HK finds a PI solution

Much can be learned from Hong Kong's PI litigation system, writes Neville Sarony.

Those ignorant and arrogant enough to characterise Hong Kong as a mere far eastern municipality would do well to ponder Hong Kong's remarkable role as a dynamically innovative jurisdiction.

The same dynamics that attracted judges of the calibre of David Hunter, Michael Kempster and Gerald Godfrey, also inspired a generation of young British and New Zealand lawyers to influence the development of the legal infrastructure relative to personal injuries.

This influence, coupled with a benign approach by the Governor's Executive Council, not only countered the local insurance industry's endeavours to carry off accolades for inflexibility and exclusionary draughtsmanship, but endowed the jurisdiction with statutory measures that greatly benefited claimants in PI cases.

The results compare well with the provisions of its English counterpart and provide a working model for improvements to our own system.

The bedrock of protective legislation in the industrial sphere is the Employees' Compensation Ordinance (ECO).

Hong Kong retained the Workmen's Compensation Act and modified it to meet the new conditions. It exists in parallel with, and complements, the common law remedy.

The ECO's objective is to supply a swift method of providing compensation for the victims of personal injury arising out of an accident sustained in the course of employment.

Damages for pain, suffering and loss of amenity are awarded on a statutory scale set out in a schedule to the ordinance. Loss of earnings is also awarded, with a ceiling on the time claimed for.

All claims are brought in the equivalent of a county court under a simplified set of rules. As employee's compensation insurance is mandatory, virtually no issue of “fault” has to be determined.

In July 1991 the Employees Compensation Assistance Ordinance established a fund to provide cover for industrial accidents similar to that given by the Motor Insurers' Bureau in road traffic accidents.

As long ago as 1984 it was realised that the ceiling on the earnings and assets of an applicant for legal aid was set disproportionately low in comparison with the cost of litigation.

To meet this, a more generous set of figures was set under the Supplementary Legal Aid Scheme (SLAS). The main provision of SLAS is that in return for being legally aided the litigant agrees to pay 15 per cent of any damages awarded to him or her into the SLAS fund.

The original fund was provided by way of an interest-free loan from the Royal Hong Kong Jockey Club. The fund, which is independent of government finance, has grown, proving that provided the merits of PI claims are prudently assessed, such a contributory scheme is practical.

While in Hong Kong, I acted for a number of UK-based plaintiffs whose grave injuries were sustained in Hong Kong and whose litigation had been enabled by this scheme.

They would certainly have been excluded under the ordinary means-tested legal aid system. Their litigation has cost the taxpayer nothing but their relatively modest contributions have broadened the ability of SLAS to entertain more of this secondary band of legally-aided claimants.

One factor of particular significance demonstrates just how effective SLAS has been: in Hong Kong, a successful defendant in a legally aided claim is entitled to his or her costs on the principle that costs follow the event, just as in any other litigation.

Hong Kong is a community whose prosperous civic leaders begrudge every penny spent on indigent litigants, yet the Hong Kong Legal Aid Department has pioneered a Contributory Legal Aid Fund (CLAF) which costs the taxpayer nothing, widens the ambit of eligibility and develops the fund financially through the success of its plaintiffs.

The British government plans to save £35m by cuts to legal aid for PI cases, yet if it were to replace the present scheme with a non-government funded CLAF, thousands of accident victims would not be legally disenfranchised.

Neville Sarony is a barrister at New Court Chambers.

It would leave an unbalanced picture if one omitted to refer to the levels of awards for psla. By the date of the handover to the Peoples' Republic of China, psla awards in Hong Kong were, across the board, substantially higher than those for comparable injuries in England and Wales. Particularly in the lower and middle registers, the English awards are derisory in comparison. Awards for any serious injuries, start at around the £50-60,000 level. Economic evidence would suggest that viewed broadly, Retail Price Indices and Wages and Salaries Indices work out to be much the same in both jurisdictions.