FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE - Withdrawal of a concession made by counsel about the scope of the pleadings - Whether leave necessary - principles to be applied

HANAVE PTY LIMITED v LFOT PTY LIMITED (formerly JAGAR PTY LIMITED) & ORS

NG 721 of 1995

MOORE J

SYDNEY

11 NOVEMBER 1997

THE COURT ORDERS THAT:

1.         Leave is given to the applicant to withdraw the concession made by it on 15 April          1997.

2.         Liberty to apply.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

An issue has arisen at the concluding stages of what has proved to be protracted litigation arising from the sale of a property in Leichhardt.  The property has variously been described as a shopping centre, a shopping complex or a group of seven shops, though its characterisation is contentious.  The issue concerns a concession said to have been made by Mr McVay who is counsel appearing for the applicant, Hanave Pty Limited ("Hanave"), the purchaser of the property and the present registered proprietor.  Hanave commenced proceedings in this Court on 19 September 1995 against the vendor, Jagar Projects Pty Ltd ("Jagar") and two of its directors, Mr Paul Tressider and Mr Joseph Glew.  The claim is pleaded on several bases but it is sufficient, for present purposes, to consider the claim insofar as it alleges misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974. 

The claim is pleaded, in part, on the basis that Jagar made representations in an advertisement advertising the property for sale by auction.  The block advertisement contained a number of details concerning the property. It included the words "established retailers". Immediately below those words appeared a reference to three companies or businesses, each in the form of a business logo.  The three companies or businesses were described in the logos as "Orrefors: Kosta Boda", "Just Jeans" and "Barbara's Storehouse".  The statement of claim contained the following:

"5.       The first respondent in the said advertisement represented that:

            (i)         a tenant in the retail outlet was Barbara's Storehouse which was an established retailer;

            (ii)        that having Barbara's Storehouse as a tenant was a significant feature of the retail outlet;

            (iii)       that having Barbara's Storehouse as a tenant was an attraction to a potential purchaser of the retail outlet;

            (iv)       that Barbara's Storehouse was a substantial tenant to have in the retail outlet;

            (v)        the retail outlet would provide an income of $312.644 per annum from the tenants thereof."

The statement of claim went on to plead another representation arising from a property report sent to Mr Robert Burke, a director of Hanave, from Laing and Simmons who were the agents acting for Jagar in the sale.  Under the heading "Property Description", the property report stated:

"This recently constructed, high exposure, single level, corner retail location, with 7 established high quality tenants including Barbara's Storehouse, Orrefors Kosta Boda and Just Jeans amongst others."

In relation to this document it was pleaded:

"9.       The first respondent by its said agent represented in the said additional information that:

            (i)         Barbara's Storehouse was an established high quality tenant of the retail outlet;

            (ii)        ..."

One of the witnesses called by the applicant was Mr Harvey Slatyer who, with his wife, was effectively conducting the business trading under the name of Barbara's Storehouse at the Leichhardt property. During the course of Mr Slatyer's cross-examination on 15 April 1997, counsel for the respondents, Mr Hodgekiss, sought to tender a document setting out turnover figures of "Barbara's Storehouse" stores operated by Mr Slatyer and his wife.  It included turnover figures not only of the store at Leichhardt but nine other stores including stores at Bondi, North Sydney and Miranda.  The tender of the document was objected to and counsel for the applicant asked rhetorically in the course of the objection: "What is the relevance of the Bondi turnover and the North Sydney turnover, the Miranda turnover - is he just tendering Leichhardt?".  Shortly thereafter counsel for the respondents explained the relevance in the following terms:

"[I]t is pleaded against us that we made representations that certain - certain tenants were established retailers when they were not.  We are proving the truth of those representations."

This is plainly a reference to the issue raised in sub-paragraph (i) of paragraph 5 of the statement of claim. I then interrupted and asked whether the allegations went beyond the circumstances of the business trading at Leichhardt.  Counsel for the respondents replied that there was a question of the construction of the advertisement.  I then said:

"Well, if Mr McVay says, and he may not wish to say it, that it relates only to the position as concerns the business at Leichhardt, I will assume that the position of the other businesses would no longer be relevant.  Would that be right?"

Mr McVay replied: "Entirely right".  He went on to say that the allegation was put this way in the applicants amended statement of claim:

"Barbara's Storehouse was an established, high-quality tenant of the retail outlet - of the retail outlet, not any other retail outlet; the retail outlet  - 9(9)(i)."

Mr Hodgekiss then referred to paragraph 9 of the statement of claim and said:

"Your Honour, if I am to understand that no point in this case will be taken except - sorry, in relation to Barbara's Storehouse, we're only fighting with respect to Leichhardt and no point will be taken at all in respect of Barbara's Storehouse at any other outlet as a tenant or retailer, then, your Honour, I can revise the tender and confine it to Leichhardt."

The reference to "tenant" and "retailer" picks up the characterisation of Barbara's Storehouse found in both paragraph 9 and paragraph 5 of the statement of claim.  As mentioned earlier, the relevance of the contentious document was that it related to the status of Barbara's Storehouse as "an established retailer". The following then appears in transcript:

"His Honour:  We will proceed on that basis, McVay?

Mr McVay:      Well, it is obvious from the way the statement of claim has proceeded, your Honour.

...

Mr McVay:      I say nothing about any other place other than Leichhardt.

His Honour:    So the answer is, "Yes, we do proceed on that basis'."

While the transcript records that other things were said at this point bearing upon this issue, it is clear, in my opinion, from a fair reading of the transcript as a whole, and notwithstanding the absence of the words "at the retail outlet" in subparagraph (i) of paragraph 5 of the statement of claim, a concession was being made by Mr McVay that the statement of claim should be approached on the basis that the representation contained in the advertisement was that Barbara's Storehouse was an established retailer at the property at Leichhardt.  He was disavowing a case brought on the basis that the representation concerned Barbara's Storehouse as an established retailer in any other capacity.  That is, an established retailer at, or having regard to its operations at, other retail outlets as well.

The scope of this concession arose later in the proceedings on 19 September 1997 during the cross-examination of Mr Burke.  Counsel for the respondents raised the issue when he put to Mr Burke that:

"[Y]ou have never complained that Jagar said that they were established retailers everywhere, in other words you understood as being established retailers at Leichhardt?"

Mr Burke answered: "No". After that answer, counsel for the respondents asserted a concession had earlier been made. That was put in issue by counsel for the applicant.  Reference was then made by counsel for the respondents to the transcript on 15 April 1997 which I have just discussed.  After a series of exchanges between me and principally counsel for the applicant, I indicated that I then held the view that I have just repeated in these reasons about the scope of the concession.  In due course, counsel for the applicant indicated that his client did not make any allegation about the business affairs of any other Barbara's Storehouse outlet other than the one at Leichhardt.  He went on to say that Mr Burke had made it clear in his evidence that he knew of other shops of Barbara's Storehouse.  He then said: "If what I said at 41 is anything different than that position then I withdraw it."

This was met by an observation by counsel for the respondents that it would be necessary to have full argument about that matter and that would occur before he concluded the cross- examination of Mr Burke.  The matter was, in substance, left on that basis, though it was not raised again before Mr Burke's evidence concluded.  Indeed it was not, as far as I recall, raised in any substantial way again before the last day of hearing of the evidence on Wednesday 29 October 1997. On that day there was a fairly disjointed debate about the issue.  I ultimately determined that written submissions should be made and I identified the issues that counsel should address. The first was whether leave was necessary for Mr McVay to withdraw whatever concession was made on 15 April 1997 that was not repeated on 19 September 1997.  The second was whether, if leave was necessary, it should be granted. The third was whether, if leave was not necessary or leave was granted, the respondents should be able to adduce further evidence.

In the written submissions filed on behalf of the applicant, no submission was made that leave was unnecessary. Indeed the written submissions commenced with an application to withdraw the concession made on 15 April 1997 to the extent that it was not adopted expressly on 19 September 1997.  An argument was developed in the written submissions of the respondents that leave was necessary and reference was made to Giuriato v The Attorney-General for Tasmania (1997) 6 TasR 344, Coopers Brewery Limited v Panfida Foods Limited (1992) 26 NSWLR 738, and an article by Justice DA Ipp, "Judicial Intervention in the Trial Process" (1995) 69 ALJ 365. In view of the approach adopted by counsel for the applicant, who has not submitted leave is unnecessary, I proceed on the basis that leave is necessary.

The critical question is whether leave should be granted.  Counsel for the applicant referred to the following passage in the judgment of Lord Denning in  H. Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694 at 703:

"An admission made by counsel in the course of proceedings can be withdrawn unless the circumstances are such as to give rise to an estoppel.  If the other party has acted to his prejudice on the faith of it, it may not be allowed to be withdrawn;  see The Clifton, Kelly v Bushby [(1835) 3 Knapp 375, P.C.]. But otherwise an admission can be withdrawn. For instance, an admission is often made by error in a pleading.  It can be withdrawn if the other party has not been prejudiced, or, indeed, if any prejudice, can be cured by compensation in costs."

See also Londish v Gulf Pacific Pty Ltd (1993) 117 ALR 361.

Giuriato is a case which illustrates a position where real prejudice might arise if the withdrawal of an admission made in a pleading was permitted.  In that case the plaintiff, an enrolled nurse, had commenced proceedings against her employer arising from an injury she contended she suffered at work.  It was alleged in the statement of claim that the injury arose from lifting a patient, Mrs McCarthy. That allegation was admitted in the defence. The defendant subsequently sought to withdraw the admission but at a time when the Mrs McCarthy had died.  The plaintiff had not secured a statement from the patient and was thereby precluded from seeking to take advantage of provisions in Evidence Act 1910 (Tas) which might have rendered admissible such a statement.  Coopers Brewery provides another example of where a court refused leave to withdraw an admission earlier made.  The admission was made as a result of an earlier order of the Court requiring the making of the admission about the truth of certain representations or the service of an expert's report supporting the contention that they were not true.  Rogers J canvassed at length the relevant principles, and authorities discussing them, and concluded at 750 :

"In the circumstances, I do not believe that the defendant's explanations for making the admission justify an order for its withdrawal, even if the admission had been incorrectly made. [His Honour had earlier concluded it had not been] I have reached this conclusion after considering two competing policies.  One, that an admission should not be permitted easily to be withdrawn so as to make the procedure meaningless and on the other that parties should not be discouraged from making admissions out fear that once given they cannot be withdrawn.  I have attempted to set out in some little detail the considerations which impact on the application before me."

His Honour had earlier identified the purpose of admissions, namely to ensure that courts are called upon to determine only questions bona fide in dispute.  His Honour had then referred to a number of authorities, including Apex Pallet Hire v Brambles Holdings Limited (Supreme Court of Victoria (Court of Appeal), 8 April 1988, unreported) which addressed the effect on court lists of delays occasioned by the inappropriate management or mismanagement of litigation by a party to a particular proceedings. 

However the question of case management and the approach courts should take in accommodating the desire of a party to raise and pursue an issue was, in a slightly different context, recently canvassed by the High Court in State of Queensland v J L Holdings Pty Ltd (1997) 141 ALR 353.  Dawson, Gaudron and McHugh JJ observed in their joint judgment that:

"[T]he ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim."

and later:

"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 the present case sub-paragraph (i) of paragraph 5 of the statement of claim sought to raise the contention that the advertisement represented that Barbara's Storehouse was an established retailer and, unlike in other parts of the statement of claim, Barbara's Storehouse was not referred to on the basis of its status at the Leichhardt property.  In the first affidavit of Mr Burke filed in these proceedings this issue was addressed.  He said:

"The name "Barbara's Storehouse" was well known to me as a shop which sold homewares and furnishings. I certainly was aware that Barbara's Storehouse had a number of outlets as I have said around the metropolitan area and I consider it to be an attractive tenant to have in any shopping centre or retail outlet.  The words in the advertisement "established retailers" fitted my understanding and my concept of Just Jeans, Orrefors Kosta Boda and Barbara's Storehouse being substantial tenants which would because of their name attract other tenants and shoppers and make a successful retail centre."

It is not absolutely clear whether there is a real issue between the parties concerning the width of the representation and the reliance on it by Mr Burke and whether it will, in any event, prove to be a material issue in determining the proceedings.  However it is not conceded by the applicant that there is no issue. Indeed the approach of counsel for the applicant and some of the evidence of Mr Burke indicates that there is.  I have not yet been taken to the evidence in detail nor have I heard final submissions from counsel for Hanave.  In those circumstances I consider I should proceed on the basis that the applicant desires to pursue its contention that a representation was made that Barbara's Storehouse was an established retailer at not only the Leichhardt shop but more generally.  That being so, and notwithstanding it was made on 15 April 1997, I consider I should give leave to counsel for the applicant to withdraw the concession if the respondents are not thereby prejudiced. 

No prejudice was pointed to in the written submissions filed of the respondents after the hearing on 29 October 1997. However at the hearing on 29 October 1997, written submissions were handed up by counsel for the respondents identifying evidence that might be led if the applicant was not bound by the concession earlier made. Counsel for the respondents indicated he would have to consider whether or not to call an accountant formerly employed by for Barbara's Storehouse to give evidence about its operations at other outlets, and whether to issue further subpoenas "to test whether Barbara's Storehouse had a wider reputation than at Leichhardt". While there would be a manifest inconvenience in exposing the respondents to the prospect of having to pursue these matters, I do not view it as creating an irremediable prejudice. 

I grant leave to the applicant to withdraw the concession made on 15 April 1997.  While counsel for the applicant did not abandon the concession made on 19 September 1997, I presently view that concession as substantially meaningless in the context of the case as pleaded. Plainly the withdrawal of the concession will raise an issue about the respondents' costs occasioned by the withdrawal. However that is a matter I have not yet had submissions on.  If, as a result of this judgment, the respondents wish to call further evidence or take some other step in the proceedings, the matter will be re-listed for that purpose. To that end, I give liberty to apply.

Associate:

Dated:              11 November 1997