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You may find yourself in a commercial dispute when you run a business. Commercial disputes occur when you and another business or customer disagree on an issue. Unfortunately, commercial disputes can end up in a commercial court for legal action. As a business owner, you may want to avoid this, as commercial cases can be timely and expensive. You should avoid actions that make you a vexatious litigant in commercial proceedings, as this could result in court orders and mean you need the court’s permission for commercial action in civil cases. This article will, therefore, explain what a vexatious litigant is and how to avoid being one.
What is a Vexatious Litigant?
A vexatious litigant is a person or business owner who deliberately tries to take court action against others. When they do so, there is no merit in their reasons. If so, they will be unable to start a civil case, such as a commercial case, unless a court permits them. This means they cannot start proceedings through one of three sorts of restraint orders.
The court will place their names on a list of vexatious litigants. This will help you determine whether a commercial party to your dispute is a vexatious litigant.
Before a vexatious litigant begins court proceedings for a commercial dispute, they must obtain an order to proceed.
How Do I Avoid Being a Vexatious Litigant?
A court can make civil restraint orders against companies, so your business needs to avoid being a vexatious litigant. If your company is a vexatious litigant, you, as the director or shareholder of your company, cannot make a claim instead.
This guide outlines how to resolve commercial disputes.
You can avoid being a vexatious litigant as a business or business owner by being clear about what is meant by ‘totally without merit’. UK courts have clarified that this includes situations where the commercial case is ‘bound to fail’. This means there is no rational reason why a commercial case may be a success. In this case, a court may decide whether to issue a civil restraint order. However, they can still make a civil restraint order where a court has not used the words ‘totally without merit’.
You can also avoid being a vexatious litigant by ensuring you do not reach the threshold set by courts before they can make a civil restraint order against you or your business. The rules about this are in the Civil Procedure Rules 2.3, which details the following:
- if you make at least two cases without merit to the court for a commercial case, a court can issue you with a limited civil restraint order;
- if you repeatedly make court claims without merit, the court can issue you with an extended civil restraint order; and
- where the above would not suit your circumstances and your claims are repetitively without merit, the court can issue a general civil restraint order.
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Key Takeaways
A vexatious litigant is where you repeatedly bring commercial court cases without merit. This means they have no real chance of success. It is crucial to avoid vexatious litigants and to avoid acting like one yourself. This will help you avoid entry onto a list of vexatious litigants. It will also mean you avoid restrictions on bringing cases to court. A lawyer can help advise on what is meant by ‘without merit’ and avoid the threshold for civil restraint orders.
If you need help understanding vexatious litigants, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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