Ping Fai Yuen v Fun Yung Li & Anor

Bitcoin may attract personal property rights as a third category of property, but that recognition does not make it subject to every existing proprietary tort. A first-instance court is bound by OBG v Allan and cannot extend conversion to digital assets where the binding ratio confines conversion to chattels. A separate cause of action drawing on elements of conversion may potentially be developed for wrongful interference with third-category things, but that issue remains open. On security for costs, residence abroad is only a threshold condition. The court must consider all the circumstances, including merits, enforcement risk, likely recoverable costs and whether the security sought is excessive or oppressive.

The claimant alleged that his estranged wife, alone or with her sister, obtained his Bitcoin seed phrase and transferred more than 2,323 Bitcoin to multiple blockchain addresses. He sought damages, proprietary relief, injunctions and several causes of action, including conversion, trespass to goods, unjust enrichment, breach of confidence, misuse of private information, causing loss by unlawful means and proprietary restitution.

The first defendant applied to strike out the conversion and trespass claims, to remove the proprietary and injunctive relief, and for security for costs because the claimant was resident abroad. The claimant applied to amend the pleadings and sought substituted service on the second defendant. The central issues were whether the pleaded torts could apply to Bitcoin or the associated wallet, whether proprietary relief should remain, and whether security for costs was just.

1. The application to amend was allowed, including the claim for causing loss by unlawful means. The pleaded facts raised an unusual and developing issue, and the objection that the tort necessarily required a three-party context was withdrawn.

2. The claim in conversion was struck out. Bitcoin was accepted to be property, and the Property (Digital Assets etc.) Act 2025 recognised that a thing is not excluded from personal property rights merely because it is neither a thing in possession nor a thing in action. That Act removed uncertainty about third-category property; it did not extend conversion.

3. The court was bound by the majority reasoning in OBG v Allan, which confined conversion to chattels and rejected extension to choses in action. The Law Commission’s analysis likewise concluded that third-category things were incapable of conversion under the existing law. Any conversion-type tort for digital objects would require a distinct development, not a claim pleaded as conversion.

4. The trespass claim was not immediately struck out. Trespass to goods ordinarily concerns direct interference involving physical contact with a chattel. The pleaded case about accessing a cold wallet and copying or using data was insufficiently clear, but the defect might be cured by amendment. The claimant was given seven days to apply to amend; otherwise that claim would be automatically struck out.

5. The declaration of ownership and proprietary injunctive relief survived. The court considered that, if the factual case were proved, it would offend ordinary property rights if recovery of the Bitcoin or damages were unavailable. The possible relevance of proprietary restitution and unjust enrichment supported leaving those remedies in place.

6. Security for costs was refused. Residence abroad under CPR 25.27(b)(i) was a threshold condition, not a presumption. The claimant had demonstrated a very high probability of success on the factual issue, the proposed costs were excessive and unreliable, valuable property was held within the jurisdiction, and no real enforcement risk had been established. Substituted service on the second defendant was ordered, including by email.