Michael Shane Zadow v Tolmer Fuels Pty Ltd No. SCGRG 94/1992 Judgment No. 5085 Number of Pages 7 Practice

[1995] SASC 5085

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA LANDER J

CWDS
Practice - appeal pursuant to leave granted ex parte against interlocutory order - r96.02A. Held - relevant and material information not put before Judge on ex parte application - failure by applicant to display necessary candour and frankness. If all information before learned Judge he would have recognized that leave to appeal sought was only against offer for costs. Held - only in exceptional circumstances is leave to appeal granted on a question of costs only - no "exceptional circumstances" in this case - leave to appeal rescinded. Supreme Court Rules r96.02A, r94.04. Thomas A. Edison Ltd v Bullock
(1913) 15 CLR 679; Garrard (Trading as Arthur Anderson and Co.) v Email Furniture (1993) 32 NSWLR 662; Smiths Ltd v Middleton No. 2 (1986) 2 All ER
539 and Star Petroleum v Pertsinidis (Perry J, 13th September 1993, Judgment No. 4175), applied.

HRNG ADELAIDE, 1 February 1995 #DATE 1:2:1995 #ADD 26:6:1995

Counsel for appellant:     Mr R Sallis

Solicitors for appellant:    Andersons

Counsel for respondent:     Mr W Boucaut

Solicitors for respondent: Phillips Fox

ORDER
Leave to appeal rescinded.

JUDGE1 LANDER J This is an appeal pursuant to leave granted by Millhouse J on 2nd December 1994 against interlocutory orders made by his Honour Judge Bishop on 3rd November 1994.

2. The orders that his Honour Judge Bishop made for which leave was granted are included in the file in the District Court, and they are these:
    "1. That the defendant's application of 24.10.94, seeking to
    strike out the original statement of claim, be dismissed
    with no order as to costs.

2. That for the purpose of enabling further consideration to
    be given to the application of the defendant for the
    dissolution of the interim injunction granted herein on 27
    September 1994, the defendant to make discovery of his
    assets to the plaintiff on or before Friday, 18 November
    1994.

3. That further consideration of that application be
    adjourned before a chamber judge at a time to be fixed.

Question of costs reserved in relation to the defendant's
    application to dissolve the interim injunction."

3. When this matter came before Millhouse J, the appellant sought leave to appeal against the `interlocutory judgment' of his Honour Judge Bishop. The affidavit supporting the application for leave was sworn by Gregory Phillip King, the solicitor for the appellant. It is a very long affidavit deposing to a number of matters over a period of time.

4. It is apparent, from the context of the affidavit, that Mr King was not present when the matter was argued before the District Court Judge. However, he has deposed at length to information supplied to him by Mr Sallis as to the matters that occurred before his Honour. Apart from referring to the orders made, he has referred to matters that were apparently said by counsel and by his Honour during argument.

5. I have been provided with the transcript of the application for leave before Millhouse J, which was heard ex-parte. The thrust of the complaint then made was that the District Court Judge had not made a decision and was in error in not treating himself as part-heard. It was also claimed that there were matters put to the learned Judge by counsel for the respondent, which were factually incorrect and which had caused the learned Judge to fall into error.

6. Lastly, complaint was made about his Honour falling into error in failing to award the appellant his costs on the application to strike out the statement of claim.

7. The notice of appeal which was filed on 15th December 1994, pursuant to the leave granted by Millhouse J, recited all of the orders that I have recited above as being appealed against.

8. The notice of appeal, in my opinion, is, in many respects, misconceived, and attempts to raise matters quite outside the orders made and outside the leave given. It also seeks to have this court decide matters which have not yet been decided by the District Court.

9. Apart from the affidavit that was sworn by Mr King in support of the leave application, a further affidavit of Mr King sworn on 1st December 1994 has been filed. That affidavit exhibits the affidavits of other deponents, including an affidavit sworn on 30th November 1994 by the appellant.

10. According to the sealed order, which recites the order made by Millhouse J, Mr King's affidavit sworn on 1st December 1994 was apparently not before Millhouse J.

11. Yet a further affidavit was sworn by Mr King on 13th January 1995. Amongst other things, Mr King deposed to the fact that the appellant made discovery of his assets by letter dated 21st November 1994. He also deposed to matters relating to security for costs which apparently the appellant seeks against the respondent. I cannot understand why that second matter is raised in this court. I make no further comment about it.

12. The fact that discovery was given in compliance with the order of Judge Bishop on 21st November 1994 was not brought to the attention of Millhouse J when he heard the application for leave. The application for leave to appeal was brought ex-parte. Such is permitted pursuant to r96A.02(2).

13. It is clear from the transcript of the hearing before his Honour that the solicitors for the appellant had had some communication with the solicitors acting for the respondent before the matter came on before the learned Judge. The transcript would suggest that those acting for the respondent were aware either of the existence of this application or of a proposed application for leave to appeal, but were not aware of the time of the hearing of the application for leave.

14. In the circumstances of an ex-parte application, there is no doubt that the party seeking an order has very clear obligations. Those obligations include the obligation to be entirely frank and to make full disclosure to the Court. Indeed, the obligations include the party supplying "the place of the absent party to the extent of bringing forward all the material facts which that party would have brought forward in his defence to that application," Thomas A. Edison Limited v Bullock (1913) 15 CLR 679 at 682.

15. Whilst that case was a case involving an ex-parte application for injunctive relief, in my opinion the responsibility on the party applying in a case for leave to appeal is no different. I can see no reason in principle why the obligations of frankness and candour should not apply equally to applications made ex-parte for leave to appeal as they do for applications for injunctive relief.

16. In Garrard (Trading as Arthur Anderson and Co) v Email Furniture (1993) 32 NSWLR 662, the Court of Appeal in New South Wales made it plain that the candour and frankness, which the High Court had spoken about in Thomas A. Edison v Bullock, is not confined to applications for injunctive relief.

17. There is another matter that was apparently not brought to the attention of Millhouse J. The appellant did not disclose to Millhouse J an affidavit of Brian Ernest Symens, sworn on 2nd November 1994. Mr Sallis, who appeared for the appellant, conceded that that affidavit was in the possession of his instructing solicitors before the matter was argued before Judge Bishop, and certainly at the time that the application for ex-parte leave was argued before Millhouse J.

18. In that affidavit Mr Symens has deposed to a number of matters, but in particular to the following matters. Firstly, that the appellant had been asked to provide particulars of his financial affairs. Secondly, that the appellant owned a motor vehicle worth approximately $5,000. Thirdly, he alleged that the appellant had acquired his present house with funds misappropriated from the respondent. Fourthly, that the appellant had failed to give an undertaking not to remove assets from the jurisdiction.

19. Mr Sallis argued in the hearing before me that all of those matters would have been known by Millhouse J at the time that the application for leave was sought. I am not sure that is right. He could only have known of those matters if he was directed to the contents of the affidavit of Mr Symens.

20. True it is that that affidavit was on the District Court file, and it is probable, as Mr Sallis says, that the District Court file was before his Honour at the time that the application for leave was granted. However, it seems to me no counsel can assume that the judge has the time to read the whole of the contents of a District Court file before the application for leave to appeal. Nor can it be assumed by counsel that a judge can read the file, on an application for leave to appeal, knowing the matters to which he or she ought to be addressing their mind, for the purpose of determining what is material.

21. In my opinion, there was an obligation upon those appearing before Millhouse J to bring to his attention specifically the matters referred to in Mr Symens' affidavit.

22. It would follow, therefore, that I have reached the opinion that if his Honour had been told that the order against which leave to appeal was sought had already been complied with, and he had been given the further information contained in Mr Symens' affidavit, his Honour would not have granted leave to appeal.

23. It is my opinion that if his Honour had been appraised of all of the matters which I believe to be material and which I have set out above, he would have therefore recognised that, in truth, the leave to appeal which was sought was leave to appeal against the offer for costs only.

24. If he had been so advised, he would have understood that the authorities are clear, that it is only in the most exceptional case that a court would allow leave to appeal to be granted upon what is virtually a question of costs only. It is only in the most exceptional case that leave to appeal would be granted from an interlocutory order relating solely to costs, Smiths Limited v Middleton No. 2 (1986) 2 All ER 539; Star Petroleum v Pertsinidis (Perry J, 13th September 1993, Judgment No. 4175).

25. It follows, therefore, that if his Honour had been appraised of the true facts, in my opinion, his Honour would not have granted leave to appeal against interlocutory orders which related solely to practice and procedure, and which in respect of one aspect of the order, had already been complied with, and in respect of the second aspect, related solely to costs.

26. Leave was given in this matter by his Honour pursuant to r96.02A.

27. Rule 96.02A(5) provides:
    "Where such leave to appeal has been granted ex-parte,
    r94.04 is to apply to any rescission of that leave."

28. Rule 94.04 provides:
    "(1) The Court may, upon an application made by any
    respondent within fourteen days of the granting of leave to
    appeal, rescind the leave to appeal.

(2) If upon the hearing of the appeal it shall appear that
    the case is not one in which leave to appeal should have
    been granted, the Court, hearing such appeal of its own
    motion, may rescind such leave."

29. There is no application before me pursuant to r94.04(1), but it seems to me, having regard to the conclusions I have reached in relation to the obtaining of leave, I ought of my own motion, to exercise the power which is given to me pursuant to r94.04(2).

30. I do not believe, for the reasons I have stated, that leave ought to have been granted. I am of the opinion that leave was only granted because relevant, and indeed, material information, was not put before the learned Judge on the ex-parte application. It follows that I am of the opinion that leave ought to be rescinded, not only because there was a failure on the part of the applicant to display the necessary candour and frankness which would, of itself, have been sufficient to rescind leave, but because the information not provided makes it quite clear that this was not a matter for leave to appeal at all. The order that I will make, therefore, in due course is that leave to appeal granted by Millhouse J on 2nd December 1994, is rescinded.

31. I have been asked by Mr Boucaut, who appeared on behalf of the respondent, if I was minded to rescind leave, to also say something in relation to the question of the appeal itself. I am disinclined to say much in relation to that matter because I think it would be inappropriate to canvass questions on the appeal, having reached a conclusion that the appeal ought not to have come before this court at all.

32. I will only say this. For a number of reasons, if this appeal had been heard on leave to appeal having been granted, I would have dismissed the appeal.

33. The matters now complained about in this court are not the matters upon which leave was granted, and in particular I refer to the fact that the thrust of the argument put before me today has been that the original order, the Mareva injunction, which was made on 27th September, ought to have been discharged for two reasons.

34. The first reason is, curiously and coincidentally, because it is said that the respondent failed to display frankness and candour at the time when the order was obtained, and therefore the order ought to be discharged. Secondly, it is said that the order ought to have been discharged, because when the order was drawn up, no undertaking for damages was included and, therefore, the order ought to be discharged.

35. Those matters are not matters which were canvassed on the application for special leave. They are not matters which appear clearly in the affidavit supporting the application for special leave, and indeed, they are not matters raised on the notice of appeal. Even if the appellant had been entitled to be heard in relation to those matters, it would have been my conclusion that neither of those submissions ought to have been accepted as having been made out, and the appeal ought to have been dismissed.

36. It is my view that his Honour clearly had a discretion in relation to the question of costs on the application to strike out the statement of claim. It is my view that in the circumstances of this matter, the appropriate exercise of discretion would have been the order that his Honour made, that is, no order as to costs. I would have exercised my discretion that way if called upon.

37. I would have exercised my discretion that way for these reasons. The plaintiff's claim in this matter was brought on 27th September as a matter of urgency. The plaintiff shortly before that time had become aware, by reason of the arrest of the appellant, that the appellant had been guilty of stealing a substantial sum of money. The respondent therefore brought these proceedings as a matter of urgency, seeking a Mareva injunction. The respondent at the same time put in place an audit to ascertain the extent of the defalcation. The respondent was, at the time the proceedings were issued, not entirely sure of the loss, nor entirely sure of the circumstances of the loss. After the proceedings were issued, and before the appellant had entered an appearance, the appellant sought by application dated 24th October 1994, to strike out the statement of claim. That application was made returnable on 26th October 1994. On that day the respondent advised that it intended to put its statement of claim in order, and sought leave, and was granted leave on that day, to file a further statement of claim. It filed that further statement of claim on 1st November. The delay between the issue of the proceedings on 27th September, and the seeking of leave on 26th October, and the filing of the statement of claim on 1st November, can almost entirely be explained by reason of the fact that during that time the respondent was carrying out an audit of its loss.

38. True it is, as Mr Sallis pointed out, the respondent has, in a number of respects, responded almost entirely to the complaints made by the appellant in relation to the statement of claim. But in the circumstances of the case where a party is obliged to bring proceedings simply to protect itself, and where the appellant admitted part of the defalcation almost to the extent of $10,000, and where the respondent had, as a matter of urgency, to carry out an audit on its own affairs, it seems to me that an appropriately quick response was made by those advising the respondent and the respondent itself to the application to strike out.

39. It seems to me that an appropriate order in relation to that application was as his Honour ordered, that there be no order as to costs.

40. As to the second matter; it is said that the learned Judge fell into error in ordering that the appellant make discovery in terms of the order I have already set out.

41. In my opinion, having regard to these matters, which the District Court Judge was aware of at the time that the matter came on before him:
    1. That on 8th September 1994 the appellant had been charged
    with, and had admitted the offences of larceny as a servant.

2. That the appellant had a joint bank account with his wife
    at the Australian Central Credit Union in the amount of
    $7,327.98.

3. That the appellant had recently agreed to purchase a
    property at Murray Bridge and moneys were standing to his
    credit with real estate agents.

4. That settlement on that property was to take place on
    29th September 1994.

5. That the appellant had pleaded guilty to the charge of
    larceny as a servant on 27th September 1994.

6. That the settlement had been accelerated so as to be
    effected before his guilty plea.

7. That, as Mr Symens' affidavit shows, the appellant
    refused to account for the moneys misappropriated by him
    from the respondent.

8. That the appellant had failed to make full and frank
    disclosure of all his assets and liabilities.

9. That the appellant had not disclosed to the respondent
    the location of his assets.

10. That the appellant, it was alleged by Mr Symens, owned a
    motor vehicle which he had not disclosed previously.

11. That the appellant refused to advise the respondent of
    his financial affairs, indicating his assets and
    liabilities.

42. In all those circumstances, it seems to me not only not inappropriate, but entirely appropriate, if I may say with respect, that an order was made in the terms his Honour made.

43. It follows that his Honour was right to adjourn the hearing of the application to discharge the Mareva injunction, until such time as the court could be made aware of the appellant's assets and liabilities in order to determine whether it was appropriate to discharge that order.

44. There are other matters which, in my opinion, would have influenced a court to reach the same decision that his Honour did and they include the appellant's behaviour, both before 8th September when he admitted the defalcation, and his behaviour after that time, the particulars of which I will not set out any further.

45. In all those circumstances I have acceded to Mr Boucaut's request to give my reasons, as shortly as I have above, for why I would have dismissed the appeal, if I was not to make the order which I am about to make. The order is that the leave to appeal given by Millhouse J on 2nd December 1994 be rescinded.