Marketlend Pty Ltd v Govindasamy [2022] NSWDC 593

District Court New South Wales

Medium Neutral Citation: Marketlend Pty Ltd v Govindasamy [2022] NSWDC 593 Hearing dates: 24 November 2022 Date of orders: 24 November 2022 Decision date: 24 November 2022 Jurisdiction: Civil Before: Montgomery DCJ Decision: Orders: (1) The defendant pay the plaintiff the sum of $185,701.95; (2) The defendant to pay interest to the plaintiff in accordance with s 101 of the Civil Procedure Act 2005 (NSW) commencing to run from 31 July 2021; (3) The defendant to pay the plaintiff's cost. Catchwords: DEED OF SETTLEMENT – liquidated debt Legislation Cited: Civil Procedure Act 2005 (NSW), s 101 Uniform Civil Procedure Rules 2005 (NSW), r 13.1 Category: Principal judgment Parties: Plaintiff: Marketlend Pty Ltd (ACN 602 720 856) Defendant: Senthil Govindasamy Representation: Counsel: Plaintiff: Mr J Willis

Solicitors: Plaintiff: Emerson Lewis

Self-Represented: Defendant File Number(s): 2021/00331955 Publication restriction: None

EX TEMPORE Judgment 1. This is judgment in the matter of Marketlend Pty Ltd v Senthil Govindasamy, 2021/00331955. This matter was referred to this Court from the Supreme Court of New South Wales. This Court has jurisdiction pursuant to s 149 of the Civil Procedure Act 2005 (NSW). 2. The plaintiff sues by summons filed in the Supreme Court on 22 November 2021 for orders as follows: 1. An order that the Defendant pay the Plaintiff the sum of $185,701.95 which is a liquidated debt presently due and payable by the Defendant to the Plaintiff pursuant to a Deed of Settlement entered into between the parties on 7 May 2021. 2. An order that summary judgment be entered in favour of the Plaintiff against the Defendant for $185,701.95 pursuant to rule 13.1 of the Uniform Civil Procedure Rules 2005 (NSW). 3. An order that interest be paid by the Defendant pursuant to section 101 of the Civil Procedure Act 2005 (NSW). 4. The Defendant pay the Plaintiff's costs. 5. Such further or other orders as the Court considers necessary. 1. Rule 13.1(1) of the Uniform Civil Procedure Rules 2005 (NSW) provides that: "13.1 Summary judgment (1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief— (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires." 1. Counsel for the plaintiff helpfully confirmed that the plaintiff does not proceed pursuant to r 13.1. In short, that means that the plaintiff proceeds for an order in accordance with prayer 1 of the summons, and for interest and costs. 2. There is no contest that the document referred to is the Deed of Settlement dated 11 May 2021, which is exhibited to affidavits in the proceedings, including the affidavit of Mr Calabretta sworn 22 November 2021. Mr Calabretta is the principal of the law firm acting for the plaintiff. 3. Essentially, the plaintiff sues on the Deed of Settlement made 11 May 2021, which I will refer to hereafter as "the deed". 4. Essentially, the defendant says that he was overborne with stress when he entered the deed because of the financial consequences to the medical centre in which he was a participant at the time of the deed - including the practices of professionals such as the dentist, pathologist and others associated with the centre at the time of that deed - should the plaintiff proceed, as it indicated to him it would, to wind up, by enforcement of its rights under the original loan agreements to which I will come, the entities behind that business. 5. In addition, the defendant says that he did not enter into the personal guarantee sued upon in the original loan agreements because he did not sign those documents. 6. The defendant is self‑represented. Mr Willis of counsel appears for the plaintiff. 7. It is appropriate to commence by saying something about the defendant. He is a medical practitioner who obtained his degree in medicine in India, and is a member of the Royal Australian College of General Practitioners. He is a person without any difficulty of reading or of understanding documents in the English language. He is a sophisticated businessperson in that, beyond being a practising doctor, he was the proprietor and manager of the medical centre at the time of entering into the loan agreements. In the course of those transactions, he was in the process of attempting to organise and establish a further medical practice. Other businesses he operated were silver extraction from the crushing of material and a wholesale lighting business. 8. In those circumstances, all of the documentation the subject of the disputes in this litigation are contracts made between commercially astute, sophisticated and educated individuals. 9. The plaintiff is a moneylender. Between about September 2016 and September 2017, loan agreements were entered into between it and a company named Lyndoch Medical Centre Pty Ltd as trustee for the ANBU Unit Trust. That business practised as the then styled, EBm Medical Practice. The defendant was a director and shareholder in Lyndoch Medical Centre Pty Ltd. I hereafter refer to that company as Lyndoch. 10. In paragraph 4 of his affidavit, made 7 July 2022, the defendant says that one of his staff members, Mr Saripalli, introduced to him the plaintiff as a lender who loaned money without any personal guarantees and at competitive interest rates with very good terms. He says that it was on that basis, that he asked Mr Saripalli to explore further about the loans, and Mr Saripalli liaised with the plaintiff "to organise the loans". Today, the defendant varied those facts slightly in oral evidence saying that Mr Saripalli was more accurately to be described as a contracted bookkeeper performing bookkeeping for Lyndoch and for the defendant's other entities. He said, from the bar table, without opposition, that Mr Saripalli emailed with the plaintiff the organisation of the loan agreements, but that Mr Saripalli was never authorised to sign loan agreements. 11. The proposition of signing is to be understood as electronic signature. The original loan agreements were signed and exchanged on the electrical or digital platform, DocuSign. It is agreed that, on the clicking at the required places on the documents provided from the plaintiff to the person dealing for the borrower, the electrical signatures of the borrower would be entered into the document, then returned to the plaintiff. The common ground is that that was the process undertaken. There is no explanation as to the attachment of electronically stylised signature of the defendant on those documents; save that, from the bar table, the defendant says Mr Saripalli was never authorised to click that place, or those places, for the entry of his electronically stylised signature. In my opinion, there is no real issue that arises out of this affixing of signatures. 12. In frank evidence given orally, the defendant concedes that when he was busy in his medical centre, he did not take time to read contracts. He said, from the bar table, and it is consistent with his oral evidence, that he did not ever see the subject loan contracts made between 2 September 2016 and 22 September 2017, until this year, 2022, after entering into the deed. The money was, in fact, loaned and he had the benefit of the money. He understood the money had been loaned pursuant to contract. And he insists, in the face of evidence of him consciously not having attended to the written contracts, that he should be only bound by what he understood the agreement to be from what was said to him by Mr Saripalli. That is a proposition not palatable on legal principle. 13. The further observation is that it follows from those facts that the plaintiff was entitled to understand Mr Saripalli was dealing with authority as agent for the defendant. There is nothing before me to suggest that the plaintiff knew, or could have known, that the defendant had not read the loan agreements. There is nothing in the evidence before me to indicate that the plaintiff knew, or ought to have known, that the signatures was not affixed by the defendant. 14. I move now to the deed. The deed is a normally drawn legal document. There is no challenge as to the signing of it. It bears the defendant's personal handwritten signature. 15. It defines EBM to mean Lyndoch as Trustee for the ANBU Unit Trust. As I have said, that was the proprietor of the entity of the medical centre operated by the defendant. The overall operation was the defendant's operation. The Settlement Amount is identified as $50,000 and the defendant is referred to as "Govindasamy". 16. The deed defines "EBM Credit Agreements" to mean the seven loan agreements made between 2 September 2016 and 22 September 2017 to which I have referred. It described "EBM Personal Guarantees" in the following terms: "Pursuant to the personal guarantee provisions contained in the EBM Credit Agreements, Govindasamy agreed that: (1) he would be personally liable for the debts owing by EBM to Marketlend (EBM Personal Guarantees); (2) that he would indemnify Marketlend in relation to any loss or liability arising by reason of EBM's breach of the EBM Credit Agreements." 1. Recital C provides that EBM has breached the EBM Credit Agreements in that it has failed to make payment to Marketlend in accordance with those agreements. 2. Recital D provides that as at 23 March 2021, the debt due and payable to Marketlend by EBM was $185,701.95 (total "EBM Debt"). Of course, it will be observed that is the sum sought in prayer 1 of the summons. 3. Recital E continued that, by reason of the failure by EBM to make payments to Marketlend in accordance with EBM Credit Agreements, Marketlend has the EBM Personal Guarantee Claim. 4. Recital F provided that Marketlend has made demand on Govindasamy for payment of all amounts owing by EBM pursuant to the EBM Credit Agreements and Govindasamy has failed to make payment to Marketlend. 5. Recital G added that Marketlend has also made a claim against Govindasamy relating to the transfer/assignment of EBM's business and/or assets to another person or entity without Marketlend's consent, the details of which were set out in a letter from Emerson Lewis Lawyers to Govindasamy dated 19 March 2021 (Asset Transfer Claim). 6. I depart from the deed to interpose that there is no real factual dispute about the transfer of EBM's business and/or assets to another person. Evidence given by the defendant and by Mr Gangapatnam is that until about mid-2017, Mr Gangapatnam was a practice manager within the medical centre effectively owned and operated effectively by the defendant. Commencing in about mid-2017, the defendant established another company called Bamboo Medical Centre Pty Ltd of which he was the sole director and shareholder. He explained a business purpose for this. It was to expand the medical practice by bringing in other partners within the new corporate entity and that they wanted to start afresh with a new corporate entity. His evidence is that the medical practice, then to be known as EBM Medical Practice (the "m" changed to "M"), was to be conducted and, indeed, was conducted by Bamboo Medical Centre Pty Ltd. The plaintiff was never informed by the defendant of those arrangements and that transfer of the business and its assets. The loan contracts (the EBM Credit Agreements) contain a standard form term, providing the right of taking a charge over assets and, indeed, the plaintiff did register a charge over the assets of Lyndoch. Obviously, that transfer depleted Lyndoch of the valuable assets of the business of the medical centre. In 2019, Mr Gangapatnam acquired sole shareholding of Bamboo Medical Centre Pty Ltd from the defendant, and with that became the principal of the company, owning and operating the business of the medical centre. 7. The relevance of these matters is not just acts by the defendant in breach of the loan agreements identified in the Recital G, but it also provides background explanation for what the defendant describes as the source of extreme stress that he suffered to the level of being overborne in duress when from about February 2021 the defendant took steps to enforce recovery - to which steps I will return in more detail. 8. That shame and that stress was described by him as arising from the loss of the business of Mr Gangapatnam, the dentist, the pathologist, and others associated with the medical practice; i.e. the shame that he would suffer from them undergoing that consequence. 9. Returning to the deed, Recital H provided: "On a commercial and without admissions basis, the parties have agreed to settle the dispute between them with respect to the EBM Personal Guarantee Claim and the Asset Transfer Claim on the basis of this deed." 1. That recital is a clear expression of the parties entering into the deed for the purpose of resolving the defendant's personal indebtedness pursuant to the guarantee under the clause of the original loan agreements, and also to resolve the consequence of liability on the plaintiff taking action under the Asset Transfer Claim. 2. Clause 3 provided that in full and final settlement of the EBM Personal Guarantee Claim and the Asset Transfer Claim, the defendant would pay to the plaintiff the Settlement Sum without any manner of set‑off, deduction or counter‑claim, to be paid on or before 30 May 2021. 3. Clause 4 is the clause which the defendant says was his only real focus. He says that when entering into the deed, he really just skimmed the other provisions. Clause 4 directly provides for the source of the shame and stress which he identified as motivating him when entering into the deed. 4. Clause 4.1 provided: "4.1 Upon receipt of the full amount of the Settlement Amount in cleared funds: (a) Marketlend releases Govindasamy from EBM Personal Guarantee Claim; (b) Marketlend covenants not to sue, commence proceedings or otherwise take any action against Govindasamy in relation to the Asset Transfer Claim; (c) Marketlend will take all steps to remove its caveat lodged over the property of Govindasamy situated at and known as 18 Hamilton Place, Mawson Lakes, SA 5095; and (d) Marketlend covenants that it will not make any application pursuant to the Corporations Act 2001 (Cth) to wind up EBM." 1. Clause 5 provided the default provisions: "5. Default 5.1 In the event that Govindasamy fails to pay the Settlement Amount as required by clause 3.1 above, Govindasamy expressly acknowledges and agrees that: (a) Marketlend will be entitled to obtain judgment for the Total EBM Debt, plus the costs of obtaining judgment; and (b) Marketlend may sue, commence proceedings or otherwise take any action against Govindasamy in relation to the Asset Transfer Claim. 5.2 For the purposes of obtaining judgment pursuant to clause 5.1(a) above, Govindasamy agrees that: (a) this Deed may be produced to the Court as evidence of Govindasamy's consent to judgment; and (b) that an affidavit by a solicitor acting for Marketlend will be sufficient evidence of: (i) a failure to receive any amount provided for by clause 3 above; and (ii) any amounts which might have been received and any amounts which remain outstanding." 1. The plaintiff moves on the affidavits of Mr Calabretta, its lawyer, made 22 November 2021; Mr Iannuzzelli, chief financial officer, made 22 November 2021; and the affidavit of Ms Schmelzer, legal executive, made 15 September 2021 - as well as the documents exhibited to those affidavits. 2. Those affidavits establish - for the purposes of cl 5 and specifically 5.2 of the deed - firstly, the deed for the purposes of establishing the defendant's consent to judgment, and, secondly, evidence of failure to receive any amount provided for in cl 3 and any amounts remaining outstanding - establishing the EBM debt in a sum of $185,701.95. Specifically that no payment has been received of the Settlement Amount of $50,000 from the defendant to the plaintiff since the making of the deed. The defendant frankly concedes that he has made no payment since the making of the deed. 3. Before moving beyond the deed, there are two further important aspects of the evidence worthy of comment in my opinion. Firstly, drafts of the deed were forwarded to the defendant prior to him entering into it. There is substantial evidence of this. But in my opinion, not more needs to be gone to than the email from Ms Saadie of 22 April 2021 at 5.29pm to the defendant. It refers to the defendant having liaised with Mr Iannuzzelli regarding execution of the Deed of Settlement and to receipt of a signed draft of the deed. The defendant had signed a draft of the deed. The signed draft incorporated, as was observed by Ms Saadie in the email, the defendant's changes to the document, such as inserting the completion date for payment of 30 May 2021. And the email further refers to clauses requested by the defendant being the clauses I have referred to, 4(c) and 4(d), in the deed. The email shows that the plaintiff's solicitors created an updated version of the document, including those changes required by the defendant. That is the deed ultimately signed. 4. The other point I wanted to make is that the defendant asked for and was given leeway when the money of $50,000 was not paid on 30 May 2021. His email of 31 May asked for an extension until 15 June. He gave the reason that he was waiting on assistance from a friend from whom he was going to borrow money after the friend had sold his house. Still, when payment was not made, on 17 June 2021, the defendant emailed Mr Iannuzzelli asking for a further two weeks. In evidence includes screenshots of messages between Mr Iannuzzelli and the defendant, showing that extensions of time continued, and promises for payment of $50,000 continued at least until 27 July 2021. 5. In my opinion, on the basis of that evidence, and those provisions of the deed, the case would be determined on the summons in favour of the plaintiff against the defendant. But out of courtesy and for completeness, I wish to deal briefly with the evidence which the defendant says goes to wrongful cause of stress, and even duress inflicted on him, such that he entered the deed in the way I have said. 6. It is, without meaning criticism in a personal way of the defendant, but an obvious criticism to be directed at any person dealing commercially in regard to the borrowing of substantial funds, to be said that it is not surprising that serious consequences against them might follow after entering into contracts which they did not bother to read. The defendant was aware the money had been received, and was, I repeat, aware it had been received pursuant to an agreement. The defendant took no steps to see the terms of the loan agreements, not only before his signature became affixed (which he said was the unauthorised activity of someone else, about which there is no evidence), but also, after that time, until this year, five to six years after making of the loan agreements. 7. This point of duress was never communicated from the defendant to the plaintiff until this hearing. In all of the dealings between the parties, the defendant never, until this hearing, said that he had not signed the agreements. In all of the dealings, until this hearing, he had never said that some impropriety of another person caused him to enter into the dealings, or that the DocuSign platform had in some way been misused. 8. The proposition that such an intelligent businessman as is the defendant would proceed in his complex and sophisticated business dealings bound only by what he thought might be the case as to the meaning of a contract because it was said to him by someone else, without having bothered to check those contracts, is, with respect, breathtaking. But more so, the proposition that somehow the other party to the contract, without knowledge of wrongful activity by his agent, and without knowledge of him having not contemplated the contract before his electronic signature was affixed or afterward, cannot rely on it is with respect, breathtaking bordering on the unreal. 9. When I say that, I want to be deliberate in this observation. Over the last two days I have considered carefully that which was said from the bar table by the defendant, and I watched him carefully in the witness box. He is a frank and honest person. That I have found his approach to these commercial transactions to have been breathtaking, and bordering on the unreal, does not mean, and I do not for one moment intend to indicate, that he has lied or given false evidence. 10. In another case with another person, the court might think with some empathy that the borrower had been naïve. The defendant is not naïve. The defendant, with his great intelligence and personal resource, chose to be cavalier. 11. So it was on the 26th and 27th of February 2021, that Mr Ianuzzelli arrived with a gentleman named Levi, and an associate of Mr Levi. Mr Ianuzzelli was only there for the 26th of February. At the practice between patients, they spoke to the defendant. A lot of evidence was taken about what was said. The plaintiff, in his affidavit says that Mr Levi threatened "immediate distrain" of the practice. Hence, as I have referred to, the defendant's statement of the shame, embarrassment and stress that he suffered. Mr Gangapatnam was present during those meetings. The meetings extended beyond the 26th of February. There was an early morning meeting on the 27th of February. It was organised, indeed, between about 5AM and 8.30AM, so as to precede and therefore not interfere with, the treatment of patients at the medical centre. 12. Mr Gangapatnam did not say that Mr Levi had threatened immediate distrain. What he said was that, to the best of his recollection, Mr Levi introduced himself as a chartered accountant who practiced in management and receivership, and could take over the business or close the business down if necessary; in the event that an agreement could not be entered, before he spoke to the plaintiff. 13. What he said was, in the absence of an agreement, then, on the plaintiff's determination to do so, he could so proceed. The defendant initially said that Mr Levi spoke of the imprimatur of an agreement, otherwise he would immediately organise a locksmith to change the locks to the door of the medical centre. That does not fit with Mr Gangapatnam's evidence of his recollection of the conversation. 14. Mr Levi said he did not recall saying such words and they were not words that he would usually use. In cross-examination, the plaintiff conceded that he did not have a precise recall of what Mr Levi said. On the whole of the evidence, it seems most likely to me that Mr Levi, being there as he was, when not officially retained as a receiver or manager, described - in no doubt forthright terms - that if he did not return to the plaintiff from the meeting with an agreement which the plaintiff was satisfied with, then the plaintiff could do those things. Indeed, under the loan agreements, the plaintiff retained powers to do exactly those things. There was nothing unconscionable in Mr Levi so speaking. He did not make any threat of illegal activity. 15. Indeed, a heads of agreement document, which is annexed as SG02, to the defendant's own affidavit, was signed by the defendant. That document referred to the loan agreements, and that the parties entered into that arrangement "to be formalised by deed". Accordingly, it was a heads of agreement, not crystallising legal rights, but contemplating a deed to be entered into. 16. The heads of agreement document framed an arrangement whereby payments would be made at $2,500 per month, and on the defendant obtaining $30,000 from his silver extraction venture within three months, that payment could be made. And there was reference to payment within three months from the sale of stock in the defendant's lighting business. 17. What is truly significant again, is to repeat that whilst they sat down and put together a document like that, there is no evidence that at that time in February 2021, the defendant said that he did not sign and did not enter the loan agreements. 18. In the end, that is not the document which was entered. The agreement entered was the deed on 11 May 2021. The deed was entered, as I have said, on all of the evidence, as a legally enforceable settlement upon which the basis of which the plaintiff is entitled to sue, and on the affidavit evidence of the debt in compliance with cl 5 of the deed to be successful in an order as sought in prayer 1 of the summons.