The civil lawyer: Withdrawal of an admission: Hodgson v Amcor; Amcor v Barnes & Ors [2012] VSC 94

The matter of Hodgson v Amcor; Amcor v Barnes & Ors [2012] VSC 94 was a dispute concerning the Amcor management. Hodgson was suing for amounts owing to him on termination of his contract of employment, and Amcor was counterclaiming against its management for breach of fiduciary and like duties for acting in their own interests when selling two Amcor businesses.

Amcor's defence contained an admission of fact, including:

4.(g) For the financial year 2003/2004, the Defendant and Plaintiff agreed on budget and performance measures to be met by the Plaintiff, upon achievement of which the Plaintiff would be entitled to a bonus and such measures included, inter alia, compliance with all laws including without limitation the Trade Practices Act 1974 (Cth) (TPA) (MIP Framework 2003/04).

8. It says that the Plaintiff did not meet the budget and performance measures agreed by the Defendant and Plaintiff for the financial year 2003/2004 as described in paragraph 4 above and otherwise denies each and every allegation in paragraph 8 SOC.

Amcor issued a reply and sought to withdraw the above admissions after the trial was completed. His Honour Vickery J discussed the relevant principles for withdrawal of admissions in light of the case management principles which were set out in Aon (at [492] to [500]).

...Amcor relied upon McKenzie v Commonwealth of Australia[56] and Jeanes v Commonwealth of Australia.[57]

493 In McKenzie Gillard J discussed the principles concerning an application to amend a defence to withdraw an admission made, which were summarized as follows:

(b) No amendment would be allowed if it raised a false issue or did not raise an arguable defence.
(c) The issue is one of justice between the parties ensuring that the real matters in controversy are decided.
(d) The trial is the proper place to determine all claims and defences and it is not appropriate, except in a clear case on a summary application to amend, to exhaustively investigate the facts and the law.
(e) The burden of proof or persuasion may be crucial on an application where there are disputed facts.
(f) It is not the law that a defendant is not permitted to resile from an admission unless it was shown the admission was made inadvertently or through error; justice is the determinant.
(g) It is unnecessary to show that there was some error or mistake which led to the form of the pleading and that there is a reasonable explanation for having made the admission, before a party may seek to withdraw the admission. A court usually requires some explanation for the change in approach, but in the absence of the same, or whether it was an adequate or inadequate explanation, can hardly determine the outcome of the application in the face of compelling reasons of justice.
494 In accordance with these well established principles governing amendment, as they stood at the time McKenzie was decided, Gillard J granted to the Commonwealth the opportunity to argue the issue it wished to raise at trial, saying that prima facie it was entitled to amend its pleading, and “Whether it be permitted depends upon whether the plaintiff will suffer a prejudice which cannot be overcome”.

495 It is to be noted that in McKenzie, the Commonwealth sought leave to amend its defence in excess of two years after the date it delivered its defence, however, the proceeding had not been fixed for trial.

496 The principles referred to by Gillard J in McKenzie were said by his Honour to be supported by a number of decisions, including Queensland v J L Holdings Pty Ltd[58] where the High Court said:

Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties. In taking an opposite view, the primary judge was, in our view, in error in the exercise of her discretion.
497 The principles as to withdrawal of an admission and amendment referred to in McKenzie were re-stated by Gillard J in Jeanes.

498 However, since McKenzie and Jeanes, the High Court handed down its decision in Aon Risk Services Australia v Australian National University,[59] which it did on 5 August 2009. This decision affirmed the importance, not only to the parties, but to the Court and other litigants, of a “just but timely and cost-effective resolution of a dispute between the parties to a proceeding”.[60] French CJ noted there is “an irreparable element of unfair prejudice in unnecessarily delaying proceedings”.[61] In particular, the Chief Justice drew attention to “the waste of public resources”, the “strain and uncertainty imposed on litigants” and “the potential for loss of public confidence in the legal system” arising from adjournment of trials without adequate justification [62] Similarly, in Aon, Gummow, Hayne, Crennan, Kiefel and Bell JJ referred to the “ill-effects of delay” upon employees and officers of corporations, as well as upon defendant corporations whose ability to plan financially may be affected by a contingent liability.[63]

499 In Aon, the High Court accepted the principles of case management by the courts, saying:[64]

Such management is now an accepted aspect of the system of civil justice administered by courts in Australia. It was recognised some time ago, by courts here and elsewhere in the common law world, that a different approach was required to tackle the problems of delay and cost in the litigation process.

500 In so doing, the High Court expressly overruled statements in its previous decision of Queensland v JL Holdings to the effect that case management concerns are only relevant in exceptional circumstances. In its place it was ruled that courts must always consider the public interest in the efficient use of court resources when determining whether to grant indulgences such as amendment of pleadings and adjournments.

Vickery J rejected the application to amend as follows (at [501] to [505]):

501 In the present case, Amcor’s application to amend was made when the trial was all but over, with all of the evidence concluded, and the principal submissions in final address delivered. It was only in an otherwise short reply that Amcor made its application.

502 Amcor did not contend, or put on evidence, to suggest that the pleading in question was the product of mistake or inadvertence. Nor could it have properly been contended that this was the case, in my view, because of the positive nature of the plea advanced in paragraph 4(g) of Amcor’s defence. No other reason or excuse was put forward for the state of its original pleading.

503 Nevertheless, Amcor submitted that Hodgson, in spite of the admissions made in its pleading, went into evidence on the matter in his witness statement and accordingly, the parties went to trial seeking a determination of the issue on the facts. Further, senior counsel for Amcor, in the face of objection, challenged Hodgson on one component of his MIP bonus calculation relating to the relevant head count and put to him that there was no agreement about that, to which Hodgson replied that he disagreed.

504 I am not satisfied that Amcor has made out its case for the amendment which it sought. Hodgson was entitled to proceed to trial on the basis of the admissions made in Amcor’s pleading. Although he called evidence on the point, he may well have put on or referred to additional evidence on the issue, had the relevant pleas not been in place. A tight timetable was put in place for the hearing of the Quantum Trial. Had the amendment been granted, an application to reopen the trial with the calling of further witnesses was foreshadowed. This may well have resulted in the trial being adjourned to enable this to occur, following a period during which the parties would have to consider their position in the light of the amendment. This would have defeated the timetable set for the hearing of this part of the proceeding and been inimical to the case management regime which had been put in place to govern the trial. It may well have delayed the conclusion of the Quantum Trial and compounded the delays already suffered in this litigation.