Slander doctor counts the cost of winning

Dr Malcolm Smith won his court case but now he is fighting bankruptcy, reports Patricia Wynn Davies

Court 66 at the Royal Courts of Justice in London is one of those streamlined modern courtrooms designed to help litigants feel at ease. But the panoply of the law remains a Hydra and nothing can ease the nightmare of Malcolm Smith, once a young medical professional with a future, and now for all practical purposes a professional litigant-in-person.

It is well over five years since Dr Smith stunned the legal world by winning pounds 150,000 in slander damages plus costs against his former general practice partner, Alanah Houston. She had falsely accused him in front of patients of groping her and her staff, feeling their breasts, pinching their bottoms and "practising" on them.

It was a slander damages record, even after the award was appealed down to pounds 50,000. But the good news, rare enough in the defamation minefield, came to an abrupt and definite end that day in October 1991.

Shortly afterwards, Dr Houston petitioned for bankruptcy. That left Dr Smith, now 40, with the prospect of meeting his own legal bills, as well as missing out on the damages. Dr Smith's costs mounted further as his solicitor tried to enforce judgment against his former partner. Now, the bills have passed pounds 250,000.

That was why Dr Smith was in court 66 last week. His latest legal tussle is with his 60-year-old former solicitor, Thomas Watts. He wants to appeal against the size of the legal bill, alleging that Mr Watts, whose name he got from the Yellow Pages, was negligent in handling his affairs. But he must first give "security for costs" - execute a charge over his remaining assets, a mortgaged medical surgery in Northamptonshire - in case he loses.

Mr Watts, red-faced under a shock of white hair, carries his case papers in a shopping trolley. However, Lord Justice Saville does not deem it necessary to hear from him. Without the security, the appeal cannot proceed. As Dr Smith emerged from the court he insisted he that he would not sign the security. He has already lost possession of his remortgaged house and relinquished the money from his bank and building society accounts and he does not want to risk further losses."I stand to be made bankrupt and lose everything," he said.

The heart of the problem goes back a lot further, to a day in 1985 when the 30-year-old Dr Smith answered a British Medical Journal advertisement from Dr Houston, a former army doctor, for a partner. The arrangement with Dr Houston - who once described herself in an advertisement as "volatile", "abrasive" and a "princess looking for a frog to kiss into a partner" - appeared doomed almost from the start as she tried to get rid of Dr Smith.

The partnership was eventually split in 1987 but the pair were still uneasily incarcerated, in rival practices, in the same building. Dr Houston, now 51 and married with two sons, always denied she intended an accusation of sexual harassment. She claimed, though, that Dr Smith invaded her space and upset her staff and partners. "It was an explosion waiting to happen," is how she now describes it.

The explosion came on 2 October 1989, a day when 750 of Dr Smith's patients' records were stolen, and following the daubing of graffiti on the surgery. Dr Houston accused Dr Smith of picking on her nurse and went on to deliver the most expensive slanderous outburst in legal history. It also amounted to accusing Dr Smith, who spent much of his time on perinatal cases, of a sexual crime.

Dr Houston represented herself in the defamation trial and never offered an apology, a point Dr Smith stresses time and again. "A doctor's reputation is local," Dr Smith said. "This accusation could have ruined me."

That he won, after the allegation was repeated through every news outlet in the land during the trial, remains his only compensation.

Almost immediately, he had to address the question of his legal bills - once the bills start, there is no stopping them. Dr Smith used his savings and his father's life savings, plus funds from the remortgage of both their homes, to pay the bills which eventually clocked up to around pounds 160,000.

A further pounds 120,000 was notched up from further legal hearings, mainly on the attempt to enforce judgment for the damages and costs on the bankrupt Dr Houston. (She has since been discharged from bankruptcy.)

At one point Dr Houston offered to pay Dr Smith pounds 50,000 damages over two years, and make over her share of the surgery. That, Dr Smith insists, would have meant taking on extra debt, via the mortgage, when Dr Houston had assets. His legal costs were already pounds 150,000, so the deal would leave him pounds 100,000 in debt.

So, once Dr Houston filed for bankruptcy, the winner was set on a critical path to lose all. Out of assets worth pounds 150,000 in the bankruptcy, Dr Smith has received just pounds 1,000, which was used to pay indemnity fees, required of all practising doctors, to the Medical Defence Union. The Medical Defence Union had refused requests for help with the original slander action.

Dr Houston, who believes her house was auctioned for pounds 105,000, expressed surprise that Dr Smith was being pursued by his solicitor in the courts for such a large sum of money. She avoided answering whether she had regrets about the accusation, and replied: "I am just sad that we couldn't have had some sort of sensible discussion some time before. I do feel really sorry for Smithy. I really do."

Mr Watts said that he warned of the risk of bankruptcy in January 1990. He strongly disputed a suggestion from Dr Smith that he could have applied to stop or delay Dr Houston's bankruptcy. But he refused to disclose even a basic hourly charging rate, without the notorious "uplift", or other add-ons.

"For a solicitor, a debt like this places a considerable financial strain on the practice," he said. "After 40 years of practice a disproportionate amount of time has to be spent working. I work almost every evening." He is a sole principal, albeit one that employs other solicitors.

Perhaps the Defamation Act now going through Parliament, with its fast- track procedure for judge-only trials and damages limited to pounds 10,000, will prove the answer for would-be litigants who were never going to be able to afford the financial risks of bringing their cases. If it proves unworkable, the law of defamation will remain widely out of reach or positively dangerous, and the law generally will remain viewed as an ass.

And it will still be debatable whether the issue of costs clocked up in such cases - the mountains of copies of documents, the faxes, the telephone calls - will ever be satisfactorily cracked. For Dr Smith, who might lose his surgery and become bankrupt, or who might face paying his legal bill in years and years of instalments, it will all be far, far too late.