It is widely known that recovery agents in Hong King have been involved in offering to help injured persons seek accident compensation on a "no win, no charge" basis. Pursuant to the agreements with such agents, injured persons would have to pay the agents an agreed portion of the compensation obtained from defendants.
Recently, the Police have arrested 21 people for champerty and maintenance offences. Yesterday, a solicitor and a recovery agent were charged with conspiracy to commit maintenance, champerty and conspiracy to commit champerty.
In May 2001, a Yeung Chun-kit suffered a serious traffic accident which left him with severe head injuries. His mother, Wong Siu-ying, was approached by a recovery agent, Cheung Oi-ping, at the Prince of Wales Hospital. Cheung offered "consultancy services" to pursue a legal claim for the victim, which resulted in the conclusion of an agreement whereby Cheung would receive 25% of the compensation.
Ms. Wong brought an action on behalf of her son and in September 2003 the case was settled for a sum of about HK$3.5 million to be paid to her son. Three years later, Ms. Wong made an application under the Mental Health Ordinance to be appointed head of the committee administering her son's estate and explained to the Court that she paid HK$861,652 to Ms. Cheung. The presiding judge commented that the deal with the recovery agent infringed the law of champerty and maintenance.
Yesterday, Ms. Wong's solicitor, Winnie Lo Wai-yan and Cheung were charged in the Eastern Magistracy Court accused of having conspired to encourage the civil action of Ms. Wong. The pair has also been charged with one count of perjury regarding the preparation of a sworn statement in May 2005. Cheung was further charged with theft and accused of illegally sharing 25% of the HK$3.5 million compensation received by Mr. Yeung. No plea was taken and the case was adjourned to July 29 for hearing in the District Court.
Champerty is the maintenance of a lawsuit by an uninterested party in return for a promise of part of the proceeds of the lawsuit. In Hong Kong it constitutes a criminal offence that could lead to seven years in jail and a fine. This is the first case of its kind to be brought in Hong Kong.
Such arrangements with recovery agents jeopardise the entitlements of injured victims. It is therefore encouraging to learn that the Police are prosecuting persons involved in champerty and maintenance. As cautioned by the Government and the Law Society, the public is encouraged to seek proper legal advice when pursuing their claims for personal injuries.