Doughty v The Law Society of New South Wales

The Court's discretion

1. There is no issue between the parties that under s 98 of the Civil Procedure Act 2005 (NSW), the usual order is that costs follow the event; that where there has been no hearing on the merits, there is no "event" to enliven that rule; but even then, the Court has a discretion to make a costs order, in an appropriate case. Such an order may be made where one of the parties has acted unreasonably (see Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622).

The parties conduct

1. There was no dispute as to the facts. What was in issue was whether either Dr Doughty or the Law Society had acted unreasonably and whether either had established a basis for a costs order being made in their favour.
2. The suspension of Dr Doughty's practicing certificate followed two complaints to the Legal Services Commission which the Law Society received in 2013, which it had to deal with under the provisions of the Legal Profession Act 2004 (NSW).
3. They arose out of Dr Doughty's active membership of the National Servicemen's Association of Australia (NSW Branch). It and the National Servicemen's Association of Australia represent returned national servicemen. Dr Doughty became involved in a dispute between the National and NSW bodies about allegations that there had been a defalcation of money which had been raised to erect a memorial in Canberra. Dr Doughty gave an advice about these matters. The allegations are still apparently the subject of an investigation.
4. It was the National Servicemen's Association of Australia which complained about allegedly false statements made by Dr Doughty and one of its officers who complained about his alleged unethical conduct. The Law Society's investigation into these complaints has also not yet concluded.
5. Dr Doughty is now 81 years of age. He was an orphan raised in the Salvation Army Guild Memorial Home in Goulburn. Before being admitted as a solicitor in 2008, he had studied accountancy, becoming a certified accountant in 1983. He had worked for some 10 years in a bank and had owned and operated a number of retail butcher stores for many years, before studying law. He has a Bachelor of Business, a Master of Laws and a Doctorate in Jurisprudence and now works as a sole practitioner out of his home. He has no employees and does not operate a trust account.
6. For most of 2014, Dr Doughty was declining new instructions, both because of his involvement in the Royal Commission into Institutional Responses to Child Sexual Assault, as a witness and adviser to other victims of abuse and because of his involvement with the National Servicemen's Association of Australia (NSW Branch). He was also suffering ill health and was undergoing treatment for cancer.
7. In February 2014, Dr Doughty wrote to various officers of the Law Society in unfortunate terms advising, amongst other things, that he would not be responding to the matters raised with him in relation to the complaints, until after completing radiation treatment on 14 March and his appearance before the Royal Commission. He did not reveal when that appearance was to occur. He also advised that in the meantime, the pursuit of the misappropriated money would continue.
8. On 16 April the Law Society's Manager Professional Services, Ms Foord, advised Dr Doughty that his advice had raised concerns as to his fitness to practice and that it had been resolved under s 105 of the Act, that he be required to undergo a medical examination by Dr Bruce Westmore. He was asked to arrange an appointment with Dr Westmore, at their mutual convenience.
9. There was no issue that the Law Society had the power to require Dr Doughty to undertake such an examination. Dr Doughty wrote to the Law Society on 23 April requesting advice, amongst other things, as to who had attended the Professional Conduct Committee meeting at which the decision that he be medically examined had been made. He asked to be provided with the material considered; copies of the minutes and other documents; advice as to why the Law Society was concerned that he was receiving cancer treatment; and how other solicitors undergoing such treatment had been dealt with. In relation to Dr Westmore he sought, amongst other things, advice about Dr Westmore, his area of expertise and resume and whether he had been mentioned in the Royal Commission in relation to the Salvation Army. He also sought other considerable information about matters dealt with by and relating to the Royal Commission.
10. The Law Society's Chief Executive Officer responded on 30 April, advising Dr Doughty that the Committee's resolution stood. That position was later reconsidered.
11. On 13 May, Dr Doughty wrote to Dr Westmore, asking him similar questions to those he had raised with the Law Society.
12. On 2 June, Ms Foord advised Dr Doughty that the Committee had further considered his matter and on 29 May had resolved under s 105, that he be required to undergo a medical examination by Dr Stephen Allnut, with whom an appointment had been made on 17 June. He was asked to advise the Law Society immediately if he could not attend that appointment and of alternative arrangements made with Dr Allnut to see him as close as possible to that date. The consequences of not seeing Dr Allnut under s 105 were drawn to his attention. They included: "(2) A failure to comply with a notice under subsection (1) by the date specified in the notice and in the way required by the notice is a ground for making an adverse decision in relation to the action being considered by the Council. (3) Without limiting subsection (2), a failure to comply with a requirement for medical examination may be accepted by the Council as evidence of the unfitness of the person to engage in legal practice."
13. Dr Doughty did not respond. Instead he wrote to Dr Allnut on 14 June advising him that any appointment would have to be after 28 June, when a sentencing hearing had been listed in the District Court, where he was the solicitor on the record. Dr Doughty sought a "quick response" to an array of questions as to Dr Allnut's area of practice, experience in the treatment of cancer, discussions with and information provided by the Law Society and his association with Dr Westmore.
14. On the case advanced for Dr Doughty, he, in fact, never refused to be medically examined. The position was, however, that he did not attend the appointment with Dr Allnut on 17 June, he did not make any other appointment to be examined by Dr Allnut, nor did he respond to the Law Society's letter of 2 June.
15. The result was that on 19 June, Dr Doughty was served with two s 61 notices, by which he was advised that Ms Foord, the Law Society's delegate, considered that grounds existed to suspend his practicing certificate for the year ending 30 June 2015 and to refuse his application for a practicing certificate for the following year. The grounds notified were his failure to attend the examination by Dr Allnut, after notification of the resolution requiring him to be examined and the resulting opinion that he was presently unfit to continue in legal practice.
16. Dr Doughty was advised that the Council would give consideration to the suspension of his practicing certificate and refusal of his application for a new certificate, on 30 June. He was invited to make submissions to the Council by no later than 4pm on Friday 27 June .
17. To that point Dr Doughty had not sought legal advice. Under the Legal Profession Act, in order to practice as a solicitor he required a practicing certificate. Only fit and proper persons may be granted such certificates. The s 105 notifications he received from Ms Foord plainly raised serious matters, but regrettably, he failed to deal with them as common sense required. The result of service of the s 61 notices was that he sought advice, engaging solicitors and briefing counsel.
18. On 25 June, his solicitor, Mr Griffiths, advised Ms Foord that he had been instructed and sought copies of letters referred to in Ms Foord's correspondence; advice about the complaints being investigated; and other documents. Ms Foord responded on 26 June.
19. On 27 June, Mr Griffiths advised that Mr Campbell SC had been briefed, but that he was in Canberra and could not advise until 3pm on 30 June. He asked that Dr Doughty be given an extension until 4 July to respond to the notices. He advised, amongst other things, that he and Mr Campbell would give expeditious attention to the matter and submitted that, in the circumstances, Dr Doughty's conduct had not brought the profession into disrepute; that his delayed responses were explicable by his age, ill health and involvement in the Royal Commission; and that he continuing to practice in the meantime, would not represent a risk to the general public, given that he had a small practice with no employees and did not operate a trust account. It was noted that the allegations about misappropriation of funds which had given rise to the complaints against Dr Doughty were being separately investigated. It was also argued that those who had made the complaints had other civil remedies available against Dr Doughty.
20. Regrettably, the extension sought was refused, Ms Foord simply advising "I cannot grant the extension as sought by you". No reasons were given. The result was that the Council had no representations from Dr Doughty when it considered his position on 30 June.
21. Under the Legal Profession Act, there was a discretion to grant the opportunity Mr Griffiths had sought. Practicing certificates are granted annually by the Council. They may be cancelled under s 61 if the Council concludes that a solicitor is no longer a fit and proper person, after giving the solicitor notice and an opportunity to make written representations, within a specified time. Subsections 61(2) and (3) expressly contemplate that such representations may be made after the time specified and that they may then be considered.
22. Under s 48(4)(b), the Council may not renew a practicing certificate, if it is not satisfied that an applicant is a fit and proper person to hold the certificate.
23. Under s 43(3), if an application for the renewal of a practising certificate has been properly made, but has not been determined by the Council by 1 July, the certificate continues in force until the Law Society Council renews or refuses to renew the certificate. Under s 48(13), if an application is not granted within three months of being made, it is deemed to have been refused.
24. On 30 June 2014, the Council resolved to suspend Dr Doughty's current practicing certificate and to refuse to issue him with a new certificate, being of the opinion that he was unfit to engage in legal practice. The reasons given for those decisions were identical: "Having regard to Ralph Doughty's [the Solicitor's] failure to co-operate in the investigation of the complaints by Allan Callaghan and Major Earle Jennings and having regard to the correspondence from the solicitor: i. Letter from Dr Ralph Doughty to the Commissioner, Office of Legal Services Commissioner dated 21 June 2013; i. Letter from Dr Ralph Doughty to the President, Law Society of New South Wales dated 28 January 2014; ii. Letter from Dr Ralph Doughty to the Chief Executive Officer, Law Society of NSW dated 23 April 2014. Council was of the opinion that the Solicitor should be medically examined. Council also considered the correspondence from the Solicitor to Dr Westmore dated 11 May 2014 and Dr Allnut dated 14 June 2014. By letter dated 2 June 2014 the Solicitor was informed that the Professional Conduct Committee of the Society had resolved to require him to attend a medical examination by Dr Stephen Allnutt at his rooms at 3.30pm on 17 June 2014. The Solicitor failed to attend the examination by Dr Allnutt. As a result of the Solicitor's failure to be medically examined, the Council was of the opinion that the Solicitor is unfit to engage in legal practice."
25. Dr Doughty's case that in the circumstances he had no alternative but to commence these proceedings must be accepted. The summons was filed on 8 July 2014.
26. The matter was settled, as I have explained, after Dr Doughty attended the medical examination arranged with Dr Fisher, who advised that he was fit to practice. That advice was accepted and the Law Society issued him with a new certificate which, by operation of s 43(3)(b), is taken to have been renewed on and from 1 July 2014.
27. Why Mr Griffith's request was refused was not explained, either by Ms Foord or in the evidence led at the hearing

Did the parties act unreasonably?

1. I consider that the evidence establishes that, at different times, both parties acted unreasonably.
2. Contrary to the case advanced for Dr Doughty, the settlement arrived at did not vindicate his conduct. It was true that he was finally issued a new practicing certificate. That, however, was the result of his attendance at the further medical examination arranged after the proceedings had been commenced. His earlier conduct in failing to respond to the letter of 2 June and being medically examined by Dr Allnut was plainly unreasonable.
3. Undoubtedly, Dr Doughty found himself in difficult personal circumstances. Not only was he in considerable ill health, for which he was receiving radiation treatment, he had to deal with the two complaints being investigated by the Law Society, which he regarded as unfounded. He was also involved in giving evidence before and advising others involved in, the ongoing Royal Commission, which must have been profoundly difficult.
4. Even so, as a solicitor, his right to private practice depended not only on him holding a current practicing certificate, but also on the Council being able to form the view that he was a fit and proper person. His approach during the investigation which the Council was obliged to pursue into the complaints made against him, was both high handed and inappropriate. That led to the requirement that he be medically examined. Finally, his attitude to that requirement was unreasonable.
5. Given the intemperate terms of Dr Doughty's correspondence, his failure to respond to the second s 105 notice and without advice to the Law Society, failing either to attend the appointment made with Dr Allnut, or to arrange another convenient time for that examination to occur, it was not unreasonable for the Law Society to have issued him with s 61 notices.
6. Had Dr Doughty responded to the 2 June letter by giving any sensible account to Ms Foord of his personal difficulties, for which he was undoubtedly entitled to considerable sympathy and understanding, or even if had he made arrangements for the medical examination with Dr Allnut to take place at another suitable time, matters would no doubt have taken quite a different course.
7. The matter did take a positive turn when Dr Doughty finally sought advice. The result, eventually, was that he underwent the medical examination which he ought to have undertaken earlier. That established his fitness.
8. It was plainly unfortunate that, when Dr Doughty did seek advice, the Law Society did not grant a short extension of time from 27 June to 4 July, to make representations to it. On the evidence, if that had occurred, it is likely that a similar outcome would soon have been reached, without the necessity of recourse to this Court and the time, trouble and expense that involved, before a settlement was arrived at.
9. That Dr Doughty would have accepted the advice which he was bound to be given as to his obligations was, of course, not known to the Law Society when Mr Griffiths' request was refused. Nevertheless, in all of the circumstances, and having in mind the consequences of the exercise of the Councils discretion under this statutory scheme, I am satisfied that it must be concluded that the Law Society was also unreasonable when Dr Doughty was refused that opportunity.
10. These events, having unfolded as they did, resulted in Dr Doughty bringing these proceedings. That, plainly, was not unreasonable. Nor was the Law Society's conduct of the proceedings. The same conclusion is not available in relation to Dr Doughty's conduct of the proceedings, which did not pay proper regard to the overriding purpose of s 56 of the Civil Procedure Act 2005 (NSW): namely, the just, quick and cheap resolution of the real issues.
11. The matter was settled on sensible terms after Dr Doughty accepted the advice he received and underwent a medical examination consistantly with the parties' obligations under s 56 of the Civil Procedure Act. In the circumstances, the Law Society's offer that each party bear their own costs was not unreasonable. The matter having been settled as it was, there was no "event" which entitled either party to a costs order. The offer was accepted by Dr Doughty's solicitors, but on his case, contrary to his instructions.
12. That reflects, it must be inferred, that he was not prepared to accept Mr Griffiths' advice. In the circumstances, that was not entirely reasonable. A costs order in his favour depended on either the Law Society accepting that it should bear his costs, or the Court exercising a discretion in his favour. In the latter case, that depended, in part, on Dr Doughty acting reasonably in the proceedings.
13. On 11 July, before Campbell J, Dr Doughty had, amongst other things, undertaken to the Court that he would not only attend a medical examination, but that he would prosecute his case expeditiously. That certainly did not occur.
14. On 21 July, the matter was adjourned to 4 August, after the appointment with Dr Fisher. On 4 August, directions were given for the filing of evidence. They were overtaken by Dr Fisher's advice and the resulting agreement which the parties reached as to Dr Doughty's practising certificate.
15. On 11 September the matter was adjourned to 2 October. That day Dr Doughty failed to appear. By 23 October, he had engaged new solicitors and was ordered to pay the costs of the proceedings on 2 October, but still required further time. On 20 November, the matter was listed for hearing in February and directions were given as to the filing and service of evidence. On 17 February 2015 a further motion filed by Dr Doughty seeking an adjournment of the hearing on 25 February, was opposed and refused, with an order for costs.
16. In the result, that Dr Doughty's conduct of the proceedings was unreasonable, at least in part, must be accepted, given that his claim in relation to costs was not pursued expeditiously and resulted in unnecessary costs being incurred.
17. In all of those circumstances, I am satisfied that no further order as to costs should be made in these proceedings.
18. While it was reasonable for the proceedings to have been commenced, Dr Doughty's conduct before he took advice from Mr Griffiths and his conduct of the claim for costs was certainly not. It may be accepted that the matters which affected his judgment before the proceedings were commenced, are no doubt still having an impact upon him, given his health, his age, his involvement in the Royal Commission and the investigation of the two complaints, which the Law Society has still not finalised. That, however, is not a proper basis for making a costs order in his favour.
19. It may also not be overlooked that while the Law Society acted reasonably in its conduct of the proceedings, had it not acted unreasonably as it earlier did, in refusing the short opportunity Mr Griffiths sought, so that he and senior counsel could advise Dr Doughty and that he could make representations to the Council, none of the costs of the proceedings would have been incurred by either party.
20. Balancing all of the matters which here arise for consideration, I have concluded that neither party has met the onus falling upon them to establish that the discretion to make a costs order should be exercised in their favour. There will accordingly be no order as to costs.

Orders

1. For the reasons given, I order that there be no order as to costs.

I certify that this and the …… preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Schmidt DATE: …………………………………… ASSOCIATE: …………………………… DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 March 2015