England and Wales Court of Appeal (Civil Division) Decisions

Neutral Citation Number: [1996] EWCA Civ 1300

CCRTI 95/0302/G

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM PORTSMOUTH COUNTY COURT
(HIS HONOUR JUDGE WROATH)


Royal Courts of Justice
Strand
London WC2

Thursday, 25 April 1996

B e f o r e:

LORD JUSTICE WAITE
LORD JUSTICE MILLETT
LORD JUSTICE THORPE


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KATHLEEN FRANCES GALE

PLAINTIFF/RESPONDENT

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SUPERDRUG STORES PLC

DEFENDANTS/APPELLANTS

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MR N VINEALL (Instructed by Messrs Lawrence Graham, London WC2R 1JN) appeared on behalf of the Appellant

MR M SOOLE (Instructed by Messrs Blake Lapthorn, Hampshire PO15 5UA) appeared on behalf of the Respondent

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J U D G M E N T
 


LORD JUSTICE WAITE:

This appeal is brought by the defendants to a personal injury action arising out of an accident suffered by the plaintiff while she was in their employment. Well before any proceedings were started, an admission of liability in correspondence by their insurers was followed up by an interim payment on account of damages. Negotiations continued on issues of quantum only. When, however, the plaintiff issued a county court summons shortly before expiry of the limitation period to prevent her claim becoming time-barred, the defendants filed a defence denying liability. That defence was struck out on the plaintiff's application by the District Judge. On 1 November 1994 an appeal from that order was dismissed by His Honour Judge Wroath, sitting in the Portsmouth County Court. From that dismissal the defendants by leave of this court now appeal.

THE LEGAL AND PROCEDURAL BACKGROUND

There is no equivalent in the County Court Rules to RSC Order 27 Rule 3, and there was initially some doubt as to whether it would have been possible for the plaintiff to raise her objection to the defendant's change of stance by any means other than the one she chose, namely an application to strike out the defence as an abuse of the process. Counsel have spared us the need to resolve that doubt by agreeing that the issue, regardless of the procedure by which it was (or might have been) raised, was one that required the county court to apply to it the same principles as those on which the court acts in cases where a defendant in High Court proceedings seeks leave to amend or withdraw an admission which has provided the basis for a motion by the plaintiff for judgment under Order 27 Rule 3. That provides as follows:

"3. Where admissions of fact or of part of a case are made by a party to a cause or matter either by his pleadings or otherwise, any other party to the cause or matter may apply to the Court for such judgment or order as upon those admissions he may be entitled to, without waiting for the determination of any other question between the parties and the Court may give such judgment, or make such order, on the application as it thinks just."

It is common ground between counsel that the discretion conferred by that rule is wide enough to allow the court to entertain an application by the defendant to resile from his admission - by amendment if it was made in a pleading, or by withdrawal if it was made in correspondence. Their researches have disclosed surprisingly little authority, however, as to the principles on which such leave may be granted or refused. The side-note at 27/3/8 of the Supreme Court Practice refers to the decision in this court of Bird v Birds Eye Walls Ltd on 21 July 1987 reported only in the Times for 24 July 1987. Since that was a case which featured prominently in argument both before the judge and in this appeal, it will be necessary to refer to it in a little detail. It was a consolidated personal injury claim for RSI brought in the county court by five cake-makers employed by the defendants. The defence contained a denial of negligence, and there was no allegation of contributory negligence. Shortly after the close of pleadings, an expert instructed by the plaintiffs called by appointment at the defendants' factory to inspect the conditions under which the plaintiffs had been working. On arrival he was told that the defendants were no longer disputing liability, and no inspection would therefore be necessary - an assurance that was confirmed in writing by the defendants' solicitors a few days later. Correspondence followed in the usual way about special damages and medical reports, and on 27 January 1986 the action was set down for trial by order of the court on the issue of quantum only. That hearing was duly listed for the end of July 1986. Four weeks before the hearing, the defendants' solicitors wrote to the plaintiffs' advisers stating that there had been a change of policy dictated by senior management which forced them now to withdraw their admission of liability, for which they apologised. The plaintiffs gave notice that they would make a preliminary application at the hearing to dispute the right of the defendants to retract their long-standing admission. They duly did so, and the judge, having heard preliminary submissions from both sides, directed adjournment of the plaintiffs' objection for further consideration, but directed that experts' reports should be obtained in the meantime. At the adjourned hearing he ruled against the plaintiffs' objection, holding that the admission had not resulted in any such prejudice to the plaintiff as required the judge to refuse to permit the defendants to resile from it, and the trial accordingly proceeded.

On appeal to this court (Ralph Gibson LJ and Sir George Waller) the judge's ruling was over-turned. Although the appeal had been argued in part on the basis of estoppel, Ralph Gibson LJ preferred to state his reasons for granting the appeal on broader grounds. He said:

"It is not necessary to formulate precisely what the test would be, but I think that Mr Methuen, in what, if I may respectfully say so, was an admirably brief and cogent submission, said what is close to being what is right, i.e. that when a defendant has made an admission the court should relieve him of it and permit him to withdraw it or amend it if in all the circumstances it is just so to do having regard to the interest of both sides and to the extent to which either side may be injured by the change in front."

A little later he continued:

"This was a formal admission made after a fully pleaded case in every respect. There had been ample time to investigate the matter. The consequence of the admission was to stop the plaintiffs completing their investigations at a time which, as Mr Methuen has pointed out, was somewhat delayed from December 1982 to a date in the late summer of 1984, but nevertheless much closer to the relevant events than would be possible after the period which followed the admission of liability.

It seems to me that there plainly was some risk of damage to the plaintiffs' cases. They had to start investigating after considerable delay. They had to see what sort of documents they got on the delayed discovery and start looking for any relevant witnesses whose evidence would appear to be useful and relevant after the investigation had been carried out. Those were the matters which I think should have been before the court on 31st July. There would inevitably be further delay if leave was given: delay required by the investigation, exchange of reports etc.

Into that balance must be taken the disappointment of plaintiffs who have for a substantial period of time supposed that the only issue in the case was the proper compensation for them to receive for the injuries which they say they have suffered and the fact that they would inevitably be kept out of that compensation for a further period of time. Asked to give leave in those circumstances, as it seems to me, the court must look to the explanation which the applicant offers for wishing to change his position.

I am not for my part greatly impressed by reference to the defendants not having indicated any defence. I think some arguable defence was indicated in the terms of the expert's report which they produced. As my Lord Sir George Waller pointed out in the course of argument, however, this was clearly a finely balanced case upon which rationally experienced insurers could decide at one point to admit liability and at another seek to argue it. Where liability is of that nature and turns upon an assessment so balanced as that, in my view it adds weight to any indication of impairment to the case of the plaintiffs by the delay which had been caused by the admission and the attempt to change the attitude of the defendants.

More importantly, as I think, some explanation is necessary. If a mistake has been made the court would in my view tend to the view that the victim of the error must be relieved if the other side can be properly protected. If some new evidence has been discovered which puts a different complexion on the case, that is in the nature of mistaken assessment of the case. For my part I would be anxious to assist a party who has made an honest error and not hold that party to a liability which, if the error had not been made, he would not have been under.

The only explanation tendered in this case, as we are told, is that there had been a decision in November 1984 made by insurers on economic grounds that they would not fight these cases, i.e. the amount which they might expect to have to pay was such that it was not worth incurring the costs of fighting the issue of liability and having it decided by the court. It was said that that decision had been made without the knowledge of the parent company of these defendants, Unilever, and that in July, shortly before the hearing date, it was discovered that the admission had been made and there was a decision to depart from it.

Speaking for myself, having regard to all the other factors, I cannot regard that as a sufficient explanation which would justify the grant of leave. The making of an admission, with the consequences which follow from it when it is allowed to lie as long as this did, are such that for my part I would look for a better explanation than that before granting leave, having regard to the actual and potential injury to the plaintiffs which would follow from it."

The judge in the instant case placed a good deal of reliance on those observations, and one of the issues in this appeal is whether he interpreted them correctly.

THE FACTS OF THE PRESENT CASE

The plaintiff suffered her injury on 04 October 1990 while working in the defendants' store. She was unloading a delivery van when one of its doors was suddenly blown towards her and struck her, causing injuries which (she claims) rendered her permanently unfit for more than sedentary employment. On 14 May 1991 her solicitors wrote a letter before action which was answered by the defendants' insurers, Legal and General, with a request for details of the claim. On 26 July 1991 Legal and General wrote to the plaintiff's solicitors asserting that the defendants had no control over the van driver; and stating that the claim should be addressed to the driver's employers Glyn John Transport (a company by then in liquidation). The response of the plaintiffs' solicitors on 24 October 1991 was to assert that it was the employers' duty to provide a safe system of work, and their letter concluded with a threat that if liability was not admitted within 14 days proceedings would be issued against Legal and General's insured without further notice. On 25 November 91 Legal and General replied in these terms:

"We can confirm that in the circumstances, we do not propose making any further dispute as to liability. We therefore invite you to submit full details of your client's claim, including disclosure of medical evidence."

On 30 January 1992 the plaintiff's solicitors forwarded a medical report to the insurers with particulars of special damage (apart from loss of earnings which needed to be based on figures known only to the employers), and that was followed up in the succeeding months with frequent requests for an interim payment. On 19 November 1992 the plaintiff's solicitors reported the commissioning of a further medical report and concluded with a threat that proceedings to secure specific discovery of documents and an interim payment would follow if they were not provided voluntarily. On 18 December 1992 Legal and General (after a further chasing letter had been sent to them) made an interim payment of £600. The plaintiffs' solicitors on 6 July 1993 informed Legal and General that a consultant orthopaedic surgeon's report was about to be disclosed, requested details of what the plaintiff's pension provision would have been if she had remained fit for work, and continued:

"We have been instructed by our client to now issue proceedings. Limitation expires in October of this year and to protect her interest in the light of the medical evidence not being final we will be issuing in the near future. Do you wish to nominate solicitors?"

On 15 July 1993 Legal and General replied that they were approaching the insured for the relevant information and stated that proceedings should be served on their insured directly.

The county court summons was issued on 22 September 1993. On 10 February 1994 solicitors instructed by the defendants served a defence admitting the accident but denying liability. It was alleged that any injury suffered by the plaintiff had been caused solely by Glyn Transport (on whom the defendants served a third party notice) and it was asserted that the plaintiff had been guilty of contributory negligence. Shortly afterwards, on 25 February 1994, the defendants made a payment into Court of £1900. Lists of documents had been exchanged a few days earlier.

The plaintiffs' advisers did not immediately object to the change of stance on liability, and for some months correspondence proceeded normally on issues of quantum. No complaint is made by the defendants, however, of any delay on the plaintiffs' part before they took the step which has given rise to this appeal, namely the issue on 28 July 1994 of a summons to strike out the defence as an abuse of process. The affidavit in support of the summons did not plead any particular head of prejudice as having been suffered by the plaintiff but relied only on the letter of 25 November 1991 admitting liability and the fact that there had been discussions with a view to settlement in September and December 1993. District Judge Gale struck out the defence at a hearing of the summons on 2 October 1994.

For the purposes of the subsequent appeal to the County Court Judge the defendants' solicitor swore an affidavit saying that when his firm was instructed "a different view was taken of the defendant's liability", observing that the plaintiff's affidavit evidence contained no allegation of prejudice suffered as a result of the change of stance on liability, and offering an undertaking to pay any losses which the Plaintiff could satisfy the court were caused by delay in bringing the proceedings referable to the late retraction of the admission. At the hearing before the judge the defendants' counsel undertook specifically that if the action were to be allowed to proceed with liability in issue his clients would not, even if successful, disturb the interim payment already made.

THE JUDGE'S APPROACH

After referring to the test formulated in Bird v Birds Eye Walls as the one to be applied in this case, the grounds stated by the judge for upholding the order of the District Judge were the following:

"At the end of the day what we have is the defendant attempting to resile from its admission and it must then be required, I think, to make an explanation. The explanation appears to me from the evidence in front of me to be quite simply that it had made the admission of liability at a very early stage, but then at a fairly late stage in the proceedings when, in fact, they had brought in the services of solicitors, it was the solicitors who in the end suggested to it that, in fact, it did have a defence and that was the reason that it changed its position.

As regards that as an explanation, that seems to me to be an explanation that would have some force where one was talking, for example, of a person who admits liability immediately after the accident by getting out of the car and saying,"Sorry, my fault", but then to whom, when consulting solicitors, various matters are pointed out. The explanation seems to me to have far less effect, where we are talking about a very large insurance company dealing with, and no doubt receiving, many thousands of claims every year, and where its claims processors are very skilled and, indeed, trained in matters of the law. It seems to me that the explanation given in this case is really a very weak one in that context.

What is the prejudice to which the plaintiff points in this case? It basically comes down to three. First, there is the inevitable prejudice that must come about as a result of the delay, and this certainly may cause difficulties as regards the evidential position, although that has not been canvassed to me at any great length. Secondly, it was canvassed on behalf of the plaintiff that the interim payment that had been made, as I understand it, back in 1992 would be in jeopardy. That, of course, would have been right. The defendant then endeavoured to overcome that problem at this very late stage in the proceedings by counsel taking instructions and offering an undertaking that, whatever the outcome, if the plaintiff did not succeed in establishing liability, they would not seek to recover the interim payment. That, I suppose, in one sense might resolve that problem, but at the end of the day it does seem to me that the principle of prejudice to the plaintiff was established and was only addressed at a very late stage.

The third prejudice and in my judgment, the most significant of all is the extremely high level of disappointment and concern to the plaintiff, because what appeared to her to be an open-and-shut and resolved issue of liability is suddenly to be brought back and to become a fully contested case. That seems to me, in the context of this case, to be a very important element, because, as I say, her expectation after that letter of admission, followed by an interim payment, must have been at the highest. Then, suddenly, over two years later, to be told that it was not so, undoubtedly must have represented a severe disappointment to the plaintiff.

In this context I think that one has to then take a pace back and ask - recognising that it is insurers, and bearing in mind what I have already said, about their understanding of the principles of law and being experienced in claims - "Is it now just to allow it suddenly to change its mind after a period of two years?" In looking at that, I think that one must look at it through the eyes of the ordinary, average person - I suppose the man on the Clapham Omnibus or the one mowing the lawn in his shirt sleeves. I really have no difficulty in concluding that that ordinary person would look at this and say, "Well, I think it would be very unjust. It is an experienced, competent firm, it knew exactly what it was doing and it really would be very unfair now, after two years plus, to allow it suddenly to completely change its position". That seems to me at the end of the day in this particular case on these particular facts to really be the key as to why now it would be unfair to allow them to pursue their defence.

What is the prejudice so far as the defendant is concerned? There is, of course, one important prejudice, and that is, by having its defence struck out, it loses the right to defend, but, as to that, again, I think that the general perception would be that, in all the circumstances, that is quite just, because it, in fact, brought it all upon itself by admitting liability over two years before and then trying to change its mind."

The judge's reasons were thus, in summary, that the admission of liability had been a formal one made by well known insurers; that it had been maintained for two years; that the interim payment had raised the plaintiff's expectations that the case was being treated as one of quantum only; and that there was no satisfactory explanation advanced by the defendants for the change of stance. Prejudice he found to be established under the three heads of delay, late offer of the undertaking regarding the interim payment, and ("most significant of all") the high level of disappointment and concern to the plaintiff. He found that there was no prejudice to the defendants apart from the self-imposed consequences of a late change of mind.

THE ARGUMENT

Both sides agree that the test mentioned by Ralph Gibson LJ that:

"when a defendant has made an admission the court should relieve him of it and permit him to withdraw it or amend it if in all the circumstances it is just to do so having regard to the interests of both sides and to the extent to which either side may be injured by the change in front"

is the correct test, but there is disagreement as to how it is to be applied.

Mr Soole for the plaintiff fastens upon the attention devoted by Ralph Gibson LJ in Bird's Eye to the sufficiency of the excuse advanced by the party seeking to resile. That, he submits, is the starting point for application of the test, and if no sufficient excuse is established, it is also the finishing point. The court, that is to say, must first address the question: is there any reasonable excuse for retracting the admission? If there is not, then the matter goes no further, and the application to resile will be refused without further inquiry. That, he submits, was the approach rightly followed by the judge in this case. The judge's finding that "the explanation given in this case is really a very weak one" was conclusive; and, although he referred to other matters as well, provided sufficient justification on its own for the exercise of his discretion in the way that he chose.

Mr Vineall for the appellant defendants says that the discretion is not to be so constrained. Explanation or excuse are, he accepts, relevant, but can never be conclusive. What the discretion requires is that the judge should conduct a weighing exercise, carefully balancing the prejudice suffered by the defendant if he is deprived of his prima facie right to resile from his admission against any prejudice which the plaintiff stands to suffer if the admission is withdrawn. In that appraisal it is not enough for the court to presume prejudice: it must be established specifically and affirmatively. He cites the analogy of the discretion to strike out for want of prosecution, where it is now well established that a party relying on prejudice must point specifically to some circumstance from which prejudice is to be inferred, and not rely merely on general assertions that delay, for example, is inevitably prejudicial (c.f. Hornagold v Fairclough Building Ltd [1993] 2 PI&QR 401). In the present case, he submits, the judge wholly failed to conduct that balancing exercise. Firstly he brushed aside the prejudice suffered by the defendants if the withdrawal is not allowed as something they would have to put up with because it is their own fault; secondly he paid no proper attention to the undertakings that had been offered in relation to the interim payment and to any other head of loss that might be established; thirdly he overlooked the fact that there was no specific evidence of prejudice filed on the plaintiff's side at all - leaving the court to guess whether, and in what respects, the withdrawal of the admission would in fact make the conduct of her case on liability more difficult; and fourthly in paying regard to the disappointment suffered by the plaintiff (which it is accepted that he was entitled to do in the general exercise of his discretion), he had given it a wholly disproportionate emphasis by erroneously treating it as a head of prejudice - and a major head at that.

Mr Soole accepted that there was very little specific prejudice proved or alleged by the plaintiff, but he says that the court was here in the area of legitimate inference, and he prayed in aid the observation of Sir George Waller in the Bird's Eye case that:

"I find it very difficult to visualise any personal injury case where, if a formal admission of liability were withdrawn eighteen months after it had been made, it would not prejudice the plaintiff".

CONCLUSION

I would reject Mr Soole's preliminary submission. There are certainly instances where, as a preliminary to the exercise of its discretion, the court will insist upon a satisfactory explanation. One such is a case where a plaintiff is seeking an extension of time for service after the validity of the proceedings has expired - see Ward-Lee v Lineham [1993] 1 WLR 755. But those are instances where a party has been in breach of some rule or direction and needs to make his peace first with the court. A party withdrawing an admission is to be regarded in a more favourable light. Excuse (or lack of it) is not entitled, in my judgment, to any particular emphasis: it is just part of the overall picture and will carry no more weight than the particular circumstances require.

I prefer Mr Vineall's submission that the discretion is a general one in which all the circumstances have to be taken into account, and a balance struck between the prejudice suffered by each side if the admission is allowed to be withdrawn (or made to stand as the case may be). Although the judge reached his conclusions in the course of a full and careful judgment, Mr Vineall's criticisms of the judge's approach to the exercise of his discretion are also, in my judgment, well founded. The judge had no evidence before him of any specific matter which rendered it more difficult for the plaintiff to prosecute a claim in liability than it would have been if the admission had never been made. No one pointed, for example, to any eye-witness whose evidence would have been obtained if liability had been in issue but who cannot now be traced. It is certainly true (as Sir George Waller pointed out) that this is a field in which there is scope for some degree of obvious inference, but the judge had nothing beside a general assumption that all delay is prejudicial to place against the very clear prejudice which the defendants would suffer if they were not allowed to urge the view of liability on which - albeit at a late stage - they had received fresh advice from their solicitors as soon as they were instructed. The judge was entitled to take account, as anyone naturally would, of the disappointment suffered by the plaintiff, but he was wrong in my view to elevate it to the status of a major head of prejudice, thereby giving it a wholly disproportionate emphasis.

The right order for the judge to have made in a proper exercise of his discretion would in my judgment have been to grant the defendants leave to resile from the admission. In saying that, I do not wish to minimise the distress suffered by the plaintiff. She had every reason to be gravely disappointed. Litigation is however a field in which disappointments are liable to occur in the nature of the process, and it cannot be fairly conducted if undue regard is paid to the feelings of the protagonists. That does not mean that the late retraction of an admission is something that the courts should encourage. But what it does mean is that a party resisting the retraction of an admission must produce clear and cogent evidence of prejudice before the court can be persuaded to restrain the privilege which every litigant enjoys of freedom to change his mind.

I would allow the appeal and discharge the orders for the striking out of the defence that were made below.

LORD JUSTICE MILLETT:

Litigation is slow, cumbersome, beset by technicalities, and expensive. From time to time laudable attempts are made to simplify it, speed it up and make it less expensive. Such endeavours are once again in fashion. But the process is a difficult one which is often frustrated by the overriding need to ensure that justice is not sacrificed. It is easy to dispense injustice quickly and cheaply, but it is better to do justice even if it takes a little longer and costs a little more.

The administration of justice is a human activity, and accordingly cannot be made immune from error. When a litigant or his adviser makes a mistake, justice requires that he be allowed to put it right even if this causes delay and expense, provided that it can be done without injustice to the other party. The Rules provide for misjoinder and nonjoinder of parties and for amendment of the pleadings so that mistakes in the formulation of the issues can be corrected. If the mistake is corrected early in the course of the litigation, little harm may be done; the later it is corrected, the greater the delay and the amount of costs which will be wasted. If it is corrected very late, the other party may suffer irremediable prejudice.

The general principles which govern the Court's approach to an application to amend the pleadings is to be found in the well-known and often cited passage in the judgment of Bowen LJ in Cropper v Smith (1883), 26 Ch.D. 700 at pp. 710-11 with which A.L. Smith LJ expressed his "emphatic agreement" in Shoe Machinery Co. v Cultam [1896] 1 Ch. 108 at p. 112. Bowen LJ said:

"It is a well established principle that the object of the Court is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights...I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such an amendment as a matter of favour or grace....It seems to me that as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected if it can be done without injustice, as anything else in the case is a matter of right."

There are numerous other authorities to the same effect. In Clarapede v Commercial Union Association (1883) 32 WR 262 at p. 263 Brett MR said

"However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs."

I do not believe that these principles can be brushed aside on the ground that they were laid down a century ago or that they fail to recognise the exigencies of the modern civil justice system. On the contrary, I believe that they represent a fundamental assessment of the functions of a Court of Justice which has a universal and timeless validity.

In my judgment the same principles apply whether or not the amendment involves the withdrawal of an admission previously made in the pleadings. The position of a defendant who belatedly seeks to raise a new defence cannot sensibly be distinguished from that of a defendant who seeks to withdraw an earlier admission. Each is seeking to raise an issue which cannot be raised without amendment; the amendment will almost invariably cause some delay and expense; and it must come as a disappointment to the plaintiff who did not expect to have to litigate the issue now raised for the first time. Nor is the position of a defendant who pleads a defence which is inconsistent with an admission made before action brought materially different from that of a defendant who seeks to withdraw an admission made in the pleadings. If anything, his position should be easier, since his change of stance is signalled at an earlier stage of the litigation, and is less likely to waste time or costs. Accordingly, I respectfully agree with the observations of Ralph Gibson LJ in Bird v Birds Eye Walls Ltd. The Times 24th. July 1987 when he indicated that a defendant should be relieved of an admission and allowed to withdraw it or amend it

"if in all the circumstances of the case it is just to do so having regard to the interests of both sides and to the extent to which either side may be injured by the change in front."

In conformity with the approach of the Court towards applications to amend the pleadings where no withdrawal of an admission is involved, I consider that the Court should ordinarily allow an admission to be withdrawn if it can be done without injustice to the other party and if no question of bad faith or overreaching is involved.

In the High Court the plaintiff may be able to crystallise the position by applying under RSC Order 27 Rule 3 for judgment on admissions. But the defendant can resist the application by seeking leave to withdraw the admission and, if necessary, amending his defence. In my judgment leave should be normally be granted if the application is made in good faith, raises a triable issue with a reasonable prospect of success, and will not prejudice the plaintiff in a manner which cannot be adequately compensated.

In the present case these criteria were met, but the Judge nevertheless refused to allow the admission to be withdrawn. He was impressed by two facts: (i) the Defendants had in his view failed to give an adequate explanation of their change of front; (ii) the grant of leave would cause serious disappointment to the plaintiff.

It is not normally necessary for a party to justify his decision to amend his pleadings or withdraw an admission. It is enough that he wishes to do so. The Judge's insistence that the Defendants should give an adequate explanation of their change of front was, in my view, based on a misreading of the decision in Bird v Birds Eye Walls Ltd. In that case the circumstances were unusual. The admission was made by the defendant's insurers who took a considered commercial decision not to dispute liability on the ground that this would not be cost effective, but to contest quantum so that they should not be held to ransom. When more cases emerged than had been expected when the policy was formulated, they attempted to withdraw the admission. There was no reason why they should not dispute liability in future cases, but once they had deliberately chosen to admit liability in a particular case even though they knew that they might be able to contest it successfully, it could hardly be unjust to hold them to their election.

The present is a very different case. The admission was made by the Defendants' insurers. When their solicitors came on the scene, they advised that liability should be contested. The admission should never have been made; the Defendants have a strongly arguable defence; they wish to put it forward; they are acting in good faith; there is no question of strategic manoeuvring. It would be a serious injustice to them if they were precluded from disputing liability. They have taken all necessary steps to prevent their change of front from causing any prejudice to the Plaintiff.

Of course, the unexpected nature of the Defence must have been a disappointment to the Plaintiff; but I cannot think that this should count for anything. The sounder the defence sought to be raised by amendment, the greater the disappointment to the plaintiff if it is allowed and the greater the injustice to the defendant if it is not. What the Court must strive to avoid is injustice, not disappointment.

In my judgment this was a very clear case. The Defence was a proper one with a real prospect of success and the Judge was plainly wrong to strike it out. Had the Plaintiff sought judgment on admissions, the Judge should have refused judgment and allowed the Defendants to defend. I would allow the appeal.

LORD JUSTICE THORPE:

Although in form an application to strike out a defence it is agreed that it is to be treated as though an application for judgment on an admission under RSC Order 27 and the issue is to be determined in accordance with authority governing order 27 applications. Only the absence of a provision within the County Court rules allowing applications for judgment on admission obliged the plaintiff to apply to strike out. Mr Vineall in a skilful and powerful submission advances the following four propositions to govern the determination of order 27 applications:

(1) The court must first identify any prejudice which the plaintiff has suffered as a result of the defendant's admission.

(2) Such prejudice must be proved.

(3) The court must then ignore such prejudice as the defendant can overcome or `buy out`.

(4) If and when residual prejudice to the plaintiff is identified, the court must balance that prejudice against the right of the defendant to have his case tried and decide whether in all the circumstances it is just to strike out the claim.

By contrast Mr Soole submits that formal admissions of liability giving rise to a right to apply for judgment distinct from the right under order 14 are of such fundamental consequence that defendants are not to be permitted to resile from them without substantial and cogent explanation and justification.

Both counsel support their contentions by reference to the judgments in this court in Bird v Birds Eye Walls Limited. Lord Justice Ralph Gibson posited the probable test as follows:

"When a defendant has made an admission the court should relieve him of it and permit him to withdraw it or amend it if in all the circumstances it is just so to do having regard to the interests of both sides and to the extent to which either side may be injured by the change in front."

However, later he stressed the significance of the quality of the defendant's justification for shifting his position in passages at pages 11, 12 and 13. For me the essential sentence is as follows:

"Asked to give leave in those circumstances, as it seems to me, the court must look to the explanation which the applicant offers for wishing to change his position."

On this issue of general principle I favour the submissions of Mr Soole. Mr Vineall's presentation is altogether too favourable to defendants. Authority with which he supports his submission is more relevant to applications to amend pleadings or applications to strike out for want of prosecution. Authority as to the practice in the High Court more than a century ago cannot recognise the demands and exigencies of the civil justice system as it is today. Furthermore it does not seem helpful to me to create a system of stages postponing or excluding altogether the need for the defendant to explain himself.

Applying the general to this particular case leads me to the conclusion that the decision reached by Judge Wroath was on the very border of the discretion which he exercised. The plaintiff's application was prepared almost as if she were entitled to the order as of right. No prejudice was asserted in the supporting affidavit and even when put on notice by the defendants's affidavit in opposition no further affidavit was filed to meet the deficiency. However the judge had before him the words of Sir George Waller:

"I find it very difficult to visualise any personal injury case where, if a formal admission of liability were withdrawn 18 months after it had been made, it would not prejudice the plaintiff."

Further the judgment of Lord Justice Ralph Gibson made it plain that he was entitled to have regard to the effect of the resurrection of liability on the plaintiff's feelings.

Although his judgment was given some weeks before the issue of the Lord Chief Justice's practice direction calling for much firmer judicial control of civil litigation it certainly reflects the message of the direction. The civil justice system is under stress and far reaching reforms are in prospect. There is a public interest in excluding from the system unnecessary litigation and a consequent need to curb strategic manoeuvring. Here the plaintiff presented the defendant's insurers with the choice of an admission of liability or service of writ. The defendant's insurers, presumably advisedly, chose to admit liability. That admission was the foundation of over two years of continuing search for a compromise on quantum. As Mr Soole submitted, had the plaintiff insisted upon obtaining a consent judgment on the issue of liability before embarking on that protracted negotiation the defendant would have protested that it was a proposal to incur costs to no purpose. I share judge Wroath's opinion that against that background the defendant's explanation for resiling from their admission was `really a very weak one`.

Although I accept the force of my lord, Lord Justice Waite's criticisms and although I recognise that this was a robust conclusion in the absence of any specific evidence of prejudice, I ultimately conclude that this was a decision to which the judge was entitled to come in the exercise of discretion and in furtherance of a more disciplinary approach to adversarial manoeuvring which the public interest now requires. I would dismiss this appeal.