Chan Wing Yan v JP-Ex Crypto Asset Platform Pty Ltd [2025] 2 HKC 1, [2024] HKDC 1628 (Tasman Tam)
Tasman Tam and Joshua Chu (solicitor advocate) represented the 1st and 2nd plaintiffs in Chan Wing Yan v JP-Ex Crypto Asset Platform Pty Ltd [2025] 2 HKC 1, [2024] HKDC 1628.
The plaintiffs were registered users of a cryptocurrency exchange and investment platform operated by the 1st defendant and the 2nd defendant under the name ‘JPEX’ (‘the Platform’). In 2023, the 1st plaintiff registered three accounts on the Platform (the ‘Accounts’). The Accounts were purportedly assigned with newly created crypto-asset wallets (the ‘1st Wallet’, ‘2nd Wallet’, etc, collectively the ‘Wallets’) bearing public addresses. The plaintiffs claimed to be victims in that they were led to deposit crypto-assets (ie USDT) into what they believed were their crypto-asset wallets on the Platform but ultimately could not retrieve any of their crypto-assets. The plaintiffs commenced proceedings in the District Court, with the 1st plaintiff seeking a declaration that the 2nd defendant was and is holding 51,999.216164 USDT received in the 1st Wallet and 195,499.092079 USDT received in the 2nd Wallet (together ‘the USDT Deposits’) on trust for 1st plaintiff. The plaintiffs then applied for default judgment against the 2nd defendant.
Held, that the plaintiffs were entitled to recover their crypto-assets by default judgment:
(1) The power to grant judgment under RDC O 19 r 7 was discretionary. The court was required to scrutinize whether the matters pleaded in the Statement of Claim entitle the plaintiff to the judgment sought. The court’s decision is made based on pleaded facts, rather than on evidence. Furthermore, the basis upon which default judgment could be obtained in circumstances where no defence is filed was that the court would assume that the Statement of Claim had been impliedly admitted by the defendant. It was necessary in each application for default judgment to consider whether the declaratory relief was properly made out on the pleadings and whether it was appropriate in the overall exercise of discretion for such relief to be granted without a trial. In the exercise of the court’s discretion, the court would consider all relevant factors, including whether the plaintiff had established a strong and obvious case for proprietary relief on the face of its pleadings, and where the claim was proprietary, whether there would be any prejudice to the plaintiff’s property and rights. Cheung Sai Lon v Cheung Sai Ha & Anor [2020] HKCFI 2551, [2020] HKCU 3481, and Feng Bo v Dela Cruz Anabelle-Gamoso [2024] HKCFI 1819, [2024] HKCU 2712 considered (paras 10-11, 13).
(2) As for declaratory relief, the rule of the court that a declaration would not be granted when giving judgment by consent or in default without a trial was a rule of practice and not of law, and would give way to the paramount duty of the court to do the fullest justice to the plaintiff to which he was entitled. The court would consider whether the declaratory relief was properly made out on the pleadings and whether it was appropriate in the overall exercise of discretion for such relief to be granted without trial. As for injunctive relief, the court had jurisdiction to grant injunctions in default judgment application. Biostime International Investment Ltd AKA 合生元國際投資有限公司 v France Heson Paper (Hong Kong) Co Ltd (法國合生元紙業(香港)有限公司) [2015] 2 HKLRD 658, [2015] HKCU 622 considered (paras 12, 14).
(3) In many common law jurisdictions, including Hong Kong, cryptocurrency was held to be ‘property’ and was capable of forming the subject matter of a trust. It was also held in Hong Kong that to create an express trust, there must be the ‘three certainties’: (a) certainty of subject matter; (b) certainty of object; and (c) certainty of intention. Furthermore, the question was to determine not just the express arrangements as to how the property was to be held but whether it was held on trust. Ruscoe v Cryptopia Ltd (In Liq) [2020] 2 NZLR 809, [2020] NZHC 728, Re Gatecoin Ltd (in Liq) [2023] 3 HKC 401, [2023] 2 HKLRD 1079, and Feng Bo v Dela Cruz Anabelle-Gamoso [2024] HKCFI 1819, [2024] HKCU 2712 followed (paras 20-23, 25-27).
(4) Based on the plaintiffs’ pleaded case, the Court was satisfied of the ‘three certainties’ to create an express trust. Firstly, there was sufficient certainty of subject matter. Secondly, there was certainty of object as the beneficiaries of the trust was certain and the extent of plaintiffs’ claim could be readily seen from the balance of the Accounts recorded on the Platform. Thirdly, there was certainty of intention based on an objective assessment of the terms of the parties’ agreement or relationship. The plaintiffs had pleaded a viable case of express trust. As operators of the Platform, the 2nd defendant (together with the 1st defendant) held the USDT Deposits on express trust for the plaintiffs (paras 28-31).
(5) The 2nd defendant was under a duty to provide a safe environment to the plaintiffs; this was accepted by the 2nd defendant. The 2nd defendant was in breach of its duty of care towards the plaintiffs. As one of the trustees, the 2nd defendant acted in breach of its duties as trustee as pleaded. Accordingly, the 1st plaintiff was entitled to the relief as pleaded on her primary case. The declaration sought was properly made out on the pleadings and that the Court ought to exercise its discretion to grant the declaration without trial. The 1st plaintiff had a strong and obvious case for seeking proprietary relief. As for the injunction sought against the 2nd defendant, it was necessary and ancillary to assist in the recovery of the USDT Deposits. Ruscoe v Cryptopia Ltd (In Liq) (above) followed (paras 32-37).
[The above is excerpted from the headnote to the report in HKC.]
