Background
Target Australia sued Smart Trike over 21 models of convertible tricycle products supplied between 2009 and 2018. Target alleges that the products failed to comply with the applicable stroller safety standard, breaching contractual warranties and the Australian Consumer Law. Smart Trike contends that the products were toys governed by different standards and advances contractual, estoppel, limitation and other defences.
In three successive defences, Smart Trike admitted that it carried on business in Australia and that its supply of products to Target was conduct in trade or commerce in Australia. Those admissions were significant to the territorial basis of Target’s statutory claim. Smart Trike later sought to withdraw them, arguing that it sold the goods to Target in China, did not import them into Australia and had made the admissions by mistake. A Registrar refused leave, and Smart Trike sought a de novo review by the Federal Court.
The Court’s Holding
Justice Cheeseman dismissed the review application and left the Registrar’s refusal of leave in place. Although Smart Trike’s proposed territorial defence was bona fide, reasonably arguable and potentially important, Smart Trike did not provide a sensible explanation, supported by evidence of a solid and substantial character, showing how the admissions had been made and maintained through three pleadings.
The evidence established that Smart Trike had told its lawyers before filing the first defence that it supplied the goods in China and that Target imported them. But there was no direct evidence from those principally responsible for drafting, settling, reviewing or approving the pleadings explaining whether the territorial issue was overlooked, misunderstood or deliberately addressed through another forensic strategy. The contemporaneous documents supported competing possibilities, and that unresolved uncertainty counted against Smart Trike because it bore the onus.
The Court also found that Target had prepared and served evidence in reliance on the admissions. Withdrawal would require substantial additional investigation and document review, prolong the proceeding and create forensic risks concerning transactions up to 17 years old that costs orders could not fully cure. Smart Trike was ordered to pay Target’s costs of the review application.
Key Takeaways
- A party seeking to withdraw a formal admission must give a persuasive, evidence-based account of both why the admission was made and why it should now be withdrawn.
- Showing that a proposed contrary position is important and reasonably arguable does not establish that an admission was mistaken or false.
- Repeated admissions and an opponent’s reliance on them increase the need for direct evidence from the people involved in drafting, settling and approving the pleadings.
Why It Matters
The decision underscores that withdrawal of an admission is not automatic merely because it may expose a significant issue for trial. Courts will weigh the need to determine the real controversy against the reliability of formal pleadings, the applicant’s explanation and prejudice caused by delay.
For litigators, the case highlights the importance of obtaining direct evidence about the pleading process when asserting mistake or inadvertence. Retrospective conclusions and evidence of underlying factual instructions may be insufficient if they do not explain how those instructions produced the challenged admission.