Stepaniuk, Nikolai v Wellstead Corporate Solutions Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Chua Lee Ming J
• Judgment Date: 28 February 2017
• Neutral Citation: [2017] SGHC 39
• Court: High Court (Singapore)
• Docket Number: Suit No 547 of 2016 (Summonses Nos 5087 and 5088 of 2016)
• Published date: 18 October 2017
• Year: 2017
• Hearing Date: 16 November 2016
• Plaintiff Counsel: Chacko Samuel and Charmaine Chan-Richard (Legis Point LLC)
• Defendant Counsel: Genesis Shen (Gloria James-Civetta & Co)
• Subject Matter: Civil procedure,Judgment and orders,Admissions of fact,Unless order
• Citation: [2017] SGHC 39

Chua Lee Ming J: Introduction

These two applications arose from the plaintiff’s claim against the first to third defendants for various orders relating to shares in and assets of the fourth defendant, Electronic Commerce Trading Limited (“ECTL”). These assets included certain funds (“the Funds”) which had been held in ECTL’s bank account (“the Bank Account”) with Hang Seng Bank Ltd (“Hang Seng Bank”) in Hong Kong. In essence, the plaintiff, Nikolai Stepaniuk, alleged that he was the sole beneficial owner of ECTL, and that the first to third defendants had wrongfully sought to deprive him of his interest in ECTL’s assets, including the Funds.

The first application, Summons No 5087 of 2016 (“SUM 5087/2016”), was for judgment against the second defendant, Nazrad Aman d/o Mohamed Hanifah (“Nazrad”), under O 27 r 3 of the Rules of Court (Cap 332, R 5, 2014 Rev Ed) based on admissions of fact made by her in various correspondence and affidavits. The second application, Summons No 5088 of 2016 (“SUM 5088/2016”), was to strike out the defences filed by Nazrad and ECTL based on their failure to adequately comply with an unless order which I made on 30 August 2016 (“the Unless Order”) requiring them to, among other things, confirm the whereabouts of the Funds in compliance with two previous orders of court. After hearing the parties, I made the following orders: In SUM 5087/2016, I granted a declaration that Nazrad holds the shares in ECTL on trust for the plaintiff and ordered the transfer of those shares to the plaintiff. In SUM 5088/2016, I struck out the defences filed by Nazrad and ECTL and made several orders against Nazrad including (i) an injunction to restrain her from dealing with ECTL’s assets, (ii) delivery up of the share certificates for the shares in ECTL to the plaintiff, (iii) an account of all of ECTL’s assets (including the Funds), and (iv) damages for losses arising from Nazrad’s breach of trust.

The defendants have appealed against my decisions.

Background

The plaintiff is a Russian citizen who claimed to be in the information technology business. The first defendant, Wellstead Corporate Solutions Pte Ltd (“Wellstead”), is a company incorporated in Singapore and provides corporate trustee services. At all material times, Nazrad was an employee of Wellstead. The third defendant, Amar Prem Kashmir @ Prem Kashmir Singh s/o Kusmavi Singh (“Kashmir”), is the sole director and the business development manager of Wellstead.ⁱ

ECTL is a company which was incorporated in Hong Kong by Wellstead in May 2015. All its shares were registered in Nazrad’s name, who was also appointed as ECTL’s sole director.ⁱⁱ

By way of a letter of engagement dated 17 July 2015, the plaintiff engaged Wellstead to assist him in setting up his business in Hong Kong.ⁱⁱⁱ Pursuant to the letter of engagement, Wellstead provided the plaintiff with ECTL together with the Bank Account.

Nazrad executed a Declaration of Trust dated 15 August 2015 in which she declared, among other things, that she held the shares in ECTL as nominee for the plaintiff and that the plaintiff was the ultimate beneficiary of the shares and all related rights.^iv She also executed a Power of Attorney (“the POA”) in favour of the plaintiff which empowered him, among other things, “to be the only person effecting payments, receive (sic) money and manage any other financial operations for [ECTL]” and “to apply to any Bank … to open account(s) of any kind and to operate … any of those account(s)”.^v The POA is dated 5 August 2015 but was signed on 15 August 2015. In addition, Wellstead arranged for a token and an online user account to be issued to the plaintiff by Hang Seng Bank so that he could operate the Bank Account online.

The plaintiff subsequently commenced business in Hong Kong, through ECTL. According to the plaintiff, based on the internal records maintained by his staff, the Funds comprised the following amounts as at 28 December 2015:^vi HK$14,820.55; €784,242.27; and US$225,300.

The plaintiff stated that on 28 December 2015, his employee started experiencing difficulties operating the Bank Account online. The next day, the same employee was denied access to the Bank Account completely. The plaintiff himself was also unable to access the Bank Account online.

Wellstead was informed about the problem. On 29 December 2015, Wellstead replied claiming that it had contacted Hang Seng Bank but “there is no quick fix” and that the plaintiff’s token (to operate the Bank Account) would be deactivated “for technical and security reasons”. It also stated that it could not say what the problem was and that a new token would be issued as soon as the problem was resolved.^vii

Further emails were exchanged between the plaintiff/his employee and Wellstead. On 5 January 2016, Kashmir (on behalf of Wellstead) informed the plaintiff that he would receive clarifications by the next day at the latest.^viii The plaintiff chased Wellstead for an answer on 6 January 2016.^ix In response, Kashmir sent an email on the same day to the plaintiff, on behalf of Nazrad, declaring the Declaration of Trust void and revoking the POA.^x The email stated that Nazrad would not carry on providing the plaintiff with trust services because she believed that he had falsified her signature on contracts submitted by him for the attention of Hang Seng Bank and had thus committed a criminal offence under Hong Kong law. The email also informed the plaintiff that Nazrad was withholding “the monies held by the trust to pay costs and potential liabilities and related services” and demanded that he pay compensation for “moral damages and potential liabilities and losses caused by [the plaintiff] abusing this trust, misusing [Nazrad’s] name and falsifying [her] signature”.

The plaintiff replied through his solicitors on 20 January 2016 denying that he had falsified Nazrad’s signatures for improper purposes.^xi He accepted that Nazrad’s signature had been imprinted on ECTL’s sales invoices, but asserted that this had been done in the mistaken belief that the POA that was granted to him required him to do so. He also demanded, among other things, that Wellstead, Nazrad and Kashmir immediately restore his access to the Bank Account and transfer the shares in ECTL to him. They did not comply with his demands.

Commencement of suit and proceedings leading to the Unless Order

The plaintiff commenced this present suit against the defendants on 26 May 2016. On 30 May 2016, Lai Siu Chiu SJ granted the plaintiff a worldwide Mareva injunction and a property injunction against the defendants.^xii Lai SJ further ordered the defendants to confirm in writing the whereabouts of the Funds which had been held in the Bank Account (“the Disclosure Order”). The defendants requested further arguments and sought to postpone the making of the Disclosure Order until the inter partes hearing of the injunction application. In a letter from their then solicitors dated 31 May 2016, the defendants claimed that disclosing the whereabouts of the Funds would somehow place the defendants’ and their associates’ lives in danger and result in interference and disruption to certain investigations which the defendants alleged were being conducted by the Hong Kong and Russian police.^xiii Lai SJ varied the Disclosure Order to one requiring the defendants to confirm the whereabouts of the Funds either in a sworn affidavit or in writing to her by 8 June 2016 (“the Varied Disclosure Order”).^xiv

In purported compliance with the Varied Disclosure Order, Wellstead wrote to Lai SJ on 8 June 2016.^xv The other three defendants did not comply with the Varied Disclosure Order. There is nothing in the letter from Wellstead to Lai SJ that suggests why it would have been dangerous to disclose the information contained within it to the plaintiff. What the letter did disclose was that between 29 December 2015 and 5 January 2016, US$191,800 was transferred to Wellstead and £579,420 was transferred to another company called Wellstead Primary Solutions allegedly “in accordance with the existing contracts and agreements (the detailed evidence and explanation of which will be provided in the Affidavits that the Defendants will supply by 13th June)”. I noted that the transfers started on 29 December 2015 which was the same day that Wellstead told the plaintiff that his token would be deactivated for technical and security reasons (see [10] above); and the transfers were completed on 5 January 2016, a day before Kashmir informed the plaintiff, on behalf of Nazrad, that the Declaration of Trust was void and the POA was revoked (see [11] above).

Two affidavits were filed on 13 June 2016 – one by Kashmir (on behalf of Wellstead, as its director, and himself) and the other by one John Tan Kee Eng (as Chief Legal Officer of Wellstead). Both affidavits made numerous allegations of money laundering and various criminal activities against the plaintiff. However, one omission stood out starkly: neither affidavit explained why the Funds were transferred to Wellstead and Wellstead Primary Solutions or who authorised or carried out the transfers.

The plaintiff made a further application seeking, among other things, an order that each of the defendants file and serve an affidavit stating whether the Funds remained in the Bank Account and, if not, what had become of them.^xvi On 15 July 2016, Andrew Ang SJ granted the application.^xvii He also ordered the defendants to comply with the Varied Disclosure Order by 20 July 2016.^xviii

On 20 July 2016, Kashmir filed an affidavit on behalf of Wellstead and himself stating that he was not aware whether the Funds were still in the Bank Account.^xix According to Kashmir, Wellstead was fully owned by a UK company, Wellstead Business Consultancy Limited (“Wellstead (UK)”) and he was merely a nominee director of Wellstead and a conduit through which instructions from...