or correct and that despite investigation they cannot find out whether they are true or correct. He submitted that in order to dispute something one must positively assert that the contrary position is true. He acknowledged that this could work an injustice, but submitted that it was the effect of the Court of Appeal decisions in Hanson and Ridolfi v Rigato Farms Pty Ltd.^[4]

14. I do not accept that submission.

15. In neither of those cases was the applicant wanting to plead a nonadmission in relation to a fact deemed to have been admitted. Ridolfi was concerned with deemed admissions by reason of non-response to a notice to admit.^[5] Hanson was a case concerning deemed admissions in consequence of non-compliance with r 166, but there the applicant wished to deny, rather than not admit, the alleged facts.

16. The rules acknowledge that a party’s pleading may contain an allegation of fact which is outside the knowledge of the opposing party, and that even after reasonable inquiries the opposing party may still not know whether such fact is true or untrue. In such cases, they permit the opposing party to plead a nonadmission, so long as it is accompanied by a direct explanation for the opposing party’s belief that it cannot be admitted.

17. There is no warrant for restricting the circumstances in which leave to withdraw an admission may be granted to those in which the applicant wishes to plead a denial and can provide a “direct explanation” for his or her belief that the allegation is untrue.^[6]

18. There may be facts solely within the knowledge of the party who pleads them. Where, however, a party (“A”) pleads a conversation between him or her and a third party (“X”), the opposing party (“B”) will seldom be entitled to plead a nonadmission simply on the basis that he or she was not a party to the conversation and its contents are within the knowledge of A. In most cases it would be reasonable to expect B to make inquiries of X to ascertain the truth or untruth of what has been pleaded. Similarly, where A pleads facts about his or her own occupation or use of land, B will seldom be entitled to plead a nonadmission simply on the basis that those facts are within the knowledge of A. In most cases it would be reasonable to expect B to make inquiries to ascertain the truth or untruth of what A has pleaded about him or herself. Of course, such inquiries may not be fruitful, and thus B may be justified in pleading a nonadmission.

19. Counsel for the plaintiffs cited several cases from other jurisdictions where parties were allowed to withdraw admissions in order simply to put the opposing parties to proof,^[7] but in none of those cases were procedural rules such as UCPR r 166 considered.

20. I consider that where a party wishes to withdraw an admission and instead to plead a nonadmission, he or she should not usually be given leave to do so in the absence of sworn evidence of inquiries made to find out whether the allegation is true or untrue, and the Court’s being satisfied that those inquiries were reasonable in all the circumstances.

Delay, prejudice

21. Questions of delay in making an application for leave to withdraw an admission and prejudice to the opposing party if leave were granted can be relevant to the exercise of the Court’s discretion. I did not understand counsel for the first defendants to rely on either delay or prejudice in the present application.

The deemed admissions

22. Counsel for the plaintiffs prepared a very helpful schedule juxtaposing allegations in the statement of claim and the allegations in the defence responsive to them which the plaintiffs are deemed to have admitted. I shall take each deemed admission in turn, identifying it by the paragraph number in the defence.

23. Paragraph 7(b) of the defence

Statement of claim   Defence

24. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 7(b) of the defence.

25. Counsel for the plaintiffs submitted that they are matters clearly within the knowledge of the first defendants. He submitted that the only inquiries that could reasonably be made were of the first defendants themselves. He submitted that whilst disclosure by the first defendants might affect the situation, it could not be asserted that the plaintiffs could, with greater effort, have placed evidence before the Court contradicting the matters pleaded.

26. However, the plaintiffs have not sworn to what, if any, inquiries they have made to ascertain the truth or untruth of the facts pleaded in paragraph 7(b) of the defence. Counsel for the plaintiffs did not ask the Court to find that they had made any inquiries of the kind required by r 166 (3).

27. In the circumstances, I refuse leave to withdraw the deemed admission of the facts in paragraph 7(b) of the defence.

28. Paragraph 9(d) of the defence

Statement of claim   Defence

29. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 9(d) of the defence.

30. Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

31. The third and fourth defendants filed a notice of intention to defend and defence on 8 December 2011, which the plaintiffs read on the hearing of this application. In paragraph 8, they admitted that on or about the day following the first inspection, the fourth defendant telephoned the first named plaintiff and they had a conversation. They denied that the fourth defendant made any representation about the approval documents. They pleaded further that if the fourth defendant made the first representation (which they denied), he did so as agent for the first defendants and in reliance on information they provided to him.

32. In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 9(d) of the defence. I give them leave to withdraw the deemed admission of those matters.

33. Paragraph 11(c) of the defence

Statement of claim   Defence

34. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 11(c) of the defence.

35. Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

36. In paragraph 12 of their defence the third and fourth defendants admitted that a conversation took place between the first named plaintiff and the fourth defendants at the time the plaintiff entered into the contract. They denied that the first named plaintiff said words to the effect as alleged in paragraph 13(a) of the statement of claim and that the fourth defendant said words to the effect alleged in paragraph 13(b). They alleged that the fourth defendant told the first named plaintiff words to the effect “I have made enquiries with the vendors and they have informed me that they will be forwarding the documents to me. I have not yet seen them. If I receive them, I will provide them to you.” They denied that the fourth defendant made any representation about the approval documents. They pleaded further that if the fourth defendant made the third representation (which they denied), he did so as agent for the first defendants and in reliance on information they provided to him.   

37. In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 11(c) of the defence. I give them leave to withdraw the deemed admissions of those matters.

38. Paragraph 11 (d) of the defence

Statement of claim   Defence

39. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 11(d) of the defence.

40. Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

41. The third and fourth defendants’ response to paragraph 13 of the statement of claim refutes what the first defendants pleaded in paragraph 11(d) of the defence.

42. In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 11(d) of the defence. I give them leave to withdraw the deemed admissions of those matters.

Paragraph 14(a) of the defence

Statement of claim   Defence

43. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 14(a) of the defence.

44. In paragraph 14 of their defence the third and fourth defendants admitted that on the day of settlement, and prior to settlement, the first named plaintiff had a telephone conversation with the fourth defendant. They admitted that during the conversation the fourth defendant informed the first named plaintiff that he had made enquiries with the first defendants about the approval documents, the first defendants had informed him that the approval documents existed, and if the approval documents were provided to him by the first defendants he would fax them to the first named plaintiff. Otherwise they denied that words to the effect alleged were said and denied that the fourth defendant made any representation about the approval documents. They pleaded further that if the fourth defendant made the fourth representation (which they denied), he did so as agent for the first defendants and in reliance on information they provided to him.

45. In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 14(a) of the defence. I give them leave to withdraw the deemed admission of those matters.

46. Paragraph 14(b) of the defence

Statement of claim   Defence

47. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 14(b) of the defence.

48. Counsel for the plaintiffs submitted that these allegations are wholly within the knowledge of the first and fourth defendants, and that there are no inquiries the plaintiffs could make at this stage to dispute them.

49. The third and fourth defendants’ response to paragraph 30 of the statement of claim refutes what the first defendants pleaded in paragraph 14(b) of the defence.

50. In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 14(b) of the defence. I give them leave to withdraw the deemed admission of those matters.

51. Paragraph 28(c) of the defence

Statement of claim   Defence

52. Each of the plaintiffs deposed to having no knowledge of the matters pleaded in paragraph 28(c) of the defence.

53. In paragraph 40 of the statement of claim, the plaintiffs pleaded –

“40. The first, second, third and fourth representations each, or alternatively collectively, represented that the building works had all necessary consents, permits and approvals in compliance with all statutory requirements relevant to such works (‘the building works representations’).”

54. In their defence the third and fourth defendants denied the allegations in paragraphs 40, 48 – 53 (inter alia) for the reasons set out in earlier paragraphs of their defence. Relevantly, their position seemed to be that if they made the building representations (which they denied), they did so as agent for the first defendants and in reliance on information they provided to them. This refutes what the first defendants pleaded in paragraph 28(c) of the defence.

55. In the circumstances, I accept that there are no inquiries the plaintiffs could make at this stage to ascertain the truth or untruth of the matters alleged in paragraph 28(c) of the defence. I give them leave to withdraw the deemed admission of those matters.

56. Paragraph 29(a) of the defence

Statement of claim   Defence

57. In their affidavits the plaintiffs did not expressly address the allegation in paragraph 29(c) of the defence that the sale of the land was not in the course of trade or commerce, although they deposed to having no knowledge of the matters alleged in paragraph 7(b) of the defence – that the female first defendant is not a property developer, that the male first defendant has acted as director of corporations carrying out property development, and that the first defendants did not obtain or use the land in the course of development activities but instead for residential and recreational purposes.

58. Counsel for the plaintiffs submitted that only the first defendants know the basis on which they sold the land, and that there is no evidence the plaintiffs could obtain to contradict the allegation in paragraph 29(a) of the defence that the sale was not in the course of trade or commerce.

59. The plaintiffs have not sworn to what, if any, inquiries they have made to ascertain the truth or untruth of the facts pleaded in paragraph 29(a) of the defence. Counsel for the plaintiffs did not ask the Court to find that they had made any inquiries of the kind required by r 166 (3).

60. In the circumstances, I refuse leave to withdraw the deemed admission of the allegation in paragraph 29(a) of the defence.

Conclusion

61. I give the plaintiffs leave to withdraw the deemed admissions of the matters alleged in paragraphs 9(d), 11(c), 11(d), 14(a), 14(b) and 28(c) of the defence of the first defendants filed on 31 May 2011.

62. I will hear the parties on the form of the order and on costs.