Heptonstall v Gaskin & Ors

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

20239/00 - Gregory HEPTONSTALL v Brian GASKIN & Ors

1 HIS HONOUR: This is an appeal from a decision by Master Harrison. On 1 August 2003 Master Harrison ordered that paragraphs 35 to 37 of the plaintiff's amended statement of claim be struck out. The learned Master came to the conclusion that those paragraphs of the pleading did not disclose a reasonable cause of action and that, as a consequence, they should be struck out. The facts pleaded did not, in Master Harrison's opinion, show the existence of a duty of care on the part of the third defendant. 2 The facts pleaded may be briefly stated. The plaintiff completed tertiary study in 1980 and commenced teaching with the Department of Education. At first, he worked as a relief teacher. Then in 1988 he was awarded his Teaching Certificate. In 1990 he was appointed to Helensburgh Public School as a Primary School Teacher. From 1995 he carried out duties including those of a Personal Health and Development Supervisor which involved teaching students gymnastics. 3 On 6 June 1997 the first and second defendants (who were police officers) arrested and detained the plaintiff at Bulli Police Station and subsequently charged the plaintiff with six counts of aggravated assault. These allegations related to statements given to the police by two ten year old pupils at Helensburgh Public School. The statements asserted that the children had, on a number of occasions, been inappropriately touched by the plaintiff during gymnastic classes. 4 On 6 June 1997 the Assistant Director-General of Education gave directions to the plaintiff not to attend the Helensburgh Public School and appointed a case manager to investigate the allegations. On 4 December 1997 a letter was sent to the plaintiff from the Office of the Director of Public Prosecutions advising him that the charges would be withdrawn at the Wollongong Local Court on 11 December 1997. On that day the charges were withdrawn and thereby dismissed. 5 I should add, as an aside, that the plaintiff's amended statement of claim seeks damages against the first and second defendants alleging assault, battery, false imprisonment, malicious prosecution and misfeasance in public office. The pleading also alleges malicious continuance of the prosecution by officers of the Office of the Director of Public Prosecutions. These allegations and the form of the pleadings contained in them are not at issue in this appeal. 6 After the withdrawal of the charges in Wollongong Local Court, the Department continued its investigations into the allegations made against the plaintiff. In late June 1998, some six months, after the dismissal of the police charges, the plaintiff was advised by officers of the Department that he had been charged within s 83(f) of the Teaching Services Act 1980 in regard to the same allegations that had formed the basis of the earlier charges. He was also charged with breaches of discipline in relation to two other matters. Section 83 of the Teaching Services Act 1980 is in the following terms: - "83. Breaches of discipline An officer or temporary employee of a Teaching Service who: (a) commits any breach of this Act or the regulations,

(c) uses intoxicating beverages or drugs to excess,

(d) wilfully disobeys, or wilfully disregards, any lawful order made or given by a person having authority to make or give the order,

(e) is negligent, careless, inefficient or incompetent in the discharge of his or her duties, or

(f) engages in any disgraceful or improper conduct, is guilty of a breach of discipline." 7 The statutory scheme envisages that a breach of discipline alleged to have been committed by an officer is to be dealt with by the appropriate Director-General or a prescribed officer. In fact, a prescribed officer was appointed to deal with the allegations and determined to do so under clause 15(2)(a) of the relevant Regulations. Essentially, this clause permits the prescribed officer to direct an explanation in writing (as opposed to conducting an inquiry under cl 15(2)(b)). The duty of the prescribed officer, after considering all relevant material, is to make a finding. On 29 July 1999, the prescribed officer found that the allegations had not been proven and all charges were then dismissed against the plaintiff. 8 The plaintiff has claimed damages, exemplary damages and aggravated damages against the third defendant. It is his claim that, as a consequence of the behaviour of the relevant officers of the Department of Education, he has suffered psychological injury, namely anxiety, depression, post-traumatic disorder and other matters, essentially being the consequence of the psychological injury. 9 The case which the plaintiff has framed against the third defendant (as the Department of Education and Training) is posited in two ways in the amended statement of claim. First, the plaintiff alleges that there were implied terms and conditions of the contract of employment between himself and the Department of Education that, in relation to allegations of impropriety and investigations of such allegations and any disciplinary proceedings consequent upon such allegations, they would be carried out expeditiously, fairly and diligently. I shall not pause to set out all the particulars pleaded in support of the existence and content of the implied terms. It is sufficient to say that the plaintiff's pleadings allege that the Department of Education, by its servants and agents, was, in its conduct of the investigations and disciplinary proceedings, in breach of the implied conditions of its contract of employment with the plaintiff. 10 The second manner in which the plaintiff's case against the third defendant is pleaded appears in paragraphs 35, 36 and 37 of the amended statement of claim. These are the paragraphs that were struck out by Master Harrison. I shall set these out in full. They are as follows: - "35. Further and/or in the alternative, the plaintiff says that the Department of Education, by its servants and agents who investigated and conducted the disciplinary procedures were negligent and as a result of which the plaintiff has suffered injury, loss and damage. 36. At all material times the said Pat Clear, Glenys Parry Blackadder, the Assistant Director General of Education and the prescribed officer and other servants and agents involved in the investigation and charging of the plaintiff were servants and agents of the Crown in right of the State of New South Wales. 37. PARTICULARS OF NEGLIGENCE OF THE DEPARTMENT OF EDUCATION, ITS SERVANTS OR AGENTS. (i) The plaintiff relies upon the particulars of breach of contract particularised above. (ii) Failed to investigate the allegations diligently and within a reasonable time. (iii) Undue delay in the investigation of the allegations and the bringing and prosecuting of the departmental charges. (iv) Caused undue delay in making findings in respect of the allegations. (v) Failed to obtain statements from relevant witnesses prior to recommending that the plaintiff be charged with disciplinary offences. (vi) Failed to have regard to the information obtained by the Police as result of which the criminal charges were withdrawn and dismissed which information they were aware or ought to have been aware. (vii) Failed to take and any reasonable steps to investigate the allegations and gather together all the relevant material prior to recommending that the plaintiff be charged with the disciplinary offences. (viii) Failure on the part of the Case Management Unit investigators to bring to the attention of those responsible within the Department of Education responsible for the charging and bringing of disciplinary proceedings against the plaintiff of relevant information within their possession, such information being consistent with the plaintiff's innocence. (ix) Failure to diligently and fairly investigate all of the relevant information of which the investigators knew or ought to have known before recommending that disciplinary charges be laid against the plaintiff. (x) Failure of the Case Management Unit to supply to the prescribed officer relevant statements namely, the statements of Carina Wilkinson, Diane Fardy, Aaron Sorenson and Paula De Carle which statements were exculpatory of the plaintiff. (xi) Supplying the said statements only after the plaintiff's solicitors had brought to the attention of the prescribed officer that the plaintiff believed that relevant statements had not been provided by the Department to the prescribed officer. (xii) Failure of the Case Management Unit to provide the prescribed officer with relevant documentary material relating to the program and teaching of physical education in schools in 1997 and only after the prescribed officer had been advised by the solicitors for the plaintiff that such material existed. (xiii) The failure of the Case Management Unit to provide to the prescribed officer the letter of Paul Whelan dated 15 May 1999, the letter of Beverley Clarke dated 24 February 1998, the letter of Cathy Dean dated 24 February 1998, a record of interview of Carolyn Banford dated 10 March 1998 and a final interview with Corina Wilkinson dated 10 March 1998 until after the plaintiff's solicitors had advised the prescribed officer that they believed that there was other relevant material within the possession of the Department of Education which had not been provided to the prescribed officer and only after the Teachers Federation lodged a dispute notification in the Industrial Relations Commission on 22 April 1999 in relation to the matter. (xiv) The failure on the part of those investigating the allegations against the plaintiff namely, Pat Clear and Glenys Parry Blackadder, to carry out their investigations fairly and without bias. (xv) That the said investigators had prejudged the allegations and failed to provide to the persons responsible for instituting the charges against the plaintiff and dealing with the charges against the plaintiff with all the relevant material in their possession much of which was exculpatory of the plaintiff. (xvi) Failure to institute, maintain and supervise a system of investigation and charging of members of the teaching profession which was fair and without bias. (xvii) Failure to lay down any or any adequate guidelines for the fair and objective investigation of allegations against members of the teaching profession any or any adequate guidelines in relation to the circumstances in which charges should be made and prosecuted. (xviii) Failure to institute, maintain and supervise any system or any adequate system to ensure that relevant officers within the Department of Education responsible for charging teachers with disciplinary proceedings and dealing with disciplinary proceedings were supplied with all relevant information in relation to the allegations made against a member of the teaching profession. (xix) Failure to institute, maintain and supervise any system of investigation and charging of members of the teaching profession that was fair, objective and without bias. (xx) Failure to heed or investigate or adequately investigate all relevant information supplied to them in relation to the allegations and departmental charges. (xxi) Failure to institute procedures that would have permitted the plaintiff to make relevant enquiry of members of the Helensburgh Public School community with a view to exculpating himself in respect of the criminal charges, the departmental investigation and departmental charges. (xxii) Forbidding the plaintiff from making relevant enquiry of members of the Helensburgh Public School community in relation to criminal charges, departmental enquiry and departmental charges.

The strike out application 11 On 24 February 2003 the third defendant filed a notice of motion seeking an order striking out paragraphs 35, 36 and 37 of the plaintiff's amended statement of claim. The application was made pursuant to Part 15 Rule 26 of the Supreme Court Rules. 12 This rule relevantly provides: - "26. Embarrassment etc

(1) Where a pleading: (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading,

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out. (2) The Court may receive evidence on the hearing of an application for an order under sub-rule (1)." 13 The motion was heard before Master Harrison on 22 July 2003. As I have said, on 1 August 2003, the Master handed down her reserved judgment. She struck out paragraphs 35, 36 and 37 of the plaintiff's amended statement of claim. There were other proceedings heard before Master Harrison at the same time but they have not been pursued on this appeal. 14 The appeal was heard before me on 18 February 2004. I directed the parties to file further written submissions and, subject to the receipt of those submissions, I reserved my decision on that day. The plaintiff's final submissions were not, however, sent to me until Monday 1 March 2004. It became apparent, however, on that day that the plaintiff now wished to withdraw a significant concession which had been made before me on 18 February 2004. This was permitted on the basis that the third defendant have leave to file additional submissions. They were provided to me on the 17th day of March 2004. 15 At the hearing of the appeal before me, additional relief was sought by the third defendant. On 29 September 2003, the third defendant had filed a motion seeking an order that paragraphs 32, 33 and 34 of the plaintiff's further amended statement of claim be struck out pursuant to part 15 rule 26 of the Supreme Court Rules. In practical terms, the third defendant sought to strike out those parts of the amended statement of claim that pleaded the existence and breach of the implied terms of the contract between the plaintiff and Department of Education. I agreed to deal with the substance of this motion notwithstanding that it was not before Master Harrison and did not form part of the appeal.

Strike out application - principles on which a court will act

The parties are in complete agreement as to the tests which are applicable to a strike out application. It is clear that the striking out of pleadings in a statement of claim allegedly containing no reasonable cause of action should only occur in circumstances where the claim is "manifestly groundless"; "so obviously untenable" that it cannot possibly succeed; so "manifestly faulty that it does not admit of argument" General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR at 125. 16 In Webster v Lampard (1993) 177 CLR 598, (a summary judgment case) Mason CJ, Deane and Dawson JJ said in their joint judgment at 602 that "the issue before the learned Master on the application for summary judgment", in that case, "was not whether the plaintiffs would probably succeed in their action against the defendant. It was whether the material before the Master demonstrated that the action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail." 17 In NRMA Insurance Ltd v A. W. Edwards Pty Ltd, NSWCA 11 November 1994, the Court of Appeal reversed a decision of Cole J in a case that was likely to turn upon developing doctrine, in relation to the extent to which tortious liability can exist concurrently with contractual liability, and its application to a relationship between a contractor and builder, so as to allow the action to continue. Kirby P, with whom Powell JA agreed, said at page 7: "The more complex and arguable is the legal point and the more dependant it may seem upon debatable factual premises, the less likely is it that the peremptory relief sought by a party will be appropriate to the circumstances of the case, particularly where it will have the consequence of terminating proceedings altogether or terminating them forever against one party." 18 The General Steel test remains the appropriate criterion for a strike out application. In that regard, more is required of the defendant, upon whom the onus lies, than demonstrating that a plaintiff's chances of success are slim: per McHugh J in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 271 (and see also Gummow J at 293). 19 The strike out power is of course not appropriate in a case where the issue primarily relates to a conflict as to matters of fact or of credit; Sidebottom v Cureton (1937) 54 WN (NSW) 88, Bank of New South Wales v Murray (1963) 80 WN (NSW) 272 and Spellson v George (1992) 26 NSWLR 666 per Young AJA, observations made in relation to SCR Part 13 Rule 5, but equally applicable to SCR Part 15 Rule 26. 20 The question for determination, in accordance with the authorities is whether a reasonable cause of action is disclosed, ie. a cause of action which has some prospect of success, or which could conceivably give the plaintiff a right to relief, or which, although weak is properly debatable, and has some apparent legitimate basis, if the facts upon which it is alleged to be based are made good: Preston v Star City Pty Ltd (1999) NSWSC 1273 - Wood CJ at CL at para 37.

The competing arguments 21 The argument advanced on behalf of the third defendant both before Master Harrison and myself in relation to the negligence pleading may be stated briefly. Mr Menzies QC who appeared on behalf of the third defendant put his argument in the following terms. The decision of the High Court in Sullivan v Moody; Thompson v Connon (2001) 207 CLR 562 is authority for the proposition that where there is a duty to act in a particular way for protection, for example where there is a statutory obligation to carry out an investigation, then there is no duty of care. It is not a question of a duty of care giving way, there is simply no duty of care. In the present case the third defendant (as the Department of Education and Training) has a statutory obligation with respect to carrying out a disciplinary investigation. Although there are differences of detail, there is in essence no difference between the objects of the investigation in the present matter and investigations such as were involved in Sullivan and earlier cases dealing with investigatory authorities. These authorities all proceed from the same proposition. That is, as a matter of policy, notwithstanding there is a foreseeable risk of injury to a person being investigated if the inquiry be negligently conducted, nevertheless, no duty of care is found to exist. This is because to find such a duty creates an environment where an investigating or prosecuting authority would be compromised in the carrying out of its statutory obligations. Mr Menzies QC elaborated these simple and straightforward propositions in both oral and written argument. 22 Put simply, counsel for the third defendant has maintained that, despite apparent differences in the relationship between the plaintiff and the third defendant here and the plaintiff and the defendants in Sullivan; and notwithstanding the differences in the relevant statutory regimes, the principle in issue stands starkly as a fortification against the intrusion of a duty of care as between the plaintiff and the Department of Education in the present circumstances. The statutory regime under division 6 of the Teaching Services Act 1980 represents a statutory investigatory scheme that is concerned not only with the efficient organisation of the teaching services but the welfare of students committed to the care and control of teaching staff. 23 As to paragraphs 32 to 34 of the amended statement of claim, that is the paragraphs pleading the breach of the implied terms and conditions of the contract between the plaintiff and the Department of Education, the third defendant argues that none of the alleged implied terms are required to give business efficacy to the contract and therefore ought not to be implied. Secondly, even if the alleged terms were otherwise open to be implied, in the circumstances of this case they ought not be, as they would be contrary to the public policy as set out in the judgment in Sullivan. The creation of legal duties - breaches of which would sound in damages - would be inconsistent with the proper and effective discharge of responsibilities pursuant to the Teaching Services Act.

What then were the arguments advanced on the plaintiff's behalf? 24 Master Harrison had placed a considerable degree of reliance on the decision of the New South Wales Court of Appeal in The State of New South Wales v Paige (2002) NSWCA 235. The plaintiff argued that the present case was readily distinguishable from Paige in that the plaintiff in the present matter was not found guilty nor was he challenging a finding of guilt. The plaintiff was not, in the present proceedings, alleging wrongful termination or seeking damages for an employment termination. The plaintiff's claim was essentially a claim for an injury suffered in the course of his employment and accordingly no issue of coherence with the law of employment arose. Further, the plaintiff argued that no issue of coherence with administrative law principles applied in the present case. It was suggested that Paige, unlike the present case, required a challenge to the finding of guilt by the decision maker and a challenge to the further administrative decision by the Department to accept the earlier resignation tendered by the plaintiff so as to terminate employment. 25 Secondly, the plaintiff argued that there were a number of factors (apart from the existing employer/employee relationship) that pointed towards recognition of a duty of care. These included foreseeability of the risk of psychiatric injury in the event that the third defendant failed to deal with the plaintiff's situation fairly and promptly after the police charges had been withdrawn; the claim was one for personal injury not just property damage or economic loss; there was no problem of indeterminacy since the duty would be owed to a specific employee; and there were no issues of allocation of scare resources, albeit that such matters could be examined at the breach level during trial (Wyong Council v Shirt (1980) 146 CLR 40). 26 Thirdly, the plaintiff sought to distinguish the present case from the principles enunciated by the High Court in Sullivan v Moody. First, there was the specific relationship between employer and employee in the present case. Secondly, the statute in that case had a specific provision that the interests of the child were "paramount". Thirdly, there was a specific statutory obligation imposed on the doctors and social workers in that case to notify all respective cases of child sexual abuse as soon as practicable. Fourthly, the statute in that case gave a specific immunity to the defendants if they acted in good faith to comply with their duty to notify cases of suspected child sexual abuse. 27 By way of contrast with the situation in Sullivan, the plaintiff argued that in the present matter the issue of "protection of children" had already been fully addressed by the time the third defendant came to take steps to consider taking, and later determining to take, steps pursuant to s 83(f) of the Teaching Services Act 1980. The plaintiff argued that the issue of protection had already been fully addressed by the two circumstances that the plaintiff had been charged with a criminal offence and the criminal proceedings had then been withdrawn by the prosecuting authorities. The plaintiff repeated its argument that the general responsibilities under the Teaching Services Act were "a long way" from the very specific provisions which in Sullivan created an apparent incompatibility between the alleged duty of care and the statutory obligation to report suspicions of child sexual abuse. The plaintiff asserted that the responsibilities and powers conferred under the Teaching Services Act were no different from the general responsibilities which are given to other statutory employers. 28 Finally, in relation to the duty of care aspect of the pleadings, the plaintiff argued that the Teaching Services Act is more concerned with the employment of teachers than with the position of students within the schools taught by government teachers. 29 In relation to the paragraphs in the statement of claim alleging breaches of implied terms of the contract between the plaintiff and the third defendant, Mr Gross QC initially accepted that this aspect of the pleading issue was governed by the same factors and policy considerations as those which had bearing upon the recognition of the asserted existence of the duty of care. This was the concession to which I made earlier reference. Mr Gross argued, however, that the issue of the existence of implied terms of the type pleaded were better determined at trial rather than on a strike out application. Subsequently, in his further written submissions, he disclosed a new argument which I shall describe later in these reasons.

Resolution of the competing arguments 30 In my opinion, both in relation to the negligence pleadings against the State, the third defendant must succeed in its strike out application. I also agree with the third defendant's arguments that in relation to the breach of contract pleadings, at least as they are presently framed, the paragraphs should be struck out. I shall deal with the two categories separately. 31 First, I am satisfied that paras 35, 36 and 37 of the amended statement of claim do not disclose a reasonable cause of action. Assuming the truth of the facts pleaded in those paragraphs, there is recognised at law no duty of care of the kind asserted by the plaintiff. 32 There are a number of matters which have drawn me to this conclusion. The first is my acceptance of the broad proposition advanced on behalf of the third defendant that the principles stated by the High Court in Sullivan are directly relevant and dictate such a conclusion. 33 In that case, the High Court commenced its discussion by noting that foreseeability of itself was insufficient to create a duty of care. The joint judgment of the court emphasised that a defendant would be liable, in negligence, for failure to take reasonable care to prevent a certain kind of foreseeable harm to a plaintiff, only in circumstances where the law imposes a duty to take such care (para 42). In discussing the different problems which may arise in determining the existence nature or scope of a duty of care, the Court said at para 50: - "Sometimes the problems may be bound up with the harm suffered by the plaintiff, as, for example, where its direct cause is the criminal conduct of some third party. Sometimes they may arise because the defendant is the repository of a statutory power or discretion. Sometimes they may reflect the difficulty of confining the class of persons to whom a duty may be owed within reasonable limits. Sometimes they may concern the need to preserve the coherence of other legal principles, or of a statutory scheme which governs certain conduct or relationships." ( Footnote references omitted). 34 The Court developed its analysis at para 53: - "Developments in the law of negligence over the last 30 or more years reveal the difficulty of identifying unifying principles that would allow ready solution of novel problems. Nonetheless, that does not mean that novel cases are to be decided by reference only to some intuitive sense of what is 'fair' or 'unfair'. There are cases, and this is one, where to find a duty of care would so cut across other legal principles as to impair their proper application and thus lead to the conclusion that there is no duty of care of the kind asserted." 35 The Court noted that, more fundamentally, these cases present a question about coherence of the law: - "A duty of the kind alleged should not be found if that duty would not be compatible with other duties which the respondents owed." (Para 55) 36 In an important passage at para 60 the Court said: - "The circumstances that a defendant owes a duty of care to a third party, or is subject to statutory obligations which constrain the manner in which powers or discretions may be exercised, does not of itself rule out the possibility that a duty of care is owed to a plaintiff. People may be subject to a number of duties, at least provided that they are not irreconcilable. A medical practitioner who examines, and reports upon the condition of, an individual might owe a duty of care to more than one person. But if a suggested duty of care would give rise to inconsistent obligations, that would ordinarily be a reason for denying that the duty exists. Similarly, when public authorities or their officers, are charged with the responsibility of conducting investigations, or exercising powers, in the public interest, or in the interest of a specified class of persons, the law would not ordinarily subject them to a duty to have regard to the interests of another class of persons where that would impose upon them conflicting claims or obligations." 37 Finally, the Court considered the statutory scheme that formed the background to the activities of the respondents in the matter under appeal. The Court found it to be, relevantly, a scheme for the protection of children. Admittedly, there was a difference between that statutory scheme and the present in that, unlike the present legislation, the scheme expressly required the respondents to treat the interests of the children as paramount. 38 There are, as was argued before me, a number of differences between the present situation and that which existed in Sullivan. First, the plaintiff is in a well-known category of relationship with the third defendant, namely that of employer and employee. Secondly, an examination of the statutory scheme under which the departmental charges were laid does not reveal the express statutory incompatibility identified in Sullivan. Nevertheless, despite these differences, the suggested duty of care would, in my view, give rise to markedly inconsistent obligations so as to suggest that the duty ought not to be found to exist.

Disciplinary Proceedings - Statutory scheme 39 I shall first examine the Teaching Services Act 1980 and the regulations with a view to assessing the function of disciplinary proceedings. 40 Section 37 of the Act provides that the Director General of Education is responsible to the Minister for the general conduct and the efficient, effective and economical management of the functions and activities of the Education Teaching Service. This latter reference is a reference to all persons employed under Division 2 of Part 4 of the Act (s 44). 41 The functions of the Director General of Education are set out in section 38. They are many and varied. They include the classification of schools; the determination of teaching staff establishment for schools; the grading of officers employed in the Education Teaching Service; the determination of promotions and transfers of officers and transfers of temporary employees. Relevantly, for present purposes the functions of the Director General extend, subject to the provisions of the Act and the regulations, to the maintenance of discipline in the Education Teaching Service, (s 38(1)(i)). 42 I have earlier set out s 83 which deals with breaches of discipline. I have also made brief reference to the regulations. Section 84(2) provides that the regulations may: "(a) make provision for or with respect to the manner of dealing with alleged breaches of discipline, and (b) prescribe all matters that are necessary or convenient to be prescribed for carrying out or giving effect to this Division." 43 Section 85 deals with punishment for breaches of discipline. Disciplinary responses include a caution, reprimand, fine, and reduction in rate of salary or wages or a reduction to a lower classification or position in the teaching service. In addition, the teacher may be dismissed or required to resign. Where the breach has been dealt with by a prescribed officer, such officer may decide to recommend to the Director General that the officer be dismissed or that he or she be required or allowed to resign. 44 Section 86 provides for punishment where an officer is guilty of "a serious offence". This refers to a finding of guilt in NSW of an offence that is punishable, either on indictment or summary conviction by imprisonment for a term of 12 months or more. It extends to a guilty finding elsewhere than in New South Wales of an offence that, if it were committed in New South Wales, would be an offence punishable by imprisonment for a term of 12 months or more. There is also a power of suspension of officers charged with breaches of discipline or serious offences (s 87). 45 The Teaching Services (Education Teaching Service) Regulation 1994 contains regulation 15(2)(a) and 15(2)(b) which I have referred to earlier. 46 The manner of laying of charges is dealt with in Regulation 14. This enables a charge to be laid orally or in writing, but, if laid orally, the member of staff must be furnished with a written copy of the charge within a reasonable time. The member must be directed to send a written reply to the authority within such time as is specified in the direction. The reply must admit or deny the truth of the charge; and may give an explanation that the person wishes to make in regard to the charge. 47 As indicated, the method of determining the charge may take one of two paths. The first is essentially an explanation path which relies on written explanations and reports. The second is by conducting an inquiry. If the latter path is chosen the conduct of the inquiry is dealt with under regulation 16. 48 Regulation 19 provides that if a charge of breach of discipline against a member of staff is found not to be proved: "(a) any suspension of the member must immediately be removed; and (b) the charge must not be recorded in (or, if already recorded, must be removed from) the member's personal record." 49 In considering the relationship of this statutory scheme to the matters pleaded in paragraphs 35, 36 and 37 of the amended statement of claim, it is necessary to bear in mind that the plaintiff had been charged in June 1997 with serious counts of aggravated assault against two ten year old children. True it is these charges were withdrawn on 11 December 1997. Nevertheless the subject matter of those charges were the subject of further investigation with a view to the laying of disciplinary charges against the plaintiff. The charges were made in late June 1998. The Prescribed Officer was appointed on 12 November 1998 and determined to deal with the changes by way of the "explanation" route in Clause 15(2)(a) of the 1994 Regulations. The allegations were found not proven and all charges were dismissed on 29 July 1999. 50 The pleading, it will be recalled, alleges that "the Department of Education, by its servants and agents who investigated and conducted the disciplinary procedures, were negligent and as result of which the plaintiff has suffered injury, loss and damage." 51 It is clear that the matters pleaded allege that the negligence was that of the servants and agents of the Department who both investigated and conducted the disciplinary procedures. It is not clear from a reading of the "particulars of negligence" contained in paragraph 37 of the pleading whether this extends to the actual charging of the plaintiff and the conduct by the Prescribed Officer of the disciplinary proceeding. I shall assume however for the purposes of the present application that it does extend to those matters. Certainly, the allegations of negligence extends to the activities of the two named persons Pat Clear and Glenys Blackadder, who were said to be involved in the investigation and charging of the plaintiff. There are some 22 particulars pleaded in paragraph 37. Essentially, these particulars allege that the allegations against the plaintiff were not investigated "diligently", "within a reasonable time"; and that there was "undue delay" in both the investigation of the allegations and the bringing and prosecuting of the Departmental charges. Other particulars include an allegation that there was a failure to obtain statements from relevant witnesses prior to recommending that the plaintiff be charged; a failure to take reasonable steps to investigate the allegations and gather together all the relevant material prior to recommending that the plaintiff be charged; and a failure to supply to the Prescribed Officer statements of persons whose evidence would be exculpatory of the plaintiff. In addition, there was a general failure on the part of the case management unit to provide to the Prescribed Officer certain detailed statements and correspondence until after the plaintiff's solicitors (and others) brought these matters to their attention. There was also an allegation that those carrying out the investigations into the allegations against the plaintiff did so in an unfair and biased manner; and that they had pre-judged the plaintiff. Finally, there were a series of particulars essentially alleging that the system of investigation involving complaints about members of the teaching profession was flawed and inadequate. 52 It will be seen that the allegation of the existence of a duty of care is postulated precisely in relation to the statutory scheme for investigating, charging and conducting disciplinary proceedings against teachers. It has been said that the nature of disciplinary proceedings, particularly in relation to professional people, is not penal in nature but protective. (Ziems v Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 at 286; Prothonotary of the Supreme Court of New South Wales v Pangallo (1993) 67 A Crim R 77; Re; Maraj (a Legal Practitioner) (1995) 15 WAR 12). There is no reason to doubt that this is so in relation to disciplinary proceedings involving teachers. 53 The "disgraceful or improper conduct" said to constitute a breach of discipline in the present matter was the serious sexual interference with young pupils. While in one sense it is correct to say, as the plaintiff did in his arguments, that the Teaching Services Act is more concerned with the employment of teachers than with the precise position of students within the schools taught by government teachers, there can be no doubt that disciplinary proceedings related to allegations of breaches under section 83 of the Act are plainly concerned with the welfare of students committed to the care and control of teaching staff. If it is necessary to identify the objects of the "protective" disciplinary system created by the Act and its Regulations it is clear, in my view, that the protection is essentially that of the students. No doubt, there are other ambits to the protective nature of the disciplinary proceedings, namely the overall efficient operation of schools and the maintenance of proper professional standards. But, in my view, the essential purpose of the disciplinary procedures is to provide protection to those for whom teaching services are provided, namely the children. 54 It is in this context that the inconsistent obligations described in Sullivan come into play. The duty of care, which the plaintiff asserts exists in the present matter, cannot be reconciled satisfactorily with the duties of those whose task it is to investigate, recommend charges and take part in the subsequent disciplinary proceedings. These functions require, if the task is to be carried out properly, a thorough and careful investigation into the circumstances without apprehension as to possible adverse consequences for the person who is the subject of the disciplinary proceedings. The example given in Sullivan at 582 para 62 is, in my view, not inappropriate to the present examination. Let it be assumed that, in the present matter, those persons in the Case Management Unit responsible for the examination of the complaints took the view that the dismissal of the police proceedings did not satisfactorily deal with the complaint by the children against the plaintiff. Let it be further assumed that, in those circumstances, the departmental officers set about making further inquiries and obtaining further statements and the like with a view to determining whether departmental charges should be brought against the teacher. The interests of the children, that is the alleged victims of the disgraceful conduct, would require the most thorough and exhaustive investigation while ever there remained any suspicion that the inappropriate conduct had occurred. On the other hand, the interests of the teacher suspected of the inappropriate behaviour, in the circumstances where it was by no means clear that the conduct had occurred, would head in the opposite direction. 55 While it is true that there is no express provision in the Act or regulations which make the interests of the children paramount, it is clear that the protective nature of the disciplinary procedures is starkly at odds with the proposition that in conducting those procedures, there is a duty of care owed by the Department and its staff to the teacher. 56 The proper investigation of a charge against a teacher in circumstances where sexual misconduct is alleged may require extensive and exhaustive inquiries. It would be contrary to the nature of disciplinary proceedings of this kind that there should exist an obligation, sounding in damages for breach, if the investigation were not able to be completed rapidly and without delay. The duty of care expressed in those terms, as it is indeed pleaded in the para 37 particulars, is in my view inconsistent and incompatible with the obligations cast on those whose duties it is to investigate, recommend and prosecute charges for serious breaches of discipline. 57 The second matter which has drawn me to the same conclusion is the careful and thorough analysis of the subject statutory scheme by Spigelman CJ in The State of New South Wales v Paige. This involved an appeal from the judgment of Graham DCJ. The respondent to the Appeal had succeeded in a claim in negligence with respect to psychological damage he suffered as a result of the manner in which he was dismissed as the principal of a public high school in Sydney. There had been, at the school, complaints of alleged sexual misconduct against one of the teachers. The respondent dealt with these matters, partly in accordance with departmental requirements but partly in his own fashion. Later when this came to light, an investigation was conducted in relation to the actions of the respondent at the time the complaints had been made to him. This in turn led to a breach of discipline charge under s 83(e) of the Teaching Services Act 1980 for "negligence in the discharge of the respondent's duties". The particular matter claimed against the respondent was that he had failed to follow departmental policy with respect to the complaints made about the former staff member. The person appointed to conduct the investigation decided to recommend to the Director of General Education and Training that the respondent be allowed to tender his resignation. The Director General, however, wrote to the respondent's solicitors informing them he proposed to direct the respondent to resign. In these circumstances, the respondent himself had submitted a notice of resignation. Later, he wrote to the Department, withdrawing his "notice of retirement" and indicating that he wished to remain in the job. Sometime later, following a certain amount of lobbying for position, the Director General wrote indicating that he had now determined that the respondent would be allowed to resign and that he had accepted the earlier application for resignation. Thereupon the respondent ceased working for the Department and subsequently commenced proceedings against the State of NSW. 58 This somewhat complicated state of affairs led, as I have said, to the respondent's ultimate success in the District Court. In those proceedings Graham DCJ found that there was a duty of care in relation to the employer's obligation to provide a safe system of work encompassing the provision of a safe system of investigation and decision making in a disciplinary inquiry. His Honour also found the duty of care had been breached and that the respondent had suffered psychiatric injury and damage. Spigelman CJ determined that a duty of care would involve an element of incompatibility with the statutory scheme. The imposition of such a duty would have an inhibiting effect on expeditious investigation under the statute. Further, the Chief Justice found that the duty contended for involved incoherence with the law applicable to termination of employment; and incoherence with the principle of administrative law in which context compensatory damages were available only in limited circumstances. Finally, his Honour determined that considerations of control and vulnerability, although they pointed in the direction of an existence of a duty of care, did not outweigh in the instant case concerns about coherence and compatibility. In this regard his Honour placed reliance upon the Court of Appeal's decision in Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43. 59 At para 177 Spigelman CJ said: - "There is, in my opinion, a real issue of coherence with administrative law if the law were to recognise a duty of care in the conduct of investigations, the laying of charges and the hearing of disciplinary proceedings. Where a decision making process again, then that should enable in many cases, the injured party to be put in the same position as he or she would have been in the absence of error. However, sometimes, as in the present case, it may not be likely if even possible that a new decision making process can have such an effect. The line between the two will often be contested. The coherence of the law, n my opinion, requires restraint even in such a context." 60 On this aspect of the decision, namely the existence or not of a duty of case, there was agreement from Mason P and Giles JA. 61 Faced with this formidable hurdle, Mr Gross QC suggested, as I indicated earlier, that Paige was distinguishable from the present matter. The present plaintiff was neither found guilty nor was he seeking to set aside the finding of guilt. The present plaintiff did not allege wrongful termination nor was he seeking damages for an employment determination. 62 There are, of course, differences between the Paige situation and that revealed by the present pleadings. But they are not in my opinion sufficient to displace the force of the principles stated and the analysis conducted in Paige. 63 First, it is fair to say that it would be a very odd result if no duty of care existed in the case of Paige where an alleged error of a kind recognised by public law may have occurred during the course of disciplinary proceedings and was one which resulted in termination of employment; but, by way of contrast, a duty of care should be found to exist in a case such as the present where inappropriate handling of a disciplinary investigation of a teacher occurred in circumstances where the charges were dismissed against the teacher. This of course, is not determinative of the matter but, as I say, it would be a very odd result indeed. But in any event, the decision of the Court of Appeal in Paige impacts precisely upon the conduct of the disciplinary proceedings that are at the core of the plaintiff's present claim. The decision is, in my view, direct authority suggesting that issues of incompatibility and incoherence must deprive the present plaintiff of a cause of action. I have earlier set out my own views in relation to incompatibility. It is important, however, to note that Spigelman CJ expressly dealt with this issue at para 101. He said: - "Within the confines of the limited range of statutory provisions upon which the Appellant relied in submissions in this case, the conflict of responsibilities is not as stark as that found in the legislation under consideration in Sullivan v Moody . Nevertheless, there is at least a level of tension, and perhaps of conflict, between imposed upon the Director-General and his or her officers, a duty owed to both the public at large and to the particular school community, to ensure the efficient and effective operation of the State education system, on the one hand, and a duty or provide a "safe" disciplinary process with respect to such matters, on the other hand. Although the Court's attention was not drawn to any specific duty, it can be readily accepted that a duty exists to have proper systems in place for investigating improper handling of allegations of sexual misconduct by teachers… As a general rule, in my opinion, it is undesirable to inhibit an investigation into the exercise of a statutory power which protects public interests by imposing the chilling effect of a risk of civil liability." 64 In relation to incoherence with administrative law principles, his Honour said: - "121 In the present case, the scheme for the laying of charges involves the formulation of an opinion that a breach may have occurred and inquiring whether it is denied prior to charge. It is desirable that this stage be conducted expeditiously. The introduction of a duty of care at this time is fraught with the possibility of delay. I note that reg 14 empowers a disciplinary authority to lay a charge orally at first and to fix a time within which a reply to a charge must be given. A concern with expedition is plainly part of the statutory scheme. 122 Subsequent to charge, some form of hearing must take place - whether on paper or oral. The charge is no more than an allegation, albeit one that a disciplinary authority has found "may" constitute a breach of discipline. The kinds of matters that may constitute such a breach cover a broad spectrum of conduct and levels of iniquity. There are many circumstances in which delay caused by the imposition of a duty of care with respect to the statements made during this phase, or with respect to the act of laying the charge itself, will render the process less efficient and effective. 123 In my opinion there is a significant level of inconsistency or incompatibility between a duty of care prior to charging and the expeditious institution of the charging process under reg 14. 124 With respect to the inquiry stage, the decision maker has a discretion to choose between the explanation route and the inquiry route. Hill v Green holds that, whichever route is chosen, there is a duty to afford procedural fairness. Although the Respondent did not plead its case by expressly adopting the public law terminology of procedural fairness, he sought to uphold in this Court the trial judge's reasoning that did so. Such an approach is not appropriate. By formulating the private law duty in terms of a public law duty, the element of incompatibility between the duties is obscured." 65 And later Spigelman CJ said: - "128 For the purposes of determining liability it is not, in my opinion, appropriate to pose the issue in administrative law terms: Was there legal error in choosing the explanation route rather than the inquiry route? Or was there a denial a procedural fairness? The issue would be: Was the conduct of the investigator that of a reasonable investigator, mindful of the risk of inflicting mental trauma? 129 Understood in this way issues of compatibility arise more clearly with respect to the investigation, in much the same way and for much the same reasons as I have discussed above with respect to the charging stage, namely the risk of adding to delay and expense, in a statutory context where expedition may sometimes be required and inhibition on the decision maker is often undesirable. 130 As to the third stage, ie, the ultimate decision, the observations of the Privy Council in Rowling v Takaro Properties are particularly apt. Misconstruing the law is so unlikely to constitute a breach that it is a factor relevant to the imposition of a duty. 131 There is an element of incompatibility between the duties. It lends weight to a conclusion that this new class of duty of care should not be established." 66 As I have earlier indicated, counsel for the plaintiff has attempted to side-step these authoritive and binding statements by suggesting that here there is no attack on the decision maker's decision. Rather, the attack is on the method of conducting the investigation prior to charges and the manner in which the disciplinary proceedings thereafter continued, having regard to those matters particularised. But just as the statutory content may require that expedition will be necessary in some instances, so there will be other instances in the statutory context where care and deliberation need to be taken in the conduct of the investigation. This may not be in the interests of the person being investigated (although strangely enough it may be if he is subsequently exonerated) but it is nevertheless in the interests of the victims of the alleged conduct. It is also in the interests of the maintenance of the system under which such disciplinary breaches are investigated. To hold otherwise would expose those processes to incompetence inefficiency and perhaps eventual destruction. 67 In any event, an examination of a number of the matters pleaded in para 37 of the amended statement of claim demonstrates that they are based on public law considerations eg, bias and pre-judgment. This consideration underlies the remarks of Spigelman CJ's which I have set out above. In my view, Paige is authority for the proposition that disciplinary investigations of employees pursuant to the Teaching Services Act do not attract a duty of care on the part of those in conducting the investigations and subsequent disciplinary inquiry. This is essentially so because of the principles deprived from Sullivan v Moody. In Paige, the New South Wales Court of Appeal found that the Department did not owe a duty of care to conduct its disciplinary procedures so as to avoid psychiatric harm to its employee. That is precisely the claim made in the present statement of claim in paras 35, 36 and 37. In this regard, the plaintiff's claim is not relevantly distinguishable from that in Paige. Accordingly I consider that the relevant paragraphs should be struck out and that the appeal from Master Harrison's decision be dismissed. 68 I should mention, for completeness, that the plaintiff supplied me with three further submissions in reply on the negligence point. I have given consideration to those matters but I have concluded that there is nothing in the additional submissions which alters the conclusion I have reached.

The plaintiff's claims in contract 69 The concession made by the plaintiff on 18 February 2004 was one that, in my view, having regard to the state of the pleadings, was properly made. This was to the effect that, if it were otherwise found that no duty of care existed in relation to the matters raised in paras 35, 36 and 37 of the amended statement of claim, it would follow that the terms sought to be implied in para 32 of the pleading ought likewise be found not to arise. This would be because the creation of legal duties arising by way of implication in the contract between the plaintiff and the third defendant - breaches of which would sound in damages - would be inconsistent with the proper effect of the discharge of the third defendant's responsibilities pursuant to the Teaching Services Act. 70 The new arguments advanced by the plaintiff in its further submissions dated 1 March 2004 drew attention to a number of English and Scottish decisions. These were essentially concerned with the implied term of trust and confidence that has recently loomed large in English law affecting the relationship between employer and employee. The existence of an implied term of trust and confidence had its provenance firmly legitimised in the decision of the House of Lords in Malik and Mahmud v BCCI (1998) AC 21. It was accepted in that case that there was now a standard term implied by law, that is, a term said to be an incident of all contracts of employment unless excluded or modified. The term is to the effect that the employer will not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. Lord Nicholls said in his speech that this was no more - "Than one particular aspect of the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages." 71 An important point of distinction was made by the House of Lords in the later decision of Johnson v Unisys Ltd (2003) 1 AC 518. In that case the employee had been employed for a number of years, when he was made redundant. The employer had been aware that the employee had special psychological needs. In 1990 he was re-employed by the employer but was summarily dismissed in 1994 following allegations concerning his conduct. The employee's complaint of unfair dismissal was upheld by the Industrial Tribunal although he was held to have contributed to his dismissal by 25%. The employee then commenced separate proceedings against the employer for damages for wrongful dismissal, claiming that, because of the manner in which he had been dismissed, he had suffered a mental breakdown and was unable to work. The employee alleged that, in breach of an implied term of his contract of trust and confidence, the employer had in the manner of dismissing him, harmed his professional development, his health and future employment prospects. The House of Lords upheld the striking out of the claim as disclosing no reasonable cause of action. Lord Bingham of Cornhill and Lord Millett agreed with the reasoning in the speech of Lord Hoffman. In that speech, Lord Hoffman had noted an argument to the effect that the employee's psychiatric injury was said to have been a consequence of a breach of the implied term of trust and confidence, which required Unisys to treat him fairly in the procedures for dismissal. As to this, Lord Hoffman said at para 46: - " It may be a matter of words, but I rather doubt whether the term of trust and confidence should be pressed so far. In the way it has always been formulated, it is concerned with preserving the continuing relationship which should subsist between employer and employee. So it does not seem altogether appropriate for use in connection with the way that relationship is terminated." 72 His Lordship, however, ultimately determined the issue in favour of the employer because of the existence and nature of the remedies for unfair dismissal contained in the Employment Rights Act 1996 and its predecessor, the Industrial Relations Act 1971. His Lordship held that for the judiciary to construct a general common law remedy for unfair circumstances attending dismissal would be contrary to the evident intention of Parliament reflected in the legislation. 73 Lord Nicholls of Birkenhead had this to say at para 2: - "In principal the employee's argument has much to commend it. I said so, in my obiter observations in Mahmud's case, at pp 39-40. But there is an insuperable obstacle: the intervention of Parliament in the unfair dismissal legislation. Having heard full argument on the point, I am persuaded that a common law right embracing the manner in which an employee is dismissed cannot satisfactorily coexist with the statutory right not to be unfairly dismissed." 74 Finally, it is necessary to note that Lord Steyn differed from the majority in this respect; in his view, the employee had a reasonable cause of action based on a breach of the implied obligation of trust and confidence. His Lordship, however, considered that, on the issue of remoteness, there was no realistic prospect that the employee could succeed and for that reason he dismissed the appeal. 75 It is now necessary to turn to a recent decision of the English Court of Appeal which is at the forefront of the plaintiff's submissions in the present matter. This is the decision in Gogay v Hertfordshire County Council (2000) IRLR 703. In that case, the Court held that the employer council was in breach of the implied term of trust and confidence because it had unreasonably suspended the plaintiff where an accusation existed against her of sexual abuse of a child in her care. The plaintiff had been a residential care worker at a council institution where the child was in care. 76 Lord Justice Peter Gibson and Lord Justice May agreed with the decision of Lady Justice Hale. Her Ladyship identified the real issue in the proceedings as the question whether the local authority had been acting reasonably, on the information available to it at the time, in suspending the claimant in the way that this had been done. Her Ladyship thought that it was plainly correct for the authority to institute enquiries into the allegation of sexual abuse, whether as a result of its ordinary common law and statutory duties or as a result of s 47 of the Children's Act 1989. At para 51 her Ladyship said: - " In my judgment, the issue should not have been presented to the judge on the basis of an agreed implied term that 'the defendants would not act otherwise than in accordance with their relevant statutory powers', still less on the basis that the only relevant statutory power was in section 47 of the 1989 Act. As already explained in paragraph 29 above, there are other relevant statutory and common law duties. The point in this case is not whether the local authority should have conducted some inquiries. Clearly it had to do so. It is not necessary for the court to decide whether or not the low threshold for embarking upon a section 47 investigation was crossed at the point when David Gibson decided that it had been crossed. Nothing in this case should deter local authorities from making what they consider to be the appropriate inquiries into the circumstances of children who may be at risk of significant harm. The point in this case, as I have already said more than once, is whether the local authority should have suspended the claimant in the way that it did simply because such inquiries were being made. " 77 In her Ladyship's opinion, the authority's conduct in suspending the plaintiff (and in particular the way in which it had done so) was unreasonable and was clearly calculated to damage the relationship between employer and employee. She described the suspension of the plaintiff as a "knee jerk" reaction. 78 On the issue of damages, Lady Justice Hale drew attention to Lord Woolfe MR's decision in the Court of Appeal in Johnson v Unisys. In this regard her Ladyship said at paras 68 and 69: - "The case before us can be distinguished from Johnson . The complaint here relates to a suspension, which manifestly contemplates the continuation of the employment relationship. The clear import of Malik is that the ambit of Addis should be confined. There are in this case two differences from Addis : first this was not a dismissal, and secondly this was psychiatric illness rather than hurt feelings. In my judgment, therefore, the judge was right to award damages for both the financial loss and the non-pecuniary damage resulting from the claimant's illness. I recognise that this produces the strange result that, according to Johnson , the defendant authority would have done better had they dismissed rather than suspended the claimant. That simply reinforces my view that the sooner these matters are comprehensively resolved by higher authority or by Parliament, the better." 79 The decision in Gogay was briefly referred to by Lord Steyne in his speech in Johnson at para 19. It was however mentioned in the context only of an examination of the difference between "injured feelings" and true psychiatric illness. It was not otherwise commented on in Lord Steyne's speech and not mentioned in the other speeches in the decision of the House of Lords. Lady Justice Hale's plea appears, at least so far, to have gone unheeded. 80 It will be seen that the situation in Gogay differs in at least two respects from the position of the present plaintiff. First, Gogay was concerned with the breach of an implied term causing psychiatric damage as a consequence of suspension, not because of a protracted or incompetent investigation. Secondly, there was not in Gogay the statutory scheme to be found in the Teaching Services Act and regulations. 81 In McCabe v Cornwall County Council (2003) IRLR 87 the English Court of Appeal followed Gogay. In this case the proceedings related to a claim by Mr McCabe, a teacher employed by the defendant council for damages for psychiatric injury in respect of events leading up to and arising out of their dismissal of him as a teacher. On the pleadings, Mr McCabe sought to limit his claim to damages for breach of an implied contractual duty of trust and confidence and/or in negligence in respect of his suspension and the subsequent manner of investigation of his conduct prior to dismissal. In the latter respect, McCabe is closer to the situation of the present plaintiff than was Gogay. 82 In addition, there was, as it will be seen, an important difference between the situation in McCabe when compared to that arising in Gogay. The claimant, in the latter case, had been suspended. The teacher, in the former case, had been suspended but then later dismissed after enquiry. Lord Justice Auld noted that Johnson had not satisfactorily addressed this distinction. In the ultimate, his Lordship thought the law on the matter was still in a state of development and, for that reason, upheld the appeal against the striking out of the claim. Lord Justice Brook agreed and stated that it would be wrong for liability to be determined, in the present developing state of the law, before the underlying facts were ascertained. Lord Justice Saidley came to the same conclusion and thought that there was an issue that was properly to be described as a mixed one of fact and law. In his view, the matter was one that was appropriate to go to trial rather than be dismissed on a strike out application. 83 I have been informed that in February 2003 the House of Lords gave leave to Cornwall County Council to appeal against the McCabe decision. It has not, however, been brought to my attention whether there has been any further movement in relation to the appeal. 84 This important area of development in English law has not received a great deal of attention in Australia and certainly not in New South Wales. However, in State of New South Wales v Paige, Spigelman CJ referred briefly to Addis v Gramophone Co [1909] AC 488. This was in the context of examining generally the question of coherence with employment law; and particularly the limitations apparently imposed in Addis on recovery of damages for the manner of dismissal. At 134 and 135, the Chief Justice said: - "134. In recent years the authority of Addis v Gramophone Co has been challenged, but not undermined, by creative use of implied terms, notably the obligation of mutual trust and confidence. (See e.g. Malik & Mahmud v BCCI [1997] 3 WLR 95; cf Husain v BCCI [2002] EWCA Civ 82. See also Burazin v Blacktown City Guardian (1996) 142 ALR 144; Naughton "The Industrial Relations Court and the Contract of Employment" (1998) 17 Aust Bar Rev 140 at 149-159). 135. The issue has recently been considered by the House of Lords in Johnson v Unisys [2001] 2 WLR 1076. Their Lordships rejected recovery in both negligence and contract for psychiatric injury arising from the manner of dismissal. Their Lordships relied on the statutory regime applicable to claims for wrongful dismissal in the United Kingdom. Malik & Mahmud v BCCI was distinguished on the basis that it was not a manner of dismissal case. English authority suggests that psychiatric injury resulting from a breach of the implied term of mutual trust and confidence is recoverable. (See Gogay v Hertfordshire County Council [2000] IRLR 703.) It is not necessary to decide whether this represents the law in Australia." 85 Spigelman CJ then went on to examine in considerable detail the speeches of the members of the House of Lords in Johnson v Unisys. He did so for the purposes of then examining both State and Commonwealth legislation for unfair dismissal in Australia. It was an examination of this "heavy regulation" in both the State and Commonwealth contexts relating to unfair dismissal that led him to conclude that the Court should not expand the duty of care in negligence to provide an alternative cause of action for unfair dismissals. (See paras 154 and 155).

Resolution of the issue 86 The proposition advanced by Mr Gross QC in his supplemental submissions is a simple one: the development of the law both here and abroad in relation to important aspects of the implied term of trust and confidence, he argued, requires that the present matter go for trial, at least on the contractual basis of the claim, and that it would be wrong and contrary to authority to strike out that part of the plaintiff's pleading that relies upon implied terms in the contract between the plaintiff and the Department of Education. In general terms, I consider that Mr Gross' argument is sound. However, the third defendant correctly points out that the pleadings do not at this stage assert or particularise an implied term of mutual trust and confidence. Nor has the plaintiff, to this point of time, made any application to amend its pleadings to allege either the existence of such an implied term or the breach thereof. 87 Mr Menzies QC has further argued that, even were such an amendment to be permitted, his primary submission would still have application. He has argued that it is necessary for there to be coherence in the law generally, and in particular between the law of employment and the law of tort. The presence of an implied term in the contract of employment of trust and confidence ought not to conflict with the statutory obligation imposed on the Department to conduct investigations and pursue disciplinary proceedings. If the effect of the implication of such a term in the contract between teacher and department were, in fact, to undermine or fetter the investigation and the conduct of disciplinary proceedings, this would be contrary to the spirit and intention of the statute and contrary to public policy. There is, it seems to me, considerable force in this proposition but there is a real issue as to whether it is of sufficient force to warrant a strike out. 88 My conclusion on these matters of dispute is this: first, the pleadings do not at present assert an implied term of trust and confidence nor any breach of such a term. Secondly, there has been no application (except perhaps by way of inference from the submissions) for leave to further amend the pleadings. Thirdly, I have not heard argument in relation to whether leave should be granted. 89 In those circumstances, I think the better course is to strike out the contractual pleadings in their present form. As I said earlier, I think Mr Gross' original concessions were properly made in the context of the pleadings as framed. I will however, grant leave to the plaintiff to make further application to amend that part of the pleading dealing with the issue of implied terms between the plaintiff and the Department. It is not appropriate that I do more than express the most tentative views in saying that it does seem to me at this stage that, in the event that pleadings are re-framed in the manner contemplated by Mr Gross, it may well be inappropriate for those amended pleadings to be struck out. Rather, the novelty of the arguments, in the light of the developing nature of the legal principles involved, may result in a situation where its more appropriate for the matter to proceed to trial (Preston v Star City Pty Limited). This, however, I stress is a tentative view and one that is not informed by the weight of full argument on the matter. 90 I make the following orders: -

1. The appeal is dismissed and the orders made by Master Harrison are confirmed. Paragraphs 35 to 37 inclusive of the plaintiff's amended statement of claim are struck out.

2. Paragraphs 32 to 34 inclusive of the plaintiff's amended statement of claim are struck out.

3. I grant leave to the plaintiff to make an application to amend further its statement of claim in relation to implied terms of the contract between the plaintiff and the third defendant.

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