Can a Liability Admission Reached by Agreement Be Judicially Set Aside?

The BC Court of Appeal had an opportunity to address this issue and the short answer is yes.
In this week’s case (Goundar v. Nguyen) the Plaintiff was injured in a multi-vehicle collision. The Plaintiff sued two motorists and ICBC initially denied fault on behalf of both.  As the lawsuit progressed the Defendant’s lawyer ‘inadvertently’ agreed to admit liability on behalf of one Defendant in exchange for a discontinuance against the second Defendant.  This deal was agreed to  and an amended Response was filed.  Subsequently a Court order was obtained setting aside the admission of liability accepting that it was agreed to inadvertently by defence counsel.
The Plaintiff appealed arguing the liability agreement superseded the Court’s jurisdiction to set aside the admission.  The BC Court of Appeal disagreed and held that the Court retained the discretion to set the admission aside.  In reaching this conclusion the Court provided the following reasons:
[26]         I have already concluded that Rule 7-7(5) applies to withdrawing an admission even if it arose from an agreement, and determined that the agreement in issue in this case does not purport to attempt to oust the application of the Supreme Court Civil Rules and, in particular, the rule governing the withdrawal of an admission made in a pleading.  The fact of the agreement and the conduct of the parties relying on it is a factor that can, to the extent necessary, be taken into account in the balancing of prejudice as part of answering the ultimate question whether the interests of justice require permitting the admission to be withdrawn.
[27]         In the result, I am satisfied that the chambers judge adopted the correct test in deciding the issue before her.
[28]         Allowing the withdrawal of an admission is a discretionary matter.  Deference is owed to the chambers judge, unless the judge erred in principle in the exercise of her discretion.  Here I see no such error.  The judge found there to be a triable issue.  She concluded that the admission had been made inadvertently.  She balanced any prejudice arising from the proposed withdrawal of the admission.  She addressed the extent to which a prejudice could be compensated by costs.  I would not interfere with the exercise of the chambers judge’s discretion.