Lawyers Briefing Notes

Tue, 18 Jan 2011

Pre-action Admissions

Where liability has been admitted prior to the issue of proceedings, it does not automatically follow that the court will hold a defendant to that admission if, on the facts of the case, it would be unfair to do so.

In Gunn v Taygroup Limited [2010] EWHC 1665, the claimant business proprietors sought to strike out parts of the defence lodged by the defendant in relation to a claim for loss where the defendant’s articulated lorry struck the overhead telephone cables that stretched between the properties of the claimant. The insurers for the claimant sought to recover a sum estimated in the region of £637,000.

Initially, agents for the defendant’s insurer admitted responsibility for the incident. However, the defendant’s loss adjusters maintained that they were not prepared to admit liability. A year later the defendant’s solicitor filed a defence formally denying liability. However, by this time the quantum of the claim had risen to approximately £3.4 million. In view of the pre action admission, the claimant sought to strike out the defendant’s defence as an abuse of process arguing that the defendant should not be allowed to withdraw the admission as key evidence may have been lost as a result of the passage of time.

In refusing the application, the Court of Appeal recognised that the claimant had not identified any bad faith by the defendant affirming that the requisite parts of the defence could only be struck out, as an abuse of process, if they were likely to obstruct the just disposal of the proceedings and the claimant could show that it would suffer some prejudice thereby affecting the fairness of the trial.

The court added that a withdrawal of a pre action admission must be founded on the principles of equity and estoppel in that if it was relied upon by a party to its substantial detriment the basis of estoppel and prejudice was established. In this case, the claimant had produced no evidence that it had been prejudiced and it would be wrong to infer prejudice in the absence of such evidence. In relation to fairness, the court had due regard to the overriding objecting acknowledging that, at the time of the admission, if the defendant’s solicitors were faced with a claim of over £3.4 million they would not have admitted liability so readily. Therefore, it seemed unfair to hold the defendant to an admission of liability on a claim then specifically quantified at something over £600,000 when the claim 2 years later had increased fivefold.

Turning to pre action admissions generally, applicable to admissions made after 6 April 2007, a pre action admission may be withdrawn under CPR 14.1A before the commencement of proceedings, if the person to whom the admission was made agrees or after the commencement of proceedings, with the permission of the court.

CPR 14.1A applies only to personal injury, clinical disputes and disease and illness claims. The pre action admission under CPR 14.1A must be stated to be in accordance under Part 14. After the commencement of proceedings, the rule also provides that in the same limited cases any party may apply for judgment on a pre action admission and the party who made the pre action admission may apply to withdraw it.

In deciding whether to withdraw an admission under this rule, the court will have regard to all the circumstances in the case including the grounds upon which the application is made, the conduct of the parties (including any conduct which led the party making the admission to do so), the prejudice that may be caused to any person if the admission is withdrawn, the stage of proceedings and the prospects of success together with the overriding criteria as to whether allowing the party to withdraw the admission is in the interests of the administration of justice.

Outside of the finite types of case under CPR 14.1A, we turn to the case of Stoke on Trent City Council v John Walley [2006] EWHC 1137. The Court of Appeal held that a party withdrawing an admission pre action did not require the permission of the court. The status of such an admission was evidential only. In such cases, the court said that the approach to be taken by the claimant where the pre action admission was withdrawn by the defendant would be an application to strike out the defence or part of it under CPR 3.4 as an abuse of process or for obstructing the disposal of the proceedings. In order to establish that the withdrawal of an admission would amount to an abuse of process it would usually be necessary to show that the defendant had acted in bad faith and, in relation to the second element, in order to show that the withdrawal of the pre action admission was likely to obstruct the disposal of proceedings it would be necessary for the claimant to show that he would suffer from prejudice that would affect the fairness of the proceedings.