Federal Court of Australia

Villawood Management Pty Ltd v Marlton Group Pty Ltd (No 2) [2026] FCA 1397

ORDERS

THE COURT ORDERS THAT:

1.    Paragraph 2 of the second respondent’s interlocutory application filed on 22 June 2026 be amended by including “and 37G” after “37F”.

2.    The interlocutory application be dismissed.

3.    The second respondent pay the applicant’s costs of the interlocutory application.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

1    This is an interlocutory application filed on 22 June 2026 by the second respondent, Wallan Pastoral Pty Ltd.

2    The only part of that application presently before me is paragraph 2. Wallan Pastoral seeks an order pursuant to r 26.11(2)(b) of the Federal Court Rules 2011 (Cth) that it have leave to withdraw each of the admissions contained at paragraphs 34A, 34K, 34KA, 37C, 37D and 37F of its third amended defence filed on 25 March 2026.

3    Rule 26.11(2)(b) relevantly provides that “a party must not withdraw an admission … that benefits another party, in a defence … unless: … (b) the Court gives leave”.

4    It was not disputed that the admissions in question here, which pleaded to the applicant’s (Villawood Management Pty Ltd) amended statement of claim filed on 27 November 2025, “benefit” the applicant within the meaning of r 26.11(2)(b).

5    Villawood opposed the application.

6    Both parties relied on written submissions, and they were supplemented by detailed oral submissions from senior counsel on both sides.

7    In Wallan Pastoral’s oral submissions, counsel sought leave to amend the application by including paragraph 37G of the amended defence in the list of admissions sought to be withdrawn. I accept that the omission of that paragraph from the application was an oversight, and I will make an order amending it accordingly.

8    For the reasons that follow, however, the application is to be dismissed.

9    The relevant factual background is summarised in the judgment of Anderson J in Villawood Management Group Pty Ltd v Marlton Group Pty Ltd [2025] FCA 980 at [9]-[11], [14]. It is unnecessary to rehearse that background here. These reasons assume familiarity with his Honour’s reasons.

10    Annexure A to Wallan Pastoral’s written submissions contained a table setting out the relevant paragraphs of the amended statement of claim and the amended defence of the first and third respondents (Mr Anthony Johnson and Marlton Group Pty Ltd), together with another column setting out the proposed amendments to Wallan Pastoral’s amended defence proffered under r 16.53(1) of the Rules to replace the admissions if withdrawal is to be permitted.

11    The proffered amendments seek to invoke r 16.07(3) of the Rules, which permits a party to state that it “does not know and therefore cannot admit a particular fact”, without falling into to the trap contained in r 16.07(2) that “[a]llegations that are not specifically denied are taken to be admitted”. The effect of a “[do] not know and therefore cannot admit” plea is that the particular fact is taken to be denied: see r 16.07(4).

12    In general terms, the allegations in the amended statement of claim concern:

(a)    actions taken by Mr Johnson (and/or Beth Johnson and/or Kara Sabo and/or Hannah Johnson) in connection with the creation and dating of a Purported Mandate Written Agreement (as defined in paragraph 4 of the amended statement of claim) (paras 34A-34K, 35A);

(b)    the execution of the Purported Mandate Written Agreement (paras 34KA);

(c)    allegations concerning assertions that Mr Johnson allegedly made through his solicitors on 19 April 2024 (para 36); and

(d)    instructions given by Mr Johnson to Mills Oakley (the former solicitors of Wallan Pastoral) in or around July 2024 and November 2024, and Mr Johnson’s state of mind when he gave those instructions to Mills Oakley (paras 37C-37D, 37F, 37G and 37K).

13    I set out below the relevant parts of Annexure A to Wallan Pastoral’s submission:

14    Wallan Pastoral relied on an affidavit of Mr Brendon Watkins sworn 22 June 2026. He is a partner at MinterEllison, the solicitors for Wallan Pastoral. In addition to setting out several matters with which it is not necessary to burden these reasons, he deposed relevantly as follows:

25    Wallan Pastoral's approach to preparing its defence in this proceeding was to recognise, as a general principle, that when Mr Johnson took an action or holds information in his capacity as director of Wallan Pastoral, then that conduct, or information was imputed to Wallan Pastoral.

26    As a consequence, where Mr Johnson had advanced pleadings in the Johnson Parties’ Further Amended Defence that related to conduct or information held in his capacity as a director of Wallan Pastoral, then Wallan Pastoral adopted those paragraphs in its own defence. Examples of this approach can be seen in paragraphs 31 to 34 of the Amended Defence.

27    This approach was also adopted by Wallan Pastoral in response to the paragraphs of the ASOC which corresponded to the Relevant Paragraphs, which resulted in Wallan Pastoral adopting certain admissions made by Mr Johnson in the Johnson Parties' Further Amended Defence.

28    Having reflected further in relation to the pleadings (and having had cause to do so by reason of the matters raised at paragraphs 29 and 30 below) Wallan Pastoral is of the opinion that the allegations raised in the Relevant Paragraphs should not be imputed to Wallan Pastoral, for one or more of the following reasons:

(a)    with the exception of paragraph 34KA of the ASOC, the allegations are directed to Mr Johnson personally, and are not made against Wallan Pastoral;

(b)    several allegations are concerned with the nature of Mr Johnson's instructions to another law firm (i.e. not MinterEllison, the firm acting for Wallan Pastoral in its defence);

(c)    several allegations are otherwise concerned with Mr Johnson's personal state of mind when providing those instructions;

(d)    with respect to the allegation in paragraph 34KA and more generally, the circumstances in which Mr Johnson is alleged to have acted in a particular manner or held a particular state of mind are such that his acts or state of mind ought not to be imputed to Wallan Pastoral.

15    That was the sum total of the explanation provided as to what the admissions were, and why they were sought to be withdrawn.

16    The parties agreed about the principles that govern whether leave should be granted to withdraw pleaded admissions.

17    There is no principle that admissions may or may not be withdrawn, rather, the discretion whether to permit withdrawal is a wide one.

18    In Juno Pharmaceuticals Pty Ltd v Millennium Pharmaceuticals, Inc [2019] FCA 526 at [38] Besanko J summarised the relevant principles as to whether leave should be granted to withdraw an admission as follows:

The overriding consideration in determining whether to grant leave to withdraw an admission is the interests of justice. In determining where the balance lies, a number of matters which overlap and interact are relevant. They are the circumstances in which the admission came to be made, the strength of the case now advanced that the admission is or may well be incorrect, whether the applicant has done all he or she could do to establish that the admission is incorrect, whether the applicant has acted in a transparent and straightforward fashion, any delay in making the application to withdraw the admission, the significance of the admission to the respective cases of the parties, prejudice to the applicant if the admission is not withdrawn and to the respondent if it is, general prejudice to the applicant and the respondent and finally, case management principles …

(authorities cited omitted).

19    In Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327 at 331 [18], the Court (Hill, Madgwick and Conti JJ) quoted with approval the following observations of Santow J in Drabsch v Switzerland Insurance Co Ltd (unreported, 16 October 1996, BC9604909):

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.

20    In Australian Competition and Consumer Commission v Construction, Forestry, Mining and Energy Union [2007] FCA 1390 at [4] Finn J adopted the following observations of Debelle J in Centrestate Exports Pty Ltd v Amarantos Shipping Co Ltd [2005] SASC 158 at [32]:

The overriding consideration is the interests of justice. The Court will not lightly permit a party to withdraw an admission where the other party has acted to its detriment on the admission or is otherwise prejudiced by the withdrawal. It is plainly necessary to have regard to all relevant factors including the nature and importance of the admission, the circumstances in which the admission was made, whether the admission was made deliberately or inadvertently, the reason given for the application to withdraw, the detriment or prejudice which might be caused to the other party and the stage which the proceedings have reached, and whether the admission is contrary to the facts. The list of relevant factors affecting the Court’s decision will plainly vary from case to case.

21    Justice Yates applied those principles in Optical 88 Ltd v Optical 88 Pty Ltd [2010] FCA 310 at [34]-[38] and in doing so made a number of observations about the facts before him that are relevant to this application:

In my view there is nothing, objectively speaking, that is odd or surprising about the fact that the same admissions are made by both the second respondent and the third respondent. They were and are, after all, the only two directors of a private company (the first respondent) that carried on the impugned activities. And even though the same admissions are made, the third respondent’s defence and amended defence have been specifically personalised to her situation. The defence and amended defence are not, on their face, slavish reproductions of the second respondent’s defence and amended defence. The fact that separate defences were prepared and filed for each of the personal respondents indicates that, at the time, there was a clear appreciation on the part of their advisers that each was seeking to plead specifically to the allegations made against him or her.

Both the third respondent’s defence and amended defence bear an endorsement that the pleading was prepared by the third respondent’s solicitor and settled by counsel. This endorsement sits oddly with the statement now made in the third respondent’s solicitor’s affidavit that it was counsel who both “prepared and settled” the defence and amended defence. No explanation has been given for this inconsistency or, if the endorsement be erroneous, how it nevertheless came to be made and repeated.

Moreover, in respect of the third respondent’s defence and amended defence, the third respondent’s solicitor certified on each pleading that the factual and legal material available to him at that time provided a proper basis for each allegation in the pleading. In the face of that certification, there is no evidence before me that reveals the precise circumstances in which the defence and amended defence came to be prepared, what instructions had been given for that purpose, when those instructions were given or how the pleadings came to be prepared in the form in which they were filed, apart from the speculation that the third respondent’s pleading was an inadvertent replication of the second respondent’s pleading.

On the other hand, the third respondent’s solicitor’s letter of 18 June 2008 (to which I have referred) supports the inference, otherwise available, that, at the time of their preparation and filing, the third respondent’s defence and amended defence contained a considered response to the specific allegations that had been made against her and each of the other respondents. These defences are specific, certified as having been made on a proper basis, and have stood as the third respondent’s defences from April 2008. It was only at the point of dealing with objections to the third respondent’s affidavit, just prior to the third respondent’s scheduled attendance for cross-examination, that the application to withdraw the admissions was made.

In light of the objective material to which I have referred, the somewhat skeletal explanation that has been provided in the third respondent’s solicitor’s affidavit, including the simple suggestion that the third respondent’s pleadings are no more than an inadvertent replication of the second respondent’s defence, is unconvincing and does not provide an adequate explanation of the circumstances in which the admissions came to be made or a sufficient basis for granting the leave that is now sought.

22    Wallan Pastoral submitted that:

(1)    The admissions the subject of the application, to varying degrees, are admissions of allegations of fact as to Mr Johnson’s state of mind, and are not admissions as to allegations concerning Wallan Pastoral’s state of mind.

(2)    The admissions “are ancillary to the key issues in this proceeding”.

(3)    Villawood Management’s amended statement of claim is not yet in its final form (counsel for Villawood Management having earlier on in the day of the hearing said that its proposed further amended statement of claim was to be proffered within 7 days).

(4)    The trial of the proceeding, together with various other related proceedings, is tentatively scheduled to commence in twelve months’ time.

(5)    No great prejudice would flow from permitting the withdrawal of the admissions and their replacement with the proposed new paragraphs.

(6)    It was in the interests of justice to allow the application.

23    Wallan Pastoral’s written submissions asserted that its “responses to paragraphs 34A, 34K, 34KA, 37C, 37D and 37F of the [amended statement of claim] are incorrect and should not stand”, but that submission was not referred to by senior counsel for Wallan Pastoral during his oral submissions, and I assume that the point was not relied on – which is hardly surprising, because Mr Watkins did not say any such thing in his affidavit.

24    Senior counsel for Wallan Pastoral took me in considerable detail to the decision of the New South Wales Court of Appeal in Aizdan Pty Ltd v L & A Laird (NSW) Pty Ltd (2024) 115 NSWLR 93 at 100-110 [31]-[71]. He did so in aid of a submission that Wallan Pastoral seeks to plead that it did not know and cannot admit the relevant allegations which it had previously admitted, and that, in any event, the question of whether Mr Johnson’s knowledge is to be attributed to Wallan Pastoral is a question for trial.

25    Aidzan concerned circumstances where a director sought to attribute his knowledge to the company for the purpose of defeating a claim by the company against him for breach of duty. The Court of Appeal (Meagher JA, Ward P and Adamson JA agreeing) held that if a substantive claim by a company against a director (or companies associated with or controlled by that director) is for fraud or breach of duty, the director’s knowledge will not be attributed to the company for the purpose of defeating or barring the company’s claims.

26    Senior counsel further relied on the Court of Appeal’s holding that, in determining whether the knowledge of a director should be attributed to a company, the rules and principles to be applied in each case depend on the nature of the claim and the purpose for which attribution is to be made. That is, that attribution is not, irrespective of the context in which and purpose for which it is sought, to be determined by the application of a single “fraud exception” which turns on whether the company has partly benefited or whether the conduct is in “total fraud” of the company.

27    As Meagher JA explained, the principles stated in that case are consistent with longstanding authorities. But they have no particular relevance to the question before me, namely, whether it is in the interests of justice to grant leave to Wallan Pastoral to withdraw the stipulated admissions and replace them with “do not know and cannot admit” defences.

28    Having regard to the applicable legal principles which I have set out above, the following matters (which are to some extent inter related) weigh significantly against the exercise of the relevant discretion under r 26.11(2)(b).

29    First, nothing in the affidavit in support of the application suggests that Wallan Pastoral was under any disability, or that it was not able to make a clear and distinct admission.

30    Secondly, in my view, the affidavit did not provide any good reason to disturb that which was conceded in the relevant paragraphs of the amended defence.

31    Thirdly, it is readily apparent that the admissions were made after due consideration, and on the basis of instructions given to Mr Watkins and counsel (presumably by Mr Johnson), and it was not suggested otherwise.

32    Fourthly and relatedly, there is no suggestion in the affidavit that the admissions were made inadvertently, or without due consideration of material matters.

33    Fifthly, at the time the defence was filed, Mr Johnson was one of only two directors of Wallan Pastoral and the allegations of fact made only concern him and not the other director.

34    Sixthly, and to adopt the language of Yates J in Optical 88 Ltd, the admissions were “specifically personalised” to Wallan Pastoral’s situation because they included additional detail to the facts picked up from the defence of Marlton and Mr Johnson. There was no “slavish reproduction” of the defence filed by Marlton and Mr Johnson. On the contrary, the paragraphs containing the admissions were obviously carefully prepared. And there was, again, to adopt the words of Yates J, “a clear appreciation on the part of [Wallan Pastoral’s legal advisors] that [it] was seeking to plead specifically to the allegations made against [it]” (Optical 88 Ltd at [34]).

35    Seventhly, Wallan Pastoral’s defence bears the following certification:

36    Eighthly, it seems to me that the explanation of how the admissions came about are beside the point. None of the matters set out in paragraphs [28(a)-(d)] of the affidavit provide any sufficient basis, singularly or together, to withdraw the admissions. I intend no disrespect, but the explanations given beg more questions than they answer.

37    I agree with the submission advanced on behalf of Villawood Management that the affidavit is silent as to the instructions Mr Watkins received from Wallan Pastoral and the investigations he made to satisfy himself that the admissions had a proper basis. The admissions were specific, and as I say, they were certified as having a proper basis and have stood as Wallan Pastoral’s defence since 25 March 2026. Nor is it suggested that the admissions were made erroneously.

38    Finally, the submission that the admissions are contrary to the actual facts was not pressed.

39    It may be accepted, in the grand scheme of things, where the trial of the proceeding is not scheduled to commence until September next year, the withdrawal of the admissions and allowing Wallan Pastoral to file a further amended defence is unlikely to prejudice that date. But permitting the withdrawal and the substitution of the admissions with the proposed amendments would entail additional work and expense for Villawood Management. However, they are in my view minor considerations in the context of all the factors that weigh against granting the leave sought.

40    I should also deal with Wallan Pastoral’s point that the allegations, or most of them, in respect of which the admissions are sought to be withdrawn are allegations directed at Mr Johnson, personally rather than qua Wallan Pastoral.

41    First, I do not understand the relevance of the distinction for the purpose of this application.

42    Secondly, and in any event, as senior counsel for Villawood Management pointed out, paragraph 43 of the amended statement of claim provides:

In respect of the contraventions pleaded in paragraph 42 above and/or the breach of contract pleaded in paragraph 42A above, VM is entitled to the following relief against each one of Johnson, Mandate and Wallan Pastoral:

…

PARTICULARS

…

CA. In respect of Mandate, the facts and acts constituting the Dishonest Conduct that render Mandate liable in respect of Johnson's contraventions alleged in paragraph 42 are those set out in paragraphs 29I, 29J, 29M, 29N, 29T, 30 to 34B, 34K, 34KA, 34KB, 35A, 36 to 37D, 37F to 37K and 37N above.

CB. In respect of Wallan Pastoral, the facts and acts constituting the Dishonest Conduct that render Wallan Pastoral liable in respect of Johnson's contraventions alleged in paragraph 42 are those set out in paragraphs 29I, 29J, 29M, 29N, 29T, 30 to 34B, 34K, 34KA, 34KB, 35A, 36 to 37D, 37F to 37K and 37N above.

43    That paragraph clearly seeks to sheet home to Wallan Pastoral the conduct of Mr Johnson.

44    And as for Wallan Pastoral’s point that the admissions “are ancillary to the key issues in this proceeding”, that remains to be seen.

45    As I said earlier, I will make an order permitting the amendment to the application to include reference to the admission omitted (paragraph 37G) and for the reasons I have given, dismiss the application. Costs must follow the event.

Associate:

Dated:    22 September 2026