Annus, Kristin v Annus, Jekaterina and others

[1] This was the application of TA Activity Singapore Private Ltd (“the third defendant”) to enforce an undertaking as to damages given by Kristin Annus (“the plaintiff”) in connection with an interim injunction she obtained against it, in support of proceedings taking place in Estonia between the plaintiff, her mother, and several other persons. The plaintiff argued that her undertaking should not be enforced, and that in the alternative, the question of enforcement should only be resolved after the main Estonian proceedings were resolved.

[3] The plaintiff is the daughter of the late Toivo Annus (“the deceased”). She claimed to have been cheated of her rightful inheritance in the deceased’s estate by way of fraud perpetrated by her stepmother, the first defendant, and so commenced proceedings against the latter in Estonia on 30 September 2021 (“the Estonian proceedings”).

[4] On 4 October 2021, the plaintiff obtained an injunction in Estonia from the Harju County Court (“the first Estonian injunction”), which prohibited the first defendant from disposing of shares in the third defendant belonging to the deceased’s estate, without the plaintiff’s consent. The third defendant is wholly owned and controlled by the first defendant and the plaintiff’s step-grandmother, Ljubov Skurd (“the second defendant”).

[6] The interim injunction was granted on 15 October 2021 in HC/ORC 5738/2021 and served on the third defendant on 19 October 2021.

[7] The third defendant claimed that it had plans to divest shares in a company called Sea Ltd over the course of six months, which commenced on 4 October 2021 and would have originally been completed on 19 April 2022. As a result of the interim injunction, the divestment was halted on 22 October 2021, and resumed only on 10 November 2021, after the plaintiff agreed to amend the terms of the interim injunction to, among other things, permit the third plaintiff to deal with its assets in the ordinary course of business.

[8] As a consequence, the divestment was completed 13 trading days later than originally intended, on 6 May 2022. This allegedly caused the third defendant to suffer losses owing to the severe downturn in the technology sector between late 2021 and the first half of 2022, compared to a counterfactual in which they had completed the divestment as originally scheduled.

[10] On 21 January 2022, the plaintiff obtained a second injunction in Estonia from Harju County Court (“the second Estonian injunction”), which, much like the original terms of the first Estonian injunction, prohibited the first defendant from disposing of the shares of the third defendant which belonged to the deceased’s estate without the plaintiff’s consent. This too was appealed in Estonia by the defendants, and on 11 April 2022, the Estonian appellate court again narrowed the scope of the second Estonian injunction to prohibit the first defendant from disposing of the 3/16 pro-indiviso share in the deceased’s estate.

[11] On 17 March 2022, this court allowed the first and second defendants’ jurisdictional challenge against HC/OS 1050/2021. On 20 June 2022, the interim injunction was set aside, and on 5 September 2022, HC/OS 1050/2021 was struck out without objection by the plaintiff. The third defendant subsequently applied to enforce the plaintiff’s undertaking, in respect of the losses it allegedly suffered as mentioned at [5].

[12] The sole issue before the court was whether to immediately allow or dismiss the application to enforce the plaintiff’s undertaking, or whether to defer that question until the Estonian proceedings had been disposed of.

[13] The third defendant’s position was that the undertaking should be enforced immediately because it was clear that the interim injunction was wrongly granted, as evinced by the fact that the Estonian injunction had been narrowed in scope, and that HC/OS 1050/2021 had been struck out without any objection by the plaintiff.

[14] On the other hand, the plaintiff’s position was that the court should decline to enforce her undertaking. This was because the grant of the interim injunction could not be said to have been wrongly granted, as the Estonian proceedings were still ongoing. In any case, even if it was wrongly granted, the reasonableness of her conduct, and the lack of any evidence that the interim injunction had caused loss to the third defendant, nonetheless made it unjust and inequitable for her to be held to it. Alternatively, it should be held in abeyance until the Estonian proceedings were fully resolved.

[15] At the outset, the relevant principles governing the enforcement of an undertaking as to damages are not controversial. The court has the ultimate discretion to determine whether the undertaking should be enforced. This discretion must be exercised with reference to all factors in the case, and the court must be satisfied that the injunction was wrongly granted and that there are no special circumstances militating against the enforcement of the undertaking (Neptune Capital Group Ltd and others v Sunmax Global Capital Fund 1 Pte Ltd and another [2016] 4 SLR 1177 at [46]).

[16] It could not be said that the plaintiff’s “reasonableness” constituted special circumstances which justified an immediate refusal to enforce her undertaking. Circumstances which would justify such refusal have been understood to include the conduct of the defendant, a delay in seeking an inquiry as to damages, or situations where the plaintiff acts in the public interest (Astro Nusantara International BV and others v PT Ayunda Prima Mitra and others and another matter [2016] 2 SLR 737 (“Astro Nusantara”) at [27]–[31]).

[21] In view of the foregoing and given that the interim injunction was ultimately obtained in support of the Estonian proceedings, the English Court of Appeal decision of Cheltenham & Gloucester Building Society (formerly Portsmouth Building Society) v Ricketts [1993] 1 WLR 1545 (“Cheltenham”) was instructive. There, the court found that that the question of the enforcement of an undertaking as to damages, given in connection with an injunction, was best reserved to the trial judge to determine after the merits of the claim were decided. In coming to this conclusion, Peter Gibson LJ placed great emphasis on the fact that the plaintiffs’ main claim was in fraud. If they were proven right on the merits at trial, and the defendants did indeed prove to be fraudsters, then that might suggest that there was a real risk that they would have attempted to defeat the judgment in precisely the manner which the injunctions had been sought to guard against. This being the case, the most prudent course would be to determine whether the undertaking should be enforced only “at the conclusion of the trial when all the facts are known” (Cheltenham at 1560).

[22] In this case, it should be borne in mind that the Estonian proceedings were likewise founded on claims of fraud. If it is found in the Estonian proceedings that there is some merit to this claim, then it would in retrospect not be unreasonable to believe that the first defendant might have taken advantage of her control over the third defendant to transfer its assets to other entities which did not form part of deceased’s estate. While this would not undermine the plaintiff’s legal rights in the estate, it would certainly impair the value of that share – indeed, there is nothing in the Estonian appellate court’s decision on 7 January 2022 to suggest that the shares in the third defendant were not part of the deceased’s estate, with its use of the phrase “individual objects belonging to the estate” in respect of those shares. In fact, the use of this phrase suggested quite the opposite.