Dmitry Yanishevskiy v. Maxim Moskalev
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HCA 1840/2019 [2026] HKCFI 4953 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1840 OF 2019 ______________________ BETWEEN
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_________________ JUDGMENT _________________ Glossary The following persons and entities are referred to in this Judgement and, for convenience, are abbreviated as follows:
Overview In summary The Trial concerned: 1.At the start of the Year of the Dog (Chinese New Year February 2018) friends of almost 20 years fell out over money. In the scheme of things it was not a large sum of money (about USD 4million), certainly it is not large in terms of a Hong Kong civil trial set down for 22 days and it is not large by reference to the valuable assets owned by Team Plaintiff and Team Defendant such as properties in Central London (Edwards Square, Cadogan Square, Marlowe’s Road, Belgrave Mansions), and other properties owned in Moscow (including a Dacha outside Moscow), and in Cyprus and no doubt other places as well.. As Dmitry observed in an email in 2018 “(our)..friendship ended for not too much money” See Document page 985. But the amount at stake does not matter. Many important cases in England and Hong Kong have resulted in the creation of good law arising out of disputes concerning small sums of money. 2.Dmitry, Maxim, Kovalenko, Zhukov, Borovskiy became friends when they met in Beijing as part of the Russian community there. They all became successful in the tough oil business between China and Russia. In 2013 they incorporated Komplekt Engineering Company (KEC)) to conduct this business (principally sourcing oil drilling equipment in China for sale to the large oil companies in Russia.) 3.The fall out between these friends became bitter and acrimonious. Ironically one of them, Maxim, adopted the email header “War and Peace”. He explained he did this to avoid hackers. But it became prophetic. As every student of Russian literature knows there is precious little peace in Leo Tolstoy’s wonderful novel; the battles between the armies are bloody, the internecine battles between families and friends are almost as fierce. Sadly, that has become the relationship between these former friends. At times it even appeared that their lawyers were instructed to continue this antipathy in Court: there seemed to be little co-operation between Counsel. 4.All these friends invested in KEC. Dmitry, with Team Plaintiff, owning a minority of KEC (about 45%) with each investing an equal amount giving them 11.25% of the equity. Team Plaintiff placed their shareholding with their nominee (Shapilova). Maxim was the major investor in KEC with 55%of the equity which is recorded in the Unified State Register of Legal Entities in Russia under the names of Abdulla and Khirbitov. The Plaintiff asserts that these men are Maxim’s nominees. Maxim denies this and he even denies knowing who they are. 5.At meetings in 2017 in London (25 June) and in Macedonia (27 July), Dmitry informed Maxim that he and Team Plaintiff wanted to exit from KEC and recover their investment. After detailed negotiation, a memorandum (the Memorandum: Bundle D2/424) was signed by Dmitry and Maxim. Dmitry and Maxim were the principal players: Team Plaintiff were content to leave the details to Dmitry (who they regarded as their document man) while they attended to their own, separate businesses. Zhukov is a successful interior designer. Borovskiy runs his own businesses from Ap Lei Chau in Hong Kong. 6.Disputes arose over the performance of the Memorandum which became bitter by Chinese New Year 2018. Despite this, Dmitry and Maxim continued to negotiate in February 2018 an Addendum to the Memorandum (the Addendum) was signed. The Addendum set out a complicated method for agreeing the price for the sale of a related business of KEC namely Telesystems. Soon after signing the Addendum the disputes between Dmitry and Maxim continued. 7.The detailed facts are summarised below. They can appear complicated because the majority of the documents are in Russian. Often, during the course of the trial, disputes arose as to the correct translation. All the principal witnesses gave evidence in Russian. 8.In this forest Russian of documents and testimony, one crucial document stands out. It is typed in English with no translation and no amendment: the Promissory Note (PN). It is the crucial document in this Trial. The Plaintiff’s main cause of action depends on it. Maxim claims that the PN is a false document which has been forged including his forged signature. 9.The PN first appeared in Moscow on 19th February 2018. The circumstances of its appearance are hotly contested:
10.The PN floats like a specter against this forest of Russian documents. Given its crucial importance it is extraordinary that it is never referred to in the numerous exchanges between the parties after the date it bears (the 16th of February 2018). The Issues Arising The Pleaded Position: In summary: 11.The Statement of Claim originally referred to a Share Purchase Agreement and a Supplemental Agreement governed by Russian Law (to be applied according to Hong Kong Law). 12.The Defence refers to the same two documents as the Memorandum of Agreement and the Addendum but denies that they constituted concluded agreements arguing instead that they were merely contemplated transactions which, lacking certainty, were no more than agreements to agree.
13.The principal claim of the Plaintiff is under the PN. As an alternative claim the Plaintiff seeks relief in respect of misrepresentations made by Maxim at the time of the Memorandum and / or the Addendum. The Plaintiff asserts that, fraudulently or alternatively recklessly, Maxim, despite his promises never intended to make full payment under either agreement. 14.The Defendant denies the alleged misrepresentations and further asserts that they do not constitute a reasonable cause of action. 15.As generally occurs the pleaded issues became more focused in Counsel’s Opening Submissions at the start of the Trial. This is particularly important because the Plaintiff made it clear that no claims were being made in respect of breaches of the Memorandum and / the Addendum. Having read both agreements carefully and other documents which suggest that breaches had occurred, I sought further clarification that the Memorandum and / or the Addendum did not form the basis for claims in breach of contract. That was confirmed again by the Plaintiff at the conclusion of the evidence (See LN Day 17 page 4 line 22 where the Court sought clarification and the clear answer at the end of the same day (See LN Day 17 page 122 line 2 to page 123 line 4). 16.Despite this clarification the Court remained troubled that a gap in the Plaintiff’s ability to recover from Maxim would emerge if the Court decided that Maxim still owes Team Plaintiff payment while also deciding that the PN was not genuine and that Maxim’s signature, has been forged. 17.On the 4th of August the Court reconvened to further consider this question (the 4th of August Question: see Day 18 LN pages 1 to 5). The parties were asked to consider the 4th of August Question which they did in a Supplemental Note dated the 10th of August and also in a Subsidiary Note (concerning the relevance of the numerous peripheral matters of credit which were raised). 18.The Court reconvened on the 14th of August for Counsel to expand on their Supplemental Notes. Counsel again confirmed that no claims were made for breach of contract in relation to the Memorandum and / or the Addendum: See Day19 LN pages 1 to 3 and pages 19 to51 and pages 69 to 71 and pages 75 to 76. 19.This exercise was most helpful. It clarified the position. Two main claims are advanced by the Plaintiff. First for breach of the promise contained in the PN. Second for misrepresentations (fraudulent or alternatively negligent) made by Maxim at the time of the Memorandum and / or the Addendum. So, the Issues to be determined are: Issue 1 Is the PN the genuine document of the Defendant setting out his promise to pay the Plaintiff? Issue 2 Was Maxim’s signature forged on the PN? These are the central issues in this trial. Issue 3 Did Maxim make actionable misrepresentations (either fraudulent or negligent) to the Plaintiff inducing him to enter into the Memorandum and / the Addendum. 20.The parties confirmed that the central issue was whether the PN is genuine and enforceable.
21.I have not spent much time on this issue because of the overriding effect of my conclusion (set out in detail below) that the PN is not a genuine document and that Maxim’s signature has been forged. Clearly in the light of this finding no claims can be founded on the PN. 22.Ultimately whether the PN is genuine and whether Maxim’s signature was forged are question of credit (See Day 19/Page 3) Mr Fan for the Plaintiff said “…everything goes to credit …this is a very peculiar case …because it turns almost entirely on credit.” 23.But it is not just the credit of the witnesses who spoke to the PN. Equally important is an assessment of the circumstances surrounding the appearance of the PN and particularly an analysis of the terms contained in the PN. 24.The Claims in misrepresentation attracted far less attention at trial. I consider them separately later in this Judgement after, first, deciding the crucial issues of the PN. 25.At the time of the 4th August Question the Court asked the parties to clarify matters relating to credit which are not directly linked to the PN (See Court Letter 10th of August). Significant among these was whether Maxim has a current Russian passport which he used to register an apartment in the Moscow Land Registry. At the Hearing on 14th of August the Plaintiff confirmed that Maxims passport issue was more important than the other peripheral matters going to credit such as:
26.All these matters (some of which are complicated) are peripheral to the main issue. I do not find them particularly helpful in deciding the questions of credit relating to the PN. None of them are connected with the issue of the PN. In most cases they relate to events which occurred either long before the appearance of the PN (such as the Verta assignment agreement) or long after the PN (such as Maxim’s passport and the Land Register records). But for completeness I consider them, in summary form, later this Judgement. 27.The parties now accept that I can proceed on the basis of Hong Kong Law. The expert evidence about relevant Russian Law was not considered, and no expert evidence was called: See LN Day 17 Page 30 Line 15. Hong Kong Law I therefore proceeded on the basis of Hong Kong Law. Issue 1 Is the PN a genuine document setting out the Defendants promise to pay the Plaintiff. 28.The law is straightforward. Normal principals apply when deciding whether the PN is genuine. Essentially it is a question of the credibility of the witnesses who spoke to the document taking into account all the surrounding circumstances including the physical nature and the contents of the PN. 29.I made the PN Court Exhibit A at the start of the Trial. Issue 2 Was Maxim’s signature forged on the PN. I was greatly assisted by the forensic witnesses who gave expert evidence about the handwriting of the contested signature. Mr Liang for the Plaintiff. Mr Leung for the Defendant. 30.As usually happens these experts produced a Joint Report which in fact agreed very little. The Joint Report shows that the experts remain an ocean apart, as Mr Leung put it. 31.The Court is not bound by the evidence of handwriting experts (See Ribeiro PJ in Nina Wang …; Credit One Finance Ltd v Leung Yong Lok and Another (2020 HKCFI 2919). Issue 3 32.The legal principles applying to claims of fraudulent, or alternatively reckless misrepresentation are well established. They were not controversial at trial. In summary the relevant approach is: 33.The Court of Appeal per Cheung JA identified the relevant features of fraud or deceit: Haifa International Finance Co Ltd v Concord Strategic Investments Ltd [2009] 4 HKLRD 29, §15 [P/#23]:
34.A representation of the present state of mind can amount to a representation of fact: see Edgington v Fitzmaurice (1885) 29 Ch.D. 459 [P#24] at 483 per Bowen LJ; see also Leung Ping Shing Roger v Lee Kwok Kei (unrep., HCA 778/2007, 16 June 2011) [P#25] at [119] per Recorder Shieh SC. 35.When determining whether there has been an express representation, the court considers what a reasonable person would have understood from the words used in the context in which they were used: IFE Fund SA v Goldman Sachs International [2006] 2 CLC 1043 [P#26] at 1056, [50] per Toulson J.; see also Jaffray v Society of Lloyd’s [2002] EWCA Civ 1101 [P#27] at [59], [303]-[307] per Waller LJ. 36.When deciding where a person was induced to act upon the misrepresentation there is a presumption of fact that a statement likely to induce a representee did so. Where the representation was made fraudulently, the presumption is stronger: see BV Nederlandse Industrie Van Eiprodukten v Rembrandt Enterprises Inc [2020] QB 551 [P#28] at 567B, [32], 570F, [43] per Longmore LJ: see also Credit Suisse Life (Bermuda) Ltd v Ivanishvili [2025] 3 WLR 789 [P#29] at 828B-E, [156]-[157], 829C-H, [162]-[164] per Lord Leggatt. It suffices for the defendant to have exploited an unconscious assumption of the plaintiff: at 832D-G, [175]-[176]. See also Marme Inversiones 2007 SL v NatWest Markets plc [2019] EWHC 366 (Comm) [P#31] at [303] per Picken; see also Zurich Insurance Co plc v Hayward [2017] AC 142 [P#32] at 155C, [29], 156G, [34] per Lord Clarke. 37.If the Plaintiff succeeds in its claims in misrepresentation the Court has already Ordered that the assessment of damages is to be adjourned for later determination (See the 2nd Case Management Hearing). Approach to the Evidence 38.The central issues in this case depend on the credibility of the witness evidence contained in their Witness Statement (standing as evidence in chief) and in their oral testimony as tested in cross examination. Their evidence relates to events which occurred eight years ago. 39.It is important to note that all the witnesses of fact are Russian who gave evidence in that language. This was then interpreted into English by the skilled (and tolerant) Court Interpreter. Sometimes the phrases used in English did not seem the way Russian oil men would express themselves. The email / WeChat exchanges between Maxim and Team Plaintiff following the Christmas Day message (which are set out and analyzed below) contain jokey, almost childlike phrases (such as “old buddy; boss; right hand man; favorite Chinese dumplings). Such phrases belie the impression that the parties were at that time in bitter dispute: they seem more like the exchanges between former friends trying to find a solution to the intractable issue of Maxim’s failure to pay the balance he owed.
40.One important witness (Kovalenko) did not even have a Russian version of his Witness Statement. This resulted in the Interpreter having to translate, into Russian, the English version of his witness statement (clearly drafted by Team Plaintiff lawyers) so as to remind him of what he was supposed to have said. 41.As generally happens the Witness Statements were drafted by English speaking lawyers. The product (which is focused and concise) is approved by the witness. Many of the Witness Statements for Team Plaintiff bear noticeable similarities of expression and format (phrases such as boss, right hand man, nominee, mere housewife are used by most of these witnesses about Maxim, Yuri Lis and his wife Joanna.)
42.The credibility of a witness is a complicated question. Many people tell lies. The reasons cover a wide spectrum of human behaviour from the innocent lies of children (“fibbing” often as a game to see what they can get away with) through the “white lies” of their parents (to protect a loved one from a crueler truth) to the cynical lie of a fraudster (the bald -faced lie).
43.It is well recognized that a witness’s memory is fallible [See Leggatt J in Blue v Ashley [2017] EWHC 1928; See particularly Yu Man Fung Alice v Chau Sing Chi Stephen [2020] HKCFI 2923 pages 19 to 22 where Coleman J sets out a comprehensive summary of the difficulties which can arise when assessing the reliability of a witness’s memory. The following have relevance to this case:
44.These considerations do not mean that memory is unreliable. Memory is generally reliable (and often the best evidence). But it is important to realise that memory can sometimes distort the truth. 45.In the age of Artificial Intelligence, a Judge applies his natural intelligence (based on years of courtroom experience). The Judge is well placed to assess a witness’s demeanor and watch how their evidence is given. Sometimes body language can be as eloquent as words: a nervous witness fidgeting with their hands, or looking round for support from their team sitting behind them in court. I watched closely as the witnesses gave evidence. 46.As a general observation I was impressed with all the witnesses, except Shapilova and, to a lesser extent, Kovalenko. Generally, they were all polite, courteous and, apparently, keen to help. But I was well aware that Team Plaintiff and Team Defendant had a cause to advance. So I was careful when deciding what weight to give to what they said and how they said it. I set out my observations below when considering the evidence. The Evidence Which Never Was 47.I sensed during the trial that I was not being told the full story. An air of mystery (sometimes even non- disclosure) hung around certain important aspects of the evidence. The tourist shops in the main squares in Moscow and St Petersburg sell the iconic Russian doll (the Matryoshka). Outside it seems to be a bright, smiley toy. But concealed inside other dolls are hidden. At times I felt like a tourist who was not shown what lurked inside Matryoshka。The Court was not told the full story hidden behind the carefully prepared evidence presented. Examples are:
The Evidence, the facts established and certain observations on credibility. 48.It is convenient to consider the fairly complicated facts in relevant time zones. 2013 to 2017: The origin of KEC leading up to the Memorandum 49.KEC was in the business of supplying of oil drilling equipment, including pipes, to oil and services companies in Russia: see Dmitry’s WS [9] [B1/1/3]; Maxim’s WS [17] [B1/9/104]. 50.Dmitry, Borovskiy, Kovalenko, Zhukov (Team Plaintiff) originally owned about 45% of KEC according to the Unified State Register of Legal Entities in Russia where their shareholding is recorded under their nominee Shapilova, but confusingly other documents produced for the sale of Telesystems auction as set out in the Addendum show their holding to be about 38%. Often in evidence and in the written submissions Team Plaintiff are referred to as the “ultimate controllers” of KEC. Under Hong Kong Law this cannot be right: at all times their holding was a minority interest as against Maxim’s 55% (and a higher 65% shown in the documents prepared for the Telesystem auction). A simple chart was submitted by the Plaintiff to illustrate its case on the entities associated with KEC (See Annexure 1). The detail is set out in Dmitry’s WS [5]-[17] [B1/1/2-7]. 51.Maxim’s interest in KEC the Plaintiff asserts was held by Abdulla and Kirbitov acting as his nominees and so forming part of Team Defendant: See D/11126 to 128. 52.KEC sold oil drilling equipment sourced in China to customers in Russia using Petrochemical as the conduit. Dmitry stated that Synergy later assumed the same role: see Dmitry’s WS [17] [B1/1/6]. 53.The Plaintiff asserted that Petrochemical was held in equal shares by Team Plaintiff and Team Defendant through nominees, namely, Gold Dragon (for the Plaintiff) and Rosewood (for the Defendant) See: [D6/150/1403, 1410]: and Dmitry’s WS [15] [B1/1/4-5]. Maxim disputed this and denied controlling Rosewood through nominees. 54.The sole shareholder / director of Synergy was Yuri wife, Joanna Lis [D6/152/1453, 1460]. The Plaintiff asserted Synergy was controlled by Maxim using Yuri Lis as his agent (right hand man). Maxim strongly denies this. Yuri Lis denies this and stated that Synergy was his family company owned and operated by his wife Joanna (whose impressive CV shows she is an experienced business woman). 55.Petrochemical and / or Synergy purchased the oil drilling equipment from Chinese manufacturers (e.g. Shengli, Feng Lei[1]), and sold it to KEC through Import Agents who arranged custom clearance and delivery to clients in Russia: see Dmitry’s WS [93.3] [B1/1/35].
56.Dolganov was the director and general manager of KEC. The Plaintiff asserted that Dolganov represented Maxim as his nominee in Team Defendant. Maxim denied this. Dolganov did not give any evidence.
57.I preferred the evidence of Maxim in this conflict of evidence. Shapilova was not an impressive witness. At times she appeared uncomfortable. She often looked around in the witness box for support from Dmitry who was sitting behind her. Shapilova was clearly in Team Plaintiff. She is still employed by Dmitry.
58.Maxim denied that he held any shares in KEC. He claimed he was just a substantial investor. See Maxim’s WS [13], [22] [B1/9/103, 105]. June to early October 2017: negotiations leading to the Memorandum 59.From June 2017 the parties discussed transferring Team Plaintiffs share in KEC to Maxim: see Dmitry’s WS [28]-[30] [B1/1/10], Maxim’s WS [25] [B1/9/106].
60.The events leading up to Memorandum include:
61.Although the Memorandum and the Addendum are not relied on as claims made by the Plaintiff considerable time was spent examining each document including construing their effect. In Opening the Plaintiff set out their understanding of these agreements and explained that the impact of Russian law was not material (it being similar to Hong Kong law save that subjective intention can be admissible to settle instances of ambiguity). 62.The Memorandum is annotated in manuscript by Maxim. This shows how careful and meticulous Maxim is: a businessman who takes his time before committing. See [D2/50/421, t424]. 63.Although it is clear from the 4th August hearing that the terms of the Memorandum and the Addendum are no longer in issue, they are relevant background material. Interesting terms are:
64.The Defendant asserts that the Memorandum, by referring to the Assignment agreements, contemplated the elimination of toxic creditors: see Defence [5(1)(c)] [A/2/54]; Maxim’s WS [8(3)], [35] [B1/9/102, 109]
65.The method for payment under the Memorandum is far from clear. I do consider that it offers scope for the Defendants assertion that Maxim’s obligation to pay Team Plaintiff was not personal to him but instead an obligation to arrange payment by way of Assignment Agreements between KEC and the Import Agents. October 2017 to early February 2018: Part Payments made under the Memorandum and the origin of the Addendum 66.On the 15th of February 2018, the Addendum was signed. As mentioned, it dealt with the non- liquid assets of KEC and fixed their value by way of an auction for Telesystems: see [D4/89/788, t789] and [D3/68/591-598]; and Borowski’s WS [5]-[9] [B1/2/52]. 67.The Plaintiff asserts that two major events occurred during this period. The Defendant disputes them both:
68.Dmitry explained how payments through the Assignment Agreements were made See his WS [110]-[113] [B1/1/42-46]:
69.Payments No. 11-12 (made on 19 December 2017 and 22 December 2017) were affected by another Assignment Agreement from Verta LLC to an Independent Entrepreneur Nikiforov [D1/14/151-152, t154-155]. The Nikiforov Assignment Agreement is summarized:
70.Thereafter further payments under the Memorandum were stopped for a time. In summary:
Mid-February 2018 into the late summer of that year: The dispute between the parties becomes entrenched around the time of Chinese New Year. The Addendum was signed. The hotly contested document, the PN, appears for the first time. 71.This period is overshadowed by the surprise appearance of the PN on the 19th of February 2018. 72.In the winter of 2017, the relationship between the former friends became strained. Team Plaintiff became increasingly alarmed by Maxim’s delay to make further payments under the Memorandum (particularly as they had already arranged for Shapilova to transfer their shares to Abdulla and Kirbitov). Maxim started to resent the pressure put on him to arrange payment. 73.The exchanges between the parties after the “Christmas Day Message” (D3/72/664) are summarised below. It is worth noting that the 25th of December is not Christmas Day in the Russian Orthodox Church (unlike the West, Russia celebrates Christmas and the New Year about three weeks later in January). 74.These messages between the parties intensified around Chinese New Year 2018 (13 / 15th of February). Counsel for the Plaintiff placed a skillful interpretation on these emails / WeChat exchanges when cross examining Maxim with a view to show that these exchanges lead up to the issue of the PN by Maxim. 75.But Maxim was up to this challenge. He dealt with Mr Hollander’s clever questions with calm, reasoned skill. Like a chess player he anticipated what was coming and had prepared his next move. He disagreed with what was being put: it was not the correct interpretation of the email / WeChat exchanges. Maxim told Mr Hollander: “You are misrepresenting my words” (See Day15). Maxim also said, more than once, when questioned about the tight phrases used in some of the documents that he was a businessman, not a lawyer. 76.Was Maxim lying (which was repeatedly put to him). Sometimes maybe, but generally no more than the key witnesses in Team Plaintiff when they were doing their best to maintain their case (See particularly the comments on the credibility of Shapilova, Dmitry and Kovalenko below). 77.Maxim pointed out to Mr Hollander that these email / WeChat exchanges were not the whole story. He discussed these matters and negotiated further with members of Team Plaintiff orally and by phone (See Day 15). There is no record of these conversations but it would be surprising if they had not taken place. 78.On the crucial issue Maxim’s evidence was clear and unshaken: these email / WeChat exchanges had nothing to do with the PN, in no sense were they the build up to the issue of the PN.
79.The “Christmas Day” messages indicate that no further payments would be made under the Memorandum and/or the Addendum by way of the Assignment Agreements. On 29th December Dmitry complained to Maxim that since he had stopped payments under the Assignment Agreements, he must find another way to pay. 80.Shapilova, dismissed as Chief Accountant of KEC on the 4th of September was brought back to help answer a Russian State Tax investigation conducted inhouse concerning certain VAT issues. 81.Borovisky met Yuri Lis in the Suvretta House Hotel in St Moritz. He stated that they discussed future payments by Maxim to Team Plaintiff. Yuri Lis did not agree with his account of their discussions. Instead, he described the occasion as a pleasant family holiday (it was early January 2018 and so the winter sport season in the Engadine Valley). 82.A few weeks later certain cash payments were made by Yuri Lis; See the emails where brick is used as Russian slang for 5 million roubles: D3/68/599 and D/4/87/764. Maxim and Yuri Lis deny that the Plaintiffs interpretation is correct. 83.Around this time Dmitry states that Maxim told him that he was experiencing cash flow problems which caused the delay in payment See WS/ B1/18-21. Zhukov also said that Maxim told him something similar: See Day9. Maxim denied this and he insisted his financial position was sound. 84.The exchanges which follow the Christmas Day message relied on by the Plaintiff to show the build up to the issue of the PN number around ten: See the emails / WeChat messages/ documents at page 765, page 764, page 793, page 935, page 936, page 937). As already mentioned, Maxim stated that these exchanges only tell part of the story. Matters were discussed orally and over the phone with Team Plaintiff (See Day16). 85.It is important to put these exchanges into a proper context. At the time of these exchanges (February / March 2018) the parties were negotiating the Addendum which was eventually signed by Maxim in February. The PN is dated the 16th of February. The Plaintiff claims that the PN was handed by Yuri Lis, acting on behalf of Maxim, to Kovalenko in Moscow on the 19th of February. Both Yuri Lis and Maxim deny this (See the analysis below). In summary the exchanges between Dmitry and Maxim are:
86.A strange feature of these exchanges in that sometimes they are expressed in hard business terms but other times the language becomes jokey and friendly.
The origin of the PN 87.This is the central issues in this Trial. At the hearing following the 4th August Question Counsel for both parties confirmed that this is essentially a question of the credibility of the main witnesses who spoke to the PN. See LN Day 19. 88.But it is important to emphasis that it is not only dependent on the credibility of the witnesses. Equally important are the circumstances surrounding the document itself including especially the words used in the PN. This is an objective assessment of the contents of the PN in relation to what the witnesses said about it. 89.The Plaintiff now asserts that the PN, was delivered in an envelope by Yuri Lis (on behalf of Maxim) to Kovalenko on 19 February 2018 in Moscow. Originally the Plaintiff asserted that the PN was given to Dmitry by Yuri Lis on the 14th of March (See Statement of Claim). This claim was radically altered to claim that Yuri Lis gave the PN to Kovalenko a month earlier on the 19th of February: (See Amended Statement of Claim). See further:
90.When he got home later that day Kovalenko opened the envelope and saw the PN. He stated that he did not understand it because he could not read English. He said he felt tired (it would have been about7.30 pm). He decided not tell Dmitry about the PN until the following day. In his oral testimony Kovalenko added the gloss that Dmitry was in Thailand, where the time difference was 5 hours ahead, so he considered it too late to phone him. When eventually he did phone Dmitry on 20th of February Kovalenko did not do so urgently first thing but he waited until the afternoon: see Dmitry’s WS [23] [B1/1/8]; Kovalenko’s WS [7] [B1/3/61]. 91.About a month after receiving the PN Kovalenko gave it to Dmitry when they met in Moscow on 14thof March: see Dmitry’s WS [58] [B1/1/22]; Kovalenko’s WS [12] [B1/3/62]. 92.The terms of the PN apparently gave Maxim an extra year to pay Team Plaintiff (i.e. on or before 22 February 2019). Maxim also apparently promised to pay much more than the debt which was owing at that time. The PN promises to pay the precise amount of USD 4,974,044.92 cents Dmitry was unable to explain how this figure is calculated. But naturally, he was happy to accept it. He assumed the larger amount was what Maxim meant by the phrase “offers which (were) hard to refuse”: see Dmitry’s WS [55], [60] [B1/1/21-22]. 93.Dmitry accepted the PN and in so doing claims to have given forbearance not to sue Maxim for breaches of the Memorandum and/or the Addendum. Instead, the Plaintiff chose to rely on the promise to pay in the PN. 94.Maxim and Yuri Lis denied any knowledge of or any involvement in producing and / or delivering the PN to Team Plaintiff: see Maxim’s WS [85] [B1/9/128]; Yury Lis’ WS [27] [B1/10/150-151]. Further:
Further payments made AFTER the appearance of the PN including up to the maturity date stated in the PN (the 22nd of February 2019) 95.Despite the PN purporting to be a promise by Maxim to pay all sums due to Team Plaintiff further payments were made to the Plaintiff under the Memorandum and the Addendum after 19th February 2018 (when the PN first appeared). These payments were made without any reference to the PN or to the fact that the PN apparently extended the date for Maxim to repay Team Plaintiff by almost a year (i.e. February 2019): See:
96.Months after Dmitry and Kovalenko stated that they knew about the PN (at latest 14th of March 2018 when Kovalenko claims that he gave the PN to Dmitry) they continued to discuss with Maxim ways of repaying Team Plaintiff under the terms of the Memorandum and the Addendum. It is extraordinary that no mention was made to the PN in these discussions See:
97.In January 2019, a report was issued by the Russian Federal Tax authority which concluded, after a lengthy on-site tax inspection of KEC, that “no violations of value-added tax were found in Q2 of 2017”, and that “the inspectors propose to refuse to prosecute for tax offences” [D5/113/1025, t1032, 1027, t1034]. Maxim said in evidence that this investigation only referred to VAT and not other tax issues. 98.On the 25th of January 2019 Maxim met Borovskiy at the Helsinki Airport: see Borovskiy’s WS [15] [B1/2/54] Borovskiy was accompanied by a lawyer friend of his who asked not to be identified. Borovskiy claims that Maxim said in the presence of this anonymous lawyer that he “… never intended to pay. All the documents, emails and other confirmation cannot be presented. It is laughable, you were stupid enough to believe me. However, I am willing to pay something just to make you shut up.” 99.Maxim denied saying anything like this: see Maxim’s WS [71] [B1/9/. Maxim added in evidence that it was inconceivable that he would have spoken in those terms in front of a lawyer (Day 16). 100.Having observed Maxim closely during the trial I find it hard to believe that he would have spoken so rashly in front of an unknown lawyer. Maxim is a careful, cautious businessman. I find it hard to accept that he would have been so foolish and spoken so rashly at Helsinki airport. Solicitors Letters before Action and the bankruptcy of KEC. 101.Maxim did not pay the sum outstanding by the end date stipulated in the PN (the 22nd of February 2019). 102.On the 3rd of May 2019 the solicitors acting for the Plaintiff, M.C.A. Lai Solicitors (“MCAL”) issued a Letter of Demand based on the PN. It was posted to Flat 4, 44 Cadogan Square, London, where Maxim’s wife and children resided. 103.In May 2019, proceedings were commenced by a Victoria LLC (“Victoria”) against KEC: see Defence [2(2)(c)-(e)], Schedule 1B [A/2/52, 76].
104.On 18 June 2019, a second Letter of Demand under the PN was issued by MCAL to Maxim’s family’s address in Cadogan Square. On this occasion service was effective and the registered letter was delivered: See [E/2/3] [D5/114A/1044-1 to 1044-2]. 105.Maxim denied receipt, or knowledge, of the two MCAL Letters of Demand: see Maxim’s WS [108(2)-(3)] [B1/9/137-138]. Maxim denied that he lived in Cadogan Square with his wife and stated that he lived in Cyprus. Maxim did however agree that his wife (Natalia Moskaleva) and children lived in Cadogan Square. 106.Zhukov stated that Maxim told him that he had received MCAL’s Letters of Demand. Apparently, Maxim told Zhukov that he would deny everything: see Zhukov’s WS [23]-[24] [B/4/71]. Analysis of the evidence adduced in respect the Issues to be decided Issue 1 Is the PN a genuine document setting out Maxim’s promise to pay Team Plaintiff for the transfer of their interest in KEC. 107.This is the crucial issue in this trial. It depends heavily on the witnesses who gave evidence about the PN. There was a complete absence of common ground between the witnesses from Team Plaintiff and the witnesses from Team Defendant. So where possible I have considered the surrounding circumstances. In particular I considered, objectively, the plausibility of what the witnesses said in evidence. Circumstances surrounding the emergence of the PN 108.I have considered, objectively, the circumstances surrounding the appearance of the PN. These have little to with what the witnesses said and so are especially helpful. Also, the contents typed in the PN are a useful indicator when determining whether it is a genuine document. 109.The PN emerged without warning on 19th of February2018. There was no reference to the PN in the many exchanges between the parties around that time (See the WeChat / email /other documents summarized above). 110.It is striking that the PN is the only document in this trial which is in English. It stands out in the forest of thousands of other documents which are in Russian. This itself is interesting so at the start of the trial I called for the original of the PN and made it Court Exhibit A. 111.Everyone who looks at Exhibit A will form their own opinion about the document. I noticed that it is printed on cheap, flimsy paper. This is surprising given the apparent importance of the document which purports to be a promise to pay almost 5 million US dollars. Usually in a commercial dispute such a document would be carefully typed on good legal paper. There is a tiny tear in the top right of the document. There are two marks on the back of the PN which do not look like ordinary stains. The language used in the PN is reminiscent of an old-fashioned draft from a book of legal precedents. A current precedent for a simple promissory note (as shown on Google) is more carefully drafted and detailed. My initial reaction to the PN was that it does not look like the finalized version of a very important document in a hard-fought commercial dispute. 112.The contents of the PN are written in simple plain legal English. They have not been altered or amended in any way. This is in stark contrast to many of the Russian documents in evidence (see for example the Memorandum, the Addendum and the Assignment Agreements). Maxim is a careful businessman who frequently amends documents in his scrawly handwriting before agreeing to the contents.
113.Determining which party is correct about the surprising choice of Hong Kong as the convenient forum is not straightforward. It is something I look at in greater detail when dealing with Costs at the end of this Judgement. Suffice to say that I find it surprising that either party would include a Hong Kong jurisdiction clause in the PN. That alone is another, albeit smaller, fact which calls into question the genuineness of the PN. 114.More significant features of the contents in the PN call into question whether it is the genuine document of Maxim:
115.Another feature of the terms of the PN attracts attention. It states that “if the promissory note is not fully repaid on or before February 16 2019 interest of 0.1 per cent for each day of delay shall be paid by the Borrower”. That amounts to the usurious rate of about 36% p.a.. I consider it to be completely out of character for Maxim to offer such a penal rate of interest. Other evidence shows that Maxim was sensitive to the rates of interest charged. After careful negotiation with Dmitry, he managed to persuade Dmitry to reduce the interest rate in the Memorandum from 14 to 12 % p.a. (See D2/427-1). Given the careful attention to detail which Maxim applied to other agreements I find it hard to believe that he would voluntarily submit to such an extortionate rate of interest. 116.A surprising feature of the PN is that it states that the Memorandum agreement was on the 25th of September 2017. In fact the sequence was different:
117.Finally the PN is only purportedly signed by Maxim as the Borrower. Dmitry, as Lender, has not signed. Although it is not strictly necessary for the Lender to sign a Promissory Note it is normally done for the good reason that it limits the scope for disagreements later about what was decided. The evidence of the witnesses surrounding the emergence of the PN. 118.The evidence from Team Plaintiff (which is summarized above) now is that the PN was given to Kovalenko by Yuri Lis at the Primavera restaurant in Moscow during the afternoon of 19th of February 2018.
119.Perhaps the most significant feature of the PN in the context of Kovalenko’s evidence that he could not understand it is that the PN contains many numerals. Numerals are not words (and certainly not English words). Numerals are international symbols to denote numbers: See the Cambridge Dictionary where the definition of a numeral is “a symbol that represents a number”.
120.So I find it hard to accept that when Kovalenko looked at the PN he could not understand any of it. At the very least Kovalenko would have recognized and understood the numerals: “USD 4,974,044.92”. He knew that the PN was a crucial document addressing Team Plaintiffs concerns about being repaid by Maxim because he claimed that Yuri Lis told him that the PN was a promise to “keep his old buddy happy” Yuri Lis denied that he said this. But from Kovalenko position it makes it more probable that he would do his very best to decipher the PN when he got back to his apartment. 121.Kovalenko did not tell Dmitry about the PN that night. He claimed that he was tired. During his evidence Kovalenko added a gloss that Dmitry was on holiday in Thailand where the time difference (5 hours) would have made it too late to call. Maybe. But I find it hard to accept that tough oil men would balk at a short call to mention such a very important document. A phone call, or an email, or a WeChat message at around midnight Thai time would not have been unreasonable given the obvious importance of the PN to Team Plaintiff.
122.In any event almost one month later Dmitry did see the PN when Kovalenko gave it to him in the Moscow apartment (14th March 2018). The strange thing is that Dmitry never mentioned the PN to Maxim. The PN is not referred to in the numerous emails / WeChat / other messages which passed between them after that date.
Observations as to the credit of Witnesses who gave evidence about the PN. Kovalenko 123.Kovalenko was careful, almost guarded, in what he said: he was not forthcoming. Frequently his answers to questions in cross examination amounted to “Don’t remember …Don’t know”. 124.When Team Plaintiff tried to explain the radical change in their case (the original claim that PN was given by Yuri Lis to Dimitry on 14th of March was amended to claim that it was given by Yuri Lis to Kovalenko on the 19th of February) Dimitry stated that he needed to clarify the matter with Kovalenko.
125.There was no evidence about Kovalenko’s position when Team Plaintiff discussed the PN but he was not one of those who supported Dmitry in relying on the PN. Perhaps there was an undercurrent which explains Kovalenko’s reticence when giving evidence about the PN. Of course I do not know. But my observation of Kovalenko’s demeanor was that he was holding something back. I did not think that he was telling the Court the full story about the PN. 126.Another aspect of Kovalenko’s evidence which I find hard to accept is that he felt too tired to deal with the PN when he returned to his apartment at around 7:30pm on the19th February. Tired? Kovalenko is a strong, robust Russian oil man. I found it unconvincing that he chose not to make such an important phone call to Dmitry that night. Dmitry 127.Like the other investors in KEC Dmitry is highly educated. He was a polite, courteous witness. Older than the others in Team Plaintiff (and 10 years older than Maxim) he gave the impression of being a natural leader. The others in Team Plaintiff deferred to his judgment. They relied on him to look after the details and the documents relating to KEC.
128.Dmitry appeared to be in control of Team Plaintiff. He sat firmly at the back of the court observing everything that was going on. No doubt Dmitry oversaw the preparation of the Plaintiff’s witness statements. There is clear evidence that Shapilova was acting on Dmitry’s instructions when she attempted to tell Dolganov what to say in a witness statement in support the Plaintiff (See above; Shapilova WS; the WeChat exchanges between Shapilova and Dolganov).
129.Other witnesses for Team Plaintifff had a close connection with Dmitry and I sensed an element of his control in the striking similarity of the words and phrases used by them to describe the relationship between Maxim and Yuri Lis, See:
130.I realise that it is common for someone to take a supervising role in the preparation of a party’s Witness Statements. But I consider that in this case that control extended further than normal with the result that, at times, it seemed that the Plaintiff’s witnesses were sticking to the same story. 131.There was a dispute between Dmitry and Yuri Lis about the circumstances of an attempt to meet in Moscow around the 12th of March 2018. See: WS B1/1/22; WeChat messages. Dimity claimed that the meeting did not take place because Yuri Lis was suddenly taken ill and went to hospital. Yuri Lis strongly denied this.
Maxim 132.Maxim is clever, cunning and cautious. Like his former friends in KEC he was capable of obscuring the real truth by incomplete answers. Maxim, too, hid behind a shield of unhelpful statements like “Don’t remember. Don’t know”. 133.As set out about above Counsel advanced a skilful cross examination in an attempt to show that the email / WeChat exchanges in January - February 2018 were the build up to the issue of the PN. Although impressed I was not persuaded by these clever questions. Dmitry and Maxim were seasoned businessmen operating in the tough oil industry 。Some of the jokey (almost childish) phrases used in these exchanges (“protecting old buddy’s nerves …) did not sound like a bitter dispute between former friends. Surely if Maxim was contemplating issuing a promissory note, he would have told Dmitry in clear terms. Then they would have discussed / negotiated the contents (like they did with all other important agreements). 134.These exchanges between Dmitry and Maxim do not explain the origin the PN. They do however show that Maxim acknowledged a debt due under the Memorandum and/or the Addendum. As mentioned above it is arguable that this debt was not personal to Maxim. But I think that it is clear that Maxim acknowledged an obligation to pay Team Plaintiff and he discussed how to do so. 135.In these exchanges Maxim was clearly playing for time and trying to delay payment (“ducking and weaving” like an Artful Dodger). Such evasive conduct does not impact well on Maxim’s credit which I have taken into account. 136.Was Maxim lying? Probably no more than the witnesses from Team Plaintiff when they were trying to gloss over a difficult truth. I do not think that Maxim’s evidence was malicious in the sense of a bald -faced liar. Rather it was that of a business man in a corner trying to find a solution. There was some mention that Maxim was suffering cash flow problems (See above) but there was no independent evidence to confirm it. 137.It is of note that sometimes, when pressed in cross examination, Maxim openly admitted that he had made a mistake. See the evidence about litigation in the Moscow Arbitration Court concerning Aspect Finance (D/2/230-244). It was put that Maxim participated in these proceedings through Yuri Lis (See Day 15) 138.Maxim denied this and stated that Yuri Lis represented the other shareholders. Apparently, Maxim did have some connection with these proceedings (but he was not a party). Much later in his evidence Maxim admitted that he might have made a mistake when he was shown the Arbitration documents. The proceedings were years earlier “I could have made a mistake over the exact dates …many years have passed. This case concerns 2015.” (See Day 15) 139.Another point of detail concerned the payment of a small bill of USD 5000 relating to Petrochemicals expenses. Dmitry asked Maxim to pay half which Maxim did. Maxim said it was only a few thousand dollars and, rather than upset Dmitry, (who he said could become angry when upset) Maxim simply did as he was asked.
140.In conclusion I do not accept that Maxim was the inveterate liar which Team Plaintiff attempted to portray. Maxim was dishonest at times, certainly, but not all the time. The key witnesses in Team Plaintiff also had moments of being economical with the truth. 141.I do not consider that Maxim was dishonest about the central issue in this Trial. As set out above I believed Maxim evidence that he did not prepare the PN; that the signature is not his; that the PN is not his promise to pay Dmitry. Yuri Lis 142.Of all the witness who gave evidence about the origin of the PN I found Yuri Lis the most reliable. He was more inclined to assist the Court. He was less inclined to hide behind shield answers like “Don’t know…Don’t remember”. 143.I was not persuaded by the Plaintiffs assertion that Yuri Lis acted under Maxims control (as a nominee/ “right hand man”/puppet). Yuri Lis gave the impression of being quite independent. His company, Synergy, did some work for KEC (arranging the logistics of importing oil equipment into Russia from China). But Synergy did such logistical work for other companies which had nothing to do with KEC or with Maxim. 144.In cross examination Yuri Lis was challenged about aspects of his evidence:
145.Repetition of an assertion does not always make it more credible. I found Yuri Lis strong denial more persuasive than the litany of other witnesses who simply asserted that he was Maxim’s nominee.
Other peripheral Issues Relating to credit 146.As explained above, the 4th of August Question was most helpful. The many issues of credit raised in the Trial were brought into focus. Mr Fan (for the Plaintiff) explained that “...this case is very peculiar …because it turns almost entirely on credit.” Mis Liu (for the Defendant) largely agreed. 147.The credit of a witness depends on many factors. The fact that a witness is dishonest about one thing does not necessarily mean that they will be dishonest about everything. Like similar fact evidence (in a criminal context) a propensity to do the same thing again is closely scrutinised: the fact that a witness once lied does not mean that they always lie (once a liar always a liar is rarely the correct analysis). 148.Credibility depends on all the circumstances. Given the crucial importance of credibility in this trial, both parties spent considerable time in their written submissions focusing on the credit arising from peripheral matters which had nothing to with the origin of the PN. Some of these occurred years before the PN (such as Verta), or they occurred years after the PN, (such as Maxims passport and the entry in the Moscow Land Registry record). In summary these peripheral matters of credit are:
149.Maxim denied that he was involved in deception when documents were backdated to give the impression that Verta had assigned debt to Nikiforov as part of an Assignment Agreement (See D1/14/151-152).
150.I do not have the full facts or a clear explanation for the Verta / Nikiorov / Victoria assignment and the apparent reassignment of the same debt. The thicket of detail is murky. 151.With regard to credit, neither party comes out of it well. I did not find much assistance when considering the central issues surrounding the PN and the allegations of misrepresentation. This is particularly so as all these assignment transactions occurred either long before or after the emergence of the PN. None of them have a direct bearing on the PN. 152.The Plaintiff asserts that Yuri Lis acted as Maxim’s nominee in respect of a guarantee Synergy issued for Petrochemicals liability under a Multy-Party Repayment Agreement (SeeD2/28/261-1-2). Yuri strongly denied that and stated that he was acting solely in Synergy’s interest and that he could easily afford to cover the guarantee. See Day 10/page 92/12-13). Maxim denied that he was involved in this guarantee or that Yuri Lis or Anna Ivanova were acting on his behalf. 153.The Plaintiff asserted that Yuri Lis was acting on behalf of Maxim in connection with a payment of US$50000 connected with Abel Mass. Yuri Lis denied this. He explained that the payment related to separate business between Able Mass and Synergy and was an operational expense (See Day 10/page 85 lime 2-4). Maxim denied that he was involved in this transaction. 154.Set against these numerous allegations of dishonesty against Maxim the Defendant asserts that Team Plaintiff was dishonest in respect of various issues. Examples are:
155.All these questions of credit are peripheral to the central issue. I consider that there is ample evidence to decide whether the PN is genuine without particular recourse to these other, unrelated, issues. Although I understand, and I have considered, the parties’ reliance on these peripheral matters I did not find them particularly helpful when deciding the central issues about the PN. 156.The Hearing on 14th of August concentrated on 2 issues of credit about which much detailed evidence was called at Trial and lengthy submissions made in the Parties closing arguments. These issues are:
157.Considering each in turn: Maxim’s Passport 158.The sole relevance is to provide another copy signature for the handwriting experts to consider. They already had many signatures (over 300 control signatures and many sample signatures). The sample signatures already had examples taken from Maxim’s identity/ travel documents:
159.The sample signatures were produced under Court Order: Mimmie Chan J (A/8/140-141).
160.I consider this issue confusing and, at times, murky. I find it hard to accept that Maxim submitted a false application to the Russian authorities at a time when he was not in Russia. Maxim is a careful man. He would know the risks of trying to deceive the Russian State bureaucracy. I had a glimpse of how efficient and unforgiving such a bureaucracy could be. I was not persuaded that Maxim participated in this clumsy attempt to secure a passport at a time when he was not in Russia. 161.Attempts were made by the Plaintiff to show that Maxim had used this passport.
162.Another issue arose when Maxim was questioned about whether he had been involved in arbitration proceedings (Day 14/line 15-18). It transpired that he had participated by way of a power of attorney: See the Judgment (Exhibit P3). This is referred to above (where I found that, to his credit Maxim openly admitted his mistake). Maxim denied that he had used the passport in the way alleged. The Land Register in Moscow 163.A lot of time was taken trying to decipher a thicket of detail contained in the Land Register records. Annex 1 to the Plaintiffs Opening contains an Aid Memoire of the relevant documents (illustrated from the Ministry forms some of which bear the Official apostille and some do not). 164.Plotnikova engaged two separate firms of Land Agents in Moscow to investigate the Ministry records. Lisenko, explained the procedures within this large bureaucracy (he had once worked there). Maxim denied that the records related to him and stated that he did not provide the passport details which are recorded. Maxim stated that Plotnikovas enquires were not objective and he referred to some apparent inconsistencies (for example documents which did not identify the person responsible).
165.There was considerable debate whether Russian Ministry of Internal Affairs documents (particularly the Land Registry) are issued in an apostilled form and, also, whether an electronic signature was necessary. Livenko gave a helpful explanation. 166.On balance I found no convincing evidence to support the Defendants claim that some of the official documents relied on by the Plaintiff were not authentic. Again, this small point of detail has no direct relevance to the central issues surrounding the PN. I did not find it an indicator of credit either way. 167.Plotnikova gave evidence that she managed to obtain Maxim’s passport number (4620 No 924945) in the MAST – Bank arbitration in Moscow (Exhibit P3). Maxim stated that he was not a party in this arbitration and indeed the Judgment does not include his name among the participants (See Day 15 / LN page57). Maxim was challenged about this since it appears that he had an indirect interest by way of a Power of Attorney. Maxim originally denied being involved, but when he was shown a record of the proceedings he openly admitted that he had made a mistake. He explained that the Moscow arbitration judgment was years ago and he had forgotten the detail (See Day 15 LN page 57). I consider that Maxim was frank and honest about this matter. He readily admitted that he had made a mistake. 168.I have spent a lot of time on questions of credit because they are central to the PN. But they are not the only question. I found an objective analysis of the circumstances surrounding the appearance of the PN and an analysis of the contents of the PN more instructive than the conflicting issues of credit arising from the many peripheral matters referred to by the parties. In situations, such as this, where there is a stark disagreement between the witness of fact it is instructive to look beyond for support. Conclusions on Issue 1 169.I am satisfied that the P.N. is not a genuine document prepared by Maxim to settle outstanding sums due in relation to the transfer of shares in KEC.
170.A suspicion necessarily arises who created the PN. The document is not particularly convincing: whoever concocted it was not that skillful. From what I saw of Dmitry and his partners in Team Plaintiff, I do not believe that any of them forged the PN. Dmitry, Zhukov, Borowski and even Kovalenko are too clever to have been so foolish. There is no evidence how the PN was created. Perhaps it was done by an over -enthusiastic underling trying to improve Team Plaintiffs position in the dispute with Maxim…but this is idle speculation which leads nowhere. But it is important to record that I found nothing to indicate that that the key witnesses in Team Plaintiff were personally involved in this deceit. 171.Forgery and/or knowingly putting a false document before the Court is a serious criminal offense in Hong Kong. A report has already been made to the Hong Kong Police. The Court was told that there is no current information about the progress of the police investigation. The criminal consequences, if any, are not my concern in this Trial. It is sufficient for this Civil trial that I have concluded that, on a balance of probabilities, the PN is not a genuine document. Issue 2 Was Maxim’s signature forged on the PN 172.This issue requires the assessment of diametrically different positions by the parties on the facts and in terms of the opinion of their expert witnesses. The correct approach is for the Court to consider:
173.The law relevant to the issue of forgery is set out in Choi Lisa Mei Yin v Yau Pak Kin (2020) 2 HKC 28 at 237-238 per Kwan J:
174.Handwriting expert evidence is considered to be necessarily of a lower order of cogency than credible direct evidence of witnesses who actually saw and heard what happened See Nina Kong v Wang Din Shin (2005) 8 HKCFAR 387 at 403-404 per Chan PJ and 463 I-J, 493 C-D, 500 F -505 H per Ribeiro PJ. 175.Two experts gave evidence about the questioned signature of Maxim on the PN
176.Both experts were polite and courteous doing their best to assist the Court understand their arcane science. They were both distinguished and each had an impressive back story of giving expert evidence in Hong Kong.
177.Extracts from the important judgment of Ribeiro PJ in the Nina Kung case put the value of handwriting expert evidence into context. Where the experts are divided and inconclusive their evidence has less weight (see 436 H-J) Handwriting evidence has a “soft, less precise facet involving professional judgment of a relatively subjective nature” (See 500 F-H). 178.The Court can determine the issue primarily on the factual material (the evidence of the witnesses, the nature of the contested document and an objective assessment of the surrounding circumstances) and explain, briefly, why the expert evidence did not assist (See Credit One Finance Limited v Leung Yong Lok (2020) HKCFI 2919. 179.The experts called at trial were experienced. Mr Liang led a Team from the Fada Institute of Forensic Medicine & Science: Li Bing and Lian Yuanyuan. Mr Leung also operated in a reputable environment. But the two of them could agree very little about the contested signature. In summary:
180.Mr Leung states that the questioned signature exhibited a variety of fundamental differences from the control signatures. These included the line quality; the letter formation; the morphology; the pen pressure; a variation in the patterns of the signature (variously described as a sausage shaped loop as distinct from a bow shaped loop). Mr Leung concluded that these fundamental differences constitute a strong indication of forgery (See Leung Report C/3/556 at paragraph 8.3). 181.Mr Liang rejected Mr Leung’s opinion and stated that there were no fundamental differences between the questioned signature and the control signatures. 182.I listened with interest to the various adjectives and analogies used to describe the features of the questioned signature: toothlike structure; bow-shaped; sausage shaped. It seemed to me to be subjective and influenced by the reaction of the person looking at the signature (like trying to describe in words the brush strokes in a Kandinsky painting). Fortunately, the scope of such descriptions was kept under control and the suggestion that an ant-eater shape was more useful did not find traction with the experts. 183.The experts explained the indicators they applied: pen pressure; interference by foreign matter (such as a paper-clip lodged under the document being signed) called an “accidental; hesitation which includes pen-lift; a hiatus which includes retouching or patching; a blemish. Mr Liang concluded that the contested signature was smooth and natural with no sign of pause, hesitation or pen-lift. Mr Leung disagreed. 184.The Plaintiff suggested that a holistic approach was required: to see the signature as a whole and not to focus on small imperfections. Particularly if such imperfections only became apparent under the microscope.
185.These observations are in no sense to question the skill of the experts (who I found very interesting and both of whom I admired). But they put into context their debate about whether a feature of the signature is a tooth, a sausage or a bow.
186.On balance I preferred the evidence of Mr Leung. His Report is more logical and reasoned. Mr Leung was a more impressive witness.
187.Given my conclusion that the PN is not a genuine document it is not so important for me to determine whether the questioned signature is a forgery. But, for completeness, I do find, on a balance of probabilities, that the signature on the PN does not belong to Maxim. It has been forged. 188.The principles are well established and were not controversial at Trial. 189.In summary the Plaintiff claims that at the time of the agreement for the transfer of Team Plaintiffs KEC shares in return for payment from Maxim he made representations that he would make full and timely payment and that he fully intended to do (Maxim’s Representations). The Plaintiff asserts that Maxim’s Representations were false and so constitute actionable misrepresentations as fraudulent (deceit) or alternatively negligent. 190.The elements of the tort of deceit are set out in Haifa International Finance Co Ltd v Concord Strategic Investments Ltd [2009] 4 HKLRD 29 [P#23] at 35, [15] per Cheung JA:
191.A representation of present state of mind is a representation of fact: see Edgington v Fitzmaurice (1885) 29 Ch. D. 459 [P#24] at 483 per Bowen LJ. If a person induces another to enter into a contract with him when he had no intention to fulfil the contract, then this could amount to fraud because at the time of contracting he must be taken to have represented an existing intention to perform the contract: see also Leung Ping Shing Roger v Lee Kwok Kei (unreported: HCA 778/2007, [P#25]. 192.In determining whether there has been an express representation, the court has to consider what a reasonable person would have understood from the words used in the context in which they were used: See IFE Fund SA v Goldman Sachs International [2006] 2 CLC 1043 [P#26] at 1056, [50] per Toulson J. 193.When considering an implied representation, the test is not one of implied contractual term, but whether, fairly read in all the circumstances, the passage contains (explicitly or implicitly) the representation alleged: see Jaffray v Society of Lloyds [2002] EWCA Civ 1101 [P#27] at [59], [303]-[307] per Waller LJ. 194.As to the requirement of falsity and dishonesty, if the representors own intentions are false, they must also be dishonest and so fraudulently made. 195.As to the requirement that the representee must have been induced to act upon the representation: -
196.As to the assessment of damages once an actionable misrepresentation has been established the Court ascertains the losses flowing directly as a result. In this Trial any question of the quantum of damages in respect of any actionable misrepresentation has, by Court Order, been adjourned to a separate hearing See the 2nd CMC Order [1] [A/7/1 33]. 197.Under section 3(1) of the Misrepresentation Ordinance (Cap. 284) [P#30], it is necessary to establish a subsisting contract (which on the facts of this Trial can only be the Memorandum and / or the Addendum). It must be established that the Representations were intended to be acted upon and were in fact acted upon and that the Representations were false.
Application of these principals to the facts 198.The first difficulty the Plaintiff faces is that the Trial proceeded on the basis that no claims are being made for breach of the Memorandum and / or the Addendum. Although the Court was taken to both of these documents and their contents were analyzed and construed there were no Submissions and so no finding by the Court that either amounted to a concluded agreement. To the contrary the Defendant throughout maintained that they were not an agreement, but at best a road map setting out an understanding to agree in the future. It follows that the Plaintiff cannot clearly demonstrate that, whatever representations Maxim made to Team Plaintiff, they were thereby induced to enter into an agreement. 199.This is unfortunate because on the evidence there is little doubt that Maxim did make representations to Team Plaintiff at the time of the Memorandum and/or the Addendum. Then, maybe, it is not so unfortunate because I do not consider that Maxim’s representations were false (in the sense of being dishonestly made). Further they were not recklessly made. In summary my reasons are:
200.The fact these payments were made to the Plaintiff under the Memorandum and / or the Addendum is the most telling point against the claim of misrepresentation. The fact that Maxim arranged for KEC to make some payments to the Plaintiff under the terms of the Memorandum and / or the Addendum must negate the assertion that Maxim was dishonest when he said he would pay. Clearly Maxim did intend to pay. That Maxim did not pay the full amount is not relevant: to amount to a misrepresentation it must be shown that Maxim never intended to pay. The fact that he did pay something must defeat the Plaintiffs assertion that Maxim acted dishonestly (or recklessly). 201.My assessment of Maxim when giving evidence supports this conclusion. I was not persuaded that Maxim is a dishonest, habitual liar. I have analysed the many allegations of dishonesty levelled against Maxim and I have concluded that he was no more lying than other witnesses from Team Plaintiff. They all lied to a certain extent to advance their case, but then at other times they were open and honest (admitting their mistakes). None of the witnesses, including Maxim, were bald -faced liars, the enemy of the truth. 202.So, in conclusion, whilst it is clear that Maxim made representations at the time of the Memorandum and / or the Addendum I do not consider them to have been dishonestly made (or reckless). The fact that Maxim did pay Team Plaintiff under these agreements and continued to pay after the appearance of the PN defeats any suggestion that he acted dishonestly (or recklessly) in this regard. Conclusion on the claims in misrepresentation 203.The Plaintiffs claims in fraudulent misrepresentation are not made out and so must fail. 204.The Plaintiffs claims in negligent (reckless) misrepresentation are, a fortiori, not made out and so must fail. Conclusion on the Plaintiffs claims in the Trial 205.The claims based the PN must fail it having been determined that the PN is not a genuine promise by Maxim to pay the Plaintiff. In further support of this conclusion, it has been determined that the signature on the PN is a forgery. 206.The claims in misrepresentation (fraudulent or alternatively negligent) are not made out and so must fail. Costs 207.The Order for Costs is an Order Nisi. The question is complicated and may well attract further submissions from the parties. If the parties do not respond, within 14 days, to this Order Nisi for Costs it will become an Absolute Order for Costs. 208.General observations are:
209.A number of Interlocutory Summonses were referred to but not determined. No order was made concerning the small Costs they will have generated. 210.The fact that I have concluded that Maxim still owes the Plaintiff further payment is a complicating factor. Although Maxim has been successful in defending the central issues in the Trial, he does not have merit on his side. 211.The fact that I have concluded that the PN is not a genuine document and that the signature was forged, but that I have also concluded that none of the key witnesses in Team Plaintiff were directly involved in this deceit is a complicating factor. Order nisi as to costs 212.All the Costs referable to the PN are to be paid by the Plaintiff to the Defendant on an indemnity basis. 213.All other Costs are to be borne by the parties themselves. There is no Order for such Costs. 214.This unusual Order takes account of the fact that Maxim, although successful in the Trial, still owes the Plaintiff a considerable sum. I do not consider it just for Maxim to benefit by receiving all the Costs of this lengthy and complicated Trial.
Mr Charles Hollander, KC (except on 4 and 14 August 2026) leading Mr Brian Fan, instructed by M.C.A. Lai Solicitors LLP, for the Plaintiff Ms Abigail Liu and Mr Chris Fong (except on 4 and 14 August 2026), instructed by Henry Wai & Co., Solicitors LLP, for the Defendant | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Dmitry Yanishevskiy v. Maxim Moskalev
Fairwing Investment Ltd v. Chau Sau Ngor and Another
Maxful Sail Ltd v. Yau Chung Wo Jeremiah and Another
Tam Ying Man v. Leung Ka Chun and Others
Allied Weli Development Ltd (in Liquidation) v. Chuang Yue-chien Eugene and Others
Koo Ming Kown v. The Baptist Convention of Hong Kong and Others
Other judgments that cite this case
Further hearings and rulings under HCA 1840/2019