The
Court of Appeal has issued new guidelines to limit the time and financial
damage done to employers and defendants in vexatious litigation cases. Colin Gibson
reports
Employers
often spend considerable time and money dealing with vexatious litigants –
individuals, with no legal representation, who abuse the court system in the
hope of settling a personal grudge against the company. These people appeal and
re-litigate repeatedly even though their claims are doomed to failure.
Traditionally,
the courts have done their best to give these litigants a fair hearing
regardless of the hopelessness of their claims.
But
the Court of Appeal has finally run out of patience. In Bhamjee v Forstick and
Others (No 2) the Court of Appeal, having recognised the inconvenience caused
to both courts and defendants by these repeat litigants, produced new
guidelines to limit this damage. These guidelines were created primarily to
protect the court but will be welcomed by employers, and any other parties,
dealing with vexatious litigants.
Who
are vexatious litigants?
Vexatious
litigants are individuals who bring court proceedings repeatedly, or appeal
repeatedly in existing proceedings, with claims based on the same facts or
against the same people. The claim will have no chance of succeeding and
various tribunals, courts and appeal courts will have told the litigant this on
numerous occasions.
Lord
Bingham CJ described vexatious claims as follows: “The hallmark of a vexatious
proceeding is, in my judgment, that it has little or no basis in law (or at
least no discernable basis); that, whatever the intention of the proceeding may
be, its effect is to subject the defendant to inconvenience, harassment and
expense out of all proportion to any gain likely to accrue to the claimant; and
that it involves an abuse of the process of the court.”
Attack
from a persistent serial litigant is stressful, time-consuming and expensive
for employers. Employees of the target company may spend hundreds of hours
fielding litigation and subject access requests under the Data Protection Act.
These employees may even find that they are added to the litigation. The
judiciary and court administrative staff also spend significant amounts of time
dealing with serial litigants. And ironically, legal fees spent dealing with
these vexatious claims are often not recoverable as the litigant can rarely
afford to pay them.
The
need to consider all claims fairly, in the interests of justice, has made
dealing with vexatious litigants difficult. But this need must be balanced
against the desire to prevent defendants and the courts suffering major
inconvenience at the hands of serial litigants. The question is where the
balance should be struck. Before the case of Ismail Abdullah Bhamjee the
advantage appeared to fall with the vexatious litigant.
The
Bhamjee case
The
Bhamjee case presents a classic example of the vexatious litigant. It began in
December 1999 after a planning inspector upheld a local authority’s denial of
Bhamjee’s request to use his rear yard for car washing, valeting and servicing,
carpet upholstery, cleaning and the pumping out of flood water.
Bhamjee
made multiple applications, involving numerous parties, in respect of this
decision and in a separate claim against Norwich Union Insurance Company, up
until May 2003. During this period, he paid the Court of Appeal six visits (as
the Court described the hearings).
Having
exhausted his options with the planning inspector and the Norwich Union,
Bhamjee went on to issue proceedings against the barristers who acted against
him in the litigation. The proceedings were, unsurprisingly, dismissed so
Bhamjee paid a further visit to the Court of Appeal.
It
was after this appeal was dismissed that a three-judge Court of Appeal was
convened to work out what could be done to stop Bhamjee and his serial
litigation attempts. At the same time, the Court of Appeal reviewed the law
concerning vexatious litigants in general.
The
courts’ approach pre-Bhamjee
Traditionally,
the courts have used a combination of harsh statutory sanction and vague common
law remedies. The power to make a Civil Proceedings Order (CPO), under Section
42 of the Supreme Court Act 1981, has always been viewed as a last resort. The
main features of a CPO are as follows:
–
Only the attorney-general, or someone acting on his behalf, can apply for a CPO
–
A CPO can only be made where the litigant has “habitually and persistently and
without any reasonable ground” instituted “vexatious civil proceedings” or
“vexatious applications”
–
A CPO forbids the vexatious litigant from starting or continuing any proceeding
without the High Court’s permission
–
The High Court must be convinced that there are reasonable grounds for the
proceedings or application and that they do not represent an abuse of process
before permission will be granted
–
A CPO will last indefinitely unless given an “expiry date”
–
If the High Court refuses permission there is no right of appeal.
The
CPO sounds like an ideal weapon for fighting the vexatious litigant. However,
it has been viewed as draconian and rarely used. It should be noted that the
defendant to a vexatious proceeding cannot decide to apply for a CPO – only the
attorney-general has this power.
The
court has had an inherent power to prevent abuses of process and has developed
ways of doing this through case law. For example, the Grepe v Loam order
prevented the litigant from making further applications in a particular set of
existing proceedings without first obtaining the court’s permission.
An
extended version of the order could be made in more severe cases. This
prevented the litigant from taking any step, including issuing new proceedings,
in any court against a particular set of defendants or stemming from certain
facts. The courts were also free to add further conditions to these orders,
where necessary. Unfortunately, the courts have been reluctant to issue these
orders.
Fresh
impetus needed
Clearly,
the courts have not fully used the available measures for dealing with serial
litigants. They have generally taken the time to listen carefully to the
litigant’s claim or application before dismissing it, hoping this will give the
litigant some sort of closure.
But
the litigant will have caused both the courts and the defendant considerable
inconvenience, and expense in the case of the defendant, on the way to the
hearing of the claim or application. The defendant can obtain a costs order at
the hearing but these are often not worth enforcing if the litigant in question
has no money.
In
Bhamjee, the Court of Appeal took two significant steps forward:
–
The pulling together of current law by re-naming the existing range of orders
and adding a new order to the arsenal
–
The Court of Appeal has encouraged the courts to use these newly-named orders
without delay and make them of their own motion where appropriate.
The
second point is the most important. The courts must become proactive in using
the new range of orders to stop serial litigants clogging up the court system
instead of allowing them to abuse the system at the expense and inconvenience
of others.
The
new range of orders
This
range of orders is not completely new as some of them had already grown out of
case law. But what the Court of Appeal has done in Bhamjee, is give the orders
new names and guidelines for their use.
The
orders open to the courts when dealing with a vexatious litigant are:
–
Striking out under CPR 3.3 and 3.4
Court
staff should refer a claim or application, which appears to be vexatious, to a
judge who can then decide whether it should be struck out as entirely without
merit. A national register of these strikeout orders has been suggested by the
Court of Appeal.
–
Civil Restraint Order (CRO)
This
was formerly a Grepe v Loam order. A CRO may be issued by any judge, of his or
her own motion, and bars the litigant from making any further applications in
the same matter without getting the court’s permission first. The CRO will last
as long as the proceedings are pending.
–
Extended Civil Restraint Order (E-CRO)
The
E-CRO was previously known as an extended Grepe v Loam order. This order
extends the provisions of the CRO by preventing the issue of new proceedings
against certain defendants or with regards to a certain set of facts. This type
of order can be made at Court of Appeal, High Court or county court level and
can be made to cover the court making it and any lower court.
It
is a severe order so should not be made for any longer than two years. The
Court of Appeal’s view on the use of these orders is clear: “Because the
nuisance represented by vexatious litigants is steadily increasing, we consider
that the courts should now be more willing to make extended civil restraint
orders.”
For
the record, Bhamjee was made the subject of a two-year extended civil restraint
order with a civil proceedings order on the way.
–
General Civil Restraint Order (G-CRO) This is a completely new order that the
Court of Appeal introduced in Bhamjee. If the activities of a serial litigant
are seriously draining a court’s resources, the judge can use this order to
stop him or her from starting any action or making any application in that
particular court without its permission.
The
order is not restricted to proceedings/applications against a specific group of
people or regarding specific facts. Again, it should not last for longer than
two years.
–
No appeal
The
Court of Appeal finally considered what should happen if a litigant, who is
subject to an E-CRO or G-CRO, applies for permission to proceed over and over
again and is denied for the same reasons each time. Following Bhamjee, the
court would be able to order that a decision denying permission is final and
may not be appealed.
How
effective will the new orders be?
The
Court of Appeal’s judgment in Bhamjee clarified and extended the range of
orders that a court can use to deal with vexatious litigants. But, more
importantly, the Court of Appeal has also encouraged the lower courts to make
full use of these orders.
The
Master of the Rolls has recommended that courts strike out claims they consider
to be utterly misconceived without further consideration. He also recommends
that judges bar individuals from further litigious activity, unless permission
is given, if they consider them sufficiently troublesome. The individual may
either be barred from a certain set of proceedings or completely.
These
guidelines were produced primarily to protect the court but should also be used
by the court, and requested by defendants and their legal representatives, to
save defendants from harassment by vexatious litigants.
The
good news for employers faced with vexatious litigants is that the new orders
can be requested by the parties to an action, unlike the traditional CPO, which
can only be requested by the attorney-general.
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Employers
facing these nuisance claims from disgruntled employees should ask their
lawyers if a CRO would be appropriate. Following Bhamjee, the answer is more
likely to be yes.
Colin
Gibson is a commercial litigation lawyer at Field Fisher Waterhouse
