VASILY TRUBNIKOV v. EVGENY VOLOSOV AND OTHERS

HCA 139/2024

[2025] HKCFI 3050

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 139 OF 2024

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DECISION

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Introduction and Applicable Principles

1.  By Summons dated 6 May 2025 (“P’s Summons”), the Plaintiff (“P”) seeks:

(1)  leave to appeal against the decision of this court dated 22 April 2025;

(2)  an order that the 2^nd Defendant (“D2”) do maintain a sum of no less than US$60.5M in its interest bearing account with China Minsheng Banking Corp Ltd, Hong Kong branch, pending P’s appeal or further order; and 

(3)  that (1) and (2) be dealt with on paper.

2.  For ease of reference and consistency, unless otherwise indicated herein, I shall adopt the abbreviations and definitions in my Decision dated 22 April 2025 ([2025] HKCFI 1576 (“the Decision”)).  

3.  For the reasons explained in the Decision, I refused to grant a proprietary injunction and ancillary disclosure order sought by P against D2.  Although I found inter alia that there were serious issues to be tried on P’s proprietary claim that the profits in D2’s bank accounts are held on trust for P and D1, I did not find that the balance of convenience lied in favour of the grant of the injunction.  This decision should be read together with the Decision.

4.  The test for granting leave to appeal against an interlocutory order of the Court of First Instance is trite.  Section 14AA(4) of the High Court Ordinance, Cap. 4, provides that leave to appeal shall not be granted unless the court is satisfied that the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.   Reasonable prospects of success involves the notion that the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable”.  See e.g. SMSE v KL [2009] 4 HKLRD 125 at §17.

5.  Moreover, the grant or refusal to grant an injunction involves the exercise of discretion on the part of the judge.  It is well-established that the appeal court is not to exercise an independent discretion of its own.  Its initial function is one of review only.  It may set aside the judge’s exercise of discretion if it can be shown that the judge was plainly wrong in the sense that, for example, he had acted on wrong principles, taken into consideration irrelevant factors, ignored relevant factors or the decision is outside the generous ambit within which reasonable disagreement is possible: see e.g. Agritrade Resources Limited & Anor v Ashok Kumar Sahoo [2022] HKCA 280 at §20 and Convoy Collateral Limited v Cho Kwai Chee & Ors [2020] HKCA 537 at §33.

Discussion

6.  The intended grounds of appeal, as summarised in P’s Submissions (For Leave to Appeal) dated 16 May 2025 (“P’s Submissions”) of Mr Leung, counsel for P, are as follows:

(1)  In concluding that the balance of convenience lied against the grant of proprietary injunction, the Court erred in principle by:

(a)  focusing on P’s ability to pursue D1/D3 for monetary relief (“Ground 1(a)”); and

(b)  failing to give proper regard to the proprietary nature of P’s claim (“Ground 1(b)”); and

(2)  The court erred:

(a)  in concluding that the balance of convenience lied against the grant of the proprietary injunction because P failed to demonstrate any risk of dissipation of assets (“Ground 2(a)”);

(b)  in failing to apply the correct principles to determine whether it was an abuse of process in all the circumstances of the case for P to have raised certain contentions (“Ground 2(b)”); and

(c)  in failing to find that the risk of dissipation was established on the evidence (“Ground 2(c)”).

Ground 1(a)

7.  Firstly, Mr Leung submitted that it was an irrelevant consideration and therefore I wrongly focused on P’s ability to pursue D1 or D3 (P’s Submissions, §3.1) or whether P can independently pursue D1 or D3 for monetary relief (P’s Submissions, §7).  I am afraid that Mr Leung has misread the Decision and/or read it out of context. 

8.  In the Decision at §48, I held that even though the injunction sought was proprietary in nature, where the injunction essentially required the defendant (D2) to set aside money in order to pay the plaintiff in the event that his claim was successful, unless there is reason to think that the defendant will be unable to meet such a claim, a proprietary injunction may be refused.  As I noted therein, that proposition was not disputed by Mr Shieh SC, counsel for P who appeared at the hearing on 25 and 26 February 2025 (“the Hearing”).

9.  By the Summons, P was seeking to restrain D2 from disposing of the monies held in its bank accounts in Hong Kong, which as at September 2023, was in the sum of USD 211,007,604.  There was no issue raised by P that D2 had no assets in Hong Kong sufficient to meet P’s claims.  At the Hearing, Mr Shieh submitted that D2 may have assets in Hong Kong but it was not clear that D1 and D3, being Russian and Armenian respectively, had assets in Hong Kong and thus the injunction sought against D2 should be granted.  See also P’s Skel at §82:

“There would be considerable difficulties for [P] to recover the sum against the Defendants without the injunction, especially given that … [D1] and [D3] are both foreign nationals. There is no suggestion that they have substantial assets which could cover [P]’s claim within the jurisdiction. Neither Defendant has adduced clear evidence on his alleged wealth or worth, or his assets within the jurisdiction...”.

10.  It was in that context that, following the approach in Wason Holdings Limited & Ors v BHP International Markets Limited & Anor [2018] HKCA 113, I took the view that although D1 and D3 may not have much in way of assets in Hong Kong, it does not follow that their assets are not adequate to meet P’s claim.  As held by Barma JA at §38:

“… Given that the shares had been sold, the effect of the injunction could be to secure a sum of money … to satisfy any judgment the plaintiffs might ultimately obtain. However, given the nature of the business operated by the 1^st defendant, requiring it to set aside a sum of money, which it would be prevented from deploying in its business, would be likely to have a significant adverse impact. On the other hand, from the plaintiffs’ point of view, whatever judgment they may obtain at the end of the day is likely to involve the payment of money to them. Where that money comes from is ultimately of little consequence to the plaintiffs. Although, their claim may be characterized as proprietary, in the particular circumstances of this case, it is nonetheless a claim to money. Unless there is reason to think that the 1^st defendant will be unable to meet such a claim, there is no particularly pressing need for money to be kept aside to meet it. With respect to the judge, while he was correct to say that the 1^st defendant did not have much in the way of assets in Hong Kong, it did not follow that the 1^st defendant’s assets overall (although possibly not very liquid) were not adequate to enable the plaintiffs’ claim to be met….”

11.  At §50 of the Decision, I further pointed out that: (1) on D1’s evidence, he owned an international portfolio of mining businesses; (2) on P’s case, the net profits in D2’s bank accounts (in Hong Kong) belonged to P and D1 in equal shares, so that if P succeeds D1 could use his half share to pay P; and (3) on P’s case, D2 was in fact controlled by D1 and D3 acted as D1’s nominee, so P could pursue D1 if they could not satisfy any judgment in favour of P.  I concluded that there was no reason to think Ds cannot satisfy P’s claim against them and where no risk of dissipation of the monies in D2’s bank account is demonstrated, the balance of convenience did not lie in favour of the grant of injunction (see the Decision, §57).

12.  I am not satisfied that it is reasonably arguable that the ability of Ds (or in particular, D1 and D3, as raised by Mr Shieh) to meet P’s claim (which was accepted to be a monetary one), was not a relevant consideration.

13.  Secondly, whilst it is correct that none of the authorities cited in the Decision at §48 supports the proposition that a proprietary injunction against one defendant should be refused unless there is reason to think that some other defendants will not be able to meet the plaintiff’s independent claim against them, it is not strictly correct that P has made independent claims against each of Ds (cf P’s Submissions, §§8-10). 

14.  P’s claims against Ds were set out at §8 of the Decision.  The summary was taken from P’s Skel.  It is plain on P’s case that the monies in D2’s bank accounts were claimed to be assets of the Partnership, which P claimed D1, D2 and D3 had wrongfully misappropriated or diverted in breach of trust, and that they engaged in an unlawful means conspiracy. Therefore, the proprietary claim to the monies in D2’s bank accounts is inextricably bound up with P’s claim against all Ds.  It follows that in the circumstances of this case, the observation of Barma JA cited above (“where that money comes from is ultimately of little consequence to [P]”) is apposite.

15.  Thirdly, in respect of the submissions that I have failed to take into account or had inadequate regard to material matters (see P’s Submissions, §§11-12), there is no basis for such submissions:

(1)  The fact that D1 and D3 are both foreign nationals was noted in the Decision at §§1, 3 and 49;

(2)  As to their lack of assets in Hong Kong, this is simply repeating the argument made at the Hearing which I had rejected at §§49-50 of the Decision for the reasons already explained above;

(3)  In so far as it is submitted that it was wrong for me to “trivialise D1’s and D3’s lack of substantial assets on the basis that they may have assets elsewhere”, given the Court of Appeal’s approach in Wason Holdings Limited & Ors that I relied upon, it is not reasonably arguable that I erred to find that even though D1 and D3 did not have assets in Hong Kong, it does not follow their assets were not adequate to enable P’s claims to be met;

(4)  The argument that where Ds’ assets are out of jurisdiction, the difficulty of enforcement against assets overseas and greater risk of unsatisfied judgment, should typically be regarded as a factor tilting in favour of the grant of injunction was never pursued by Mr Shieh at the Hearing and should not be now allowed.  Besides, there was never any evidence placed before me of any difficulty of enforcement or risk of unsatisfied judgment.  Therefore, even if this potentially was a relevant factor, given that it was never raised and no evidence was adduced in support, I could not be faulted for failing to consider this factor.

Ground 1(b)

16.  There is no basis to assert that I had “arguably failed to give due regard to the distinct proprietary nature of P’s claims to the relevant profits” (see P’s Submissions, §14).  The fact that P was seeking a proprietary injunction is made clear throughout the Decision:

(1)  At §14, I set out the applicable principles governing proprietary injunction.  The fact that a proprietary injunction is distinguishable from a Mareva injunction was plainly appreciated by me in stating therein that it is not necessary to show risk of dissipation of assets or that damages would be an adequate remedy;

(2)  At §15, I expressly stated that it is with the applicable principles in mind that I turned to consider whether to grant the proprietary injunction sought;

(3)  At §48, on the basis of the authorities cited therein, I referred to the proposition that even in a case where the injunction sought is proprietary in nature, where the injunction essentially required the defendant to set aside money in order to pay the plaintiff in the event the plaintiff succeeds in his claim, unless there is reason to think that the defendant will not be able to meet such a claim, a proprietary injunction may be refused; and

(4)  At §70, I expressly stated that I would not grant the interlocutory proprietary injunction sought by P.

17.  As for the submissions that once a proprietary claim is established, the court will much more readily grant interim relief to preserve the subject asset, and that had I borne in mind this principle I could not have found the balance of convenience lied against granting the proprietary injunction (P’s Submissions, §§15-18), this very same argument (although made in P’s Skel at §80) was never orally pursued by Mr Shieh at the Hearing.

18.  In any event, at the highest, the authorities cited by Mr Leung held that the court will more readily afford a claimant who shows a sufficiently arguable case for proprietary remedy interim remedy by way of injunction: see e.g. Madoff Securities International Ltd & Anor v Raven [2011] EWHC 3102, §§131 and 140.  However, on the other hand, in   李明實, 方壘 and 史洪源& Ors v Ace Lead Profits Ltd & Anor [2024] HKCA 523 at §§14 and 16, the Court of Appeal held that a case of proprietary interest will not in the circumstances necessarily carry the day and will depend on the balance of convenience dictated by the case before the judge.  See also Wason Holdings Limited & Ors at §37. These authorities are binding on me.  I do not agree that the case of 李明實, 方壘 and 史洪源does not assist (cf P’s Submissions, §19.1).  Besides, Mr Leung himself accepted that every injunction application is facts-sensitive.  In the circumstances, I do not consider that this argument advances P’s case that I erred in finding that the balance of convenience did not lie in favour of the grant of proprietary injunction on the facts of the present case.

Ground 2(a)

19.  Insofar as Mr Leung suggests that I erred in refusing to grant the proprietary injunction sought because I was not satisfied that P had demonstrated a risk of dissipation (see P’s Submissions, §§20-23), again it seems that this is based on a misreading of the Decision.

20.  As already explained above, where a proprietary injunction is sought over monies (as opposed to a proprietary claim over property with a unique character which cannot be readily purchased or substituted on the market as explained by Anthony Chan J in DBS Bank (Hong Kong) Limited v Tian Wen Quan (unrep) HCA 3228/2016, 12 October 2017 at §§14-15), unless there is reason to think that the defendant would not be able to meet the claim, the court may refuse to grant the injunction.  At the Hearing, Mr Shieh did not dispute the above proposition.  It was in this context that in P’s Skel, §82 (under the heading “Balance of Convenience; Just and Convenient to Grant Injunction”), he invited this court to take into account inter alia the alleged clear risk that Ds would dissipate their assets and there would be considerable difficulties for P to recover the sum against Ds without the injunction (as noted in the Decision, §51).

21.  Accordingly, the issue of risk of dissipation arose in the court’s assessment of whether D1 is able to meet P’s proprietary claim.   This is made clear at §57 of the Decision.  It is not reasonably arguable that I erred in refusing to grant the proprietary injunction by reason of P’s failure to demonstrate any risk of dissipation which plainly I was aware was not a requirement for the grant of proprietary injunction.

Ground 2(b) and Ground 2(c)

22.  In respect of the submissions that P had in fact clearly established risk of dissipation and my finding to the contrary was wrong (see P’s Submissions, §§13 and 25-59), I am of the view that it is not reasonably arguable.

23.  Firstly, in respect of the submissions that given Ds’ stance that the profits in D2’s bank accounts are held on behalf of East Coal BVI there is a risk of dissipation, this point was never raised in P’s Skel but was only raised in Mr Shieh’s oral submissions in reply at the Hearing.  In any event, he did not take me to any evidence to support the submission that Ds’ stance necessarily carried a risk that the profits may be called upon in favour of East Coal BVI and therefore may be dissipated.  As held in Convoy Collateral Limited (as referred to in the Decision at §55), the onus is on P to demonstrate by solid evidence the risk of dissipation.  On the other hand, it was stated more than once in P’s Skel (see e.g. §§23.3 and 81.2) that net profits have been accumulated for years in D2’s accounts which suggests that East Coal BVI had no immediate use of them.  Admittedly, I did not expressly mention my views on this argument in the Decision but it does not mean that I did not take this into my consideration: see Harbour Front Limited v Money Facts Limited & Ors [2019] HKCA 916 at §9.  I simply did not believe that this unmeritorious submission was seriously pursued by Mr Shieh.

24.  Secondly, it was submitted that it is reasonably arguable that my holding at §54 of the Decision lost sight of the fact that the doctrine of issue estoppel does not apply to interlocutory applications. However, I have not held that P was prevented to raise the matters concerning the alleged diversion on board TAN BINH 136 and alleged fictitious documents in relation to the Universe Wealthy shipment by reason of issue estoppel.  At the Hearing, I expressly confirmed with counsel that there was no dispute that the doctrine of issue estoppel did not apply to interlocutory applications so it was common ground. Rather, in the Decision at §54, I held that it would be an abuse of process to raise these two matters.

25.  Thirdly, as for the complaint that I had applied a mechanistic approach and failed to consider whether there was any actual abuse, this is not reasonably arguable.  At §§52-54 of the Decision, I had considered that:

(1)  In the Decision of the Judge, the Judge also considered whether there was a risk of dissipation in the context of an earlier application for interim receivers and managers which also required her to consider whether there was a real risk of dissipation by D1;

(2)  The Judge had considered broader and wider matters than presented by P on the risk of dissipation (which included discrepancies in the shipping documents in relation to the Universe Wealthy shipment) but they were all roundly rejected by her;

(3)  There was no material change of circumstances since the Decision (the date of the Decision of the Judge was just over 2 months before the Hearing);

(4)  There was no appeal against the Judge’s findings on no risk of dissipation notwithstanding Mr Shieh’s criticisms of the Judge’s acceptance of D1’s explanation on the alleged discrepancies of the shipping documents at the Hearing; and

(5)  To raise again this matter raised before the Judge and the other matter concerning the alleged diversion, which could have been but was not raised before the Judge, would in my view amount to an abuse of process.  

26.  The approach taken by me is more or less consistent with Hui Chun Ping v Hui Kau Mo [2024] 2 HKLRD 178 at §24 and Lau Sin v Wong Mary & Others [2018] HKLRD 202 at §33, authorities cited by Mr Leung.  It was held that generally speaking, the court should consider what is just and reasonable and whilst it is inappropriate and impossible to set out exhaustively what the relevant considerations should be, naturally, the court will need to consider: (a) the nature of the interlocutory application; (b) whether the applicant could and should have challenged the first interlocutory decision by other means; and (c) why a second application on the same matter has been made.  Furthermore, it was held that the court should adopt a holistic rather than a dogmatic or mechanistic approach.  I do not consider that it is reasonably arguable that I committed any error of principle or approach.

27.  Fourthly, in respect to the submissions that had I considered all the relevant circumstances, I should have found that there was no abuse of process, I am of the view the high threshold to appeal against the exercise of my discretion is not satisfied:

(1)  Whilst, Mr Leung submitted that there could and were various reasons why P decided not to appeal, no such reasons were provided to me at the Hearing.  In the absence of any explanation why P did not appeal the Decision of the Judge, I was entitled to take the view that it would be an abuse to seek to re-litigate the same issue of risk of dissipation which had only been rejected 2 months previously when there was no apparent material change of circumstances;

(2)  I do not agree that the issues before the Judge were not in fact identical to the issues before me.  Although in the context of interim application of receiver and managers, the Judge had also to consider whether there was a risk of dissipation by D1 (see Decision of the Judge, §40) and as noted by me, dismissed such risk by rejecting even wider and broader grounds presented by P;

(3)  Despite Mr Leung’s submissions, which is a rehash of Mr Shieh’s submissions that the Judge erred in her conclusions concerning the discrepancy of the shipping documents, there being no appeal and the application before me was not an appeal against the Decision of the Judge, it is not reasonably arguable that I ought to have independently considered this matter because P “has strong reasons to object” to the Judge’s findings;

(4)  Besides, at the Decision at §55, I held that even taking into account the complaint concerning the diversion of the shipment on board TAN BINH 136 and the alleged discrepancy in the letters of credits relied upon by Mr Shieh, examined holistically, I was not satisfied that a real risk of dissipation by D1 has been demonstrated;

(5)  I do not accept my finding at §55 was plainly wrong by reason of the matters submitted in P’s Submissions §49.  I was entitled to take the view because P had known of the shipment and received the mates receipt, this was an arguable answer and taken with the other allegations, examined holistically, P has not demonstrated by solid evidence a risk of dissipation;

(6)  As for the submissions that I erred to find the staleness of the two complaints (there was a delay of over 2-2.5 months between service of the Amended Writ on Ds and the issuance of the Summons) coupled with the lack of explanation militated against any risk of dissipation, this is clearly not reasonably arguable.  I had cited Convoy Collateral Limited at §54 which plainly held that, “Delay after a defendant gained knowledge of a plaintiff’s claim can militate against the risk of dissipation as such defendant would already have the opportunity to dispose of assets should he be inclined to do so.  This is the stable-door argument which Mr S Wong strongly urged upon us in the present appeal…”.  See also §§77-79, which I had in mind when I mentioned the lack of explanation for the delay. Whilst I accept that the Court of Appeal had held that delay per se would not necessarily bar relief, at §79, it also held that depending on the circumstances of the case, where the assets remained notwithstanding a defendant has knowledge of the claim for a long period of time, this can be evidence negating an inference of dissipation and in such a case, unexplained delay can be fatal (citing the case of China Art Bank Co Ltd v Xu Zhiqiang [2018] HKCA 63); and

(7)  For the reasons explained above, I do not think my finding of lack of solid evidence of a risk of dissipation was plainly wrong, and therefore coupled with the lack of explanation for the delay, it is not reasonably arguable that I erred in finding the delay militated against any real risk of dissipation.

Disposition and Order

28.  For all the above reasons, I am of the view that none of the intended grounds of appeal against the Decision has a reasonable prospect of success or that the exercise of my discretion against granting the proprietary injunction sought is demonstrated to be plainly wrong. 

29.  As I refuse leave to appeal, there is no basis to grant the order that D2 do maintain a sum of no less than US$60.5M in its interest bearing account with China Minsheng Banking Corp Ltd, Hong Kong branch, pending P’s appeal.

30.  Accordingly, P’s Summons is dismissed. 

31.  There is no reason why costs should not follow the event.  I therefore order P to pay Ds’ costs of P’s Summons to be summarily assessed if not agreed.  D1 has already submitted his Statement of Costs.  I hereby direct that D2 and D3 are to lodge and serve their Statement of Costs within 7 days from the handing down of this decision.  P is to lodge and serve any objection to Ds’ Statements of Costs within 7 days thereafter.  There shall be an assessment of Ds’ costs on paper by me thereafter.