2 A Master of this Court dismissed an application by the defendant for further and better discovery by the plaintiffs. The defendant appealed to a Judge of this Court. On 14 November 2003, the appeal was heard by Prior J who reserved his decision. On 28 November Prior J published reasons and dismissed the appeal. On 28 November the defendant applied to Prior J for leave to appeal to the Full Court. Prior J refused leave. The defendant then applied to the Full Court for leave to appeal. The application was considered in private pursuant to Rule 94.03 and on 22 December 2003 leave to appeal was granted. The grant of leave prompts this application.

3 Rule 94.04(1) of the Supreme Court Rules provides that an application to rescind leave to appeal must be brought within 14 days of the granting of leave to appeal. The present application was filed on 27 January 2004. The plaintiffs require an extension of time within which to bring the application.

4 The time between the grant of leave and the filing of this application included the Court's Christmas vacation. The plaintiffs legal advisers did not realise at the time of making the application that an extension of time would be necessary. The only prejudice asserted by the defendant relates to the incurring of costs in the preparation of appeal books for the Full Court. That is a matter which can be compensated, if necessary, by an appropriate award of costs. The delay is not lengthy and, as will be seen, the plaintiffs plainly have an arguable case. In the circumstances it is appropriate to extend the time within which the plaintiffs can bring the present application.

5 The plaintiffs assert that the defendant did not make full disclosure of three facts when making the ex parte application for leave to appeal. It is well settled that, on an ex parte application for leave to appeal as on any ex parte application, the applicant must make full disclosure. Failure to do so may result in an order rescinding the grant of leave: Zadow v Tolmer Fuels Pty Ltd (Lander J, 1 February 1995, unreported, Judgment No S5085). The obligation is to disclose "all the material facts which [the absent] party would presumably have brought forward in his defence to that application": Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679 at 682.

6 Two of the alleged failures to disclose can be dealt with shortly. One relates to an alleged misstatement of fact in the defendant's outline in support of the ex parte application relating to the release rather than the variation of a Mareva injunction. The other allegation related to a failure properly to disclose to the Full Court the true nature of the assets the subject of the variation of the Mareva injunction. In our opinion, even assuming for the purposes of the argument that there were such misstatements in the outline, they were not material to the granting or withholding of leave to appeal.

7 The only issue of substance is whether, on the ex parte application for leave to appeal, the defendant made full and fair disclosure of the fact that Prior J had raised the question whether he should refer the matter to the Full Court and that Prior J had given a warning as to the costs of a further appeal to the Full Court. The plaintiffs do not contend that there has been a deliberate failure to make proper disclosure. They submit that the order should be set aside even if the disclosure was unintentional. The issues on this application are whether the defendant had discharged the duty to make disclosure and, if so, the consequences of failing to do so.

8 Before dealing with the facts, it is convenient to recall the relevant principles in more detail. The obligation to make full disclosure on an ex parte application is a most serious responsibility: Thomas A Edison Ltd v Bullock (supra) at 682. As McPherson J pointed out in Re South Downs Packers Pty Ltd [1984] 2 Qd R 559 at 570, ex parte orders are an exception to the fundamental principle of natural justice that a person against whom a claim or charge has been made must be given a reasonable opportunity of appearing and presenting his case. It is because it is an exception to the rules of natural justice that the moving party on an ex parte application is under an obligation of complete candour. That party has a duty to make full and fair disclosure of all relevant facts. The duty is a duty to the Court itself: Digital Equipment Corporation v Darkcrest Ltd [1984] Ch 512 at 524.

9 As Dr Spry noted in his text Equitable Remedies (4th ed. at 487), the rule is based on public policy in the sense that it is designed to prevent abuse of the ex parte procedure by a person who has a special advantage because of the absence of the other party. The principle applies whether the failure to make full disclosure was deliberate or unintentional: Behbehani v Salem [1989] 1 WLR 723 at 726 - 728. A party is not necessarily excused because he believed that the non-disclosed material is not material, although that belief may be relevant to the exercise by the court of its discretion: Behbehani v Salem (supra) at 727. If there is a failure to make proper disclosure, the Court has a discretion to continue the order, to set it aside, or to make a new order on terms: Lloyds Bowmaker Ltd v Britannia Arrow Holdings PLC [1988] 1 WLR 1337 at 1343 - 1344, cited with approval in Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350 at 1358, which in turn is cited in Behbehani v Salem (supra) at 727.

10 Isaacs J expressed the content of the obligation in these terms in Thomas A Edison Ltd v Bullock (supra) at 681 - 682:

" Dalglish v. Jarvie [1850] EngR 688; 2 Mac. & G., 231, a case of high authority, establishes that it is the duty of a party asking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance. Uberrima fides is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fall."

11 Although the remarks of Isaacs J were directed at applications for ex parte injunctions, they apply with equal force to other ex parte applications including an ex parte application for leave to appeal in private. The remarks apply with equal force today: see, for instance, Town and Country Sport Resorts (Holdings) Pty Ltd v Partnership Pacific Ltd (1988) 20 FCR 540; Re Southern Equities Corporation Ltd; Bond v England (1997) 25 ACSR 394 at 423.

12 The obligation to make proper disclosure requires the moving party not only to place before the Court all relevant matters which would have been raised by the other party if that party had been present but to make express reference to those matters. The obligation must extend so far because the ex parte procedure constitutes an exception to the rules of natural justice. Furthermore, it is not reasonable to impose upon the Court the obligation to sift through the papers for the purpose of ascertaining everything which is material to its decision whether to grant the relief sought. As Lander J said in Zadow v Tolmer Fuels Pty Ltd (supra) at [20]:

"True it is that that affidavit was on the District Court file, and it is probable ... 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."

While the Court will, of course, conscientiously examine the papers, it is possible that relevant material may be overlooked, particularly given that the Court is not as familiar with all relevant facts as are the parties and it is not always immediately apparent what is relevant.

13 We turn to the facts which are said to give rise to a material non-disclosure. At the commencement of the hearing of the appeal before Prior J, a discussion occurred between Prior J and counsel as to the possibility of referring the appeal to the Full Court. Two issues of principle were identified by counsel for the defendant as being raised on the appeal. The Judge made it clear that he was seeking an indication from counsel as to whether his client would seek to have the matter reserved to the Full Court. In the course of the exchange, which was lengthy and extends over some nine pages of transcript, Prior J said:

"If you don't seek to have the matter reserved immediately, that will go to whether you get leave at all should you fail. If you're now saying that, within this appeal, there are so many significant matters of principle that call for the immediate resolution by the Full Court, then you're wasting the court's time and the parties' money by having another little try-on before a single Judge. I cannot make it any plainer. The choice is yours."

The response of counsel was that this was not an appropriate case to be reserved to the Full Court notwithstanding that there were matters of principle worthy of the attention of the Full Court. He said:

"This is one of those cases where the progressive [honing] down of the issue or the point of principle, either by resolution by Judge or discarding of factual detail through the process, is just essential. There is so much detail in this case that it has to have this level of judicial treatment before any point of principle is sufficiently naked and alone to be appropriate."

"You've been given the choice; I understand you now to have made it."

A reading of the transcript of 14 November 2003 shows that the Judge expressed in clear and unequivocal terms that the defendant might be at risk as to costs if it sought leave to appeal to the Full Court.

14 Neither the nature nor content of that exchange was mentioned in the defendant's summary of argument on the ex parte application for leave or in the affidavit in support. The only reference to it in the application book appeared in the transcript of the hearing on 28 November 2003 when Prior J refused leave to appeal. The transcript was attached to the summary of argument. On that occasion counsel, when seeking leave to appeal, referred again to the two matters of principle, to which Prior J responded:

"That's no surprise. Those issues were foreshadowed to me when I asked you specifically whether you were disposed to ask me to reserve the matter for the consideration of the Full Court."

"... not to mention also the further fact that when counsel was asked whether to avoid the duplicity involved in a further appeal he did not say that he would ask me to consider to reserve the matter for the Full Court."

The question is whether, in addition to attaching the transcript, the defendant had an obligation to mention the effect of the exchange in express terms in the summary of argument.

15 The first question is whether the exchange with Prior J was a material matter. On the ex parte application for leave to appeal, this Court was aware that leave to appeal was being sought in relation to a decision of a single Judge of the Court who in turn heard an appeal from the decision of a Master. The Court was obviously aware that the subject matter of the proposed appeal was a matter of practice and procedure, namely, an application for discovery or further and better discovery of documents. The fact that what was proposed was a second appeal, and the fact that that second appeal related only to a matter of practice and procedure with attendant delays in the prosecution of the action, were considerations which were relevant to the issue of whether leave to appeal to this Court should be granted and, if so, on what terms, including terms as to costs.

16 The matter not disclosed to the Court by the defendant on the ex parte application was the fact that Prior J had raised with counsel for the defendant the possibility of the appeal being referred to the Full Court thereby avoiding the costs associated with two appeals. That is a fact which is material to the issue of the terms, including terms as to costs, upon which leave to appeal might be granted. It is unnecessary to decide in this case whether that will be relevant to the issue whether the case itself is an appropriate one for leave to appeal. It is sufficient for the purposes of this case to find that the fact is material to the question of whether terms as to costs should be imposed on the grant of leave to appeal.

17 The second question is whether those facts were properly disclosed to the Court. If the summary of the defendant's argument had stated that the exchange had occurred and briefly noted its content, that would have constituted sufficient disclosure. It was not necessary for the defendant to provide detail of the exchange. Although the defendant was entitled to assume that the Full Court would look at all the papers, a material matter should be expressly identified in the summary of argument. In any event, an express reference was necessary because the transcript of the hearing of the leave application on 28 November 2003 does not convey the tenor of the lengthy exchange between counsel and Prior J at the commencement of the hearing of the appeal. It does not in any sense convey that Prior J had in clear terms expressed a willingness to refer the appeal to the Full Court, had sought a clear indication as to whether there was an intention to appeal to the Full Court, and that, in the Judge's mind, a failure to accept the invitation to refer the appeal to the Full Court would be relevant to the granting of leave if the defendant should fail before the Judge, as it did, or as to the terms of leave. Whilst we do not impute any improper motives to those preparing the material for consideration by the Full Court on the ex parte application for leave to appeal, and it may well have been that the nature of the exchange was merely overlooked, the fact of the matter is that what was presented to the Full Court did not disclose the true nature of the exchange or its full effect which, for the reasons already expressed, was something that was material at least to the question as to the terms of any grant of leave. It is, therefore, appropriate to reconsider the terms on which leave to appeal should be granted.

18 As this is an issue on a matter of practice and procedure and as Prior J had given a clear warning as to the consequence of the issues not being referred to the Full Court, we believe that the grant of leave should be on terms as to costs. The defendants should not to seek to disturb the order for costs made against it by Prior J, whatever the outcome of the appeal may be. However, we do not accept the plaintiffs' contention that, if the appellant should succeed on the appeal to the Full Court, all of the orders for costs in the courts below should not be disturbed. If the defendant had accepted the invitation of Prior J and had succeeded in the Full Court, the Full Court would have set aside the order for costs made by the Master. It is proper, therefore, that the undertaking not to set aside any order for costs extends only to the hearing before Prior J. We therefore vary the order made on 22 December 2003 to make it a term of the order that the defendant will not seek to disturb the order for costs made by Prior J on 28 November 2003. Alternatively, the defendant may be willing to give an undertaking to that effect.

19 The defendant should pay the plaintiff's costs of this application in any event.