JURISDICTION	:	SUPREME COURT OF WESTERN AUSTRALIA 
IN CHAMBERS 

CITATION	:	EC DAWSON INVESTMENTS PTY LTD -v- CRYSTAL FINANCE PTY LTD [No 2] [2011] WASC 8 

CORAM	:	BEECH J 

HEARD	:	ON THE PAPERS 

DELIVERED	:	11 JANUARY 2011 

FILE NO/S	:	CIV 1176 of 2008 

BETWEEN	:	EC DAWSON INVESTMENTS PTY LTD (ACN 121 204 448)
Plaintiff
 
AND
 
CRYSTAL FINANCE PTY LTD (ACN 104 866 631)
First Defendant
 
ROBERT FREDERICK COOMBS
Second Defendant 

Catchwords:
Practice and procedure - Pleadings - Withdrawal of admissions - Application to strike out defence on ground that it withdraws admissions - Whether amended defence withdraws admissions - Turns on own facts 
Legislation:
Nil 
Result:
Application dismissed 
Category:    B 

Representation:
Counsel:
Plaintiff	:	No appearance (on the papers)
First Defendant	:	No appearance (on the papers)
Second Defendant	:	No appearance (on the papers) 
Solicitors:
Plaintiff	:	Redding & Associates
First Defendant	:	Carol Bahemia
Second Defendant	:	Carol Bahemia 

Case(s) referred to in judgment(s):

Commonwealth of Australia v Spotless Catering Services Ltd [1999] WASCA 136
Donyette Pty Ltd v Toplodge Nominees Pty Ltd [2010] WASC 388
E C Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [2009] WASC 395
Shine v Williams [2007] WASCA 194
The Bell Group Ltd (In Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1
Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212

BEECH J:  
Introduction
1		The plaintiff applies to strike out various paragraphs of the defendants' further re‑amended defence of 22 July 2010 on the ground that the paragraphs withdraw admissions.
2		For the reasons that follow:
(a)	in my opinion, par 1.3 of the further re‑amended defence does not withdraw any admissions;
(b)	further and in any event, to the extent that it does, the further re‑amended defence should not be struck out on that ground; and
(c)	paragraph 1.4 should not be struck out on that ground.
3		It is convenient to begin by outlining the material parts of the pleadings.
The pleadings
4		The defendants filed the further re‑amended defence pursuant to the general liberty to amend at any time until seven weeks before the trial given under my orders of 19 February 2009.  In substance, the plaintiff applies to disallow the amendment.  The basis for the application is that the further re‑amended defence withdraws admissions in relation to pars 1.3 and 1.4 of the statement of claim.
5		In the action, the plaintiff sues on a number of causes of action which, the plaintiff pleads, were assigned to it by the party entitled to those causes of action.  This application relates to the pleadings respecting the assignment.
6		The statement of claim has been amended on a number of occasions.  As the paragraphs relevant to this application have not been amended, I will simply refer to the 'statement of claim'.  
7		Paragraphs 1.3 and 1.4 of the statement of claim are in the following terms:
1.	The plaintiff:-
…
1.3	brings this action pursuant to an agreement in writing (Sale Agreement) between the Plaintiff and the liquidator of Finance Relationship Consultants Pty Ltd (in liquidation) (FRC), under which the plaintiff was assigned FRC's causes of action against the First and Second Defendants.
[Particulars of the Sale Agreement are provided but omitted here]
1.4	gave express written notice of the Sale Agreement and assignment thereunder to the Defendants on 19 January 2008.
8		Until July 2010, the relevant paragraphs of the defence were in the following terms:
1.(1)	Save to admit that the Defendants received notice of a variation to the alleged Sale Agreement made between FRC and the Plaintiff on 22 February 2007, the First and Second Defendants admit the assignment referred to in paragraph 1 of the [relevant version of the] Statement of Claim.
(2)	Further and in any event, the Defendants say that FRC has never held any cause of action of merit against them.
9		By par 1.3 of the further re‑amended defence of July 2010, the defendants admit that the plaintiff brings the action pursuant to the Sale Agreement and pleads a number of matters about the proper construction of the Sale Agreement, including that:
(a)	on its proper construction, the Sale Agreement only assigned, to the extent permissible by law, rights and remedies that existed as at 21 December 2006 and causes of action that accrued before and existed as at 21 December 2006 (par 1.3(7)(a));
(b)	the Sale Agreement did not purport to assign any causes of action vested personally in the liquidator of FRC or any future causes of action (par 1.3(7)(b));
(c)	the Sale Agreement could not as a matter of law and did not on its proper construction assign various species of cause of action (see par 1.3(7)(c)); and
(d)	as a matter of law, neither FRC nor Mr Holbrook could assign various causes of action of the character set out in par 1.3(8).
10		By par 1.4 of the further re‑amended defence, the defendants plead as follows:
The Defendants deny the allegations pleaded in paragraph 1.4 of the Statement of Claim but:
(1)	admit that on 19 January 2008 the Defendants received from ECDI [(the plaintiff)] a copy of:
(a)	a document entitled 'Offer for Purchase of Assets' signed by ECDI and Edge and dated '25 September 2006' (Offer Document); and 
(b)	a letter dated '22 September 2006' from Mr Holbrook on behalf of FRC (In Liquidation) (Liquidator's Acceptance Letter), and
(2)	admit that on 28 February 2008 the Defendants received from ECDI a copy of the Sale Agreement; and 
(3)	say that, in the premises pleaded in paragraphs 1.3(1) and 1.4(1) and (2) above, the Defendants did not receive anything that was sufficient in law to constitute notice if any assignment as alleged in the Statement of claim or at all as made by the Sale Agreement prior to the issue of the writ in these proceedings (which occurred on 27 February 2008).
The plaintiff's submissions
11		The plaintiff submits that by their original defence, the defendants did not traverse all of the matters pleaded in par 1 of the statement of claim.  In particular, the plea in the statement of claim that under the Sale Agreement the plaintiff was assigned FRC's causes of action against the defendants was not traversed.  Accordingly, the plaintiff submits, that plea is taken to be admitted:  Rules of the Supreme Court 1971 (WA) O 20 r 14(1).  For reasons I will explain, I do not accept that submission.
12		The plaintiff submits that the overall effect of the original defence was that the real issue was whether FRC had any causes of action of merit against the defendants.  I accept that latter submission.  No issue was raised in the defence as to the efficacy and proper construction of the assignment or as to whether the causes of action relied on by the plaintiff were capable of assignment.  However, for reasons to which I now turn, I do not consider that to be of decisive significance.  In my view, the starting point is to identify what was (and was not) admitted by the original defence.
What did the original defence admit?
13		In order to identify what the defence admitted, it is, by definition, necessary to direct attention to what the statement of claim pleaded.  Paragraph 1.3 of the statement of claim pleaded only, relevantly, that the plaintiff brings the action pursuant to the Sale Agreement, by which the plaintiff was assigned FRC's causes of action against the defendants.  It did not plead that the Sale Agreement was legally effective to assign all of the causes of action on which the plaintiff relied in the statement of claim, or that all such causes of action were, in law, capable of being assigned.  Reading the statement of claim as a whole, it can fairly be said that those matters are premises underlying the plaintiff's claims made in the statement of claim.  Nevertheless, that is not to say that those allegations were specifically made in par 1.3.
14		In any event, even if it were thought that those allegations were at least implicit in par 1.3 of the statement of claim, those allegations were not admitted in the original defence.  All that the original defence admitted was the assignment constituted by the Sale Agreement.  The matters expressly admitted in par 1 of the original defence remain the subject of admissions in the further re‑amended defence.
15		The plaintiff submits that, by O 20 r 14, the defendants are taken to have admitted the additional allegations that the plaintiff says are contained in par 1.3 of the statement of claim to which the defendants did not specifically plead in their original defence.  The plaintiff then submits that par 1.3 of the further re‑amended defence withdraws those things that had been admitted under O 20 r 14.
16		In my opinion, O 20 r 14 does not assist the plaintiff in relation to par 1.3 of the statement of claim.  By its terms, O 20 r 14 applies in relation to an allegation of fact.  It has no operation in relation to an allegation of law or, in my opinion, an allegation of mixed law and fact.  In Shine v Williams [2007] WASCA 194 [26], Buss JA and Murray AJA stated that if a statement of claim pleads a matter of law, as is permitted under O 20 r 12, the opposing party need not traverse in its defence any matter of law.  It is only the pleaded facts which must be traversed if they are not to be taken to be admitted under O 20 r 14.  The allegation that the Sale Agreement was legally effective to assign all the causes of action relied on by the plaintiff is an allegation of law or of mixed fact and law.  Consequently, O 20 r 14 does not apply to that allegation.
17		If a matter of law is pleaded in the statement of claim and admitted in the defence, then it will perform a useful function in defining the issues between the parties:  Shine v Williams [26].  See also Commonwealth of Australia v Spotless Catering Services Ltd [1999] WASCA 136.  However, there is, at the least, doubt whether an admission in respect of a matter of law binds the trial judge.  See, for example, The Bell Group Ltd (In Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239; (2008) 39 WAR 1 [4528].  That issue does not arise in this case because there is no matter of law which has been pleaded by the plaintiff and expressly admitted by the defendants.  As I have said, the deemed admissions under O 20 r 14 apply only in relation to allegations of fact and not to allegations of the sort that the plaintiff seeks to have deemed to be admitted by the defendants.
18		For these reasons, in my opinion, par 1.3 of the further re‑amended defence does not involve the withdrawal of any admission.  Consequently, I would dismiss the plaintiff's application in relation to par 1.3 of the further re‑amended defence.
19		That is sufficient to dispose of the application as regards par 1.3.  For the sake of completeness, I will later state my views on the discretion that would arise if par 1.3 of the further re‑amended defence involves the withdrawal of admissions.
20		I turn to par 1.4 of the statement of claim.
21		Paragraph 1.4 of the statement of claim pleads that the plaintiff gave express written notice of the Sale Agreement and assignment thereunder to the defendants on 19 January 2008.  The original defence opened with the inapt words 'save to admit' that the defendants received notice of a variation to the alleged Sale Agreement made between FRC and the plaintiff on 22 February 2007.  The language of admission was inapt because that was not pleaded in the statement of claim.
22		Arguably at least, the plea in par 1.4 of the statement of claim involves a mixed question of law and fact.  I am content to assume, favourably to the plaintiffs, that O 20 r 14 operated in relation to the allegations of fact in par 1.4 of the statement of claim.  That paragraph was not specifically traversed in the original defence.  I thus proceed on the basis that there was a deemed admission in the original defence that written notice of the Sale Agreement and assignment under it was given on 19 January 2008.  There is not a deemed admission of the sufficiency of that notice.  However no issue was raised about it in the original defence.
23		Paragraph 1.4 of the further re‑amended defence admits receipt on 19 January 2008 (the date referred to in par 1.4 of the statement of claim) of the documents dated September 2006.  It also admits that on 28 February 2008 the defendants received the Sale Agreement, namely the deed of 21 December 2006.  Those two sets of documents mirror what is particularised in par 1.3 of the statement of claim as constituting the Sale Agreement and a variation of it.
24		The defendants plead that receipt of those documents did not constitute notice of assignment under the Sale Agreement prior to the issue of the writ on 27 February 2008.
25		I would infer that the reference in par 1 of the original defence to 22 February 2007 was a mistake and was intended to be a reference to February 2008.
26		I am content to proceed on the basis that par 1.4 of the further amended defence involves some withdrawal of admissions of fact in relation to par 1.4 of the statement of claim.  For the reasons that follow, as a matter of discretion, I would decline to strike out par 1.4 of the defence on that ground.
Discretion
27		Further and in any event, if, contrary to my view, par 1.3 of the further re‑amended defence is thought to involve the withdrawal of admissions as alleged by the plaintiff, I would decline to strike out par 1.3 of the defence on that ground.  I also decline, as a matter of discretion, to strike out par 1.4 on that ground.
28		I begin with the principles relevant to the withdrawal of an admission.
Legal principles
29		In Water Corporation v Cardno BSD Pty Ltd [2009] WASCA 212 [19] ‑ [21], Wheeler and Newnes JJA outlined the general principles relevant to the withdrawal of an admission in a pleading:
The general principles to be applied upon an application to withdraw an admission in a pleading can for present purposes sufficiently be stated as follows:
1.	The court has a broad discretion to permit or refuse an amendment which has the effect of withdrawing an admission; the ultimate question must always be what is in the interests of justice in the circumstances of the case.
2.	But it is a serious matter to make an admission in a pleading and ordinarily a party should not be permitted to withdraw an admission in a pleading without good cause.
3.	In determining whether or not to permit an amendment to withdraw an admission, relevant considerations will generally include:
(a)	the circumstances in which the admission was made;
(b)	the reason it is sought to be withdrawn;
(c)	the significance of the admission;
(d)	the time for which it has stood on the record; and
(e)	any prejudice that is likely to be suffered by the other side that cannot appropriately be compensated by an order for costs.
See Sangora Holdings Pty Ltd v Dunstan (Unreported, WASC, Library No 990172, 13 April 1999); Hutton v Meston [2004] WASCA 178; Essex Securities Pty Ltd v Lunt [2006] WASC 58.
As with any other application to amend a pleading, where an application is made late in the day and requires that dates set down for trial be vacated, the applicant bears a heavy burden to show why leave should be granted.  In such a case the public interest in the timely and efficient resolution of legal proceedings and the effective use of court resources is also a relevant consideration: Aon Risk Services.
30		For a recent discussion of the principles relevant to the withdrawal of admissions see also Donyette Pty Ltd v Toplodge Nominees Pty Ltd [2010] WASC 388 [16] ‑ [31].  I agree, with respect, with Corboy J's conclusion at [40] that there is not an absolute rule requiring a party seeking to withdraw an admission to give evidence of the circumstances surrounding the making of the admission and its proposed withdrawal.
31		I turn to outline some of the procedural history of this matter.  In my view, that history militates against the disallowance of the amendments to the defence.
Procedural history
32		It is clear that the issues raised by the further re‑amended defence were not raised by the defendants for the first time in July 2010.  Rather, in substance, the defendants identified these issues in late 2009.
33		In late 2009, the plaintiff filed an application for non‑party discovery.  I determined that application by written reasons delivered on 17 December 2009:  E C Dawson Investments Pty Ltd v Crystal Finance Pty Ltd [2009] WASC 395.  In the course of their submissions in opposition to the application, the defendants filed submissions dated 15 December 2009.  Those submissions raised issues that, in substance, mirrored the major matters raised in the further re‑amended defence.  In the application for non‑party discovery I concluded that it was not necessary or appropriate to express any firm views about those matters, in that an application for non‑party discovery was not an appropriate occasion to determine the merits of the claim pleaded in the statement of claim:  E C Dawson [62].
34		From then, the plaintiff was on notice of the fundamental issues sought to be raised by the defendants.
35		The matter was listed for directions in February 2010.  Prior to that directions hearing, the plaintiff's solicitors advised that new counsel had been briefed and that it was proposed to file an amended statement of claim.  The defendants filed and served a minute seeking an order that certain issues be determined as preliminary issues.  Those issues included whether the pleaded causes of action were capable of assignment, whether FRC had a continuing interest in certain assets, whether FRC had an interest in a finance broking business and whether the Sale Agreement was effective to assign the pleaded causes of action at all, or to the extent that such causes of action accrued after 21 December 2006.
36		At the directions hearing on 25 February 2010, the plaintiff sought time to file an amended statement of claim.  It was ordered that an amended statement of claim be filed by 18 March 2010 and the directions hearing was adjourned to 1 April 2010.  On 30 March 2010, orders were made by consent that the amended statement of claim be filed on 1 April 2010 and the directions hearing be adjourned to 22 April 2010.
37		The amended statement of claim was not filed and served until 15 April 2010.  Largely in consequence of this, it was agreed that the directions hearing that had been listed for 22 April 2010 be adjourned to 13 May 2010.
38		At the directions hearing on 13 May 2010, the defendants advanced a minute of proposed orders for the trial of preliminary issues, substantially reflecting those in their February 2010 minute.
39		The court raised questions as to the appropriateness of an order for the trial of preliminary issues in respect of matters that were not pleaded in the defence.  The defendants accepted that they should amend their defence to plead the matters referred to and then confer in relation to the question of preliminary issues.
40		Counsel for the plaintiff stated that the appropriate course was for the defendants to plead the issues referred to in their minute and therefore put them 'squarely before the court' (ts 134).  The plaintiff did not at that time contend that the defendants were precluded from raising as issues the matters the subject of their application for the trial of preliminary issues on the ground that those matters were the subject of an admission in their original defence.
41		The defendants filed the further re‑amended defence in July 2010.
42		On 29 July 2010, the plaintiff filed an application to strike out the further re‑amended defence on the ground that it withdrew admissions.  On 17 August 2010, the plaintiff filed an outline of submissions in support of that application.
43		The matter came before the court on 19 August 2010, at the court's initiative.  By this stage, both parties were pursuing strike out applications.  The purpose of the directions hearing was to invite further reflection by the parties on the approach that they were taking to the litigation.  In particular, questions were raised as to whether the interlocutory applications that were on foot were conducive to the efficient and just resolution of the real issues between the parties.
44		Following the directions hearing, the parties agreed that submissions on the strike out applications not be filed, pending further conferral.  This conferral continued until October 2010.
45		By October 2010, the position had been reached that both parties proposed to pursue their strike out applications.  Directions for submissions on the applications were made on 21 October 2010.
46		Subsequently, the defendants agreed to the withdrawal of their strike out application.  By amended application dated 4 November 2010, and by submissions of that date, the plaintiffs pursued this application.
47		Trial directions for the preparation of a trial bundle and the exchange of witness statements have not been made, so the action is not yet ready to be listed for trial.  Consequently, this is not a matter in which the amendment of the defence will cause the adjournment of a trial or the vacation of trial dates.
The interests of justice
48		In my opinion, to the extent that the further re‑amended defence involves any withdrawal of admissions, it is not in the interests of justice to strike out pars 1.3 or 1.4 of the further re‑amended defence and thereby preclude the defendants from raising the matters raised in those paragraphs.  The following matters lead to me to that conclusion:
(1)	the history of proceedings as outlined above;
(2)	the action is not yet ready for trial;
(3)	the matters pleaded in par 1.3 of the further re‑amended defence were, in substance, raised by the defendants from about December 2009;
(4)	any admission made in relation to par 1.3 of the statement of claim was an admission of something implicit in the statement of claim, not pleaded expressly;
(5)	consequently, there is less call for any explanation for the making of the admissions;
(6)	because any admissions in relation to par 1.3 of the statement of claim and some of what was admitted in par 1.4 relate to questions of law or mixed law and fact, they at least arguably may not bind the trial judge in any event;
(7)	there is no evidence or any submission about any specific prejudice to the plaintiff consequent upon the amendment to the defence so as to withdraw the alleged admissions;
(8)	as to par 1.4 of the further re‑amended defence, the amendments to the defence do not raise any new factual issues of substance ‑ rather they clarify the defendants' position without substantially altering it on the facts, and raise a question of law about the sufficiency of the notice given.
Conclusion
49		For the reasons I have given, I would dismiss the plaintiff's application.  On the face of it, costs should follow the event and should be fixed in an appropriate sum.  However, I will hear from the parties on the question of costs.
50		The procedural history of this action strongly suggests that it has not progressed in a manner that accords with the objects of O 1 r 4B and the goal of O 1 r 4A.  In light of this, there will be a strategic conference in accordance with Practice Direction 4.1.2 to consider the future conduct of this matter.
51		I make the following orders:
(1)	the plaintiff's application to strike out paragraphs of the further re‑amended defence be dismissed;
(2)	the costs of the application be determined on the papers;
(3)	the parties' solicitors confer without delay as to the costs of the application;
(4)	failing agreement, the parties file and serve their submissions on the costs of the application by 4.00 pm 21 January 2011.