The pair met in Patong's famous walking street, Soi Bangla, about 2am on Saturday and agreed to have sex for 1000 baht.
While the ladyboy was giving Justin from Brisbane a massage back at her place in another part of Patong, the Australian - who admitted to being drunk - noted his gold necklet was being tugged.
After the pair had sex, he noticed the necklet was not just being tugged - it had disappeared.
As it was a birthday present to the 23-year-old Australian from his mother, he was not keen to have it vanish so easily. He figured the ladyboy had taken it.
''If I give you money, will you give the necklet back to me?'' he asked. ''How much will it cost me?''
The ladyboy wrote down on a piece of paper the sum she wanted: 50,000 baht.
Justin said he had a problem raising that much cash for the necklet, but agreed to go to his apartment to see if there was something the ladyboy might take in exchange.
Justin told police in Patong today that he remembers the ladyboy giving him a peek at the missing necklet, while still firmly grasped in her fist.
Back at his apartment, he told an officer, he gave her $A1100 to return the necklet. That's an amount close to 30,000 baht.
Not enough, the ladyboy told Justin, who then gave up a couple of credit cards. The ladyboy hit the street and tried them, but there was no money in either account.
So the ladyboy said she wanted Justin to accompany her back to her place, to decide what to do next.
On the way back, however, at a stop light Justin slipped off the motorcycle, walked back to his apartment, and alerted friends staying nearby to his predicament.
His friends alerted Patong police.
A little later, police took Justin to the ladyboy's apartment block where they met her on the ground floor. She accompanied the officers to her room, where the necklet was found.
Back at Kathu Police Station, headquarters for the officers who oversee Patong, Justin very generously gave the police $800 as a reward for recovering his cherished necklet.
That left him $300 for the remainer of his Phuket adventure.
Police dropped him off at his apartment and could not help but notice as they departed that the same ladyboy emerged to talk to him.
She hadn't been paid for the sex they'd had, police discovered when the pair were brought back yet again to Kathu Police Station.
It was there that the ladyboy told police her version of events. Only after they'd had sex, she said, did she discover Justin had not used a condom.
She was horrified, and alarmed that she might suffer a fatal infection.
So she'd demanded 50,000 baht instead of 1000 baht for the protection-free sex, and in accepting her argument, Justin had given her the necklet.
The case remains one that Patong police have to solve. It may yet have to go to Phuket Provincial Court in Phuket City for mediation.