|
HCA 1753/2024
[2026] HKCFI 2302
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1753 OF 2024
________________________
BETWEEN
| |
GAO YING (高莹) |
Plaintiff |
| |
and |
|
| |
LIN SHUJIA |
1st Defendant |
| |
KING CREDIT LIMITED |
2nd Defendant |
________________________
| Before: |
Mr Recorder William Wong, SC in Chambers |
| Date of Hearing: |
17 December 2025 |
| Date of Decision: |
24 April 2026 |
________________________
DECISION
________________________
INTRODUCTION
1. By a Summons dated 27 June 2025, the Plaintiff seeks a summary judgment against the 2nd Defendant, as a second-tier recipient of the proceeds of a telephone fraud against the Plaintiff pursuant to Order 14, rule 1 of the Rules of the High Court (Cap. 4A) for, inter alia, (a) the sum of HK$2,050,000, (b) a declaration that the said sum was at all material times the property of the Plaintiff held by the 2nd Defendant on constructive trust and (c) a declaration that the 2nd Defendant is liable to account as constructive trustee.
2. The Plaintiff has already obtained a judgment in default against the 1st Defendant as the first-tier recipient of the proceeds of a telephone fraud perpetrated against the Plaintiff between March and April 2024, whereby a total sum of HK$8 million was defraud out of the Plaintiff’s bank account with CMB Wing Lung Bank Limited (No. 601-523-9553-8) (the “Plaintiff’s Account”).
3. The 2nd Defendant’s defence is basically that it is a bona fide recipient and purchaser of a series of legitimate cryptocurrency (USDT) transactions with the 1st Defendant without notice of the 1st Defendant’s fraud and it has, thus, changed its position.
BACKGROUND FACTS
4. The Plaintiff, a Mainland Chinese national then on a business trip in Hong Kong, was systematically deceived by fraudsters impersonating law enforcement officials from Hong Kong and Shenzhen. Through an elaborate scheme involving fake arrest warrants, fabricated investigation documents, and round-the-clock surveillance via video conferencing applications, the fraudsters induced the Plaintiff to consolidate her savings into a single bank account, i.e. the Plaintiff’s Account. From which HK$8,000,000 was subsequently misappropriated without her knowledge or consent.
5. The 2nd Defendant is the second-tier recipient of HK$2,050,000.
6. The documentary evidence illustrates the following transfers.
(a) First, HK$5,250,000 was transferred from the Plaintiff’s Account to the 1st Defendant’s bank account with Bank of China (Hong Kong) (No. 81820227538) (the 1st Defendant’s Account”) in 7 tranches between 18 and 24 April 2024.
(b) Secondly, out of this sum, HK$2,050,000 was transferred from the 1st Defendant’s Account to the 2nd Defendant’s bank account with Chong Hing Bank account (No. 297-10-1037264) (the “2nd Defendant’s Account”) in 6 tranches between 18 and 24 April 2024.
(c) The 2nd Defendant admits receiving the said HK$2,050,000 in 6 tranches between 18-24 April 2024 in the following time sequence. I must say that the timing of the transfers was almost instantaneous.
| Into the 1st Defendant’s Account |
Into the 2nd Defendant’s Account |
18.4.2024 (22:14)
|
1,000,000 |
18.4.2024 (22:38)
|
400,000 |
19.4.2024 (00:03)
|
1,000,000 |
-- |
-- |
22.4.2024 (23:00)
|
1,000,000 |
22.4.2024 (23:08)
|
400,000 |
23.4.2024 (00:02)
|
650,000 |
23.4.2024 (00:02)
|
350,000
|
23.4.2024 (00:10)
|
300,000 |
23.4.2024 (23:56)
|
350,000 |
-- |
-- |
24.4.2024 (00:00)
|
1,000,000 |
24.4.2024 (12:01)
|
300,000
|
24.4.2024 (12:12)
|
300,000 |
25.4.2024 (00:00)
|
250,000 |
-- |
-- |
| |
5,250,000 |
|
2,050,000 |
7. The Plaintiff obtained final judgment in default against the 1st Defendant on 15 January 2025 for HK$5,250,000 together with interest and costs.
8. The 2nd Defendant filed its Defence on 10 October 2024 (amended on 16 January 2025; re-amended on 24 November 2025). Whilst admitting receiving HK$2,050,000 from the 1st Defendant’s Account, the 2nd Defendant contends that those funds representing the proceeds of 6 cryptocurrency (USDT) transactions (the “6 USDT Transactions”) conducted in the ordinary course of the 2nd Defendant’s USDT trading business and relies upon the defences of bona fide purchaser for value without notice and change of position.
9. The Plaintiff’s case is that the 2nd Defendant’s defences are devoid of merit and fail to raise any triable issue.
(a) Neither the bona fide purchase defence nor the change of position defence is unsupported by coherent evidence and, in any event, both of them fail on the facts.
(b) Furthermore, the 2nd Defendant’s cryptocurrency trading business was conducted in contravention of applicable licensing requirements, such that its purported transactions are tainted by illegality and cannot ground a lawful defence.
ANALYSIS AND DETERMINATION
10. I am of the view that the Plaintiff has established that she is the beneficial ownership of the funds by her bank statements, which demonstrate, inter alia, the 7 remittances to the 1st Defendant between 18-24 April 2024 (totaling HK$5,250,000). I am also satisfied that the Plaintiff has established the relevant elements of unjust enrichment and money had and received vis-à-vis the 2nd Defendant.
11. It is also not contested that the HK$2,050,000 received by the 2nd Defendant came directly from the funds transferred from the Plaintiff’s Account.
12. The transfers of the Plaintiff’s funds (HK$8,000,000) were vitiated by the fraudsters’ deceit. The Plaintiff never intended to benefit the 1st Defendant and the 2nd Defendant, or any other person. She was operating under the mistaken belief, induced by fraud, that she was cooperating with a legitimate law enforcement investigation. The consideration for the transfers has totally failed, as the Plaintiff received nothing in return.
13. The key is the credibility and viability of the 2nd Defendant’s defence.
14. The 2nd Defendant is a Hong Kong company of which Mr Wong Hiu Kwan (“Mr Wong”) is the sole director and shareholder. It was incorporated 18 March 2022 and initially operated as a licensed money lender. In or around January 2024, it transitioned its business to cryptocurrency trading, specifically the sale of USDT (Tether).
15. It is important to understand the 2nd Defendant’s business model.
16. Mr Li Yang Yang (“Mr. Li”), described as the company’s “sole intermediary broker”, would refer customers wishing to purchase USDT. These customers would transfer Hong Kong dollars to the 2nd Defendant’s Account, and in return, the 2nd Defendant would transfer the equivalent amount of USDT to Mr Li’s e-wallet on the Binance platform (“Li’s E-Wallet”) for onward transmission to the customer.
17. It is critical that in the present case it is not suggested that there exists any contract between the 1st Defendant and the 2nd Defendant pursuant to which the sum of HK$2,050,000 was received by the 2nd Defendant.
18. Rather, it is said that the 1st Defendant was introduced by Mr Li as a customer wishing to purchase USDT. Know your client checks were said to have been conducted on the 1st Defendant though very flimsy evidence of such checks were produced by the 2nd Defendant.
19. Six transactions took place between 18-24 April 2024, in which the 1st Defendant transferred a total of HK$2,050,000 to the 2nd Defendant’s Account in exchange for USDT.
20. On this basis, the 2nd Defendant contends that it received the HK$2,050,000.00 as a bona fide purchaser for value without notice of any fraud or adverse claim, and that it has changed its position by transferring USDT in reliance on the receipt of the funds.
21. The legal principles in relation to summary judgment applications are well established and I do not propose to recite the same here save to say that I have read the parties’ submissions that it does not appear to this Court that there are disagreements on the applicable legal principles.
22. I have considered the 2nd Defendant's submissions carefully but I am not convinced that it has established a bona fide defence as, principally, there are no evidence that there is a contractual relationship between the 1st Defendant and the 2nd Defendant.
23. The evidence shows that after the almost instantaneous transfers from the 1st Defendant’s Account to the 2nd Defendant’s Account, USDT were transferred to Li’s E-Wallet. Mr Li had not said that he, as either the 1st Defendant or the 2nd Defendant’s agent, then transferred the USDT to the 1st Defendant. In fact, Mr Li’s evidence is that he then transferred the same to some unknow entities. On the 2nd Defendant’s own evidence, such transfers were made with Mr Li, not with the 1st Defendant.
24. I agree that on the evidence the 2nd Defendant received money from the 1st Defendant and provided value to a different person, Mr Li, without any evidence that these were two sides of the same transaction. This is fatal to both the bona fide purchaser defence and the change of position defence.
25. According to the 2nd Defendant’s pleaded case, all 6 purported USDT transactions (the “6 USDT Transactions”) were between the 2nd Defendant and the 1st Defendant. The 2nd Defendant’s pleaded case for the 1st to 5th USDT transaction is that Mr Li would only made the onward transfer of USDT from E-Wallet after (1) he received the USDT from the 2nd Defendant and (2) he deducted the corresponding USDT therefrom.
26. However, the transaction record shows otherwise.
|
Sum from
The 1st Defendant (HK$) |
USDT transferred by Mr Wong to Li’s E-Wallet |
USDT transferred out by Mr Li |
| 1. |
18.4.2024
(22:38) |
400,000
|
18.4.2024
(22:44) |
50,188 |
18.4.2024
(22:28) |
50,000 from “大鵬” |
| 2. |
22.4.2024
(23:08)
|
400,000
|
23.4.2024
(11:00) |
131,911
|
22.4.2024
(23:06) |
50,000 from Li’s E-Wallet |
| 3. |
23.4.2024
(00:02) |
350,000
|
23.4.2024
(00:00) |
43,750 from Li’s E-Wallet |
| 4. |
23.4.2024
(00:10) |
300,000
|
23.4.2024 (00:07) |
37,500 from Li’s E-Wallet |
| 5. |
24.4.2024
(12:01) |
300,000
|
24.4.2024
(12:06) |
37,880
|
24.4.2024 (11:58) |
37,620.29 from “大鵬” |
| 6. |
24.4.2024
(12:12) |
300,000
|
No transfer made
|
24.4.2024 (12:07) |
37,620.29 from “大鵬” |
27. For the 1st to 5th USDT Transactions, all the outward transfers made by Mr Li took place before the 2nd Defendant’s remittances of USDT to Li’s E-Wallet.
28. For the 2nd to 4th USDT Transactions, Mr Li made 3 outward transfers a day or 12-hour ahead of the transfer of 131,911 USDT from the 2nd Defendant to Li’s E-Wallet. Mr Yam for the Plaintiff submitted that the change of position defence requires the 2nd Defendant to show that it changed its position “in reliance on” the receipt. But on the documentary evidence, Mr Li transferred USDT out of Li’s E-Wallet before Mr Wong transferred any USDT into it. Even if those were the Defendant’s USDT to start with, the 2nd Defendant cannot have changed its position in reliance on the receipt when the alleged change of position occurred before the 2nd Defendant even provided the USDT. The outward transfers would have occurred regardless of the 2nd Defendant’s subsequent remittances. I agree.
29. Insofar as it is said that there was an understanding that money would be coming from the 1st Defendant and hence Mr Li arranged the transfer of the USDT well in advance, there is no documentary evidence in support of such understanding. I agree that it is contrary to commercial and common sense, especially when the 1st Transaction was the first time the 2nd Defendant dealt with the 1st Defendant, and the value involved (HK$400,000) was not insubstantial.
30. I also note that despite being alerted of the 2nd Defendant’s Account being frozen, the 2nd Defendant did not bother to ascertain the propriety of the 6th USDT Transaction. As of now, there is no evidence as to how any of the 6 USDT Transactions as between the 1st and the 2nd Defendant was concluded.
31. Further, there is no evidence of the transfer of the USDT from the 2nd Defendant to the 1st Defendant. All the evidence tendered stopped at the outward transfer of USDT from Mr Li. Mr Li also did not say that he had delivered any USDT to the 1st Defendant.
32. Mr Li claims he received purchase orders from a downstream broker identified only as “幣安火幣之王” (subsequently renamed “奔跑吧兄弟1”), whose true identity is unknown. Mr Li admits he has no knowledge of whether this broker dealt directly with the 1st Defendant or through further intermediaries. Mr Li’s WhatsApp communications with “幣安火幣之王” cannot be recovered.
33. There is the absence of credible evidence that the cryptocurrency transactions were placed at the request of, for the benefit of, or with the knowledge of the 1st Defendant. That really should be the end of analysis.
34. Mr Yam also submitted that I agree that in any event, the 2nd Defendant’s change of position defence fails completely in respect of the 6th USDT Transaction, in which HK$300,000 was transferred to the 2nd Defendant’s account on 24 April 2024.
35. The 2nd Defendant admits in terms that it did not transfer any USDT in respect of this transaction. (See: §9(f) of its Re-Amended Defence). The 2nd Defendant thus received HK$300,000 and gave nothing in return. It has not changed its position at all. It has simply retained the money.
36. Mr Yam also submitted that the USDT transferred by Mr Wong allegedly for and on behalf of the 2nd Defendant in relation to the 1st to 5th USDT Transactions belonged to Mr Wong and not the 2nd Defendant. They came from Mr Wong’s (1) “OKX electronic wallet”and (2) Mr Wong’s “Binance Platform electronic wallet”. However, on this point, I am prepared to accept that Mr Wong of the 2nd Defendant deployed those electronic wallets on behalf of the 2nd Defendant. But this does not get the 2nd Defendant anywhere.
37. As a result of my analysis above, I do not find it necessary to deal with the Plaintiff’s reliance on the suggested contraventions of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance, Cap 615.
DISPOSITION
38. For all the reasons stated above, I make an order in terms of the Summons dated 27 June 2025 in favour of the Plaintiff.
39. The Plaintiff is entitled to summary judgment against the 2nd Defendant for the sum of HK$2,050,000.00.
40. The 2nd Defendant shall pay interest from the date of Writ, i.e. 2nd September 2024 at HSBC’s prime lending rate plus 1% until the date of this Decision and thereafter at judgment rate until full payment.
41. The 2nd Defendant is to pay the costs of and occasioned by the present application to the Plaintiff, to be taxed on party-to-party basis, if no agreement can be reached.
42. Finally, it remains for this Court to thank counsel’s able assistance.
| |
(William Wong SC)
|
|
Recorder of the High Court |
Mr. Rex Yam, instructed by Messrs. Jack Fong & Co., for the Plaintiff
Ms. Angel HY Wong, instructed by Messrs. Solar Wong & Co., for the 2nd Defendant
|