Madsen v Darmali (No 2) - [2024] NSWSC 268

Supreme Court

New South Wales

Medium Neutral Citation: Madsen v Darmali (No 2) [2024] NSWSC 268
Hearing dates: On the papers; last submission received 15 March 2024.
Date of orders: 19 March 2024
Decision date: 19 March 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision:
Costs of application to set aside ex parte orders payable forthwith

Catchwords:
COSTS – ex parte orders set aside for lack of candour – proceedings expedited given plaintiff’s terminal illness – some evidence that plaintiff had divested himself of assets – plaintiff’s claim being reformulated.
PAYABLE FORTHWITH – r 42.7 Uniform Civil Procedure Rules 2005 (NSW) – court’s discretion to “order otherwise” – principles at [2]-[7] – motion concerned a discrete matter – existence of some unreasonable conduct – some distance to go in the litigation – no evidence that a ‘forthwith’ costs orders would stultify the proceedings – defendants ought nor bear credit risk associated with plaintiff’s asset divestiture – payment of costs order should be finalised given plaintiff’s terminal illness and likelihood of additional disruption to the litigation.

Legislation Cited:
Uniform Civil Procedure Rules 2005 (NSW) r 42.7

Cases Cited:
Australiawide Airlines Ltd t/as Regional Express v Aspirion Pty Ltd [2006] NSWCA 365
Bradman v Allens Arthur Robinson (No 2) [2009] SASC 180
FiduciaryLtdvMorningstarResearchPty Ltd (2002) 55 NSWLR 1; [2002] NSWSC 432
Madsen v Darmali [2024] NSWSC 76
Pavlovic v Universal Music Australia Pty Ltd (No 2) [2016] NSWCA 31
Richards v Kadian (No 2) [2005] NSWCA 373
Royal Australian Naval Reserve Rifle Club Inc v New South Wales Rifle Association Inc [2010] NSWSC 351
W Hoy Pty Ltd v WTH Pty Ltd (No 2) [2018] FCA 506

Texts Cited:
G E Dal Pont, LawofCosts (5th ed, 2021, LexisNexis) at [14.51], [14.52]

Category: Costs
Parties: Benny Madsen (Plaintiff)
David Darmali (First Defendant)
Chu Li (Second Defendant)
Representation:
Counsel:
Mr A Cheshire SC / 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: On 7 and 9 February 2024, I made orders discharging ex parte passport, freezing and disclosure orders, together with an order that the plaintiff pay the defendants’ costs of the application to set aside the orders. I gave reasons on 13 February 2024: Madsen v Darmali [2024] NSWSC 76. The defendants now seek to vary the costs order, seeking costs on an indemnity basis payable forthwith. The plaintiff has agreed to pay indemnity costs but not forthwith. The parties provided written submissions (by and large, it is not necessary to set those submissions out here). There were no further affidavits. This judgment assumes familiarity with my earlier judgment.

Costs payable forthwith

The costs of interlocutory applications are dealt with by r 42.7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), which provides:

(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings … are to…

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 (No 2)

Details

AGLC: Madsen v Darmali (No 2) [2024] NSWSC 268
Case: [2024] NSWSC 268
Decision Date: 19 March 2024

CaseChat Overview and Summary

The case of Madsen v Darmali (No 2) involved a plaintiff who was terminally ill and the defendants who were subject to an ex parte order. The plaintiff sought to have the ex parte orders set aside due to a lack of candour by the defendants and requested an expedited process given their condition. There was also evidence that the plaintiff had divested themselves of assets, prompting a reformulation of their claim. The court was tasked with deciding whether the defendants should be required to pay costs forthwith under rule 42.7 of the Uniform Civil Procedure Rules 2005 (NSW).

The court considered the discretion available to it under rule 42.7, focusing on the principles outlined in the case law. The motion at hand was deemed a discrete matter, and while there was some evidence of unreasonable conduct by the defendants, there was still considerable distance to cover in the litigation. Importantly, there was no evidence that a forthwith costs order would stymie the proceedings. The court also noted that the defendants should not bear the credit risk associated with the plaintiff's asset divestiture. Given the plaintiff's terminal illness and the likelihood of additional disruptions to the litigation, the court decided that the payment of the costs order should be finalised.

The court ruled that while there was some evidence of unreasonable conduct, it was not sufficient to warrant a forthwith costs order. The defendants were ordered to pay the costs of the proceedings, but the payment was not required forthwith. The court emphasised that the defendants should not bear the credit risk associated with the plaintiff's asset divestiture, and that the plaintiff's terminal illness warranted a finalisation of the payment of costs order.

The final orders included the setting aside of the ex parte orders for lack of candour, an expedited process due to the plaintiff's terminal illness, and the formulation of a new claim given the plaintiff's asset divestiture. The court also ordered the defendants to pay the costs of the proceedings, but without the requirement for immediate payment, taking into account the plaintiff's condition and the likelihood of additional disruptions.

Orders