Clark and Doherty v The State of New South Wales

APPLICANTS/RESPONDENTS ON THE MOTION Mr P M Hall QC with Mr J Fernon of counsel

SOLICITOR Emery Partners Solicitors CESSNOCK LEGAL REPRESENTATIVES: RESPONDENT/APPLICANT ON THE MOTION Mr P Menzies QC with Ms E Brus of counsel

SOLICITOR Crown Solicitor's Office SYDNEY

JUDGMENT: - 21 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

PERRY CLARK v STATE OF NEW SOUTH WALES Application under s106 of the Industrial Relations Act 1996

TERRENCE EDWARD DOHERTY v STATE OF NEW SOUTH WALES Application under s106 of the Industrial Relations Act 1996

1 The applicants have initiated these matters by seeking relief under the unfair contract provisions contained in Part 9 of the Industrial Relations Act 1996. This interlocutory judgment concerns motions filed by the respondent in each of these matters seeking to strike out the summons for relief for want of jurisdiction. The motions were contested.

2 In keeping with the usual approach to matters of this kind the evidence of the applicants, as contained in the summary of facts in each summons for relief has been "taken at its highest" in the applicants' cases. That is to say, the allegations of fact contained in the summonses are accepted as if they are established.

3 The background to each summons is similar. The applicants were teachers at the Broadmeadow High School. Mr Doherty was a history teacher with 35 years' teaching experience up to his retirement in March 1998 on the basis of total and permanent incapacity. Mr Doherty now receives $290 per week as workers' compensation. Mr Clark had 24 years' teaching experience and was teaching in the English department up to his being medically retired in August 1998. He now receives a pension.

4 The medical retirement of each of the two teachers arose from circumstances relating to another teacher at the school who, after complaints from a number of female students, was convicted of sexual offences and sentenced to a term of imprisonment.

5 Mr Clark, in 1996, had become aware of rumours relating to this teacher. He reported them to other teachers in the staff room, to be informed that the head teacher of the department in which the errant teacher was employed and also the principal of the school were aware of the rumours and were trying to do something about them. Mr Clark was subsequently interviewed about his knowledge of these matters.

6 Mr Doherty went further, making complaints to leading teachers in the relevant department; to the Deputy Principal of the school and to other teachers; to a member of a Quality Assurance Team from the Department of Education in Newcastle who visited the school and interviewed the teachers at random. Mr Doherty's complaints were either deflected, somewhat aggressively in one case, or, he understood, not responded to. On 13 November 1996 he made a complaint to the Police Royal Commission and subsequently made a statement thereto. On 12 February 1997 Mr Doherty gave evidence of these matters to the Royal Commission. The Principal of the school was due to give evidence at the Royal Commission on 17 February 1997 but committed suicide on 16 February. This led to the applicants and other teachers who had been somewhat outspoken about the issues receiving comments indicating a perception by others of the complainants bearing some responsibility for the Principal's suicide.

7 In May 1997 Messrs Clark and Doherty were both charged departmentally. The charges were of negligence in the discharge of duty, the particulars of which alleged failure to ensure relevant knowledge or suspicion relating to a particular teacher were identified to the appropriate authorities.

8 These charges were ultimately held to be "not proven". The aftermath was that the experience had severe psychological and physical effects upon the applicants and led eventually to their medical retirements.

Relief Sought 9 Each summons seeks the same orders as follows: 1. An order declaring that the contract or arrangement between the applicant and the respondent is unfair.

2. An order that the contract or arrangement between the applicant and respondent be varied from 1 December 1996 to provide that the respondent will not charge the applicant with any breach of discipline without a full and proper investigation to determine whether there are reasonable grounds for such a charge.

3. An order varying the contract or arrangement between the applicant and the respondent from 1 December 1996 to provide that should the respondent fail to undertake a full and proper investigation prior to charging the applicant with a breach of discipline that the respondent will pay to the applicant upon the applicant's retirement an amount equal to the present value on that retirement date of the applicant's salary until the age of 65 years.

4. An order for the payment of money which the Commission considers just in the circumstances of the case.

5. An order that the respondent pay the applicant the cost of the proceedings.

10 The particulars of the manner in which any money amount is claimed are as follows: Mr Clark:

At the time the applicant was retired on medical grounds the applicant was 46 years old and intended to work until the age of 65 years. The applicant was then receiving approximately $49,000.00 per annum. The applicant presently receives a pension of approximately $600.00 per week.

(1) $49,000.00 salary as indexed for 16 years, less the present value of the applicant's pension to retirement.

(2) The difference between the equivalent salary of the applicant from the date of retirement to date of hearing less the value of the applicant's pension payments over the same period.

(3) The applicant claims an amount which the Commission considers just in the circumstances of the case compensation for the pain, loss and suffering occasioned to the applicant by the conduct of the respondent.

At the time the applicant was retired on medical grounds the applicant was 58 years old and intended to work until the age of 65 years. The applicant was then receiving $896.00 per week gross. The applicant presently receives a workers compensation of $290.00 per week gross.

(1) $896.56 per week salary for seven (7) years, less the present value of the applicant's compensation payments to retirement plus increments.

(2) The applicant claims an amount which the Commission considers just in the circumstances of the case in compensation for the loss and suffering occasioned to the applicant by the conduct of the respondent.

Section 106 11 Section 106 of the Industrial Relations Act is as follows:

106(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract.

106(2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason.

106(3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.

106(4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force.

106(5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case.

The Motion 12 The respondent's motion, which was heard by consent as an interlocutory matter, seeks an order that the proceedings be struck out, with costs. The grounds and reasons raised by the motion include a contention that there is no jurisdiction in the Commission to make the orders sought by the applicant in the summons for relief or, in the alternative, if there be jurisdiction it ought not be exercised. The grounds and reasons also include:

· The matter as pleaded clearly seeks a remedy for personal injuries allegedly suffered by the applicant during the course of his employment with the Respondent and therefore falls outside the provisions of s.106. · There exists a specific statutory remedy for personal injury allegedly suffered during the course of employment, such remedy being provided by the Workers Compensation Act 1987 which regulates the measure of calculation of damages (Part V Div. 2 of the said Act) · The jurisdiction under s106 does not extend to matters where the contract has ended as a result of a workplace injury.

13 The respondent's argument proceeded upon the basis that s106(5) of the Industrial Relations Act, in relation to a contract as defined which the Commission has found to be an unfair contract (s106(2)) and which has been declared wholly or partly void, or varied (s106(1)) limits an order for the payment of money to a payment "in connection with any contract declared wholly or partly void, or varied . . . ". While it was accepted these words are of wide import, their meaning depends on their context and the purpose of the statute to which they appear (Burswood Management Ltd v Attorney General (Cth) (1990) 23 FCR 144 at 146; R v Orcher (1999) 48 NSWLR 273 per Spigelman CJ at 279).

14 It was also accepted that under s106(2) the court is entitled to find a contract is unfair at the time it was entered into or that it subsequently became an unfair contract because of the conduct of the parties, any variation of the contract or any other reason. However, that does not mean in context, reading the Industrial Relations Act as a whole, that an order for the payment of money for personal injury can be described as a payment for money "in connection with" the contract.

15 It was submitted that the claims here seek damages specifically and only for personal injury. Accordingly, the judgments of the Commission (in Pullen v R&C Products (1994) 60 IR 183 per Marks J and King v State Bank of New South Wales [2000] NSWIRComm 229, 6 December 2000 per Marks J) provide no assistance because those cases considered the discretionary jurisdiction of the court to award damages for personal injury within the context of a broader claim made pursuant to s106(3).

16 It was submitted that s106(3) is the leading provision and s106(5) is subordinate thereto. Thus any payment ordered to be made in connection with the contract must be related back to the terms of the contract and not to the law of tort, which arises quite independently of the contract. It was not the purpose of the legislature to create (through s106) a new forum for claims for damages for personal injury.

17 Common law damages are only available to injured workers in the modified form pursuant to Part 5 of the Workers Compensation Act 1987. The definition of damages under s149 is sufficiently broad to encompass the claim in these proceedings. Further, s151E(3) makes it clear that Division 3 of Part 5 of the Workers' Compensation Act 1987 will apply to the calculation of damages in this case. Section 151E(3) reads as follows: This division applies to an award of damages in respect of an injury caused by the negligence or other tort of the worker's employer even though the damages are recovered in an action for breach of contract or at any other action. 18 It was submitted that if the Court has jurisdiction then it will be necessary for the Court to apply Part 5 of the Workers Compensation Act 1987 to the calculation of any damages that are awarded.

19 On that basis alone and whether or not the court actually has jurisdiction, the court ought exercise its discretion not to hear this matter which ought be heard in a jurisdiction where these matters are heard on a regular basis and which has appropriate rights of appeal.

20 Mr Menzies of Queen's Counsel who, with Ms Brus of counsel, appeared for the respondent, sought leave, which was granted, to argue an additional ground, the applicants being provided with an opportunity to make such further submissions in writing as they might be advised due to short notice of the point. This point was that s97 of the Teaching Service Act 1980, which preserves the Crown's right to dispense with the services of any persons employed in the teaching service, provides to the effect that an officer or a temporary employee whose services are dispensed with shall not be entitled to any compensation by reason thereof. This was said to be a bar to an order for the payment of money pursuant to s106 of the Industrial Relations Act. Subsequently, written submissions in reply were filed by Mr P M Hall QC and Mr Fernon of counsel, who appeared for the applicants.

21 It was submitted that in the case of both Mr Clark, who was medically retired in August 1996 pursuant to s76 of the Teaching Service Act and Mr Doherty, who was retired totally and permanently incapacitated in March 1988, the consequence was that their services were dispensed with.

22 The second additional argument advanced by the respondents refers to the judgment of the High Court in Sullivan v Moody; Thompson v Connon [2001] HCA59, 11 October 2001 in which it was held there was no duty of care from the defendants, who were under a statutory obligation to investigate allegations of sexual impropriety involving children, towards the fathers who came under suspicion and suffered psychological damage as a result of the investigations. Where there is a statutory duty to investigate which conflicts with a common law duty of care, the duty of care gives way to the statutory duty.

23 It was submitted that the policy which approves the High Court's decision in Sullivan v Moody applies equally to a consideration of whether or not a contract could be relevantly unfair if an investigator, as has been asserted here, did not investigate properly.

24 The applicants' submissions against the motion were to the effect that the respondent bears a heavy burden and must demonstrate the claims made in the summons will not succeed; that they are manifestly faulty so as to not admit of argument - see Nagle v Tilberg (1993) 51 IR 8 at 13; Bell v Macquarie Bank (1998) 83 IR 431 and Beahan v Bush Boake Allen Australia Limited (1999) 47 NSWLR 64. Further, it was argued that, according to the principle adopted in Nagle v Tilberg, it was premature to determine the matters raised by the motion.

25 The applicants allege the contract and arrangement in issue was an unfair contract under s106, unfair in its terms and in its operation. The unfairness manifested in the unfair conduct of the respondent, which used its position to the disadvantage and detriment of each applicant. It is a typical kind of s106 case; it is plain that the respondent's submission is limited to the applicants' claims for a payment of money and does not go to other claims for variation of the respective contract of employment. This is hardly surprising. Those claims are utterly conventional and squarely within jurisdiction of the Commission under s106. It follows the respondent's motion cannot succeed and should be dismissed on this ground alone.

26 It was submitted the respondent's characterisation of the claim for the payment of money as a claim for personal injury is not appropriate. The claims made for lost salary and other benefits between the actual date of retirement and the date anticipated for retirement in each case are closely connected to the unfairness alleged. This is precisely the kind of claim that may be the subject of an order by the Commission for a payment of money (cf Barwick CJ in Brown v Rezitis (1971) 27 CLR 157 at 165 and Menzies J at 170).

27 These claims are closely analogous to claims made on a regular basis in the Commission for salary and other benefits lost because of unfair termination. Orders for the payment of redundancy benefits are similarly analogous.

28 Even if this connection between the unfair contract alleged and the payments of money claimed is not apparent at this stage of the proceedings, it is respectfully submitted that it is not open to conclude, with confidence, that the claims made by the applicants could not succeed, are manifestly faulty or do not admit of argument - cf Nagle v Tilburg (1993) 51 IR 8 at 13. In these circumstances the respondent's motion should be dismissed.

29 In the circumstances that apply in these cases, even if s151E of the Workers' Compensation Act 1987 applied as is submitted by the respondent, it would only operate to modify, but not eliminate, the applicants' claims.

30 For s151E of the Workers Compensation Act to affect these cases in any way the Commission would need to be satisfied, as a starting point, that all of the prerequisites of the section applied. It would be necessary, for example, to conclude that an order under s106(5) was "an award of damages", that it was "in respect of an injury", and that the injury was "caused by the negligence or other tort of the worker's employer". This requires that the Commission undertake a factual inquiry to determine whether any of the pre-requisites of s151E apply, and if so, whether there is any impact upon the orders that may be made by it. All of these matters are inappropriate for consideration at this interlocutory stage.

31 As to the respondents' argument relying upon s97(2) of the Teaching Service Act it was argued that this provision was inapplicable in the circumstances of this case because it was concerned with the dismissal of a person from the Teaching Service. This is clear from the phrase "being dispensed with" and the context in which it appears in s97 and in particular s97(1).

32 Even if s97 is not limited to a dismissal it is implicit in the respondent's submission that the applicants were involuntarily terminated - "dispensed with". Section 76(1) of that Act envisages retirement will be caused by the Director-General, that is, it will be non-consensual. There is no evidence to suggest that is the case here.

33 In any event the reliance made by the respondents on s97 indicates a misunderstanding of the basis for the relief claimed by the applicants. The applicants do not claim compensation "by reason of" their services being "dispensed with". The fact of the applicants' services having come to an end is a relevant factor but the compensation claim is not made because services were dispensed with. The applicants' claim is concerned with the unfairness of the contract or arrangement which is antecedent to and does not necessarily depend on the cessation of each applicant's employment.

34 Section 5 of the Teaching Service Act makes clear that the Act does not amend or affect the provisions of the Industrial Relations Act in the absence of an express provision. No part of the Act, including s97 expressly provides that the Industrial Relations Act does not apply. Accordingly, if the services of each applicant were dispensed with within the meaning of that phrase in s97(2), that section has no bearing on the applicants' claims in these proceedings.

Conclusions 35 The power to make an order for the payment of money in a matter in which the Commission has jurisdiction under s106 derives from s106(5).

36 In Brown v Rezitis, Barwick CJ spoke of the limitation on the making of orders for the payment of money imposed by s88F(2) of the Industrial Arbitration Act (1940), the forerunner to s106(5) (which appears to me to be in somewhat plainer English but to no different effect) as follows: It seems to me that the expression "in connection with" the contract or arrangement varied or avoided provides the necessary limitation as to the nature of the orders for payment of money which can be made and as to the person against whom they may be made. The draftsmanship of the section is inadequate: but I think the expressed intention as to this limitation can be derived from the subsection read as a whole. Whilst it can be said that the expression "in connection with" is of wide import, it does emphasise the need for a close connexion between the order made and the contract or arrangement varied or avoided. In my opinion, the power to make an order for the payment of money is at best no more than a power to make such an order as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement which has been varied or avoided.

37 This power is not at large, in the sense that it may not be exercised, once a contract (as defined) is found to be unfair without regard for the unfairness found to have occurred. The remedy must relate appropriately to that unfairness.

38 In a case where the unfair element is confined to a particular aspect of the contract, the finding generally would not authorise monetary compensation in respect of another aspect which, standing alone or in context, has not been found to be unfair. In a case where the unfairness found goes to the contract or arrangement on a wider basis, for example in its formation based on serious misrepresentations, it will be permissible to consider compensation on a wider basis. The touchstone is "as the Commission considers just in the circumstances of the case." (s106(5)). This may operate to confine the scope for an order.

39 I have come to the conclusion that the respondent's submissions based upon the characterisation of the applicants' claims as one for the payment of damages for personal injury must fail at this stage. Were it my view that the claims are correctly characterised in that way, I would incline to the conclusion that the Commission lacks jurisdiction to deal with the matter or, alternatively, should decline to exercise that jurisdiction in relation to a claim which would more appropriately be heard in a jurisdiction more obviously the correct forum for claims of that kind. However, I think the respondent's position falls far short of establishing at this early stage that the claims are "personal injury claims masquerading as s106 claims". The respondent's submissions, in attempting to distinguish judgments of the Commission in Pullen v R&C Products and King v State Bank of New South Wales, sought to rely on this characterisation of the claims in contrast with the position in those cases where the claims for damages for personal injury were brought within the context of a broader claim under s106. Yet, it is this wider concept which the applicants contend supports their approach at this stage. Whether that is so and whether there is power to make an order for the payment of money in the circumstances of the case remains a question for determination in the final proceedings. However, I consider the applicants are entitled to advance their claims on the basis postulated and to have any residual issue of jurisdiction resolved in the light of the evidence and the full case advanced. It will be necessary for the applicants to establish, as they well appreciate, that their claims are capable of a remedy within the confines of s106 and, perhaps more particularly, s106(5).

40 I would observe that this approach conforms with that taken by Hungerford J in Stonham v The Speaker of the Legislative Assembly of New South Wales (No 3) [2000] NSWIRComm 69, 5 May 2000. The claim in that matter included a claim for compensation for the payment of money, the particulars of which included "compensation for stress and suffering in the course of the applicant's employment" and "compensation for impairment of employment prospects and reduction in quality of life". After referring to the judgment of Marks J in Pullen (Schmidt J's judgment in King v State Bank of New South Wales not then having been given) and the judgment of the Full Court of the former Industrial Relations Court in Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 which held that shock, humiliation and distress suffered in respect of an unlawful termination were matters properly to be taken into account in considering the amount of compensation under s170EE of the Workplace Relations Act 1996 (Cth), and the concomitant view taken by the Full Bench of the Australian Industrial Relations Commission in Lieu v Coms (No 21) Limited (Print S3571 - 25 February 2000), Hungerford J concluded: Indeed, the present state of the authorities on this aspect would seem to favour a view that power exists to entertain this head of the applicant's claim. However, the proper construction of s106(5) requires detailed consideration in the context of the full argument in all the circumstances as they may be found at a final hearing and at this preliminary stage I decline to make a final ruling. Therefore, this argument on the motion must be rejected on the principle in Nagle v Tilburg .

41 Where there is authority in the court's jurisprudence for the proposition which underpins a claim, however limited that authority may be, it seems to me that the argument in favour of dismissing a claim at this early stage will be unlikely to meet the strict test applicable to a strike-out argument. That test was referred to by Kirby P in Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 at 446-7 as being: '. . . where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits. But, as with any threshold relief of this kind, it must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation. Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Commission might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction. This burden, which is a heavy one, was accepted by the claimants'.

42 This approach has been consistently applied in this jurisdiction (see Beahan v Bush Boake Allen Australia (1999) 47 NSWLR 648 and the cases there cited at pp653-4). The respondent has in my opinion failed to satisfy that test. Accordingly, I would dismiss the motion on this ground.

43 I now turn to consider the alternative argument based upon the provisions of s97(2) of the Teaching Service Act. Section 97 provides as follows: 97 Crown's right to dismiss not abrogated (1) Subject to subsection (3), nothing in this Act shall be construed or held to abrogate or restrict the right or power of the Crown to dispense with the services of any person employed in a Teaching Service.

(2) An officer or temporary employee of a Teaching Service shall not be entitled to any compensation by reason of any reduction in salary or of his or her services being dispensed with, whether under this section or otherwise.

(3) Subsections (1) and (2) do not apply so as to affect the rights, under any other Act, of any person whose salary has been reduced or whose services have been dispensed with to appeal against the decision or determination reducing the person's salary or dispensing with the person's services or to be reinstated to a Teaching Service.

Except to the extent that this Act otherwise expressly provides, nothing in this Act amends or affects the provisions of the Industrial Relations Act 1996.

76 Retirement or transfer of officers through invalidity or incapacity

(1) Where the appropriate Director-General determines: (a) that an officer of a Teaching Service is, because of invalidity or physical or mental incapacity, unable to perform the duties of his or her position,

(b) that the invalidity or incapacity is likely to be of a permanent character, and

(c) that the invalidity or incapacity has not arisen from actual misconduct on the officer's part or from causes within the officer's control,

(d) may cause the officer to be retired from the Teaching Service, or

(i) to some other position in the Teaching Service,

(ii) if the appropriate Department Head so approves, to some position in the Public Service, or

(iii) if the other Director-General so approves, to some position in the other Teaching Service,

with salary and other conditions of the officer's employment appropriate to that position. (2) A decision or determination of the appropriate Director-General under subsection (1) is not subject to appeal under the Government and Related Employees Appeal Tribunal Act 1980.

45 I have included s76(2) here because it appears to me to be an appropriate illustration of the adoption by Parliament of an express reference of the kind likely to have been adopted to achieve a limit on the Commission's jurisdiction, as referred to in s5. No such provision exists in relation to the Industrial Relations Act.

46 The critical phrase in s97(2) is ". . . by reason of . . . his or her services being dispensed with, whether under this section or otherwise". The phrase "being dispensed with" in my opinion bears the ordinary meaning of being terminated at the behest of the employer. The reference to the circumstances arising "whether under this section or otherwise" would seem firstly to refer to s97(1), although I note the observations of Spigelman CJ in this regard, to which I refer in par.56 hereof. That provision concerns the preservation of the right or power of the Crown to dispense with the services of any person. The language of s97(1) is quite inappropriate to identify a situation where an employee voluntarily terminates or where an employer and an employee mutually agree to a termination. The language of s97(1) and (2) together indicate, to my mind, an intention to be confined to the unilateral termination by the employer. It must follow that the reference to the power to dispense with services "otherwise" than under s97 equally refers to a unilateral termination of that kind in different circumstances. The question arises whether a medical retirement constitutes such a dispensing with services in the circumstances of this case.

47 It would seem clear enough that the phrase in s76(1)(d) "may cause the officer to be retired" are wide enough to extend to a situation where a person is medically retired contrary to the will of the employee. Where, however, the position is mutual or a situation in which both parties recognise the inevitability of the retirement, there does not seem to be room for the application of the notion that the service has come to an end solely at the will of the employer.

48 Another factor suggesting that s97 is concerned only with the unilateral termination of employment by the employer is the heading given by the statute to s97 - Crown's right to dismiss not abrogated. One is entitled to pay regard to the language of the heading (see Statutory Interpretation of Australia, 5th Edition, Pearce and Geddes, Butterworths, para.4.41 and the cases there cited). In the present matter there is, in my view of it, a consistency between the limitation contained in the words of the heading and the idea of dispensing with services conveyed by the section itself. I would dismiss the motion on the Teaching Service Act ground.

49 The final ground advanced in support of the motion relates to the approach adopted by the High Court in Sullivan v Moody. In this respect, I think the applicants' position is again to be preferred. That case concerned a suit of the Crown by parents of abused children, alleging that a duty of care was owed by the Crown to them in the course of a sexual assault investigation. The High Court said: The supposed duty of care 42. The argument was conducted upon the basis that it was foreseeable that harm of the kind allegedly suffered by the appellants might result from want of care on the part of those who investigated the possibility that the children had been sexually abused. But the fact that it is foreseeable, in the sense of being a real and not far-fetched possibility, that a careless act or omission on the part of one person may cause harm to another does not mean that the first person is subject to a legal liability to compensate the second by way of damages for negligence if there is such carelessness, and harm results. If it were otherwise, at least two consequences would follow. First, the law would subject citizens to an intolerable burden of potential liability, and constrain their freedom of action in a gross manner. Secondly, the tort of negligence would subvert many other principles of law, and statutory provisions, which strike a balance of rights and obligations, duties and freedoms. A defendant will only be liable, in negligence, for failure to take reasonable care to prevent a certain kind of foreseeable harm to a plaintiff, in circumstances where the law imposes a duty to take such care.

50 While the circumstances in Sullivan v Moody and here both involve sexual assault investigations that would appear to be the end of the similarity. The matter here is not a suit based in negligence but rather a case of the employer bringing disciplinary proceedings against the applicants in which they are alleged to have failed to report in accordance with their obligations. Sullivan v Moody is properly distinguishable and on that basis alone cannot operate as some form of limitation upon the scope of the Commission's statutory jurisdiction in the context of the present case.

51 Subsequent to the completion of the argument Mr Menzies referred me to the judgment of the New South Wales Court of Appeal in State of New South Wales v Paige [2002] NSWCA235, 19 July 2002. That case involved an appeal from the District Court where it had been held that the New South Wales Department of Education owed a duty of care to conduct disciplinary proceedings in a manner which avoided psychiatric harm to the person investigated. The relevant person, who was the principal of a Sydney high school, was charged with a breach of duty for non-compliance with departmental procedures concerning his handling of complaints from students regarding the sexual misconduct of a teacher. He was found guilty of the charges and his employment was brought to an end. The principal had earlier submitted, and subsequently withdrew, a notice of retirement. The Director-General of the Department purported to accept his original notice of retirement.

52 Spigelman CJ, with whom Mason P and Giles JA agreed, held that there was no duty of care owed by the Department in the conduct of its procedures to avoid psychiatric harm to an employee (Sullivan v Moody). Issues of coherence in the law as between the proposed duty in tort and the law applicable to termination of employment were considered. It was observed that a duty of care as asserted by the plaintiff/respondent would thwart the statutory regime provided under the Industrial Relations Act for dealing with cases concerning unfair dismissals and the limitations imposed both as to class of applicants, the size of any award (being limited to six months' remuneration), and the time limit for applications (being 21 days).

53 Relevantly for present purposes there was reference to an argument advanced on behalf of the appellant employer that the substance of what had occurred in the process of accepting the resignation was to "dispense" with the principal's services within the meaning of s97 of the Teaching Service Act. It was submitted that s97(2) operated in accordance with its terms and no compensation was payable by reason of the services "being dispensed with".

54 The Chief Justice, after referring to the judgments in the Court of Appeal and the High Court in Suttling v Director-General of Education (1985) 3 NSWLR 427 and Director-General of Education v Suttling (1986) 162 CLR 427, said: 312 The purpose of s97 is to preserve to the Crown the prerogative that it traditionally enjoyed with respect to servants of the Crown and to provide for the consequences, or rather the lack thereof, of an exercise of such power. The focus is on the acts of the Crown. 313 It is by no means clear that the Director-General has any statutory or other authority to act in the name of or on behalf of the Crown, in this relevant respect. This position is contrasted with the express provision in the qualificatory introductory words of s52 and the express terminology of s23A, both quoted above, providing that, in the respects to which those sections refer, the Secretary of the Department of Education and Youth Affairs acts for the Crown. 314 In Suttling at 450E, McHugh JA noted that the conduct in question in that case was that of the Director-General and not of the Crown. His Honour added: "It does not follow that, because a person has authority to employ on behalf of the Crown, he has an independent authority to dismiss on behalf of the Crown." 315 In the High Court, Brennan J at 442.5 distinguished the Crown from the Director-General, by noting that, on the facts of that case, it was not the Crown but the Director-General who purported to prematurely terminate appointment to a particular office. 316 In my opinion, the Appellant has not established any right on the part of the Director-General to act on behalf of the Crown. Section 97(1) has no application. 317 In any event, s97(1) was never invoked. The Appellant apparently realised at a late stage of the proceedings before the trial judge, that it had exercised the Crown prerogative to dispense with the services of an employee, without knowing it. The Appellant's submissions place the Director-General in the position of Monsieur Jourdain in Moliere's Le Bourgeois Gentilehomme, who realised one day that he had spoken prose all his life, without knowing it. 318 As indicated above, the first decision of the Director-General was to reject a recommendation to the effect that the Respondent be permitted to resign. He made a decision that the Respondent be directed to resign. The Director-General of Education was empowered to do this by s85(2) of the Act as set out above. The Director-General subsequently accepted the recommendation that he vary his earlier decision and simply accept the Respondent's previous resignation. There is no proper basis for any inference that, in some way, the Crown prerogative, affirmed by s97(1), had been exercised.

55 It seems to me that the same approach must apply in the present matter. However, Spigelman CJ also referred to an argument based on s97(2) of the Teaching Service Act, as follows: 324 At the conclusion of its oral submissions in reply, the appellant invoked s97(2) that prohibits compensation by reason of "his services being dispensed with" whether under s97(1) "or otherwise". The Appellant was given leave to rely on s97 by the trial judge during the course of the trial. No amended defence has ever been filed. I would not myself give the Appellant leave to invoke this provision in the way it sought to do in this Court in reply. 325 In any event, s97(2) requires services to have been "dispensed with", relevantly, otherwise than under s97(1). The only basis for the submission that there had been such an act was the conduct said to constitute the acceptance of the resignation. For the reasons discussed above, that conduct did not "dispense with" the services of the Respondent. According, s97(2) is of no assistance to the Appellant.

56 Earlier the Chief Justice had referred to s97(2) in the following terms: 305 Section 97(2) makes reference to services being dispensed with "whether under this section or otherwise". The submissions of the Appellant focused on the proposition that what had occurred was a "dispensing with". No submission was directed to the particular mechanism used to effect the "dispensing". Nothing turned in this respect in the submissions on the phrase at the end of s97(2) "whether under this section or otherwise". These are difficult words to construe in the context. Section 97(1) is not a subsection "under" which services are dispensed with. Section 97(1) preserves the prerogative right of the Crown to "dispense with the services" of, relevantly, a teacher. The dispensing is done "under" the prerogative, rather than "under" the section. Nor is it clear what conduct is intended to be encompassed within the words "or otherwise".

57 His Honour's observations are not determinative of the residual issue now before me, namely, whether or not a retirement under s76(1) is a dispensing with services for the purpose of s97(2). I intend to adhere to the conclusion I have arrived at earlier in these reasons with respect to the meaning and application of the phrase "being dispensed with".

58 For these reasons, I dismiss the motion brought by the respondent. The respondent is to pay the applicants' costs of the motion.

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