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Can prior admissions come back to bite?

Feature Articles

Cite as: October 2009 80(10) LIJ, p48

Whether admissions made by a party in pleadings in one proceeding can be used as admissions against them in another is a question of fact in the circumstances, according to a Federal Court decision.

By Michael Wise

Complex commercial frauds and corporate collapses often involve multiple victims with claims against wrongdoers. They often spawn a multiplicity of proceedings that arise, in part, out of a common set of facts. Can admissions or positive allegations made by a party in pleadings in one set of proceedings be used as admissions against them in another? With the imminent commencement of the new Evidence Act 2008 (Vic) (the Victorian Act), the law in Victoria is set to change.

The current law in Victoria

The common law in Victoria as it currently stands is adequately described in the sixth edition of Cross on Evidence.1 The learned authors say: "Formal assertions in pleadings, at least when not verified on oath, do not constitute admissions in other proceedings", citing Laws v Australian Broadcasting Tribunal.2 The High Court in that case decided that the old rule that the allegations in pleadings merely served the purpose of outlining the party's case and defining the issues to be tried and did not constitute an admission "in an absolute sense [of] the truth or correctness of the particular matters pleaded" was to be preferred over more recent departures from that rule.3

Admissibility under the Uniform Evidence Acts

In the recent decision ACCC v Pratt (No. 3)4 (Pratt), Ryan J considered the question as it arose under Part 3.4 of the Evidence Act 1995 (Cth) (the Commonwealth Act). Part 3.4 concerns the admissibility of prior admissions as an exception to the hearsay rule. The new Victorian Act has equivalent provisions to the Commonwealth Act. On its commencement (by no later than 1 January 2010), the law in Victoria will be the same as that under which Pratt was decided.

In Pratt Ryan J was required to determine whether admissions made by a respondent (Pratt) in certain documents filed in a prior proceeding for civil penalties under the Trade Practices Act 1974 (Cth) were admissible in subsequent criminal proceedings. The subsequent proceedings alleged in substance that Pratt had knowingly given false and misleading evidence to the ACCC in its investigation of the primary offences.

The ACCC sought to rely on four documents filed by Pratt in the earlier proceedings. They were a form of proposed order, a penalty statement, an agreed statement of facts and a further amended defence.

Ryan J noted the recommendations in the ALRC report on which the Uniform Evidence Acts (including the new Victorian Act) were based.5 Those recommendations provided that the common law rule should be abrogated and admissions under the Uniform Evidence Acts should include admissions made in pleadings. They said that "it should be a question of fact in the circumstances whether the particular statement constitutes an admission".

His Honour held (at [72]) that the effect of the Commonwealth Act was that whether an admission made in a pleading in a prior civil proceeding was an admission for the purposes of Part 3.4 was a question of fact in the circumstances. He said that the circumstances will include "the type of pleading or other document and the terms in which the alleged admission has been expressed".

Ryan J drew a distinction between a matter alleged in a statement of claim and that alleged in a defence.6 He relied on the following passage in Richards v Morgan,7 which was recently cited by Rares J with approval in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd:8

"It cannot be doubted that a man's assertions are admissions, whether made in the course of a judicial proceeding or otherwise, and, in the former case, whether he was himself a party to such proceeding or not. It may be given in evidence against him in any suit or action in which the fact so asserted or admitted becomes material to the issue to be determined. And in principle, there can be no difference whether the assertion or admission be made by the party himself who is sought to be affected by it, or by someone employed, directed or invited by him to make the particular statement on his behalf. In like manner, a man who brings forward another for the purposes of asserting or proving some fact on his behalf, whether in a court of justice or elsewhere, must be taken himself to assert the fact that he thus seeks to establish."

Ryan J considered that passage to be an early recognition that "to be admissible as an admission in the evidentiary sense, the statement in the pleading must, on balance, amount to a positive assertion or acknowledgement of a material fact" (at [73]). This appears to have been the touchstone test applied in Pratt.

He noted (at [73]) that a statement in a defence or subsequent pleading that a party "admits" an allegation in a particular paragraph of a statement of claim may not constitute such a positive assertion or acknowledgment. "It may", he said, "in its context and other relevant circumstances, signify no more than that the party admitting the allegation is content for the litigation in which it is made to be resolved on the basis that the allegation is true or has been proved. That election may be made for a variety of forensic reasons, including a desire to avoid the costs of contesting the allegation in question or a belief that the party making the admission can succeed on some other issue without disputing the particular allegation. A fortiori, a statement in a defence or subsequent pleading that a party 'does not admit' an allegation in an earlier pleading will rarely, if ever, constitute an admission in the relevant sense. It indicates no more than that the party on whose behalf the 'non-admission' is made intends to put the opposing party to proof at trial of the alleged fact."

Although Laws v Australian Broadcasting Tribunal was not cited in Pratt, Ryan J's reasoning here takes into account the purpose of pleadings in the same way that led the High Court in that case to decide that an admission in a pleading was not to be taken to be an admission in later proceedings.

Ryan J said (at [74]):

"These reflections have led me to conclude that it is a question of fact whether a pleading or analogous statement in previous proceedings constitutes an admission available to be adduced in later civil or criminal proceedings against the party on whose behalf the pleading was filed or the statement was made."

Has an admission been made?

How then is the question of fact, whether a statement in a pleading "amount[s] to a positive assertion or acknowledgement of a material fact" to be determined?

In Pratt the matter was determined by a detailed examination of the course of events that led to the documents concerned having been agreed to, signed and filed on behalf of Pratt in the prior proceedings. This was carried out on a voire dire (in this case the determination of certain preliminary questions) that occupied 11 sitting days and resulted in a 52 page judgment.

The judge's reasoning took into account all of the circumstances surrounding the making of the admissions in the documents. It is not clear from the decision whether viva voce evidence and cross examination took place. However, it is clear that all of the correspondence and conversations passing between the parties going to these matters was admitted into evidence.

In holding the admissions in each of the four documents not to have been made as a matter of fact, the judge considered the following matters:

  • the nature of the documents concerned and the type of statements within them;
  • that an agreement does not ordinarily constitute a representation by a contracting party (at [77]);
  • that some of the documents were signed by persons having authority to act for Pratt (i.e. his solicitors) but not by Pratt himself (at [76]);
  • evidence external to the documents themselves that, at about the time the documents were signed, Pratt continued to deny as a matter of fact that he had committed the conduct that was admitted in the documents filed (at [76]);
  • that a recital to a deed or a contract may be so expressed as to warrant the conclusion that both contracting parties intended it to operate as an assertion of actual fact, but that that was not the case before him (at [77]);9
  • that although one of the documents enured for Pratt's benefit, it was an agreement between the ACCC and Pratt's companies, not Pratt himself (at [78]);
  • that one of the documents was an agreed statement of facts made pursuant to s191 of the Commonwealth Act, which describes an "agreed fact" in s191(1) as "a fact which the parties to a proceeding have agreed is not, for the purposes of the proceeding, to be disputed" (at [80], emphasis added);
  • a paragraph of the agreed statement of facts which stated that the respondents "agree the facts contained herein pursuant to s191 of the Evidence Act 1995 (Cth) for the purposes of this proceeding only. This agreement is not to be taken as an admission to these facts outside that context" (at [85]).

In respect of the further amended defence filed in the prior proceedings, Pratt "admit[ted] that he met with Russell Jones (Jones) at Mr Jones' request on 21 May 2001 and communicated to Mr Jones that Visy Board would adhere to an understanding that Debney had reached with Peter Brown (Brown) being the understanding admitted in paragraph 19 herein".

Ryan J held (at [90]) that this admission was not an admission in fact but rather was made only for the purposes of the proceeding in which the document was filed.

He held this to be so because there was absent from the pleadings any "unqualified assertion of any of those matters as a fact for any purpose beyond that of the proceeding in which the Further Amended Defence was filed" (at [90]).

It should be noted that the pleading was a fairly standard plea in a defence in which the pleader recites and admits certain words alleged in the relevant paragraph of the statement of claim. The judge's reasoning would appear to make it unlikely that, in the ordinary course, an admission in a defence would be admissible in subsequent proceedings unless the pleader travels beyond the usual practice and positively gives some indication that the admission is not so qualified.

His Honour noted (at [91]) that the defence contained prefatory words:

"To the Second Further Amended Statement of Claim dated 30 November 2006 and for the purposes of this proceeding only, the Fourth Respondent (Pratt) says as follows (subject to paragraph 35 herein)".

Paragraph 35, in turn, was in these terms:

"The parties have agreed a statement of facts pursuant to s191 of the Evidence Act 1995 (Cth) for the purposes of this proceeding which has been filed contemporaneously with this amended defence. To the extent that any admission or statement made herein differs from the facts agreed in that statement, the admission herein is to be read subject to that statement and modified to that extent."

Taking into account all of those circumstances, Ryan J ruled that none of the admissions sought to be relied on by the ACCC was admissible.10

In future cases it would appear that an exhaustive examination of all of the circumstances in which the admissions came to be made in the prior proceedings will have to be carried out in order to determine whether such admissions can be relied on in subsequent proceedings. l

Michael Wise is a member of the Victorian Bar and an experienced trial advocate practising in all aspects of commercial law.

1. JD Heydon, Cross on Evidence (6th Australian edn), 2000, Butterworths, at [3160].

2. (1990) 170 CLR 70.

3. Per Mason CJ and Brennan J at 85, and Gaudron and McHugh JJ at 98.

4. (2009) 175 FCR 558.

5. Interim Report on Evidence (Report No. 26, 1985) vol 1, ch 34, p. 421 para 755.

6. See the distinction drawn in [72] and [73].

7. (1863) 4 B & S 641 at 661.

8. (2008) 167 FCR 314 at [34].

9. His Honour was perhaps referring to estoppel by deed, a species of conventional estoppel. However, this form of estoppel is usually confined so as to prevent a party from denying the asserted fact only in respect of the transaction effected by the deed concerned: see Horton v Westminster Improvement Commissioners (1852) 7 Ex 780 at 791; applied in Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337.

10. Shortly after the decision was handed down the Commonwealth DPP dropped the charges against Mr Pratt, who died soon thereafter.


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