Pearce v Waller Legal Pty Ltd (Ruling)
[2024] VSC 779
•16 December 2024
| 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 AJA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21 November 2024 | |
DATE OF RULING: | 16 December 2024 | |
CASE MAY BE CITED AS: | Pearce v Waller Legal Pty Ltd (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2024] VSC 779 | (First revision (17 December 2024): [7]) |
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NEGLIGENCE – Professional liability – Negligence claim regarding adequacy of advice given by lawyer to client in settlement of historical institutional sexual abuse claim.
EVIDENCE – Admissibility – Tendency evidence – Probative value – Application to adduce tendency evidence of advice given by lawyer to other clients in similar claims and table of de-identified settlement outcomes – Advice given to other clients in respect of other settlement outcomes not relevant to the question of reasonableness of advice given to plaintiff – Advice given to other clients in respect of other settlement outcomes does not have strong probative value in respect of the reasonableness of advice given to plaintiff – Tendency evidence inadmissible.
Evidence Act 2008, ss 55, 97.
DP (a pseudonym) v Bishop Bird [2021] VSC 453, applied; Hughes v The Queen (2017) 263 CLR 338; DPP v Roder (a pseudonym) (2024) 98 ALJR 644, considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Hammond SC | Rightside Legal |
| For the Defendant | Mr P Solomon KC with Mr M Tehan | Lander & Rogers |
HIS HONOUR:
Gary Pearce, the plaintiff, instituted a proceeding against his former solicitors, Waller Legal Pty Ltd (‘Waller Legal’) in February 2023.
Waller Legal is an incorporated legal practice which holds itself out as being experienced in claims for victims of crime and those who have endured sexual assault or child abuse.
In October 2015, Mr Pearce retained Waller Legal to act on his behalf in respect of a claim against the Missionaries of the Sacred Heart (‘MSC’) in respect of abuse allegedly inflicted upon him by two MSC brothers whilst a student at Monivae College, Hamilton, in 1977 and 1978.
Mr Pearce’s claim was managed by Dr Vivian Waller, director and principal solicitor of Waller Legal.
Waller Legal engaged in an Alternate Dispute Resolution process (‘ADR’) with MSC prior to issuing a proceeding on behalf of Mr Pearce.
In March 2017, on Dr Waller’s advice and in the course of ADR, Mr Pearce’s claim against MSC was settled for $140,000 inclusive of costs. Clause 9 of the deed of release acknowledged that no claim for economic loss was made by Mr Pearce, and the settlement sum did not include an economic loss component.
In precis, Mr Pearce’s claim in this Court is that Dr Waller’s advice as to the settlement of his claim was inadequate and, in particular, that he should not have been advised to abandon his claim for economic loss.
The trial of Mr Pearce’s proceeding is now fixed for 28 January 2025, and the issues have been crystallised by a joint statement of issues and written opening statements of each of the parties.
In October 2024, Mr Pearce’s lawyers filed a notice of intention to adduce tendency evidence (‘the notice’) pursuant to s 97(1)(a) of the Evidence Act 2008 (‘the Act’).
This ruling concerns whether Mr Pearce should be permitted to rely upon the evidence set out in the notice.
The alleged tendencies and the tendency notice
The evidence which Mr Pearce wishes to adduce and set out in the notice goes solely to the question of the alleged negligence of Waller Legal. In the joint statement of issues, the following are said to be the issues that arise in relation to negligence:
Did Waller Legal breach a duty of care owed to Mr Pearce by reason of any one or more of the following:
(a)failing to quantify Mr Pearce’s claim for economic loss;
(b)failing to advise Mr Pearce as to the strength and value of his claim for economic loss;
(c)failing to investigate, make, pursue and/or negotiate a claim for economic loss;
(d)failing to advise Mr Pearce that it was in his best interests to pursue a claim for economic loss;
(e)settling, or advising Mr Pearce to settle, for $140,000;
(f)making statements to:
(i) Counsel;
(ii) the lawyers for the Missionaries of the Sacred Heart;
without, or contrary to, Mr Pearce’s instructions;
(g)failing to advise Mr Pearce (and Counsel) that any repayment to Centrelink if he pursued an economic loss claim was likely nil;
(h)failing to recommend to Mr Pearce that he commence a common law claim in the Courts?
The notice asserts two relevant tendencies of Dr Waller :
a.Tendency 1: in the resolution of historical childhood abuse claims, the tendency to recommend and advise clients who have common law claims for injuries from childhood sexual abuse, to engage in an alternative dispute resolution process (ADR), or an out of court settlement process, rather than to pursue a litigation process commencing with the issue of a Writ.
b.Tendency 2: in the resolution of claims for injuries incurred from historical childhood sexual abuse a tendency to recommend and advise plaintiffs not to claim compensation for loss of economic capacity caused by their injuries.
By Table A, the notice then sets out the allegations and the facts in issue to which the tendency evidence was said to relate, as follows:
(a) in relation to the ADR process:
·Did the defendant recommend and advise the plaintiff to pursue an ADR or out of court settlement process?
·Did the defendant provide the plaintiff with advice and alternatives to an ADR or out of court settlement process?
·Did the defendant provide the plaintiff with advice on the relative merits of ADR or an out of court settlement process, and a litigation process commencing with the issue of a writ, including as to the likely quantum range obtainable from each course?
(b) as to Dr Waller’s advice about economic loss and the approach to claiming economic loss:
·Did the defendant recommend and advise the plaintiff to pursue a claim for loss of economic capacity?
·Did the plaintiff have a valuable claim for economic loss that the defendant failed to recommend and advise that the plaintiff pursue as part of his claim?
·Did the defendant assess the plaintiff’s claim for loss of economic capacity and advise him of the quantum of the claim?
By Table B, the notice then sets out particulars of conduct in relation to the evidence of nine potential witnesses (‘the tendency witnesses’) who were past clients of Waller Legal and attaches documents relevant to their dealings with Waller Legal (and in particular, Dr Waller) in annexures A to I. It is asserted that Waller Legal previously acted for the tendency witnesses in advising on settlement and the giving (or not giving) of advice concerning the relative merits of ADR or an out of court settlement process and the prosecution of economic loss claims.
Annexure J is titled ‘Confidential Waller Legal Miscellaneous Catholic Past Settlement Chart – column headed “LOE claimed?” (the ‘past settlements chart’). The chart contains de-identified information in respect of 22 past clients of Waller Legal with columns headed ‘Client Name’ (redacted), ‘CCI Matter?’, ‘Entity’, ‘Offender/s’, ‘Date of abuse’ (some redaction), ‘Allegations’ (redacted), ‘Medical diagnosis’, ‘LOE claimed?’, ‘Settlement amount’, ‘Date of settlement’ and ‘Notes’ (most of which are redacted). It does not contain details of any advice given. In respect of the 22 claims contained in the past settlement chart, the notice asserts that Waller Legal did not claim economic loss in any of claims listed on that chart which resulted in settlement amounts ranging from $60,000 to $167,000 inclusive of costs made between November 2013 and late 2016.
Other than asserting that no economic loss was claimed by the unidentified persons, it is not at all clear as to the relevance of the material set out in the past settlements chart. Notwithstanding that this document does not comply with reg 8(1) of the Evidence Regulations 2019, I propose to consider it — albeit that it is devoid of any real detail.
The Evidence Act and the tendency rule
Section 55(1) of the Act defines ‘relevant evidence’ in a proceeding as follows:
55 Relevant evidence
(1)The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.
The tendency rule is set out in s 97 of the Act:
97 The tendency rule
(1)Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person’s character or otherwise) to act in a particular way, or to have a particular state of mind unless—
(a) the party seeking to adduce the evidence gave reasonable notice in writing to each other party of the party’s intention to adduce the evidence; and
(b) the court thinks that the evidence will, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value.
(2) Subsection (1)(a) does not apply if—
(a)the evidence is adduced in accordance with any directions made by the court under section 100; or
(b)the evidence is adduced to explain or contradict tendency evidence adduced by another party.
‘Probative value’ is defined in the Dictionary to the Act as follows:
probative value of evidence means the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue;
For the purpose of the adducing of tendency evidence in a civil proceeding of this type, I adopt what I said in DP (a pseudonym) v Bishop Bird as to the conditions that must be met:[1]
[1][2021] VSC 453, [20] (citations in original).
•First, the tendency and the fact (or facts) in issue which it is said to prove must be identified.[2] That evidence, if accepted, must rationally affect the assessment of the probability of the existence of the fact (or facts) in issue.[3]
[2]Hughes v The Queen (2017) 263 CLR 338, 348–9 [16] (‘Hughes’).
[3]Act s 55.
•Second, the tendency evidence (which should be viewed as a whole, and not piecemeal,[4] and in light of the other evidence adduced in the case[5]) must be capable of sustaining the conclusion that the relevant person had an identified tendency to:
(a)act in a particular way; and/or
(b)have a particular state of mind.[6]
•Third, the tendency must be one of some specificity and not at a high level of generality.[7] This means that a feature or features of the tendency evidence must link that evidence with the allegation(s) in the proceeding.[8]
•Fourth, it is necessary to establish that the tendency evidence is of significant probative value.[9] So it is fundamental that the evidence increases the likelihood of the asserted conduct of the relevant person as alleged to such an extent that it is of significant probative value.
•Fifth, and for completeness, the common law test for propensity is to be ignored.
•Finally, if the tendency evidence is shown to have significant probative value, this (in an appropriate case) must not be substantially outweighed by the danger that the evidence might either be unfairly prejudicial to a party; be misleading or confusing; or, cause undue waste of time in the proceeding, such that the court is persuaded to exercise its discretion to exclude the evidence irrespective of its admissibility.[10]
[4]R v Bauer (a pseudonym) (2018) 266 CLR 56, 88 [59] (Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ) (‘Bauer’).
[5]Ibid 73 [22].
[6]Act s 97.
[7]McPhillamy v The Queen (2018) 92 ALJR 1045, 1052 [36]–[38] (Edelman J) (‘McPhillamy’); Hughes 363 [64] (Gageler J).
[8]Hughes 363 [64] (Gageler J); Bauer 87 [58]; McPhillamy 1051 [32] (Kiefel CJ, Bell, Keane and Nettle JJ).
[9]Act s 97(1)(b). The majority in Hughes suggests that whether evidence has ‘significant’ probative value turns on its impact upon the fact-finding exercise: ‘significant’ probative value is ‘lower than … “substantial” probative value; but … [the] evidence must still be “important” or “of consequence” to the assessment of the probability of the existence of a fact in issue’: at 368–9 [81]. See also Gageler J at 370 [86]: the impact must be ‘significant enough to justify the risk of cognitive error which tendency reasoning entails. The statutory standard of “significant”, and its non-statutory but helpful synonyms “important” and “of consequence”, are best understood and applied purposively in that light’.
[10]Act s 135. This is not a requirement of s 97; rather, it flows from s 135 and is often (but not always) relied upon to argue the exclusion of the tendency evidence.
To this I would add what was said by the High Court earlier this year in DPP v Roder (a pseudonym), as to the underlying principle:[11]
In Hughes v The Queen, the majority in this Court explained that with tendency evidence, ‘[t]he trier of fact reasons from satisfaction that a person has a tendency to have a particular state of mind, or to act in a particular way, to [determining] the likelihood that the person had the particular state of mind, or acted in the particular way, on the occasion in issue’ (emphasis added).[12] The process of reasoning involved is similar to the manner in which an assessment of the significant probative value of the evidence is undertaken by the trial judge for the purpose of determining its admissibility, namely, by first assessing the strength of the evidence in establishing the tendency and then considering ‘the extent to which the tendency makes more likely the elements of the offence charged’.[13]
[11](2024) 98 ALJR 644, 650 [24] (Gageler CJ, Gordon, Edelman, Steward, Gleeson, Jagot and Beech‑Jones JJ) (citations in original).
[12]Hughes v The Queen (2017) 263 CLR 338, [16]; 92 ALJR 52.
[13]Hughes v The Queen (2017) 263 CLR 338, [64]; 92 ALJR 52.
Submissions of the parties
Mr Pearce submitted that the evidence of four of the tendency witnesses demonstrated that Waller Legal ‘had a general policy (based on a misunderstanding of the law) and consequently a pre-disposition, not to claim economic loss where Plaintiffs had been sexually abused as children’. It is then said that the evidence of the other five tendency witnesses (and the past settlements chart — which I treat with caution) are examples of Waller Legal’s clients who did not make economic loss claims, and that in some of those cases there was ‘strong evidence to support an economic loss claim including supportive psychiatric evidence as to the injuries, causation and the impact of the abuse on the Plaintiff’s education and employment’.
The submissions further note that of the 22 claims set out in the past settlements chart there was no claim for loss of earnings or loss of opportunity in 12 of those claims; in eight of the claims, loss of earnings was ‘not formally’ claimed; and in two claims, ‘loss of opportunity was claimed’.
The basis asserted for the use of the tendency evidence is as follows:
In fact, a very substantial claim for loss of economic capacity could properly and confidently have been submitted to the MSC as part of the Plaintiff’s claim. Even if relevant concessions were made, a substantial claim could still be maintained. Why would that not be done unless the Defendant’s understanding of the underlying law was misconceived? That is the point that the Plaintiff seeks to make by use of the tendency evidence.
Waller Legal contends that there are a number of reasons why the matters the subject of the notice do not satisfy the statutory test. First, the notice is ‘entirely unclear’ and fails to address a basic issue — what is the fact in issue to which the evidence of the various tendency witnesses and the past settlements chart relate? The issue in the case, so it argues, is the adequacy of the advice given by Waller Legal — not the content of the advice which the alleged tendencies go to — and that advice given in other cases ‘cannot rationally bear on the adequacy of the advice in this case’.
Second, as to the basis identified by Mr Pearce in [24] above in respect of the use of the tendency evidence, Waller Legal submits that the issue identified by rhetorical question is a ‘false issue’ and ‘whether or not the defendant had a generally misconceived understanding of the law is not the issue in this case’. Rather, so Waller Legal asserts, ‘[t]he issue in this case is whether the advice given to the plaintiff was negligent, which calls for an objective assessment of the advice: the defendant’s subjective understanding of the law is not relevant to that assessment’.[14]
[14]Waller Legal’s emphasis.
The third point made by Waller Legal is that there is no pleaded issue about a tendency: the statement of claim identifies only matters specific to the plaintiff and does not make any allegation of Waller Legal having ‘some generally negligent system of dealing with clients (or similar)’. The absence of such pleading underscores the absence of a fact in issue to which the tendency evidence would be significantly probative.
The final point made by Waller Legal is that even if the content of the advice given to the Mr Pearce were a ‘true matter in issue’,[15] the Court is not significantly assisted by the evidence in respect of other clients as each case turns on its own facts and circumstances. Similar advice given to other clients would not assist the Court to form a view as to whether it was more or less likely that Mr Pearce received the same advice and, in any event, the notice only identifies nine clients.
[15]Waller Legal’s emphasis.
Disposition
The first, second and final points of Waller Legal’s submissions should be accepted.
The evidence sought to be led pursuant to the notice fails at the first hurdle, namely, the relevance of the tendency evidence to the issues at trial.[16]
[16]See s 55 of the Act; Phillips v The Queen (2006) 225 CLR 303, 319 [50] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ).
It is patent from Waller Legal’s defence and opening statement that there is no issue in the case that Dr Waller advised Mr Pearce to participate in ADR and to settle the case with no allowance for economic loss. These are the two asserted tendencies in the notice (see [12] above) — both are non-issues and do not satisfy the s 55 threshold. That really is the end of Mr Pearce’s argument.
In any event, as Waller Legal submits, in the claim in negligence the primary issue is whether, in the circumstances of this case, viewed objectively as at the time (or times) advice was given, Dr Waller acted reasonably in giving such recommendation(s) to Mr Pearce. Whether evidence is admissible as tendency evidence is a question of fact which must be ‘answered in light of the facts and circumstances of the particular case’.[17] Advice given to others is irrelevant to determining the reasonableness of the advice given to Mr Pearce.
[17]KRI v The Queen [2011] VSCA 127, [57] (Hansen JA, Buchanan and Tate JJA agreeing). See also RHB v The Queen [2011] VSCA 295, [18] (Nettle JA, Harper JA agreeing).
The following illustrates this point: Assume Mr Pearce establishes that it was Dr Waller’s practice in cases of historical sexual abuse to engage in ADP and to endeavour to settle cases of historical sexual abuse without an economic loss component. This may, or may not be, entirely acceptable practice in the context of a particular claim. The determination of what a reasonable solicitor would have done in the circumstances of a particular client is, patently, case specific. The use of a plethora of other examples relating to settlements involving different clients and different tortfeasors in different circumstances, and with different instructions from the client, to try to demonstrate a particular ‘MO’ (modus operandi) is irrelevant to the determination of the issues in this case.
The written submissions of Mr Pearce identify another basis (not mentioned in the notice) for allowing the tendency evidence to be adduced: a tendency on the part of Dr Waller to misunderstand the law. Even if this were to be accepted, this also goes nowhere in determining whether the advice as to settlement of Mr Pearce’s claim was reasonable or otherwise.
As the submissions of Waller Legal postulate, the test of reasonableness in a lawyer’s negligence claim is measured by what a competent solicitor in Dr Waller’s position dealing with Mr Pearce’s case would have advised. The issue is Dr Waller’s approach to this case — what she did in relation to other cases is neither here nor there. If Dr Waller is wrong about the law in her approach to Mr Pearce’s claim then that will emerge as the evidence unfolds at the trial — it is not established by calling nine witnesses to say what advice she gave them in their particular circumstances.
If I am wrong about this and the evidence of the tendency witnesses (and the de-identified outcomes of claims by unnamed persons set out in the past settlements chart) has some rational probative value to the determination of the issues at trial, for the reasons set out above the tendency evidence does not have ‘significant probative value’ in determining whether Dr Waller’s advice to Mr Pearce was reasonable or otherwise. In fact it falls far short. Section 97(1)(b) is not satisfied.
In summary, the question to be resolved at trial is whether Dr Waller’s conduct of Mr Pearce’s claim and advice given to him was reasonable. The evidence of the tendency witnesses and the unnamed persons in the past settlements chart to whom Waller Legal gave advice in their cases does not affect, in any rational way, the question of whether its conduct and advice in Mr Pearce’s case was good, bad, or indifferent.
The evidence the subject of the notice is inadmissible.
Subject to hearing from the parties, Mr Pearce should pay Waller Legal’s costs of this application, which should be stayed until the completion of the proceeding.
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CERTIFICATE
I certify that this and the 9 preceding pages are a true copy of the reasons for judgment of Justice J. Forrest of the Supreme Court of Victoria delivered on 16 December 2024.
DATED this sixteenth day of December 2024.
Alec Deasey (Associate)
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