Neil Hickman examines when defendants can change their minds about admitting liability for a claim

The Civil Procedure Rules 1998 (CPR) rule 14.1(5) provides that the court may allow a party to amend or withdraw an admission.

But when will a party be allowed to retract an admission that he now regrets?

Lord Justice Ralph Gibson stated the test in deceptively simple terms in Bird v Birds Eye Walls [1987] CAT 766.

He said: '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'.

The test was put in rather different terms in Gale v Superdrug [1996] 1 WLR 1089.

In that case, the Court of Appeal - with Lord Justice Thorpe dissenting on the facts - said the test was threefold.

Is the application made in good faith? Does it raise a triable issue with a reasonable prospect of success? Will it prejudice the claimant in a manner that cannot be adequately compensated, usually in costs?

In Bird, repetitive strain injury was alleged.

An expert arrived to inspect the defendant's factory but was told liability was not in dispute and the inspection was unnecessary.

This was then confirmed in writing by the defendant's solicitors.

Shortly before the trial on quantum was set to take place 19 months later, the defendants sought to withdraw the admission of liability following a change of policy by senior management.

Unsur-prisingly, the Court of Appeal was having none of this.

In Gale, the claimant was injured at work in 1990, liability was admitted, and an interim payment made.

Proceedings were issued in 1993 and the defendants disputed liability.

The judge struck the defence out, saying that the most significant issue was the 'extremely high level of disappointment and concern to the plaintiff'.

An appeal succeeded, Lord Justice Waite saying 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'.

The attempt to withdraw the admission failed.

But in Sollitt v D J Broady Ltd CA (unreported 23 February 2000), S was injured in 1994 while working for B Ltd.

The injuries were not particularly serious - damages were ultimately assessed at 10,567.

In 1995, B Ltd transferred its assets, but not its liabilities, to Newco and then changed its name to Shellco, Newco in turn taking the name of B Ltd.

In 1996, the then B Ltd mistakenly admitted liability.

When in 1999 it sought to resile from that admission, Shellco was without assets and uninsured, and the individual who had been responsible for the accident had disappeared.

That was important because the modest level of the claim meant that S might have been able to sue him.

The prejudice to S was clear.

B Ltd was not allowed to retract the admission.

In Flaviis v Pauley [2002] All ER (D) 436 (Oct), F was an illegal immigrant with a stolen passport and a driving licence under a false name.

He hired a spectacularly unroadworthy motorcycle from P (who rejoiced in the singularly appropriate business name of Banjax Bike Hire).

The motorbike fell apart while being ridden at 60mph and the resulting claim was settled at 702,421, the defendants being unaware of the claimant's dishonesty.

Mr Justice Nelson allowed the defendants to withdraw their admission of liability so that they could argue that the hire contract was illegal and hence no duty of care arose.

They were not permitted to re-open the issues of negligence or contributory negligence.

This case highlights an important fallback position for a claimant faced with an application to withdraw an admission.

The court may be willing to limit the extent to which the defendant will be allowed to withdraw.

Most recently, Mr Justice Keith tried Hamilton v Herts County Council [2003] EWHC 3018 (QB), (2003) Lawtel 15 December.

Ms Hamilton claimed that she had injured her back at work in 1998.

Liability was admitted in January 2001.

In early 2002, the council sought to withdraw the admission, the insurers having made a mistake in assessing the claim.

They had supposed that there was only one possible explanation for the claimant's accident; there was another, which would not have entailed negligence on the defendants' part.

The defendants had realistic prospects of successfully defending, and the second limb of the Gale test was satisfied.

Once again, the argument that the claimant would be disappointed was advanced without success.

The judge drew attention to the overriding objective.

Dealing with a case justly after April 1999 includes the various factors mentioned in CPR rule 1.2, and the provisions of the personal injury protocol, paragraph 3.9.

The protocol states that in respect of claims of less than 15,000 there is a presumption that a party will be bound by an admission.

The claimant in Hamilton failed because she adduced no evidence of specific prejudice.

But had her claim been less than 15,000, the reference in the protocol to a 'presumption that a party will be bound' must mean that the burden of showing an absence of prejudice would have rested on the defendants.

Hamilton raised an important new point.

Mr Justice Keith said: 'If the court is to deal with cases justly in pursuit of the overriding objective of the Civil Procedure Rules, account should be taken of the way claims for damages for personal injuries are now funded.

Such claims are frequently funded by conditional fee agreements, in which the assessment of risk by claimants' solicitors at an early stage is critical.

Admissions which are later withdrawn jeopardise the availability of funding.' On the facts, there had admittedly been no prejudice in Hamilton, but the judge indicated that in another case this consideration might be decisive.

One lesson from Hamilton must be that a claimant or his advisers should seek to show specific prejudice even if this involves revealing what success fee has been agreed and the extent to which it has been reduced in reliance on the admission.

Another lesson, which one might have thought was already clear from Gale, is that a claimant's disappointment of itself will cut little ice.

Prejudice should not be assumed.

Specific evidence of litigation prejudice should be adduced, as was successfully done in Sollitt.

District Judge Neil Hickman sits at Milton Keynes County Court