14 June 2014

Court of Appeal Issues Decision on Vexatious Litigation

The British Columbia Court of Appeal has just released its decision in Extra Gift Exchange Inc. v The Owners, Strata Plan LMS3259, in which the court summarizes and applies the case law on when someone can be declared to be a vexatious litigant.

This issue is important because serious consequences can follow from a judge's decision that someone has repeatedly started frivolous lawsuits. Under s. 18 of the Supreme Court Act, the court can make an order that someone not start a lawsuit in either the Supreme Court or the Provincial Court without permission from the court:
If, on application by any person, the court is satisfied that a person has habitually, persistently and without reasonable grounds, instituted vexatious legal proceedings in the Supreme Court or in the Provincial Court against the same or different persons, the court may, after hearing that person or giving him or her an opportunity to be heard, order that a legal proceeding must not, without leave of the court, be instituted by that person in any court.
Section 29 of the Court of Appeal Act says pretty much the same thing:
If, on the application of any person, a justice is satisfied that a person has habitually, persistently and without reasonable cause commenced vexatious proceedings in the court, the justice may, after hearing that person or giving that person an opportunity to be heard, order that proceedings must not be brought or commenced in the court without leave of a justice.
(Making things even better — or even worse, depending on your perspective — s. 221(1) of the new Family Law Act says that a judge can make an order:
A court may make an order prohibiting a party from making further applications or continuing a proceeding without leave of the court if satisfied that the party
(a) has made an application that is trivial, 
(b) is conducting a proceeding in a manner that is a misuse of the court process, or 
(c) is otherwise acting in a manner that frustrates or misuses the court process.
Under s. 221(2)(c), the judge can also order that the person pay the expenses of another party resulting from this sort of misbehaviour, pay up to $5,000 to someone affected by the person's conduct or pay a fine of up to $5,000.)

Of course it's not at all clear what it means to start "vexatious" lawsuits "habitually," "persistently" and "without reasonable cause." (You can get a sense of some of the confusion on this issue from the comments to my posts "Litigation Conduct may Constitute 'Family Violence' under the Family Law Act" and "Supreme Court Releases Decision on Vexatious Litigants.") And this is why the common law function of the courts is so important: it's their job to decide how many times you have to do something to be "persistent" or "habitual," how much of a dog your case has to be to be brought "without reasonable cause" and how pointlessly irritating your conduct has to be to be "vexatious."

The Court of Appeal was dealing with a real doozy in Extra Gift Exchange, which essentially concerned a series of disputes between someone who'd bought a unit in a mall in Richmond and the strata company responsible for managing the mall and the behaviour of the unit owners. The litigation had gone on for about 13 years before getting to the Court of Appeal on the vexatious litigation issue, and involved 15 different lawsuits, mostly started by Extra Gift Exchange, that had resulted in five appeals. However, the circumstances of the present appeal are less important than the court's discussion of the law, which really boil down to a recapitulation of the Ontario High Court of Justice's 1987 decision in Re Lang Michener et al. v Fabian et al.

The court in Re Lang Michener decided that the following seven factors need to be considered when a judge is deciding whether "a person has persistently and without reasonable grounds ... instituted vexatious proceedings in any court," the test set out in the Ontario legislation (secret decoder ring translation in italics):
"(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;
(Starting a lawsuit about a problem that a court has already decided may be vexatious;)
"(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;
(starting a lawsuit that is obviously doomed to fail may be vexatious;)
"(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;
(starting a lawsuit just to harass someone, not because you have a genuine problem, may be vexatious;)
"(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;
(recycling the same complaints and problems in lawsuit after lawsuit suggests that the litigation is vexatious;)
"(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;
(the court should look at everything that has gone on in the litigation to date, and not just look at whether the original lawsuit was reasonable, to decide if the litigation is vexatious;)
"(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;
(failing to pay court-ordered costs suggests that the litigation is vexatious; and,)
"(g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings."
(bringing lots of losing appeals suggests that the litigation is vexatious.)
The court added three points to Re Lang Michener:
  • applications to extend time and other procedural applications in appeal proceedings won't usually suggest that the litigation is vexatious; 
  • the Court of Appeal can look beyond the appeal and consider a litigant's conduct in the trial court to decided whether the litigation is vexatious; however,
  • there must be some misconduct in the Court of Appeal and the frequency of appeals in the Court of Appeal must be vexatious.
Returning to Extra Gift Exchange, the court decided that aspects of how Extra Gift Exchange managed the litigation suggested that the litigation was vexatious (important bits in bold, as always):
"[42] In the Supreme Court, [Extra Gift Exchange] have demonstrated many of the hallmarks of vexatious conduct that were described in [Re Lang Michener]:
· They have demonstrated a propensity to re-argue issues that have been decided against them
· They have brought multiple proceedings of dubious merit replete with unsubstantiated allegations of conspiracy and fraud, that could be described as harassment of the applicants. 
· The proceedings seem to roll forward and duplicate proceedings that have already been dismissed or struck. 
· Their pleadings have been described as prolix and unintelligible
· There remain outstanding costs orders."
However, despite these seemingly damning conclusions, the held that:
"[44] I cannot conclude that the conduct in this Court, even informed by their conduct below, has yet risen to the level necessary to grant the order sought. My primary reason for saying so is that the frequency of appeals simply cannot be said to be vexatious. I acknowledge that the appeal in this case appears to have little merit and the factum is difficult to understand. But nevertheless, without a stronger pattern of abusive and vexatious conduct in this Court, I am unable to grant the order sought. I have some considerable sympathy for the position of the Strata. They may of course renew this application should [Extra Gift Exchange] conduct themselves in this Court in a vexatious manner. But so far [Extra Gift Exchange's] conduct does not reach that exceptional level that would merit limiting their access to this Court."
Although this decision was sure to disappoint the strata company, the court did note that other remedies were available to it, such as applying for an order that Extra Gift Exchange be require to pay money into court to make sure that funds are set aside to cover any costs order made against Extra Gift Exchange.

Ultimately, Extra Gift Exchange is less than helpful in clarifying readers' questions about how many times you have to do something to be "persistent" or "habitual," how bad your case has to be to be brought "without reasonable cause" and how pointlessly irritating your conduct has to be to be "vexatious." All we know is that the degree of your misbehaviour must be "exceptional," and that you should bear in mind the seven factors described in Re Lang Michener.

However, from a family law perspective, it helps to remember that the language used in s. 221 of the Family Law Act is different from the language of s. 18 of the Supreme Court Act or s. 29 of the Court of Appeal Act. What s. 221(1) talks about is:
  • applications that are "trivial;"
  • "misuse of the court process;" and, 
  • behaving in a manner that otherwise "frustrates or misuses the court process."
None of these three reasons for asking for an order that someone not make further applications or continue a lawsuit use the troublesome language found in the court acts, and it seems to me that Extra Gift Exchange may not apply to applications under s. 221 of the Family Law Act at all. When the legislature uses different language to discuss a similar concept in different laws, it's presumed to having a reason for doing so, and one obvious reason would be to make orders under s. 221 easier to get than orders under the court acts.

I should also say something about the other remedies the court talked about in Extra Gift Exchange. The Family Law Act is full of useful orders that the court can make to modify litigants' behaviour, including these:
  • under s. 223(1)(a), the court can dismiss all or part of a lawsuit or an application;
  • under s. 223(1)(b)(ii), the court can delay a lawsuit until someone obeys an order;
  • under s. 224(1)(a), the court can require parties to attempt to resolve their dispute outside of court; and,
  • under s. 227(a), the court can require someone to pay money into court as security for the person's good behaviour.
Although it can be terribly difficult to get an order declaring someone to be a vexatious litigant, as Extra Gift Exchange shows, the Family Law Act provides a number of useful tools that might accomplish something approaching the same result and ought to be easier to obtain.

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