Pearce v Waller Legal

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROFESSIONAL LIABILITY LIST

S ECI 2022 00957

GARY PEARCE	Plaintiff
v
WALLER LEGAL PTY LTD (ACN 167 030 757)	Defendant

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JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATE OF HEARING:	28, 30–31 January, 4–7, 17–18 February, 4 March 2025
DATE OF JUDGMENT:	6 June 2025
CASE MAY BE CITED AS:	Pearce v Waller Legal
MEDIUM NEUTRAL CITATION:	[2025] VSC 324

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NEGLIGENCE – Professional liability – Negligence claim regarding adequacy of advice given by lawyer to client in historical institutional sexual abuse claim against unincorporated religious order for abuse suffered by plaintiff at Catholic school managed by order – Plaintiff advised to settle general damages and not make ‘formal’ economic loss claim in circumstances where scant evidence of plaintiff’s work history due to failure to file tax returns – Defendant law firm believed Ellis defence would be taken and unincorporated association would not name appropriate defendant – Defendant law firm’s belief as to obstacles facing plaintiff in making common law claim negligently held – Law firm gave erroneous advice – Breach of duty of care established – Causation established.

DAMAGES – Difficultly in assessing value of a loss of opportunity to litigate – Not possible or appropriate to assess loss by way of arithmetical calculation – Necessary to undertake informed estimation.

MISLEADING OR DECEPTIVE CONDUCT – Claim made under s 18(1) of the Australian Consumer Law – Claim framed as misleading conduct by silence of junior solicitor in failing to correct asserted error of counsel – Relevant conduct by barrister not law firm – Defendant law firm did not engage in actionable conduct within meaning of s 18.

Malec v JC Hutton Pty Ltd (1990) 169 CLR 638; Badenach v Calvert (2016) 257 CLR 440, applied.

Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis (2007) 70 NSWLR 565; Taseska v Carus [2019] VSC 342; Rosenberg v Percival (2001) 205 CLR 434; Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; Talacko v Talacko (2021) 272 CLR 478; Jadwan Pty Ltd v Rae & Partners (a firm) (2020) 278 FCR 1, referred to.

Wrongs Act 1958, ss 51(1)(a), 52, 58, pt X div 5.

Australian Consumer Law, s 18.

Evidence Act 2008, ss 135(a), 55, 140.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr T Hammond SC with Mr J Gordon	Rightside Legal
For the Defendant	Mr P Solomon KC with Mr M Tehan	Landers & Rogers

TABLE OF CONTENTS

The issues

Factual background

Mr Pearce’s early life

Monivae: 1977–1978

The Monivae abuse

Mr Pearce’s education — post Monivae

Mr Pearce’s life after leaving school

Mr Pearce’s employment history

Events following the settlement of Mr Pearce’s claim

The trial

The application to adjourn the trial

Evidence at the trial

Developments in the prosecution of civil institutional abuse claims

The evidence relating to Waller Legal’s handling of Mr Pearce’s claim, and particularly his economic loss claim

Mr Pearce’s evidence as to his mental health

Mr Pearce’s medical treatment and medical opinions relating to his claim

The evidence of the other non-expert witnesses called by Mr Pearce

Kathryn Taylor — Mr Pearce’s mother
Charmaine Radke — Mr Pearce’s first ex-wife
Sarah Higgins — Mr Pearce’s second ex-wife

The evidence of Waller Legal’s handling of other institutional abuse claims

Michael Schack
Andrew Ure
John Negri

Ms Natasha Savic’s affidavit

Evidence of Dr Waller

Expert Evidence — Dr Morrison KC, the barrister

First report
Supplementary Reports
Oral evidence

Expert Evidence — Mr Thompson, the accountant

First report
Second, third and fourth reports

Findings of fact

The misleading conduct claim

Negligence — the scope of the duty of care

Did Waller Legal breach its duty of care to Mr Pearce?

Did Waller Legal adequately investigate and/or prepare the economic loss claim on behalf of Mr Pearce?

Did Waller Legal correctly advise Mr Pearce as to the strength of the Ellis defence and other potential obstacles to the prosecution of his economic loss claim?

Did Waller legal advise Mr Pearce correctly as to the nature and value of this economic loss claim — and that he was able to make such a claim?

Did Waller Legal abandon Mr Pearce’s economic loss claim contrary to his instructions?

Did Waller Legal advise Mr Pearce correctly as to any obligation on his part to make DHS repayment from any settlement?

Should Waller Legal have provided Mr Pearce with a copy of the Calderbank offer made by MSC?

Did Waller Legal act unreasonably in advising Mr Pearce to settle for $140,000 inclusive of costs rather than advising him to proceed with the claim?

Causation

Principles

The counterfactual scenarios

Proposed tender of the reasons of Forbes J

Analysis

Damages

Principles

Analysis

Conclusion

HIS HONOUR:

In October 2015, Gary Pearce retained Waller Legal Pty Ltd (‘Waller Legal’) to act on his behalf in relation to alleged abuse while he was a student at Monivae College, Hamilton (‘Monivae’).
Mr Pearce instructed Waller Legal that he had been abused in 1977 and 1978 by two brothers of the Order of the Missionaries of the Sacred Heart (‘MSC’).[1]
[1]It was not in issue that Monivae was conducted by the Order of the Missionaries of the Sacred Heart whose abbreviated name is MSC (Missionarii Sacratissimi Cordis in Latin). Priests and brothers of that Order managed and staffed the school in Hamilton and the boarding school at Monivae. MSC is unincorporated in this country. I have used ‘MSC’ generically to describe the organisation which managed and controlled Monivae at the relevant time. Mr Pearce’s lawyers also referred to it as ‘the Missionaries’.
Waller Legal, of which Dr Viv Waller is the principal, prepared Mr Pearce’s case against MSC and arranged for an informal settlement conference (‘ISC’) with MSC and its lawyers in November 2016.
The claim did not resolve at the ISC but negotiations continued. In January 2017, Mr Pearce conferred with Dr Waller to discuss settlement of his claim.
In February 2017, Mr Pearce settled his claim for $140,000 inclusive of legal costs (‘the settlement agreement’). As part of the settlement agreement, he renounced all his legal rights against MSC and several MSC brothers. In addition, it was acknowledged that no claim for economic loss had been made by Mr Pearce and that the settlement sum did not include any economic loss component.
In February 2021, Mr Pearce issued a fresh proceeding against MSC. In November 2022, her Honour Justice Forbes of this Court 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.[2] 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).
[2]Pearce v Missionaries of the Sacred Heart [2022] VSC 697, [111] (‘the setting aside application’).
Mr Pearce in this proceeding sues Waller Legal for negligent advice and misleading conduct in relation to both Waller Legal’s handling of his economic loss claim and the advice given to him about that part of his claim. He contends that Waller Legal’s negligence and misleading conduct resulted in him losing the right, or the opportunity, to recover substantial damages for economic loss from MSC.
Waller Legal disputes that it was negligent or misleading and says, if it was, that Mr Pearce has not proved that it resulted in any loss.

The issues

The statement of claim is prolix and complex; it does little to assist in determining the real matters in dispute.
Through a combination of a joint statement of issues and helpful advocacy, I consider that the following issues (some of which are intertwined) have to be resolved in determining whether Waller Legal exercised reasonable care in its handling of Mr Pearce’s claim.
First, did Waller Legal adequately investigate and/or prepare the economic loss claim on behalf of Mr Pearce?
Second, did Waller Legal correctly advise Mr Pearce as to the strength of the Ellis defence and other potential obstacles to the prosecution of his economic loss claim?
Third, did Waller Legal advise Mr Pearce correctly as to the nature and value of his economic loss claim ─ and that he was able to make such a claim?
Fourth, did Waller Legal abandon Mr Pearce’s economic loss claim contrary to his instructions?
Fifth, did Waller Legal advise Mr Pearce correctly as to any obligation on his part to repay Department of Human Services (‘DHS’) payments[3] he had received from any settlement that included an allowance for economic loss?
[3]The type of Commonwealth benefits received by Mr Pearce under the Social Security Act 1991 (Cth) varied from time to time. In 2015 and 2016, DHS was responsible for payments and also recovery of payments made to a person who receives lump sum compensation. There have been name changes to both the department administering the benefits and the benefits themselves over the period he received payments. I have used the expression ‘DHS payments’ generically to describe any payments made to Mr Pearce under the Social Security Act (whether described as Centrelink, DSS payments or otherwise) and potentially recoverable by the Commonwealth. I have used the expression ‘DHS repayments’ and ‘Centrelink repayments’ generally to describe potential repayments to be made by Mr Pearce.
Sixth, should Waller Legal have provided Mr Pearce with a copy of the Calderbank offer made by MSC?
Finally, did Waller Legal act unreasonably in advising Mr Pearce to settle for $140,000 inclusive of costs rather than advising him to proceed with a claim?
If it is established that Waller Legal acted unreasonably in any of the ways described above, then the next question is, has such conduct been causative of any loss? Or, to put it another way, would there have been a different outcome if Mr Pearce’s claim was handled in a different way by a solicitor acting reasonably?
If the answer is affirmative, then Mr Pearce must demonstrate that he lost a valuable opportunity, and the Court then evaluates the value of that loss.
An alternative claim based upon breach of s 18 of the Australian Consumer Law (‘ACL’) is also made against Waller Legal on the basis that it failed to advise Mr Pearce that he ‘almost certainly’ would not have to repay Centrelink the money received by him out of any settlement which included an allowance for economic loss.

Factual background

The following sets out the relevant events relating to Mr Pearce’s claim, its settlement and subsequent events.[4]

Mr Pearce’s early life

[4]The detail of Mr Pearce’s dealings with Waller Legal and its handling of his claim is set out later in the judgment.

Mr Pearce was born on 3 October 1965 in the United Kingdom.
Mr Pearce immigrated to Australia in 1968, when he was three years of age. He was accompanied by his parents, his brother, Ronnie, and his grandparents.
In July 1970, his mother gave birth to his brother, Nicholas.
Mr Pearce attended primary schools at Toorak and Gardenvale. He was also a talented dancer as a child, to the point of obtaining a part in a professional production of the musical, Gypsy.
At this time, his father worked full-time as a waiter, and his mother raised the three children.
At the end of Grade 4, Mr Pearce’s parents separated. His grandparents had purchased an establishment known as The Chalet in Lorne, and he went to live with them and attended Lorne Primary School.
Subsequent to attending Lorne Primary School, in 1974 Mr Pearce went to Sydney with his father and spent most of his time swimming. He then returned to live with his mother in Caulfield but had a period of approximately six months when he did not attend school.
In 1976, Mr Pearce’s mother commenced looking for an appropriate school for him to resume his education. He sat an entrance exam for Catholic schools and was offered places at St Patricks College, Ballarat and Monivae College, Hamilton.

Monivae: 1977–1978

Mr Pearce says that he elected to attend Monivae and commenced Year 7 (Form 1) at the age of eleven. He resided at the boarding school, which was located on the outskirts of Hamilton, and attended the day school, which was in the Hamilton township. He would travel by bus to the day school.
At that time, Father Uhr was the rector of the school and Brother Xavier, the boarding master. Brother Frith was a teacher. Brother Mamo was a groundsman and handyman. In the first term of Mr Pearce’s Year 7 (in 1977), he was assaulted by Brother Mamo. In 1978, when in Year 8, he was assaulted by Brother Frith. The details of the assaults as described by Mr Pearce are set out subsequently.
Most of Mr Pearce’s school reports for this period were produced and can be summarised as follows:
(a)The Form 1 (Year 7), term 1 report (described by his lawyers as pre-abuse) showed average grades of ‘B’ and ‘C’ across all subjects, with mathematics being his strongest performance. It was commented that Mr Pearce’s work had improved as he gained more confidence, however it was said that he needed to be more responsible in his studies. He was noted as having a brilliant personality with great potential but had a lack of self-control in his conduct.
(b)The Form 1, term 2 report (described by his lawyers as post-abuse) again showed average performance in all subjects, aside from mathematics. The report noted that his results had improved from first term but that he could be a real nuisance in the classroom as he distracted others. It was further noted that his attitude, comments and disruptions had been unacceptable, and he had ‘a most unsatisfactory term’.
(c)The Form 1, term 3 report noted that his marks were ‘very low in a number of subjects. And he is particularly weak in written expression’. It also noted his poor attitude to classroom behaviour. It was stated that he ‘finds it almost impossible to conform to classroom standards of conduct and behaviour without strict supervision. He is continually promising to change or improve, but this never happens, except when he is getting individual help, personal encouragement and praise’.
(d)The Form 2 (Year 8), term 1 report noted that he had a poor approach to his studies, with average grades again recorded across all subjects. It stated that he was ‘very suspect in the area of trust and integrity’ and that ‘many students will have nothing to do with him, simply because he cannot be trusted’.
(e)Mr Pearce’s academic performance remained similar in his Form 2, term 2 report, which noted that his general attitude had improved, although he could still be a nuisance in some subjects. His behaviour was stated as being satisfactory although he was described as ‘a great manipulator of other students’.
Towards the end of Year 8 in 1978, Mr Pearce was involved in an incident on a bus taking him and other students from the boarding school to the day school. Mr Pearce said that he and a group of boys decided it would be a good idea to set fire to the back seat of the bus. After the incident, he was taken out of class and back to the boarding school. He said his packed bag was in the foyer and he was told that he was expelled and would be leaving Monivae that day. Mr Pearce’s mother was notified, and he was placed on a train from Hamilton back to Melbourne.
Mr Pearce said that he did not engage in this type of behaviour before he went to Monivae.

The Monivae abuse

Mr Pearce has recounted the details of the Monivae abuse on a number of occasions. In November 2014, he made a statement to Victoria Police in relation to the abuse by Brother Mamo. The relevant parts read as follows:
At sometime in my first term at Monivae in 1977 when I was still 11 years old I went with some other students to the back of the pine trees after dinner whilst they had a smoke. One of the students AB[5] was with me at the time. Brother Mamo Eddie [sic] appeared right in front of us with a torch. Brother Mamo told myself and AB to come with him. I had no idea what was going to happen. …
[5]The student is identified in the statement and is anonymised for the purpose of this proceeding.
We kept following Brother Mamo down a dark corridor underground, under the school. …
We came to the end of the corridor and got to a room at the end of it which had a lock on the door. Brother Mamo unlocked the door and put the light on. Once he put the light on I realised we were in a laundry type room with sheets or towels folded and piled up. I think he looked [sic] the door behind us. Brother Mamo pulled out a a black leather strap which had a raised edge along two lines along the length of it. He pulled this out of some folded sheets or towels it had been wedged in the middle of them. The sheets and towels were on wooden shelves around two sides of the room. The strap was about 50 centimetres long. I had never had the strap before I didn’t even know they existed. I was so naïve that I thought he had pulled out a snake initially. I had never been given any pain by anyone and I couldn’t comprehend that he was going to hurt me. I still didn’t even know he was a Brother.
As soon as the strap appeared AB pulled down his pants and jocks. AB was still to the right of me standing beside me. There were two tea chests in front of us side by side. There were made of a very thin type of chipboard. I had seen them at my grandparent’s chalet that they operated in Lorne when I lived with them. Everything was happening so fast. Brother Mamo then gave me a choice. He told me that I could go to the Rector and tell him that I was caught up the back of the oval smoking or I could receive six straps on the backside. I decided to just follow AB as he seemed to know what to do. I pulled down my pants and I left my jocks on. Brother Mamo then told me, no, no, no you have to take your jocks off too. Once I had done this he then hit AB six times across his bare bum. AB was an extremely tough kid and his straps happened very quickly. AB was leaning over the tea chest but not resting on it. He had his hands on the tea chest and was slightly bend [sic] over. He also had his legs as far apart as they would go with his pants around his ankles. His hits were over and done within 2 minutes. 1 could see out the corner of my eye AB’s bare buttocks and there were marks all across his bum. The sound of the strap hitting AB was causing me to cry even more as I could tell he was being hit with a lot of force. I think AB pulled his pants up after he received six straps and he stayed in the room until I had been dealt with.
As soon as I had seen the strap come out and realised what it was I started crying I was inconsolable. Brother Mamo gently guided me to put me where he wanted me to be. As he was talking to me he used his foot to gently spread my legs apart to where he wanted them. He also gently leant me over so I was also leaning on the tea chest with my hands. As he was doing this he was saying things along the lines of don’t be a baby. The first strap I received took my breath away the pain was unbearable. I couldn’t comprehend how I could handle receiving another five more straps from him. I was trying to negotiate with to try to get some control back of the situation. I was also praying for it to stop. The only thing I managed to get him to do was to not let him to hit me so hard. I took about 20 minutes for me to get the six straps. In between the hits of the strap he would console me by talking to me. The tea chests were in the middle of the room in between the door and the far wall. Brother Mamo sat on a bench or a stool in front of the tea chests and talked me asking me what my interest [sic] were. He was telling me he was trying to take my mind off the punishment. I was shaking in fear. He moved around the room sometimes standing to the left of me and he put his hand on my shoulder and lent over the tea chest with me telling me things like we are in this together, this will be better than going to the Rector, I’m helping you, you’re new here and things like that. He touched me on my backside rubbing over the welt marks he had made with the strap. As he was rubbing my bum Brother Mamo was saying I’ll hit you on the other side if this side hurts, meaning the other side of my bum. I was desperately trying to make eye contact with him to plead with him. I did get the six straps but he probably eased off the force he used as the straps went on. I was still in an incredible amount of pain.
At end of the six straps he came over to me and letting me know it’s over. It was almost like he had to make friends with me before I left the room. I now feel that because I was new to the school and he didn’t know anything about me he wanted to learn a little bit about me. I pulled up my pants and the three of us left the laundry and he took us back out of the corridor. He had us thank him and we stood outside talking to him for a while. As soon as Brother Mamo turned around and walked off AB and I ran as fast as we could back to the recreation room.
…
Later the night after being punished by Brother Mamo sometime before bed when I was back in my dorm I told Brother Xavier what had happened with Brother Mamo. I can’t remember in what detail I told it to him. Brother Xavier was aware of Brother Mamo’s method of punishment but was more interested in prevention rare [sic] than a cure. Brother Xavier told me not to go to the pine trees then I wouldn’t have this problem again.
…
The second time I was taken to the linen room to be punished by Brother Mamo was within a few weeks of the first time. It would have been before the Easter school holidays in the first term of 1977. I was still eleven years old. I can’t remember what I did wrong to be called over by Brother Mamo and taken back to the linen room. I know it was something minor. It was earlier in the day than the previous time that I had been taken there but I can’t remember what time of the day it was. I remember I wasn’t far from the laundry this time as it didn’t take as long to walk there this time. As we approached the laundry I heard him get his keys out to unlock the linen door. The linen room was at the end of a dark corridor and everything echoed in the corridor. We went into the room and I’m pretty sure he locked the door behind us. Once inside brother Mamo got the strap out from the sheets or towels. It was the same strap he had hit me with the first time, the black leather one. He placed the strap in front of me. Once I got inside the door I went straight in and didn’t look around. Brother Mamo gave me the option of going to the Rector or getting punishment then or there. I told him that I wasn’t going to and I’m not taking the punishment. He told me to the Rector. I told him that I wasn’t doing that either. I think I did this, as last time I felt that there was a weakness in him in that he wanted to be liked and I thought that I would try and exploit this. Brother Mamo just left the room and turned the light off and left me in there in the darkness. I think he left me in there for at least an hour. In that hour I didn’t even look around the room I was too scared too. I didn’t move from the spot that I was in, which was in front of the tea chest with the shelves to the front and side of me and the door behind me. I didn’t even check if he had locked the door.
I had a heightened sense of sound as I was standing in a dark room. I remember hearing the sound of the keys and Brother Mamo came back to the room and asked me if I had made a decision. As I have said my senses were heightened and my memory is very strong of what he said to me. I told him, I’ll do it.’ I then just dropped my pants and jocks and spread my legs and leant over the tea chest in front of me. Brother Mamo didn’t direct me as to what to do I just did it from the last time I was in there. He hit me six times across my bare buttocks. It still took a while as I was crying. In between hits Brother Mamo was consoling me by talking to me telling me things like you’ll be right and rubbing my bare buttocks where he had struck me with the strap at the same time. As soon as I had got the last strap I pulled my pants straight up and Brother Mamo let me out. I walked with him and at the end of the corridor we went our own separate ways. Coming out I remember that it was dark which felt weird as I went in there in daylight.
…
The third time I was to receive punishment from Brother Mamo was at some stage after the second time. It was some time during Cricket season. Training started in between September as soon as footy finishes and games start in October. I don’t know how long after it was but it was still in 1977 my first year at Monivae. I would have been 11 or perhaps just 12 as my birthday is on the 3^rd of October. On this day I was coming back from school and myself and some others ‘mooned’ some cars. By mooned I mean we pulled our pants down and exposed our buttocks to passing cars. I remember a few of us did it but I was the only one singled out to be punished. The Monivae junior school which is where year 7 and 8 students went to class was in town in Hamilton itself and we had to get the school bus to get there. Brother Mamo had been driving the school bus. He drove it quite often but not all of the time. We got off the bus and Brother Mamo had to go and park the bus and do whatever else he had to do with the bus. He had told me to meet him somewhere near the entrance to the laundry. The bus would be parked about 100 metres away from the laundry entrance. All of the other students would have went to the locker rooms to get changed in their sports uniform to go and do sport after school. I remained near the entrance in my school uniform waiting for Brother Mamo.
Brother Mamo was walking in a direct line from the bus parking area to the laundry entrance. As he neared me I told him that I wanted to see the Rector. Brother Mamo kept walking to the laundry entrance and took a minute to digest what I had just said to him. He then said fine, it’s your choice. He then took me to the Rectors office on the first floor.
Brother Mamo knocked on the Rectors office and said something to him and then sent me in alone. I can’t remember the Rectors name but we referred to him as Father. He asked me why I had been sent there. I told him what I had done and he asked me if Brother Mamo had given me options. I told him that he had but I chose to see you. He told me there was going to be some ramifications from this. As the Rector didn’t know me he called in Brother Mamo to find out what punishment would serve me best. Once he knew I loved sport he told me that I couldn’t play sport that weekend I had to do cleaning duties instead.
…
The next time Brother Mamo punished me was in 1978 when I was in form 2 and 12 years old. This was the fourth time that it had happened. I can’t remember what I had done wrong. What ever I had done wrong Brother Mamo motioned for me to follow him to the linen room. I walked him behind him to the room and he got to the door and unlocked the door with a key he had on him. I can’t remember if he gave me the option of going to the Rector because as soon as I got in there I told him that I was considering playing Hockey. Brother Mamo was very encouraging telling me that I am making a good choice and that I should do it. He told me to come to training. He was very eager to come and have me play. He pulled the strap out from between the towels and sheets and put it in front of me. I just pulled my pants and jocks down, spread my legs and placed my hands on the tea chest so I was slightly bend over it without leaning on it. He then hit me with the strap I was crying and upset and Brother Mamo consoled me with words and rubbed my buttocks and between my legs using his hands in between hits with the strap. He may have brushed me on my genitals but I couldn’t say if it was intentional or not. I was in so much pain that all I was thinking about at the time was the pain I was in and not where he was touching me. After the last hit I pulled my pants up. As I had mentioned playing Hockey the conversation was alot [sic] more jovial and the atmosphere was alot [sic] more open to conversation afterward.[6]
[6]Truncated Court Book with Additional Documents Tendered on 04.04.2025, 05.02.2025, 06.02.2025 (as at 2:15pm) & 18.02.2025 filed on 19 February 2025, 1162–1171 (‘CB’).

In November 2015, Mr Pearce made a statement to Victoria Police[7] about the abuse committed by Brother Frith. The relevant parts are reproduced below:
[7]The statement produced in the CB and tendered as an exhibit was unsigned. However, there was no issue that Mr Pearce had adopted the statement as his account of Brother Frith’s alleged abuse.
My first interaction with Brother FRITH was when I had a minor headache and one of my friends took me to the Infirmary and I spoke to Brother FRITH. I didn’t even know where the Infirmary was.
The next time I went to the Infirmary was in the summer of 1977. I would have been either 11 or 12 years old depending on whether it was it [sic] before or after my birthday in October.
It was a sunny Sunday afternoon and I wasn’t feeling well. I hadn’t gone home this particular weekend as I only went home every third weekend. Monivae had some trampolines that were located just before the oval and I went and lay down in the sun near them. It was a warm day but I remember I was feeling cold. I laid there for hours. Eventually somebody came up to me and asked me if I was okay. I told them that I couldn’t get up and that I was thirsty. It seemed like a long time later, but it may well have not been, Brother FRITH came along and helped to my feet. Brother FRITH took me to the Infirmary. I remember when I got to the Infirmary there were about 3 to 4 other students lying down in bed there. I didn’t know any of these boys as they were in higher year levels.
The Infirmary was set up like a hospital room with about 6 to 8 beds in it. There was a TV and there was a bath in the middle or to the side of the room. I can’t remember exactly where it was in the room but I remember that the bath could be seen from all of the beds in the room. It certainly wasn’t in a separate room. The bath had two glass panels either side which was [sic] made of frosted glass. It definitely had a door but I can’t remember what type of door it was. The Infirmary was made up of 2 rooms. The one that I have just described and another long narrow room with a bench with Dettol, bandages etc. and a few stalls where students could come in and get cleaned up without needing to go to the infirmary.
Not long after getting to the infirmary on this day Brother FRITH suggested that I have a bath and get comfortable. I remember being a little worried that the other boys could see me in the bath. Once I got inside the bath I realised that the boys could not see me through the frosted glass. Behind the frosted glass there was a small area with room to get changed and hooks to hang up your clothes. Brother FRITH ran the bath for me and left the area and by the time he returned I had got changed and I think he may have assisted me into the bath as I was very unsteady on my feet.
When Brother FRITH returned and talked to me about my family. I told him about my Mum and that my Dad lived in Sydney. Brother FRITH looked down at my groin area and asked me if I had been shown how to wash my penis properly as I was not circumcised. Brother FRITH asked me to show me to show him how I wash my penis by pulling back my foreskin. I was really sick at the time and Brother FRITH made me feel like I wasn’t cleaning myself properly. I had no idea what to do and pulled my foreskin back a very small amount. Brother FRITH told me that it wasn’t satisfactory and asked me if I wanted him to show me what to do. I told him okay. Brother FRITH then took my penis and began pulling the foreskin back but there was some resistance to the skin going back all the way as far as would go. Brother FRITH didn’t push it. There was a soap dispenser near the bath and he got some soap and used his fingers he pulled my foreskin back and forth very gently almost using the tips of his fingers. Although I was very sick I remember this feeling uncomfortable and it being painful. When Brother FRITH first touched my penis his eyes went an unusual black colour and he got white froth around the corners of his mouth. His tongue also kept going in and out of his mouth similar to a lizard. I also remember Brother FRITH kept looking towards the door of the bath area. I don’t think the other boys would have heard what we were talking about nor would they have been able to see it. I realised what he was doing wasn’t right purely by the way he constantly kept looking around towards the door, keeping a watch in case anyone came near the bed. I didn’t have any pubic hair at the time. I had never had anyone touch my penis before.
I can’t remember when I saw a Doctor but I know one did come and see me at some stage and I was diagnosed with Glandular fever. I was very weak and slept a lot. I have no idea where the Doctor was from. I ended up spending one month at the Infirmary with glandular fever.
…
During my month in the Infirmary Brother FRITH ran a bath for me every night and every night Brother FRITH pulled my foreskin back and forth on my penis whilst I was in the bath. At the start of my visit to the Infirmary I was quite weak but as I got stronger Brother FRITH continued to pulled the foreskin on my penis back and forth even when I was capable of washing myself. Brother FRITH never washed nor touched any other part of my body whilst I was in the bath.[8]
[8]CB 1144–1146, 1149.
Brother Mamo pleaded guilty in the County Court to seven charges of indecent assault on a male person from February 1976 to December 1980 while he was at Monivae. He was sentenced on 22 February 2013 by his Honour Judge Leckie to two years and three months’ imprisonment, with a requirement that he serve a minimum term of 18 months before being eligible for parole.[9]
[9]DPP v Mamo (County Court of Victoria, Judge Leckie, 22 February 2013) at CB 1384–1392.
Brother Mamo also pleaded guilty in the County Court to a further 21 charges of indecent assault on male persons, from 1973 to 1981 at Monivae. Several of these charges related to the abuse of Mr Pearce. Brother Mamo was sentenced on 11 December 2015 by his Honour Judge Smallwood to 34 months’ imprisonment, with 22 months of the sentence suspended.[10] Mr Pearce attended both the plea and the sentence.
[10]DPP v Mamo [2015] VCC 1831 at CB 1376–1383.
Brother Frith has not been convicted of any criminal offences.

Mr Pearce’s education — post Monivae

After being expelled from Monivae, Mr Pearce was placed at St Augustine’s Orphanage in Geelong, which, he said, was the only institution that would take him. He was there for between 18 months and two years, during which he attended school at St Joseph’s College. Mr Pearce described himself as a ‘terrible’ student.[11]
[11]T193.
Mr Pearce left St Joseph’s College when he went to live with his mother, after she purchased a house in Richmond. Subsequently, he attended Cathedral College in East Melbourne for six months before leaving school during Form 4 (Year 10). He said that he struggled with his studies at this school, where the teachers were predominately Brothers. He did not progress past Year 10.

Mr Pearce’s life after leaving school

After leaving school, Mr Pearce worked as a strapper/stable hand at various racing stables in Victoria and New South Wales. He said that prior to this, he had spent time on weekends and during school holidays working at Bart Cummings’ stables in Flemington, and that he had naturally gravitated to this type of work.
Mr Pearce said that he was promiscuous during this time and would have unprotected and casual sex. He also consumed alcohol excessively. He also said he earned money as a sex worker at age 16 for about a year. He described this as a shameful period and said that he tries not to think about it.
When Mr Pearce was 17 years old he met his future wife Charmaine, a nurse, whom he married a year or so later. At the suggestion of Charmaine, Mr Pearce began work in the hospitality industry. He initially worked at Two Faces restaurant in South Yarra, during which he was enrolled in a course at the William Angliss Institute, which he never completed.
Mr Pearce and Charmaine had two children (Kent, born approximately 1984, and Jacob, born approximately 1987) together. Mr Pearce said that the relationship ended due to his infidelities. Charmaine gave evidence at the trial.
Following his separation from Charmaine when he was 21 years old, Mr Pearce commenced a relationship with Tania. A daughter, Holly, was born when he was 22. Mr Pearce and Tania remained in a relationship for three years. They separated due to what he described as dissatisfaction with each other. Mr Pearce said that he was unfaithful to Tania with multiple women during this period.
At age 25 or 26, Mr Pearce contracted Hepatitis C.
In his late twenties, Mr Pearce commenced a relationship with his second wife, Sarah. They married in 2001 and had three children together (Jack, Will, and Harry), before separating in 2010. Mr Pearce said that during this period he would experience flashbacks of the abuse when he experienced difficulties controlling his work environment, and that he would drink until he fell asleep as a coping mechanism. Sarah gave evidence at the trial.
Mr Pearce sought medical assistance in relation to poor mental health in 2010, after experiencing suicidal thoughts for the first time. During this period, he was admitted as a psychiatric inpatient at Monash Hospital, where he stayed between five and seven days.
In 2015, when he was approximately 43 years old, Mr Pearce commenced a relationship with his current partner, Karen. They have one child together, Ryder. The family lived in rented premises at Mentone and in 2015 both were working, with Mr Pearce employed as a chef at Aero Bar at Moorabbin Airport.[12]
[12]T221, T244–245.
In September 2015, Mr Pearce was referred by his GP, Dr Peter O’Brien, to a psychologist, Ms Janice Whetton.[13] He attended sessions with her into 2016.
[13]CB 1365.
In approximately mid-2016, Mr Pearce experienced liver dysfunction related to his Hepatitis C which necessitated medical treatment and his taking approximately several months off work.[14]
[14]T264–267; CB 1193, 1229–1230.
Subsequently, he returned to work as a chef at Mordi Pizza Pasta and finished up in 2023. At the time of the trial, he was unemployed and living in Mentone with his partner, Karen.

Mr Pearce’s employment history

Mr Pearce’s employment history since finishing school has been unstable and often undocumented. Two things stand out. The first is that throughout his working life until 2017 he had never filed a tax return and only paid income tax when on an employer’s ‘books’.[15]
[15]T297.
The second is the inconsistencies or holes in his accounts of his working history. As mentioned earlier, after leaving school he worked as a strapper/stable hand and a chef, both in Melbourne and in rural Victoria and NSW. He also worked for short periods as a builder’s labourer, cleaner, salesperson, and private investigator. He worked as a rural horse trainer for a number of years. These roles varied between casual, part-time, and full-time positions. At times, Mr Pearce was paid in cash and, in some jobs, he was paid ‘on the books’. For significant periods, he was unemployed and in receipt of Commonwealth benefits.
Below is a table based on one prepared by his current solicitors, Rightside Legal (‘Rightside’) on Mr Pearce’s instructions in May 2022, which sets out in general terms his employment history from the age of 18.[16] Unfortunately, it is, in a number of respects, inaccurate and incomplete, but at least it gives an overall idea as to Mr Pearce’s working life to date.
[16]CB 987–988. The only alteration to the solicitor’s document is to the format.

Period

Age

Work

1983

18

Mr Pearce did odd jobs at the stables of Ross McDonald in Mordialloc.

1984

19

Mr Pearce worked in the kitchen at the Melbourne restaurant, Two Faces. He was enrolled at William Angliss at the same time.

1985-1986

20-21

Mr Pearce worked full-time as a chef at Mirabelle.

1987-1990

22-25

Mr Pearce worked as a chef at his mother’s restaurant, Joint Rest. He worked full time as a chef.

1991-1992

26-27

Mr Pearce worked for his grandparents who owned the Pathfinder Motel in Cotham Road Kew. There was a French Restaurant attached to the Motel and Mr Pearce worked in this restaurant. Mr Pearce worked casually as a chef for 20-25 hours per week.

1993

28

Mr Pearce worked at Scallywags in Williamstown and Customs House in Williamstown. He worked full-time. He also worked casually at Rosstown Hotel in Carnegie.

1994-2007

29-42

Mr Pearce did casual work as a chef for VIP agency and Peter Rowlands. He also worked part-time at horse racing premises at Seymour and Pakenham doing odd jobs.

2008-2010

43-45

Mr Pearce worked as a chef at several places including Castellos in Cheltenham, Zooks in Dandenong Hospital and Café Euro in Bourke Street.

2011-2013

46-48

Mr Pearce worked full-time as a chef at the Dandenong Hotel for 2 years. He then worked at the Hampton RSL full-time for 8 months. He later worked casually at the bistro Red Pepper in Bentleigh.

2014-2017

49-52

Mr Pearce worked part-time as a chef at Aero Bar at Moorabbin Airport.

2018

53

Mr Pearce worked part-time as a chef at an Italian restaurant, Hosteria 200.

2019-Dec 2020

54-55

Mr Pearce was unemployed in this period.

Jan 2021-March 2021

55

Mr Pearce worked part-time at the General Store in Edithvale. He worked 9:30-1:30 Monday to Friday.

April 2021 to Jan 2022

55-56

Mr Pearce was unemployed in this period.

February 2022 - present

56

Mr Pearce works as a chef for 20 hours per week at Mordi Pizza Pasta in Mordialloc. This work is ongoing.

Mr Pearce said that he stopped work at Mordi Pizza Pasta in 2023 due to having issues with his knees. He is currently unemployed.
The following should be noted in addition to Mr Pearce’s employment history detailed in the table above:
(a)At some point of time in the late 1990s, he worked for at least four to five years (and on one account for ten years) as a horse trainer at Seymour and had a licence issued by Racing Victoria. He had approximately four horses in work.[17]
(b)Mr Pearce said that ‘not long after 2017’, he started filing tax returns for the first time.[18] Up until that time, he had never lodged a tax return.[19] The Australian Taxation Office (‘ATO’) was able to assist him with preparing some of his tax returns with information uploaded to the ATO website, however he was informed that he would need the assistance of an accountant to prepare the rest.[20]
(c)When he informed Rightside that he was unable to file tax returns without the assistance of an accountant, he was put in contact with tax agent, who assisted him with filing returns in 2022 and 2023.[21]
(d)Mr Pearce’s delayed tax returns and notices of assessment disclose the following income:
[17]T216.
[18]T297.
[19]T297.
[20]T297.
[21]T311.

Financial year

Taxable income

2011

$9,610

2012

$979

2013

$9,822

2014

$9,240

2015

$11,015

(e)Information obtained from the DHS reveals that he received unemployment benefit for 639.2 weeks during the period between 9 January 1997 and 8 June 2021 (a cumulative period of 1,273.8 weeks).[22]
(f)As set out earlier, Mr Pearce did not finish his high school education, nor has he obtained any tertiary qualifications. In his late teens, he was enrolled at the William Angliss Institute to undertake vocational training in hospitality but did not attend the course.
(g)Mr Pearce described his employment as ‘empty meaningless work’ and said that he wanted to be educated and wanted to help people.[23]
(h)Mr Pearce has said to others on multiple occasions that he wished to study law and that he contacted Swinburne University prior to the COVID-19 pandemic in relation to studying law at that institution. He said nothing eventuated from those enquiries as courses were cancelled due to the pandemic.[24]
(i)Mr Pearce has also, at various times, told others that he wished to be a Jesuit missionary or to be more closely involved with racing horses.

Events following the settlement of Mr Pearce’s claim

[22]CB 336.

[23]T219.

[24]T220.

As mentioned earlier, in February 2017 Mr Pearce settled his claim for $140,000 inclusive of legal costs. Mr Pearce said that after he had received his settlement monies his relationship with Waller Legal ended. However, he continued to monitor developments and recommendations arising from the Royal Commission into Institutional Responses to Child Sexual Abuse (‘Royal Commission’).[25]
[25]T293.
After learning about legislative changes which would require institutions to nominate a proper defendant to be sued in legal proceedings, Mr Pearce contacted Waller Legal again in 2019 to discuss the possibility of revisiting his case against MSC. He said that he was told by Waller Legal to find another lawyer, and that he then came across Michael Magazanik of Rightside.[26]
[26]T294.
Mr Pearce said that Mr Magazanik advised that he first needed to apply to the Court to have his previous deed set aside before any further claim could be advanced against MSC.[27] Mr Pearce then, on the advice of Rightside, instituted a proceeding against MSC in February 2021.
[27]T295.
As part of that proceeding, his application to set aside the settlement agreement was heard by Forbes J in this Court in August 2022. Her Honour’s judgment was delivered in November 2022.[28] Mr Pearce gave evidence, and the transcript of his cross-examination was tendered.[29]
[28]The setting aside application: [2022] VSC 697.
[29]Exhibit 49.
Justice Forbes set aside the previous deed as to general damages and medical expenses only and found that a claim of economic loss was not previously made and was extinguished by the deed.
Mr Pearce described the outcome of the application to set aside the previous deed as a ‘half win’.[30]
[30]T295.
Following part of the settlement agreement being set aside, Mr Pearce’s general and special damages claim against MSC was settled in May 2023 for $400,000 plus costs. This figure was in addition to the sum Mr Pearce had originally received as a result of the settlement agreement.[31]
[31]T296.
In September 2024, Mr Pearce gave evidence about his experiences at Monivae, including with Brother Frith and Brother Mamo in a civil claim commenced in this Court by another former Monivae student against MSC.[32]

The trial

The application to adjourn the trial

[32]Clifford v Missionaries of the Sacred Heart [2024] VSC 812.

On 23 January 2025, five days before the trial of this proceeding was scheduled to commence, Mr Pearce’s lawyers applied to adjourn the trial to obtain further discovery from Waller Legal.
After hearing argument, I dismissed the application and gave brief oral reasons. I promised to deliver more fulsome written reasons — which now follow.
The application was supported by two affidavits from Mr Magazanik, Mr Pearce’s lawyer. Mr Magazanik shares the conduct of Mr Pearce’s claim. He swore affidavits on 23 and 28 January 2025. The first affidavit exhibited extracts of the Waller Legal file of Mr Andrew Ure (‘the Ure file’), which in the second affidavit, Mr Magazanik said had been inspected on 13 January 2025 by Rightside.
Mr Ure has been a client of the Rightside since February 2024 and is a former client of Waller Legal which acted for him in a claim for damages (including economic loss) against the Christian Brothers arising out of alleged sexual abuse. Mr Ure’s claim was resolved in September 2015, following an ISC.
Mr Simon Ellis, a lawyer acting on behalf of Waller Legal, swore an affidavit in response on 24 January 2025. Waller Legal opposed Mr Pearce’s application.

At the commencement of the trial, I heard argument from counsel for both parties as to whether the trial date should be vacated and the trial adjourned.
An issue in the trial was advice allegedly given by Waller Legal and a barrister, Mr Timothy Seccull QC, to Mr Pearce about his potential obligation to make DHS repayment. The basis for Mr Pearce’s application was that his lawyers had only recently come into possession of the Ure file. This, it was said, contained information which demonstrated Waller Legal’s ability to seek advice as to potential DHS repayments by its clients who had abuse claims against members of the Catholic clergy. Also, it was argued, it demonstrated Waller Legal’s knowledge of the intricacies of the DHS scheme in respect of potential repayment by its clients. It was said that the contents of the Ure file demonstrated that there was a strong possibility that the assertions made in Waller Legal’s defence and its answers to interrogatories as to ‘(u)ncertainty about the repayment to government agencies from any settlement sum such as social security and Medicare’[33] were misleading.
[33]Plaintiff’s submissions in support of application to adjourn trial filed 28 January 2025, [4], quoting Dr Waller’s witness outline.
So, the central contention for Mr Pearce on the application for further discovery was that it was likely that there were other files of Waller Legal clients which contained similar material to that in the Ure file, and which may well have demonstrated the inaccuracy of Waller Legal’s contentions about its understanding of the DHS repayment provisions and their mechanics.
Counsel for Mr Pearce sought to have the trial adjourned so that proper discovery could be obtained ‘in light of the fortuitous revelation of the Ure documents’.[34] It was further said that there was a prospect that Mr Pearce may have also wished to amend his pleadings to plead a claim of misleading or deceptive conduct and may have sought to strike out parts of the defence.
[34]T52.
The question of the extent of Waller Legal’s knowledge generally of DHS requirements and practices in relation to the repayment of Commonwealth benefits by its clients is a live issue in the case. And it can be readily accepted (as I did) that there is material in the Ure file relevant to that issue.
Counsel for Mr Pearce relied upon what I said in Volunteer Fire Brigades Victoria v CFA (Discovery ruling) in relation to discovery:
However, even with the introduction of the CPA, this is not how discovery works. Discovery has never been limited in such a way; discovery is an integral component in trial preparation. Discovery is not concerned with admissibility: it is part of the fact finding exercise in getting a case to trial. Indeed, often discovery may lead to a train of inquiry not confined to the tender (or putative tender) of a particular document in the course of a trial. Further, it may be that the document, or its contents can be deployed by a party in cross examination rather than part of its case. Much depends upon what happens at trial. One thing is clear: it is not for this Court on an interlocutory application to determine whether a potentially discoverable document will or will not be admissible at trial: that is the function of the trial judge.
As long as the document in the possession of a party goes to a real (and not peripheral) issue to be determined at the trial then, absent any proportionality consideration, it is relevant and ought to be discovered.[35]
[35][2016] VSC 573, [40], [41] (‘Volunteer Fire Brigades Victoria’).
However, prior to this passage I made the following observations as to the applicable principles which are relevant to the resolution of this application:
There is no ambiguity about the application of the principles of the CPA. In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited the High Court said of its NSW analogue:
The evident intention and the expectation of the CPA is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose.
That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge’s individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the CPA can be furthered, together with other relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the CPA assume that its purpose, to a large extent, will coincide with the dictates of justice.
The approach to discovery has changed markedly in the past half-decade or so. The Peruvian Guano test has been consigned to the dustbin. The CPA now requires a court to cut through the layers of interminable argument and nit picking which had traditionally accompanied discovery contests. This case is just such an example of the old approach; three senior and five junior counsel (three engaged by VFBV) to argue about discovery and a day-and-a-half’s argument over documents which can only have been created in in the last six months or so.
….
Finally, where discovery potentially requires extensive trawling through databases and emails, a court must be conscious of the words of the High Court in Armstrong and obligations under the CPA. As I said in Liesfield, the days of the search for the smoking gun are gone. The key is ensuring the discovery exercise is proportionate not only to the relevance of the issues, but also to the likely cost to be incurred bearing in mind that it is the trial that is the focus of the proceeding and not the discovery fight.[36]
[36]Ibid [32]–[33], [36] (emphasis in original) (citations omitted).
I emphasised questions of proportionality and cost in resolving discovery fights.
Of singular note on this application was the failure by Mr Pearce’s lawyers (I exclude counsel from this observation), in both their submissions and in Mr Magazanik’s affidavits, to disclose their inspection of Waller Legal files other than that of Mr Ure prior to making the adjournment application only days before the trial was due to commence. It transpired, upon my questioning of counsel, that Rightside already had in its possession some 80 files of Waller Legal clients. Of those, 33 were said to relate to the period relevant to Mr Pearce’s claim. These had been examined by members of the firm to discern whether there was anything in those files that would assist in this case in relation to the question of Waller Legal’s knowledge or practice in determining whether DHS repayment by its clients was likely.
I was told that, out of those 33 files, two (including Mr Ure’s file) had been identified as disclosing material potentially relevant to this issue. It was also apparent from the material annexed to Mr Ellis’ affidavit that the issue of the production by Waller Legal of information relevant to settlement of other claims with DHS repayment issues had been alive and the subject of correspondence between the lawyers since October 2024.
I had initially thought that it may be sensible for Waller Legal to conduct a sample search of its files to see whether there was any similar material to that contained in the Ure file. But, in effect, this is what has occurred by Rightside’s own examination of the files in its possession.
In these circumstances, questions of proportionality or, more prosaically, the search for the smoking gun or, to put it more accurately in this case, the hunt for a needle in a haystack, arose.
Whilst I accept that there might be something out there in the hundreds of Waller Legal’s files that may have assisted Mr Pearce’s case, the prospect of their identification was clearly low. Importantly, given what is contained in the Ure file, it was difficult to see how discovering another file with relevant contents would have materially advanced Mr Pearce’s case on this point. The relevant parts of the Ure file enabled him to argue that any assertion by Waller Legal or Dr Waller as to the limited extent of their knowledge or uncertainty as to DHS repayment provisions and their mechanics was either ill-founded or had been misrepresented.
The trial of this proceeding had been fixed and refixed on several occasions. Waller Legal and Dr Waller’s reputation, integrity and competence is called into question. Dr Waller personally has had this case hanging over her head for several years.
Mr Pearce’s case was ready to start, and the adjournment application was made in the late afternoon of the second last business day before the trial was due to commence.
To delay the hearing of the case on such short notice for an indeterminate time on the basis that there should be a search of potentially hundreds of other files with only a small chance of a result which would seem unlikely to improve Mr Pearce’s position in any significant way, would have been wrong. It would not have sat comfortably with the provisions of the Civil Procedure Act 2010, nor with the principles I have referred to.
Counsel for Mr Pearce indicated that they may seek to amend the claim to include a claim under s 18 of the ACL; this was not opposed by counsel for Waller Legal. The suggestion that Mr Pearce may seek to strike out parts of the defence relevant to the DHS repayment issue was devoid of merit — a question of what Mr Pearce was told about DHS repayments by either Mr Seccull or Waller Legal is patently a trial issue.
I refused the application and reserved the question of costs.

Evidence at the trial

The following witnesses gave evidence at the trial:
(a)Mr Pearce;
(b)Sarah Higgins, Mr Pearce’s former wife;
(c)Kathryn Taylor, Mr Pearce’s mother;
(d)Charmaine Radke, Mr Pearce’s former wife;
(e)Dr Matthew Tagkalidis, a consultant psychiatrist;
(f)Michael Schack, a former student at Monivae;
(g)Dr Vivian Waller, the principal of Waller Legal; and
(h)Mark Thompson, a forensic accountant who gave expert evidence
(i)Dr Andrew Morrison QC, a barrister who gave expert evidence.
A vast number of documents (at least by common law standards) were tendered. These included the following:
(a)the notes (or most of them) from Mr Pearce’s Waller Legal file made by Ms Zelez including those relating to the ISC and the conference with Dr Waller in January 2017;
(b)correspondence (usually by email) and file notes of conversations between Mr Pearce and Waller Legal;
(c)correspondence between Waller Legal and MSC’s lawyers, Colin Biggers & Paisley (‘CBP’);
(d)the brief to counsel and communications with Mr Seccull;
(e)medical reports relating to Mr Pearce’s claim;
(f)extracts of files of other claims handled by Waller Legal and in particular those of Mr Ure, Mr Michael Schack and Mr John Negri;
(g)Mr Pearce’s tax returns and notices of assessment for financial years 2011 to 2015 (and other ATO documents annexed to Mr Thompson’s instructions);
(h)Brother Mamo’s reasons for sentence in the County Court dated 13 February 2013 and 11 December 2015;
(i)transcript of the cross-examination of Mr Pearce in the hearing before Forbes J on 16 August 2022 in the setting aside application;
(j)expert reports of Mr Thompson, the forensic accountant, including Mr Thompson’s communications with, and letters of instruction from, Rightside;
(k)reports of four consultant psychiatrists Drs Tagkalidis, Neill, Jager and Triggs;
(l)various interrogatories of Mr Pearce together with Waller Legal’s answers;
(m)the Truth Justice Healing Council’s Activity Report: Volume 3;
(n)website page of the Truth, Justice and Healing Council;
(o)List of Member Congregations of the Catholic Religious Australia as published on the Catholic Religious Australia website;
(p)Safeguarding Children and Vulnerable Adults (Policy of the Missionaries of the Sacred Heart, Australian Province) dated February 2016;
(q)second reading speech for the Wrongs Amendment (Organisational Child Abuse) Bill 2016;
(r)submission in response to the Commonwealth Redress Scheme for Institutional Child Sexual Abuse Bill 2017 from Waller Legal dated 2 February 2018; and
(s)extracts of various documents subpoenaed from Victoria Police and MSC regarding Brother Mamo, Brother Frith and Monivae.

Developments in the prosecution of civil institutional abuse claims

I will now endeavour to set out the legal landscape in which Mr Pearce’s claim against Waller Legal needs to be considered. The period leading up to the time of settlement of the claim was one of considerable flux in terms of case law, legislative changes and the approach of the Catholic Church to claims against its clergy.
Throughout the trial there were references by both parties to these developments which I summarise below.
In the 2007 decision of Trustees of the Roman Catholic Church for the Archdiocese of Sydney v Ellis,[37] the New South Wales Court of Appeal overturned a first instance decision[38] to grant the plaintiff an extension of time under the Limitation Act 1969 (NSW) within which to bring proceedings against the defendants arising out of his sexual abuse by an assistant priest between 1974 and 1979. In upholding the appeal, the Court held that the Catholic Archdiocese of Sydney was an unincorporated association which did not exist as a juridical entity and was therefore unable to be sued in its own name at common law.[39] Whilst persons or groups within the Archdiocese were able to be held liable in tort or contract as principals, the liability of these persons or groups was personal, not representative in nature.[40]
[37](2007) 70 NSWLR 565 (‘Ellis’).
[38]Ellis v Pell [2006] NSWSC 109.
[39]Ellis (2007) 70 NSWLR 565, 576 [47].
[40]Ibid 577 [49], [51], 604 [200]–[201].
In practical terms, Ellis spelt out that in pursuing a claim against a member of the Catholic clergy there were significant, if not at times insurmountable, obstacles in identifying an appropriate defendant other than the alleged offender. There were many diverse organisations or persons running schools, orphanages, parishes and archdioceses which had no corporate being. Identifying a tenable defendant in a claim was particularly difficult. The offender personally was unlikely to have assets. Those corporations with Catholic affiliations that existed usually had a limited function such as holding land and did not directly operate a school or employ clergy. Diocesan priests or assistant priests were probably not employees of the diocese — and in any event it had no corporate entity. Even if an extant relevant organisation or person who had some responsibility for the conduct of the offender could be identified and was potentially liable (this usually required establishing that there was knowledge of the offender’s propensity), then there was a question as to whether there were assets sufficient to meet the claim.
Dr Waller said (and I accept) that the decision in Ellis merely identified at that time, what were already apparent to those who practiced in this area, significant jurisprudential and practical problems in prosecuting any claim against a religious institution that was unincorporated — as most if not all were.[41] I have subsequently used the expression ‘Ellis defence’ as an all-encompassing term for the difficulties of suing at common law for abuse suffered as a result of the actions of Catholic clergy.
[41]T642–643.
The Victorian Attorney General, Mr Pakula, described the situation in speaking to the Wrongs Amendment (Organisational Child Abuse) Bill 2016:[42]
The Family and Community Development Committee tabled its landmark report Betrayal of Trust on 13 November 2013. The report highlighted, among other things, the difficulties that survivors of organisational child abuse face in recovering compensation for the devastating effects of their abuse, and the lack of clarity in the common law about when an organisation might be liable for child abuse perpetrated by its personnel.
In particular, the Family and Community Development Committee found that the common law has not developed sufficiently in Australia to recognise the liability of organisations for child abuse perpetrated by organisational representatives.
Indeed, despite recent developments in the High Court, the law of vicarious liability and non-delegable duties in relation to organisational child abuse is still an area of great uncertainty and confusion in Australia.
Historically, Australian courts have been reluctant to find that an organisation can ever be vicariously liable for the deliberate criminal acts of its employees. The courts have not indicated a clear willingness to establish vicarious lability in circumstances outside of a strict employee-employer relationship, and have also been reluctant to include intentional criminal conduct within the scope of non-delegable duties. In addition, within the existing law of negligence, it can be very difficult to make out a duty of care that encompasses the prevention of harm caused by criminal conduct.
This uncertainty is of no benefit to plaintiffs and defendants alike. Plaintiffs often find it difficult to recover compensation against organisations for organisational child abuse they have suffered. There is also little clarity for defendants about when an organisation might be subject to liability for child abuse perpetrated by its personnel.
In the Betrayal of Trust report, the Family and Community Development Committee concluded that statutory intervention was necessary, stating that organisations should have ‘a clear legal duty to take appropriate measures to minimise the risk of abuse that arises because of the creation of relationships of trust for which they are responsible’, and that ‘there is a need to recognise the legal obligation of organisations to reasonably ensure the safety of children who come into contact with their members’.
…
The bill provides the legislative response that is required. As recommended by Betrayal of Trust, the bill amends the Wrongs Act 1958 to create a duty of care that will allow an organisation to be held liable in negligence for specified contexts of organisational child abuse committed by individuals associated with the organisation, unless the organisation proves that it took reasonable precautions to prevent the abuse.[43]
[42]Ultimately enacted as the Wrongs Amendment (Organisational Child Abuse) Act 2017.
[43]CB 3104.
On 22 May 2015, the Truth Justice Healing Council of the Catholic Church (‘the Council’) published the following media release which I reproduce in part.
The Archbishop of Sydney and one of Australia’s most senior Church Leaders, Anthony Fisher, has said the Ellis defence is no longer a legal tactic used within his Archdiocese.
Speaking on ABC’s Radio National this morning Archbishop Fisher said both within the Archdiocese of Sydney and more broadly across the Church the position is that in cases of child sex abuse survivors there will always be someone or thing to sue which will be backed by assets and or insurance.
Archbishop Fisher said he is unaware of any case of child sexual abuse against a church body in which the Ellis defence is being used.
“We have been very clear that what we do for victims is, as far as possible, don’t put them through a legal process at all and help them settle outside of Court.
“If they want their day in Court then we will help them identify who is the person to sue and make sure that is backed by insurance or assets.”
Francis Sullivan, CEO of the Truth Justice and Healing Council, said the comments by Archbishop Fisher are the strongest yet coming from a Church leader about the controversial legal defence.
“This very public endorsement of the new position, developed by the Council and endorsed by Church leaders last year, sends a clear message that it is not business as usual,” Mr Sullivan said.
“If a survivor wants to take a claim to Court then at the very least they must have an entity to sue.
…
The Church position in relation to the identification of a proper defendant in civil claims calls for:
The enactment of legislation in the states and territories imposing a requirement on an unincorporated association which appoints or supervises people working with children to establish or to nominate a body corporate to be the proper defendant to any claims of child sexual abuse brought against the association.
The identity and corporate structure of the body corporate should be left to the institutions to determine in accordance with their internal structures, provided that the body corporate has sufficient assets or is appropriately insured or indemnified.[44]
[44]CB 1470.

On 1 July 2015, amendments to the Limitations of Actions Act 1958 removed any limitation defence founded on the assertion that a claim for childhood sexual abuse was statute barred.[45]
[45]Section 4 of the Limitation of Actions Amendment (Child Abuse) Act 2015 inserted Div 5 of Part IIA into the Limitation of Actions Act 1958.
In November 2015, the Council published the following guidelines, which I reproduce in part:
When dealing with civil claims related to child sexual abuse, Church authorities should at all times act honestly, fairly and compassionately by:
(a) dealing with claims promptly and not causing unnecessary delay in the handling of claims and litigation
(b) assisting the claimant to identify the correct defendant to respond to the legal proceedings
(c) facilitating access to records relating to the claimant, subject to considering the privacy entitlements of third parties and documents that are legally professionally privileged
(d) making an early assessment of:
(i) the Church authority’s prospects of success in defending the proceedings, and
(ii) the Church authority’s potential liability in the claim made against it
(e) acting consistently in the handling of claims and litigation
(f) mindful of the potential for litigation to be a traumatic experience for claimants who have suffered sexual abuse, endeavouring to avoid legal proceedings wherever possible or to confine the scope of the proceedings
(g) paying legitimate claims without litigation
(h)considering resolving matters without the need for a claimant to take the formal step of filing a statement of claim
(i) providing information about services and supports available to claimants and considering requests from claimants for counselling, pastoral and psychological care assistance, and other kinds of acknowledgement or redress, including meetings with the Church leader, site visits, etc
(j) offering, and participating fully and effectively in, alternative dispute resolution processes wherever possible
(k)if it is not possible to avoid litigation, keeping the costs of litigation to a minimum, including by:
(i) not requiring the claimant to prove a matter which the Church authority knows to be true or has accepted as true
(ii) not contesting liability if the Church authority knows that the dispute is only about the amount of compensation
(ii) monitoring the progress of the litigation and using appropriate methods to resolve the litigation, including alternative dispute resolution, settlement offers and payments into court, and
(iv) ensuring that arrangements are made so that a person participating in any alternative dispute resolution process or settlement negotiations on behalf of the Church authority can enter into a settlement of the claim or legal proceedings in the course of the process or the negotiations
(l) not taking advantage of a claimant who lacks the resources to litigate a legitimate claim
(m) if a statutory limitation period is available as a defence, not relying on that defence unless:
(i) the claim involves other defendants that are not Church defendants and there is a risk that the Church authority might bear a disproportionate share of the whole liability to the claimant, or
(ii) the lapse of time has a burdensome effect on the Church authority that is so serious that the Church authority considers that a fair trial would not be possible
(n) if there is a need for expert evidence, co-operating with claimants about choice of expert, to facilitate agreement on the use of a single expert if practicable
(o) not undertaking and pursuing appeals unless the Church authority believes that it has reasonable prospects for success
(p) apologising if the Church authority is aware that it or its representatives or lawyers have acted wrongfully, improperly or in breach of these guidelines.[46]
I will refer to the Council media release and the Council guidelines collectively as ‘the Council public statements’.
[46]CB 1476–1478.
The Council was ‘established by the two overarching Catholic Church organisations, the Australian Catholic Bishops Conference and Catholic Religious Australia which represent dioceses and congregations across Australia’.[47] MSC is as a ‘member congregation’ of Catholic Religious Australia[48] and authorised the Council to represent it during the Royal Commission process.[49]
[47]CB 2856.
[48]CB 2861.
[49]CB 2854.
By its policy titled ‘Safeguarding children and vulnerable adults (Policy of the Missionaries of the Sacred Heart Australian Province)’ dated February 2016, MSC purported to subscribe to the Council guidelines. Relevantly, the policy includes the following:
Preamble
This policy sets out practice and procedure to safeguard from abuse children and vulnerable adults who are in the care of or in contact with the Australian Province of the Missionaries of the Sacred Heart.
…
This policy aims to optimise a safe and nurturing culture for all children and vulnerable adults and rests on the Province’s commitment to:
…
1.5.Compassionate and just responses to victims of abuse;[50]
The protocol for Commitment 5 (item 1.5 immediately above) includes the following:
1. In the conduct of litigation related to claims of child sexual abuse, the Province will seek to follow a compassionate, just and humble approach that one might expect from a “model litigant”.
2. This requires that the Province act honestly and justly by:
…
a. Assisting the claimant to identify the correct defendant to respond to the legal proceedings;[51]
[50]CB 2869–2870.
[51]CB 2878–2879.
Mr Pearce said that he had no knowledge of any press release by the Archbishop of Sydney in November 2015 about abandoning reliance upon the Ellis defence.[52]
[52]T245.
On 15 December 2017, the Royal Commission delivered its final report to the Governor General.
On 1 July 2018, the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 commenced operation. It required ‘non-government organisations’ to nominate an entity that is capable of being sued to act as defendant and to incur liability on behalf of that organisation.
On 18 September 2019, s 32 of the Children Legislation Amendment Act 2019 inserted ss 27QA to 27QF into the Limitation of Actions Act 1958. Section 27QA(2) permitted an action to be brought ‘on a previously settled cause of action’ and s 27QE(1) gave the court the power to set aside a previous settlement, if satisfied it was ‘just and reasonable to do so’. When first introduced, this provision applied only in respect to settlements made before 1 July 2015. On 26 April 2021, this was extended to settlements made before 1 July 2018.[53]

The evidence relating to Waller Legal’s handling of Mr Pearce’s claim, and particularly his economic loss claim

[53]The amendment was effected by s 44 of the Justice Legislation Amendment (Drug Court and Other Matters Act) Act 2020.

The following comes from the contents of the Waller Legal file, the evidence of Mr Pearce and Dr Waller.
Before I go to the evidence, I should make the following observations.
First, Mr Pearce’s claim was managed by Ms Zelez who was not called as a witness. Her notes are both typewritten and handwritten. They are detailed and the handwritten notes, unbelievably legible.
Dr Waller made no notes relevant to Mr Pearce’s claim. She was not present at either the ISC on 29 November 2016 or the conference with Mr Seccull in his chambers on 22 November 2016. However, Dr Waller was a party to the telephone attendance on Mr Pearce with Ms Zelez on 13 January 2017 in which there was a long discussion as to the settlement of Mr Pearce’s claim — and of which there is another lengthy and legible note made by Ms Zelez.
Second, in the main, the contents of the file and any inferences to be drawn from them are not in issue. Where there are conflicts with the oral evidence, they are identified.
Third, the failure by Waller Legal to call Ms Zelez warrants a Jones v Dunkel[54] inference where appropriate. It was not in issue that Ms Zelez was a highly relevant witness and that her failure to give evidence was unexplained by Waller Legal. She was patently a witness one would have expected Waller Legal to call; or, to put it another way, she was in Waller Legal’s camp.
[54](1959) 101 CLR 298.
Finally, I should deal with the reliability and credibility of the two protagonists: Mr Pearce and Dr Waller — although their paths only crossed on one occasion.
Mr Pearce gave evidence over a period of three days. He was clearly of reasonable intelligence and, not surprisingly, conversant with the way in which litigation in courts operates. His credit was not attacked in any significant way by counsel for Dr Waller. Notwithstanding this, I have the following major reservations as to both his reliability and credibility.
First, I considered his evidence, at times, as to his dealings with Waller Legal, to be based upon his current interpretation and view of events in the light of this proceeding rather than based on a proper recollection of what happened at the relevant time.
Next, I cannot reconcile much of his evidence as to his employment history as being either truthful or accurate. Although he was not tackled in the course of this case (which was understandable), his account of his employment history and his receipt of DHS payments is impossible to fathom and goes very much to, at the least, his reliability as a witness.
One instance was identified by counsel for Waller Legal in their submissions — a period of time (five or perhaps ten years) when Mr Pearce worked in country Victoria as a horse trainer. In the table of his ‘employment history’ prepared by his lawyers for the forensic accountant (set out at [56] above), it is said that he did casual work as a chef and had ‘odd jobs’ at horse racing premises between 1994 and 2007. In other accounts he dramatically downplayed his working life in the equine industry. For instance, Mr Thompson’s evidence was that he did not know about Mr Pearce having a training licence or training horses.[55]
[55]T563.
In fact, it was apparent during the trial that he had held a Victoria Racing trainers licence for some time and during this period had usually had four or five horses in work. Trying to determine exactly how long he had engaged in this occupation was as clear as mud. In his evidence, he said that when he was in a relationship with Sarah (which started in 1994) he held a trainers licence and had rented stables at Seymour and trained or pre-trained horses for four or five years. In his instructions to Ms Zelez at the 22 November 2016 conference with Mr Seccull, she recorded that he worked for ten years as a trainer between 1994 and 2005.[56] Whatever the period, he must have leased stables and employed staff (even if only sporadically). The duration of this occupation and any income derived from it was cloaked in mystery. Whether he made any money, or lost money, from this occupation is totally unexplained.[57] Mr Pearce also gave evidence that ‘years and years later’ (which the context suggests means years after his initial employment in the industry) he had worked for Aquanita Racing.[58]
[56]CB 1938.
[57]T216–217.
[58]T201.
Further, even a guesstimate as to his income from the other jobs (such as a chef) at times during this period of thirteen years is impossible.
Then there is Mr Pearce’s failure to submit any tax returns during his working life and to work for cash, other than when working ‘on the books’, until about 2017.[59] Waller Legal’s notes record that Mr Pearce had no pay slips, tax returns or other financial records.[60] In his evidence, he said that no tax records existed in mid 2016.[61] On any view, it would have told substantially against Mr Pearce being accepted as a witness of credit. Ms Zelez correctly described him as ‘a ghost’.[62]
[59]T259–260.
[60]CB 1199, 2180.
[61]T259.
[62]CB 1201.
This, I regard, as highly significant and going to the heart of his credibility. No psychologist or psychiatrist attributed this conduct to any mental health issue — whether related to the Monivae abuse or otherwise. His counsel did not argue otherwise except to say that this type of conduct occurs from time to time in institutional abuse claims. This is no response. This was clearly a deliberate decision by Mr Pearce to not file tax returns and, at times (never identified with any precision), not to pay tax on his income. The evidence of a person who has lived their life ‘in the black economy’ for over 30 years must be viewed with caution. Notwithstanding his counsel and Dr Morrison’s downplaying of the relevance of this ongoing and flagrant breach of Commonwealth laws, I take a different view — as I expressed during the trial.
There is also the stark divergence in Mr Pearce’s evidence in this trial as opposed to that which he gave in the setting aside application in respect of the advice given by Mr Seccull and Ms Zelez in November 2016 relating to his claim for economic loss. On that application, he said that he received no advice whatsoever from Waller Legal or Mr Seccull as to his potential economic loss claim. This is explained in detail later, but it suffices to say that his evidence on that application as to the advice (or more accurately the asserted lack of it) was patently untrue. This topic, as Ms Zelez’s notes reveal, was canvassed with him on multiple occasions by his legal representatives.
Accordingly, I treat his evidence particularly cautiously — indeed with considerable scepticism. As will become apparent, there are a few parts of his testimony that I accept as being inherently credible; others I reject as being either improbable, false, self-serving or a mixture of all. Where there is a conflict between Mr Pearce’s evidence and other evidence (be it testimony or documentary) I prefer the contemporaneous documentary evidence.
I consider that Dr Waller generally endeavoured to give frank and accurate evidence. However, as will become apparent during the course of these reasons, I have concluded that she is convinced of the propriety and correctness of her position on various issues notwithstanding significant or indeed overwhelming evidence to the contrary. She was, as I perceived it, extraordinarily defensive of any criticism of the firm’s conduct and its reputation. Also, her evidence on at least one critical matter (namely, her discussions with Mr Patrick Monahan, a senior partner at CBP, in respect of the Ellis defence) was vague and unsatisfactory.
I was urged by counsel for Mr Pearce to find that Dr Waller knowingly misled the Court in respect of the conduct of Waller Legal’s defence relating to the advice given to Mr Pearce concerning DHS repayments. I will return to this submission when dealing with Dr Waller’s evidence.
Now, as to the relevant parts of the evidence, I set out below some extracts of the Waller Legal file (including file notes, emails and other correspondence) and the evidence at trial relevant to some of those extracts. Given the wide-ranging allegations of negligence, these are lengthy but do not comprise every discussion or statement recorded by Ms Zelez or made by Mr Pearce. However they are, I think, sufficient to understand Mr Pearce’s attitude to the litigation as well as the thought processes that underpinned the advice as well as the advice given to him by Waller Legal as to his claim, and particularly his economic loss claim.
In 2014 and as a result of his discussions with Broken Rites (an organisation which assists victims of institutional abuse), Mr Pearce contacted Waller Legal as well as Victoria Police.[63] He was advised by Waller Legal in December 2014 to wait until Brother Mamo’s prosecution had concluded.[64]
[63]T230.
[64]T232.
On 17 September 2015, Mr Pearce contacted Waller Legal, and an appointment was made for him to confer with Ms Zelez on 29 October 2015 at Waller Legal’s offices in Collingwood.[65]
[65]CB 2453.
As mentioned earlier, Ms Zelez was responsible for the conduct of Mr Pearce’s claim[66] under Dr Waller’s general supervision. Ms Zelez had the day-to-day management of Mr Pearce’s claim and occasionally referred it to Dr Waller for advice. Sometimes his case was discussed at weekly team meetings chaired by Dr Waller.
[66]T234, 235.
On 27 September 2015, Mr Pearce emailed Ms Zelez stating that: ‘I am looking forward to ending all this by xmas if possible’.[67]
[67]CB 2417.
On 29 October 2015, Mr Pearce met with Ms Zelez at Waller Legal’s offices. Ms Zelez’s notes of the meeting are typewritten and extensive. The notes record his life history, and particularly his experiences at Monivae.[68] The following are selected parts of Ms Zelez’s note, with which Mr Pearce agreed apart from the record of the name of the treating psychologist:[69]
[68]CB 1153–1159.
[69]T241.
If you had asked him during the first three months at Monivae — he would have said he wants to be a Jesuit and get a law degree.
What did they take from him — desire to become a Jesuit and a lawyer.
It was in his heart to become a Jesuit. He may not have made it through the seminary.
Also he was a year ahead of everyone else, his grades were great.
When he told everyone at career day — that he wanted to pursue the law — they all thought that was suitable.
No drugs.
Beer occasionally.
He has always desired to do missionary work.
With the abuse — it was hard to embrace Catholism [sic] and to so [sic] missionary work.
Each occasion that occurred — his heart grew less and less focused on becoming a Jesuit
Law degree – That option/opportunity was taken away from him – because he became dysfunctional, lack of ability to concentrate
School work became too easy to him. In the end didn’t even try.
He gave up – remembers when his grades started slipping.
Form 1 First term – straight A’s.
18 months later – got the lowest grades possible.
No school records.
Mum has looked everywhere.
We’ll see whether the MSC give us anything.
Report comments were very positive first six months. The next months – were about his behavior [sic],
Wanted to be a jockey – when he left school.
Form 4 – he was only 14 or so.
He was living in Richmond – on weekends and holidays – got a job with Bart Cummings. Discussed with Mr Cummings to leave school and become a jockey. He encouraged that. He was allowed to leave school.
Bart Cummings got him a job in the country for six months.
Then he just started looking after horses.
Stable life suited him – loved the horses.
Got his training licence.
Trained some winners – had some luck.
Also worked as a chef.
With the Flemington set-up — took on more progressed jockeys.
Got disillusioned in the country – got a job at Caulfield. Worked for a guy called Jeff Murphy – trained a horse that won the Caulfield Cup.
Then he walked out of there one day.
Walked into a restaurant in Toorak Road South Yarra.
Got a job there and became a chef.
Has been chef-ing since the age of 16 to now.
…
Apart from Janice – no other counselling or psychology.
Since making the statement in October 2014 — his life/momentum has consumed his every waking hour.
Couldn’t sleep last night.
Extremely tiring. Feels like he is running out of steam.
Before Bernard at Broken Rights – hadn’t told anyone. Kept it hidden for all those years.
Wasn’t until the eldest boy turned 11 (kids with Sarah). It was almost a revelation. Someone mentioned boarding school him — and all of a sudden he was seeing everything.
Suppressed it for so long. Then remembered it all.
Told GP briefly. Got a mental health care plan from him. A medical clinic in Mentone.
Never antidepressants or anything like that.
…
Doesn’t stay at jobs very long – most chefs are like that anyway.
His family – keep him extremely busy – four kids under 12. Weekends are spent with them.
Physical health problems – contracted hepatitis C (never taken drugs) – contracted it in 1990. Basically he got very sick with it. Went on a program with interferon. Put him in remission. At that time – they gave him ten years to live. But he’s still here. Gets liver function tests – all good.
…
Biggest impact – 2 main things – still a desire to do missionary work. When he sees that sort of thing – he wants to be involved. Hard with young children doing much else socially. Basically just feels that he could have done better had he stayed at school. He was certainly allegeable [sic] to achieve more than he did. If his education wasn’t impeded by what he did – he would have had a better quality of life.
…
Being a chef – no superannuation – a lot of places pay cash. Wants the money for his retirement. Wants superannuation for the kids. Conscious of his mortality. Wants to help them.
Discussing ADR process. Discussed Ellis.
Discussed issues with ongoing criminal proceedings.[70]
[70]CB 1154–1158.

Mr Pearce argued that the judge’s reasons contain findings as to the existence of facts relevant to the issue in this proceeding — the outcome of the setting aside application (i.e. Mr Pearce’s deed was set aside in part) and the judge’s rationale for the order giving effect to that outcome. Within this he asserted that her Honour had no information as to the reasons why Mr Pearce was advised not to make a claim for economic loss.
Mr Pearce then submitted that the negligence and/or the misleading conduct of Waller Legal caused the adverse finding to be made by Forbes J. And then it was said that the causal consequences of the negligence could have been avoided or ameliorated by the chance offered to Dr Waller to assist by giving evidence in Mr Pearce’s setting aside application, including, as to any link between the Ellis issue and the failure to claim economic loss.
In oral submissions, it was also argued that the insertion of the exclusion of the economic loss claim within the settlement agreement (at the request of Ms Zelez) was another instance of negligence that led to the setting aside application on that head of damage failing.
Waller Legal resisted the application. It contended that the relevant parts of the reasons are limited to what was before the Court in that proceeding. It does not purport to be a complete examination of everything known or told to Mr Pearce by Waller Legal. Rather, the judge was necessarily limited to what evidence Mr Pearce chose to produce.
Accepting, for the moment, that it is open to this Court to admit her Honour’s reasons into evidence, then I fail to see what they have to do with the issues in this case which relate to Waller Legal’s handling of Mr Pearce’s economic loss claim in 2016 and 2017. I remain totally bemused by the breadth of the assertion and its lack of any logical or legal foundation.
It is tolerably clear that the application to set aside the economic loss part of the settlement failed on account of the lack of sufficient evidence to enable the judge to reach an affirmative conclusion that the economic loss part of the claim was abandoned due to a reason connected with the Ellis defence.
Prior to the setting aside application, the file of Waller Legal was provided to Mr Pearce’s lawyers, Rightside, which enabled Mr Pearce to produce any documents from the file that he wished to rely upon at the hearing of that application. Mr Pearce did not subpoena Dr Waller. Unsurprisingly, Dr Waller said that had she been subpoenaed, she would have given evidence.[608]
[608]T755.
It then appears to be part of Mr Pearce’s extraordinary hypothesis that notwithstanding the above, Dr Waller’s failure to volunteer her services as a witness in 2022 was negligent. Dr Waller was no longer retained by Mr Pearce and owed him no duty to do so.
It should also not be forgotten that during the setting aside application, Mr Pearce gave false evidence as to the advice (or asserted lack of it) that he received from Waller Legal and Mr Seccull as to his economic loss claim.
I accept the submission of Waller Legal that, taken at its highest, the judgment in the setting aside application amounts to Forbes J concluding that she did not have sufficient material before her to be satisfied that the Ellis defence was a cause of Mr Pearce not claiming economic loss. The absence of material on that application is irrelevant to the issues in this proceeding.
The reference to economic loss being excluded in the settlement agreement as argued by counsel for Mr Pearce is also irrelevant — it had nothing to do with the ultimate outcome of the setting aside application which turned on the material adduced before the judge relating to Mr Pearce’s acceptance of the MSC offer. Nothing done by Waller Legal in 2022 or in 2016 or 2017 led to the setting aside application failing in part; if it arises from any error, then it is the way in which Mr Pearce elected to conduct his setting aside application.
The reasons should not be admitted. I conclude by mentioning that in reaching this decision I have not adverted to the provisions of ss 91 or 92 of the Evidence Act and their impact upon the proposed tender.

Analysis

It is convenient to deal initially with Mr Pearce’s second counterfactual. This can be done very briefly. The substance of this counterfactual (as far as it can be discerned), is based on the proviso that the Ellis defence was a ‘legitimate barrier’ to Mr Pearce’s claim. I have accepted that in the context of MSC’s conduct of the defence of Mr Pearce’s claim Ellis was not a barrier to the pursuit of his common law claim.
In any event, I accept Waller Legal’s contention that Mr Pearce’s failure to have the settlement set aside could not constitute a reasonably foreseeable consequence of any breach of duty by Waller Legal during the time of its retainer by Mr Pearce.[609] That is because the relevant legislation (ss 27QA, 27QB, and 27QD of the Limitation of Actions Act) which provided the basis to apply to set aside the settlement did not exist in early 2017 and could not have been reasonably anticipated by it.
[609]Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd(The Wagon Mound) [1961] AC 388.
Finally, as the discussion relating to the admission of the reasons of Forbes J demonstrates, it is impossible to see how anything done or not done by Waller Legal had any bearing on the result of the setting aside application and the consequent refusal by Forbes J to set aside the settlement of the economic loss component.
Mr Pearce’s second counterfactual cannot be entertained.
Returning to the remaining counterfactuals and determining whether causation is established by Mr Pearce. This, as the authorities I have referred to demonstrate, undoubtedly, is one of the most difficult exercises a court can, in tort jurisdiction, undertake. In both medical and professional negligence cases, endeavouring to determine the state of mind of an individual faced with a number of hypothetical contingencies and choices they may have or may not have made on the basis of hypothetical advice significantly different to that given at the relevant time (and often several, if not many years, prior to any judicial evaluation) is daunting.[610]
[610]See Hart Security Australia Pty Ltd v Boucousis [2016] NSWCA 307, [131]–[151] (Meagher JA, Bathurst CJ and Beazley P agreeing). Rosenberg (2001) 205 CLR 434, 441–442 [16] (Gleeson CJ) but cf 443–444 [25] (McHugh J).
Mr Pearce relied upon the following extracts from the Waller Legal file to support his first counterfactual:
(a)Mr Pearce’s desire to proceed with his civil case, in the middle of criminal proceedings against Brother Mamo.[611]
(b)in a telephone conversation with Ms Zelez on 20 December 2016, in which there was discussion of the Calderbank offer, Mr Pearce stated that he thought he would ‘present well before a jury’ and that ‘he’d happily gamble that’ — he was ‘willing to gamble that to walk away w[ith] what he thinks’.[612]
(c)in a telephone conversation with Ms Zelez and Dr Waller on 13 January 2017, Mr Pearce is recorded as stating that he is ‘willing to risk it’ (i.e. proceed to Court).[613]
[611]CB 2389, 2406.
[612]CB 1880–1881.
[613]CB 1828.
Mr Pearce contended that, notwithstanding that he did not know what his case was worth, that he had not been told about the contents of the Calderbank letter, the evidence in relation to the public statements of the Catholic Church, and that the Centrelink advice was wrong, he was nevertheless ‘demonstrating clearly an appetite to litigate’.[614]
[614]T1093.
Mr Pearce also relied upon his own evidence as to his intentions if given appropriate advice. During his examination-in-chief, Mr Pearce was asked what he would have said if Waller Legal had advised him that he had an economic loss claim worth something in the range of $1 million but he would have had to issue a court case to get it or to get some of it, Mr Pearce told the Court that he would have said, ‘Go for it.’[615]
[615]T288.
When asked why he would have said ‘Go for it’, he stated the following:
Because that would be so beneficial for myself and my family as a way of um – as a way of compensating me for the trauma and suffering that I’d had to endure because of the abuse and the lack of career opportunities, obtaining a higher education. I would have had – I could have – it would have gone a long way into saying sorry and compensating. Further than that, the children didn’t – didn’t ask for this situation. They deserved better … my children deserve better. You saw the photo up there when I was nine. Potentially how life would have gone. It couldn’t have been any far – any more opposite. You couldn’t make that up. It’s just dreadful. So the opportunity of going to court before a judge where they couldn’t hide anything, everything would have to be put on the table for a judge to decide, yes, that – if that money was possible then I would have given clear direction to go into court.[616]
[616]T288–289.
Mr Pearce was also asked whether he would have maintained that position even if he was told that it was going to be a really tough case to win. He responded as follows: ‘I’ve faced adversity all my life. It couldn’t be any harder than some of the … trauma I’ve faced … I wouldn’t have shied away from it’.[617]
[617]T289.
When asked if he would have still gone to court, even if his economic loss claim was worth less than a million dollars but still a substantial amount, Mr Pearce said: ‘I would’ve gone to court. I would’ve trusted the process of the court and the judge to make a decision rather than the defence lawyers’.[618]
[618]T291.
It was also argued by Mr Pearce that despite his compromised physical and mental health, he has shown significant capacity and tenacity in legal proceedings — as revealed by the subsequent proceeding against MSC, including the setting aside application.
Finally, it was said that Mr Pearce’s physical health (which was said to be a driver for his desire to resolve the case) had improved by the time he settled the case — and particularly that of his Hepatitis C infection and liver condition.[619]
[619]CB 1946.
As previously mentioned, Waller Legal, in response, argued that the counterfactual posited by Mr Pearce was too narrow and missed an essential point. It said that the ‘true’ counterfactual was reflected by the question and answer in his cross-examination that I set out above.
Waller Legal also emphasised Mr Pearce’s desire to settle his claim — expressed on multiple occasions by Mr Pearce to Mr Zelez. It argued that Mr Pearce had been urging Waller Legal to conclude the matter quickly, from almost the first day of engaging the firm. He had been unwell at different stages of the retainer and expressed clear frustration in his correspondence about how long the matter was taking to resolve. If a common law claim had been a realistic option and had been commenced sometime in early 2017, Mr Pearce would have been informed of the likely timeline (with no resolution for many months thereafter) and such timeline would not have achieved Mr Pearce’s desire to wrap the matter up quickly. In those circumstances, he would have accepted the MSC offer of $140,000.
Mr Pearce’s first and remaining counterfactual is too narrow in that it focuses on the parts favouring rejection of the MSC offer (no DHS repayment, no Ellis defence and a viable economic loss claim). This avoids a number of matters that would have been conveyed to Mr Pearce and would have pointed to the desirability of Mr Pearce settling his claim. As framed, this counterfactual invites consideration of only one side of the coin and ignores entirely the downside of proceeding with the claim in the face of the Calderbank offer.
Waller Legal’s so called ‘true counterfactual’ suffers from a similar failing — it focuses solely on the spectre of an adverse costs order in the event of not overcoming the Calderbank offer and ignores those parts of the advice that would have prompted Mr Pearce to push on to litigation.
The true test is whether given the entirety of the advice I have set out, Mr Pearce has established that it is more probable than not that he would have proceeded with the claim.
As it is necessary to determine the hypothetical state of mind of Mr Pearce in early 2017, the best guide is to be found in the contemporaneous statements (if available) made by him from which one may draw an inference as to what course he would have adopted given the right advice. Such an approach conforms with the usual principles of evidence and avoids, it is to be hoped, entering the realm of speculation. In this case, Ms Zelez’s notes and the correspondence between Mr Pearce and Ms Zelez provide a reasonable basis upon which to undertake the exercise.
I draw little, if any, comfort from the after the event statements of Mr Pearce given in evidence. Not only do I think that the underlying premise of a number of the questions asked of him were ill-founded but, given my views as to his credibility, I think his evidence now as to what he would have done can be discounted. Indeed, even if Mr Pearce was a credible witness, problems arise where evidence as to a hypothetical course of conduct is given by a witness with the benefit of hindsight knowing where his or her interests lie.
I have just set out several of the contemporaneous statements relied upon by Mr Pearce and recorded in the Waller Legal file. There are others which demonstrate that mindset — a desire to seek a sum greater than $140,000 and to prepare for a long process ‘so long as’ he has ‘vindication and compensation’.
On the other hand, Ms Zelez, and later Mr Seccull, in 2016 emphasised to Mr Pearce the difficulties surrounding his economic loss claim — not necessarily confined to any question of DHS repayment. In June 2016, Ms Zelez records as part of a discussion with Mr Pearce: the ‘trouble w[ith] hospitality is cash’ and ‘as it appears — he is a ghost’. It is also noted in respect of any argument in relation to the impact on his education caused by the abuse that that link might be a stretch to prove. Ms Zelez described his economic loss claim as ‘crystal ball gazing’ and told him that she would leave quantum to the barrister.
Throughout 2016, Mr Pearce expressed the desire, communicated to Ms Zelez regularly, that he wished to resolve the case. For instance, in July, he was insisting on a settlement to ‘place all this behind [him]’, and that he wanted it ‘settled as soon as humanly possible’. In October, he emailed Ms Zelez, saying that he was ‘looking forward to this being over’.
In the weeks following the ISC (and prior to the Calderbank offer), he remained insistent upon the settlement of the case, however he expressed mixed sentiments from around Christmas in 2016. On 20 December 2016, Ms Zelez’s notes of a telephone conversation with Mr Pearce on that date record that he had said that there was ‘no way’ he would accept the offer at that time of $130,000, felt like he could ‘move on if fair’, and that he would ‘happily gamble that’ but noted that he would be ‘guided by [Waller Legal]’ as it was ‘up to [them] to fund it’. On 26 December 2016, Mr Pearce emailed Ms Zelez saying he was ‘[e]ager to put all this behind [him]’ and instructed her to make a counteroffer of $210,000 with the hope it could be ‘done by end of January’.
In an email of 11 January 2017 (two days before the conference with Dr Waller), he again exhibited concern as to whether to settle or proceed, writing that he understood ‘what battles [he] face[d]’ and that he needed to convince Ms Zelez/Waller Legal ‘first above anyone’, and that while it was in everyone’s interest for him to settle quickly and he understood that, ‘but it is me and I want what I want’.
It is also apparent that in the telephone conference with Dr Waller and Ms Zelez on 13 January 2017, there was wide ranging discussion about the offer (at that time, $130,000) and Mr Pearce was, at least to some extent, equivocating about acceptance. Ms Zelez’s note of the conference included reference to the Calderbank offer and Catholic clergy abuse cases with the note ‘never been a successful sexual abuse case in Australia — reason for that — current state of the law stacked against plaintiff’. It contained numerous notes as to Mr Pearce’s state of mind including ‘if push comes to shove difficult to prove in court. — Probably correct. // Gary agreed… Gary is realistic, not a dreamer… Pleased where it’s @. Not pleased with figure… Gary would be willing to risk it. But we don’t think it’s gonna happen — Gary knows we’re willing to give it a crack… wouldn’t be foolish enough to not get on board… thanks for telling me like it is… he feels like ^ runaway train’.
On 22 February 2017, in an email to Ms Zelez, Mr Pearce expressed real concern over the delay in effecting the settlement.
Notwithstanding, the shifting sands of Mr Pearce’s intentions in terms of settlement or litigation, I am satisfied that during the time from the ISC (November 2016) to the time that he instructed Waller Legal to settle his claim (February 2017), Mr Pearce had a level of dissatisfaction both with the process and with the level of the offers being made by MSC. I think that at the time of the settlement, he was unhappy with the amount he ultimately accepted, but based on the advice he received, determined to accept it.
I am also satisfied that Mr Pearce was convinced that he possessed a viable economic loss claim and that the two matters which significantly influenced his decision to accept the offer of $140,000 were: first, the prospect of having to make a DHS repayment, which militated against a claim for economic loss which he believed he possessed; and second, the strength of the Ellis defence (as he perceived it) which had been reinforced by Dr Waller in the course of the 13 January 2017 telephone discussion.
To the contrary, if he was told (as he should have been) —
(a)that the Ellis defence was, so far as could be reasonably determined at that stage, not being relied upon by MSC and that the only issue was the assessment of his damages; and
(b)that his economic loss claim was viable, and although particularly difficult to assess, had medical evidence to support it; and
(c)that, in all likelihood he would not have to repay any amount to DHS out of an economic loss component;
then each of these factors would have encouraged him to proceed with his claim despite his countervailing desire to resolve the claim as soon as possible.
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.
It follows that I am satisfied that Waller Legal’s negligence deprived Mr Pearce of a valuable opportunity — namely, to pursue the economic loss component of his common law claim against MSC.

Damages

Principles

It was not in dispute that if negligence and causation were established by Mr Pearce, then he had sustained the loss of a valuable opportunity. The remaining issue is the assessment of that loss.
Although the decision in Sellars[620] related to s 52 of the Trade Practices Act 1974 (Cth), it is consistent with the decisions of the High Court in both Malec v Hutton[621] and Commonwealth v Amann Aviation Pty Ltd.[622] The principles derived from these decisions have been applied regularly by the High Court and intermediate appellate courts in subsequent contract and tort cases.
[620](1994) 179 CLR 332.
[621](1990) 169 CLR 638.
[622](1991) 174 CLR 64.

The damage identified by the plurality of the High Court (Mason CJ, Dawson, Toohey and Gaudron JJ) in Sellars was:
the loss of the opportunity or chance of securing commercial benefits which entry into the Pagini agreement and completion of it would have brought. The lost opportunity or chance, assuming it to have value, is a form of economic loss.[623]
[623](1994) 179 CLR 332, 348.
In a separate judgment in Sellars, Brennan J said as follows:
Provided an opportunity offers a substantial, and not merely speculative, prospect of acquiring a benefit that the plaintiff sought to acquire or of avoiding a detriment that the plaintiff sought to avoid, the opportunity can be held to be valuable.[624]
And then said:
To prove the substantiality of a prospect of acquiring a benefit or of avoiding a detriment and what would have been the plaintiff’s actions if the opportunity had been offered, it would usually be necessary to tender evidence to establish the plaintiff’s objectives and the contingencies in the way of their achievement. Evidence of that kind will bear upon both the existence and the value of the lost opportunity.[625]
And:
Although the issue of a loss caused by the defendant’s conduct must be established on the balance of probabilities, hypotheses and possibilities the fulfilment of which cannot be proved must be evaluated to determine the amount or value of the loss suffered. Proof on the balance of probabilities has no part to play in the evaluation of such hypotheses or possibilities: evaluation is a matter of informed estimation.[626]
[624]Ibid 364.
[625]Ibid 365.
[626]Ibid 368 (emphasis added).
The determination the value of such a loss as explained in Sellars was addressed recently by the High Court in Talacko v Talacko as follows:
In the second category, the existence of a loss is sufficiently shown by proving that the tort caused a permanent impairment of the value of the plaintiff's existing right. It is enough that the right is ‘something of value’ and that its value is diminished or lost. An example of loss in this category, given by Brennan J in Sellars, is a plaintiff’s cause of action which becomes statute barred by reason of the negligence of a solicitor. The right may not have been lost but its value has declined, often to nothing, by the expiry of the limitation period. Damages are assessed as the amount by which the value of the right has diminished from the value it would have had if the acts comprising the tort had not been committed. This quantification of loss, by reference to events which did not happen, has been said to have ‘nothing to do with loss of chance as such. It is simply the judge making a realistic and reasoned assessment of a variety of circumstances in order to determine what the level of loss has been’.[627]

Analysis

[627](2021) 272 CLR 478, 496 [43] (Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ) (citations omitted) (emphasis added).

The difficulties in assessing damages in the context of a lost opportunity to pursue a piece of litigation were highlighted in the decision of the Queensland Court of Appeal in Lewis v Hillhouse.[628] In that case, the appellant alleged that his lawyers had been negligent in the conduct of an appeal against his criminal convictions by failing to advance an argument that particular evidence had been wrongly admitted. Keane JA (with whom McMurdo P and Wilson J agreed) rejected the claim on the basis that it amounted to a collateral attack on the appellant’s conviction. However, Keane JA also addressed the question of whether the alleged breach (if proved) would have led to a different result and said as follows:
In the present case, unless the appellant is able to show that the evidence admission point was a good point, ie that it would have been accepted and acted upon by the Court, he will have failed to show that he has lost anything of value. An opportunity to litigate, considered in the abstract and without regard for the prospects of a favourable outcome, is not something of value. Rather, it is an occasion of confrontation, conflict and expense. No litigant suffers any real loss by losing the opportunity to run up dry gullies.[629]
[628][2005] QCA 316.
[629]Ibid [24].
Whilst this passage is directed to the question of whether a loss of opportunity had been proved (as opposed to the assessment of damages as a result of the established lost opportunity), it helpfully illustrates the proposition that endeavouring to assess the value of the lost opportunity caused by a failure to litigate can be fraught with problems. This is all the more so in this case, where Mr Pearce’s economic loss claim although having supportive medical evidence was beset with forensic difficulties.
Mr Pearce submitted that, had a common law claim been issued in first half of 2017 following the exchange of offers between the parties and the exhaustion of the ADR process and the drafting of a statement of claim, the most likely outcome is that Mr Pearce’s claim would have settled in mid to late 2018 prior to trial. Waller Legal did not argue to the contrary.
I accept this submission. It reflects not only common practice and experience in this Court but also accords with Mr Pearce’s expressed desire on multiple occasions in 2016 to resolve the claim as soon as possible. Whilst there was a remote chance that the case might have proceeded to trial, it was vastly more likely that it would settle. On this issue, I agree with Dr Morrison[630] and Dr Waller,[631] and I proceed on that basis.
[630]T937.
[631]T832–833.
Mr Pearce relied on the evidence of Dr Morrison that at a mediation in 2018, it would have been reasonable to settle for a total of $1,140,000 for past and future economic loss,[632] made up of $660,000 for past economic loss (lost income and superannuation) and around $480,000 for future economic loss.[633] Dr Morrison then discounted that by $40,000 arriving at ($1.14 million). Then it was said that in addition to Dr Morrison’s figure, Mr Pearce would be entitled to interest for the loss of the use of that sum — Mr Thompson used a simple 4.5% interest rate which over six-and-a-half years is about $325,000, a total of about $1.465 million. Mr Pearce’s submission was that a settlement number for his loss of earning capacity claim was in the range of about $1.4 million.
[632]Plaintiff’s closing submissions, 76 [398]–[400].
[633]CB 976–977.
I have not accepted Dr Morrison’s opinion on this issue and have rejected Mr Thompson’s calculations. I have taken into account all the matters adverted to in Mr Pearce’s submissions relating to how a jury would have treated Mr Pearce.[634] For the reasons I have expressed as to Mr Pearce’s credibility and reliability, I reject the frankly ludicrous suggestion that the ‘general and unspecified litigation risk’ could be assessed at 10–15%.[635] I think the risks are all at the other end of the scale. The perils relating to the prosecution of Mr Pearce’s economic loss claim were significant and this was correctly appreciated by both Ms Zelez and Mr Seccull and need not be restated.
[634]Plaintiff’s closing submissions, 76 [408]–[409].
[635]Ibid 81 [421].
In Mr Pearce’s written submissions, it was argued that there were factors which weighed in favour of a ‘modified approach’ to assessment in circumstances where Mr Pearce had failed to pay tax or to file tax returns.[636] In particular, it was said that his failure to pay tax was at least in part ‘the consequence of the substantial and irretrievable impact of the abuse on his developmental trajectory’.[637] There is not a shred of evidence to support this proposition. Whilst three of the forensic psychiatrists accepted that Mr Pearce had sustained PTSD as a result of the abuse, none opined that his failure to abide by the income tax laws of the Commonwealth was a result of the Monivae abuse. Indeed, my impression of Mr Pearce when giving evidence over three days was that he possessed sufficient intelligence, unimpeded by any psychological condition, to understand that what he was doing when he failed to pay tax on his income over many, many years was unlawful.
[636]Ibid 78 [408].
[637]Ibid 78 [408(e)].
I also reject Mr Pearce’s submission that a judge or jury ‘would have extended him some understanding and would not have marked him harshly for having worked for cash’.[638] I think that his decision to live his working life until 2017 in the black economy, or as Ms Zelez put it as ‘a ghost’, accompanied by other attacks on his credit, meant that he was never a candidate for a large award of damages for economic loss, nor for a large settlement of his economic loss claim. This is understood by all who practice in this area and have a sensible appreciation of how a jury may treat a case where the integrity of the claimant is demonstrably undermined — notwithstanding the conduct of the tortfeasor. This would have been appreciated by the lawyers for MSC once an economic loss claim was formulated and advanced at a mediation or settlement conference.
[638]Ibid 79 [409].
Mr Pearce’s hypothetical settlement estimate is fanciful and devoid of any relationship to reality. Waller Legal argued that Mr Thompson’s calculations and hypotheses were couched in speculation and should not be accepted. I have reached the same conclusion as I explained earlier.
In some cases an arithmetical calculation can be made and a Sellars discount[639] applied — if appropriate. Such a discount may be made in a case where a court has confidence in the assessment of the loss, and it is possible to identify the loss with a reasonable degree of precision.
[639]See for example Eastwood Retirement Pty Ltd (as Trustee for the Eastwood Retirement Unit Trust) v Joseph Finance and Investment Pty Ltd (as Trustee for the Lifestyle Investment Unit Trust) [2025] VSCA 30, [80]–[90] (Beach, Orr JJA and Matthews AJA).
In Malec v Hutton, Brennan and Dawson JJ said ‘[d]amages founded on hypothetical evaluations defy precise calculation’.[640] In Lonergan v The Trustees of the Sisters of Saint Joseph,[641] a couple of forensic accountants attempted to predict the likely career path and earnings of a farmer who had suffered abuse in his youth. Unlike Mr Pearce’s case, there was reasonable material available to the judge as to possible earnings of the plaintiff and his actual earnings. After referring to the principle in Malec v Hutton, Keogh J undertook the exercise mathematically, noting however that:
Depending on circumstances a plaintiff’s claim may be too speculative for it to be appropriate to use mathematical calculations… as the basis for an assessment of economic loss.[642]
[640](1990) 169 CLR 638, 640.
[641][2021] VSC 651.
[642]Ibid [198] (Keogh J).
For the reasons I have endeavoured to set out, this is just such a case. The estimates of Mr Thompson as to both Mr Pearce’s past earnings and his hypothetical earnings without the abuse are riddled with guesses and speculation to the point of being arguably inadmissible. Ms Zelez’s ‘crystal ball’ may well be a better option.
Given my rejection of Mr Thompson’s arithmetical calculations and Dr Morrison’s opinion, based on them then a ‘realistic and reasoned assessment’[643] or an ‘informed estimation’[644] needs to be made. There is nothing unusual in this approach — indeed it is the basis upon which civil juries in common law trials are charged — even when provided with actuarial figures.
[643]Talacko (2021) 272 CLR 478, 496 [43] (Kiefel CJ, Gageler, Keane, Gordon, Edelman, Steward and Gleeson JJ).
[644]Sellars (1994) 179 CLR 332, 368 (Brennan J).
In reaching an informed estimation, I take into account the following matters which do not need elaboration:
(a)Mr Pearce’s statements as to the nature of, and the effects that, the abuse had had upon him and his capacity to earn;
(b)the opinions of Dr Triggs and Ms Whetton supportive of Mr Pearce’s claim that his earning capacity had been significantly affected by the abuse, including the prospect that further evidence may have been obtained — such as that obtained from Drs Tagkalidis and Jager;
(c)the corroborative evidence from members of his family which supported his claim and would have been adverted to at the mediation or settlement conference; and
(d)the possible provision of an economic loss report in the form of that provided by Mr Thompson (and this is notwithstanding my concerns as to its basis and whether it would ultimately have found its way into evidence).
On the other side of the ledger, are the following:
(a)MSC’s reliance upon Dr Neill’s report and the prospect that it may obtain supportive evidence for that opinion;
(b)MSC’s awareness that Mr Pearce’s work history was clouded in mystery and completely undocumented (with a couple of retrospective exceptions). It would have become apparent that in the past he received a substantial number of DHS payments, often worked for cash, had not paid income tax for much of his working life and had never filed tax returns before 2017. This undoubtedly would have affected MSC and its lawyers in predicting a court’s assessment of Mr Pearce’s veracity and any potential award of damages;
(c)the risk that MSC may change its approach to the claim. I am satisfied that up to the time of settlement it was treating Mr Pearce’s claim as an assessment and that it would have nominated an appropriate defendant if the claim had not settled. However, that would not have prevented it from, at some future time in the litigation, asserting that Mr Pearce needed to prove his case on liability;
(d)the willingness of MSC to offer a sum that reflected an economic loss component, and the value placed upon it;
(e)that Mr Pearce’s lawyers would have advised him, as Ms Zelez and Mr Seccull did, as to the risks of prosecuting his claim before a jury and the cost consequences of his failing to overcome the Calderbank offer;
(f)the lack of any objective evidence (e.g. neuropsychological testing) as to his capacity to work in areas other than those in which he has worked in the past; and
(g)Mr Pearce’s physical ailments unrelated to the abuse which had affected (and would affect) his capacity to work.
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.[645]
[645]In the event that there is any application by Mr Pearce for interest pursuant to the Supreme Court Act 1986, then the portion of this assessment attributable to the post-issue period would need to be taken into account.
Finally, I reject Waller Legal’s submission that Mr Pearce is required to bring into account (or for it to be used as a set off), the amount received by way of settlement of his revived general damages claim —$400,000 inclusive of costs plus retention of the original settlement sum of $140,000. This was said to be necessary because the relevant loss of opportunity was that of the pursuit of a common law claim and he had recovered $540,000 in respect of that claim.
I do not accept the submission. It fails to properly identify the nature of the claim brought in this Court. Mr Pearce’s claim is confined to seeking damages for the loss of opportunity to pursue an economic loss claim. As Mr Pearce contended, by pursuing the setting aside application, he endeavoured to mitigate his loss in terms of any form of claim against Waller Legal. He failed to have the economic loss component set aside and this proceeding is the result. The payment of $540,000 went solely to satisfaction of his claim for general damages.
General damages and damages for economic loss are separate heads of damage and if Mr Pearce’s case had proceeded to verdict, then there would have been discreet awards. Neither would be offset against the other. The manner of assessment of the losses under the two heads are unrelated and there is no question of double compensation.
There is no basis upon which the amount paid by MSC to Mr Pearce in respect of a different head of damage — general damages — can be brought into account in relation to a claim for the loss of opportunity to pursue his economic loss claim.

Conclusion

There should be judgment for Mr Pearce in the sum of $263,000.

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Period	Age	Work
1983	18	Mr Pearce did odd jobs at the stables of Ross McDonald in Mordialloc.
1984	19	Mr Pearce worked in the kitchen at the Melbourne restaurant, Two Faces. He was enrolled at William Angliss at the same time.
1985-1986	20-21	Mr Pearce worked full-time as a chef at Mirabelle.
1987-1990	22-25	Mr Pearce worked as a chef at his mother’s restaurant, Joint Rest. He worked full time as a chef.
1991-1992	26-27	Mr Pearce worked for his grandparents who owned the Pathfinder Motel in Cotham Road Kew. There was a French Restaurant attached to the Motel and Mr Pearce worked in this restaurant. Mr Pearce worked casually as a chef for 20-25 hours per week.
1993	28	Mr Pearce worked at Scallywags in Williamstown and Customs House in Williamstown. He worked full-time. He also worked casually at Rosstown Hotel in Carnegie.
1994-2007	29-42	Mr Pearce did casual work as a chef for VIP agency and Peter Rowlands. He also worked part-time at horse racing premises at Seymour and Pakenham doing odd jobs.
2008-2010	43-45	Mr Pearce worked as a chef at several places including Castellos in Cheltenham, Zooks in Dandenong Hospital and Café Euro in Bourke Street.
2011-2013	46-48	Mr Pearce worked full-time as a chef at the Dandenong Hotel for 2 years. He then worked at the Hampton RSL full-time for 8 months. He later worked casually at the bistro Red Pepper in Bentleigh.
2014-2017	49-52	Mr Pearce worked part-time as a chef at Aero Bar at Moorabbin Airport.
2018	53	Mr Pearce worked part-time as a chef at an Italian restaurant, Hosteria 200.
2019-Dec 2020	54-55	Mr Pearce was unemployed in this period.
Jan 2021-March 2021	55	Mr Pearce worked part-time at the General Store in Edithvale. He worked 9:30-1:30 Monday to Friday.
April 2021 to Jan 2022	55-56	Mr Pearce was unemployed in this period.
February 2022 - present	56	Mr Pearce works as a chef for 20 hours per week at Mordi Pizza Pasta in Mordialloc. This work is ongoing.

Financial year	Taxable income
2011	$9,610
2012	$979
2013	$9,822
2014	$9,240
2015	$11,015

[2025] VSC 324

6 June 2025