How the court can protect your business from vexatious litigants

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If your business is facing persistent legal claims from the same person or company, it could have a vexatious litigant on its hands. Here, we explain what a vexatious litigant is and how the court could help to keep them at bay.

Legal claims are the last thing businesses need right now, particularly when those claims are incessant, aggressive, and totally without merit. In the face of such a nuisance, businesses have two options: tackle the problem in court, or ignore the claim and hope the claimant gives up and moves on.

In this Catch-22 situation, it can feel like the claimant holds all the cards. There are, however, ways in which businesses can reduce the risks, manage the costs, and even secure a court order to prevent what is known as a ‘vexatious litigant’ from making more claims.

What is a vexatious litigant?

A vexatious litigant may have different motives, but generally they will persistently issue claims on grounds that are completely without merit. In other words, there is neither a legal nor a factual basis for their claim. A disgruntled customer, for example, may claim that another business has acted in breach of its contract or overcharged them, despite having no evidence, or even having evidence to the contrary.

There are a wide range of reasons why businesses or individuals may act as vexatious litigants, but two principal motivations are often: to either waste their target’s time or money, or act under the misguided belief that they are entitled to legal recourse. To prevent vexatious litigants from abusing the court process, defendants may seek a Civil Restraint Order.

What is a Civil Restraint Order?

Civil Restraint Orders (CROs) were created to discourage abuse of the court system, and the inconvenience vexatious litigants can cause. Broadly speaking, they prevent a vexatious litigant from issuing further applications or claims.

When an application is made for a CRO the court will ask itself three things, a process known as the CRO test:

  1. Has the litigant issued claims or made applications which are totally without merit and, if so, how many?
  2. Is the litigant’s behaviour likely to persist if nothing is done to prevent it?
  3. If the answers to 1 and 2 is yes: which of the three types of available CRO would be most suitable?

What types of CRO are available?

There are three types of CRO, which are all defined under the Civil Procedure Rules. The extent of the restrictions they impose vary and may even be adapted to suit the case’s specific facts.

  1. Limited CRO: prevents a claimant from making any further applications in the current proceedings after they have made two or more deemed totally without merit by the court. As its name suggests, a Limited CRO only applies to the proceedings in which it was made.
  2. Extended CRO: prevents a claimant from making certain claims or applications in particular courts, depending on where the order is made. If made in the Court of Appeal, for example, the order will apply in any court. To obtain this order, a party must have persistently issued claims or made applications which are totally without merit. Unlike a Limited CRO, Extended CROs can last for up to three years, and may even be Extended in three-year increments.
  3. General CRO: is similar in scope to an Extended CRO, but it applies to any claim or application a claimant wishes to make. Like an Extended CRO, a party against whom the order is being made must have persisted in issuing claims or making applications which are totally without merit. However General CROs are often reserved for more serious cases in which Extended or Limited CROs would be insufficient.

Once subject to a CRO, a vexatious litigant can only make a claim after securing permission from the court. Should they fail to do so, their claim will be dismissed without requiring a response from the other side. They could even face being placed in contempt of court if they persist.

Is it easy to get a CRO?

Access to justice remains a central tenet of the English and Welsh legal systems. As such, the court is usually reluctant to implement measures that restrict access and has set a high bar for CRO applications to meet. This is particularly so in terms of the number of applications that a claimant must have made before a CRO can be considered. To secure a General CRO, for example, at least three applications deemed totally without merit are usually required, by which time a defendant may have accrued significant costs. Furthermore, while a defendant can apply for a CRO against a claimant, it is entirely up to the court whether such an order will be made.

Nevertheless, businesses can manage the costs and reduce the risks until a CRO is granted by working with legal experts to devise the most effective strategy.

In the first instance, businesses should consult the publicly available list of vexatious litigants to see if a claim can be immediately struck out. If this is not possible, businesses could consider making an offer at an early stage. This may be a bitter pill to swallow but it can be the more commercially viable option, particularly if the claimant is unlikely to pay any cost awards ordered by the court.

For any claims that do make it to court, a business should instruct its legal advisers to request that the court makes, and explicitly states, a finding of totally without merit in its ruling. This can then be used as evidence in a CRO application, should the claimant persist.

Not all litigants are vexatious, but litigation in any form can be both expensive and reputationally damaging for those involved. Whether a business faces a standalone claim or a string of claims from a disgruntled customer, working with legal advisers from the outset is one of the best ways to manage the risks and control the costs.

Gateley Plc is authorised and regulated by the SRA (Solicitors' Regulation Authority). Please visit the SRA website for details of the professional conduct rules which Gateley Legal must comply with.

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