Permanent Trustee Co Ltd v Gulf Import and Export Co

[2006] VSC 110

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL & EQUITY DIVISION
PRACTICE COURT

No. 8130 of 2002

PERMANENT TRUSTEE COMPANY LTD
(ACN 000 000 993)
(As trustee under the Security Trust Deed and New South Wales Security Trust Deed each dated 25 January 1996)

Plaintiff

v

GULF IMPORT AND EXPORT COMPANY

EMIRATES TRADING AGENCY LLC

First Defendant

Second Defendant

---

JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	23 MARCH 2006
DATE OF JUDGMENT:	24 MARCH 2006
CASE MAY BE CITED AS:	PERMANENT TRUSTEE CO LTD V GULF IMPORT AND EXPORT CO. & ANOR
MEDIUM NEUTRAL CITATION:	[2006] VSC 110

---

PRACTICE AND PROCEDURE – Appeal from a Master – Failure to file within time a notice of dispute in response to a notice to admit – Whether defendants should have leave to withdraw deemed admissions – Whether a genuine dispute in relation to the facts and documents in question – Appeal allowed – Supreme Court Rules, r.35.03(3) and r.35.05(3).

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr P. Jopling QC with Mr J. Styring	Minter Ellison
For the Defendants	Mr R. Garrett QC with Mr T. Thomas	Aitken Walker & Strachan

HIS HONOUR:

1. The issue before me on this appeal from a Master of the Supreme Court is whether (as the Master determined) the defendants should be allowed to withdraw certain admissions earlier made by them by inadvertence.  The Master having granted the defendant’s application, the plaintiff seeks by this appeal to have that decision reversed.  It submits that the Master failed to take into account a relevant circumstance – namely, that the Court should not allow deemed admissions to be withdrawn where the facts and documents deemed admitted are not themselves in contention.

1. Order 35 of the Supreme (General Civil Procedure) Rules 1996 provides for the admission of facts and documents.  Its purpose is to assist in the identification of matters not in dispute, and to avoid the costs of proving those matters.  It is to the obvious advantage of litigants and the court that time and money not be unnecessarily expended by calling, at the trial, evidence that is not in genuine contention.  Indeed, it may properly be said that, in general, the interests of justice are thereby best served.

1. It may be helpful to refer to such of the rules as are of particular relevance to the unusual circumstances of this case.  Rule 35.03 provides that a party may serve on another party a notice stating that unless that other party, within a time to be expressed in the notice, disputes the facts specified, that party shall – for the purpose of the proceeding only – be taken to admit those facts.  Then, if the party served with the notice does not – within the time allowed for that purpose – dispute any fact by himself serving notice of such dispute, he shall be taken to admit that fact.  A similar provision is, by r.35.05, made for the admission of documents.  By a combination of r.35.06 and r.63.18, where a party has served a "notice of dispute" and afterwards the fact or document thus disputed is proved in the proceeding, the costs of such proof shall (unless the court otherwise orders) be paid by the party who, by the notice of dispute, put it in contention.

1. A failure to serve a notice of dispute within the appropriate time shall be taken to be an admission of (as the case requires) either the fact, or the authenticity of the document, or both.

1. In this case, the plaintiff served upon the defendants a notice which doubled as a notice pursuant to r.35.03 (admission of facts) and r.35.05 (admission of documents).  By inadvertence, the defendants failed, within the time allowed, to respond with a notice of dispute.  Accordingly, the defendants are, unless the court grants leave to withdraw, to be taken to admit the relevant facts and documents.

1. Which brings me to r.35.03(3).  By that rule, a party may by leave of the Court withdraw an admission of any fact which otherwise is taken to have been admitted.  Rule 35.05(3) is in like terms.  The Master, on the application of the defendants, granted such leave. 

1. One important point, which the Master rightly took into account in favour of the defendants, is that their failure to respond within time was not by calculation or design, but by mistake.  The failure is also to be evaluated against the circumstance that it was – or was sought to be – rectified within five days of the expiration of the time allowed.   The relevant notice to admit was served on 11 January 2006.  The time for service of any notice of dispute expired at 4.00 pm on 25 January.  The notice of dispute upon which the defendants seek to rely was served five days after that, on 30 January.

1. There are, however, other matters to be considered.  First among them is that the defendants do not contend that the particular facts and particular documents the subject of the plaintiff's notice to admit are in themselves contentious.  As I understand it, the defendants accept that they are merely part of the matrix of facts in the light of which the plaintiff hopes to convince the Court that it should be granted the relief which it seeks.  It is the grant of that relief that is very much in contention; and the facts and documents in respect of which the defendants are deemed to have made admissions are to that extent, but to that extent only, in contention. 

1. In this context, one circumstance is highly relevant.  It is that the affidavit filed by the defendants in support of their appeal does not contend that there is a genuine dispute about any of the facts or documents the subject of the plaintiff's notice.  The affidavit in question was sworn by Anton Emil Dunhill on 10 February 2006 and filed on that day.  Having sworn in paragraph 23 that liability is genuinely in issue, Mr Dunhill in his penultimate paragraph, deposes that:

"The defendants disputed the authenticity of all facts and documents … because they wanted to put the plaintiff into a position whereby it had to call the relevant (senior) employees … to prove those facts and documents and the alleged indebtedness."

1. In general, a party ought not to be allowed to withdraw an admission where the truth of the relevant fact or facts, and the authenticity of the relevant document or documents, is not the subject of a genuine dispute.  This is so even where the admission is a "deemed" admission by reason of a failure to serve, in time, a notice of dispute.  Ex hypothesi, a notice of dispute ought not, in the absence of a genuine dispute, to be served at all.  In these circumstances, a court that granted leave to withdraw would allow the withdrawing party to thwart the very purpose which the rules are designed to advance.  I agree, with respect, with a passage in the judgment of Williams J sitting as a member of the Court of Appeal of the Supreme Court of Queensland in Ridolfi v Rigato Farms Pty Ltd[1]:

"Certainly an admission flowing from the operation of [the equivalent of r.35.03(2)] should not be withdrawn merely for the asking.  In my view a clear explanation on oath should be given as to how and why the admission came to be made and then detailed particulars given of the issue or issues which the party would raise at trial if the admission was withdrawn."

In this case, the defendants are not in a position to give any of the detailed particulars to which Williams J referred.

[1](2001) 2 Qd R 455 at 461

1. The defendants contend that the present circumstances are exceptional.  By their defence and counterclaim, they allege that the plaintiff's case is vitiated by fraud, and that that fraud is also sufficient to sustain the counterclaim.  They wish to advance their case at trial by cross-examining witnesses whom the plaintiff is not likely to call unless forced to do so in order to prove the facts and documents in respect to which the plaintiff has sought admissions.

1. The defendants put their case in terms of justice.  They submit that it would be unjust to deny them the opportunity to cross-examine such witnesses as the plaintiff may call in order to prove the facts and documents which, in essence, are not in contention but in respect of which the defendants wish to withdraw their deemed admissions.  In support of this submission, senior counsel for the defendants pointed out that the mistake in question was made by a junior solicitor, was entirely innocent and, if uncorrected, would have consequences which are disproportionate – especially in that the plaintiff cannot point to any injustice to it should the deemed admissions be withdrawn. 

1. In other words, the defendants wish to preserve a tactical advantage that, had a notice of dispute been served within time, they would have enjoyed.  And it is true that the Court could not have prevented the defendants from obtaining that advantage by an order that no notice of dispute be served.

1. I am nevertheless of the opinion that the appeal should succeed.  I do not accept the defendants' submission that justice is on their side, and that the plaintiff would suffer no injustice were the admissions withdrawn.  The matter may, I think, be tested in part by asking whether, if the plaintiff were at the conclusion of the trial to seek its costs of proving the facts and documents in question, it would succeed pursuant to r.63.18. This rule provides that, where a party serves a notice of dispute and afterwards the fact or document is proved in the proceeding, that party shall – unless the Court otherwise orders – pay the costs of proof.  While one can never pre-empt what might happen at this point in a trial, it seems to me that the plaintiff in making a claim for its costs would be on very strong ground.  Yet on this hypothesis those costs would be paid by the defendants despite the Court having granted leave to them to effect the withdrawal that subsequently resulted in the costs being incurred.

1. In my opinion the plaintiff is, in the circumstances of this case, entitled to maintain a technical advantage, if indeed that is what it is, which has accrued to it by means of the carelessness of the defendants’ solicitors.  The plaintiff is after all entitled to expect that the Court will not nullify the rationale of one of its rules simply in order that a tactical advantage once accruing to its opponents should, as a consequence of rectifying their own mistake, be restored to them.

1. It seems to me, in other words, that the defendants seek not so much justice as a tactical advantage.  This is not in my view an adequate reason for the Court granting leave to take a step which would be contrary to the purpose which Order 35 was designed to achieve. 

1. I should not, however, conclude before taking into account a factor which seems to me properly to affect the ultimate outcome.  On 1 October 2004, well before the service of the notice to admit in question here, the plaintiff filed and served a notice to admit documents and a notice to admit facts.  By notices of dispute filed on 14 October 2004 the defendants disputed each document and every fact. A comparison of the notice to admit documents filed on 1 October 2004 and the notice to admit filed on 11 January 2006 suggests that admissions have been sought by the plaintiff in a number of instances in relation to the same documents.  So, for example, the first document listed in the earlier notice is:

"Facility Agreement dated 26 January 1996 between Bustan International Pty Ltd, Bustan Australia Holdings Pty Ltd, Rabo Australia Limited and the Commonwealth Bank of Australia"

while the first document in the most recent notice is a “Facility Agreement” dated 26 January 1996 being “Document 3 in the plaintiff’s discovery”.  The same correlation appears to apply to at least fifteen of the documents listed in both notices.

1. Where the plaintiff has earlier sought admissions in respect of any documents or facts which the defendants have then disputed, it is not open to the plaintiff to rely on any deemed admissions arising out of a failure to respond within time to a later notice in respect of the same documents or facts.  Where such a circumstance arises, there can be no deemed admission.

1. For these reasons, the appeal must be allowed, subject to there being no alteration to the position which relevantly obtained following service by the defendants of their notices of dispute filed on 14 October 2004.

---