Keenact Ltd and Others v. Elena Siivinen (Formerly Known As Elena Igorevna Romanova) and Others

Read the full judgment text of HCA 1498/2024 on BabelCite. This High Court CFI judgment was delivered on 7 March 2025.

2. On 30 July 2024, the plaintiffs applied to continue the Injunction Order [2] and sought some other orders.

Cited by 1 case · Cites 3 cases

Case No.HCA 1498/2024[2025] HKCFI 938
Court
High Court CFI
Date07 Mar 2025
Judge
Case Document
100%Judiciary

HCA 1498/2024

[2025] HKCFI 938

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1498 OF 2024

____________

BETWEEN

  KEENACT LIMITED 1st Plaintiff
  SEA NATURE LIMITED 2nd Plaintiff
  HARBOUR SUN HOLDINGS LIMITED 3rd Plaintiff
  FORTUNE BOND HOLDINGS LIMITED 4th Plaintiff
  PAVEL MELNIKOV 5th Plaintiff
  and  
  ELENA SIIVINEN 1st Defendant
  (formerly known as ELENA IGOREVNA ROMANOVA)  
  SHOTA ZURABOVICH SHAMUGIYA 2nd Defendant
  ELENA OLEGOVNA ORLOVA 3rd Defendant

____________

Before: Deputy High Court Judge Maria Yuen in Chambers
Date of Hearing: 12 December 2024
Date of Decision: 7 March 2025

______________

D E C I S I O N

______________

1.1On 29 July 2024, Fung J (“the duty judge”) granted an ex parte order (“Injunction Order”) against the 1st defendant[1] for:

(1)  a Hong Kong proprietary injunction restraining her from disposing of or dealing with assets listed in Schedule 1A of the order, being:

(a)  various amounts transferred between March 2008 and February 2012 from:

-  HSBC bank accounts held by each of the 1st to 5th plaintiffs respectively, and

-  an HSBC joint bank account in the names of the 5th plaintiff and the 1st defendant (“Joint Account”)

to the 1st defendant’s personal bank account at HSBC (“D1 Account”); and

(b)  an amount of HKD352,815.65 transferred on 30 July 2018 from the D1 Account, an unknown sum of which was received in her account with Monex Boom Securities (HK) Ltd (“MBS”) at the Bank of China on 30 July 2018; and

(2)  a worldwide Mareva injunction up to the value of 4,090,950 euros and HKD799,925 and USD11,000, including any securities or money belonging to her held with MBS, and any money belonging to her held in her account with Nordea Bank Plc in Finland (“Nordea Account”).

1.2The duty judge also made ancillary disclosure orders against the 1st defendant.

The plaintiffs’ application

2.On 30 July 2024, the plaintiffs applied to continue the Injunction Order[2] and sought some other orders.

The 1st defendant’s application

3.On 7 October 2024, the 1st defendant applied by summons for the following orders:

(1)  to set aside the ex parte order of the duty judge granting leave to the plaintiffs to serve the concurrent writ on her out of the jurisdiction;

(2)  a declaration that the court has no jurisdiction over her;

(3)  alternatively, stay of the proceedings on the ground of forum non conveniens.

The grounds were:

(i)  material non-disclosure by the plaintiffs;

(ii)  Hong Kong is not the appropriate forum for the trial of the action;

(iii)  none of the jurisdictional gateways under Order 11 rule 1 of the Rules of the High Court applied (this ground was abandoned at the hearing as the 1st defendant’s counsel accepted that Order 11 rule 1(1)(i)[3] applied);

(iv)  there was no serious issue to be tried.

Failing (1) to (3) above, the 1st defendant sought an order that the Injunction Order be discharged.

4.On 12 December 2024, I heard both applications. There were placed before the court affidavits or affirmations made/filed on the following dates:

(a) Yeung Wing In, the plaintiffs’ solicitor 26.7.2024/30.7.2024
(b) 5th plaintiff (I) 1.8.2024/5.8.2024
(c) Ian Childs, the plaintiffs’ solicitor 30.9.2024/2.10.2024
(d) 1st defendant (I) 3.10.2024/7.10.2024
(e) 2nd defendant (I) 19.10.2024
(f) 1st defendant (II) 1.11.2024/4.11.2024
(g) Vyacheslav Yuryevich Lobanov 24.11.2024
(h) 2nd defendant (II) 24.11.2024
(i) 5th plaintiff (II) 27.11.2024

5.1The 1st defendant objected to the inclusion of the following affidavits:

(e) and (h) which were exhibited to (i), and

(g) and (i) which were exhibited to an affirmation of the plaintiffs’ solicitor Chan Po Man filed on 29 November 2024.

5.2I shall deal with these objections later in this Decision.

The parties

The 5th plaintiff

6.1The 5th plaintiff is Russian, holds Turkish citizenship, spends “much of his time” in Latvia[4], and is entitled to Hong Kong residence, having held a Hong Kong Identity Card since 2012. He is an entrepreneur and has a successful business in plumbing and sanitary products.

6.2He controlled the 1st to 4th plaintiffs, BVI companies which held accounts at HSBC Hong Kong until they were closed in 2018. In paragraph 81 of his 1st affidavit, he indicated that his own account was also closed by 2021 (although it is not clear when he closed it).

6.3The 1st to 4th plaintiffs were struck off the BVI companies register between 2020 and 2023. The 5th plaintiff caused the companies to be restored to the BVI companies register in 2022 and 2024[5] when, he alleges, he realized they had claims against the 1st defendant.

6.4As set out in more detail below, he is the defendant in a tax evasion trial in the Finnish District Court (“the Finnish court”) in which the movement of money across different countries is said to have been effected through accounts including those of the corporate plaintiffs (which are said to be his “front companies”) and the D1 Account and the Nordea Account, the money being used to pay company-related expenses[6]. Judgment has not yet been delivered by the Finnish court.

The 1st defendant

7.1The 1st defendant is also Russian, and holds Finnish citizenship. She resides in Finland with her husband, a Finnish citizen, and their children. She has a business there.

7.2She worked for the 5th plaintiff from 2003 - 2013[7] in Russia and latterly, in Finland. It is common ground that she became his personal assistant in 2007. She alleges that they developed an intimate relationship, and she was his mistress from 2008 to 2012[8], which he denies[9].

7.3It is common ground that she and the 5th plaintiff visited Hong Kong in 2008 when the HSBC accounts were opened[10]. She said the D1 Account was opened at the 5th plaintiff’s request[11], and until June 2011, all the statements (of the plaintiffs’ accounts as well as the D1 Account) were sent to the 5th plaintiff’s company secretary or certified public accountants in Hong Kong[12]. She closed the D1 Account in 2018.

7.4Notably, it is common ground that the D1 Account was sometimes used on behalf of the 5th plaintiff and his companies[13] although the 5th plaintiff says payments for the corporate plaintiffs should have been made directly from their respective accounts[14]. Be that as it may, it is therefore not open to the plaintiffs to contend that all funds received in, or disbursed from, the D1 Account must have been the result of misappropriation by the 1st defendant. The recipients of funds from the D1 Account have been set out (partly) in a fund flow chart exhibited to the 5th plaintiff’s 1st affidavit[15] (although it has not been disclosed who compiled it or when or how it was compiled).

The 2nd defendant

8.1The 2nd defendant, a Russian national, worked for the 5th plaintiff from 2005 to 2016. The 3rd defendant is his wife. The 2nd and 3rd defendants had a joint account with HSBC (“D2/D3 Account”).

8.2As noted earlier in this Decision, the proceedings against the 2nd and 3rd defendants have been stayed by consent for the purpose of performing the terms set out in a settlement agreement: Consent Order, 15 November 2024. The 2nd defendant has made two affidavits which have been exhibited by the 5th plaintiff in support of the plaintiffs’ case, to which the 1st defendant has objected.

Present proceedings

Plaintiffs’ case against the 1st defendant

9.1The plaintiffs’ case against the 1st defendant is that between 26 March 2008 and 7 February 2012, she made a number of unauthorised withdrawals from the plaintiffs’ accounts and the Joint Account (“alleged unauthorised withdrawals”) and paid the amounts into the D1 Account (the plaintiffs referred to these amounts as “1st Level Payments”).

9.2Pausing here, included in the 1st Level Payments is the sum of HKD50,000 from the 5th plaintiff’s personal account. There is a withdrawal form which appears to bear his signature[16]. In his 2nd affidavit, he said he believed it was forged. However he is no longer pursuing this sum[17].

Plaintiffs’ case against the 2nd defendant

10.The plaintiffs’ case against the 2nd defendant was that he had discovered the 1st defendant’s “suspicious activities” but did not report her in exchange for her payment of “hush money” of 1.83 million euros [18] (alternatively 2 million euros[19]) from some of the 1st Level Payments into the D2/D3 Account (“2nd Level Payments”).

11.It is the plaintiffs’ case against the 1st defendant that, following the payment of the “hush money” between 30 June 2011 and 7 July 2011, she misappropriated 2 million euros from them between 20 December 2011 and 7 February 2012 (as part of the 1st Level Payments).

12.1On 29 July 2024, the plaintiffs applied ex parte for the Injunction Order, which was granted by the duty judge after a 5 minute hearing (the transcript of which has been provided).

12.2The plaintiffs sought as against the 1st defendant[20]:

-  a declaration that the 1st Level Payments were their property and the 1st defendant held them on constructive trust,

-  an account, and

-  damages and/or equitable compensation;

and alleged against her and the 2nd and 3rd defendants:

-  conspiracy to use unlawful means to injure the plaintiffs, for which damages are sought.

1st defendant’s case

13.1As mentioned above, it is common ground that the D1 Account was used at times on behalf of the 5th plaintiff and his businesses[21]. The 1st defendant’s case is that she was the 5th plaintiff’s mistress and that:

“Any fund movements where money withdrawn from the plaintiffs’ accounts ultimately ended up with me and of which [the 5th plaintiff] now complains were gifts to me”[22].

“[The 5th plaintiff] and I agreed at the time that the [D1 Account] would be for my own personal needs but that I would, in addition to using money available in it for my own personal needs, use the [D1 Account] as and when needed to help with [the 5th plaintiff’s] personal and business needs. To the extent that funds transferred to the [D1 Account] were not used for [the 5th plaintiff’s] personal and business needs, those funds were freely available for my use.

It is in this context that I described as gifts to me money received in the [D1 Account] which were not needed for [the 5th plaintiff’s] personal or business needs”.[23]

“[The 5th plaintiff] clearly knows that those deposits from the plaintiffs’ accounts to the [D1 Account] were of course not my wages, but rather, movements of money pursuant to a global scheme to move money covertly, and/or to gift the same to me”[24].

13.2She alleges that the present proceedings “are likely a pretext to provide support for a defence that [the 5th plaintiff] has been running in the ongoing tax evasion case against him in Finland” [25], the defence being along the lines that he was not party to the global money movements of his companies, and was himself the victim of fraudulent conduct on the part of his employees.

Issues

14.The issues before me can be summarized below:

(1)  whether certain evidence placed before the court should be taken into consideration;

(2)  whether there was urgency or need for secrecy to justify an ex parte application;

(3)  whether there was material non-disclosure before the duty judge;

(4)  if there was no urgency or need for secrecy, and/or there was material non-disclosure, so that the ex parte Injunction Order should be set aside,

(a)  whether the Hong Kong proceedings should be stayed by reason of forum non conveniens; and

(b)  whether an injunction should be regranted.

15.Before I discuss the issues, it would be helpful to summarize the relevant evidence.

Relevant evidence[26]

16.Finnish law enforcement agencies’ investigations and related events:

2018:

-  on 22 September 2018, Finnish law enforcement agencies including the police and the National Bureau of Investigations (“NBI”) executed a raid on the properties of Airiston, a company owned by the 5th plaintiff, of which the 1st defendant was one of the directors from November 2007 to July 2013 and managing director from December 2007 to March 2016[27];

-  the Finnish law enforcement agencies suspected various offences had been committed, including

-  money laundering (within the NBI’s remit), and

-  tax fraud, accounting offences and pension insurance contribution offences apparently for “off-book” expenses (collectively “tax fraud offences”);

-  on 27 September 2018, the 1st defendant was interviewed[28] by the Finnish Central Criminal Police during which she disclosed that she had two bank accounts in Hong Kong (which she named as DBS and Bank of China) with approximately 1.4 million euros, which was derived from 2 million euros she received in 2011 in one amount from the 5th plaintiff as a gift at her request, the sum being “enough for me, for the future, it would be for securing the future”[29];

-  pausing here, it is noted that although she mentioned that the 5th plaintiff had gifted her some money, she did not mention an intimate relationship between them, said the sum of 2 million euros was paid in one amount, and did not mention the D1Account;

2019:

-  in 2019, the 5th plaintiff came to know of the 1st defendant’s statement;

-  a tax audit of Airiston was undertaken which the 5th plaintiff said “helped to unearth the suspected wrongdoings of the 1st defendant”[30];

-  on 18 October 2019, the 5th plaintiff’s Finnish lawyers wrote to the 1st defendant’s Finnish lawyers demanding that she return 2 million euros by 1 November 2019, otherwise “we will take the necessary legal action to safeguard the rights of [the 5th plaintiff]”[31];

-  by an email the next day, the 1st defendant’s Finnish lawyers rejected the claim, asserting that they had previously sought more detailed reasons for the claim but no answer had been given[32];

2020:

-  on 16 March 2020, the 5th plaintiff’s Finnish lawyers lodged a request with the Finnish police for investigation of the 1st defendant for embezzlement, money laundering or other crimes; the request referred to her statement to the police[33] that in 2011, she received 2 million euros from him “as a gift from [the 5th plaintiff] to her Hong Kong bank account. However [the 5th plaintiff] has not given the gift claimed by [the 1st defendant]. In the present case, there are grounds for suspecting that [the 1st defendant] has committed a crime in this case by appropriating two million euros from [the 5th plaintiff]”[34];

2021:

-  in respect of the above request however, on 20 April 2021 the Finnish police closed their investigation against the 1st defendant due to lack of evidence[35];

2022:

-  on 16 February 2022, the 5th plaintiff’s Finnish lawyers sent an email to the 1st defendant’s Finnish lawyers demanding the return of 2 million euros, and asking “do you consider conciliation as in returning the funds possible without trial or would it be in these circumstances obviously unnecessary?”[36];

-  on 28 February 2022, the 1st defendant’s Finnish lawyers replied denying that she had obtained the funds illegally and asserting that it was a gift. There was then a without prejudice offer to return part “without upholding the substance of the claim”[37];

-  on 20 April 2022, the NBI announced it has closed the preliminary investigation of the 5th plaintiff and others for suspected money-laundering linked to Airiston[38];

-  on 8 June 2022, the Finnish court issued charges against the 5th plaintiff and the 1st defendant (and others) for the tax fraud offences[39]

-  on 9 June 2022, Finnish prosecutors discontinued the pre-trial investigation of the 5th plaintiff for money laundering[40];

2023:

-  the trial of the 5th plaintiff in the Finnish court for the tax fraud offences commenced[41];

2024:

-  in January, the trial of the 5th plaintiff in the Finnish court finished, with judgment being reserved;

-  on 13 June 2024, the charges against the 1st defendant for the tax fraud offences were dismissed in the Finnish court after expiration of the limitation period as she could not be served[42].

17.Obtaining documentation:

2021

-  in 2021, the 5th plaintiff made enquiries with his former relationship manager at HSBC, as a result of which he was supplied with the 1st plaintiff’s bank statements for 17 February 2011 to 16 April 2011[43]; the 5th plaintiff has not disclosed when he received those statements;

-  those statements showed withdrawals totaling 1.12 million euros (called the “Keenact Payments”) which are part of Schedule 1A:

Date From Euros
22.01.2011 1st plaintiff’s account 320,000
17.03.2011 1st plaintiff’s account 450,000
18.03.2011 1st plaintiff’s account 350,000

-  it is not known why the statement for January 2011 was not sought or provided. That statement would have shown two withdrawals on 13 January 2011 and 15 January 2011 totaling 720,000 euros;

-  although the February to April 2011 statements show an internet reference for the Keenact Payments, the name of the recipient was not shown;

2022

-  the 5th plaintiff alleges that in around early 2022 he came to know from his Hong Kong solicitors about Norwich Pharmacal applications[44];

-  on 19 February 2022, the 5th plaintiff’s solicitors wrote to HSBC alleging that he had recently discovered that there were unauthorised transfers of 1.12 million euros in 2011 from the 1st plaintiff’s account; that he suspects that in total more than HKD23 million of his/his companies’ funds had gone missing, and that he had strong reasons to believe that a former employee had stolen the funds; they asked for remittance advices, instructions and transaction records for the Keenact Payments[45];

-  from March 2022, the 5th plaintiff instructed lawyers in the BVI to restore the plaintiff companies to the BVI companies register[46];

-  on 24 March 2022, the 1st plaintiff was restored to the BVI companies register;

-  on 12 April 2022, HSBC supplied to the plaintiffs’ solicitors a DCP (Direct Computer Payment) transaction report showing the account number of the recipient of the Keenact Payments (the account number being that of the D1 Account)[47];

-  pausing here, as mentioned above, the D1 Account statements had from 2008 to 2011 (until June 2011) been sent to the plaintiffs’ CPA, so if the 1st/5th plaintiff had checked these statements, it/he would have seen that the Keenact Payments had been received in the D1 Account;

-  on 27 September 2022, a Norwich Pharmacal application in HCMP1428/2022[48] was made against HSBC for statements of the D1 Account; the 5th plaintiff said “the stance taken by the Finnish Central Criminal Police had ultimately led me to make the Norwich Pharmacal application” and “I do not believe that the application in HCMP1428/2022 would have been necessary if the Finnish Central Criminal Police had taken action because I would probably have been satisfied with this”[49];

-  on 13 December 2022, Recorder Manzoni made a Norwich Pharmacal order for reasons given in his Decision[50];

-  on 6 and 13 January 2023, HSBC provided the plaintiffs’ solicitors with the entire set of D1 Account bank statements from 16.2.2008 to 30.7.2018[51];

-  on 7 February 2023, the plaintiffs’ solicitors asked HSBC for all of the 1st plaintiff’s bank statements; it is not clear why they were not sought or provided earlier;

-  on 4 August 2023, HSBC provided the plaintiffs’ solicitors with a redacted set of the D1 Account statements;

-  other bank statements of the other plaintiffs’ accounts were obtained from HSBC between February and November 2023.

18.The 5th plaintiff’s prosecution:

-  on 7 September 2023, the 5th plaintiff issued a summons for leave to disclose documents obtained in the Norwich Pharmacal application to defend criminal proceedings against him in Finland[52];

-  in December 2023 - January 2024, the 5th plaintiff was tried in the Finnish court for the tax fraud offences involving the use of the corporate plaintiffs as “fronts” to pay “off-book” company-related expenses[53];

-  on 21 July 2024, Mr Childs sent a Whatsapp message to Gleb Eremin, a co-defendant in the Finnish trial, and the 2nd defendant’s successor and friend, asking Mr Eremin to make an affidavit about his conversation with the 2nd defendant in which the 2nd defendant admitted wrongdoing, as with such an affidavit, “we shall stand more chance of a HK Court Order to help in Finland. And that would be in yours and [the 5th plaintiff’s] interests”[54];

-  the Finnish court has not yet handed down its judgment as at the date of the hearing before me (12 December 2024).

19.It is against the backdrop of the above events that the 1st defendant submitted that the ex parte Injunction Order should be discharged and an order should not be regranted, and the plaintiffs submitted that the Injunction Order should be continued. It also provides the background for the 1st defendant’s application for a stay of proceedings on the ground of forum non conveniens, her case being that the forum which is clearly or distinctly more appropriate is Russia, or if not Russia, then Finland.

Discussion

(1) Whether some affidavits should be placed before the court

20.I shall first deal with the 1st defendant’s objections to some affidavits (listed as (g), (e) and (h) in §4 above) being placed before the court.

21.On 4 October 2024, DHCJ KC Chan gave directions giving leave to the plaintiffs to file and serve evidence in reply to the 1st defendant’s evidence within 28 days. The 1st defendant objects to the affidavits above, arguing that they were not in substance “in reply” to her affirmations.

22.In my view, Mr Lobanov’s affidavit can be put to one side in any event. In it, he said he is a longstanding employee of the 5th plaintiff, and that he had never seen any intimate conduct between the 5th plaintiff and the 1st defendant. I consider this evidence of little value in any event, as generally it is in the nature of an extra-marital affair that the parties would keep the relationship secret from others.

23.1As for the 2nd defendant’s two affidavits, the 1st was made on 19 October 2024[55]. There is no explanation why it was not filed soon after that date, rather than being produced only as an exhibit to the 5th plaintiff’s 2nd affidavit filed on 27 November 2024 (more than a month later), after the 1st defendant’s 2nd affirmation had already been filed on 4 November 2024.

23.2The 5th plaintiff accepts (in his 2nd affidavit) that the 2nd defendant’s affidavits implicate the 1st defendant in “very serious and dishonest wrongdoing in Hong Kong as well as in Finland”. Since they are so material, it must follow that they should have been filed as soon as they were available, so that the 1st defendant would have had the opportunity to respond to their contents in her 2nd affirmation.

24.It is well-established that parties to litigation should place all relevant evidence before the court as soon as possible, and any attempts to “ambush” the other side with late evidence (which could and should have been produced earlier) should be discouraged. The more serious the implications contained in the affidavits, the greater the need for them to be served without delay on the other side for its response, so that the court can assess if the implications are satisfactorily answered. In the present case, there was no explanation why the 2nd defendant’s affidavits were produced only after the 1st defendant 2nd affirmation. Accordingly, in the exercise of the court’s discretion, I consider that the 2nd defendant’s two affidavits should not be taken into consideration.

(2) Whether there was urgency to justify an ex parte application

25.Generally, applications should only be made on an ex parte basis if there is an urgent need to do so or if there is a need for secrecy. If neither can be shown, the court would set aside the ex parte order[56].

26.It seems to be the plaintiffs’ submission that the need for an ex parte application in the present case arose from a need for secrecy[57]. Nevertheless I shall consider the aspect of urgency first. The need for secrecy is subsumed in the discussion on material non-disclosure later in this Decision.

27.The allegedly unauthorised withdrawals occurred between 2008 and 2012. More than 12-16 years had elapsed before the ex parte application was made for the injunctions. Quite apart from any limitation arguments, it is obvious that the court must carefully consider if there are any satisfactory explanations why, after such a long period of time, an ex parte application was sought as a matter of urgency.

28.1It was the plaintiffs’ case that it was only in 2018-2019 that the 5th plaintiff became aware, from the 1st defendant’s statement to the Finnish law enforcement agencies, that she alleged that he had given her a gift of 2 million euros in 2011.

28.2The 5th plaintiff said “the information and materials which relate to the NBI investigations and then prosecution while some are known to me and have been for some time because I was entitled to see such materials for my criminal defence needs, under Finnish law these were subject to and remained under strict confidentiality obligations until used in Court or the NBI’s investigation was closed. Accordingly, the information was not useable in any way whatsoever elsewhere save in relation to the defence of the NBI’s criminal investigations/prosecutions until August 2022"[58].

28.3Be that as it may, the 5th plaintiff instructed his Finnish lawyers to send the 1st defendant a letter of demand on 18 October 2019, threatening legal proceedings if she failed to repay 2 million euros the next month. It has not been satisfactorily explained how that fell within the confidentiality obligations.

29.It seems that the 5th plaintiff has proffered as an excuse for his lack of timely action that between 2020 and 2021, he had hoped that the Finnish police would investigate his complaint against the 1st defendant[59]. In my view, the making of a report to the police cannot itself be a sufficient excuse for the lack of timely action to institute civil proceedings. In any event, the Finnish police had informed him on 20 April 2021 that they had closed their investigation against the 1st defendant due to lack of evidence[60]. That was more than 3 years before the ex parte application was made.

30.1Even if the plaintiffs could not make use of the 1st defendant’s statement to the Finnish law enforcement agencies because of confidentiality obligations, they could, as early as 2019, have checked their own bank statements against those of the D1 Account to verify if there was/were unauthorised withdrawal(s) amounting to 2 million euros in 2011.

30.2Relevant banking materials would have been available to the plaintiffs for some time before the Norwich Pharmacal applications. The bank statements for the plaintiffs as well as that of the D1 Account (this account until June 2011) had been sent to the plaintiffs’ company secretary or CPA in Hong Kong. (Even if all the statements were not available from the representatives, even one from the D1 Account would have shown the account number). And yet there is no evidence that the 5th plaintiff had approached his representatives for these statements.

30.3These statements would have shown the alleged unauthorised withdrawals from the accounts of the 1st and 2nd plaintiffs, the 5th plaintiff’s personal account and the Joint Account respectively to the D1 Account which all occurred before June 2011. A comparison of these statements would quickly show that apart from some USD/HKD transactions, euro transactions in exactly matching sums were withdrawn and received on the same day.

30.4As it is, the plaintiffs have not produced evidence to show who, when and how it was decided that the specific sums in Schedule 1A should be claimed. It is not known who compiled the fund flow chart, what were their sources of information, and what process had been undertaken for its compilation.

31.Further, apart from not asking the plaintiffs’ company secretary and CPA, the 5th plaintiff has not explained why he did not, in 2019, ask his former HSBC relationship manager for the statements of his own account and the Joint Account (as he did later in 2021 for the 1st plaintiff’s statements, as a result of which she provided him with the February to April 2011 statements showing the Keenact Payments).

32.1As for the corporate plaintiffs, in particular the 1st plaintiff, it is noted from the section on Obtaining Documentation above that

-  on 24 March 2022, the 1st plaintiff company was restored to the BVI companies register;

-  on 12 April 2022, HSBC provided the DCP transaction report showing the account number of the recipient of the Keenact Payments (the account number being that of the D1 account).

32.2In any event, HSBC had

-  in January 2023, provided the full set of the D1 Account statements[61] and

-  in February 2023, provided the full set of the 1st plaintiff’s statements[62].

There was no reason why the application could not have been taken out then, and why it was necessary to wait for restoration of the other corporate plaintiffs.

33.The transcript of the hearing before the duty judge shows that he was concerned with the delay before the ex parte application was made. The reasons given to him were that it was necessary to restore the registration of BVI companies and to obtain documents. The judge’s attention was however not drawn to the fact that:

(a)  the 1st plaintiff had already been restored more than 2 years before the ex parte application was made, and

(b)  the statements had previously been sent to the plaintiffs’ Hong Kong representatives, and in any event, HSBC had provided the statements of the 1st plaintiff’s account and the D1 Account at the latest in early 2023, 1½ years before the ex parte application was made.

34.For the above reasons, I take the view that the ex parte application was not justified on the ground of urgency. I shall discuss if there was a need for secrecy in the section below.

(3) Whether there was material non-disclosure before the duty judge

35.As mentioned above, the 5th plaintiff’s Finnish lawyers had sent a letter of demand to the 1st defendant’s Finnish lawyers in October 2019. In February 2022, there was a further demand by email.

36.1The 5th plaintiff said that the 2019 letter of demand was before the duty judge[63] in exhibit “PM-1". This exhibit comprised 850 pages. It is well-established that “the duty to disclose could not simply be fulfilled by exhibiting voluminous documents covering the points to the supporting affidavit but without making any distinct reference to the points in the body of the affidavit itself or when addressing the judge at the often short hearing”[64].

36.2It is accepted by the plaintiffs now that the duty judge was not informed about these demands. They argued however that the 2019 demand was not material because its “shelf-life” had expired[65], and that the 2022 demand was without prejudice.

37.I consider that both these demands were material facts which should have been drawn to the attention of the duty judge, as they are evidence that even though the 1st defendant was aware of the plaintiffs’ claims against her, she had not taken any action to dissipate her assets[66]. In respect of the 2019 demand, I do not accept the “shelf-life” argument. On the contrary, the earlier the demand, the more time she has had to dissipate her assets (which she has not done). As for the 2022 demand, that was not made without prejudice. The reply from the 1st defendant did contain a without prejudice offer, but the plaintiffs could and should have redacted that part, and the duty judge so informed. These demands also show that there was no need for secrecy such as would justify an ex parte application being made.

38.Due to the lack of urgency and/or need for secrecy, and material non-disclosure, the ex parte order should be set aside. I shall consider the issue of regrant later.

(4)(a) Whether the Hong Kong proceedings should be stayed by reason of forum non conveniens

39.The 1st defendant submitted that the proceedings should be stayed on the ground of forum non conveniens.

40.In The Adhiguna Meranti[67], the Court of Appeal set out a three-stage approach as follows.

(I)  The applicant for stay (the 1st defendant) has the burden to show that Hong Kong is not the natural and appropriate forum and there is another available forum which is clearly or distinctly more appropriate, being the forum “with which the action has the most real and substantial connection”.

(II)  If the applicant succeeds at (I), the respondents (the plaintiffs) have the burden to show that trial at the other forum would deprive them of a legitimate personal or juridical advantage.

(III)  If the respondents succeed at (II), then the court has to balance the advantage at (I) against the loss of advantage at (II). In this balancing exercise, the loss of advantage at (II) is not conclusive, the consideration being whether the applicant can satisfy the court that trial at the other forum is more suitable “for the interest of all the parties and the ends of justice”.

41.It is the substance of the action, or put another way, the nature of the disputes between the parties, that the court should consider when deciding the matters in these three stages. Put briefly, the disputes in this case are as follows:

(a)  whether the 1st defendant was the 5th plaintiff’s mistress, as a result of which relationship he allowed her to take funds from accounts controlled by him for herself as gifts, on the understanding that she may need to disburse funds for his personal or business needs;

(b)  even if there was no such relationship or understanding, whether the 1st defendant is liable to return the specific sums in Schedule 1A, when the plaintiffs accept that at times, funds in that account were used on behalf of the 5th plaintiff and his businesses[68].

42.1In respect of stage (I), I take the view that Hong Kong is not the natural and appropriate forum and that Russia is the forum which is clearly or distinctly more appropriate, being the forum with which the action has the most real and substantial connection.

42.2The only connection with Hong Kong is that funds moved from the plaintiffs’ Hong Kong accounts to the 1st defendant’s Hong Kong account (indeed, there is no evidence that the transfers arose from physical acts done by the 1st defendant in Hong Kong[69]). These movements have been proved by way of documents. Even if other banking documents from Hong Kong are required, the 5th plaintiff accepts that “the location of documents does not matter”[70].

42.3It is clear that essentially, this action is concerned with a dispute between two Russian individuals, viz the 5th plaintiff and the 1st defendant. (Although the corporate plaintiffs are BVI companies, it is common ground that they were controlled by the 5th plaintiff and had no role to play in the dispute).

42.4The 5th plaintiff and the 1st defendant are both Russian by birth and had lived and worked there, acquiring other citizenships later in adulthood.

42.5Although the 5th plaintiff has acquired Hong Kong residency, and owns properties here, even on the plaintiffs’ own case, it is not suggested that he lives in Hong Kong as it is said he spends most of his time in Latvia now[71].

42.6The 1st defendant has never lived or worked in Hong Kong. Between 2008 and 2018, she has only visited on four short trips. Since 2016, she has lived in Finland and Russia.

43.1The main dispute between them is (a) whether the 1st defendant was the 5th plaintiff’s mistress, as a result of which he allowed her to take funds from accounts controlled by him for herself, although she would also make disbursements from the gifted funds in her account if needed by him personally or his businesses. The nature of the alleged relationship and the consequent understanding is personal, not commercial.

43.2For the determination of this important factual dispute, clearly the 5th plaintiff and the 1st defendant are essential witnesses who would need to testify whether there was or was not such a relationship and understanding. Since such a dispute would primarily have to be decided on oral evidence, how they express themselves at trial and their demeanour when doing so would be crucial to the judge’s decision. As noted above, both are native Russians, and Russian is their mother tongue[72]. Indeed, the 5th plaintiff has said that this is the only language he speaks[73]. In view of the importance of their oral evidence to the primary dispute, substantial weight must be given to this point.

43.3The 5th plaintiff has sought to support his case (that there was no unprofessional relationship with the 1st defendant) through the evidence of Mr Lobanov and the 2nd defendant. These individuals are also Russian natives, live in Russia, and speak Russian[74].

44.1The second dispute is (b), i.e. even if there was no such relationship or understanding, whether the 1st defendant is liable to return the specific sums in Schedule 1A when the plaintiffs accept that at times, funds in that account were used on behalf of the 5th plaintiff and his businesses.

44.2In this respect, the 1st defendant has said that the 5th plaintiff’s “money movement operations were based primarily in Russia” and handled by individuals there[75]. If that is the case, then the language of documents would likely be Russian (given that is the only language the 5th plaintiff knows) and any possible witnesses would likely be in Russia. The 5th plaintiff in fact accepts that if the trial were to take place in Hong Kong, witnesses will need to be flown in to give evidence[76], and that translation would be needed[77].

45.It is also common ground that the 1st defendant was employed in Russian entities in the 5th plaintiff’s business organization, and he accepts that her employment relationship was governed by Russian law[78].

46.For all the above reasons, I take the view regarding stage (I) that Hong Kong is not the natural and appropriate forum and Russia is clearly and distinctly the more appropriate forum, being the forum with which the action has the most real and substantial connection.

47.As for stage (II), the plaintiffs have alleged that they would lose a juridical advantage in that constructive trust and tracing remedies are not available in Russia. However, no expert evidence on Russian law has been adduced, and it remains a bare assertion by the 5th plaintiff who is not legally qualified. As the burden is on the plaintiffs to show the loss of a legitimate personal or juridical advantage and they have not discharged that burden, it is not necessary to move on to stage (III).

48.Accordingly, I take the view that the Hong Kong proceedings should be stayed on the ground of forum non conveniens.

(4)(b) Whether an injunction should be regranted

49.The last issue is whether an injunction should be regranted.

50.There is no evidence of dissipation. Indeed, the fact that the 1st defendant has not sought to withdraw her funds in Hong Kong despite the 2019 and 2022 demands from the 5th plaintiff is evidence against any risk of dissipation.

51.That leaves the proprietary injunction. On the materials I would have found that there was a serious question to be tried, due to the 1st defendant’s failure to refer to the alleged relationship with the 5th plaintiff and resultant gift in her statement to the police in 2018 and her lawyers’ reply to the 5th plaintiff’s lawyers in 2019, as well as her unexplained payment of 2 million euros to the 2nd defendant. I do not consider that the limitation defence is so clear, given the allegation of concealment. I also do not consider that the alleged ulterior motive behind the application would affect the finding of a serious question to be tried. Whilst a Hong Kong court decision in the plaintiffs’ favour may assist the 5th plaintiff’s defence, the proceedings were only commenced and the Whatsapp message to Mr Eremin both came after the conclusion of the trial.

52.However, I have concluded for the reasons above that the proceedings in Hong Kong should be stayed in favour of Russia. The plaintiffs have not indicated that they would be prepared to bring proceedings in that forum, and no application for regrant has been made in aid of any proposed Russian proceedings. In paragraph 17 of the Plaintiffs’ Written Submissions (Continuation of Proprietary and Mareva injunction) dated 9 December 2024, the plaintiffs accept that “success for D1 in D1's Summons may render the Continuation Summons unnecessary”. Further, in the section on regrant in the Plaintiffs’ Written Submissions (Jurisdiction and Discharge of Proprietary and Mareva Injunction) dated 10 December 2024[79], the plaintiffs did not seek a regrant in the event that the court stayed the proceedings on the ground of forum non conveniens. Accordingly, I would not make an order for regrant of either the Mareva injunction or the proprietary injunction.

Order

53.The ex parte Injunction Order of Mr Justice Fung dated 29 July 2024 as continued by DHCJ Phoebe Man on 2 August 2024 and DHCJ KC Chan on 30 August 2024 and the ancillary disclosure orders should be set aside, and all further proceedings in this action are stayed on the ground of forum non conveniens. I would dismiss the plaintiffs’ summons of 30 July 2024. There will be an order nisi that the plaintiffs pay the 1st defendant’s costs to be taxed if not agreed.

  (Maria Yuen)
Deputy High Court Judge

Mr Toby Brown, instructed by Stephenson Harwood, for the 1st to 5th Plaintiffs

Mr James Wood and Ms Tiffany Yau, instructed by Timothy Loh LLP, for the 1st Defendant



[1]  Orders were also made against the 2nd and 3rd defendants. The proceedings against them were subsequently stayed by consent for the purpose of performing the terms set out in a settlement agreement: Consent Order, 15 November 2024 (A/43).

[2]  It was continued by DHCJ Phoebe Man on 2 August 2024 and DHCJ KC Chan on 30 August 2024. The 1st defendant was absent on both occasions. On 4 October 2024, DHCJ KC Chan continued the Injunction Order pending determination of the parties’ respective summonses.

[3]  A claim to assert a proprietary right over moveable property within the jurisdiction.

[4]  Plaintiffs’ Written Submissions for hearing before the duty judge, §104(a).

[5]  The 1st plaintiff was restored to the register on 24 March 2022, the 2nd plaintiff on 18 March 2024, and the 3rd and 4th plaintiffs on 28 June 2024: 5th plaintiff’s 1st aff. §§30-39.

[6]  1st defendant’s 2nd aff, §20, 90-102.

[7]  She alleges that after 2013, she remained a director of Airiston Helmi Oy (“Airiston”), a company owned by the 5th plaintiff, through an oversight on the part of the 5th plaintiff’s business organization: 1st defendant’s 1st aff, §13(b).

[8]  1st defendant’s 1st aff, §20.

[9]  5th plaintiff’s 2nd aff, §8(c).

[10]  5th plaintiff’s 2nd aff §113.

[11]  1st defendant’s 1st aff, §§28-30.

[12]  1st defendant’s 1st aff, §8(iii) and (iv), 31-33

[13]  5th plaintiff’s 1st aff, §109, 155; 1st defendant’s 1st aff, §30(b); Recorder Manzoni’s Decision §9, §12.2.

[14]  5th plaintiff’s 2nd aff, §108(c).

[15]  B5/1401.

[16]  1st defendant’s 2nd aff, §84.

[17]  5th plaintiff’s 2nd aff, §106.

[18]  According to 5th plaintiff’s 1st aff, §6

[19]  According to the SOC, §20(d).

[20]  The separate relief sought against the 2nd and 3rd defendants have not been set out here.

[21]  5th plaintiff’s 1st aff, §155; 1st defendant’s 1st aff, §30(b); Recorder Manzoni’s Decision §9, §12.2.

[22]  1st defendant’s 1st aff, §8(b).

[23]  1st defendant’s 2nd aff, §§143-144.

[24]  1st defendant’s 2nd aff, §90.

[25]  1st defendant’s 1st aff, §8(b), 47.

[26]  Significant dates underlined for emphasis.

[27]  According to the plaintiffs: B1/485. The 1st defendant says that she left the 5th plaintiff’s employ in 2013, and remained as a director of Airiston probably due to oversight on the part of the 5th plaintiff’s business organization: 1st defendant’s 1st aff, §13(b).

[28]  Transcript of the interview: B4/1240.

[29]  B4/1242.

[30]  5th plaintiff’s 2nd aff, §86.

[31]  B4/1248.

[32]  B4/1250.

[33]  Said to be in January 2019: B1/486.

[34]  B1/484.

[35]  5th plaintiff’s 1st aff, §76.

[36]  B4/1252.

[37]  B4/1254.

[38]  Chronology in “PM-1" (B1/387).

[39]  B6/1564

[40]  B1/517.

[41]  See §18 below.

[42]  B6/1561.

[43]  5th plaintiff’s 1st aff, §82; B1/489-502

[44]  5th plaintiff’s 1st aff, §78.

[45]  5th plaintiff’s 1st aff, §84.

[46]  See footnote 5 for the dates of restoration.

[47]  B1/510.

[48]  There was a second application before Auyeung J which did not feature at the hearing before me.

[49]  5th plaintiff’s 1st aff, §78.

[50]  [2022] HKCFI 3688.

[51]  Chronology in “PM-1" (B1/388), apparently this was retracted and replaced with a redacted set in August 2023: HSBC’s letter dated 4 August 2023 (B1/376).

[52]  Chronology in “PM-1" (B1/390).

[53]  1st defendant 2nd aff, §19.

[54]  B3/993.

[55]  The 2nd affidavit (entitled ‘statement’ but on its face, made on oath) supplemented matters set out in the 1st affidavit .

[56]  Nico Constantijn Antonius Samara v Stive Dan [2018] HKCFI 1022 §23-26.

[57]  Skeleton submission of counsel for the plaintiffs: §100.

[58]  5th plaintiff’s 1st aff, §70.

[59]  5th plaintiff’s 1st aff, §141.

[60]  5th plaintiff’s 1st aff, §76.

[61]  The plaintiffs’ allegation (5th plaintiff, 1st aff, §36) that HSBC did not allow them to “use” the D1 Account statements until August 2023 is not understood: no such restriction on use was expressed.

[62]  5th plaintiff’s 1st aff, §37(a).

[63]  5th plaintiff’s 2nd aff, §13.

[64]  Rever (AMA) Salon Ltd v For Danny & Ors [2001] HKC 241, 246 E-F.

[65]  Plaintiffs’ written submissions, 10 Dec 2024, §104.

[66]  Amounting to HKD1.18 million.

[67]  [1987] HKLR 904.

[68]  5th plaintiff’s 1st aff, §155; 1st defendant’s 1st aff, §30(b); Recorder Manzoni’s Decision §9, §12.2.

[69]  The 1st defendant says she was not in Hong Kong on those days: 2nd aff, §208.

[70]  5th plaintiff’s 2nd affirmation, §118.

[71]  Plaintiffs’ Written Submissions for hearing before the duty judge, §104(a).

[72]  Although the 1st defendant also speaks English.

[73]  5th plaintiff’s 2nd aff, §97.

[74]  Although the 2nd defendant also speaks English.

[75]  1st defendant’s 2nd aff, §210.

[76]  Although there may be evidence from HSBC on the number of tokens provided for the accounts, it is unlikely that such evidence would be controversial.

[77]  5th plaintiff’s 2nd aff, §117.

[78]  5th plaintiff’s 2nd aff, §112.

[79]  §§116-118.

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