HKSAR v. MUI KWOK KEUNG

CACC 133/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CRIMINAL APPEAL NO 133 OF 2013

(ON APPEAL FROM DCCC 890 of 2012)

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REASONS FOR JUDGMENT

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Hon Macrae JA (giving the reasons for judgment of the Court):

1.  The applicant, a practising barrister of 19 years’ call, was convicted on 26 March 2012 by HH Judge Woodcock of five charges of Champerty, contrary to common law and section 101I of the Criminal Procedure Ordinance, Cap 221.  He was sentenced on the same day to a total of 3½ years’ imprisonment.  He appealed against both his conviction and sentence.

2.  On 8 October 2013, we dismissed the appeals against both conviction and sentence and said we would give our reasons later. This we now do.

3.  Given the rarity of this somewhat ancient common law offence, it is necessary to look at the particulars of the charges preferred against the applicant, as well as the facts which were found in support of them, before examining whether or not they come within the offence of champerty, as it is understood and applied in this jurisdiction.  There can no longer be any issue as to whether champerty is a criminal offence per se under the law of Hong Kong, notwithstanding the abolition of the common law offences of maintenance and champerty in England and Wales under section 13(1) of the Criminal Law Act 1967.  This matter has been settled by the Court of Final Appeal in Unruh v Seeberger (2007) 10 HKCFAR 31, and re-affirmed in Winnie Lo v HKSAR (2012) 15 HKCFAR 16. 

4.  What is in issue is the scope of that offence and, in particular, whether an agreement between a legal representative and his lay client to give the legal representative a share of the proceeds of litigation, if successful, can amount to the criminal offence of champerty under the common law of Hong Kong.  That particular question is at the heart of this appeal.

The Charges

5.  Four of the offences charged (Charges 2, 3, 4 and 5) concerned personal injury actions in which the applicant, who acted for each plaintiff, had originally either been instructed by a solicitor (Charge 2), or had been personally introduced to the respective plaintiff through a relative, colleague or acquaintance of the plaintiff (Charges 3, 4 and 5), and had then obtained the services of a solicitor to act for the plaintiff.  In relation to all four charges, the same solicitors’ firm and solicitor were ultimately brought in to act for the plaintiffs, although the lay clients had either limited or no contact with the solicitor concerned. 

6.  It is perhaps only necessary to set out in full the particulars of one of these four charges, since its pattern and terms were the same in each charge.  By way of example, Charge 2 was particularised as follows:

Particulars of Offence

MUI Kwok-keung, between the 15^th day of February, 2002 and the 25^th day of October, 2004, both dates inclusive, in Hong Kong, unlawfully:

(a) promoted and supported a civil action (HCPI No. 121 of 2002) in the Court of First Instance of the Hong Kong Special Administrative Region between FUNG Kwok-ming as the Plaintiff and FOK Wing-hang as the Defendant, in consideration of the said FUNG Kwok-ming agreeing to reward him with a share in the proceeds of the civil action if it succeeded;

(b) agreed with the said FUNG Kwok-ming that he would take 25 per cent of the damages to be recovered from the Defendant as his share of the said proceeds; and

(c)  took a sum of $425,000 Hong Kong currency from the said FUNG Kwok-ming upon settlement of the said civil action by the parties.

7.  In each of the allegations in Charges 2 - 5, the arrangement was that the applicant would take a 25% share of any damages recovered; and in each case he did so, save for the last charge where, for reasons we shall come to, he took for himself a share amounting to 62% of the proceeds.

8.  Charge 1 was slightly different.  The underlying action involved a claim for damages against the Secretary for Justice and the Hospital Authority arising out of alleged police misconduct which had led to the plaintiff’s arrest for assault and his transfer to the psychiatric ward of a hospital.  Although the share of proceeds of any successful action was agreed at 30%, nothing was in fact ever paid because the action was time-barred and subsequently discontinued; with the plaintiff being ordered to pay the costs of the Secretary for Justice, as 1^st defendant.  Furthermore, unlike the position in Charges 2 – 5, the plaintiff concerned had been personally contacted by telephone ‘out of the blue’ by the applicant, upon his legal aid application being refused; and the action subsequently commenced.  Again, the applicant arranged for a solicitor to be engaged, who happened to be the same as in all of the other actions.

The facts of each charge

Charge 1

9.  In December 1997, Mr Pang Mo-fung (PW1) had been arrested for assaulting a police officer following a domestic dispute with his then wife, to which incident the police had been called.  Following his arrest, PW1 was taken to the United Christian Hospital from which he was transferred under section 35A of the Mental Health Ordinance, Cap 136 to the psychiatric unit of the Nethersole Hospital for a period of nine days.  He was subsequently tried and convicted by a magistrate of assaulting a police officer during the earlier incident. 

10.  In October 1998, PW1 appealed against his conviction and his appeal was allowed by the High Court.  He subsequently applied for legal aid in order to launch a civil action against the police and the United Christian Hospital.  His application was refused (it would seem on the merits), whereupon he sought to appeal the Director of the Legal Aid’s decision; which appeal was also refused. 

11.  About a month after his legal aid appeal was refused, in mid-October 1999, the witness received a telephone call from the applicant.  At first the witness was concerned as to how the applicant had learned of the matter and come by his telephone number, but when the applicant said he could help him, he agreed to see the applicant in his chambers in Central.  At that meeting, the applicant asked the witness about the proposed legal action and said that he had experience in these kinds of matters, having previously been a police officer.  When the witness told him that he had no money and was living on social security, the applicant proposed that he would do the case on the basis of a 30% share of any proceeds if the action succeeded: if it failed, the witness would not have to pay anything.  The witness accepted the proposal.

12.  PW1 subsequently saw the applicant on about ten further occasions at his chambers, one of which involved a consultation with a doctor whom the applicant had arranged to examine the witness in his chambers. On none of these occasions was a solicitor ever present, although PW1 subsequently met a solicitor at the offices of a solicitors’ firm in Admiralty at the applicant’s request in 2002; and once more in 2003, and again in 2004.

13.  On 12 October 2001, a writ was issued by the solicitors’ firm on behalf of PW1 against the Secretary for Justice, for and on behalf of the Hong Kong Police, and against the Hospital Authority, for and on behalf of the United Christian Hospital.  By then, of course, the action was already time-barred.  Nevertheless, on 23 May 2002, a statement of claim drafted by the applicant was filed in the District Court.  On 27 January 2003, the applicant appeared in the District Court on behalf of PW1 as plaintiff.  In May and September 2003, the actions against the Hospital Authority and the Secretary for Justice were respectively discontinued, with the plaintiff being ordered to pay the costs of the Secretary of Justice.

14.  In due course, PW1 made a complaint to the Bar Association; not, it would seem, because of the arrangement he had been persuaded to enter into by the applicant, but because of the applicant’s alleged negligence in allowing the action to become time-barred.  As part of its ensuing investigation into this complaint, a representative of the Bar Association visited the solicitors’ firm in question and obtained copies of two briefs in the applicant’s name, both of them in respect of the hearing of 27 January 2003, and both apparently signed by the same solicitor on the same day. Rather curiously, one brief was marked at HK$50,000, with a daily refresher of HK$30,000: the other was marked pro bono.

15.  The civil action having been discontinued, no money was ever paid to the applicant under his arrangement with PW1.  As for the costs order made against PW1, we are told that nothing has ever been paid.

Charge 2

16.  In March 1999, Mr Fung Kwok-ming (PW2) was injured in a car accident.  A firm of solicitors was instructed, who in turn gave instructions to the applicant to represent PW2.  An action was duly commenced in the High Court on 15 February 2002.  However, as a result of a disagreement between PW2 and his then solicitor during a conference at the applicant’s chambers, the original firm of solicitors withdrew.  The applicant nevertheless told PW2 that he would continue to handle the litigation and that he would take 25% of any damages subsequently ordered by the court.  Upon the applicant’s recommendation, a new firm of solicitors was then brought in to act for PW2.  A notice of ‘change of solicitors’ was filed on 9 October 2003 by the new firm of solicitors, who happened to be the same as the solicitors of record in relation to PW1’s civil claim.

17.  In October 2004, the action was settled at HK$1.7 million plus costs, with a cheque being given personally by the applicant to PW2 in his chambers.  At the same time, the applicant gave PW2 a bank account name and number for him to transfer HK$445,000, representing 25% of the award of HK$1.7 million, as well as HK$20,000 in respect of a psychological report which the applicant had paid for in advance.  This consultation had also taken place in the applicant’s chambers.

18.  The defendant in the civil suit further paid HK$488,000 to the plaintiff’s firm of solicitors as costs.  They in turn paid the applicant HK$175,000 as his brief.  Notwithstanding that the applicant had received 25% of the proceeds of the settlement under his agreement with PW2, he thereby received a further sizeable amount as his professional fees.  Interestingly, when PW2 was shown the fee-note tendered by the applicant to the new firm of solicitors, he was surprised to note that at least one conference was said to have been in the presence of an instructing solicitor: he maintained that he had never at any stage met or seen any solicitor from the second firm arranged by the applicant.

Charge 3

19.  In March 2003, the wife of Mr Kong Ka-shing (PW3) died in an accident during the course of her employment.  There were two daughters of the marriage, aged six and eight.  A colleague of PW3 introduced him to the applicant about a month after his wife’s death, as a result of which a consultation took place at the applicant’s chambers.  At this first meeting, at which no solicitor was present, the applicant proposed that he should receive 25% of any damages obtained in a civil action as his legal fees, while PW3 would not be required to pay anything.  A solicitors’ firm was brought in to act for the Plaintiff, which was the same firm and the same solicitor engaged by the applicant in the previous two actions.  PW3 never paid any fees to this firm and only met the solicitor once, whereas he met the applicant on about ten occasions, always in his chambers, and always alone.

20.  The witness had experienced financial difficulties since the death of his wife and, when he told the applicant about this, the applicant lent him money on three occasions amounting to some HK$25,000 to HK$30,000.

21.  Two actions were launched on behalf of PW3: an employee’s compensation action and a claim for damages in the District Court.  The employee’s compensation action was settled by consent on 16 July 2004, with PW3 and his two daughters receiving HK$841,560 plus costs; half of the award being apportioned to PW3, and a quarter each to his two daughters.  About a month later, PW3 received a cheque signed by the solicitors in the sum of HK$420,781 from the applicant in his chambers.  At the same time, the applicant gave PW3 a bank account name and number into which he was to deposit HK$120,000, comprising 25% of this part of the award together with a repayment of HK$15,000 of the loans advanced by the applicant.

22.  In October, PW3 received again from the applicant personally a further solicitor’s cheque in the sum of HK$205,108.  Again on the instructions of the applicant, PW3 drew a cheque for HK$105,000 and deposited it in the same bank account as before.  Ultimately, PW3 paid a total of HK$225,000 into this account, comprising the applicant’s 25% share of the award and the repayment of the personal loans.

23.  In relation to the action in the District Court, in August 2006, the solicitors on the record were changed to another firm without the knowledge of the witness.  Indeed, he said he had never met anyone from this new firm of solicitors.  This action was settled in January 2007 for HK$100,000 plus costs.  In late 2008, PW3 was given a further cheque in the sum of HK$100,000 drawn on the account of the new solicitors’ firm.  He was then required by the applicant to pay into the same bank account the sum of HK$35,000, representing 25% of the award plus repayment of a further loan of HK$10,000.

24.  Two bills of costs of the first set of solicitors relating to these two actions were produced at trial.  Both bills recorded 15 conferences with the lay client at which a particular solicitor had been present.  Since PW3 was adamant that he had only ever met this solicitor on one occasion, the prosecution contended that these bills of costs must have been false.

Charge 4

25.  In March 2005, Mr Chan Chak-ki (PW4) was 16 years of age when he was knocked down by a bus in Kowloon and injured.  Roughly two months after the accident, a relative of PW4 introduced him to the applicant, as a result of which a meeting was convened between PW4, his mother, his uncle and the applicant in the applicant’s chambers.  No solicitor was present.  At this meeting, the applicant told PW4 and his family members that he could pursue an action against the bus company on PW4’s behalf and that if he was successful, PW4 should pay him 25% of the award as his legal costs.  A firm of solicitors was arranged to act on behalf of PW4, which again was the same firm and the same solicitor organised to act on behalf of PW1, PW2 and PW3. The witness said he had spoken to the solicitor concerned on the telephone on about ten occasions but had never met him.  Since PW4 was temporarily unable to work, the applicant lent him a total of HK$8,000 over a few months between August and October 2006.

26.  Ultimately, the bus company agreed to pay HK$360,000 plus costs to PW4.  A cheque for the agreed amount and drawn on the bus company’s account was presented to PW4 by the applicant in his chambers.  As directed by the applicant, HK$108,000 was transferred by PW4 into the same bank account as the payments in the previous cases, representing 25% of the settlement, HK$10,000 for a medical report previously paid for by the applicant and repayment of the HK$8,000 personal loan.

27.  As with the cases of PW2 and PW3, the bill of costs submitted to the defendant by the solicitors included four conferences with the lay client which, if PW4’s evidence was true, had never taken place.  Nevertheless, the bus company paid a further HK$77,000 in costs to the solicitors, HK$9,000 of which was used to settle the applicant’s professional fees.  Accordingly, the applicant obtained 25% of the settlement of PW4’s action and a further HK$9,000 in counsel’s fees.

Charge 5

28.  In June 1999, Mr Wong Wui-sing (PW5) injured his back during the course of his employment.  In April 2000, he was granted legal aid to pursue a claim against his employer, solicitors being duly appointed by the Director of Legal Aid to commence an employee’s compensation claim in the District Court.

29.  In June 2000, PW5 was introduced to the applicant through a District Councillor at a legal seminar arranged in the neighbourhood where he lived.  PW5 told the applicant about his accident and the applicant invited him to come and discuss the matter at his chambers.  When the two met again, the applicant offered to conduct his case for a share of 25% of any damages which might ultimately received.  PW5 agreed to this arrangement. In July 2000, the legal aid certificate was discharged at PW5’s instigation.

30.  In August 2000, a new firm of solicitors filed a notice to act on behalf of PW5 in his employee’s compensation claim in the District Court.  PW5 said he had neither heard of nor seen anyone from this particular solicitors’ firm. The applicant also assisted PW5 in his claim against his insurance company.

31.  In October 2001, the employee’s compensation claim was settled at HK$279,718 plus costs.  Since the employer had already paid HK$120,000 in advance, PW5 received only the balance of HK$160,000.  He also agreed to accept HK$130,000 from his insurance company. PW5 then paid 25% of both sums of money to the applicant.  He had never paid any fees to the solicitors’ firm.

32.  Following the accident, PW5 had gone through a number of personal tragedies and financial crises, which resulted in him at one stage receiving treatment in a mental hospital for seven to eight months.  Having gambled away the compensation he received, he had applied for public assistance.  He had also borrowed some HK$20,000 from the applicant.

33.  In 2002, a personal injuries claim was commenced in the District Court against PW5’s employer by the same firm of solicitors who had been brought in at various stages to act for the other prosecution witnesses.  PW5 said he had never met anyone from this firm of solicitors nor had he paid them any fees.  In February 2004, the action was transferred to the High Court and, in January 2005, it was ordered by consent that the defendant pay to the plaintiff the sum of HK$1,764,718. After deducting employee’s compensation and an advance payment made by the employer to PW5, HK$1,430,000 was paid to the plaintiff’s solicitors.  Costs were also ordered to be paid by the defendant.

34.  In October 2003, PW5 had opened a joint bank account with the applicant at the Bank of China. This was done at the applicant’s suggestion in order to facilitate the flow of funds received.  The bank account was controlled by the applicant, with his chambers’ address being used as the address for the account.

35.  On 21 January 2005, a cheque for HK$1,430,000 drawn on the solicitors’ account was deposited into PW5’s and the applicant’s joint Bank of China account.  Six days later, the applicant transferred HK$550,250 from the joint bank account into PW5’s own personal account with Bank of China. At the same time, the applicant withdrew HK$879,750 in cash from the joint bank account.  On 30 March 2005, the applicant closed the joint bank account and withdrew the remaining balance of about HK$5,000.

36.  PW5 knew that he had only received 38% of his award but, when he asked the applicant about it, he was told that, apart from the HK$20,000 which he had earlier borrowed, he owed other legal fees which were incurred when the applicant represented him in his divorce proceedings, at his arrest for assault and during an investigation into child neglect. However, he was never given a breakdown of what these fees actually entailed.

The judge’s reasons

37.  Having found the above facts proved, the judge went into some detail as to her understanding of the common law offence of champerty.  In particular, she cited and relied upon the following passage from the judgment of Lord Denning MR in In re Trepca Mines Ltd (No 2) [1963] Ch 199, at 219:

“Champerty is derived from campi partitio (division of the field). It occurs when the person maintaining another stipulates for a share of the proceeds… The reason why the common law condemns champerty is because of the abuses to which it may give rise. The common law fears that the champertous maintainer might be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses.”

38.  The judge went on to hold that:

“What Lord Denning describes succinctly is the mischief targeted by champerty. The arrangement may lead to a perversion of justice; there is a real danger. Where the champertor is an officer of the court, there is a real danger a champertous agreement may give rise to conflicts between his interest in financial gain and his duties to the court as well as his lay client. Justice may be undermined by such real conflicts.”

39.  She found as facts, and as a matter of law, that the applicant had officiously intermeddled with the five prosecution witnesses’ litigation and agreed to obtain a share in the proceeds of that litigation in ways that could not be justified under any of the public policy exceptions to the offence.  As a barrister and member of the legal profession, she considered that the applicant’s conduct posed a genuine risk to the integrity of the court process.  It was, she said, champerty in its purest and most obnoxious form.

The applicant’s grounds of appeal

40.  A number of grounds of appeal have been advanced by Mr Yuen, on behalf of the applicant.  There is, however, a measure of overlap between them and they may be reduced to the following propositions.  First, it is submitted that the judge was wrong to find that public policy dictated that the type of agreement entered into between the applicant and the prosecution witnesses should be regarded as criminal.  Secondly, it is said that the judge failed to consider the exceptions which operated to remove the applicant’s conduct from criminal sanction: in particular, the applicant’s and the litigants’ common interest in the outcome of the proceedings, and the litigants’ right of access to justice and lawyers of their choice.  Thirdly, it is argued that the judge was wrong to find that the applicant’s conduct posed a genuine risk to the integrity of the judicial process.

A consideration of the applicant’s arguments

The first proposition

41.  It must be acknowledged that just as public policy brought the common law offences of maintenance and champerty into being, they are necessarily susceptible to changes in that policy.  As Lord Phillips of Worth Matravers MR put it in R (Factortame Ltd) v Transport Secretary (No 8) [2003] QB 381, at 399:

“Because the question of whether maintenance and champerty can be justified is one of public policy, the law must be kept under review as public policy changes.”

42.  Ribeiro PJ, giving the principal judgment of the Court in Winnie Lo, considered the effects of the changes in public policy on the essential rationales of the offences.  He observed, at 45:

“In Unruh v Seeberger, this Court noted that these offences are traceable in English law back to at least the 13th century. It was pointed out that their core definitions, applicable equally to maintenance and champerty as crimes, as torts and as the basis for rendering contracts unenforceable as against public policy, have remained essentially unchanged throughout this time.

The kernel of the offence of maintenance has always involved a defendant’s “officious intermeddling” in litigation in which he has no legitimate interest. And the crux of champerty has always involved a defendant who takes a share of the proceeds of the litigation maintained.

…..

As the Court noted in Unruh v Seeberger, the scope of these two offences has progressively been narrowed over the years by the courts carving out common interest and similar exceptions to liability to reflect changed public policy considerations.”

43.  It is argued by Mr Yuen that, following the abolition in England of the common law crimes and torts of maintenance and champerty by the Criminal Law Act, 1967 and the subsequent permitting of those conducting litigation to enter into contingency agreements in limited circumstances under section 58 of the Courts and Legal Services Act, 1990, public policy has changed and, indeed, moved so far away from the policies which brought the common law crimes of maintenance and champerty into existence, and thereafter sustained them in a steadily attenuated form, that they have become a virtual dead letter in Hong Kong.  Mr Yuen went so far as to say of contingency fee arrangements that, given the competing public interest of ensuring access to justice and the right to have a lawyer of one’s choice, conditional or contingency fees by those conducting litigation “should not be so wicked and objectionable” as the judge found them to be.

44.  There are a number of difficulties which confront the applicant in mounting his arguments.  First, it is not simply public policy which proscribes contingency fee arrangements.  Section 64(1)(a) and (b) of the Legal Practitioners Ordinance, Cap 159 provides as follows:

(1) “Nothing in section 58, 59, 60, 61 or 62 shall give validity to –

(a) any purchase by a solicitor of the interest, or any part of the interest, of his client in any action, suit or other contentious proceeding; or

(b) any agreement by which a solicitor retained or employed to prosecute any action, suit or other contentious proceeding stipulates for payment only in the event of success in that action, suit or proceeding;

(c)  … ”

45.  These provisions mirror in identical language the provisions in England of section 65 of the Solicitors Act, 1957.  Of the English section, it was noted by Steyn LJ (as he then was) in the Court of Appeal decision in Giles v Thompson [1993] 3 All ER 321, at 329, that the Law Reform Commission in England, in its Proposals for Reform of the Law relating to Maintenance and Champerty of October 1966, had said:

“16. There is, however, one field in which that particular species of maintenance -- champerty-- plays an effective role. There is a substantial body of case law to the effect that champertous agreements (including in this context “contingency fee” agreements) are unlawful as contrary to public policy; see e.g. Laurent v Sale & Co ([1963] 2 All ER 63, [1963] 1 QB 232). This rule has an important bearing upon the practice of solicitors. For instance, section 65 of the Solicitors Act 1957 reflects the rule when it declares that nothing in the Act is to be treated as giving validity to “(a) any purchase by a solicitor of the interest, or any part of the interest, of his client in any action, suit or other contentious proceeding; or (b) an agreement by which a solicitor retained or employed to prosecute any action, suit or other contentious proceeding stipulates for payment only in the event of success in that action, suit or proceeding.” And it is clear that a client can apply pursuant to section 61 of the Act to set aside a champertous agreement made with a solicitor for the conduct of litigation.”

46.  Furthermore, the passage referred to from Lord Denning MR’s judgment in In re Trepca Mines Ltd (No 2), and cited by the judge (at para 37 supra), which sets out the potential abuses of champertous arrangements, immediately continues, at 220:

“These fears may be exaggerated; but, be that so or not, the law for centuries has declared champerty to be unlawful, and we cannot do otherwise than enforce the law; and I may observe that it has received statutory support, in the case of solicitors, in s 65(1)(a) and (b) of the Solicitors Act 1957.”

47.  Accordingly, it is not merely public policy which prohibits contingency fee arrangements.  The Legal Practitioners Ordinance gives statutory force to the prohibition.  Whatever the position in England, Hong Kong has not seen fit to modify the rule in the limited way which section 58 of the Courts and Legal Services Act has done. 

48.  Secondly, the principles which made champertous agreements contrary to public policy in England still apply, and have particular application to legal practitioners conducting litigation.  While the emphasis of the offence may have shifted and its scope narrowed, the underlying rationale remains the same.  In Winnie Lo, Ribeiro PJ summarised (at 46) the effect of its earlier decision in Unruh v Seeberger:

“In Unruh v Seeberger, this Court held that the traditional legal policies underlying maintenance and champerty continue to apply, with the mischief aimed at continuing to be “officious intermeddling” in litigation in the case of maintenance.  It acknowledged the continued relevance of the traditional concerns underlying champerty, namely, the tendency of an agreement to share the spoils of litigation to encourage the perversion of justice; to endanger the integrity of the judicial process or to involve trafficking in the outcome of litigation.  It emphasised the need to consider the totality of the facts in ascertaining liability and the importance of considering countervailing policies and recognising that other approaches may be more suitable in a particular case.”

49.  In the House of Lords decision in Giles v Thompson, at 351, Lord Mustill considered how the amelioration, if not removal, of the conditions which had led, as a matter of public policy, to the creation of the common law offences of maintenance and champerty - historically the exploitation by men of power of litigants and litigation - had resulted by the twentieth century in a very limited sphere of application for either offence:

“In the most recent decades of the present century maintenance and champerty have become almost invisible in both their criminal and tortious manifestations. In practice, they have maintained a living presence in only two respects. First, as the source of the rule, now in the course of attenuation, which forbids a solicitor from accepting payment for professional services on behalf of a plaintiff calculated as a proportion of the sum recovered from the defendant. Secondly, as the ground for denying recognition to the assignment of a ‘bare right of action’. The former survives nowadays, so far as it survives at all, largely as a rule of professional conduct, and the latter is in my opinion best treated as having achieved an independent life of its own.”

50.  Although the last sentence of this passage might seem to be at odds which what we have earlier said (at para’s 44 - 47 supra), it was pointed out by Lord Phillips MR in R (Factortame Ltd), at 402:

“With respect, this statement is not correct. The basis of the rule is statutory.”

51.  Thirdly, there are cogent reasons why maintenance and champerty have retained a particular application and significance in relation to legal practitioners.  The statement of Lord Denning MR in In re Trepca Mines Ltd (No 2) (at para 37 supra) has been recast by Lord Phillips MR in R (Factortame Ltd), at 400, so that one must look to the facts of a particular case:

“…and consider whether those facts suggest that the agreement in question might tempt the allegedly champertous maintainer for his personal gain to inflame the damages, to suppress evidence, to suborn witnesses or otherwise to undermine the ends of justice.” (emphasis supplied)

52.  Later in his judgment, at 407, Lord Phillips MR explained how the ends of justice may be undermined in the case of lawyers entering into champertous agreements with their clients:

“There is good reason why principles of maintenance and champerty should apply with particular rigour to those conducting litigation or appearing as advocates. To demonstrate this we can do no better than cite a passage in the judgment of Buckley LJ in Wallersteiner v Moir (No 2) [1975] QB 373, 401-402:

“A contingency fee, that is, an arrangement under which the legal advisers of the litigant shall be remunerated only in the event of the litigant succeeding in recovering money or other property in the action, has hitherto always been regarded as illegal under English law on the ground that it involves maintenance of the action by the legal adviser. Moreover where, as is usual in such a case, the remuneration which the adviser is to receive is to be, or to be measured by, a proportion of the fund or of the value of the property recovered, the arrangement may fall within that particular class of maintenance called champerty… It may, however, be worthwhile to indicate briefly the nature of the public policy question. It can, I think, be summarised in two statements. First, in litigation a professional lawyer’s role is to advise his client with a clear eye and an unbiased judgment. Secondly, a solicitor retained to conduct litigation is not merely the agent and adviser to his client, but also an officer of the court with a duty to the court to ensure that his client’s case, which he must, of course, present and conduct with the utmost care of his client’s interests, is also presented and conducted with scrupulous fairness and integrity. A barrister owes similar obligations. A legal adviser who acquires a personal financial interest in the outcome of the litigation may obviously find himself in a situation in which that interest conflicts with those obligations…” ”

53.  Or, as Steyn LJ succinctly put the matter in Giles v Thompson, at 331:

“The rationale of the common law rule is that such agreements allowed the duty and interest of solicitors to conflict with a resultant risk of abuse of legal procedure.”

The same, in our view, may be said in relation to barristers.

54.  Accordingly, for these reasons, we would reject Mr Yuen’s first proposition that public policy, however else it may have eroded the common law rule, has changed so as to reflect a different attitude to champertous arrangements by lawyers with their clients and thereby removed them from the ambit of the criminal law.

The second proposition

55.  However, our conclusion is not complete without an examination of Mr Yuen’s second proposition.  It is argued that certain public policies have achieved greater prominence and force in recent years which in turn have led to the narrowing of the ambit of the common law offences; the “shrinking scope of maintenance and champerty”, as Ribeiro PJ termed it in Unruh v Seeberger, at 65.  Of the common law tort of maintenance, Fletcher-Moulton LJ had said over a century ago in British Cash and Parcel Conveyors Ltd v Lamson Store Service Co Ltd [1908] 1 KB 1006, at 1013:

“The present legal doctrine of maintenance is due to an attempt on the part of the Courts to carve out of the old law such remnant as is in consonance with our modern notions of public policy…”

56.  Since then, of course, human rights and other legislation have entrenched certain fundamental imperatives, such as the right of equal access to justice and the right to legal assistance of one’s own choosing. Furthermore, the law now recognises that certain relationships can have a sufficient, legitimate common interest in the outcome of litigation to justify one of them supporting the litigation of another: for example, the fishing companies and their accountants in the R (Factortame Ltd) case. Moreover, as Ribeiro PJ held in Unruh v Seeberger, at 66, this ‘common interest’ category of exception is not closed.

57.  The judge was aware of the categories of exception which might exclude conduct from being regarded as the criminal offences of maintenance or champerty at common law.  Notwithstanding that no argument was mounted before her that any such exception applied (save, somewhat faintly, the access to justice exception), she found that they did not arise on the facts of the case.  In our judgment she was right to so find.

58.  It was always open to the litigants in these cases to have the lawyer of their choice (within reasonable limits) without entering into a champertous arrangement.  Nor did they have access to justice only by virtue of the champertous agreement.  PW5 had in fact been granted legal aid, which he discharged upon entering into an arrangement with the applicant.  The judge said of the five plaintiff prosecution witnesses:

“None had any experience in the legal profession or previous litigation indicating they would necessarily know or be familiar with the procedure of instructing a solicitor who may brief counsel as well as how fees are normally charged and collected.”

59.  She expressly found, in relation to all five prosecution witnesses, that they:

“... did not pay any legal fees upfront or in advance or on account to any solicitors’ firm… which is the norm, because there was a champertous agreement in place for their litigation. They met the (applicant) directly and dealt only with the (applicant) and not a solicitor who instructed the (applicant) on their behalf because there was a champertous agreement between the prosecution witnesses and the (applicant). They paid what they thought was their legal fee directly to the (applicant’s) designated account because they had a champertous agreement in place with the (applicant). All five prosecution witnesses knew very little about their litigation, the progress or the negotiations that led to settlements, and I am sure that was deliberate on the part of the (applicant). I am sure all were told they did not have to pay any fees if there was no win or award, which is the rationale behind champerty.”

60.  In other words, the applicant exhibited a complete disregard of his professional responsibilities towards his lay clients.  As Ribeiro PJ warned in Winnie Lo, at 52:

“A solicitor who has conduct of a piece of litigation therefore may attract liability only when he transgresses his proper professional role. ...

…by far the most common instance of a solicitor incurring liability in respect of litigation which he is conducting involves his committing champerty. In such cases, the solicitor plainly departs from his proper professional role and is held liable for that “particularly obnoxious form” of maintenance “when the maintainer seeks to make a profit out of another man’s action -- by taking the proceeds of it, or part of them, for himself.” ”

Ribeiro PJ concluded, at 55, that:

“… under the law as it stands, it does further illustrate the importance of solicitors keeping within their usual professional role as litigation attorneys, charging no more than their ordinary fees, if they are to avoid being tainted with maintenance or champerty.”

61.  The same may be said, with equal if not greater force, in relation to barristers, particularly where the solicitor is a man of straw who plays no useful or effective role in the litigation beyond that of allowing his name to appear on the record.

62.  As for the suggestion that, by taking up the case in question, the barrister arrogates to himself a common interest in the outcome, the argument involves a circularity which was described and disposed of by Sir Thomas Bingham MR (as he then was) in the Court of Appeal decision in Giles v Thompson, at 347:

“Ordinarily, an alleged maintainer or champertor cannot rely on the agreement alleged to be unlawful as giving him his legitimate business interest. An outsider will very probably become involved in the litigation by virtue of some agreement, and if such an agreement were held to confer a sufficient interest the exception would consume the rule. Hence the repeated reference in the cases to a pre-existing interest, and hence the House of Lords’ decision in Trendtex that assignment of a bare right to litigate remains unlawful. It is plain that where an outsider has no legitimate business interest beyond such as he derives from the agreement whose validity is in question, he is merely trafficking in litigation, an activity which English law continues to regard as contrary to public policy.”

63.  Accordingly, we find no basis either in law or on the facts of this case for saying that any of the exceptions can apply to the applicant’s champertous arrangements with each of the prosecution witnesses. 

The third proposition

64.  We turn to Mr Yuen’s third proposition, which is that the judge was wrong to find that the applicant’s conduct posed a genuine risk to the integrity of the judicial process.

65.  To a large extent we have already dealt with the risks associated with lawyers entering into champertous agreements with their clients, when examining the policy behind the common law rule.  That policy is summarised in the passage from Lord Denning MR in In re Trepca Mines Ltd (No 2) (at para 37 supra), as extended by Lord Phillips MR in R (Factortame Ltd) (at para 51 supra), and as explained by Buckley LJ in Wallersteiner v Moir (No 2) (at para 52 supra).  A solicitor or barrister who acquires a personal financial interest in the outcome of litigation may obviously find himself in a situation in which his interest conflicts with his obligations to his client and to the court.

66.  Mr Yuen submits that there is no evidence or suggestion that any of the abuses envisaged in the authorities, when a solicitor or barrister acquires a personal financial interest in the outcome of his client's litigation, had ever occurred in any of the five cases concerned. With respect, in many cases of champerty, that might be difficult to show.  But that is not the point.  What is exposed by such arrangements is the obvious risk that such abuses might occur. 

67.  A brief excursion into the facts of the five cases reveals that by virtue of the applicant pursuing a claim on behalf of PW1 which was time-barred, the plaintiff was ordered to pay the costs of the 1^st defendant.  Not surprisingly, those costs have never been paid.  In relation to PW2’s claim, the applicant received HK$425,000 as his share of the champertous agreement, while the fee notes he rendered to his solicitors in respect of the case amounted to HK$180,000.  Notwithstanding his champertous agreement with PW2, he received in addition legal costs from the defendant of HK$175,000.  In respect of PW4’s settlement, the applicant also received his professional fees in addition to his share of the award, albeit on a smaller scale.  In relation to PW3, about HK$105,000 of the award of employee’s compensation, which should have gone to two minors as daughters of PW3, went to the applicant.  And in relation to PW5, legal aid was discharged in favour of a champertous agreement, from which the applicant ultimately availed himself of 62% of the award. 

68.  Even if one leaves out of consideration these unsavoury facts, and the irregular dealings and unprofessional relationships he established as a barrister with all of the witnesses, the applicant evidently profited far more than he would have done had he charged in the ordinary way, on proper instructions from a solicitor or the Director of Legal Aid, for work properly or fairly done on behalf of the plaintiffs.  Not only did the plaintiffs pay far more under these champertous arrangements than they would otherwise have paid under a properly regulated system of representation, but the defendants were clearly at risk of paying more than they might otherwise have agreed to pay but for the champertous agreements they knew nothing about.  One can safely assume that, in those cases where they were required to pay the plaintiff’s legal costs, the defendants were not informed that the plaintiff’s counsel was in fact receiving 25% of the settlement.  To that material extent, they were deceived.

69.  The matter has been rationalised in this way by Buckley LJ in Wallersteiner v Moir (No 2), at 402:

“Under a contingency fee agreement the remuneration payable by the client to his lawyer in the event of his success must be higher than it would be if the lawyer were entitled to be remunerated, win or lose: the contingency fee must contain an element of compensation for the risk of having done the work for nothing. It would, it seems to me, be unfair to the opponent of a contingency fee litigant if he were at risk of being ordered to pay higher costs to his opponent in the event of the latter’s success in the action than would be the case if there were no contingency fee agreement. On the other hand, if the contingency fee litigant were to lose the action, his opponent’s right to recover costs against him should not in fairness be affected by the fact that the former party has a contingency fee agreement. Consequently under our system of what are sometimes called indemnity costs a contingency fee litigant would in the event of success have to bear a heavier burden of fees, irrecoverable from his opponent, than he would otherwise do, while remaining exposed to the risk of being ordered to pay his opponent’s taxed costs in the event of his failure. The arguments in favour of the contingency fee system are accordingly a good deal less cogent here than they are in the United States of America.”

70.  Thus we cannot accept Mr Yuen’s allied argument that, since the historical rationale behind the public policy was to protect defendants from the unscrupulous trafficking in litigation by wealthy and powerful interests, and since the defendants’ interests (as distinct from those of the plaintiffs) were not the interests affected by the applicant’s actions, public policy did not operate to make these agreements criminal.  In reality, as Buckley LJ pointed out, champertous agreements operate to the disadvantage of both sides in litigation. 

71.  It is well to remember the cautionary words of the Privy Council in Ram Coomar Coondoo v Chunder Canto Mookerjee (1876) LR 2 App Cas 186, at 210:

“Their Lordships think it may properly be inferred from the decisions above referred to, and especially those of this tribunal, that a fair agreement to supply funds to carry on a suit in consideration of having a share of the property, if recovered, ought not to be regarded as being, per se, opposed to public policy. Indeed, cases may be easily supposed in which it would be in furtherance of right and justice, and necessary to resist oppression, that a suitor who had a just title to property, and no means except the property itself, should be assisted in this manner.

But agreements of this kind ought to be carefully watched, and when found to be extortionate and unconscionable, so as to be inequitable against the party; or to be made, not with the bona fide object of assisting a claim believed to be just, and of obtaining a reasonable recompense therefor, but for improper objects, as for the purpose of gambling in litigation, or of injuring or oppressing others by abetting and encouraging unrighteous suits, so as to be contrary to public policy, -- effect ought not to be given to them.”

72.  In our judgment, the agreements entered into between the applicant and the five prosecution witnesses undoubtedly presented an obvious and genuine risk to the integrity of the court’s process.

Conclusion

73.  For these reasons, the application for leave to appeal against conviction was refused.  We turn now to consider the appeal against sentence.

Appeal against sentence

74.  The judge sentenced the applicant to a total sentence of 3 and a half years’ imprisonment, which she achieved by passing two years’ imprisonment on Charges 1, 2, 3 and 4 and two years and 10 months’ imprisonment on Charge 5; and then making all sentences concurrent save for two months from each of the sentences on Charges 1 to 4, which were ordered to run consecutively to the sentence on Charge 5.  She also ordered the applicant to pay compensation in a total amount of HK$1,509,750 to the four prosecution witnesses (PW2, PW3, PW4 and PW5).

75.  In sentencing the applicant, the judge described his actions as champerty “in its most obnoxious form”.  She continued:

“A member of the legal profession has abused his position and the trust of his lay clients. There are no guidelines for this offence. It is a rare offence and each sentence will depend on the facts of each case. The fact that it is rare and no longer an offence in some jurisdictions is not a factor that will attract leniency. In fact, I can say from the outset, this is a very serious case. I cannot imagine it getting much worse.

The defendant acted wholly inappropriately and in total disregard of his honourable profession.  As a member of the Bar, he should have no direct contact with any lay client.  Yet with all five prosecution witnesses, he dealt with them directly and independently of any solicitors.  He cold-called PW1 and solicited him, tempting him with success with untruths.”

76.  She found, as an aggravating feature of the applicant’s conduct, an element of exploitation, particularly in relation to PW5. However, implicit in her reasoning was the finding that all five prosecution witnesses had been manipulated by the applicant, who preyed on their trust, their ignorance of the legal system and, to varying degrees, their vulnerabilities, whether in terms of youth, financial difficulties or mental instability.

77.  We respectfully agree that it is difficult to imagine a worse case of champerty by a member of the Bar.  Quite apart from the blatant disregard of his professional responsibilities under the Code of Conduct of the Hong Kong Bar Association, these were five different, unconnected cases involving considerable sums of money which the plaintiff witnesses in question could ill afford to forego.

78.  As for the complaint that the judge should not have ordered compensation in the terms she did, we note that she specifically asked defence counsel at trial (not Mr Yuen) whether he had taken instructions on the prosecution’s application for compensation.  Counsel indicated that he had instructions from his client not to make any submission on the matter.  In relation to the further complaint that the judge did not make an enquiry into the means of the applicant to pay such compensation, the judge specifically asked counsel if he would like her to conduct an examination of the applicant’s ability to pay compensation, but he reiterated that, upon instructions, he did not wish to make any submission on the issue.  Notwithstanding the applicant’s clear position, and out of an abundance of caution, the judge nevertheless stood the matter down until after the luncheon adjournment so that counsel could take full instructions on the question of compensation.  When the court resumed in the afternoon, and the judge asked again if he had taken instructions over the adjournment in relation to the issue of compensation, counsel repeated his instructions:

“... the position of the accused person is just the same in the morning session that we will not make any reply submission in respect of (the application for compensation by the prosecution).”

79.  In the light of the applicant’s position at trial, and the careful and prudent course adopted by the judge in relation to the prosecution’s application for a compensation order, we are distinctly unimpressed by these complaints; as we are with the submission that the relevant prosecution witnesses were themselves parties to an illegal contract and thereby not entitled to any compensation.

Conclusion

80.  We would not have interfered in the circumstances of this case with an overall sentence of five years’ imprisonment. The application for leave to appeal against sentence is refused.  We have given considerable thought as to whether we should use our powers under sections 83I(3) or 83W(2) of the Criminal Procedure Ordinance, Cap 221.  However, given that there were matters of law in relation to conviction which might be said to be at least arguable, if only because of the highly unusual nature of the offence, and given the absence of sentencing precedent, as well as the inevitable extra-curial consequences for the applicant of his misconduct, we have decided with some reluctance not to use those powers.

81.  However, any member of either profession who enters into the kind of arrangements with which we have been concerned in this case must realise that he or she will, if convicted of a similar offence, inevitably go to prison for a substantial period of time, with the inevitable consequences on their professional careers.

Postscript

82.  The question of law reform in this area of the law was raised at the conclusion of the judgment of Ribeiro PJ in Winnie Lo, at 71:

“As a postscript, I wish to raise for consideration the question whether and to what extent criminal liability for maintenance should be retained in Hong Kong.

In England and Wales, criminal and tortious liability for both maintenance and champerty were abolished by the Criminal Law Act 1967. As pointed out in 1997 in Magic Menu Systems Pty Ltd v AFA Facilitation Pty Ltd ((1997) 72 FCR 261), such liability was abolished in Victoria in 1969, in South Australia in 1992 and in New South Wales in 1995 by the Maintenance and Champerty Abolition Act 1993 (NSW).

The issues are, however, of some complexity and may involve taking a different view in respect of maintenance as opposed to champerty; and of criminal as opposed to tortious liability.  It is in my view a fit topic to be referred to the Law Reform Commission.”

83.  The Court was, of course, dealing with a solicitor who had been charged with maintenance, and not champerty, in circumstances where it found the evidence fell well short of establishing either offence.  In the light of the facts which have emerged in this case, it might be argued that there are very good reasons for preserving the common law offence of champerty where legal practitioners are involved in these sort of champertous arrangements with their clients.  This was an egregious example of the offence and we wonder if, without the benefit of the common law offence, there would be other sufficient criminal sanctions and safeguards to deal with such conduct.