Pearce v Waller Legal [2025] VSC 324 (Link to AUSTLII).
With thanks to Michael Magazanik for drawing attention to this Victorian (judge alone) decision. The judgment is rather long; not all issues are addressed in this note.
When represented by the defendant, Mr Pearce settled his abuse claim against Missionaries of the Sacred Heart for $140,000 inclusive of legal costs. About 4 years later Mr Pearce issued a fresh proceeding against MSC. Justice Forbes set aside the part of the settlement agreement which related to Mr Pearce’s claim for general and special damages but refused to set aside the part that related to his claim for economic loss. He later settled his claim for general and special damages for $400,000 (in addition to the $140,000 he had received from the initial settlement).
Mr Pearce then sued the present defendant for negligent advice and misleading conduct in relation to both the handling of his economic loss claim and the advice given to him about that part of his claim. He contended that the defendant’s negligence and misleading conduct resulted in him losing the right, or the opportunity, to recover substantial damages for economic loss from MSC.
Developments in the prosecution of civil institutional abuse claims were discussed in the judgment ([92] – [106]).
The relevant factual findings are set out at [477]. These included:
That at no time during the course of negotiations did MSC, or its lawyers, CBP, intimate (either verbally or in writing) that it proposed to rely upon the Ellis defence which Waller Legal had outlined to Mr Pearce. There is no mention of this in any of the correspondence between the lawyers, during the ISC, and most tellingly in the Calderbank offer which solely relates to issues of quantum. This was not disclosed to Mr Pearce.
That Mr Pearce was not provided at any time by Waller Legal with any estimate as to the worth of his economic loss claim. I accept his evidence on this point which is consistent with Dr Waller’s evidence that he was not given advice as to the quantum of his common law claim ‘because he didn’t have one.
That Mr Pearce did not give specific instructions to Waller Legal to pursue only an ‘informal’ economic loss claim as part of a general damages claim and not to pursue a ‘formal’ loss of earning claim. I accept that he was never asked in terms to confirm that his economic loss claim should be abandoned. There is no note of Ms Zelez to this effect, and she was not called to say that she had these instructions. However, Mr Pearce was aware that this was the manner in which Waller Legal had suggested that the claim be conducted and, in fact, was subsequently negotiated with MSC. But I repeat that he did not give Waller Legal a specific instruction to abandon his economic loss claim — and if he had, it would have been under the misapprehension that it could be maintained in some way as a part of a claim for general damages.
Breach of duty
The trial judge held in relation to the Ellis defence at [559]:
I am satisfied therefore that there was no reasonable basis for Waller Legal to assume in late 2016 and 2017 that MSC, represented by CBP, was likely to maintain the approach that the Ellis defence and associated problems was a real obstacle to Mr Pearce’s claim. To the contrary, by the time of the ISC it was clear that Mr Pearce’s claim was being treated by MSC as an assessment of damages. If Dr Waller truly held the belief that MSC would adopt the Ellis defence in Mr Pearce’s claim, then, in my view, it was negligently held. Accepting that Mr Pearce was advised at the time of the ISC and subsequently that the defence was an insurmountable obstacle to his claim, then he was wrongly advised.
And held at ([577] – [578]) in relation to obtaining instructions:
Dr Waller accepted that Waller Legal did not seek or obtain from Mr Pearce specific instructions to abandon his economic loss claim. It is incorrect, however, to suggest that Mr Pearce did not know that Waller Legal was not pursuing his ‘formal’ economic loss claim. Ms Zelez’s notes and his own evidence demonstrate that he was aware that Waller Legal was not pursuing the claim. Mr Pearce understood exactly how Waller Legal was endeavouring to pitch his economic loss claim, however it should have obtained his clear instructions not to pursue an economic loss claim.
As to the Calderbank offer, at [592]:
I do not intend, and should not be taken to, set any hard and fast rule about the provision of a Calderbank letter to a client in each and every circumstance. However, as a Calderbank letter will usually contain the opposing side’s contention as to why the offer should be accepted, I cannot see any good reason not to provide it to the client — unless it was perceived that it would unduly confuse a client. This was not such a case.
Causation
Before discussing causation in detail, the trial judge said at [607]:
It follows that I am not satisfied that Mr Pearce would have been given definitive advice to proceed with his claim and institute a proceeding on the basis that his economic loss claim was worth a million dollars, as he asserts. However, that does not preclude him establishing causation on the basis that, after considering all the advice (as to the pros and cons of litigation as I have just set out), he would have instructed his lawyers to reject the offer and to proceed to litigate his claim.
And than held at [669]:
Notwithstanding the other matters which point towards Mr Pearce accepting the offer of $140,000, and even without a firm estimate as to the worth of his economic loss claim, I think it probable that he would have rolled the dice. He would have rejected the MSC offer and instructed Waller Legal to proceed with his claim, including the economic loss component in anticipation of achieving an increased offer at a mediation or settlement conference.
Damages
The trial judge held at [691], leading to a judgement in the sum of $263,000:
Doing the best I can, I think that an appropriate allowance for Mr Pearce’s loss of the opportunity to pursue an economic loss claim to the point of a successful mediation or settlement conference is $200,000. Assuming that this loss crystallised around mid-2018, Mr Pearce should also be awarded a sum to compensate him for being shut out of the use of that sum over that period of approximately seven years. Applying the simple interest rate of 4.5% over that period (as Mr Thompson did) and allowing for a loss over seven years, the appropriate allowance for interest is $63,000.
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