FEDERAL COURT OF AUSTRALIA

Turner & Townsend Pty Ltd v Berry [2012] FCA 111

THE COURT ORDERS THAT:

1.    The first respondent be granted leave nunc pro tunc to withdraw admissions made to paragraphs 18 and 19 of the applicant’s amended statement of claim.

2.    The applicant pay the first respondent’s costs of the first respondent’s notice of motion filed on 16 December 2011 as agreed or taxed.

3.    The second and third respondents be granted leave nunc pro tunc to withdraw admissions made to paragraphs 18 and 19 of the applicant’s amended statement of claim.

4.    The second and third respondents’ costs of the first respondent’s notice of motion filed on 16 December 2011 be costs in the cause.

5.    The applicant serve a draft further amended statement of claim re-pleading the allegations against the 4th and 5th respondents and accessorial liability of the 2nd and 3rd respondents based thereon by 5 March 2012.

6.    The respondents are to notify the applicant whether they object to the applicant being granted leave to rely on the draft further amended statement of claim (and if so, give particulars for their objections) by 12 March 2012.

7.    The matter be listed for further directions at 9.15 a.m. on 29 March 2012. The second and third respondents are to notify the first respondent of these orders.

8.    The applicant’s interlocutory application filed 10 February 2012 be dismissed.

9.    Each party is to pay their own costs in connection with the applicant’s interlocutory application filed 10 February 2012.

10.    The second and third respondents’ notice of motion filed 16 December 2012 to strike out the applicant’s claims against the fourth and fifth respondents be adjourned until 29 March.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    These are two notices of motion filed on 16 December 2011 by the first, as well as the second and third, respondents. The respondents request leave to withdraw admissions made to paragraphs 18 and 19 of the applicant’s amended statement of claim.

2    The applicants alleged firstly in paragraph 18 that:

At 11.30 p.m. on 16 December 2009, while employed by Turner & Townsend and a director of Turner & Townsend, Mr Berry sent an email to each of Mr Morgan and Mr Holbrook which provided, inter-alia, as follows: …

3    There is then set out, in inverted commas and italics, what purports to be the terms of the email alleged to have been sent.

4    In paragraph 19 it is alleged that:

On 21 December 2009, while employed by Turner & Townsend and a director of Turner & Townsend, Mr Berry sent an email to Johnstaff Projects (or an entity associated with it including Johnstaff NSW), by Mr McCue, which provided, inter-alia, as follows: …

5    There is then set out, again in quotes and italics, what purports to be the terms of the email alleged to have been sent.

6    The respondents’ handling of the allegations in paragraphs 18 and 19 of the amended statement of claim has a lengthy history. This is contained in the affidavit evidence and is also summarised in the applicant’s submissions opposing the application for leave to withdraw. The applicant’s submissions state that:

    the amended statement of claim was filed on 17 March 2011, and pleaded the said emails in full;

    on 2 May 2011 Johnstaff (the second and third respondents) filed a defence which did not admit paragraphs 18 and 19 and alleged that the emails were “illegally obtained”;

    on 12 May 2011 Mr Berry (the first respondent) filed a defence which admitted paragraphs 18 and 19 of the statement of claim;

    on 19 May 2011 Johnstaff filed an amended defence not admitting paragraph 18 but admitting paragraph 19 of the amended statement of claim; and

    subsequently, Johnstaff on 22 November 2011 filed a further amended defence in which it reverted to not admitting paragraphs 18 and 19 of the statement of claim and, again, alleging that the emails were “illegally obtained”.

7    The present position is that both Mr Berry and Johnstaff, being the first, second and third respondents, seek leave to withdraw their admissions to paragraphs 18 and 19 of the amended statement of claim. As noted, the applicant opposes that course.

8    Mr Berry, the first respondent, has filed evidence in support of the application and has also been cross-examined. In an affidavit he said as follows:

I did not have any copies of emails sent by me in December 2009 at the time of filing my defence. I was not sure that I did send copies of emails in the form quoted in paragraphs 18 and 19 of the amended statement of claim. I am still not sure.

9    Mr Berry also deposes in that affidavit to his belief that his personal computer may have been compromised so that emails and other images on his computer were automatically transmitted to another email address. In his oral evidence given today Mr Berry said that when he saw the amended statement of claim his first reaction was that the applicant had the emails in question. A second issue which came to his mind was that the emails had been obtained through illegal means. He also said he assumed they (the emails) were complete, that is, that the pleading was complete and a true record and the emails had been distributed from his account. However, he did not know if he sent those emails.

10    There is other evidence available, including an email which Mr Berry sent to his solicitors and others, commenting on the statement of claim. This includes material corroborating the fact that at the time in question Mr Berry had a belief that his personal email account had been compromised. In another affidavit Mr Berry deposes as follows:

In light of the failure of Turner & Townsend to discover or produce the emails, I say that I:

(a)    admitted sending the emails without having a copy of the emails before me or at any time since the admission;

(b)    have not retained any emails sent from my personal email account since January 2010, when I threw away my previous computer and replaced it with a new computer after discovering that spyware had been installed on my previous computer that sent screen shots of my computer screen to another computer without [my] knowledge or consent,;

(c)    cannot recall the content of the emails and in circumstances where the emails have not been discovered by Turner & Townsend, I believe it was an error to admit to sending the emails; and

(d)    in the absence of having the original emails before me, wish to put Turner & Townsend to proof in that respect.

11    The evidence available in support of this application includes redacted copies of the emails in question. A sequence of correspondence between the then solicitors for Mr Berry and the applicant’s solicitors includes a letter of 22 September 2011 which, as part of a request from Mr Berry to be provided with copies of the emails, contains the following statement:

Further, and in any event, as you are aware the emails were written almost two years ago. While our client’s best recollection is that the emails were sent in the form pleaded, and so our client believed it was appropriate to admit the emails for the purposes of his defence, it is only fair and proper that he be provided with a copy of the emails in their original form so that he can check word for word that they are accurately set out in the pleading.

12    In terms of the position of the second and third respondents, there is an affidavit from Andrew White, their solicitor. Mr White deposes to the circumstances in which the second and third respondents variously amended their defence in relation to the allegations in paragraphs 18 and 19 and now wish to withdraw the admissions. Mr White’s affidavit is generally consistent with the position that seems to have been put to Emmett J at a directions hearing on 27 May 2011, where counsel for the second and third respondents said:

First of all, can I indicate that on the last occasion your Honour raised some concerns with some denials that were contained, or non-admissions contained in paragraphs 18 and 19 of our defence in light of the admissions already made in the first respondent’s defence, so we’ve taken that on board.

13    In other words, it seems from the material that is available, and contrary to the submission put for the applicant, that the position of the second and third respondents largely followed on from the position that was taken by the first respondent. This is unsurprising, given that the allegations in paragraphs 18 and 19 are specifically directed towards the actions of the first respondent, Mr Berry, and whether he sent certain emails.

14    The parties are not in disagreement as to the relevant principles. All rely on the judgment of Sackville J in Deangrove Pty Ltd v Commonwealth Bank of Australia [2003] FCA 268 at [28] to [35] (Deangrove). In particular, the parties rely on his Honour’s citation of the decision of Santow J in Drabsch v Swiss General Insurance Co Ltd (16 October 1996, unreported, Supreme Court of New South Wales) (Drabsch) in which Santow J summarised the relevant principles. Most relevant for present circumstances are the principles contained in paragraphs 1 and 4, as identified by Santow J:

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…

2.    The question is one for the reviewing judge to consider in the context of each particular appeal, with the general guidelines 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…

3.    Where a court is satisfied that admissions have been made after consideration and advice such as from the parties’ expert and after full opportunity to consider its case and whether the admission should be made, admissions so made with deliberateness and formality would ordinarily not be permitted to be withdrawn…

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…

5.    Following Cohen v McWilliam & 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 costs 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”.

15    In the present case what is particularly relevant, in my view, is that none of the evidence before me suggests that the admission has been in any way relevantly acted upon by the applicant. The applicant would have proceeded on the basis that the matters pleaded in paragraphs 18 and 19 of the amended statement of claim had been admitted and, accordingly, that the applicant would not be put to proof of those matters. However, the circumstances of this matter are that it has not yet been fixed for hearing and there are unresolved applications, both to strike out part of the statement of claim and to further amend the statement of claim by the applicant. Much of the time which has expired since May 2011, as the court record in this matter will show, has been taken up with disputes about pleadings and discovery. It is difficult to accept that the mere passage of time has in any way led the applicant to relevantly act upon the admissions. As Mr Clarke for the first respondent put it, any difficulty of proof which might exist or not in relation to the alleged sending of the emails is a difficulty which always existed from the outset of this matter. The fact that the applicant, by reason of any withdrawal of the admissions, would not be put to proof in circumstances where the matter has not yet been fixed for hearing or, indeed, where the evidence has not yet been completed, cannot be relevant prejudice or injustice.

16    The second relevant aspect is that this is not a case where it has been shown that the admissions are contrary to the actual facts. However, as is plain from what Santow J said, leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters. It seems to me that this is not a case where it could be said the admissions were made inadvertently, but it certainly is a case where it might be concluded (and I do so conclude) that the admissions were made without due consideration of material matters. Insofar as it might be relevant, it seems to me that paragraphs 18 and 19 of the amended statement of claim were such as to make it not unreasonable for Mr Berry to assume that Turner & Townsend were in possession of emails from which the pleading did no more than quote. The fact that Mr Berry, from some time before this, believed that his computer had been compromised in some way, does not suggest that at that time he should also have assumed that the pleading as framed was other than accurate. He said in his evidence, and I accept, that he assumed Turner & Townsend had the emails in its possession. He assumed that they were complete and a true record and were emails that had been distributed from his account. This assumption was not unreasonable given the way in which the pleadings were framed. It became apparent through subsequent correspondence that Turner & Townsend did not possess the original emails. Mr Berry now seeks to put the applicant to proof in circumstances where, on his own evidence, he acted on the basis of an assumption which was not unreasonable. I do not construe those circumstances as suggesting that in making the application for leave to withdraw admissions the respondents hoped to gain any form of improper forensic advantage in the litigation. Mr Berry acted on the basis of an incorrect assumption and the second and third respondents, in my view and according to the evidence, effectively followed along. The fact that the emails are obviously of central importance to the case against Mr Berry, as the applicant’s submissions state, also weighs in favour of an exercise of discretion in the respondents’, and not the applicant’s, favour.

17    It would be unjust, in my view, if this matter were to proceed on the basis of the admissions in all of the circumstances. The admissions were made without due consideration of material matters and there has been no relevant change of position by the applicant in reliance upon the admissions. In these circumstances, the relevant discretionary considerations consistent with the reasoning of Santow J in Drabsch and Sackville J in Deangrove indicate that the interests of justice weigh heavily in favour of the grant of leave to withdraw the admissions, and I so order.

Associate:

Dated:    20 February 2012