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Madsen v Darmali

Madsen v Darmali

Case [2024] NSWSC 76 13 February 2024

Interlocutory Orders

Injunction

Duty of Candour

Material Non-Disclosure

Civil Litigation & Procedure

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Madsen v Darmali [2024] NSWSC 76
Hearing dates: 2 February 2024, last submissions received 5 February 2024
Date of orders: 8 and 9 February 2024
Decision date: 13 February 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision:
Discharge ex parte passport, freezing and disclosure orders, with costs.

Catchwords:
INTERLOCUTORY INJUNCTIONS – ex parte application made to vacation Duty Judge for passport orders and third-party freezing orders – plaintiff transferred $14M to Singapore in 2021 to defendants’ bank account – Court told there was “big black hole” as to what has happened to the money – Court informed it was “a very sophisticated equitable fraud” – Court not taken to the exhibits which documented what had happened to the money – Court not taken to material indicating that defendants posed no flight risk, including a report from a private investigator.
FREEZING AND PASSPORT ORDERS – principles at [6]-[11] – duty of candour on ex parte applications – principles at [12]-[15] – material non-disclosure – orders discharged.

Cases Cited:
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Bayer AG v Winter [1986] 1 All ER 733 at 738
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Brags Electrics Ltd v Gregory [2010] NSWSC 1205
Brink’s Mat Ltd v Elcombe [1988] 3 All ER 188
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Danieletto v Khera (Supreme Court (NSW), Bryson J, 17 February 1995, unrep)
Hislop v Paltar Petroleum Ltd (No 2) (2017) 122 ACSR 358
Hutchinson v Nominal Defendant [1972] 1 NSWLR 443
Huynh v Attorney General (NSW) (2021) 107 NSWLR 75
JSC MezhdunarodnyPromyshlenniy Bank v SergiViktorovichPugachev [2015] EWCA Civ 1108
Kodak (Australasia) Pty Ltd v Cochran (Supreme Court (NSW), Brownie J, 4 April 1996, unrep)
Lakatamia Shipping Company Ltd v Su [2021] EWCA Civ 1187
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90
Principal Financial Group Pty Ltd v Vella [2011] NSWSC 327
RD Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389
Self Care Corporation Pty Ltd v Green Forest International [2021] FCCA 129
Short v Crawley(No 42) [2009] NSWSC 1110
Singtel Optus Pty Ltd v Almad Pty Ltd [2011] NSWSC 492
Walter Rau NeusserOel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 955

Texts Cited:
Peter Biscoe, Freezing and Search Orders (3rd ed, 2023, LexisNexis)

Category: Procedural rulings
Parties: Benny Madsen (Plaintiff)
David Darmali (First Defendant)
Chu Li (Second Defendant)
Representation:
Counsel:
Mr P Doyle-Gray / Mr JD Cook (Plaintiff)
Mr MA Friedgut (First and Second Defendants)
Solicitors:
YST Legal (Plaintiff)
TEP Legal (Defendants)

File Number(s): 2024/5024

JUDGMENT

HER HONOUR: This is an application by the first and second defendants, David Darmali and wife Chu (Claire)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Madsen v Darmali

Details

AGLC: Madsen v Darmali [2024] NSWSC 76
Case: [2024] NSWSC 76
Decision Date: 13 February 2024

CaseChat Overview and Summary

Madsen sought interim injunctive relief to restrain the defendants from removing Australia and to freeze their assets. The plaintiff alleged that the defendants had engaged in sophisticated equitable fraud and had received $14 million from the plaintiff which had been transferred to an account in Singapore. The plaintiff applied ex parte to the Duty Judge for freezing and passport orders. The Court was not provided with the evidence documenting what had occurred to the transferred funds, nor was it provided with evidence that the defendants posed no flight risk.

The central legal issue before the Court was whether the plaintiff had demonstrated a serious question to be tried and whether the Court should grant the interim relief sought. The Court also had to determine whether there had been a material non-disclosure which would prevent it from making the orders. The Court found that there had been a material non-disclosure as the evidence had not been presented and the principles relating to the duty of candour on ex parte applications had not been observed.

The Court found that there was a significant risk that the evidence supporting the plaintiff’s case had been withheld and that the material non-disclosure undermined the Court’s ability to properly assess the application. The Court also found that the plaintiff had not demonstrated that there was a serious question to be tried in relation to the freezing and passport orders. Accordingly, the Court discharged the orders. The Court warned the plaintiff of the consequences of similar conduct in the future.

No orders were made. The Court discharged the interim orders made by the Duty Judge.

Orders