Background
In underlying commercial litigation, Villawood Management Pty Ltd alleged misconduct relating to the creation, dating and execution of a purported development management agreement and to instructions given by Anthony Johnson to solicitors about that agreement. Wallan Pastoral Pty Ltd, the second respondent, had admitted several of those allegations in its third amended defence filed on 25 March 2026.
Wallan Pastoral applied under r 26.11(2)(b) of the Federal Court Rules 2011 (Cth) for leave to withdraw the admissions and replace them with pleas that it did not know and therefore could not admit the relevant facts. Its solicitor explained that the admissions had been adopted from the defence of Mr Johnson and Marlton Group on the view that Mr Johnson’s conduct or knowledge as a director was attributable to Wallan Pastoral. Wallan Pastoral later considered that the allegations, many concerning Mr Johnson’s conduct and state of mind, should not be imputed to it.
The Court’s Holding
Justice O’Callaghan dismissed the application. The governing consideration was the interests of justice, assessed by reference to matters including how the admissions were made, whether they might be incorrect, the explanation for seeking withdrawal, prejudice, delay and case-management considerations. Wallan Pastoral’s evidence supplied no good reason to disturb its clear, specific and certified admissions: it did not suggest disability, inadvertence, insufficient consideration, factual error or that the admissions were contrary to the actual facts.
The Court found that the admissions had evidently been made after due consideration and were carefully tailored to Wallan Pastoral’s position, rather than copied mechanically from another defence. The solicitor’s affidavit did not disclose the relevant instructions or investigations supporting the original admissions, and its explanation raised more questions than it answered. Questions about attributing a director’s knowledge to a company did not resolve whether justice required leave to withdraw the admissions, while Villawood’s pleading expressly relied on Mr Johnson’s conduct to establish Wallan Pastoral’s alleged liability.
Although withdrawal was unlikely to endanger the trial date and the resulting additional expense to Villawood was a minor consideration, those matters did not outweigh the factors against leave. The Court permitted Wallan Pastoral to amend its interlocutory application to include the inadvertently omitted admission in paragraph 37G, but dismissed the amended application and ordered Wallan Pastoral to pay Villawood’s costs.
Key Takeaways
- A party seeking to withdraw a beneficial admission must provide a persuasive, evidence-based explanation addressing how the admission arose and why it should no longer stand.
- Specific admissions made with legal advice and certified as having a proper basis will not readily be replaced by “does not know and cannot admit” pleas without evidence of mistake, inadvertence or inconsistency with the facts.
- Limited prejudice and ample time before trial do not by themselves justify withdrawal where the applicant has failed to establish a substantive reason for disturbing the pleaded position.
Why It Matters
The decision underscores the weight the Federal Court gives to deliberate and formally certified pleadings. Corporate parties cannot retreat from admissions merely by reconsidering the legal basis on which a director’s conduct or knowledge may be attributed to them; they must confront the circumstances in which the admissions were made and demonstrate why justice requires their withdrawal.