District Court New South Wales Medium Neutral Citation: Visvalingam Pty Ltd v Vitarag Pty Ltd [2021] NSWDC 364 Hearing dates: 16 and 17 June 2021 Date of orders: 5 July 2021 Decision date: 05 July 2021 Jurisdiction: Civil Before: P Taylor SC DCJ Decision: (1) Judgment for the plaintiff against the first defendant in the sum of $175,546.91. (2) First defendant to pay the plaintiff's costs. (3) Liberty to either party to apply in respect of order (2) by email to my associate within seven days. Catchwords: LOAN – moneys advanced – not repaid – identity of borrower Legislation Cited: Civil Procedure Act 2005, s 100 Cases Cited: Newell; Muriniti v De Costi [2018] NSWCA 49 Category: Principal judgment Parties: Visvalingam Pty Ltd (plaintiff) Vitarag Pty Ltd (first defendant) Ashish Nanubhai Patel (second defendant) Representation: Counsel: Mr D S Weinberger (plaintiff) Mr M F Newton (first defendant) Solicitors: Chedid Storey Legal (plaintiff) Gokani & Associates Legal (first defendant) File Number(s): 2018/47055 Publication restriction: None Judgment Introduction 1. Visvalingam Pty Ltd sued Vitarag Pty Ltd and Ashish Patel on an unpaid loan dating from 2008. Mr Ashish Patel did not file a defence and default judgment in a liquidated sum has been given against him. This judgment concerns the claim by Visvalingam against Vitarag. Current issues 1. Visvalingam is the current trustee of the Savi3 Superannuation Fund ("the Fund"), which is the fund which provided the loan funds. Visvalingam is also the assignee of that debt arising from the loan. No issue was raised about Visvalingam's entitlement to sue for the debt. Nor was it disputed that the loan funds were provided by the former trustees of the Fund in the sum of $94,000. [1] 2. Nor was any issue raised about the interest rate applicable. 3. The only issue raised was the identity of the borrower, or, as Vitarag submitted: "The dispositive factual issue in this case is whether the Court can find, as a fact, that in 2008, it was the first defendant who undertook an obligation to repay the $94,000 to the former trustees of the Fund". [2] 1. The first defendant did not attempt to identify the correct borrower. It referred to evidence which might have pointed to Mr Nanubhai Patel, the father of Mr Ashish Patel, but expressly refrained from submitting that he was the borrower. 2. The pleadings indicated an issue about the trusteeship of Vitarag. The original defence denied that Vitarag was the trustee of the Kailash Trust ("the Trust"), [3] and the subsequent amended defence "does not admit" that Vitarag was the trustee for Kailash Trust. [4] But no evidence to dispute the contrary assertions in the letters of confirmation, to which I will come, was proffered, and no submissions were made to the contrary of Vitarag's trusteeship. 3. Without intending any disrespect and as the parties have done, for clarity and convenience I will refer to Mr Nanubhai Patel as "Nanu", Mr Ashish Patel as "Ashish", and Mr Selva Nithan Thirunavukarasu, the director of the plaintiff, as "Nithan". Uncontroversial matters of importance 1. On 1 September 2008 Ashish by email provided Nithan with the account details of the "Kailash Trust", and as a consequence, on 10 September 2008 Nithan by email instructed his father, then a trustee of the Fund, to transfer $94,000 to that account. That transfer occurred on or about 11 or 12 September 2008. No repayments in respect of that advance have been made. 2. On about 28 June 2012 as a consequence of a request from the auditors of the Fund for confirmation of the loan, Ashish signed a "Letter of Confirmation" of the loan in the following terms: "This letter is to confirm that Vitarag Pty Ltd ATF Kailash Trust has received the below sum from the Savi3 Superannuation Fund on the terms and conditions set out below: Received amount AUD 94,000 Date Received 12/09/2008 Purpose of Investment Investment Loan Duration of Loan 5 years Interest on Loan 6% p.a simple interest Security Provided Security against Kailash Trust holdings in Riverside Mining Penalties for Early Repayment Nil [signature] Ashish Patel Director Vitarag Pty Ltd ATF Kailash Trust Date: 12/09/2008". [5] 1. On or about 8 October 2014 Ashish signed three further letters of confirmation in identical form, which were dated 30 June 2012, 30 June 2013 and 30 June 2014 respectively. The 2014 dated letter had an additional acknowledgement stating: "We acknowledge the loan is currently due, and expect the principal and all interest to be paid this coming Financial year 2015". [6] Background 1. It was common ground that at all relevant times, Nanu and Ashish controlled the operations of Vitarag. Vitarag was incorporated in 2004, with Ashish and Nanu as directors, Nanu initially holding 1 of 100 shares and Ashish holding the residue. [7] Nanu ceased as a director on 14 May 2018. Ashish ceased as a director and secretary on 15 April 2019, when David Murray was appointed director and secretary. Ashish continues to hold 100% of the shares, having acquired his father's share on some uncertain date, probably in 2018. [8] 2. Further, there was evidence, undisputed, that the Kailash Trust was in 2008 controlled by Ashish, and the Trust had a 45% shareholding in the Riverside mining or quarry operation in California in which Nanu's company had an interest and is "General Partner". [9] Witnesses 1. Oral and affidavit evidence was given by Nithan, by Nanu, and by Vitarag's solicitor, Mr Anand Gokani of Gokani and Associates Legal. Mr Gokani also held an interest in Gokani and Associates, an accounting firm located at the address which was the registered office of Vitarag, and was the address of Vitarag specified in the letters of confirmation dated in 2008, 2012, 2013 and 2014 referred to earlier. [10] 2. Nithan gave evidence of his interactions with Ashish and the circumstances of the loan. I found him to be a straightforward and honest witness, doing his best to recall old events, some occurring more than a decade earlier. I would expect that his recollection would not be unfailingly accurate in respect of the details of the creation of emails, or the contents of conversations because of the passage of time, but otherwise I accepted him to be a reliable witness. He readily accepted that the original loan had a higher interest rate and was not specifically for five years, but that these amendments were agreed to in 2012. 3. Nanu gave oral evidence by audio-visual link from California. The cross‑examination was relatively brief. On some straightforward questions about who resided with him and his claimed limited contact with his son, Ashish, he was evasive and hid his face from the camera. Apart from evidence either confirmed by documents or not in contest, I would not accept his evidence. In any event, he gave no evidence about the particular transaction the subject of the claim. 4. Mr Gokani was somewhat reluctant and wary to provide details in his evidence. He accepted that he had not had contact with Ashish until 2019. He believed both that Mr Murray was not in contact with Ashish and that Mr Murray paid his accounts, although gave no explanation as to why Mr Murray might do that having no financial interest in Vitarag. I formed the impression that Mr Gokani's evidence of carefully crafted denials of contact with Ashish may have been correct but was not persuasive as to whether Ashish was aware of the proceedings and whether Ashish or Mr Murray could have given relevant evidence: Ashish about the transaction, and Mr Murray about Ashish's ability to give evidence. 5. In these circumstances, I preferred the evidence of Nithan to Nanu and Mr Gokani. 6. Nithan gave evidence of conversations between him and Mr Gokani, Ashish's solicitor, that the Trust holds "[the] family's investments", and the trustee was Vitarag, evidence which I would accept for the reasons given. Mr Gokani denied the historical conversations, but did not offer an alternative account of them, nor did he dispute the trusteeship. Nor did he provide any notes of a conversation that he conceded occurred and was purportedly able to identify the precise date of the meeting. Also, the matter was of significance to Nithan, and thus, more likely to be remembered accurately by him than Mr Gokani, since it was presumably a commonplace event in Mr Gokani's practice. 7. Mr Gokani also gave no evidence about the transaction, nor was any person called from Gokani & Associates to do so. Mrs Patel, the wife of Nanu who resided with him, and who, according to Nanu, had contact with Ashish, also did not give evidence to explain Ashish's absence. 8. In these circumstances, the Court was entitled, if it were minded, [11] to draw Jones v Dunkel inferences, that the evidence of Mr Murray and Mrs Patel would not have assisted Vitarag on the availability of Ashish, that Ashish's evidence and any evidence from Gokani & Associates would not have assisted Vitarag on the existence of the claimed debt it owed, and that any evidence Nanu could have given but did not about the transaction would not have assisted Vitarag. 9. The failure, satisfactorily, to explain the absence of Ashish as a witness, and the absence of evidence from Nanu or from Gokani & Associates on the circumstances of the funds being received by the Kailash Trust, the trusteeship of Vitarag, and whether Nanu obtained access to the funds from the Kailash Trust account, allows the Court more readily to be satisfied of and draw inferences on these matters in favour of the plaintiff. However, even without these inferences, the absence of evidence of the transaction enabled me to conclude that an alternative explanation to that stated by the letters of confirmation was unlikely. 10. Vitarag pointed to a number of matters which were said to suggest that no loan to the Kailash Trust or Vitarag was made. The underlying, although not expressed, submission was that either Ashish or Nanu was, or Ashish and Nanu jointly were, the borrower. Neither Ashish nor Nanu claimed that obligation, no document supported it, and the circumstances of the transfer, the emails prompting it, and the subsequent four letters of confirmation indicate the contrary. 11. The primary matters pointed to by Vitarag were as follows. 12. Sometime from 2007 to 2009, [12] Ashish and Nithan worked together in Sydney. [13] Nanu was the president of quarry or mining companies incorporated in California. 13. In early 2008, Nanu requested Ashish to assist him to obtain loan finance. [14] In May or June 2008, Ashish sought funds from Nithan for "[m]y dad and I" for "outstanding bills and interest repayments for the quarry". [15] The Savi3 Superannuation Fund was established in June 2008. [16] On 20 August Ashish forwarded to Nithan details of Nanu's bank account, and "was making an anxious request for funds to be transferred as a matter of urgency". [17] On 21 August 2008 Ashish emailed: "I really need you to come through here … Please bro, first thing in the morning, please wire the cash so it is pending and hits the account. This is really important." [18] 1. Given the commercial nature of the quarry operation conducted by a corporation or corporations, that the request was to meet quarry debts, that there was "a significant amount of equity" in the quarry property, [19] and the circumstance that Ashish was "guaranteeing" the borrower, it seems unlikely that Nanu or Ashish were intended to be the personal borrower. Had the money been transferred into Nanu's account, without more, such an inference might have been available. But the funds were transferred to the Trust. 2. Vitarag also referred to Nithan's involvement in Ms Rajitha Rajasingham transferring funds to Nanu's bank account, shortly after Ashish's urgent request. That might support the assertion that Ms Rajasingham's funds were provided to Nanu. But the funds later transferred were different. Ashish sent an email on 1 September 2008 saying, "Here are the trust details", and providing the details of the Kailash Trust's bank account. [20] That email makes sense only if some prior discussion had occurred between them about providing funds into the Trust's account. I would infer that such a conversation occurred. The circumstance that the conversation was not recalled or included in Nithan's affidavit some 13 years after the event is unremarkable. About 10 days after provision of the details, the Fund's moneys were transferred into that account. 3. The change in the account, the relatively significant lapse of time of three weeks between the request for urgent cash that day and the provision of loan moneys from the Fund, and the fact that unrelated moneys from Ms Rajasingham were earlier transferred to Nanu's account, all support the inference that some features of the arrangement had changed. It was not suggested, nor could it reasonably be, that the transfer to the Trust's bank account was an error. Nor was there evidence or a submission that Vitarag's bank account was a conduit to provide the funds to some other identified party like Nanu. 4. Vitarag also relied on the entry in the Fund's annual accounts which referred to the loan as an "overseas managed investment". It submitted that the Kailash Trust account was an Australian account. But it appears that the intent of Nithan and Ashish was that the funds would assist in the Californian mining or quarry business. As the Trust had 45% of the mining operation at Riverside, [21] the description of an overseas managed investment, if inaccurate, is unsurprising. It does not point to a loan to Nanu, even less so when the same accounts refer to it as a Kailash Trust investment bond. [22] 5. To the extent that there was any uncertainty in 2008 as to whether the Trust was the borrower, that uncertainty was removed by the subsequent letters of confirmation, establishing in the plainest terms what had been likely but undocumented earlier: that the Trust, by its trustee, Vitarag, was the borrower and liable for the loan. None of the conversations or communications in early 2008 displaces this weighty documentary material provided by Vitarag, repeatedly, on four occasions, contrary to the submissions Vitarag made at trial, and unexplained by it. 6. Vitarag also referred to later emails referring to money lent to Ashish and Nanu. [23] In context, where the subject of the correspondence is the Kailash Trust, the reference to Ashish and Nanu is of no significance in identifying the actual borrower. That the Fund's auditor in 2012 understood the transaction to involve the Fund and the Trust indicates the contrary: that there was little uncertainty, and that this was not a transaction where Nanu or Ashish were the legal borrowers. [24] Conclusion 1. For these reasons, I am persuaded that Vitarag was the borrower of the funds and liable to repay them in accordance with the letters of confirmation. 2. Interest is payable at 6% until the conclusion of the term of the loan, and thereafter at statutory rates. A schedule of interest was provided by the parties. In short, the plaintiff is entitled to five years of simple interest at 6% per annum, or 30% in total, being $28,200 payable as at 11 September 2013, the conclusion of the term. As at maturity, Vitarag thus owed $122,200. 3. This amount, together with statutory interest under s 100 of the Civil Procedure Act 2005 from 11 September 2013 to date is $175,546.91. Costs 1. The parties requested that costs follow the event with liberty to either party to make application in respect of cost orders. Orders 1. The orders of the Court are: 1. Judgment for the plaintiff against the first defendant in the sum of $175,546.91. 2. First defendant to pay the plaintiff's costs. 3. Liberty to either party to apply in respect of order (2) by email to my associate within seven days. ********** Endnotes 1. First Defendant's Outline of Closing Submissions, 17/6/21 (FDOCS) at [73]. 2. FDOCS at [75]. 3. Defence at [4]. 4. Amended defence at [4]. 5. Exhibit A, p 243 of Court Book (CB). 6. Exhibit A, p 245 CB. 7. FDOCS at [4]; Exhibit A, p 298 CB. 8. Mr Anand Gokani's oral evidence indicated this. 9. Exhibit A, p 125 CB. 10. Selva Nithan Thirunavukarasu affidavit, 26/11/19, at [26]. 11. Newell; Muriniti v De Costi [2018] NSWCA 49 at [78]-[80]. 12. Selva Nithan Thirunavukarasu affidavit, 26/11/19, at [7]-[11], [32]-[33]. 13. FDOCS at [3]. 14. FDOCS at [9]; Nanubhai Patel affidavit, 20/2/20, at [20]. 15. FDOCS at [10]; Selva Nithan Thirunavukarasu affidavit, 26/11/19, at [15]. 16. FDOCS at [11]; Exhibit A, p 201 CB. 17. FDOCS at [14]. 18. Exhibit A, p 206 CB. 19. Selva Nithan Thirunavukarasu affidavit, 26/11/19, at [15]. 20. Exhibit A, p 208 CB. 21. Exhibit A, p 118 CB. 22. See e.g. Exhibit A, p 222 CB. 23. Exhibit A, p 239 CB. 24. Exhibit A, p 239 CB. Amendments 11 March 2022 - Date corrected from "28 June 2021" to "28 June 2012". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 March 2022