Champerty and maintenance

Last updated

Champerty and maintenance are doctrines in common law jurisdictions that aim to preclude frivolous litigation:

Contents

In Giles v Thompson [4] Lord Justice Steyn declared: "In modern idiom maintenance is the support of litigation by a stranger without just cause. Champerty is an aggravated form of maintenance. The distinguishing feature of champerty is the support of litigation by a stranger in return for a share of the proceeds."

At common law, maintenance and champerty were both crimes and torts, as was barratry (the bringing of vexatious litigation). This is generally no longer so [5] as, during the nineteenth century, the development of legal ethics tended to obviate the risks to the public, particularly after the scandal of the Swynfen will case (1856–1864). [6] However, the principles are relevant to modern contingent fee agreements between a lawyer and a client and to the assignment by a plaintiff of his rights in a lawsuit to someone with no connection to the case. Champertous contracts can still, depending on jurisdiction, be void for public policy or attract liability for costs.

History

The restrictions arose to combat abuses in medieval England. Unscrupulous nobles and royal officials would lend their names to bolster the credibility of doubtful and fraudulent claims in return for a share of the property recovered. [7] Speaking extrajudicially in the early seventeenth century, Lord Chief Justice Coke described the origins of maintenance in this way: [8]

Maintenance, manutenentia, is derived from the verb manutenere, and signifieth in law a taking in hand, bearing up, or upholding of quarrels and sides, to the disturbance or hindrance of common right.

The comments were made in context of the court previously having been anxious to prevent a wide range of maintenance; the phrase "maintenance" had been used to apply not just to those who gave support in civil claims, but also to those who sought to maintain robbers, heretics and even "a new sect coming from beyond the sea, clad in white garments". [9] Judicial independence was gradually established, however, and by the early 19th century Jeremy Bentham wrote: [10]

A mischief, in those times it seems but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares an English judge for the swords of a hundred barons? Neither fearing nor hoping, hating nor loving, the judge of our days is ready with equal phlegm to administer, upon all occasions, that system, whatever it be, of justice or injustice, which the law has put into his hands.

By jurisdiction

Australia

In Australia, champerty and maintenance as common law causes of action (as either a crime or a tort) have mostly been abolished by statute. In New South Wales, champerty and maintenance were abolished by the Maintenance, Champerty and Barratry Abolition Act 1993. [11] In Victoria, champerty and maintenance was abolished as a tort by section 32 of the Wrongs Act 1958, [12] and as a crime by section 332A of the Crimes Act 1958. [13]

Canada

In Canada, the common law crimes of champerty and maintenance were abolished, alongside all remaining common law offences except contempt of court, by the 1953 consolidation of the Criminal Code. However, champerty and maintenance remain torts in some Canadian jurisdictions.

In Ontario, champertous agreements are invalid under the Champerty Act, RSO 1897, c. 327.

England and Wales

Maintenance and champerty have not been crimes or torts since the passing of the Criminal Law Act 1967. [14] However, the 1967 Act stated:

The abolition of criminal and civil liability under the law of England and Wales for maintenance and champerty shall not affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal.

— section 14(2)

There are circumstances in which a non-party who funds litigation can be liable for costs, if the action fails. [15] [16] [17]

For instance, in Re Oasis Merchandising Services Ltd [18] the Court of Appeal reincarnated the tort against the assignment of a wrongful trading claim by a liquidator to a specialist litigation company to pursuing directors for wrongful trading. This has come under criticism given that claims against directors are enforced sub-optimally as company liquidators, typically accountants, are cautious to take on risks rather than save as much of the company as possible.

Hong Kong

In Hong Kong, champerty and maintenance were long thought to be obsolete both as a crime and a tort, but these two principles have been revived in recent years in response to the prevalence of recovery agents which present problems quite different from the mischief which historically these rules intended to combat.

The recovery agents typically perform "ambulance chasing" on accident victims, offering to arrange lawyers to handle their claims on a "no win no fee" basis. If the claim succeeds the recovery agents share a portion of the damages. This is seen as deception on uneducated victims who are ignorant to the availability of legal aid. The division of the damages in effect deprives the victims of the just compensation that they are entitled to for their bodily injury. The intermeddling of recovery agents in the lawsuit also presents ethical problems to lawyers, who may have undermined impartiality in advising on settlement. In response, the Department of Justice and the Law Society of Hong Kong carried out a massive publicity campaign aiming at educating the public to refuse recovery agents, citing that maintenance and champerty are criminal offences under the laws of Hong Kong.

In 2008, 21 people were arrested for champerty, maintenance and conspiracy. They were recovery agents "helping" accident victims on a "no win no fee" basis. One of the people arrested was a lawyer. Champerty and maintenance carries a sentence of up to seven years in Hong Kong. [19] [20]

On 25 June 2009, Winnie Lo Wai Yan, a solicitor, was convicted for conspiracy to maintain and a recovery agent was convicted for conspiracy to champer. She was found to have agreed to share 25% from the damages paid to the next friend of an 18-year-old traffic accident victim who suffered from permanent total loss of earning capacity. On 10 July 2009, Lo was sentenced to 15 months' imprisonment and the recovery agent was sentenced to 16 months' imprisonment (Case number: DCCC 610/2008). Lo appealed in the same year and on 3 December 2010, her appeal was dismissed by the Court of Appeal (Case number: CACC 254/2009).

On 30 January 2012, Lo's conviction was quashed in the Court of Final Appeal (Case number: FACC 2/2011). The Reasons for Judgment, published on 23 February 2012, stated that there is a serious problem with the finding made and endorsed by the trial judge and the Court of Appeal respectively that Lo knew that there had been champerty involved. Although the judge found maintenance and champerty are constitutional, he questioned whether criminal liability for maintenance should be retained in Hong Kong as liability for both maintenance and champerty were abolished in places such as England and South Australia. [21]

On 26 March 2013, Louie Mui Kwok-keung, a barrister, was sentenced in the District Court to 3.5 years of imprisonment. He pleaded not guilty on 18 February 2013, to five counts of champerty and maintenance, allegedly committed between 1999 and 2008. He was the first barrister in the city to be convicted of such crimes (Case number: DCCC 890/2012). [22]

Ireland

The Maintenance and Embracery Act 1634 passed by the Parliament of Ireland provides that "all statutes heretofore made in England concerning maintenance, champerty and embracery, or any of them now standing and being in their full strength and force, shall be put in due execution in this realme of Ireland". [23] Poynings' Law had already imported all English statutes up to 1495; the 1634 act additionally imported the Maintenance and Embracery Act 1540. The 1634 and 1540 acts are still in force in the Republic of Ireland. [24] In 2015 Persona, which lost to Esat Digifone in a 1997 telecoms bidding process criticised by the Moriarty Tribunal, applied to launch a lawsuit against those involved in the 1997 bidding, to be funded by a UK company, Harbour Litigation Funding, in return for part of any damages awarded. [24] [25] In 2016, the High Court ruled that such third-party funding constituted champerty prohibited by the 1634 act; Persona said it would have to drop the case, being unable to afford the €10m expenses. [24] [25]

New Zealand

Maintenance and champerty are torts, not crimes, under New Zealand law. Despite calls for their abolition, the New Zealand Law Commission recommended their preservation in a 2001 report titled Subsidising Litigation. [26]

United States

This concept exists in American jurisprudence but is disdained by "fans of entrepreneurial lawyering in the academy and elsewhere". [27] There has been recent common usage of the term in the media in Nevada [27] and Ohio. [28] In NAACP v. Button , laws that overburden free speech rights in the name of preventing champerty were found to be unconstitutional. [29] Courts in Florida have found that the causes of action for maintenance and champerty are no longer viable in Florida, but have been superseded by laws related to abuse of process, malicious prosecution, and wrongful initiation of litigation. [30] Florida courts have held that champerty and maintenance may continue to exist as affirmative defenses, but only as to the enforceability of the champertous contract itself. [31]

See also

Notes

  1. ↑ Curzon, L. B. (2002). Dictionary of Law (6th ed.). London: Longman. ISBN   0-582-43809-8.
  2. ↑ Coke (1641) Institutes
  3. ↑ "Oxford English Dictionary". oed.com. Oxford University Press. Retrieved 14 January 2021.
  4. ↑ Giles v Thompson [1993] UKHL 2 , [1993] 3 All ER 321(26 May 1993)
  5. ↑ Abolished by Part II of the Criminal Law Act 1967, except as regards embracery, abolished by section 17 of the Bribery Act 2010.
  6. ↑ Pue, W. W. (1990). "Moral panic at the English Bar: Paternal vs. commercial ideologies of legal practice in the 1860s". Law and Social Inquiry. 15 (1): 49–118. doi:10.1111/j.1747-4469.1990.tb00275.x. S2CID   145788677.
  7. ↑ Winfield (1919)
  8. ↑ 1 Coke Litt 368b, cited in Friston, M, Civil Costs Law and Practice (2nd ed), Jordans, ISBN   978-1846613128
  9. ↑ Friston, M, Civil Costs Law and Practice (2nd ed), Jordans, ISBN   978-1846613128
  10. ↑ Works (Bowring (ed), 1843) vol 3, pp 19–20
  11. ↑ "MAINTENANCE, CHAMPERTY AND BARRATRY ABOLITION ACT 1993". austlii.edu.au Australasian Legal Information Institute. Archived from the original on 31 May 2008. Retrieved 22 December 2008.
  12. ↑ "WRONGS ACT 1958". austlii.edu.au Australasian Legal Information Institute . Retrieved 22 December 2008.
  13. ↑ "Crimes Act 1958 – SECT 322A". austlii.edu.au Australasian Legal Information Institute . Retrieved 22 December 2008.
  14. ↑ Criminal Law Act 1967, ss.13-14
  15. ↑ Senior Courts Act 1981, s.51(1) and (3)
  16. ↑ Aiden Shipping Co Ltd v. Interbulk Ltd [1986] AC 965
  17. ↑ Arkin v Bouchard Lines [2005] EWCA Civ 655
  18. ↑ [1998] Ch 170
  19. ↑ Caution issued on recovery agents Archived 21 November 2008 at the Wayback Machine
  20. ↑ 包攬訴訟屬刑事可判囚
  21. ↑ "Judgment". judiciary.gov.hk.
  22. ↑ "History made as barrister Louie Mui is jailed for illegal deals with clients". South China Morning Post. 27 March 2013.
  23. ↑ "Maintenance and Embracery Act, 1634". Irish Statute Book . Retrieved 21 April 2016.
  24. 1 2 3 "Case against State, O'Brien, Lowry will be dropped". RTÉ. 20 April 2016. Retrieved 21 April 2016.
  25. 1 2 "Application for funding agreement in licence case". RTÉ. 18 November 2015. Retrieved 21 April 2016.
  26. ↑ Subsidising Litigation (PDF), archived from the original (PDF) on 28 April 2020, retrieved 28 April 2020, pages 2 and 11. Wellington: New Zealand Law Commission. ISBN   1-877187-72-0. Published 30 April 2001. Also published as New Zealand Parliamentary Paper E 3172.
  27. 1 2 Green, Steve (14 June 2011). "Judge rules Righthaven lacks standing to sue, threatens sanctions over misrepresentations". Vegas Inc.
  28. ↑ Rancman v. Interim Settlement Funding Corp., 99 Ohio St.3d 121, 2003-Ohio-2721.
  29. ↑ NAACP v. Button, 371 U.S. 415
  30. ↑ See e.g., Hardick v. Homol, 795 So.2d 1107 (Fla. 5th DCA 2001).
  31. ↑ See e.g., Malibu Media LLC v. Zumbo, 2014 WL 2742830 (M.D. Fla. 2014) (not reported in F.Supp.3d).

Related Research Articles

Barratry is a legal term that, at common law, described a criminal offense committed by people who are overly officious in instigating or encouraging prosecution of groundless litigation, or who bring repeated or persistent acts of litigation for the purposes of profit or harassment.

A statute of limitations, known in civil law systems as a prescriptive period, is a law passed by a legislative body to set the maximum time after an event within which legal proceedings may be initiated. In most jurisdictions, such periods exist for both criminal law and civil law such as contract law and property law, though often under different names and with varying details.

A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable by the state. While criminal law aims to punish individuals who commit crimes, tort law aims to compensate individuals who suffer harm as a result of the actions of others. Some wrongful acts, such as assault and battery, can result in both a civil lawsuit and a criminal prosecution in countries where the civil and criminal legal systems are separate. Tort law may also be contrasted with contract law, which provides civil remedies after breach of a duty that arises from a contract. Obligations in both tort and criminal law are more fundamental and are imposed regardless of whether the parties have a contract.

A lawsuit is a proceeding by one or more parties against one or more parties in a civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used with respect to a civil action brought by a plaintiff who requests a legal remedy or equitable remedy from a court. The defendant is required to respond to the plaintiff's complaint or else risk default judgment. If the plaintiff is successful, judgment is entered in favor of the defendant. A variety of court orders may be issued in connection with or as part of the judgment to enforce a right, award damages or restitution, or impose a temporary or permanent injunction to prevent an act or compel an act. A declaratory judgment may be issued to prevent future legal disputes.

Malicious prosecution is a common law intentional tort. Like the tort of abuse of process, its elements include (1) intentionally instituting and pursuing a legal action that is (2) brought without probable cause and (3) dismissed in favor of the victim of the malicious prosecution. In some jurisdictions, the term "malicious prosecution" denotes the wrongful initiation of criminal proceedings, while the term "malicious use of process" denotes the wrongful initiation of civil proceedings.

A contingent fee is any fee for services provided where the fee is payable only if there is a favourable result. Although such a fee may be used in many fields, it is particularly well associated with legal practice.

Alienation of affections is a common law tort, abolished in many jurisdictions. Where it still exists, an action is brought by a spouse against a third party alleged to be responsible for damaging the marriage, most often resulting in divorce. The defendant in an alienation of affections suit is typically an adulterous spouse's lover, although family members, counselors, and therapists or clergy members who have advised a spouse to seek divorce have also been sued for alienation of affections.

<span class="mw-page-title-main">Personal injury</span> Legal term for an injury to a person

Personal injury is a legal term for an injury to the body, mind, or emotions, as opposed to an injury to property. In common law jurisdictions the term is most commonly used to refer to a type of tort lawsuit in which the person bringing the suit has suffered harm to their body or mind. Personal injury lawsuits are filed against the person or entity that caused the harm through negligence, gross negligence, reckless conduct, or intentional misconduct, and in some cases on the basis of strict liability. Different jurisdictions describe the damages in different ways, but damages typically include the injured person's medical bills, pain and suffering, and diminished quality of life.

A civil conspiracy is a form of conspiracy involving an agreement between two or more parties to deprive a third party of legal rights or deceive a third party to obtain an illegal objective. A form of collusion, a conspiracy may also refer to a group of people who make an agreement to form a partnership in which each member becomes the agent or partner of every other member and engage in planning or agreeing to commit some act. It is not necessary that the conspirators be involved in all stages of planning or be aware of all details. Any voluntary agreement and some overt act by one conspirator in furtherance of the plan are the main elements necessary to prove a conspiracy.

<span class="mw-page-title-main">Tort reform</span> Legal reforms aimed at reducing tort litigation

Tort reform consists of changes in the civil justice system in common law countries that aim to reduce the ability of plaintiffs to bring tort litigation or to reduce damages they can receive. Such changes are generally justified under the grounds that litigation is an inefficient means to compensate plaintiffs; that tort law permits frivolous or otherwise undesirable litigation to crowd the court system; or that the fear of litigation can serve to curtail innovation, raise the cost of consumer goods or insurance premiums for suppliers of services, and increase legal costs for businesses. Tort reform has primarily been prominent in common law jurisdictions, where criticism of judge-made rules regarding tort actions manifests in calls for statutory reform by the legislature.

Feres v. United States, 340 U.S. 135 (1950), combined three pending federal cases for a hearing in certiorari in which the Supreme Court of the United States held that the United States is not liable under the Federal Tort Claims Act for injuries to members of the armed forces sustained while on active duty and not on furlough and resulting from the negligence of others in the armed forces. The opinion is an extension of the English common-law concept of sovereign immunity.

<span class="mw-page-title-main">Criminal Law Act 1967</span> United Kingdom legislation

The Criminal Law Act 1967 is an Act of the Parliament of the United Kingdom that made some major changes to English criminal law, as part of wider liberal reforms by the Labour government elected in 1966. Most of it is still in force.

<span class="mw-page-title-main">Criminal conversation</span> Tort arising from adultery

At common law, criminal conversation, often abbreviated as crim. con., is a tort arising from adultery. "Conversation" is an old euphemism for sexual intercourse that is obsolete except as part of this term.

<span class="mw-page-title-main">Legal financing</span>

Legal financing is the mechanism or process through which litigants can finance their litigation or other legal costs through a third party funding company.

Common law offences are crimes under English criminal law, the related criminal law of some Commonwealth countries, and under some U.S. state laws. They are offences under the common law, developed entirely by the law courts, having no specific basis in statute.

A case bond is an investment in a legal claim. More specifically, it is a non-recourse purchase of an assignment interest in a legal cause of action. A case bond provides a litigant with money prior to a monetary recovery. In return, the case bond accrues fees until there is a recovery which triggers the satisfaction of the assignment interest. If there is no recovery in the underlying claim or lawsuit the case bond self terminates and the obligation to satisfy its terms expire. Typically, case bonds are used by litigants to cover the costs of daily living expenses, medical bills and litigation costs.

The first signs of the modern distinction between criminal and civil proceedings were during the Norman conquest of England in 1066. The earliest criminal trials had very little, if any, settled law to apply. However, the civil delictual law was highly developed and consistent in its operation.

Harrison v. NAACP, 360 U.S. 167 (1959), is a 6-to-3 ruling by the Supreme Court of the United States which held that the United States District Court for the Eastern District of Virginia should have abstained from deciding the constitutionality of three barratry, champerty, and maintenance laws in the state of Virginia until state courts had had a reasonable chance to construe them.

NAACP v. Button, 371 U.S. 415 (1963), is a 6-to-3 ruling by the Supreme Court of the United States which held that the reservation of jurisdiction by a federal district court did not bar the U.S. Supreme Court from reviewing a state court's ruling, and also overturned certain laws enacted by the state of Virginia in 1956 as part of the Stanley Plan and massive resistance, as violating the First and Fourteenth Amendments to the United States Constitution. The statutes struck down by the Supreme Court had expanded the definitions of the traditional common law crimes of champerty and maintenance, as well as barratry, and had been targeted at the NAACP and its civil rights litigation.

<i>Persona Digital Telephony Ltd v. Minister for Public Enterprise, Ireland</i> Irish Supreme Court case

Persona Digital Telephony Ltd v. Minister for Public Enterprise, Ireland, [2017] IESC 27; was an Irish Supreme Court case in which the Court ruled that third party funding to support a plaintiff's legal costs and disbursements is unlawful.

References

This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.