NM Rural Enterprises Pty Ltd v Rimanui Farms Limited [2010] NSWSC 969 (2 September 2010)

Last Updated: 3 September 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
NM Rural Enterprises Pty Ltd v Rimanui Farms Limited [2010] NSWSC 969


JURISDICTION:


FILE NUMBER(S):
2003/93179

HEARING DATE(S):
27 August 2010

JUDGMENT DATE:
2 September 2010

PARTIES:
NM Rural Enterprises Pty Ltd (Plaintiff)
Rimanui Farms Limited (First Defendant)
Gil Gil Farming Pty Ltd (Second Defendant)
Lloyds Syndicate No 1243 (Third Defendant)

JUDGMENT OF:
Harrison J

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
J E Maconachie QC with S B Docker and M W E Maconachie
T J Hancock with J P Donohoe and A T Martin (First Defendant)
B Loukas (Second Defendant)
G T W Miller QC with D A Lloyd (Third Defendant)

SOLICITORS:
TurksLegal (Plaintiff)
Webb and Boland (First Defendant)
Doyle Wilson (Second Defendant)
Riley Gray-Spencer (Third Defendant)


CATCHWORDS:
PRACTICE & PROCEDURE – UCPR 12.6 – admissions – withdrawal of admissions – application for leave – whether defendants entitled to withdraw an admission that they jointly contracted with a third party for aerial spraying on the plaintiff's land – whether withdrawal necessary to expose real issues in dispute – whether true position was that separate contracts entered creating several liability – whether Court liable to determine an issue based upon a fiction unless leave granted - delay – where admissions made five and a half years previously – actual and presumptive prejudice – leave refused.

LEGISLATION CITED:
Uniform Civil Procedure Rules
Civil Procedure Act 2005

CATEGORY:
Procedural and other rulings

CASES CITED:
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27
(2009) 239 CLR 175
Bank of Western Australia v Salmon [No 1] [2009] NSWSC 224
Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738
Dennis v Australian Broadcasting Corporation [2008] NSWCA 37
Drabsch v Switzerland General Insurance Co Ltd (Supreme Court of New South Wales
Santow J
16 October 1996
unreported)
Maile v Rafiq [2005] NSWCA 410
The Nominal Defendant v Gabriel [2007] NSWCA 52
(2007) 71 NSWLR 150

TEXTS CITED:


DECISION:
The notices of motion filed by the first and second defendants seeking leave respectively to withdraw admissions made by the first defendant in paragraph 10 of its defence filed 9 November 2006 and by the second defendant in paragraph 5 of its defence filed 4 December 2006 to the amended statement of claim filed 26 September 2006 should be dismissed with costs.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

HARRISON J

2 September 2010

2003/93179 NM Rural Enterprises Pty Ltd v Rimanui Farms Limited & Ors

JUDGMENT

1 HIS HONOUR: Between 23 and 26 November 2000, Gwydir Air Charter Pty Ltd sprayed certain fields on the property "Boonaldoon" with the herbicide glyphosate on behalf of the first defendant Rimanui Farms Limited and the second defendant Gil Gil Farming Pty Ltd. The plaintiff alleges that some of the spray from that operation drifted onto cotton and sorghum crops planted on its property "Telleraga" causing damage. The plaintiff pleaded that Rimanui and Gil Gil had contracted jointly with Gwydir to do the work and both Rimanui and Gil Gil respectively admitted that allegation. They each now seek to withdraw their admissions. For the reasons that appear below, I do not consider that they should be permitted to do so.

Background

2 Paragraphs 10 and 11 of the plaintiff's amended statement of claim filed on 26 September 2006 were in the following terms:

"10. In or about November 2000, the first defendant and the second defendant jointly contracted with Gwydir Air Charter Pty Limited ACN 001 940 852 ("Gwydir Air") for Gwydir Air to spray herbicide ("the Herbicide") onto Boonaldoon from aeroplanes ("the Spraying").

11. In the alternative, in or about November 2000 the first defendant and the second defendant each contracted with Gwydir Air for the Spraying, which was to occur during the same period in respect of each contract."

3 Paragraphs 10 and 11 of the original statement of claim filed on 29 October 2003 had been in identical terms.

4 On 4 December 2006 Rimanui filed its defence. Paragraph 10 was as follows:

"10. The First Defendant admits paragraph 10 of the Plaintiff's Amended Statement of Claim and by reason of the admission does not respond to paragraph 11 of the Plaintiff's Amended Statement of Claim."

5 Paragraph 6 of Rimanui's defence to the original statement of claim filed on 2 February 2004 had been in relevantly identical terms.

6 On 4 December 2006 Gil Gil filed its defence to the amended statement of claim. Paragraph 5 of that defence is in relevantly identical terms to paragraph 10 in Rimanui's defence. Paragraph 4 of Gil Gil's defence to the original statement of claim filed on 16 February 2004 had also been in relevantly identical terms.

7 Gil Gil filed its DCM document on 17 June 2004. Paragraph 1.3(c) of that document was as follows:

"1.3(c) The Defendants through their contractor Gwydir Air Charter Pty Ltd . . . jointly carried out spraying operations on the property 'Boonaldoon'."

8 It does not appear that Rimanui filed a similar document.

Applicable legal principles

9 UCPR 12.6 provides relevantly as follows:

"12.6 Withdrawal of matter in defence or subsequent pleading

(1) A party raising any matter in a defence or subsequent pleading may withdraw the matter at any time.

(2) Despite subrule (1), a party may not withdraw any admission, or any other matter that operates for the benefit of another party, except with the consent of the other party or by leave of the court."

10 This rule and some of the principles relating to formal admissions and their withdrawal in court proceedings are referred to in the judgment of Campbell JA in The Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150 at [103] – [112]. At [110] – [111] his Honour said this:

"[110] As it is the pleadings that define the issues for trial, if an admission is made in a defence, there is no issue at the trial about the truth of the fact admitted, and therefore no evidence may be led, or submission made, for the purpose of controverting that admitted fact. Similarly, an assumption that underlies the requirement for leave to withdraw a formal admission made in court proceedings by one of the means prescribed by the Rules, other than admission on the pleadings, is that, unless and until leave to withdraw that admission is given, the matter that is admitted cannot be controverted by other evidence in the case. However, pursuant to UCP Rule 17.6, such an admission operates only in favour of the party in whose favour it was made, and is taken to have been made for the purpose of those particular proceedings only.

[111] It is only because admissions made by a formal step in proceedings, of the various types I have just mentioned, prevent there being any issue in the proceedings about the correctness of the matter admitted that any question arises about such admissions being "withdrawn". Granting leave for such an admission to be withdrawn is, in effect, granting permission for an issue to be raised in litigation about the correctness of the matter that had been admitted."

11 In Drabsch v Switzerland General Insurance Co Ltd (Supreme Court of New South Wales, Santow J, 16 October 1996, unreported), his Honour summarised the applicable principles at 7 as follows:

"1. Where a party under no apparent disability makes a clear and distinct admission which is accepted by its opponent and acted upon, for reasons of policy and the due conduct of the business of the court, an application to withdraw the admission, especially at appeal, should not be freely granted; Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 per Rogers CJ Comm D, followed in IOL Petroleum Ltd v O'Neill per Young J (Young J, 17 November 1995, unreported) and Apex Pallett Hire Pty Ltd v Brambles Holdings Ltd (full Supreme Court of Victoria, 8 April 1988, unreported), and in that respect not following H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694 at 703.

2. The question is one for the reviewing judge to consider in the context of each particular appeal, with the general guideline being that the person seeking on a review to withdraw a concession made should provide some good reason why the judge should disturb what was previously common ground or conceded; IOL Petroleum Ltd v O'Neill (supra), in the context of withdrawing a concession made before the Registrar.

3. Where a court is satisfied that admissions have been made after consideration and advice such as from the parties' expert and after a full opportunity to consider its case and whether the admissions should be made, admissions so made with deliberateness and formality would ordinarily not be permitted to be withdrawn; Coopers Brewery Ltd v Panfida Foods Ltd (supra) at 745 and 748. Thus a court will not lend its approval to the withdrawal of admissions where, by analogy with the making of amendments, this is actuated by purely tactical reasons; compare Devae Prufcoat Pty Ltd v Altex Industrial Paints Ltd (Cole J, 15 March 1989, unreported).

4. It will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts. Leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters. Irrespective of whether the admission has or has not been formally made, leave may be refused if the other party has changed its position in reliance upon the admission; H Clark (Doncaster) Ltd v Wilkinson (supra), in that respect not doubted.

5. Following Cohen v Mc William and Anor (1995) 38 NSWLR 476, a court is not obliged to give decisive weight to court efficiency, such that a party who wishes to defend its claim is entitled to a hearing on the merits, with cost orders being available as a means of compensating the other party for any costs thereby unnecessarily incurred or not fairly visited on the other party."

12 In Maile v Rafiq [2005] NSWCA 410, Tobias JA adopted these principles and said this at [75]:

"[75] In my opinion, there is no essential difference between the principles articulated by Master Harper in Wyer on the one hand, which were sourced in the decision of the Full Court in Celestino and that of Santow J in Drabsch, and the statement of principle by the primary judge on the other that the onus lay upon the claimant to place before the Court material not only to explain the circumstances which led to the situation in which the claimant had now found itself but also to satisfy the Court that, were relief to be granted, the opponent would not be prejudiced in obtaining a fair trial on the issue of breach of duty of care."

13 At [58] - [63] and [78] - [91], Tobias JA discussed the issue of prejudice if an admission were withdrawn. A respondent carries no onus to establish actual prejudice and the Court is entitled to take into account presumed prejudice, which arises from delay. His Honour continued at [95]:

"[95] In these circumstances, the evidence must establish an adequate reason based on evidence or a sensible explanation of a solid and substantial character explaining the admission of a breach of duty of care in the Notice of Grounds of Defence filed on 11 May 2004..."

14 Kirby J also helpfully referred to the way in which White J had approached some of the pertinent issues in Bank of Western Australia v Salmon [No 1] [2009] NSWSC 224 at [40] – [41] and [43] – [46] as follows:

"[40] . . . The authorities are helpfully collected by White J in a case of SLE Worldwide v WGB & Ors [2005] NSWSC 816. It is convenient to quote from the headnote in that case which is in these terms:

' ... Held that admissions made formally and deliberately by party legally advised should prima facie not be permitted to be withdrawn unless party seeking to withdraw them can point to an error when admissions were made or a relevant change of circumstance.'

[41] Later in the judgment, White J set out at some length the passages from a number of authorities. They included Sangora Holdings Pty Ltd v Dunstan (Supreme Court of Western Australia, Full Court, 13 April 1999, unreported; BC9901667) where Steytler J (with whom Scott J agreed) said the following: (at 7)

'[54] It is a serious matter to make an admission in a pleading. From that point onwards the admitted fact or facts cease to be in issue and the action proceeds upon that assumption. It may often be the case that, absent the admission, the action would have proceeded upon a different basis. It has consequently been said on a number of occasions that, as a matter of principle, a party who has made an admission in a pleading should not be entitled to withdraw that admission without good cause (see, for example, Divcon (Australia) Pty Ltd v Devine Shipping Pty Ltd [1996] VicRp 58; [1996] 2 VR 79 at 80). The withdrawal of an admission will often even less readily be allowed if it has stood for a long time (see Davey v Harrow Corporation [1958] 1 QB 60 at 69) or when the withdrawal will cause significant prejudice to the other party (see Hamilton v Australian Telecommunications Commission [1989] 2 Qd R 18 at 20 and Permanent Building Society v Wheeler, unreported; FCt SCt of WA; Library No 940115; 22 February 1994 and see, generally, Seaman: Civil Procedure Western Australia para 20.14.2)'

*****

[43] White J observed that this remained a correct statement of the relevant principles after Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146. (Jeans v Commonwealth Bank of Australia [2003] FCAFC 309; (2003) 204 ALR 327 at 330-331; Silver v Dome Resources NL [2005] NSWSC 265 at [8]- [9]). His Honour continued:

'56. ... In Jeans v Commonwealth Bank of Australia, the Full Court of the Federal Court said that there was no principle that admissions might or might not be withdrawn, but that the court had a broad discretion to weigh up all matters, with the overall question being to ensure there was a fair trial. (At 330 [18]). Nonetheless, I approach the task of assessing what fairness to the parties requires, guided by the principles expounded by Santow J in Drabsch. It is legitimate and it may be necessary to consider whether the party making the admission did so deliberately, or whether he did so in error, whether the significance of the admission has changed since it was made, for example by reason of other amendments, (Silver v Dome Resources NL at [12]), or whether new evidence has come to light. In this case there is no suggestion that the admission was made in error. There has been no change to the pleadings which has altered the significance of the admissions. It is not suggested that new evidence has come to light which justifies their withdrawal. Where a party, who is legally advised and does not suffer any disability, deliberately and without mistake, admits liability in whole or in part, and there are no relevant changes of circumstance, prima facie, justice or fairness to both parties does not require that it be allowed to change its mind. That is why admissions made with deliberateness and formality are not ordinarily permitted to be withdrawn.'

[44] His Honour later referred to a Queensland case Rigato Farms Pty Ltd v Ridolfi [2000] QCA 292; [2001] 2 Qd R 455, where De Jersey CJ said this:

'Fulfilling procedural requirements will often contribute significantly to securing an ultimate result which may be considered just. Allowing the appellant to withdraw these deemed admissions would substantially erode the beneficial worth of a very important procedural mechanism directed, through expediting cases and reducing costs, to promoting the interests of justice.'

[45] McPherson JA, in the same case, emphasised that, in permitting an admission to be withdrawn, the Court should be satisfied that there was a genuine dispute, and that would ordinarily require an explanation of how the admission came about. White J quoted the following passage from that judgment:

'Before permitting the admission to be withdrawn, the first step to be determined here was whether there was a genuine dispute about the defendant's liability in this action. ... it is not enough for that purpose simply to assert that a dispute exists: ... Some proper basis must be laid for that assertion, which would ordinarily include an explanation of how the earlier admission came to be made and why it should now be permitted to be withdrawn. That is not shown by a (sic) saying simply that there has been a change of solicitors, or that it is possible to see that, before the admission was made, the issue of liability was an open question. Here the defendant has not condescended to swear to the circumstances in which the admission came to be made, or to show that it occurred by inadvertence, mistake or in some other way that might now justify its withdrawal.'

[46] I was also taken to the decision of the Federal Court in Re Rocco Celestino v Antonio Celestino [1990] FCA 299 and especially paragraphs 12 to 14; and Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 (Rogers CJ Comm D)."

Why is the admission important?

15 The events that give rise to the present proceedings are now almost ten years old. In 1999 Rimanui and Gil Gil entered into a share farming agreement pursuant to which they jointly worked certain fields on Boonaldoon, which was owned by Rimanui. Rimanui worked the balance of the fields on its own account. The plaintiff has sued Rimanui and Gil Gil for the alleged consequences of chemical drift from their spraying activities on all of these fields. Rimanui and Gil Gil both engaged Gwydir to carry out spraying over the four days in question. As a result, it becomes difficult to allocate any particular responsibility for the physical consequences of spray drift between the aerial applications of glyphosate upon the fields in the control of Rimanui on the one hand and similar applications upon the fields in the control of Gil Gil on the other hand. The admission by Rimanui and Gil Gil that they jointly contracted with Gwydir to carry out the spraying has meant that since as long ago as 2 February 2004 in the case of Rimanui, and 16 February 2004 in the case of Gil Gil, the plaintiff has been blissfully unconcerned to investigate or explore the question of who were the parties to the contract or contracts with Gwydir and what were the terms pursuant to which Gwydir performed the spraying. In like measure, the plaintiff has been equally unconcerned to decipher the possible differences in effect between what Gwydir sprayed for Rimanui and what Gwydir sprayed for Gil Gil or to attempt to apportion responsibility between them for the consequent damage.

16 In the nature of things, Rimanui and Gil Gil were concerned to direct my attention to what they contended was the evidence that supported the existence of a separate contract between each of them and Gwydir, which they submitted led to a conclusion that they were severally liable in fact, in contradiction of the admissions that they have made. For obvious legal and practical reasons, Rimanui and Gil Gil did not attempt to show or even to suggest that spraying by Gwydir on behalf of one or other of them had led to damage that could easily or arguably be traced to spraying performed for one of them to the exclusion of the other.

One contract or two?

17 Rimanui and Gil Gil submitted that the evidence revealed that there were two contracts. The plaintiff in contrast contended that they had not shown this to be so, and that that was fatal to the applications.

18 Rimanui and Gil Gil took me to a great deal of evidence otherwise available for consideration in the case. First, the report of Amanda Woollams dated 18 August 2001. Paragraph 11.5 of that report refers to the fact that B & W Rural Pty Ltd supplied agronomic advice and herbicide products to both Rimanui at Boonaldoon and Mr Garry Colley through Gil Gil. B & W Rural raised separate invoices or sales dockets for the supply of glyphosate to Gwydir on 24 November 2000. Order No 10810 is shown to the account of Mr Colley, whereas order No 10808 is shown to the account of Boonaldoon. The products would also appear from the B & W delivery dockets to have been separately delivered to Keytah airstrip and signed for separately as well.

19 Secondly, Gwydir raised separate work orders in respect of the work to be performed for Rimanui and Gil Gil. By way of example, work order No 19392 for spraying glyphosate on "Bottom" and "Middle" on 25 November 2000 is directed to Gil Gil and Mr Colley is shown as the contact. In contrast, work order No 19419 for spraying glyphosate on "Woods" on 26 November 2000 is directed to Boonaldoon and Mr Upton is shown as the contact. Several other work orders for the provision of spraying services on behalf of Rimanui and Gil Gil maintain the same distinctions over the period in question. Gwydir separately invoiced Rimanui and Gil Gil for the work it performed.

20 Thirdly, the share farming agreement between Rimanui and Gil Gil contains these clauses:

"3.2 The farmer will apply to the crop and the land all fertiliser and chemical which in the farmer's opinion is reasonably required for the proper health and maintenance of any planted or growing crop.

3.6.1 [The farmer shall] [t]ake all necessary steps to eradicate or control all vegetation detrimental to crops and all noxious plants and animals on the land and in particular shall comply with the provisions of all laws, by-laws, ordinances and regulations relating to noxious plants and animals."

21 Fourthly, Mr Colley said in his 20 May 2009 affidavit that he contacted Gwydir but could not recall who he spoke to there. He said that he advised them of the fields he required sprayed and of the rates of application. No written job request from Mr Colley or Gil Gil is in evidence.

22 Fifthly, Mr Upton said in his 15 May 2009 affidavit that on 23 November 2000 he raised a purchase order No 703 directed to B & W Rural for the supply of glyphosate for the spraying. On the same day he went to the offices of Gwydir in Moree and hand delivered a job request No 82 bearing that date and a map of the areas to be sprayed for Rimanui by Gwydir. He did not at any time instruct Gwydir to undertake any aerial spraying on behalf of Gil Gil or Mr Colley.

The pleadings

23 In addition to the statement of claim and the amended statement of claim and the respective defences to those documents filed by Rimanui and Gil Gil referred to already, they drew my attention to what appeared in the various cross claims and defences to them that have been filed. For example, paragraph 6 of Rimanui's cross claim against Gil Gil repeats against Gil Gil the allegation, contained in paragraph 11 of the amended statement of claim, that Rimanui and Gil Gil "each contracted" with Gwydir. Paragraph 4 of Gil Gil's defence to that cross claim responds that Rimanui and Gil Gil contracted jointly.

24 Curiously, Gil Gil's cross claim against its insurer, the third defendant, alleges that Gil Gil contracted with Gwydir to carry out spraying of herbicide over the parts of Boonaldoon that were under its control and supervision, without any mention of it having done so jointly with Rimanui. Lloyds' defence to the cross claim admitted that allegation. Lloyds' defence to the amended statement of claim somewhat more curiously admitted paragraph 10 of the amended statement of claim. Indeed, it adopted the precise wording used by Rimanui and Gil Gil in their defences to the same paragraph, which contain the very admissions they now seek to withdraw.

Some events on 27 July 2009

25 The first suggestion that any application might be made to withdraw the admissions would appear to have arisen no earlier than 27 July 2009 in the course of what passed between Mr Maconachie QC and me. The hearing was originally listed to commence that day. This is what was said:

"MACONACHIE: ...Before I come to what I was about to come to, I need to deal with another aberration, at least it is so far as I am concerned. In paragraph 10 of our amended statement of claim we pleaded in effect that Rimanui and Gil Gil jointly contracted with Gwydir Air. In paragraph 11 of our statement of claim we pleaded that they individually contracted with Gwydir Air. In their defences the two farming entities admit that they jointly contracted. When they come to plead to paragraph 11 they do not respond because of the manner in which they admit jointure in paragraph 10. In their affidavit material Mr Upton and Mr Connell are at pains to say: I entered into a contract with Gwydir Air myself and in concert with no one else --

HIS HONOUR: You are paraphrasing.

MACONACHIE: Yes, I am paraphrasing. I am bemused how they can hope to put forward a case which is inconsistent with pleadings that have been around for quite some time. I do not understand but our case will be they have admitted jointure. It is not an issue and they should not be permitted to lead evidence inconsistent with their case and if they wish to amend to withdraw that admission we will want to have something to say about it.

HIS HONOUR: We will deal with that later.

MACONACHIE: I raise it now so there cannot be any doubt about where we stand on the issue of jointure.

HIS HONOUR: Will it have any practical consequences?

MACONACHIE: It could but I do not think it will because we would say that the overwhelming probability is that it was all of the applications of Gil Gil and Rimanui, mainly Rimanui, which was causative of the damage. So it really does not matter whether it is joint or not. I am not going to come here and fight fights I do not have to fight. We put it on both bases, jointure is not an issue and if it is they are both in it and if we want to get really interested in the two causatives we will get down to the two hunters firing and hitting one victim and what do you draw from that. As I said earlier, there is the possibility of a difference in scientific opinion about what was the cause, how did it happen and the like."

26 Mr Donohoe of counsel for Rimanui and Mr Loukas of counsel for Gil Gil contended that Mr Maconachie's statement that he did not think withdrawal of the admissions would have any practical consequences, was significant and arguably determinative of the applications. Mr Maconachie for the plaintiff insisted that the passage above when read as a whole made it clear that from the plaintiff's point of view Rimanui and Gil Gil should not be permitted to lead evidence that was inconsistent with the admissions, particularly as they had been made at an early stage of the proceedings and had not been revisited since.

27 In my opinion the plaintiff's position at that time was clear. It would not consent to any application to withdraw the admissions. The statements by Mr Maconachie contain some references that are arguably capable of being understood in another way. However, on balance and quite persuasively, the burden of what was said was consistent with the position that the plaintiff now seeks to maintain. It is not without significance that the issue was raised by Mr Maconachie for the express and stated purpose, in his words, that there could not "be any doubt about where we stand on the issue of jointure".

Submissions by Rimanui and Gil Gil

28 Rimanui and Gil Gil contended that the admission did not go to a matter or question that was material to any issue in the case, such as liability (presumably in the sense of a breach of duty) or contributory negligence. In Maile, for example, the moving party was seeking to withdraw an admission of liability, and was permitted to do so in the circumstances of that case. It was submitted, in plain contrast to the enthusiasm with which the present applications are being pursued, that the admission itself is comparatively insignificant. It was said not to go to any substantive issue in the proceedings. Rimanui and Gil Gil emphasised that there were clearly two separate contracts and that it was a fiction to permit the admissions to stand. Moreover, they stressed that the admissions did not change the plaintiff's case in any appreciable manner. This was because, according to this submission, the plaintiff determined upon a particular course for the conduct and prosecution of its case some three years prior to the commencement of the proceedings when it commissioned the services of Ms Woollams, Mr Somervaille and Mr Combellack. Their respective and particular investigations and enquiries were not predicated or dependent upon the assumed contractual relationship between Rimanui and Gil Gil.

29 Even though this is the first time that Rimanui and Gil Gil have sought leave to amend their defences in this way, notified no earlier than 9 August 2010 when the hearing resumed before me, they submitted that the proposed amendment would not cause any prejudice to the plaintiff or occasion any significant delays or waste of the Court's time or resources. They contended that the withdrawal of the admissions would allow the Court to determine the real questions raised in the proceedings. The withdrawal of the admissions and the consequent amendment of the defences would also "bring the pleadings into line with the evidence adduced by the plaintiff and that which is yet to be adduced by the defendants [sic]".

30 Rimanui and Gil Gil submitted that nothing that was said by the High Court of Australia in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 was authority for the proposition that modern case management rules created a default position of not permitting any amendments, which the party seeking to amend must first overcome. That case demonstrated that the question of whether amendments are permitted is a balancing exercise, which includes appropriate weight being given to the case management rules. That is said to be clear from what was said at [102] in these terms:

"[102] The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some ill-effects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment."

31 Aon did not deal with the withdrawal of an admission. Rimanui and Gil Gil submitted that its authority and utility in the present case, other than by analogy, was therefore reduced.

32 Rimanui and Gil Gil also submitted that the question of the contractual interrelationship of the various alleged tortfeasors was of marginal, if any, significance or relevance to the question of whether or not they were liable as such. They contended that even if only theoretically it had some legal effect of importance on the plaintiff's case in negligence, one might have expected the existence of some detailed case law that had considered the issue. None is referred to by the plaintiff.

33 Rimanui and Gil Gil submitted that the plaintiff would not be prejudiced if the admissions were withdrawn, saying that the "exact arguable prejudice from a legal standpoint ... by reason of the contractual relationship between [them] remains only one of conjecture". Moreover, any reading of the totality of the pleadings, including the cross claims, would leave no one surprised or able to allege prejudice caused by uncertainty as to what were the precise contractual relationships or arrangements. Rimanui and Gil Gil submitted that it was quite clear on the face of the pleadings that what was being ventilated was the existence of separate contracts between Gwydir and Rimanui and Gil Gil respectively.

The plaintiff's submissions

34 The plaintiff's submissions were to a considerably different effect.

35 The application to withdraw the admissions was made on the 15th day of a complicated hearing. The first day of the hearing was almost 13 months before that. On that occasion the plaintiff made its position clear in unambiguous terms. On 27 July 2009 when the plaintiff did so, per medium of Mr Maconachie's words quoted earlier, Rimanui's defence and Gil Gil's defence had each relevantly been in the form they are now in for approximately five and a half years. With joint engagement of Gwydir by Rimanui and Gil Gil not in issue, Gil Gil gave discovery on 22 July 2004 and Rimanui did so on 3 August 2004.

36 Rimanui filed its defence to the amended statement of claim on 4 December 2006. Mr Grellman verified it on its behalf before its solicitor Mr Moylan. The plaintiff advances the inference that Mr Moylan must be taken to have informed Mr Grellman of the significance of his solemn deposition before he made it. Mr Grellman gave evidence on 23 August 2010 but he did not take, or was not given, the opportunity to explain the circumstances in which he came to swear an affidavit verifying the defence in its current form.

37 Mr Colley verified Gil Gil's defence to the amended statement of claim on 16 November 2006.

38 The plaintiff's case is all but closed. The evidence it deployed in proof of its case was led in circumstances in which it was not an issue, and could not be addressed by evidence, that Rimanui and Gil Gil jointly engaged Gwydir. The third defendant, the insurer of Gwydir, made the same admission. The only three parties capable of knowing the true position took a uniform approach to the issue.

39 The fifth proposition identified by Santow J in Drabsch should be qualified. First, s 56 to s 60 inclusive of the Civil Procedure Act 2005 have altered the common law so that issues of case management now have greater force and importance: see Dennis v Australian Broadcasting Corporation [2008] NSWCA 37 at [28] – [29]. Secondly, Aon reasserts the importance of case management and court efficiency considerations. Since the decision in Aon, the matters raised in Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 regain their significance.

40 Furthermore, Aon discussed the importance of an explanation being given for delay in a party seeking to amend: see [106] to [109]. If no explanation is provided, the Court is not entitled to speculate that there is a satisfactory explanation and should infer that one does not exist.

41 The plaintiff contended that there could be no suggestion of confusion, misunderstanding or oversight as a cause for the admission having been made in the first place or no application to withdraw it having been made earlier in the second place. The way in which paragraphs 10 and 11 of the amended statement of claim and their predecessors were dealt with in the subsequent pleadings filed by all defendants makes it clear that they were well understood and deliberately answered with knowledge of the true facts.

42 The plaintiff also submitted that on or after 27 July 2009 Rimanui and Gil Gil consciously, purposefully and deliberately maintained their defences in their original form, containing the admissions, even after their attention had been drawn on that day to the fact that the plaintiff placed reliance upon them. They had been in that form for many years. The plaintiff submitted that those circumstances bespeak a perception that Rimanui and Gil Gil pursued that course for some forensic advantage, and that such perception tells against a grant of leave to withdraw the admissions. The plaintiff submitted that there has been no explanation, or certainly no adequate explanation, of why the admissions were made otherwise than intentionally, deliberately and accurately.

43 Mr Scott Kennedy of Curwoods signed the 4 December 2006 defence. That firm was at that time the solicitors on the record for Rimanui. Mr Kennedy is a partner of that firm and easily contactable. No evidence was called from Mr Kennedy to explain why the defence was in that form and no explanation for the failure or omission to call him has been provided. The plaintiff asserts that it is entitled to the benefit of an inference that nothing Mr Kennedy could have said would have assisted Rimanui in the present application.

44 The plaintiff submitted that the only conclusion that is available in the circumstances is that at the time the defences were verified and filed they were true and accurate. Indeed, the solicitors for Gil Gil corresponded on the very topic of an application to withdraw the admissions with the plaintiff's solicitors on 30 September 2009, enclosing a proposed amended defence, denying paragraph 10, and yet nothing came of it. The last word in that chain of correspondence was a letter dated 22 October 2009 from Maria Crocker for the plaintiff to Mr Wilson for Gil Gil. Part of what Ms Crocker said is as follows:

"A matter which is of central importance to your proposal to withdraw the admission is the consequences it will have for the proceedings. As a result of the admission by both the first and second defendants, the litigation has been conducted on the basis that it is unnecessary for a distinction to be drawn between the herbicide which was targeted at the first defendant's crops and the herbicide that was targeted at the second defendant's crops. The evidence has been prepared by all parties based on this premise and your client and the first defendant have even engaged the same expert witnesses.

If the admission is withdrawn it will result in a significant change to the way the case is run and will result in further delay to the finalization of the proceedings which have already experienced significant delay. This is prejudice of the kind which cannot be cured by orders for costs."

45 No response to that letter is in evidence.

46 The plaintiff also asserted that the Court should infer presumptively that it is irremediably prejudiced by a proposal so fundamentally to change the pleadings at this late stage. It is said to be self-evidently difficult, if not impossible, for the plaintiff to reconstruct hypothetically what it would have done, many years after the event, if Rimanui and Gil Gil had denied jointure and alleged severalty. It may have administered interrogatories, focused more attention upon the records of Gwydir and its personnel, such as Mr Hovenden and perhaps others, and instructed its experts in a more focussed way to attempt with precision to identify what spray applications by which defendant caused what damage. It should not now be required to do so. The plaintiff submitted that its potential exposure to such a possibility manifests prejudice without more.

Mr Moylan

47 Mr Moylan is Rimanui's solicitor. He swore a series of affidavits that were read on Rimanui's application. The burden of what he said in those affidavits is that he had formed the view that the evidence did not support Rimanui's maintenance of the admission and that as a function of his professional and ethical responsibilities he considered that it should be withdrawn. He offered no explanation of why the admission was made in the first place. He was not the solicitor for Rimanui when the original defence was filed. He was the solicitor on the record for Rimanui when the current defence was filed.

48 Mr Moylan gave evidence on this application. He confirmed that counsel settled the defence to the amended statement of claim. He was also referred to what occurred in Court on 27 July 2009 and gave the following evidence about it:

"Q. Were you in Court on 27 July 2009?

A. Yes, from the best of my recollection I believe I was.

Q. And have you heard in the last few days reference being made to page 50 of that transcript where in opening words were said to the effect that the admissions made in your client's defence at paragraph 6 would be relied on?

A. I can't say whether I specifically heard it, I have been in and out but I understand that is the opening that certainly has been relied upon, yes.

Q. You knew that, did you not, in 2009?

A. Yes I did and it's a matter that I was of the understanding that an application was to be made. On my return back to Moree from Sydney during the first hearing last year it was a matter that I had, on my list to address as such and that's where it stayed.

*****

Q. Was the withdrawal of the admission an issue, which was of significance in your mind in July 2009?

A. In July of 2009 it became of significance, yes."

49 No further or other explanation of why the admission was made in the first place was provided. No correspondence between the plaintiff's solicitors and Mr Moylan since 27 July 2009, if there was any on this issue, is in evidence.

Mr Wilson

50 Mr Wilson is the solicitor for Gil Gil. He also swore an affidavit that was read on the application. His affidavit did not include an explanation of why the admission was originally made. He gave evidence as follows:

"Q. When you swore the document, you were conscious of your need to be accurate, were you not?

A. Yes.

Q. At that point in time, it was firmly in your mind that the reason why the defence was in the form that it is was because you had followed the defence filed by the first defendant, correct?

A. I was certainly guided by the defence of the first defendant.

*****

Q. That is a document which you brought into existence, is it not?

A. That's correct.

Q. Being your client's, the second defendant, DCM document as required by the rules of court?

A. That's correct.

Q. You prepared that document?

A. Yes.

Q. With some care?

A. I believe I did.

Q. It being a matter of some importance to inform the court of the true issues, as you understood them to be, correct?

A. Correct.

Q. Go to p 2 par 1.3(c), where you there stated, didn't you, that "the defendants" - meaning both the first defendant and the second defendant; is that correct?

A. Yes.

Q. "Through their contractor, Gwydir Air Charter Pty Ltd, jointly carried out spraying operations", correct?

A. Yes.

*****

Q. Have a look at the document that I now show you, sir. Have a look at that document. That document was drawn by you, was it?

A. Yes, I understand it was drawn by me.

Q. Was it settled by counsel?

A. I don't think we had counsel instructed in the matter at the time, so. Look, the answer to that, I'm not one hundred per cent certain whether it was.

Q. It might have been, it might not have been?

A. Correct. My belief is it probably was not settled by counsel.

Q. Well, in that event, can I ask you to cast your eye over it. You will agree with me, wouldn't you, that there are extensive amendments to the original defence reflected in the form of the document you are now looking at, is that correct?

A. That is correct.

Q. Accordingly. This document must have been prepared by you, after extensive consultation with the office of Gil Gil Pty Ltd, is that right?

A. I can't really recall the circumstances of how I came to amend the defence. I am sorry.

Q. But it is not your practice nor your habit to make extensive amendments to the court process on behalf of a client without instructions, is it?

A. That's correct.

Q. It follows surely, as night follows day, that the extent of the amendments demands the conclusion that you had careful and detailed consultation with your client, Mr Colley, correct?

A. That would have - I would assume that would be correct. But, again, I cannot recall the exact circumstances of my consultations.

*****

Q. Whether you can remember it or not, according to your practice and habit, there must have been a careful consultation with Mr Colley, surely?

A. My understanding was that the amended defence was prepared in response to the amended statement of claim.

Q. Yes?

A. Again, and I don't have an independent recollection of this, but I believe that the amendments may have been guided by the amendments made by the first defendant. No doubt, I would have taken instructions and made those amendments. But the extent to which I consulted Mr Colley, in relation to the amendments, I can't say. I can't say how much detail I had actually gone into those instructions with him."

51 No other explanation for the maintenance of the admission was provided.

Consideration

52 Paragraphs [111] to [114] of Aon are instructive. They are as follows:

"[111] An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future.

[112] A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.

[113] In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings.

[114] Rule 21 of the Court Procedures Rules recognises the purposes of case management by the courts. It recognises that delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants. The Rule's objectives, as to the timely disposal of cases and the limitation of cost, were to be applied in considering ANU's application for amendment. It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases. What was a "just resolution" of ANU's claim required serious consideration of these matters, and not merely whether it had an arguable claim to put forward. A just resolution of its claim necessarily had to have regard to the position of Aon in defending it. An assumption that costs will always be a sufficient compensation for the prejudice caused by amendment is not reflected in r 21. Critically, the matters relevant to a just resolution of ANU's claim required ANU to provide some explanation for its delay in seeking the amendment if the discretion under r 502(1) was to be exercised in its favour and to the disadvantage of Aon. None was provided."

53 Contrary to the submissions of Rimanui and Gil Gil, I consider that the admissions do go to a matter or a question that is material to an issue in this case. I disagree with the suggestion made by Mr Moylan in his letter dated 14 October 2009, to which Ms Crocker's letter was a response, in which he suggested that "the practical effect of the amendment which appears to cause your client significant concern is minimal". As I have adverted to earlier, the enthusiasm with which Rimanui and Gil Gil are belatedly prosecuting the present application is somewhat discordant with that assertion. The practical and procedural advantages to the plaintiff are obvious and significant. It is difficult to conceive of an easy way in which the plaintiff could have differentiated between the damage caused by a plume of spray from Rimanui's operations and damage caused by a plume of spray from Gil Gil's operations if it had been required to do so. Part of the advantage to the plaintiff arising from the admissions that have been made is that the plaintiff does not have to embark on such an exercise.

54 Nor am I satisfied that the evidence establishes that there were two separate and distinct contracts between Rimanui and Gil Gil with Gwydir. There are documents that indicate that separate invoices were issued by all concerned in the operation, from the supply of chemicals to the spraying operation itself, that distinguish between the two entities. That distinction is as consistent with a need or desire to maintain separate records of expenditure for internal accounting or taxation purposes as it is with anything else.

55 I also disagree with the proposition that the admissions are irrelevant because by the time they were made the plaintiff's factual and expert investigations had been completed, so that nothing changed when the admissions were made. For all that is known, the plaintiff's decision to continue with the proceedings beyond the date that it received the original defence may in large measure have been influenced by the apparent forensic benefit that flowed from the admissions that it contained. That decision would presumably only have been enhanced and reinforced the longer that the admission remained uncontroverted.

56 The submission that the withdrawal of the admissions would permit the Court to determine the real issues or questions raised in the proceedings is to misconceive what those real issues or questions are. Mr Loukas submitted that the reference to "the real issues in the proceedings" in s 56 of the Civil Procedure Act was an exhortation to align the pleadings with the evidence as it may ultimately unfold. This is not how pleadings operate. Pleadings define the issues for determination rather than the reverse. Section 56 operates upon the basis that the overriding purpose is informed by the pleadings. As was said in Aon at [71]:

"[71] The words "the real issues in the proceeding" in r 501(a) obviously refer to issues raised, perhaps unclearly, in the pleadings at the time of the application for leave to amend. The "real" issues may also extend beyond the pleadings, as cases concerned with the purpose stated in the original Rules show. But, as is explained in these reasons, to be regarded as a real issue, and for amendment therefore to be necessary, the relevant dispute or controversy must exist at the time of the application. Amendments raising entirely new issues fall to be considered under the general discretion given by r 502(1), read with the objectives of r 21."

57 I agree that the question of the contractual interrelationship between Rimanui and Gil Gil is not necessarily coextensive with determination of the nature or extent of their liability to the plaintiff as joint tortfeasors or otherwise. However, the admissions in question are not made or framed in a way that limits their foundation or viability to some particular underpinning contractual relationship. Rimanui and Gil Gil proceeded with their applications to withdraw the admissions upon the basis that a demonstration of the existence of separate contracts with Gwydir was necessarily decisive and determinative of the application in their favour. However, at the time that the admissions were made it must be assumed that both Rimanui and Gil Gil were aware of and appreciated the contractual relationship that each had with Gwydir and with each other as share farmers. Nothing in those circumstances led either of them to deny the allegation that they jointly contracted with Gwydir for the spraying, and they alone must clearly have known what the true position was. Even now neither Rimanui nor Gil Gil has led evidence that satisfactorily explains why the original admissions were made if the contractual position was not as they have admitted.

58 It is not open to Rimanui or Gil Gil to look to the pleadings as a whole in order to assert in effect that the plaintiff should have realised that the admission was "wrong". The pleadings do not speak with one voice. Rimanui and Gil Gil cannot approbate so much of the pleadings as support their contention and reprobate those parts that do not. The extent to which a plaintiff would be interested in or concerned with the status of issues joined on cross claims to which it is not a party must also be in some doubt.

59 The applications are late by any measure. There is no explanation for their lateness. Rimanui and Gil Gil were on notice that an application to withdraw their admissions would be contested. Rimanui at least engaged in correspondence about it but took the matter no further after October last year. If Gil Gil's decision not to prosecute the present application was at one time made because it had insufficient resources to do so, that cannot avail it in the present circumstances.

60 It does not appear to me that Rimanui or Gil Gil have managed to place before the Court material that not only explains the circumstances that led to the making of the admissions, but which satisfies me that the plaintiff would not be prejudiced in obtaining a fair trial on the issue if leave to withdraw the admissions were granted. The evidence does not establish an adequate reason or a sensible explanation of a solid and substantial character explaining why the admissions were made. If Rimanui and Gil Gil respond by suggesting that they made the admissions inadvertently without due consideration of material matters, the evidence does not support the suggestion. They have certainly not said so in terms. There is no explanation of why Rimanui made the admission in its defence filed on 2 February 2004. Gil Gil's explanation would appear to be that it simply adopted the form of that defence in its own defence filed two weeks later.

61 Nor am I satisfied that the admissions have been made contrary to the actual facts. The facts that generated the contract or contracts between Gwydir on the one hand and Rimanui and Gil Gil on the other hand necessarily involved agreement on some terms being reached with Gwydir. No part of the evidence includes any material from Gwydir that might go towards explaining what occurred or what the contractual terms were. It is apparent that some controversy attends the question of precisely what those terms were. However, that is different to an admission that is made in the face of some fact that is notorious or incontrovertible. In such a case the notion of a fiction, to which Rimanui and Gil Gil made reference in their submissions, might infect the usefulness of the pleadings. That is not the case here.

62 Even if I am wrong about that, the delay in bringing the present applications is extreme. There had been many opportunities to amend before the recommencement of the hearing on 9 August 2010. None was taken. The issue then arose on the first day of the hearing last year. It was flagged at that time as a significant matter, but not by Rimanui or Gil Gil. The plaintiff had been sufficiently alert to recognise that some of the evidence that Rimanui or Gil Gil wished to rely upon was potentially inconsistent with the admissions. Senior counsel brought the issue to the fore. The case was ultimately adjourned and some correspondence ensued. Ms Crocker would appear to have convinced Mr Wilson at least that the plaintiff's opposition to an application to withdraw the admission would be fierce and the matter once again retreated into insignificance. It remained there until resumption of the hearing.

63 The making of an admission is a serious matter. The plaintiff treated it seriously. The admissions in this case have stood for a long time and the opportunity to apply to withdraw them earlier was not taken. That of itself would have sent a clear message to the plaintiff about the attitude that Rimanui and Gil Gil took to the question. It is particularly significant that the plaintiff was not even alerted to the prospect that the admissions may be scrutinised until recently, as I have indicated. It is not by way of contrast as if the problem for Rimanui and Gil Gil was flagged from an early time, thereby putting the plaintiff on notice, so that only the actual application to withdraw the admissions is late.

64 Moreover, the significance of the admission has not changed since it was made from the point of view of Rimanui or Gil Gil, but it has arguably changed in importance for the plaintiff. By reason of the passage of time it is likely that the plaintiff's ability to prove those things that the admissions otherwise establish will have markedly contracted. It seems to me that this is a case where Rimanui and Gil Gil were legally advised and where there have been no relevant changes in circumstances. The applications have to be determined in the context of justice and fairness to all parties. An application of those principles leads me to conclude that Rimanui and Gil Gil ought not now be allowed to change their minds, because it would be particularly unjust to the plaintiff but correspondingly less so for Rimanui and Gil Gil. Their admissions were made with deliberateness and formality and they ought not now be permitted to withdraw them. The evidence does not show in any satisfactory way how the admissions came to be made or that they were the result of inadvertence or mistake. The evidence does not satisfy me that withdrawal of the admissions is justified.

Conclusion

65 In these circumstances I consider that the notices of motion filed by Rimanui and Gil Gil seeking leave respectively to withdraw admissions made by Rimanui in paragraph 10 of its defence filed 9 November 2006 and by Gil Gil in paragraph 5 of its defence filed 4 December 2006 to the amended statement of claim filed 26 September 2006 should be dismissed with costs.

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LAST UPDATED:
2 September 2010