Jin Zikai v. Griffin International Holding Ltd and Another
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DCMP 480/2024 [2026] HKDC 1847 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO 480 OF 2024 -------------------------
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-------------------------- DECISION -------------------------- APPLICATION FOR LEAVE TO APPEAL 1.This is the 2nd Defendant’s application, by inter partes summons, for leave to appeal against the judgment I handed down on 23 March 2026 (“the Judgment”). In the Judgment, I ordered, among other things, that the 2nd Defendant must forthwith pay the Plaintiff the sum of $199,900.00 deposited in her bank account (no. 388-756045496550) at Livi Bank Limited, together with interest. BACKGROUND 2.The facts of this case are set out in detail in the Judgment, and I do not propose to repeat them here. 3.In summary, the Plaintiff was the victim of a telephone fraud, in which he was deceived by fraudsters into making a series of deposits totalling $2,796,875 into his newly opened account at Hang Seng Bank. He handed over the control of the account to the fraudster. When the scam was discovered, only $395 remained in the account, resulting in a loss of $2,796,480. 4.The investigation revealed that, without the Plaintiff’s knowledge, the fraudster transferred part of the funds from the Hang Seng Bank account to an intermediary account held by Ng Ka Kin. From this intermediary account, $155,000 was transferred to the 1st Defendant’s account at Hong Kong and Shanghai Bank on 26 April 2023, and a further $199,000 was transferred to the 2nd Defendant’s account (no. 388-756045496550) at Livi Bank on 27 April 2023. 5.The police subsequently froze both sums in the respective bank accounts. 6.On 23 January 2024, the Plaintiff commenced this action seeking to recover these sums from the respective Defendants. 7.The 1st Defendant did not contest the Plaintiff’s claim, and a default judgment was entered against it on 17 April 2025. 8.The 2nd Defendant was not legally represented at trial. She claimed that the $199,000 in question was transferred by Ng Ka Kin, as purchaser, to her Livi Bank account as payment for the sale of 25,239.89 units of USDT by the 2nd Defendant. As explained in the Judgment, her principal defence in her affirmations, in effect, was that she was a bona fide purchaser for value without notice. 9.In the Judgment, this Court held that, on a balance of probabilities, the 2nd Defendant failed to prove that the transaction was genuine and that she had no notice of the Plaintiff’s equity in the funds. I therefore found that the 2nd Defendant was unjustly enriched and was liable to make restitution. THE APPLICATION 10.By a summons dated 20 April 2026, the 2nd Defendant seeks leave to appeal against the Judgment on the grounds as set out in the draft Notice of Appeal (“Draft Notice”) annexed thereto. She also seeks costs of the application. 11.In the Draft Notice, the 2nd Defendant advances the following grounds of appeal:
THE APPLICABLE LEGAL PRINCIPLES 12.The test for granting leave to appeal is well established and uncontroversial. The applicant must demonstrate that the appeal - based on the grounds set out in the Notice of Appeal - has a reasonable prospect of success or that there is some other reason in the interests of justice for the appeal to be heard (see s 63A(2) of the District Court Ordinance, Cap 336). A “reasonable prospect of success” requires an arguable case with a chance of success that is more than merely “fanciful,” though it need not be “probable”: see Wing Tat Haberdashery Company Limited v Elegance Development & Industrial Co Limited [2011] 5 HKC 474 (CA), at p 476B-C; and SMSE v KL [2009] 4 HKLRD 125 (CA), at p 129, §17. DISCUSSION 13.In assessing the merit of this application, I am mindful that, under Order 59 Rule 3(1) of the Rules of High Court, an appeal to the Court of Appeal proceeds by way of re-hearing - though it is a re-hearing based solely on the record. The Court of Appeal will examine this Court’s findings to determine whether there has been an error of law or procedure, or, in respect of findings of primary fact, whether such findings lacked any reasonable basis or were plainly wrong. 14.Where the appeal concerns findings of fact based on inference, the Court of Appeal will consider whether, on the primary facts found, the trial judge’s inference was plainly wrong or unsustainable. To apply the ‘plainly wrong’ test, the applicant must pinpoint the palpable errors made by the Judge, that is, errors of such nature which warrant intervention of the appellate court: DBS Bank (Hong Kong) Limited v Sit Pan Jit, CACV 91/2015, unreported, 10 June 2016, at §§111-116. Thus, if more than one inference is reasonably open, the appellate court will not substitute its preferred inference merely because it might have reached a different conclusion. 15.Only errors that are sufficiently fundamental will justify the appellate court in overturning this Court’s judgment. These standards of review are integral to our legal system, as they promote finality in the adjudication of cases. Accordingly, I must consider whether the grounds of appeal advanced by the 2nd Defendant in the Draft Notice have a reasonable prospect, as defined by the authorities, of meeting these standards of review. 16.I will address the four grounds of appeal and the related complaints raised in the Draft Notice in turn below. Ground 1: the proper enquiry should be whether the 2nd Defendant has changed her position in good faith 17.Under Ground 1, the 2nd Defendant argues that, because the Plaintiff’s sole cause of action is a personal claim for restitution based on unjust enrichment, the proper inquiry should be whether she changed her position in good faith. 18.This ground lacks merit. 19.The 2nd Defendant cites Zief Incorporated v Tekchandani Ajai Mohan [2021] 3 HKC 69 (§§30, 33) and contends that the defence of ‘bona fide purchaser for value without notice’ is available only where the plaintiff’s restitutionary claim seeks to vindicate property rights. This contention is not supported by the cited authority. In Zief Incorporated, Recorder Fung (as he then was) did not make such a finding; instead, since both parties accepted that the defence generally applies to all restitutionary claims, the case proceeded on that basis. 20.The defences of ‘bona fide purchaser for value without notice’ and ‘bona fide change of position’ are distinct, though they may sometimes overlap. For example, overlap may occur where a defendant receives misdirected funds or property and provides value to a third party in return. Although it might appear that the defendant has changed position by giving value, the orthodox analysis is that this situation constitutes a bona fide purchase if the defendant acquired an interest in property from a third party for value and without notice. 21.In an unjust enrichment claim, a defendant may rely on the defence of ‘bona fide purchaser for value without notice’, the ‘change of position’ defence, or both, depending on whether the case is concerned with transactional security or with reliance-based unfairness. 22.In this case, the 2nd Defendant relied solely on a ‘bona fide purchaser for value without notice’ defence in her affirmation[1] and closing submissions[2]. If she intended also to invoke a ‘bona fide change of position’ defence, she should have stated this clearly in her affidavit evidence as a defence to the Plaintiff’s claim, so that its factual merits could be examined at trial: Goff & Jones, The Law of Unjust Enrichment (10th edn), at §27-08.
23.As the 2nd Defendant did not raise a ‘bona fide change of position’ defence at trial or in her affidavit evidence, there is no basis for her to contend that the proper inquiry for this Court was whether she had changed her position in good faith. 24.Even if I am mistaken, and as the 2nd Defendant now argues, this Court should have considered whether she changed her position in good faith, it is important to note that, to establish the ‘change of position’ defence, the 2nd Defendant must demonstrate not only a causal link between the receipt of the benefit and her change of position, but also that her position changed in circumstances rendering it inequitable to require restitution to the Plaintiff. 25.On the facts of this case, in considering whether it would be inequitable to require the 2nd Defendant to return the funds in her Livi Bank account to the Plaintiff, the same facts and observations set out in sections D1 to D10 of the Judgment remain relevant. Taking the evidence as a whole, I would have reached the same conclusion on the balance of probabilities: the 2nd Defendant was aware of the fraud perpetrated on the Plaintiff, and/or by effecting the transaction in question, was assisting the fraudsters in laundering the funds. Consequently, it would not be inequitable to require the 2nd Defendant to make restitution. 26.Accordingly, I hold that this ground of appeal has no reasonable prospect of success. Ground 2 – Lack of evidential basis 27.It is clear that the 2nd Defendant bears the burden of proving her defence, whether as a ‘bona fide purchaser for value without notice’ or under a ‘bona fide change of position’ defence. Apart from a document showing that $199,000 was paid from Ng Ka Kin’s account for the purchase of 25,239.89 units of USDT from the 2nd Defendant, the only evidence she provided was her assertion that she did not know Ng Ka Kin and was unaware of the source of the funds in question. 28.As stated in paragraph 40 of the Judgment, the Plaintiff had no knowledge of any relationship between the fraudsters and the 2nd Defendant, nor of the reasons for transferring the disputed sum from Ng Ka Kin’s account to the 2nd Defendant’s account at Livi Bank. Consequently, the Plaintiff was unable to produce any direct evidence to challenge the 2nd Defendant’s assertion of being a bona fide purchaser without notice, except by testing her credibility against contemporaneous documents presented at trial. 29.Accordingly, as noted in paragraph 41 of the Judgment, I held that the 2nd Defendant’s defence of ‘bona fide purchaser for value without notice’ rests entirely on the credibility of her evidence, particularly her assertion of being a bona fide purchaser without notice. 30.At trial, the Plaintiff relied on the 2nd Defendant’s conduct at the relevant time to assert that she had knowledge of, or at least constructive notice of, the fraud.[3] 31.Based on the evidence presented by both parties, including the 2nd Defendant’s testimony at trial about how USDT transactions operate on the Binance platform, I made a series of factual findings and observations, detailed in sections D1 to D10 of the Judgment. 32.In evaluating the credibility of the 2nd Defendant’s claim to be a bona fide purchaser without notice, the Court compared her evidence with these factual findings and observations (see Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd & Ors, HCA 3023/2016, 2 May 2017, at §50). Notably, the 2nd Defendant does not contest this approach in her Draft Notice. 33.After this analysis and consideration of the matters set out in sections D1 to D10 of the Judgment, I was not satisfied, on the balance of probabilities, that the 2nd Defendant was a bona fide purchaser without notice. I therefore found that she had not discharged her burden of proof.[4] This finding was based on her credibility and demeanour. 34.Although the 2nd Defendant failed to prove, on the balance of probabilities, that she was a bona fide purchaser without notice in relation to the transaction with Ng Ka Kin on 27 April 2023, I further inferred from the other evidence, including that referenced in sections D1 to D10 of the Judgment, that it was more probable than not she assisted the fraudster in laundering the funds received.[5] 35.I will now address the various complaints raised by the 2nd Defendant under this ground. Ground 2(a) - The Judge erred in making the findings that the 2nd Defendant assisted the fraudster in money laundering 36.With respect to §§2.1–2.2 of the Draft Notice, the fact that contemporaneous documents indicate the disputed sum was paid for the purchase of USDT from the 2nd Defendant is irrelevant to the question of whether, by effecting the transaction, the 2nd Defendant was assisting the fraudster in money laundering. 37.Regarding §2.3 of the Draft Notice, the pattern of transactions in the 2nd Defendant’s cryptocurrency account - which, the 2nd Defendant contends, shows she consistently acquired USDT at a lower price and sold to multiple purchasers at a higher price - does not necessarily establish that the transactions with Ng Ka Kin on 26, 27, and 28 April 2023 were genuine. Moreover, the pattern does not clarify whether the other purchasers were connected to the fraudsters. As explained in paragraphs 76 to 89 of the Judgment, when the pattern of transactions is considered alongside the relevant factual background, particularly the platform’s operation, it strongly suggests that the 2nd Defendant was not an innocent seller of USDT in the transactions with Ng Ka Kin. 38.In paragraph 2.4 of the Draft Notice, the 2nd Defendant contends there was no proper evidential basis for the Judge to find that she sold her USDT stablecoins at an undervalue or overvalue, or that her sale was not in accordance with the market price of USDT during that period. 39.This complaint is, again, misconceived. The Court made no finding as to whether the 2nd Defendant sold her USDT at an undervalue or overvalue. Paragraph 85 of the Judgment explicitly states that the Court could not determine whether the fluctuations in USDT price in the 2nd Defendant’s transaction records reflected the actual market fluctuation. 40.As to paragraph 2.4(a) of the Draft Notice, the reference to the Chief Executive of the Monetary Authority’s statement in paragraph 89 of the Judgment was appropriate. It shows that the price of stablecoins (including USDT) typically fluctuates within a limited range and does not generally trend upward over time. Thus, if the unit price of USDT is high at a certain time, it will inevitably decrease at some stage - indeed, according to the 2nd Defendant’s transaction records, such decreases can occur within hours, and occasionally even within minutes[6]. Given this market behavior, there was no commercially sensible reason for the fraudster to repeatedly purchase USDT from the 2nd Defendant at the same relatively high price if she were an innocent seller. 41.Hence, the grounds advanced by the 2nd Defendant fail to demonstrate that the inference drawn by this Court was unsustainable or plainly wrong. 42.The 2nd Defendant does not challenge the validity of the factual findings stated in sections D1 to D10 of the Judgment, nor does she contend that any of the observations therein were irrational or made without factual basis. 43.Even if this Court’s inference that the 2nd Defendant was assisting in money laundering were impermissible, it does not follow that the Court must accept her unsubstantiated assertion of innocence, especially in light of the findings and observations in sections D1 to D10 of the Judgment. The 2nd Defendant has, in any event, failed to discharge her burden of proving her ‘bona fide purchaser without notice’ defence. Ground 2(b) - The Judge erred in making the findings that the 2nd Defendant was part of the fraud perpetrated by the fraudster (§§2.1, 2.2 and 2.5 of the Draft Notice) 44.This complaint is misconceived. The Judgment contains no suggestion, much less a factual finding, that the 2nd Defendant was complicit in the fraud. Paragraph 101 merely observes that, if the 2nd Defendant were part of the fraudsters, her conduct and reactions at the relevant time would be explicable and expected. No factual finding was made on this point. 45.As clearly stated in paragraph 102 of the Judgment, the Court found that (a) the 2nd Defendant failed to discharge her burden of proof in respect of her defence, and (b) on balance, it was more probable that she was assisting the fraudsters in money laundering. Ground 3 - The Judge erred in making an inferential finding that the 2nd Defendant was aware that the monies she received from the Fraudster (for the acquisition of her USDT stable coins) represented proceeds of crime or were otherwise tainted with illegality (§3 of the Draft Notice) 46.The grounds set out in paragraphs 3.1, 3.2, and their subparagraphs of the Draft Notice were advanced in the context of the ‘bona fide change of position’ defence. 47.For the reasons set out above, the arguments relating to this new defence, which was not raised by the 2nd Defendant in her affidavit evidence or at trial, have no reasonable prospect of success in the intended appeal. 48.Nonetheless, I consider it necessary to address several points raised by the 2nd Defendant under this ground to prevent any potential confusion. 49.In paragraph 3.2 of the Draft Notice, the 2nd Defendant repeatedly asserts that, if a fact was not specifically mentioned in the Plaintiff’s affirmations, it is unpleaded and the Court may not make a factual finding based on it. For example, in subparagraph 3.2(a), the 2nd Defendant contends that, because the Plaintiff did not mention the timing of her opening of the Livi Bank account, it was an impermissible and unpleaded complaint. She suggests that the Court was not entitled to find that the Livi Bank account was opened on 11 April 2023 or to proceed on that basis. 50.The 2nd Defendant has cited no authority in support of this broad contention. She is, in effect, suggesting that the Court may only consider facts set out expressly in the Plaintiff’s affirmations, even if they are apparent from undisputed documentary records. This cannot be correct. In the present example, the date of opening the account was evident from the bank statement produced by the 2nd Defendant and was not disputed by her during cross-examination. 51.In paragraph 3.2(d) of the Draft Notice, the 2nd Defendant misinterprets paragraph 80 of the Judgment. As noted there, the Plaintiff's legal representative, Mr Ng, suggested that the Livi Bank account was controlled and used by a money laundering syndicate for illicit activities, but the Court observed that no evidence was adduced by the Plaintiff in support of this suggestion. The Court did not reject any contention that the 2nd Defendant was using her bank account for money laundering purposes. 52.In paragraph 3.2(f)(iii) of the Draft Notice, the 2nd Defendant refers to paragraph 88 of the Judgment and claims that the Court recorded she had sold her USDT stablecoins at a fixed price of $7.91 to $7.92 per unit on multiple occasions to purchasers unrelated to the fraudster. This is incorrect. There was no evidence to show that the other purchasers were unrelated to the fraudster, and no factual finding was made on this point, let alone recorded in the Judgment. Ground 4 - Wrong in law in making the findings on fraud against the 2nd Defendant (§4 of the Draft Notice) 53.This complaint is also without merit. 54.In the Judgment, no findings of fraud were made against the 2nd Defendant. 55.As previously stated, the Court found, on the balance of probabilities, that the 2nd Defendant was assisting the fraudsters in money laundering with respect to the disputed sum. To the extent this conduct constituted serious wrongdoing, the finding was based on the factual evidence presented and the circumstances and observations detailed in sections D1 to D10 of the Judgment. 56.Accordingly, this ground has no reasonable prospect of success on appeal. DISPOSITION 57.In order for the Court to grant leave to appeal, the grounds identified in the (draft) Notice of Appeal must satisfy the legal test for granting leave. Specifically, the points raised in the intended appeal must have a reasonable prospect of success. 58.For the reasons stated in the Discussion section above, I conclude that the 2nd Defendant’s intended appeal, based on the grounds stated in the Draft Notice, does not have a reasonable prospect of success. Accordingly, I dismiss the 2nd Defendant’s application for leave to appeal. 59.Consequently, I further make a costs order nisi that the costs arising from the 2nd Defendant’s application shall be paid by the 2nd Defendant to the Plaintiff forthwith. Such costs are summarily assessed at $110,000. The Plaintiff’s own costs shall be taxed in accordance with the Legal Aid Regulations. The aforesaid costs order nisi will become absolute within 14 days of this decision if neither party applies for a variation.
Mr Ng Man Kin of Kwok, Ng & Chan, for the Plaintiff Mr Martin Ho & Ms Celeste Chan, instructed by Charles Yeung Clement Lam Liu & Yip, for the 2nd Defendant |
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Cases cited in this judgment
Shenzhen Hifrozen International Logistics Development Co., Ltd v. Splendid Joy Corporation Ltd
Lee Chick Choi v. The Hong Kong Golf Club
Cai Group Ltd v. Liu Nan Fei
Further hearings and rulings under DCMP 480/2024