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August 29, 2012

Withdrawing Deemed Admissions

When will a party be permitted to withdraw deemed admissions arising from the failure to respond to a Request to Admit?

In Epstein Equestrian Enterprises Inc. v. Cyro Canada Inc., 2012 ONSC 4653 (S.C.J.), the plaintiff served a Request to Admit eleven days before trial was scheduled to begin in 2010.  Trial was adjourned initially for one week and then again until 2012.  One of the defendants, Jonkman, failed to respond to the Request to Admit.  Rule 51.02(1) provides that a party is deemed to admit the contents of a Request to Admit if it does not respond to it within 20 days after it is served.  Jonkman sought to either set aside the Request to Admit or to withdraw the admissions.

Justice Morgan held that even though the Request to Admit was not served 20 days before trial, once the trial was adjourned and did not start for 20 days, the deeming provision applied. The main issue therefore centred on whether Jonkman was entitled to withdraw its admissions. The court may grant leave to withdraw the admissions if the following conditions are met:

  1. The proposed change raises a triable issue;
  2. There is a reasonable explanation for the change of position; and
  3. The withdrawal will not result in any prejudice that cannot be compensated for in costs. (citing Antipas v. Coroneos, 1988 CarswellOnt 358)
Justice Morgan permitted the admissions to be withdrawn. At the time the Request was served, Jonkman was basically without legal representation as its counsel was in the process of being removed from the record. It had instructed counsel not to respond to the Request to Admit.  It subsequently brought a coverage application and was now being defended by an insurer.  The plaintiff supported the coverage application and must have understood that if coverage was achieved, a defence would be pursued. Jonkman's new counsel and insurer were unaware of the Request Admit and it would be unable to defend itself if the admissions stood.  The coverage application had been settled, and Justice Morgan speculated that the insurer's position may have been different had it known that Jonkman had effectively deprived itself of a defence by failing to respond to a wide ranging Request to Admit.

Justice Morgan was of the view that any prejudice to the plaintiff would not be inordinate as a trial would have been needed to canvas issues with the co-defendant in any event. The plaintiff further argued it was prejudiced as it had entered into a Pierringer Agreement with the remaining defendants and was concerned Jonkman would attempt to pin liability on those parties at trial. Justice Morgan held that the plaintiff had previously assumed Jonkman was insolvent when it entered the settlement and so this factor was to the plaintiff's benefit not prejudice.  The admissions were withdrawn.

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