STATE OF NEW SOUTH WALES v PAIGE

LOWER COURT JURISDICTION : District Court LOWER COURT DC 3492/99 FILE NUMBER(S) : LOWER COURT Graham DCJ JUDICIAL OFFICER :

COUNSEL : P Menzies QC / B J A Shields (Appellant) G B Hall QC / C Locke (Respondent) SOLICITORS : Moray & Agnew (Appellant) Velleley & Associates (Respondent) CATCHWORDS : TORTS - negligence - novel duty of care - interaction with administrative law - interaction with employment law - whether novel duty of care would infringe legal coherence - whether duty of care to conduct disciplinary proceedings so as to avoid psychological injury to teacher - TORTS - negligence - causation - whether evidence of causation goes to alleged breach of duty - CONTRACT - employment contract - interaction with provisions of statute - whether resignation received - whether resignation validly acted upon - whether resignation effectively withdrawn Education Commission Act 1980 Industrial Relations Act 1996 LEGISLATION CITED : Public Sector Management Act 1988 Teaching Services Act 1980 Teaching Services (Education Teaching Service) Regulation 1994 Workplace Relations Act 1996 (Cth) Achal v Electrolux Pty Limited (1993) 50 IR 236 Addis v Gramophone Co [1909] AC 488 Aldersea v Public Transport Corporation (2001) 183 ALR 545 Annetts v Australian Stations Pty Limited (2000) 23 WAR 35 Attorney General (NSW) v Quin (1990) 170 CLR 1 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 B v Attorney General [1999] 2 NZLR 296 Baltic Shipping Co v Dillon (1993) 176 CLR 344 Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 Barrett v Enfield LBC [2001] 2 AC 550 Bienke v Minister for Primary Industries & Energy (1994) 125 ALR 151 Bienke v Minister for Primary Industries & Energy (1996) 63 FCR 567 Birrell v Australian National Airlines Commission (1984) 5 FCR 447 Brodie v Singleton Shire Council (2001) 75 ALJR 992 Burazin v Blacktown City Guardian (1996) 142 ALR 144 Caparo Industries Plc v Dickman [1990] 2 AC 605 Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 Director-General of Education v Suttling (1986) 162 CLR 427 Dunlop v Woollahra Municipal Council (No 2) (1978) 40 LGRA 218 Dunlop v Woollahra Municipal Council [1982] AC 158 EMI (Australia) Ltd v Bes [1970] 2 NSWR 238 Fernandez v Tubemakers of Australia [1975] 2 NSWLR 190 Finch v Oake [1896] 1 Ch 409 Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 Gogay v Hertfordshire County Council [2000] IRLR 703 Gould v Stuart [1896] AC 575 Hill v Chief Constable of West Yorkshire [1989] 1 AC 53 Hill v Green (1999) 48 NSWLR 161 Hill v Van Erp (1997) 188 CLR 159 Husain v BCCI [2002] EWCA Civ 82 Johnson v Unisys [2001] 2 WLR 1076 Kioa v West (1985) 159 CLR 550. Lucy v The Commonwealth (1923) 33 CLR 229 Lustre Hosiery Ltd v York (1935) 54 CLR 134 CASES CITED: Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 Malik & Mahmud v BCCI [1997] 3 WLR 95 Marks v The Commonwealth (1964) 111 CLR 549 Martin v Yeoman Aggregates Limited [1983] ICR 314 McVicar v Commissioner for Railways (NSW) (1951) 83 CLR 528 Morgan v Tame (2000) 49 NSWLR 21 Ngo v Link Printing Pty Limited (1999) 94 IR 375 Northern Territory v Mengel (1996) 185 CLR 307 Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 167 CLR 637 Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679 Phelps v London Borough of Hillingdon [2001] 2 AC 619 Pyrenees Shire Council v Day (1998) 192 CLR 330 R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 Redhead Grange Incorporated v Brett Davidson [2002] NSWSC 90 Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43 Riordan v War Office [1959] 1 WLR 1046 Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431 Rowling v Takaro Properties Limited [1988] 1 AC 473 Russell v Duke or Norfolk (1949) 1 All ER 109 Sanders v Snell (1998) 196 CLR 329 Sayali v Rangi [1986] 4 ACLC 239 Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262 South Australia v The Commonwealth (1962) 108 CLR 130 State of New South Wales v Seedsman [2000] NSWCA 119 Sullivan v Moody (2001) 75 ALJR 1570 Sutherland Shire Council v Heyman (1985) 157 CLR 424 Suttling v Director-General of Education (1985) 3 NSWLR 427 Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Waverley Council v Lodge [2001] NSWCA 439 Welbridge Holdings Ltd v Metropolitan Corporation of Greater Winnipeg (1972) 22 DLR (3d) 470 Williamson v The Commonwealth (1907) 5 CLR 174 Wiswell v Metropolitan Corporation of Greater Winnipeg (1965) 51 DLR 2ND 754 Wyong Shire Council v Shirt (1979) 146 CLR 40 X (Minors) v Bedfordshire County Council [1995] 2 AC 633 DECISION : The appeal on negligence is upheld. The appeal on contract is dismissed. The award of damages below is quashed and damages for breach of contract as assessed below substituted.

• 27 -IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40293/01 DC 3492/99

SPIGELMAN CJ MASON P GILES JA

Friday 19 July 2002 STATE OF NEW SOUTH WALES v Peter Rankin PAIGE

Mr Paige ("the Respondent") was the Principal of a Sydney high school from 1992 to 1998. In 1992, he received complaints from students regarding sexual misconduct of a teacher at the school occurring before the Respondent's appointment. He notified the New South Wales Department of Education ("the Department") of some complaints, but dealt with the complaints by a direct approach to the teacher and arranged to have him transferred from the school. In 1997, the Director-General of the Department issued a statement requesting a re-notification of sexual misconduct cases that had not been adequately investigated. The Respondent re-notified the complaints and notified some other complaints for the first time.

The Respondent's conduct was investigated under Division 6 of Part 4 of the Teaching Services Act 1980. The Respondent was charged with a breach of his duties for non-compliance with Departmental procedures in the way he had handled the complaints. The charges were determined, pursuant to Clause 15 of the Teaching Services (Education Teaching Service) Regulation 1994, on written submissions only.

In October 1997, the Respondent submitted, and subsequently withdrew, a notice of retirement. The prescribed officer found the Respondent guilty of the charges and the Director-General purported to accept the original notice of retirement. The Respondent concluded his service on 2 March 1998.

The Respondent suffered psychiatric harm and lost income. The trial judge found that the Department had breached its duty of care to the Respondent. His Honour also found that the Department had not effectively terminated the Respondent's contract of employment. The trial judge awarded damages in both tort and contract, adjusting the award to eliminate double-recovery.

A. Duty of care (per Spigelman CJ, Mason P and Giles JA agreeing)

The Appellant did not owe a duty of care to conduct its disciplinary procedures so as to avoid psychiatric harm to the Respondent.

In deciding whether to impose a novel duty of care, issues of legal coherence, including the consistency and compatibility of a proposed duty of care with a statutory scheme, must be considered. Sullivan v Moody (2001) 75 ALJR 1570 applied. Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 referred to.

It is not appropriate to pose the issue in administrative law terms e.g. was there a denial of procedural fairness in the conduct of the Appellant's disciplinary procedures. 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 and decision under the statute. Sullivan v Moody, supra , applied. X (Minors) v Bedfordshire County Council [1995] 2 AC 633; Rowling v Takaro Properties Limited [1988] 1 AC 473; Hill v Chief Constable of West Yorkshire [1989] 1 AC 53; Crimmins, supra, referred to.

The duty contended for involves incoherence with the law applicable to termination of employment. Statutes provide a well-developed mechanism for adjusting the interests of employer and employee. Johnson v Unisys [2001] 2 WLR 1076 applied. Aldersea v Public Transport Corporation (2001) 183 ALR 545; Malik & Mahmud v BCCI [1997] 3 WLR 95; Burazin v Blacktown City Guardian (1996) 142 ALR 144; Morgan v Tame (2000) 49 NSWLR 21; Addis v Gramophone Co [1909] AC 488; Baltic Shipping Co v Dillon (1993) 176 CLR 344; Gogay v Hertfordshire County Council [2000] IRLR 703; referred to.

The duty contended for involves incoherence with administrative law, in which context compensatory damages are available only in limited circumstances. Recovery in negligence could, in substance, remove the substantive decision to the courts from the decision-maker in whom the decision is reposed. Welbridge Holdings Ltd v Metropolitan Corporation of Greater Winnipeg (1972) 22 DLR (3d) 470; Dunlop v Woollahra Municipal Council [1982] AC 158 discussed. Pyrenees Shire Council v Day (1998) 192 CLR 330; Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431; Attorney General (NSW) v Quin (1990) 170 CLR 1; Macksville & District Hospital v Mayze (1987) 10 NSWLR 708; X v Bedfordshire CC, supra; Northern Territory v Mengel (1996) 185 CLR 307 referred to.

Considerations of control and vulnerability do not outweigh, in this case, concerns about coherence and compatibility. Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43; Sutherland Shire Council v Heyman (1985) 157 CLR 424 referred to.

Even if a duty of care existed, the trial judge erred, on four of the five alleged breaches, in finding that the conduct of the Appellant was a breach of the duty. As to the fifth, it was inappropriate to decide whether there was a breach.

There was insufficient evidence for the finding that the alleged breaches of the duty of care, as opposed to the fact of the charge and dismissal, was the cause of the Respondent's injuries. Johnson v Unisys, supra, referred to.

D. Contract Appeal on the contract case dismissed.

1. The resignation was not submitted "in the heat of the moment" giving rise to any right of withdrawal. Birrell v Australian National Airlines Commission (1984) 5 FCR 447; Martin v Yeoman Aggregates Limited [1983] ICR 314 referred to.

2. The Respondent's evidence of a Departmental practice allowing resignations to be withdrawn until the day of cessation of service was inadequate to establish a contractual effect. Redhead Grange Incorporated v Brett Davidson [2002] NSWSC 90 referred to.

The resignation was received by the District Superintendent as agent for the Director-General. Riordon v The War Office [1959] 1 WLR 1046 applied.

The resignation was never effectively received by the Crown in the manner for which the contract of employment provided. There was no inhibition on its withdrawal. Riordon v War Office [1959] 1 WLR 1046; Finch v Oake [1896] 1 Ch 409 referred to.

The deliberate holding back of the Respondent's resignation by his superiors prevented it from being delivered to and accepted by the Director-General within the meaning of s78 of the Teaching Services Act 1980. There was no inhibition on its withdrawal.

Section 78 addresses only an officer's position, not the officer's employment in the Teaching Service. The Respondent's resignation took effect in the usual way. Marks v Commonwealth (1964) 111 CLR 549 referred to.

5. (per Spigelman CJ, Mason P and Giles JA agreeing)

No conduct of the Director-General purported to rely upon s97(1) of the Teaching Services Act 1980 which preserves the Crown prerogative to dispense with the services of a teacher. The Appellant may not now rely on that power. Suttling v Director-General of Education (1985) 3 NSWLR 427; Director-General of Education v Suttling (1986) 162 CLR 427 discussed. Gould v Stuart [1896] AC 575 referred to. The Appellant may not rely on s97(2) to deny compensation to the Respondent as the Respondent's services were not "dispensed with" within the meaning of that section.

The appeal on negligence is upheld. The appeal on contract is dismissed. The award of damages below is quashed and damages for breach of contract as assessed below substituted. IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40293/01 DC 3492/99

SPIGELMAN CJ MASON P GILES JA

Friday 19 July 2002 STATE OF NEW SOUTH WALES v Peter Rankin PAIGE Judgment 1 SPIGELMAN CJ: This is an appeal from a judgment of Graham DCJ. The Respondent 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. He was also successful in a claim in contract. His Honour adjusted the damages award to eliminate double counting.

The Factual Background 2 The Respondent was appointed principal of the relevant school in February 1992. Mr N was a teacher at the school. In March 1992, the Respondent received two complaints of alleged sexual misconduct against Mr N ("the March complaints"). The written accounts of the complainants revealed that most of the incidents took place in 1991, before the Respondent was appointed as principal, and that one incident occurred shortly after he had commenced at the school. In August 1992, the Respondent received information about two further complaints against Mr N, relating to events in 1991 ("the August complaints"). 3 The Respondent notified the March complaints to the Department of Education but was dissatisfied with the Department's response. He dealt with the March complaints, after interviews with the complainants, by discussion with Mr N and a request to the Department to transfer Mr N from the school. Mr N was transferred. 4 In February 1997, after the Royal Commission into the New South Wales Police Force had raised doubts about the adequacy of the Department's treatment of complaints of sexual misconduct by teachers, the Director-General of the Department of Education issued a statement indicating, inter alia, that past cases of such misconduct that had not been adequately investigated should be re-notified. The statement of the Director-General included the following: "The identity of the complainant will not be revealed and there will be full protection against legal action." 5 The Respondent replied by informing the District Superintendent of the March complaints. He did not refer to the August complaints. 6 In May 1997, the Respondent was informed of an investigation by the Department of Education into the March complaints and advised that he was not the subject of investigation. This assurance was reiterated in a letter of June 1997. In May and June 1997, the Respondent was interviewed by a District Inspector and disclosed the August complaints for the first time. 7 In August 1997, an investigation was conducted in relation to the actions of the Respondent in 1992. In a report prepared by officers of the Department for the Director of Employee Relations, the allegations against the Respondent were discussed. The report noted that the alleged failures to notify certain of the complaints would form the basis of a charge under s83(e) of the Teaching Services Act. It then said: "In order for Employee Relations Services to draft charges it is considered that further independent investigation is required to establish the chronology of events in all matters, to take statements from appropriate DSE, DOCS and Police Service Officers, and complete details in relation to the management of the … allegations." 8 Accordingly, the recommendation that was made was: "1 That the facts of the matter be further established by an independent investigation. 2 That following the independent investigator's report serious consideration be given to commencing disciplinary action under s83(e) of the NSW Teaching Services Act 1980." 9 The Director of Employee Relations did not approve this recommendation. He wrote on the document: "Approved - move to charge ASAP."

A Notice of Charge was issued without the "independent investigation". It was dated 26 August 1997. 10 The Respondent was charged with a breach of discipline under s83(e) of the Teaching Services Act 1980 for negligence in the discharge of his duties. The particulars provided referred to his alleged failure to follow Departmental policy with respect to the March and August complaints, his failure to inform others of the complaints and the fact that he had revealed the complaints, and sometimes the identity of the complainant, to the teacher involved. 11 By letter of 9 December 1997, the person appointed to conduct the investigation advised the Respondent's solicitors as follows: "In view of the clear expectation by the Department of School Education that a Principal of considerable experience should have a clear knowledge of policy and procedure relating to improper conduct of a sexual nature and child sexual assault; and that there is strong evidence of deliberate actions in contravention of Department of School Education policy and procedures with the potential for placing students' welfare at risk, I have decided to recommend to the Director-General of Education and Training that Mr Peter Paige be allowed to tender his resignation to be effective no later than 27 January 1998." 12 By letter of 23 December 1997, the Director-General of Education and Training wrote to the Respondent's solicitor referring to the finding, but noting that he proposed not to accept the recommendation to the effect that Mr Paige be allowed to resign and, in lieu thereof, pursuant to s85(2)(a) of the Teaching Services Act 1980, the Director-General proposed "to direct Mr Paige to resign". 13 The following was said in the report from the inspector that was before the Director-General: "Mr Paige has sought to resign from the Department of Education and Training to be effective from March 1998. This application for resignation has not been processed whilst the investigation was being conducted." 14 The Respondent had completed and submitted to the District Superintendent a form entitled "Teachers Resignation / Retirement" on 13 October 1997 nominating the date of cessation of teaching as 2 March 1998. By letter of 16 December 1997, the Respondent wrote to the Department withdrawing what he called his "notice of retirement" and indicating that he intended to remain in the job for another two or three years. 15 MacMahon Drake Balding, solicitors for the Respondent, wrote to the Director-General on 14 January 1998, referring to the Director-General's letter of 23 December 1997. The letter noted the decision to direct Mr Paige to resign, rather than to accept the inspector's recommendation, and referred to the absence of any reasons for rejecting that recommendation. The letter went on to put a case for Mr Paige. It also stated that he had instructed the solicitor that he would not resign and added: "Before he was charged, Mr Paige had notified the Department that he wished to retire on 1 March 1998. He has, in indignation at the treatment he has received from the Department, withdrawn that application, as he wishes to conclude his long and successful teaching career with his excellent reputation intact." 16 Internal memoranda were prepared for the Director-General of Education and Training setting out the history of the matter and noting the following: "Representation by MacMahon Drake Balding and general comment within the school community indicates support for Mr Paige. He has spoken publicly to both the executive and significant members of his school community about his perception of being victimised by the disciplinary procedures. It is likely that the matter will go to appeal. Mr Paige has already submitted a retirement application to take effect from 2 March 1998. The Director-General need not accept Mr Paige's request to withdraw his retirement application and allow him to resign from 2 March 1998. This would allow the school community to mark the end of Mr Paige's service as they choose and enable the implementation of the decision on penalty without further direction. This may also minimise negative media impact. Furthermore, if the Director-General allows Mr Paige to resign by accepting a previously tendered retirement form it is unlikely that the matter would go before the Industrial Relation Commission. He may still choose to appeal against the severity of the penalty in GREAT but would be conscious of the fact that one outcome could be reinstatement in a demoted position which would have significant impact on his superannuation." 17 Accordingly, the recommendation was made that: "The Director-General reconsiders his decision and allow Mr Paige to resign by accepting his previously tendered retirement form." 18 On 23 January 1998, the Director-General wrote to the solicitors for the Respondent in the following terms: "I refer to your letter dated 14 January 1998 asking me to reconsider the proposed penalty imposed on your client Mr Paige. I have reviewed all the relevant information relating the matter, and have determined that Mr Paige will be allowed to resign. I have accepted Mr Paige's application for resignation, submitted in October 1997, to be effective from 2 March 1998." 19 This letter was, to say the least, disingenuous. It purported to accept a submission and suggested that the Director-General was now accepting the recommendation of the inspector, when the actual conclusion purported acceptance of a resignation which had, to the knowledge of the Director-General, not only been withdrawn, but the withdrawal of which had been emphasised and reiterated in the very submission which the Director-General was purporting to accept. 20 The Respondent rejected this purported acceptance of his resignation. Nevertheless, having been informed that the Department believed such a notice could not be withdrawn and that the Director-General could still dismiss him, he ceased working on 2 March 1998, the previously notified date of resignation.

Findings on Negligence 21 The trial judge found in favour of the Respondent on the cause of action in tort. Initially his Honour expressed the duty of care in the following way: "…an employer is under a duty of care to take reasonable steps to prevent psychological injury to its employees."

His Honour relied for this proposition on State of New South Wales v Seedsman [2000] NSWCA 119. His Honour noted that the facts of that case were substantially different. His Honour is correct in that observation. It is unnecessary to discuss what, if any, general proposition Seedsman stands for, in view of the limited issues which the Appellant in that case raised for the Court's determination. Seedsman was concerned with the effects upon an employee of the circumstances in which she was required to perform the duties of her office. The present case, as his Honour noted, was concerned with matters peripheral to the actual performance of duties, including what his Honour described as: "…the conduct of investigations, disciplinary proceedings and the manner by which employment is terminated …" 22 His Honour formulated the duty of care that he applied in more specific terms than his initial formulation which I have set out in [21] above: "Subject to the necessity imposed by the obligation of the defendant to carry out investigations and, where appropriate, to take action against employees who are in breach of the terms of their employment, for example, by the commission of disciplinary offences, it seems to me that the general duty of care resting on an employer to provide a safe system of work encompasses the provision of a safe system of investigation and decision making in the way described in the Statement of Claim. … that is subject to the necessity involved in discharging contractual, common law or statutory obligations in relation to the conducting of inquiries. Any teacher who is subject to a disciplinary inquiry is likely to suffer stress and, possibly psychiatric injury, as a result of the conduct of such an inquiry. The breach of the duty of care in those circumstances will only come about where the system of investigation or decision making is not a proper or reasonable system or is carried out otherwise than in accordance with the rights of the employer to regulate its activities in accordance with contract, common law or statute". 23 His Honour then dealt with the issue of breach of duty in terms of conduct which "fell short of the obligations of the duty of care imposed on an employer and which were not justified by the requirements of the law and statutes governing this form of employment". His Honour at first identified four such matters and, subsequently in his judgment, added a fifth. 24 The five matters are as follows:

(1) "… the plaintiff was misled and given a false sense of assurance by the reference in the Director General's memorandum of 18 February 1997 to the legal protection which would be afforded."

(2) "…he was assured that he was not the subject of investigation or allegation when he was interviewed by Mr Chandler and when he signed the statement which he did at the request of Mr Chandler."

(3) "…the decision to override the recommendation of a full investigation prior to a decision on charging was one which was negligent in the circumstances because he failed to properly consider the basis upon which charges could be laid."

(4) "…the manner in which the inquiry was held was one which was in breach of principles of procedural fairness or natural justice. In that regard there was a request for an inquiry rather than for a paper or explanation type inquiry."

(5) "… a further instance of a breach of the duty of care on the part of the defendant in relation to the circumstances surrounding the decision to act upon his purportedly withdrawn resignation or retirement in January 1998. That episode, it seems to me, was one which was conducted in a way which went beyond the bounds of what the defendant was entitled to do in dealing with a disciplinary situation. It itself constitutes, in my view, a sustained particular of negligence in these circumstances." 25 The first, second, third and fifth matters have been referred to in my outline of the factual background above. 26 The fourth itemised matter relates to a choice available under the relevant statutory regime, to which I will further refer below. The conduct of an investigation may be by way of a full hearing, on the one hand, or by way of written submissions, on the other hand. (Referred to as the "inquiry route" and the "explanation route" respectively. See Hill v Green (1999) 48 NSWLR 161 at [14].) 27 His Honour considered this issue in terms of whether, in all the circumstances, the Respondent had been denied procedural fairness. After analysing a number of defects, his Honour concluded there had been a denial of procedural fairness, with the consequence that the Respondent had been denied the opportunity of putting his case before the investigation. 28 His Honour referred to a submission made to him that it was not necessary in this case to choose the "inquiry route" rather than the "explanation route", by reason of the fact that the plaintiff admitted the particulars in the charges and that submissions were directed only to the effect of the conduct. His Honour accepted the force of this submission but noted that in his opinion the distinction was not "of itself sufficient to preclude the need for an inquiry". His Honour went on to explain: "The plaintiff, for example, had never met the prescribed officer. The prescribed officer was, accordingly, weighing up explanations and, ultimately, made decisions concerning the motivation and intention of the plaintiff without having the opportunity of seeing him for himself, and assessing for himself the validity of the explanations offered by the plaintiff for his course of conduct, or of assessing for himself the likelihood or otherwise that the plaintiff would in future comply with the Department's policy concerning the reporting of misconduct by teachers to principals. And perhaps just as importantly, of putting to the plaintiff a number of matters upon which findings were made and which, in my view, the plaintiff was not given a proper opportunity to meet because of the way in which the charges were determined." 29 His Honour noted that detailed written submissions on behalf of the Respondent had been made on a number of occasions, but found that further material would have been put before an oral inquiry. In this context his Honour had in mind a submission to the effect that a number of matters had been determined without what, it had been submitted to him, was "proper consideration of all of the relevant facts" and that an oral hearing would have given the plaintiff an opportunity to put those matters before the inquiry. 30 Amongst these "facts" was the proposition that the Respondent's failure in 1992 to follow Departmental directions had not in fact caused harm to anyone. Furthermore, there was evidence that the teacher about whom the complaints had been made was not the subject of any further complaints within four years thereafter. His Honour concluded that matters supporting this proposition "would have been capable of being … at least more fully brought before an inquiry conducted orally". 31 His Honour also referred to certain findings of the officer conducting the inquiry that were never put to the Respondent, namely, findings that the Respondent "would have concealed evidence"; "that he was electing to independently create policy" and "that he took deliberate actions in contravention of departmental policy with a potential to place students at risk". 32 His Honour found that these were serious findings "which an oral inquiry would have had the opportunity of putting to the plaintiff for his consideration and, if possible, for his answer". 33 His Honour concluded that in an inquiry the officer would have had the opportunity of "making a first hand assessment of the attitude and intentions of the plaintiff" and that he may have come to the same view as the trial judge had come, i.e. that the Respondent would not have been guilty of concealing evidence or of seeking to independently create policy. 34 His Honour concluded, on the basis of his own observations of the Respondent, that: "I have no doubt - and I have little doubt that a prescribed officer would have come to the same conclusion - that the unorthodox but effective action of the plaintiff represented a very effective means of dealing with the situation." 35 His Honour concluded that the final report of the prescribed officer, both in terms of the actual findings and "the tone of [the] findings", would have been different and said: "The effect of making those findings purely on the documentary evidence was to deprive the plaintiff of the opportunity of fully understanding the case which was being made against him." 36 His Honour also noted that the actual report failed to "give any significant acknowledgement" to what his Honour found to be the case, namely, that the conduct of the Respondent was designed to ensure that the teacher was transferred from the school in circumstances which "would have had a favourable result for the students who had complained and would also represent some advantage to the teacher himself". 37 In conclusion, his Honour said: "… It seems to me, in all of those areas, there were breaches of the principles of procedural fairness in the conduct of the inquiry leading to severe adverse findings against the plaintiff which, in my view, were not adequately informed by an examination of the plaintiff's motives and did not properly address the question of the extent to which any such conduct would be repeated on his part." and: "The result of the procedure adopted was that decisions were made about whether the charges had been made out and as to what consequences should flow from them in the absence of an opportunity for the plaintiff to have the prescribed officer fully consider the circumstances of the plaintiff. Those in my view represent breaches of the principles of procedural fairness."

Findings on Causation 38 His Honour accepted the medical evidence tendered by the Respondent to the effect that the Respondent suffered from depression and anxiety. His Honour also relied on the expert reports on the issue of causation. 39 The earliest expert report in time was that of a consultant psychologist, Ms Martha Knox, dated 13 February 1998. She made a diagnosis of depression and expressly stated that the Respondent's "symptoms" date from the time of the presentation of charges on 26 August 1997. His Honour relied on this report. 40 Mr W John Taylor, a clinical forensic psychologist, also referred to the Respondent's treatment in the course of his employment as the origins of the "depressive disorder with some anxiety" which he diagnosed. Furthermore, Professor Alexander McFarlane, a professor of psychiatry at the University of Adelaide, reported on the Respondent in terms which attributed the depressive disorder he diagnosed to treatment he described in the following way: "Mr Paige's depression is directly attributable to the administrative procedures of the Department of Education, which led up to his premature retirement." 41 His Honour referred to the evidence of Dr Robbie, called for the Appellant. Dr Robbie expressed the opinion that the plaintiff was not suffering from a discernible psychiatric illness. 42 His Honour concluded: "The bulk of the evidence is in favour of the proposition that the plaintiff has an ongoing depressive disorder with features of anxiety as well. More importantly, for present purposes, each of those experts, with the exception of Dr Robbie, trace the condition diagnosed to the handling of the investigation and disciplinary proceedings concerning the plaintiff." 43 His Honour's final conclusion on causation was expressed as follows: "The medical evidence, which I accept, is that the reason for the depressive disorder which the plaintiff suffers is the course of treatment of him by the Department of Education which I have found was a breach of its duty of care. The element of causation is therefore established."

Findings on Contract 44 With respect to the cause of action in contract, his Honour noted that there were alternative claims. There was a claim based on wrongful dismissal in early 1998. The alternative claim was that the contract was not effectively terminated and, accordingly, that the Appellant was still in employment. The claims were real alternatives in the sense that if one succeeded, the other could not. 45 His Honour noted that the position at common law was that a resignation was effective as a unilateral act and could not be withdrawn. Accordingly, resignation requires no acceptance by the employer and cannot be withdrawn. 46 His Honour noted that, in exceptional circumstances, a resignation could be withdrawn. His Honour concluded that the circumstances in which the Respondent's resignation was submitted in October 1997 fell within this exception. His Honour said: "The resignation could be said to have been given 'in heat', or, more particularly, in a state of emotional stress. The symptoms of depression which I have referred to, coupled with a sense almost of betrayal which the plaintiff felt, it seems to me would constitute the type of emotional stress which would allow the exception to the general rule to come into operation." 47 His Honour found a second basis upon which the resignation could not be acted upon by the Director-General. His Honour referred to s78 of the Teaching Services Act which provides that a resignation operates so as to deem a position vacant if the officer resigns and the resignation is accepted by the Director-General. His Honour said that s78 does not permit the Director-General to defer consideration of the resignation indefinitely. What had happened in the present case, his Honour found, was that the resignation was put "on hold" until the disciplinary proceedings had been finalised. His Honour concluded that this decision to defer was a "constructive refusal to accept that resignation". Accordingly, his Honour concluded that on this alternative basis, there was no extant resignation at the time that the Director-General purported to accept it. 48 His Honour noted that the Director-General did not purport to rely upon the provisions of s85 of the Teaching Services Act, that empowered the imposition of punishment after a finding that a breach of discipline has occurred. Nor did he act in accordance with s85 when accepting the withdrawn resignation. His Honour concluded that the Respondent could not be retired by virtue of an acceptance of the resignation that had been withdrawn. Nor could the provisions of s85 be applied. 49 His Honour then dealt with an alternative submission put on behalf of the Appellant relying upon s97 of the Teaching Services Act (set out in par [67] below). His Honour noted that there had been no purported reliance on this provision at any time. The issue had arisen by means of a late amendment to the defence, in the course of submissions before him. His Honour found that the Appellant did not purport to rely on s97 in order to "dispense" with the services of the Respondent. His Honour further held that it was unconscionable for the Appellant to rely on s97 for some form of constructive dismissal, when it had purported to act on a different basis, i.e. that the Respondent had voluntarily resigned. Accordingly, the Appellant would be estopped from making any such assertion. His Honour referred to Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, and subsequent authorities, as determining the principles of estoppel that he applied. 50 His Honour concluded that the contract of employment had never been validly terminated. Accordingly, his Honour said the Respondent remained employed under the Teaching Services Act. 51 The Respondent did in fact leave the employment. He accepted superannuation entitlements as a former employee. In a sense this was done under protest. Nevertheless, his Honour did not determine the alternative claim in contract for wrongful termination of the contract of employment. Indeed, as noted, he found that the Appellant was estopped from asserting a constructive dismissal.

The Statutory Scheme 52 The Teaching Services Act 1980 ("the Act") was originally enacted as the Education Commission Act 1980. The Act makes provision for two parallel administrative structures relating to two different spheres of education, including the appointment of two Directors-General and the creation of two Teaching Services - referred to, respectively, as the Education Teaching Service and the Technical and Further Education Teaching Service. These proceedings are concerned with the former Teaching Service, covering teachers employed in primary and secondary schools. Under the Act, certain functions are also performed by the Secretary of the Ministry of Education and Youth Affairs. 53 Section 37 of the Act provides: "(1) 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. (2) For the purpose of exercising responsibility under subsection (1), the Director-General of Education may take such action as he or she deems appropriate and as is not inconsistent with any function of the Secretary or any function, specified in this Act, of the Public Employment Industrial Relations Authority." 54 Section 38(1) confers a number of functions on the Director-General: "(1) The Director-General of Education shall, subject to the provisions of this Act and the regulations: (a) classify the schools in which members of the Education Teaching Service are employed, (b) determine the teaching staff establishments for those schools, (c) determine the staff establishments for the positions of staff inspectors and inspectors of schools, (d) determine the staff establishments for positions (other than positions within the staff establishments referred to in paragraphs (b) and (c)) which the Director-General and the Public Employment Industrial Relations Authority agree are positions: (i) which are concerned with advising, controlling or supervising teachers in schools, and

(ii) to which members of the Education Teaching Service may be appointed, (e) determine the method of classifying and grading officers employed in the Education Teaching Service, (f) prepare and maintain, in respect of different classes of positions, being the positions of teachers in public schools, lists of officers eligible for appointment or promotion to those positions, (g) determine the qualifications required for appointment to the Education Teaching Service or for an officer to be included on any promotions list prepared and maintained as referred to in paragraph (f), (h) determine promotions and transfers of officers and transfers of temporary employees, and (i) maintain discipline in the Education Teaching Service. (2) Before exercising any functions under subsection (1)(a), (b), (c), (d) or (e), the Director-General of Education shall, unless otherwise directed by the Secretary, consult with the Secretary and have regard to any principles recommended by the Secretary to be applied in the exercise of those functions." 55 By s47(1), the Director-General of Education is empowered to appoint persons with the appropriate qualifications to permanent positions in the Education Teaching Service. Appointments are made on probation, unless the Director-General otherwise determines (s48). Such appointments may be made on a temporary basis (s50). By s50(5)(b) a person appointed temporarily "may be dismissed at any time". No such provision is found in s47 relating to appointment to permanent positions. 56 Subdivision 1 of Div 4 in Pt 4 of the Act is concerned with the filling of vacancies in the Education Teaching Service, specifically positions for which there is in existence a promotions list. The Director-General of Education may appoint a person to fill a vacancy for such a position (s59B). The Subdivision makes provision for appointment on merit, including a system of appeals. 57 Section 78 arises for consideration in these proceedings. It provides: "An officer of a Teaching Service shall be deemed to have vacated the officer's position if: (a) the officer dies, or (b) the officer resigns the officer's position by writing signed by the officer and delivered to the appropriate Director-General and the officer's resignation is accepted by that Director-General." 58 Division 6 of Pt 4 makes provision for disciplinary conduct. Section 83 relevantly provides: "An officer or temporary employee of a Teaching Service who: (a) commits any breach of this Act or the regulations, (b) engages in any misconduct, (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."

Section 83(e) is directly relevant in the present case. 59 Section 84 provides that an alleged breach of discipline "shall be dealt with by the appropriate Director-General or a prescribed officer". It authorises regulations to be made with respect to "the manner of dealing with alleged breaches of discipline". That power has been exercised in the Teaching Services (Education Teaching Service) Regulation 1994. 60 Regulation 14 provides for the laying of charges: "14(1) If it appears to a disciplinary authority that a member of staff may have committed a breach of discipline, the member may be charged by the authority with the breach. (2) The charge may 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. (3) At the time the member of staff is charged by a disciplinary authority in writing or furnished with a written copy of the charge, the member must be directed to send a written reply to the authority within such time (being at least 14 days) as is specified in the direction. (4) The reply: (a) must admit or deny the truth of the charge; and (b) may give any explanation that the person wishes to make in regard to the charge. (5) If a reply is not received by the disciplinary authority within the time specified in the direction, the member of staff is to be taken to have denied the truth of the charge." 61 "Disciplinary authority" is defined to mean the Director-General and certain senior officers. 62 Section 85 authorises the Director-General to impose certain punishments in cases where a breach of discipline has been established: "85(1) Where a breach of discipline is dealt with by the appropriate Director-General or a prescribed officer in accordance with the regulations and the Director-General or prescribed officer, as the case may be, finds that the officer or temporary employee charged has committed the breach or the officer or temporary employee admits to the Director-General or prescribed officer that he or she committed the breach, the Director-General or prescribed officer: (a) may decide to impose on the officer or temporary employee any one or more of the following punishments, that is to say, may decide to: (i) caution the officer or temporary employee, (ii) reprimand him or her, (iii) fine him or her, (iv) except in the case of a senior executive officer, reduce his or her rate of salary or wages, or (v) except in the case of a senior executive officer, reduce him or her to a lower classification or position in the Teaching Service of which he or she is a member, (b) may decide to impose any one of the following punishments, that is to say: (i) where the breach is dealt with by the Director-General, the Director-General may decide to dismiss him or her from the Teaching Service of which he or she is a member, direct that he or she resign from that service within such period as may be specified in the direction or direct that his or her resignation from that service, if tendered within a period specified in the direction, be accepted, or

(ii) where the breach is dealt with by a prescribed officer, the prescribed officer may decide to recommend to the Director-General that the officer or temporary employee be dismissed from the Teaching Service of which he or she is a member or that he or she be required or allowed to resign, or (c) in the case of an officer on probation - may decide to annul his or her appointment. (2) Where a prescribed officer makes a recommendation referred to in subsection (1)(b)(ii), the Director-General to whom the recommendation is made may decide to: (a) impose any one of the punishments referred to in subsection (1)(b)(i), or (b) impose any one or more of the punishments that may be imposed under subsection (1)(a). (3) Where a Director-General, in the exercise of the powers under this section, directs: (a) that an officer or temporary employee resign from a Teaching Service within a period specified in the direction, or (b) that the resignation from a Teaching Service of an officer or temporary employee, if tendered within a period specified in the direction, be accepted, and the officer or temporary employee does not resign or tender his or her resignation, as the case may be, within the period specified in the direction, the Director-General may decide to dismiss that officer or temporary employee from the Teaching Service." 63 In the present case, the investigation was undertaken by a "prescribed officer" who made a recommendation under s85(1)(b)(ii). 64 The position of teachers as employees of the Crown is affirmed by s42 which provides: "Except as provided by section 24, a member of a Teaching Service shall be deemed to be employed by the Government of New South Wales in the service of the Crown." 65 Section 24 to which reference is made in s42, is found in Pt 2 Div 2 of the Act which is entitled "Functions of the Secretary". By s25 the Secretary is authorised to determine conditions of employment including salaries, wages and other remuneration of members of the Teaching Service. Section 24 states that for the purposes of exercising the powers under s25, or in any proceedings in a tribunal relating to industrial matters, the Secretary "shall … be deemed to be the employer of those members". 66 Notwithstanding this deeming provision, by s23A it is provided that: "The Secretary, in exercising the function under this Part, acts for the Crown." 67 This context is of some significance for the purposes of the construction of s97 on which the Appellant relies in these proceedings. Section 97 relevantly provides: "97(1) … 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." 68 No express provision is made as to who acts for the Crown in this respect, in contrast with the express reference in s23A. 69 As indicated above, one of the issues that arises in this appeal concerns the options available for the conduct of disciplinary proceedings against a teacher. The distinction between the "explanation route" and the "inquiry route" is set out, relevantly, in Reg 15(2)(a) and (b) of the Teaching Services (Education Teaching Service) Regulation 1994. The relevant regulations are: "15 Dealing with charges (1) If a member of staff denies the truth of a charge, the Director-General (or some other disciplinary authority appointed by the Director-General) is to deal with the charge. (2) A disciplinary authority may deal with the charge: (a) by directing the member of staff to furnish an explanation in writing within such time (being at least 14 days) as is specified in the direction; or (b) by conducting an inquiry. (3) If a disciplinary authority takes action under subclause (2)(a): (a) the authority may make a finding after considering any reports relating to the breach of discipline and any replies or explanations of the member of staff; or (b) the authority may decide to deal with the charge by conducting an inquiry under subclause (2)(b). (4) If 2 or more charges are laid against a member of staff at the one time and the member admits to the truth of one or more but not all of the charges, all of the charges may be dealt with in the manner prescribed by subclause (2). 16 Conduct of inquiries (1) If it is decided to conduct an inquiry, the disciplinary authority must give written notice to the member of staff charged of the time, date and place at which the inquiry is to be conducted. (2) If the member of staff does not, without reasonable cause, appear at the time, date and place notified, the charge may be inquired into and dealt with in the member's absence. (3) For the purposes of an inquiry, a disciplinary authority may call on any person to appear and to give such evidence, and produce such documents, as appear to the authority to be relevant to the inquiry. (4) A member of staff must not, without reasonable cause: (a) fail to appear, give evidence or produce documents at an inquiry when called on to do so; or (b) knowingly give false or misleading evidence at an inquiry. (5) A member of staff may be represented at an inquiry by a barrister, solicitor or agent employed at the member's expense. (6) A disciplinary authority may conduct an inquiry without regard to legal formality, and is not bound by any law or practice as to evidence, but may inform himself or herself of any matter in such manner as he or she thinks fit. (7) However, a disciplinary authority must not inform himself or herself of, or take into consideration, any matter that has not been disclosed in evidence at a sitting of the inquiry if the matter is one that ought, in the interests of justice, to be available for challenge or testing by the persons entitled to be present at the inquiry. (8) Nothing in subclause (7) prevents a disciplinary authority: (a) from informing himself or herself of, or taking into consideration, any matter of which a court would be entitled to take judicial notice; or (b) when deciding whether or how to punish a member of staff found to have committed a breach of discipline, from taking into consideration any previous breach of discipline that has been found by a disciplinary authority to have been committed by the person charged ".

70 The relationship between these regulations and the principles of procedural fairness was discussed by this Court in Hill v Green (1999) 48 NSWLR 161.

Issues on the Appeal 71 The Appellant challenged his Honour's findings both with respect to the case in tort and the case in contract. A number of distinct grounds were relied upon. 72 With respect to the case in tort the Appellant submitted that there was no relevant duty of care and, alternatively, that there was no breach. The finding of the trial judge on breach was challenged on a number of specific bases. Particular attention was directed to the element in the trial judge's finding of breach that turned on the issue of procedural fairness. The Appellant submitted that the trial judge erred in finding that the Respondent had not been afforded procedural fairness. 73 With respect to the case in tort the Appellant also challenged the trial judge's findings as to causation. It submitted that his Honour erred in finding that the Appellant's conduct was the cause of the Respondent's depressive illness and further submitted that there was no evidence that any injury was caused by the conduct found to be in breach of procedural fairness. It submitted specifically that there was no evidence which permitted the trial judge to infer that if the inquiry route had been followed, rather than the explanation route, that this would have made a material difference to the result. 74 There were four grounds of appeal relevant to the contract case: "3 The trial judge erred in finding that the Appellant was in breach of any contractual obligation to the Respondent. 4. The trial judge erred in finding that the Appellant was not entitled to rely on s97 of the Teaching Services Act in accepting the Respondent's resignation. … 10. The trial judge erred in finding that at all material times the Respondent remained an employee of the Appellant. 11. The trial judge erred in finding that the Director-General was not entitled to defer accepting the Respondent's resignation." 75 There was no ground of appeal relating to the quantification of damages. Furthermore, there was no ground of appeal which invoked the relevant case law restricting recovery for mental trauma. The Appellant did not assert that a person of normal fortitude would not have suffered any such injury (cf Morgan v Tame (2000) 49 NSWLR 21 at [13]-[19], [166] and Annetts v Australian Stations Pty Limited (2000) 23 WAR 35 - in both cases the appeals to the High Court are reserved). Nor did the Appellant challenge the finding of negligence on the basis that there was no sudden assault on the senses (see Morgan v Tame, supra at [48]-[61], [145]-[158], [167]; Gifford v Strang Patrick Stevedoring Pty Ltd (2001) 51 NSWLR 606 at [50]-[51], [68]-[73] and cf State of New South Wales v Seedsman [2000] NSWCA 119 per Mason P, (Spigelman CJ and Meagher JA not deciding).) Nor did the Appellant assert that psychiatric injury was not reasonably foreseeable (see Morgan v Tame at [60]-[62] per Mason P and [160] per Handley JA).

Duty of Care 76 In his reasons, his Honour expressed the duty of care owed by the Appellant as the employer in two interrelated ways. First, his Honour said there was a duty of care "to take reasonable steps to prevent psychological injury to its employees". Secondly, his Honour said the duty to "provide a safe system of work encompasses the provision of a safe system of investigation and decision making", relevantly, with respect to procedures for discipline and termination of employment. 77 In its submissions to this Court, the Appellant accepted that it had a duty to avoid the risk of foreseeable injury and that there were circumstances in which psychiatric injury was relevantly foreseeable. Nevertheless, it submitted that there was no duty of a character relevant to the present proceedings. 78 The trial judge's reference to the well known category of duty to provide a "safe system of work", conceals the novelty of the duty his Honour identified in this case. There is an ambiguity inherent in the word "system". The body of case law with respect to a "safe system of work" has been, so far as I am aware, exclusively concerned with the conduct of tasks for which an employee is engaged. (See e.g. Bankstown Foundry Pty Ltd v Braistina (1986) 160 CLR 301 at 308-309.) His Honour made no reference to any authority, nor was any authority drawn to the attention of this Court, that extended the concept of a "system of work" to matters concerning the incidents of the contract of employment, such as the disciplinary procedures under consideration in the present case. This is a novel category of duty and involves an extension of employers' duties. In the present context, it raises important considerations concerning the interrelationship between duties of care and statutory powers and duties. 79 The Appellant's basic contention is that there was no duty that extended to encompass the conduct on behalf of the Appellant in issue in these proceedings. The Appellant relied on the recent decision of the High Court in Sullivan v Moody (2001) 75 ALJR 1570. 80 In Sullivan v Moody, two fathers, each of whom had been accused of sexual assault on their children, sued the medical practitioners who had examined their children and reported to the Department of Community Welfare that the boys appeared to have been sexually abused. Further investigations were carried out by officers of the Department who reached the same conclusion. They referred the matter to the police and the police charged the two fathers with sexual offences. Those charges were ultimately dropped. The fathers asserted that they had suffered shock, distress and psychiatric harm. The fathers asserted that the medical practitioners had acted negligently in their examination and diagnosis. The State of South Australia, as employer of the officers in the Department of Community Welfare, was said to be liable for the negligent investigation and reporting of those officers. 81 The fathers did not assert that a duty of care relating to investigation and reporting was owed to every member of the community the subject of an investigation of a possible crime. They submitted that the particular parental relationship between themselves and their children was such as to create a duty with respect to conduct, a duty which may not arise in the usual case. A negligent finding with respect to parental abuse of the child was likely to disrupt the parent/child relationship against the very interests of the children that the investigation process seeks to protect. 82 In Sullivan v Moody, the joint judgment of the Court referred to the proposition that foreseeability alone is not sufficient and in that context, the Court said that, if it were otherwise: "… 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." (at [42]) 83 The Court also said at [50]: "Different classes of case give rise to different problems in determining the existence and nature or scope, of a duty of care." 84 After noting certain problems that may arise, the Court continued, relevantly for present purposes at [50]: "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. The relevant problem will then become the focus of attention in a judicial evaluation of the factors which tend for or against a conclusion, to be arrived at as a matter of principle." (footnote omitted) 85 When the Court came to assess the considerations relevant to determining whether or not a duty of care existed in the case before it, the Court noted that the injury to the fathers arose by reason of what each father and others had been told. The Court said at [54]: "At once, then, it can be seen that there is an intersection with the law of defamation which resolves the competing interests of the parties through well-developed principles about privilege and the like. To apply the law of negligence in the present case would resolve that competition on an altogether different basis. It would allow recovery of damages for publishing statements to the discredit of a person where the law of defamation would not." (footnote omitted) 86 Similarly, in the present case the application of the law of negligence to the current relationship would intersect with two other areas of the law: judicial review of administrative action and the law of contract, as modified by statute, with respect to wrongful dismissal under a contract of employment. 87 The joint judgment again referred to the "coherence of the law" and added at [55]: "Considering whether the persons who reported their suspicions about each appellant owed that appellant a duty of care must begin from the recognition that those who made the report had other responsibilities. A duty of the kind alleged should not be found if that duty would not be compatible with other duties which the respondents owed." 88 Their Honours went on to consider the functions, powers and responsibilities of the persons and authorities alleged to owe a duty to the fathers in the course of investigating and reporting on the allegations made against them. Their Honours noted that statutory obligations are not necessarily inconsistent with the existence of a duty of care because: "People may be subject to a number of duties, at least provided they are not irreconcilable." (at [60]) 89 Their Honours went on to say at [60]: "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 interests 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." 90 Their Honours concluded at [62]: "The statutory scheme that formed the background of the activities of the present respondents was, relevantly, a scheme for the protection of children. It required the respondents to treat the interests of the children as paramount. Their professional or statutory responsibilities involved investigating and reporting upon, allegations that the children had suffered, and were under threat of, serious harm. It would be inconsistent with the proper and effective discharge of those responsibilities that they should be subjected to a legal duty, breach of which would sound in damages, to take care to protect persons who were suspected of being the sources of that harm. The duty for which the appellants contend cannot be reconciled satisfactorily, either with the nature of the functions being exercised by the respondents, or with their statutory obligation to treat the interests of the children as paramount. As to the former, the functions of examination, and reporting, require, for their effective discharge, an investigation into the facts without apprehension as to possible adverse consequences for people in the position of the appellants or legal liability to such persons. As to the latter, the interests of the children, and those suspected of causing their harm, are diverse, and irreconcilable." 91 The determination of whether a common law duty of care exists with respect to the exercise of statutory powers is not the subject of authoritative guidance from the High Court. A number of different approaches is discernible in recent authority. (See Pyrenees Shire Council v Day (1998) 192 CLR 330; Romeo v Conservation Commission of the Northern Territory (1998) 192 CLR 431; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; Brodie v Singleton Shire Council (2001) 75 ALJR 992.) The joint judgment in Sullivan v Moody does not reconcile the different approaches, save by rejecting the three stage test previously applied by Kirby J. 92 However, as Gleeson CJ has noted in Brodie supra at [31]: "Legislation and the common law are not separate and independent sources of law; the one the concern of parliaments, the other the concern of courts. They exist in a symbiotic relationship." 93 When considering the issue of coherence it is necessary to give close consideration to the statutory scheme: specifically whether a common law duty is "inconsistent" or "incompatible" with the statute and, relevantly in this case, the regulations. (See e.g. Crimmins at [3], [18], [93 at 6], [114], [203]-[213]; Sullivan v Moody at [60].) However, issues of coherence may arise even if there is no direct inconsistency. It may be enough if the effect of imposing civil liability is to "distort [the] focus" of the statutory decision-making process. (Crimmins at [292] per Hayne J.) 94 Similar issues have arisen in New Zealand with respect to investigations by social workers into the suitability of prospective adopting parents and into allegations of child sexual abuse. However, in New Zealand law the three stage test in Caparo Industries Plc v Dickman [1990] 2 AC 605 at 617-618, is applied. The New Zealand cases ask whether imposing a duty of care is "fair, just and reasonable". This is not the law in Australia. (Sullivan v Moody at [49].) Nevertheless, the cases do indicate the variety of considerations that suggest a relevant incompatibility between a statutory scheme and a common law duty. (See Attorney-General v Prince and Gardner [1998] 1 NZLR 262; B v Attorney General [1999] 2 NZLR 296; see generally Todd "Liability in Tort of Public Bodies" in Mullany & Linden (eds) Torts Tomorrow: A Tribute to John Fleming 1998 at 48-49.) Recent English authority on civil liability for the exercise of a statutory power also applies the three stage Caparo test and is, similarly, of little assistance. (See e.g. Barrett v Enfield LBC [2001] 2 AC 550; Phelps v London Borough of Hillingdon [2001] 2 AC 619.) 95 When in Sullivan v Moody at [50], the joint judgment referred to "the need to preserve the coherence of other legal principles, or of a statutory scheme", the authority referred to was Hill v Van Erp (1997) 188 CLR 159 at 231, where Gummow J had referred to "one coherent system of law". The present case raises issues of compatibility and coherence both between the law of tort and statutes and between the law of tort and the law of contract, as modified by statute and between the law of tort and administrative law. 96 This case is not concerned with the difficulties that have arisen when it is alleged that a decision-maker was obliged to exercise a statutory power. This case is concerned with how statutory powers, relevantly in the regulations under s84 and in s85 of the Act, were exercised. Nor is this case concerned with a quasi-legislative power or a "policy" decision, in the sense that word is used in the problematic policy/operational dichotomy. (See e.g. Pyrenees supra at [62]-[68] per Toohey J and [180]-[182] per Gummow J; Crimmins at [27]-[44] per Gaudron J and [84]-[87] per McHugh J.)

Compatibility 97 Graham DCJ was aware of issues of coherence and compatibility when he said that the duty to provide a "safe system of investigation and decision making" was subject to the performance of "contractual, common law or statutory obligations", at least where the system of decision-making is "a proper or reasonable system". The reasoning in Sullivan v Moody, handed down since his Honour's judgment in this case, makes it clear that the recognition of a new category of duty for purposes of the law of negligence, must consider the requirements of a coherent system of law in Australia. (Issues of coherence can arise in many legal contexts. See Mason P writing extra-judicially, "The Unity of the Law" (1998) 4 The Judicial Review 1.) 98 His Honour's approach appears to take a common law duty as the starting point and then to ask whether the statute has modified it. That approach is consistent with some recent statements in the High Court, but inconsistent with that of others, which focus on the statute in the first instance. (See Davies "Common law liability of statutory authorities" (2000) 8 Tort Law J 133 at 138-141.) 99 As noted above Sullivan v Moody directs attention to the compatibility of a duty of care with other duties. The particular aspect of the statutory context to which their Honours gave emphasis was the express statutory provision that the interests of a child would be the paramount consideration. In the present proceedings, the Appellant did not draw the Court's attention to any particular statutory provision relating to the provision of education which was similar to that considered in Sullivan v Moody. The submissions in this Court were restricted to the terms of the Teaching Services Act itself. 100 Section 37(1) of the Act imposes upon the Director-General of Education a responsibility for "the efficient, effective and economical management of the functions and activities of the Education Teaching Service". One of the functions conferred upon the Director-General is to "maintain discipline in the Education Teaching Service" (38(1)(i)). For purposes of the present case, the relevant breach of discipline is that found in s83(e) of the Act concerned with "negligent, careless, inefficient or incompetent" discharge of duties. However, when considering the imposition of a duty of care with respect to disciplinary proceedings, the Court must be concerned with the full range of breaches of discipline set out in s83, including misconduct, alcohol and drug abuse, breach of regulations, disobedience of lawful orders and disgraceful or improper conduct. 101 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 the duty 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 to provide a "safe" disciplinary process with respect to such matters, on the other hand. 102 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. The Director-General's statement of 18 February 1999 commenced with a reference to evidence before the Royal Commission into the NSW Police Service and said: "Evidence given by teachers and other departmental officers revealed a totally unacceptable response to allegations of professional misconduct and criminal behaviour by several teachers in a number of schools in one of the former DSE regions." 103 The statement concluded with the following: "The care and protection of young people is our first and fundamental responsibility." 104 A number of Departmental documents establishing procedures for handling allegations of child sexual assault are in evidence. The tension between the Department's various duties is highlighted in the covering circular for the first such document of March 1988: "This Department has an obligation to take seriously all allegations of misconduct on the part of employees and to act promptly in the interests of students. On the other hand, every effort will be taken to protect the rights and reputation of employees." 105 The issue of inconsistency or incompatibility may arise, like many other elements, at both the level of duty and the level of breach. The conflict or tension between duties must be placed in the balance with the range of factors pertinent to duty to determine whether a duty of care existed. 106 Issues of compatibility at the level of duty arise with respect to each of the three stages of the statutory decision-making process with which his Honour was concerned. The five matters identified as breaches of duty by his Honour can be analysed in terms of three stages; charge, inquiry and decision. 107 The first three matters - the assurance of legal protection and the statement that he was not the subject of investigation, together with the decision to proceed to a charge without further investigation - preceded the formal act of charging. 108 The second stage, the fourth matter, was the failure to accord procedural fairness. 109 These four matters, his Honour found: "… fell short of the obligations … imposed on an employer and which were not justified by the requirements of the law and statutes…" 110 The third stage encompassed the fifth breach identified by his Honour - the decision to act on the withdrawn resignation. This, his Honour said, "went beyond the bounds of what the [Appellant] was entitled to do…" 111 As to the first stage, the steps required to be taken prior to a charge are found in Regulation 14, made pursuant to s84(2) and s100(h) of the Act. Under Regulation 14(1) a member of staff may be charged "If it appears to a disciplinary authority that a member of staff may have committed a breach of discipline". Wherever a member of staff denies the truth of a charge, the Director-General is required by s84(1) and Regulation 15(1) "to deal with the charge". 112 As to the second stage, the statutory decision-maker may choose either the explanation route or the inquiry route, under Regulations 15 and 16. In either event there is a supervening obligation to accord procedural fairness as a matter of administrative law. (See Hill v Green supra esp at [39]-[45], [83] and [94]-[95], [98].) 113 As to the third stage, it is not clear whether the limitation on the authority of the Director-General was regarded by his Honour to arise from statute or contract. 114 One factor that is common to all three stages is the inhibiting effect on the process of investigation and decision that would arise if the law were to impose a duty of care to avoid the risk of mental trauma to the person whose conduct was being investigated. 115 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. As Lord Keith of Kinkel said with reference to police investigation of crime: "In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind."

( Hill v Chief Constable of West Yorkshire [1989] 1 AC 53 at 63.) 116 In X (Minors) v Bedfordshire County Council [1995] 2 AC 633, Lord Browne-Wilkinson said: "… a common law duty of care cannot be imposed on a statutory duty if the observance of such common law duty of care would be inconsistent with, or have a tendency to discourage, the due performance by the local authority of its statutory duties." (at 739)

and "… the task of the local authority and its servants in dealing with children at risk is extraordinarily delicate. Legislation requires the local authority to have regard not only to the physical wellbeing of the child but also to the advantages of not disrupting the child's family environment … if a liability in damages were to be imposed, it might well be that local authorities would adopt a more cautious and defensive approach to their duties. … If the authority is to be made liable in damages for a negligent decision … there would be a substantial temptation to postpone making such a decision until further inquiries have been made in the hope of getting more concrete facts. Not only would the child in fact being abused be prejudiced by such delay: the increased workload inherent in making such investigations would reduce the time available to deal with other cases and other children." (at 750) 117 These passages were relied on in the South Australian Supreme Court in Sullivan v Moody and implicitly referred to with approval in the High Court. (See at [30], [39] and [59]. Cf Barrett v Enfield London Borough Council, supra, at 568.) 118 In Rowling v Takaro Properties Limited [1988] 1 AC 473 the Privy Council had before it a claim for damages said to have been caused by an ultra vires decision made by a Minister pursuant to a statutory power. The Privy Council identified a number of factors that militated against the imposition of any duty of care. A number of these considerations are material in the present context. These factors include the following at 502: "… in the nature of things, it is likely to be very rare indeed that an error of law of this kind by a minister or other public authority can properly be categorised as negligent. As is well known, anybody, even a judge, can be capable of misconstruing a statute; and such misconstruction, when it occurs, can be severely criticised without it attracting the epithet 'negligent'. Obviously, this simple fact points rather to the extreme unlikelihood of a breach of duty being established in these cases, … but it is nevertheless a relevant factor to be taken into account when considering whether liability in negligence should properly be imposed." 119 Their Lordships went on to refer, as a further consideration, to "the danger of overkill" by reference to certain circumstances in which "the imposition of liability may even lead to harmful consequences", about which their Lordships elaborated at 502: "… once it became known that liability in negligence may be imposed on the ground that a minister has misconstrued a statute and so acted ultra vires, the cautious civil servant may go to extreme lengths in ensuring that legal advice, or even the opinion of the court, is obtained before decisions are taken, thereby leading to unnecessary delay in a considerable number of cases." 120 In Rowling v Takaro their Lordships rejected the proposition that a minister was under an obligation to take legal advice in cases relevant to the exercise of a discretionary power (at 502-503). They concluded that the imposition of liability in negligence could lead to delay occurring in the decision-making process. Nevertheless, their Lordships did not determine the issue. They decided the question on the issue of breach of duty, rather than the existence of a duty. The circumstances of the case proved to be an example of what their Lordships indicated would usually be the case i.e. the mere misconstruction of a statute cannot be described as negligent. 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 Regulation 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 Regulation 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. 125 As Dixon CJ put it in South Australia v The Commonwealth (1962) 108 CLR 130 at 140: "… the subject matters of private and public law are necessarily different." 126 McHugh J said in Crimmins supra at [82]: "… I am unable to accept that determination of a duty of care should depend on public law concepts. Public law concepts of duty and private law notions of duty are informed by differing rationales. On the current state of the authorities, the negligent exercise of a statutory power is not immune from liability simply because it is within power, nor is it actionable in negligence simply because it is ultra vires."

(See also Crimmins supra at [217]-[218] per Kirby J.) 127 As Lord Brown-Wilkinson said in X v Bedfordshire County Council supra at 736F: "… I do not believe that it is either helpful or necessary to introduce public law concepts as to the validity of a decision into the question of liability at common law for negligence." 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 of 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, i.e. 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. It may not, however, be of sufficient weight to alone determine that issue, unlike, perhaps, the express statutory incompatibility identified in Sullivan v Moody. However, this element must be combined with other aspects of coherence, as discussed in Sullivan v Moody.

Coherence: The Law of Employment 132 Of particular significance for the present case is the need for coherence in the law, in view of the interaction and interrelation between the proposed duty in tort and the law applicable to termination of employment i.e. the law of contract as modified by statute. In my opinion, the possibility of incoherence in the system of law applicable in this State is such that the proposed duty should not be recognised. 133 In the context of contracts of employment, Addis v Gramophone Co [1909] AC 488 has long been cited as authority against recovery of damages for the manner of dismissal. That restriction would not apply where there is physical injury. (Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 362, 381, 405.) It is suggested the reference in this line of authority to "anxiety, disappointment and distress" should not extend to psychiatric damage, on the basis that the latter is a form of physical injury. (Aldersea v Public Transport Corporation (2001) 183 ALR 545 esp at [58] and [96]-[98].) However, psychiatric damage is regarded as a category distinct from personal injury for other purposes, such as foreseeability. (See Morgan v Tame supra at [5]-[7].) As presently advised, I would not extend the observations in Baltic Shipping v Dillon about physical injury to psychiatric damage. 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. 136 In Johnson v Unisys Lord Hoffmann said at [37]: "… judges, in developing the law, must have regard to the policies expressed by Parliament in legislation. Employment law requires a balancing of the interests of employers and employees, with proper regard not only to the individual dignity and worth of the employees but also to the general economic interest. Subject to observance of fundamental human rights, the point at which this balance should be struck is a matter for democratic decision. The development of the common law by the judges plays a subsidiary role. Their traditional function is to adapt and modernise the common law. But such developments must be consistent with legislative policy as expressed in statutes. The courts may proceed in harmony with Parliament but there should be no discord." 137 To similar effect are the observations of Lord Millett at [80]: "But the creation of the statutory right has made any such development of the common law both unnecessary and undesirable. In the great majority of cases the new common law right would merely replicate the statutory right; and it is obviously unnecessary to imply a term into a contract to give one of the contracting parties a remedy which he already has without it. In other cases, where the common law would be giving a remedy in excess of the statutory limits or to excluded categories of employees, it would be inconsistent with the declared policy of Parliament. In all cases it would allow claims to be entertained by the ordinary courts when it was the policy of Parliament that they should be heard by specialist tribunals with members drawn from both sides of industry. And, even more importantly, the coexistence of two systems, overlapping but varying in matters of detail and heard by different tribunals, would be a recipe for chaos. All coherence in our employment laws would be lost." 138 Lord Bingham agreed with both Lord Hoffmann and Lord Millett. (See generally Brodie "Legal Coherence and the Employment Revolution" (2001) 117 LQR 604.) These observations are consistent with the reasoning of the joint judgment in Sullivan v Moody, particularly with respect to the requirements of coherence, and are pertinent to the present case. 139 In Johnson v Unisys, the House of Lords decided that there was no cause of action, either in contract or tort, for damages for financial loss flowing from psychiatric injury caused by the manner in which an employee was dismissed. Their Lordships considered that the same considerations applied to the imposition of a duty of care in tort as to the implication of an obligation in contract, but their discussion focused primarily on the contractual arguments. (See Lord Steyn at [13], Lord Hoffmann at [59] and Lord Millett at [81].) 140 Four members of the House of Lords decided that the determining factor preventing the cause of action in tort or contract was the legislative intervention by Parliament in the area of unfair or wrongful dismissals. Lord Steyn alone considered that an action on the implied obligation of mutual trust and confidence could sit comfortably with the legislative provisions. 141 Lord Nicholls at [2], Lord Hoffmann at [51]-[53] and Lord Millett at [73]-[74] (Lord Bingham agreeing with Lords Hoffmann and Millett at [1]) identify the aspects of the legislative intervention that render the imposition of either the relevant duty of care or implied term an inappropriate judicial step. Three matters were emphasised. 142 The first was the creation of specialist tribunals as part of the United Kingdom's legal system to hear and determine unfair dismissal cases. The jurisprudential development that had taken place under the statute would render a parallel common law action inconsistent with the considerations regularly assessed in the employment tribunals. 143 The second was the limitation of the class of applicants who could bring an action. The limitations were as to age of the employee and length of permanent service. The third was the limitation on the size of the award that can be made under the legislation. These last two factors suggested a concern on the part of the legislature to give a manageable scope to the liability of employers. 144 Lord Hoffmann describes the legislation as "an attempt to balance fairness to employees against the general economic interests of the community" (at [54]). 145 Additional considerations were the limitation on time for making an application (per Lord Nicholls at [2]) and the workability of the duty or obligation contended for, in that causation would be almost impossible to establish with any certainty and would result in generalised awards, infringing the rule that there are no damages for dismissal per se (per Lord Hoffmann at [48] and Lord Millett at [77]). Lord Hoffmann considered that such difficulties may have been one of the reasons that the tribunals were given a wide discretion to award a fair and equitable sum in compensation, but with limits as to quantum. A judicially-created cause of action at common law would extend existing rights without subjecting them to any kind of similar limitation. 146 Their Lordships distinguished the rights that had been created in Malik & Mahmud v BCCI, supra, using the implied obligation of mutual trust and confidence. They considered that the trust and confidence term was applicable only to an ongoing employment relationship. In cases of dismissal it would be necessary to imply a term or an obligation akin to a requirement to exercise the power of dismissal in good faith and with due regard to any known sensitivities of the employee. Such an obligation could not be consistent with the right of an employer to dismiss an employee on any grounds. 147 Similar considerations apply to the Australian industrial relations context, and similar purposes as those imputed to the UK Parliament are discernible in the legislation governing unfair dismissals in Australia. 148 With respect to the factors given weight in Johnson v Unisys, the relevant provisions in New South Wales under the Industrial Relations Act 1996 are: · Tribunals - Chapter 4 sets up the Industrial Relations Commission for the hearing of disputes under the Industrial Relations Act (ss145, 146); s84(1) provides that applications for a remedy after unfair dismissal are made to the Commission. · Class of applicants - s83(1) limits a right of application to public sector employees, any employee whose annual remuneration is less than $64 000 (supplied by Workplace Relations Regulations 1996 (Cth) 30BB, by reason of Industrial Relations Regulation 2001 (NSW) Clause 5) and any employee who is covered by an industrial instrument regardless of their remuneration. Also specifically excluded by s83(2) with Regulation Clause 6 are certain probational, short-term, casual and specific-purpose employees. · Size of award - the primary remedies are reinstatement or re-employment (s89). The quantum of compensation that may be awarded cannot exceed the value of 6 months' remuneration, discounted by any failure of the employee to mitigate his/her circumstances by seeking employment. · Time for application - an application must be made within 21 days of dismissal with provision for the consideration of out of time applications (s85). 149 The New South Wales legislation thus evinces a similar intention to that discussed in Johnson v Unisys, namely, to limit the class of applicants and the quantum of compensation that may be awarded within reasonable parameters, in the interests of employers and the community generally. Burazin v Blacktown City Guardian, supra, suggests that awards for compensation may be made for psychological injury provided the quantum is within the specified limits. Additionally, the scheme for dealing with unfair dismissal claims involves a specialised tribunal, with a range of remedial options and a requirement to expedite the proceedings by bringing a claim, in the usual course, within 21 days of dismissal. 150 These arrangements are directed to the efficient handling of unfair dismissal claims and would be thwarted by the creation of a parallel remedy of unlimited scope, that could be sought at any time, subject only to the Limitations Act, and would be dealt with in the general jurisdiction of the NSW court system without the availability of the primary remedies of reinstatement or re-employment. 151 The Commonwealth legislation (Workplace Relations Act 1996) is in very similar in terms. · Tribunals - s8 of the Act creates the Australian Industrial Relations Commission, its membership and operation. s170CE provides that applications in relation to unfair dismissals are to be made to the Commission. · Class of applicants - Under s170CB the general application of the Act in relation to unfair dismissals is to Commonwealth public sector employees, Territory employees, Federal award employees in a constitutional corporation and Federal award employees engaged in various occupations, the governance of which is within Commonwealth legislative power pursuant to s52 of the Constitution. s170CC and Regulation 30B limit the class of applicants by excluding those employed for a specified time period, a specified task, on probation of 3 months or less, a casual employee or trainee. Additionally, non-award employees earning above the specified rate (presently $64 000) are excluded from making applications. · Size of award - The Act provides for a process of mandatory conciliation (s170CF), followed (if unsuccessful) by an election of arbitration or court proceedings (s170CFA). The awards of amounts in lieu of reinstatement as a remedy in arbitration (under s170CH) and orders of payment made pursuant to Court proceedings (s170CR) are both limited by s170CH(8) and (9). These amounts are limited to, in essence, the value of 6 months' salary but not exceeding, in the case of non-award employees, $32 000. · Time for making applications - As in the New South Wales legislation, the requirement is to make an application within 21 days after the dismissal (s170CE(7)) subject to the Commission's capacity to permit an application outside the time limit. 152 The propositions set out above in relation to the operation of the New South Wales legislative provisions apply equally to the Commonwealth legislation. The combination in each Act of the confined class of applicant and the reference to salary proportions in the setting of limits on awards of damages means that, for non-award employees, compensation cannot exceed $32 000 in either jurisdiction. The provisions for consideration of unfair and unlawful dismissal claims in the Commonwealth context are even more detailed and confer an even more specialised jurisdiction upon the Australian Industrial Relations Commission than the NSW Commission. The matters to be taken into account and the mechanisms for attempting to settle claims at the conciliation stage and making determinations at the arbitration stage are comprehensive. The clear intention is to deal with claims constructively, the object of the procedures and remedies being to provide a "fair go all round" to both employer and employee (s170CA(2)). 153 The law of tort is part of the unified common law of Australia. In a different context it may be difficult to conclude that the development of the law of tort should be inhibited by the existence of statutory provision in only some of the component parts of our federal system. Although I have concentrated on the statutes in New South Wales and the Commonwealth, some form of special provision is found in all States. The authors of one text summarise the position as follows: "The specific nature of the provisions varies from state to state. Legislation in South Australia and New South Wales provides for a remedy where the termination is "harsh, unjust or unreasonable". In Queensland the assessment is whether the employee has been "unfairly dismissed", and in Western Australia the relevant question is whether the employee was "harshly, oppressively or unfairly dismissed". In Tasmania, the power lies within the general power to hear and determine industrial disputes (although with some modification). In some states, the legislation regulates the considerations that are to be taken into account in assessing whether or not the dismissal was "unfair". In New South Wales, Queensland and South Australia, these considerations are similar to those listed in s170CG(3) of the Workplace Relations Act 1996 (Cth). On the other hand, the assessment of whether or not the dismissal is unfair in Tasmania and Western Australia is subject to the Commission's general discretion."

(Macken, O'Grady and Sappideen, The Law of Employment, 5th ed, 2002 at 350-351, footnotes omitted. Victoria has referred its industrial relations powers to the Commonwealth.) 154 The area of unfair dismissals is heavily regulated in both the State and Commonwealth contexts. It represents a particular and carefully calibrated balancing of the conflicting interests involved namely, between preserving the expectations of employees on the one hand and enabling employers to create jobs and wealth, on the other hand. The arguments and factors accepted in Johnson v Unisys are directly applicable to the legislation examined above and the same conclusion, namely a refusal to expand the duty of care in negligence to provide an alternative cause of action for unfair dismissals, should be the result. 155 The expansion of the law of tort to matters concerning the creation and termination of a contract of employment, as distinct from performance under the contract, may distort the balance of conflicting interests found to be appropriate as a matter of contract or by intervention of statute. Where, as here, the courts are asked to create a novel duty of care, the courts should refrain from doing so where there is such a well developed alternative mechanism for adjusting the interests involved. Matters concerning the creation and termination of a contract of employment can, in my opinion, properly be left to the law of contract, subject to the extensive statutory modification that the parliaments have introduced into this specific area of contract law.

Coherence: Administrative Law 156 In the present case an issue also arises as to coherence with administrative law. 157 The issue is not one of interrelationship with the action for misfeasance in a public office. The joint judgment in Northern Territory v Mengel (1996) 185 CLR 307 at 348 and 352-353 indicated that the applicability of the law of negligence to public officials was one of the reasons for not extending liability for misfeasance in a public office in the manner sought in that case. (See also Sanders v Snell (1998) 196 CLR 329 esp at [37]-[40].) However, Brennan J in Northern Territory v Mengel identified incoherence as pertinent, where the default consists of an error as to the extent of a power. "The law", his Honour said at 359, "does not speak with a forked tongue when dealing with the limit of liability of a public officer". 158 In the present case, the relevant tension arises because the specific negligence alleged intrudes into matters within the heartland of judicial review of administrative conduct. 159 In relation to procedural fairness the general position was recognised by Deane J in Attorney General (NSW) v Quin (1990) 170 CLR 1 at 45, where his Honour said: "The law has not recognized a cause of action for damages for denial of procedural fairness in the exercise of statutory or prerogative powers. Curial relief, in the case of a denial of procedural fairness, is ordinarily confined to a declaratory order that the relevant exercise of power or authority is invalid and to ancillary relief to prevent effect being given to it."

(See also Park Oh Ho v Minister for Immigration and Ethnic Affairs (1989) 167 CLR 637 at 645) 160 In Macksville & District Hospital v Mayze (1987) 10 NSWLR 708 this Court by majority (Mahoney and Priestley JJA, Kirby P dissenting) dismissed an appeal from an order of a trial judge directing an inquiry as to damages in a case in which a medical practitioner had been denied natural justice in a decision-making process by a public hospital. However, the majority was careful to note that the decision in that case did not determine whether or not the doctor was in fact entitled to damages (at 731-732). 161 In legal proceedings in this Court, that culminated in the Privy Council decision in Dunlop v Woollahra Municipal Council [1982] AC 158, Wootten J had held that one aspect of a decision of the Council was defective, by reason of the Council's failure to afford the landowner procedural fairness. In subsequent proceedings before Yeldham J, the landowner sought damages on a number of different bases, including negligence. The Privy Council concluded (at 172): "Yeldham J held that failure by a public authority to give a person an adequate hearing before deciding to exercise a statutory power in a manner which will affect him or his property, cannot by itself amount to a breach of a duty of care sounding in damages. Their Lordships agree. The effect of the failure is to render the exercise of the power void and the person complaining of the failure is in as good a position as the public authority to know that this is so. He can ignore the purported exercise of the power. It is incapable of affecting his legal rights. In agreement with Yeldham J their Lordships are of opinion that the claim in negligence fails too." 162 Yeldham J had considered the issue of whether or not there was any duty of care at all. (See Dunlop v Woollahra Municipal Council (No 2) (1978) 40 LGRA 218 at 237-240.) His Honour noted, with respect to the defect that had been identified, that the Council had acted on the assumption that it had a power that it did not have. His Honour said (at 239): "The present is a case of the purported fixing of a maximum height which was later relied upon by the defendant as one of a number of reasons for declining to grant development approval at all. Not only does this fact raise questions of considerable complexity in relation to causation but it is relevant to the question of the existence of a duty of care and, indeed, breach. It is apparent also that the case is not concerned with the alleged negligent exercise of a power which a local authority undoubtedly has. Amongst factors to be considered is that the ascertainment of whether or not the defendant had the power which it purported to exercise under s309(4) is something which could equally be known to or capable of ascertainment by the plaintiff or those advising him, as it would be to the defendant. That question, as appears from the judgment of Wootten J raises questions of construction of some complexity. Here the defendant's error was one of law, and the consequence of its erroneous assumption that it had power to do that which it purported to do was that its resolution was a nullity and could have been ignored or (as was done) declared to be invalid. Whether, in the circumstances, it owed a duty of care to the plaintiff is a matter upon which I entertain considerable doubt and one which I need not finally resolve. I say this because I have come to the conclusion that, on the assumption that the defendant did have a duty to the plaintiff to exercise reasonable care of fixing or purporting to fix the maximum height of his building, it did not fail to exercise that care, notwithstanding that it had no power to pass the relevant resolution." (footnotes omitted) 163 In the Privy Council, their Lordships accepted his Honour's conclusion on breach, but noted that they shared his Honour's "considerable doubt" as to whether a duty of care existed at all (at 171). 164 In a Canadian case, a municipal bylaw concerned with zoning had been set aside as invalid on the basis that the defendant municipality had failed to comply with a self-imposed procedure for the giving of notice to affected parties. (See Wiswell v Metropolitan Corporation of Greater Winnipeg (1965) 51 DLR 2ND 754.) 165 In subsequent proceedings, seeking damages in negligence, Luscombe J, who delivered the judgment of the Supreme Court of Canada, characterised the decision-making process as based on a legislative and not a "quasi-judicial" power. (Welbridge Holdings Ltd v Metropolitan Corporation of Greater Winnipeg (1972) 22 DLR (3d) 470.) The primary basis on which the appellant failed was the quasi-legislative character of the zoning decision which was found to be defective. (See e.g. Pyrenees Shire Council v Day, supra, at [180] and [182] per Gummow J. See also Bienke v Minister for Primary Industries & Energy (1994) 125 ALR 151 at 173-174; Bienke v Minister for Primary Industries & Energy (1996) 63 FCR 567 at 591-592.) 166 In Welbridge Holdings, his Lordship went on to say at 478-479: "Moreover, even if the quasi-judicial function be taken in isolation, I cannot agree that the defendant in holding a public hearing as required by statute comes under a private tort duty, in bringing it on and in carrying it to a conclusion, to use due care to see that the dictates of natural justice are observed. Its failure in this respect may make its ultimate decision vulnerable, but no right to damages for negligence flows to any adversely affected person, albeit private property values are diminished or expenses incurred without recoverable benefit … because the risk of loss from the exercise of legislative or a adjudicative authority is a general public risk and not one for which compensation can be supported on the basis of a private duty of care. The situation is different for a claim for damages for negligence is based on acts done in pursuance or in implementation of legislation or of adjudicative decrees." 167 The exclusion of liability for failure to give procedural fairness may well be a specific example of a broader exclusion with respect to procedural irregularities in the performance of statutory duties or the exercise of statutory powers. In X v Bedfordshire County Council, supra, Lord Browne-Wilkinson said that common law liability will not attach in the case of an exercise of a statutory discretion "unless it is so unreasonable that it falls altogether outside the ambit of the statutory discretion". (See at 736 B-C, 736 H-737 A and 737 E-F.) 168 Although his Lordship used the terminology of "reasonableness" and, at the end of this relevant passage (at 737 G) began a discussion of "policy" decisions (in the sense of the problematic policy/operational dichotomy), I do not understand his Lordship to be confining his remarks to Wednesbury unreasonableness or to "policy decisions". (Cf Crimmins, supra, at [84]-[90] per McHugh J; Trindade & Cane, The Law of Torts in Australia (2nd ed) at 698-699.) 169 This approach is similar to that adopted by Brennan CJ in Pyrenees Shire Council v Day, supra, at 346 which his Honour affirmed in Romeo v Conservation Commission of the Northern Territory supra at 443 in the following passage: "In Pyrenees Shire Council v Day , I expressed my opinion that no duty to exercise a statutory power and to exercise it with care can be imposed by the common law on the repository of the power when the statute, operating in the particular circumstances, leaves the repository with a discretion whether to exercise it or not. If it were otherwise, the common law would impose on the repository a duty to decide for itself whether and in what manner the power should be exercised."

(See also Crimmins supra at [27] per Gaudron J.) 170 Where the conduct cannot be regarded as referable to the exercise of a statutory power in any way, then a statute should afford no protection from civil liability. Although I have rejected the use of public law concepts above, (note the observations of McHugh J in Crimmins at [86]) some assistance may be found in the formulation of Dixon J in a public law context: "… provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body." ( R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 615)

It is not appropriate to apply this reasoning as if it were a statutory formulation. It represents an articulation of an important principle. Conduct which travels so far from the statute is not within the ambit of such protection as it might afford. 171 Administrative law has been one of the most dynamic areas of the common law for over half a century. That dynamism has not yet run its course. The development of administrative law continues to raise difficult issues about the proper role of the courts. Although the process of balancing the conflicting interests has not stabilised, the substantial expansion has not led to a significant role for monetary compensation. 172 Compensatory damages for administrative error are available only in very limited circumstances. There is considerable debate about the role of such a remedy. See generally Barton "Damages in Administrative Law" in Taggart (ed) Judicial Review of Administrative Action in the 1980's, 1986, p123; Campbell "Liability to Compensate for Denial of a Right to a Fair Hearing" (1989) 15 Monash Uni Law Review 383; Allars "Tort & Equity Claims Against the State" in P D Finn (ed) Essays on Law & Government, vol 2, 1996, p49; Lachlan Roots "Damages for Wrongful Administrative Action: A Future Remedy Needed Now' (1995) 2 Aust J. of Admin L 129; PP Craig "Compensation in Public Law" (1980) 96 LQR 413; PP Craig Administrative Law (3rd ed), 1994, Ch 17; De Smith Woolf & Jowell, Judicial Review of Administrative Action, London, (1995), Ch 19; Panetta "Damages for Wrongful Administrative Decisions" (1999) 6 Aust J. of Admin L 163. 173 Proposals for the development of an administrative tort have been made from time to time, so far without success. The intrusion of the tort of negligence into the area of procedural irregularities in administrative decision-making could well overwhelm the traditional remedies of administrative law. 174 Perhaps the most significant characteristic of our system of administrative law is that, subject to special statutory regimes for merits review, the courts are concerned only with the legality of the decision-making process. The courts do not determine, either directly or indirectly, the substantive issue. Judicial review results, in the ordinary course, in the statutory decision-maker making the decision again. 175 The purpose of judicial review of administrative decisions is not compensatory. Its purposes include such objectives as upholding the rule of law and ensuring effective decision-making processes. (See, relevantly in relation to procedural fairness, Aronson and Dyer, Judicial Review of Administrative Action, (2nd ed) 2000 at 305-307.) The end result of proceedings for judicial review is not the exercise of a statutory function by the courts. Generally, the courts require the statutory function to be performed in accordance with the law by the person in whom the statutory function has been reposed. There are, however, circumstances in which the decision cannot be taken again. 176 An award of damages based on defective decision-making will often be explicable only on the basis that the decision ought to have been made in favour of the person who suffered damage. The effect of extending the law of tort to permit recovery of damages for errors subject to judicial review will therefore often be, in substance, to remove to the courts the determination of matters that a statute reposes in another. In my opinion, the courts should be very slow to extend the law of negligence to a new category that has such a consequence. (Cf Attorney-General v Prince & Gardner, supra, at 276.) 177 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 can be done 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 or even possible that a new decision-making process can have such an effect. The line between the two will often be contestable. The coherence of the law, in my opinion, requires restraint even in such a context.

Conclusion on Duty of Care 178 One matter that operates in favour of the recognition of the duty in the present case is the fact that it focuses on a relationship, i.e. that of employer and employee, in which a wide range of duties - indeed non-delegable duties - already exists. The authorities suggest that the development of the law in this respect should be incremental and proceed by analogy with established categories, e.g. Sutherland Shire Council v Heyman (1985) 157 CLR 424 at 481 per Brennan J. 179 Whether something should be described as "incremental" is a matter on which reasonable minds may differ. It may be appropriate to describe the addition of a new kind of duty into a relationship replete with such duties, as "incremental" in the relevant sense. The fact that so wide a range of duties is already recognised in the particular relationship is a factor in favour of recognising a new category. It does not, however, appear to me that the present context involves any analogy with an established category. 180 Another factor which is of significance is the vulnerability of the persons who may be subjected to negligent conduct. (See the authorities collected in Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43 at [29]-[43].) In the present case, this factor would favour recognition of a duty. With respect to the disciplinary process, a person whose conduct is being investigated is not able to protect himself or herself, other than by way of protest and proceedings for judicial review, if the investigators fail to observe proper procedures. 181 Finally, the element of "control" has been emphasised in a number of judgments. That element is satisfied here, in the sense that the Appellant, by its officers, was in control of the disciplinary process. 182 Nevertheless, the issues of coherence with the law of employment and administrative law, which I have discussed above, together with the element of incompatibility of duties, are so significant as to outweigh these considerations. In my opinion, there was no duty of care of the character found by his Honour.

Breach 183 The Appellant submitted that even if there was a relevant duty of care - to avoid the risk of psychiatric injury from the conduct of a disciplinary process, or to provide a safe system of discipline - there was no breach of this duty. 184 As indicated above, his Honour identified five separate matters that constituted a breach of the duty in the present case. His Honour did not differentiate between any of those matters when he came to discuss the issue of causation and damage. His Honour treated the breaches as having a cumulative effect. It will be necessary to consider each of the matters. Difficulties would arise if the Court were to uphold the appeal with respect to some of the matters but not with respect to others. 185 His Honour recognised that there may be contractual, common law or statutory obligations (and no doubt rights) that could be legitimately carried out in such a manner as to have similar adverse effects on an employee. Certain kinds of conduct would not constitute breach of the relevant duty by reason of compliance with an applicable standard of care. His Honour identified the standard of care in the most general terms. First, as "a proper or reasonable system". Secondly, as a system "carried out … in accordance with the rights of the employer to regulate its activities in accordance with contract, common law or statute". 186 The Appellant made submissions with respect to each of the five matters identified by his Honour as constituting a breach of the duty. 187 The first was the reference in the Director-General's memorandum of 18 February 1997 that "there will be full protection against legal action". The Appellant submitted that this could only constitute a breach if it was a negligent misstatement, in reliance upon which the Respondent suffered damage. It submitted that a fair reading of the statement must lead to the conclusion that it referred only to protection against legal action brought by the person who was the subject of any complaint. In any event, even if it could be read more broadly to encompass something in the nature of an amnesty for a person coming forward with information in response to the memorandum, it does not follow that it was a negligent misstatement simply on the basis that it was not adhered to. 188 The second matter to which his Honour referred as a breach was the assurance given to the Respondent that he was not the subject of an investigation. The Appellant submitted that this statement was completely true at the time it was made. It was only in the course of the investigation that information became known that called into question his own conduct. 189 The third matter identified by his Honour was the failure to accept a recommendation to the effect that some form of further investigation be conducted prior to laying a charge. The Appellant submitted that it is not negligent to make a decision of this character. It is entirely within the appropriate discretion of the decision-maker. 190 The fourth matter identified by his Honour was the finding that the Respondent had been denied procedural fairness. It will be necessary to consider the submissions in this regard in detail below. The Appellant submitted that there was no denial of procedural fairness, specifically that there was no obligation to choose the "inquiry route" rather than the "explanation route". 191 The fifth matter identified by the trial judge concerned the circumstances in which a decision was made to act upon the withdrawn resignation. The position as to whether or not such conduct was permissible at all is the subject of a separate ground of appeal. The Appellant submitted that, even if it be the case that the Appellant could not act in this way, there was some basis for believing that acceptance of a resignation was not required, and even if, as a matter of law, that proved to be erroneous, it could not constitute negligence. 192 The classic statement of the assessment of breach is that of Mason J in Wyong Shire Council v Shirt (1979) 146 CLR 40 at 47-48 where his Honour said: "In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal o fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position. The considerations to which I have referred indicate that a risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors." 193 These considerations have often been assessed in frequently recurring classes of cases and do not require express consideration in such cases. However, the need to balance these various considerations must be carefully borne in mind in a case, such as the present, where the Court is asked to determine a standard of care in a novel area. 194 In the context of statutory authority the "reasonable person" has been referred to as a "reasonable authority". (See e.g. Crimmins, supra, at [34] per Gaudron J and [90] per McHugh J.) For the present case I find it convenient to refer to a "reasonable investigator". 195 As is frequently the case, many of the factors that are pertinent to determining whether or not a duty of care should be imposed at all, also arise at the level of breach in terms of determining a standard of conduct. The matters I have considered in terms of incompatibility are also pertinent to the issue of breach. 196 Graham DCJ was well aware of the principles outlined by Mason J. However, in his judgment his Honour focused on the issue of incompatibility, to which Mason J referred, in terms of "other conflicting responsibilities". His Honour did not expressly consider issues of "the magnitude of the risk and the degree of the probability of its occurrence", nor issues of "expense, difficulty and inconvenience". These are matters that require consideration. 197 The determination of an appropriate standard of conduct with respect to avoiding a risk of psychiatric injury gives rise to the full range of considerations that have led the courts to proceed cautiously with respect to such injury. (See Morgan v Tame supra at [3].) These are matters that are likely to be reviewed in the cases presently reserved in the High Court. For present purposes it is sufficient to note that a standard of care in this field has to be determined in a context where linkages between conduct and injury are less transparent, inherently more contestable and more difficult to assess by forensic processes, than is the case with most forms of physical injury. The factors of "magnitude of risk" and "degree of probability" of the risk materialising, and "expense, difficulty and inconvenience", become particularly difficult to assess. 198 A standard of care must be determined in advance of an incident occurring. One of the great weaknesses of the tort of negligence, in its practical operation, is the propensity to determine a standard of care with the full advantage of hindsight in a particular case. Where the courts have determined a standard on the basis of experience obtained from hearing numerous cases of a particular character over a long period of time, this hindsight bias will tend to work itself out over time. In a case, such as the present, where a novel category of duty is under consideration, particular care must be taken to eliminate hindsight bias. 199 The courts do have experience about the effects of stress on persons, albeit not as extensive as the experience about cases of physical injury. It can readily be accepted that the process of laying disciplinary charges, the conduct of a hearing into those charges, and a finding that the charges are made out, will impose stress on the person whose conduct is being investigated. It can also be accepted that stress of that character may, depending on a wide variety of factors, not all of which are within the control of, or reasonably foreseeable by, a defendant, result in mental trauma. 200 The experience of the courts is not yet such as to enable a court to assess the degree of risk involved with any confidence. Nor is it such as to lead to a clear judgment as to the expense and difficulty of implementing measures that have reasonable prospects of protecting against the risk coming home. The position would of course be different if there was any evidence of known special vulnerability on the part of the person, the subject of the investigation. That is not the case here. 201 There is no particular evidence on these issues in the present proceedings. The body of experience on which the courts can draw is limited. In my opinion, the most that it is open for the Court to decide in the present case - on the assumption that there is a duty of care - is that there is a risk of the requisite character but that there is no sound basis for assessing the probability of the risk. The risk is foreseeable in the sense that it is not "far-fetched or fanciful", however, there is no proper basis on which the court can find, in favour of the Respondent, that this element in the balancing exercise is entitled to significant weight. 202 The second matter is the issue of "expense, difficulty and inconvenience". Again there is a tendency, when assessing matters of this character in hindsight, to focus only on the specific events that have happened and to identify a minor adjustment which would have avoided the injury in the specific case before the court. This form of hindsight bias must be avoided. The determination of a standard of care for purposes of assessing what a reasonable investigator would have done in the circumstances, must be made in advance of the specific incident under consideration, rather than in light of the particular facts of the case. The standard of care must be formulated ex-ante not ex-post. 203 A decision-maker will need to take precautions against a much wider range of risks than those which happen to have come home. (See, for example, the analysis of Bryson J in Waverley Council v Lodge [2001] NSWCA 439 at [29]-[37].) It is necessary for a court to assess "expense, difficulty and inconvenience" for all risks of a similar kind arising in similar circumstances. It is not appropriate to concentrate on the specific risk that came home in the particular circumstances of the case. The foresight required of a reasonable person cannot be confined by the pellucidity of hindsight. 204 The standard of care which his Honour applied would have the result that in all cases of disciplinary proceedings against teachers, not just in the particular case before the Court, the Appellant should, as a general rule, conduct much more detailed investigations prior to the laying of the charges and, also, as a general rule, conduct much more elaborate processes of inquiry, than that which occurred in the present case. This would cause additional expense and delay of a magnitude that the Court cannot judge on the materials before it. In this respect the evidentiary onus was on the Appellant. Nevertheless, it is a material consideration to place in the balance when determining the standard of care. In this regard the incompatibility of duties, that I have discussed above in relation to duty is also pertinent to breach. 205 I will treat each of the five matters found by his Honour to have constituted a breach of the standard of care separately. However, it is also necessary to assess their effect cumulatively, as his Honour did. 206 The first matter concerned the statement about "full protection against legal action". His Honour found that the Respondent misunderstood this statement to constitute some kind of amnesty applicable to persons who responded to the Director-General's memorandum. Whether that be a reasonable interpretation or not, I do not agree that the fact that the statement was open to such an interpretation constitutes a breach of the standard of care. The finding of breach appears to be based on the proposition that a reasonable investigator would not make statements capable of misinterpretation. In my opinion that is altogether too high a standard. In any event if there was a representation of this character at all, there was no suggestion of any kind that it was incapable of being withdrawn. 207 The second matter to which his Honour referred - the express statement that the Respondent was not the subject of an investigation - is of the same character as the first. Again, there was no suggestion that this statement could not be withdrawn. It was. The Respondent was given full notice of the subsequent process by charge and an opportunity to make submissions. 208 In the case of the second statement, it is relevant that it accurately reflected the state of mind of the person making it, as at the time it was made. A reasonable investigator would not, indeed could not, have acted differently. 209 The thrust of the Respondent's position with respect to the first two matters is that he was lulled into a sense of security which, in the event, proved to be false. No doubt this can lead to disappointment. There is no reason to believe that such disappointment carries with it any material risk of psychiatric injury. In this respect the "far-fetched and fanciful" test is, in my opinion, satisfied. The injury was not reasonably foreseeable. Furthermore, bearing in mind the conflict of responsibilities for those responsible for maintaining discipline - as elaborated in my discussion of conflicting duties under the heading of "Duty" above - a standard of care should not be determined which does not allow for the possibility that a reasonable investigator may change his or her mind during the course of an investigation. 210 In my opinion, the first two findings of breach were erroneous, whether considered in their own right or as an element entitled to weight in a cumulative finding. 211 The third matter concerned the decision to reject a recommendation that some form of further investigation be conducted before charging. There seems little doubt that the act of laying the charge itself had a significant effect in the present case. In my opinion, it would be reasonably foreseeable - on the "far-fetched and fanciful" approach - that this step could lead to mental trauma on the part of the person against whom the charges remain. However, reasonable foreseeability is not enough, whether at the level of duty or at the level of breach. 212 For the reasons indicated above, it is particularly difficult in the circumstances of this case to make an assessment of the magnitude of the risk of mental trauma arising from the act of charging. There is no reason to give this factor significant weight. Nor can it be set aside. 213 The element of expense and difficulty - understood as that required in the full range of analogous disciplinary proceedings, rather than for the specific case - is of comparatively little weight. The reason for this is that the matters subject to the investigation prior to charge would be required to be compiled in any event for the purposes of an investigation after charge. There does not seem to be any significant prospect of waste or duplication. Accordingly, the decision to conduct an investigation prior to charge would not lead to any significant additional expense. 214 In my opinion the determinative factor here is that of "conflicting responsibilities", to use the terminology of Mason J in Shirt's case. This involves the aspects of incompatibility I have already discussed. A number of additional matters should be noted. 215 Regulation 14 empowers the laying of the charge "[i]f it appears to a disciplinary authority that a member of staff may have committed a breach of discipline". The present is a case where it was reasonably open for a disciplinary authority to form the requisite opinion, without further investigation at that time. Although the power to lay charges is expressed in discretionary terms, the decision-maker has a responsibility for the proper administration of the education system to proceed when he or she thinks it is appropriate to do so. 216 In the present case, there were certain aspects of the conduct on the part of the Respondent that were matters that could reasonably be of concern. I refer in particular to the fact that the Respondent identified some complainants by name to the teacher about whom complaint had been made. This act was, understandably, in breach of the protocols for handling matters of this character that existed in the Department. In these circumstances, it was not, in my opinion, appropriate to conclude that the breach of the duty of care outweighed the conflicting responsibilities to the education system. 217 In my opinion, the conduct constituted by the rejection of further investigation before charge was not a breach of the standard, separately, or of significant weight in the cumulative assessment. 218 The fourth breach identified by his Honour was the denial of procedural fairness. 219 The obligation to accord procedural fairness is not capable of statement in a form that identifies a standard of care for purposes of assessing conduct and determining whether or not the standard is breached. Procedural fairness is a principle rather than a standard or rule. 220 It has been said on many occasions that the doctrine of natural justice or procedural fairness, however it is expressed, does not constitute a fixed body of rules. The particular requirements of procedural fairness depend on all of the circumstances of the case, including the nature of the inquiry and the subject matter being dealt with, the statutory framework and the expectations as to conduct that have arisen in the particular context or the particular case. (See e.g. Russell v Duke or Norfolk (1949) 1 All ER 109 esp at 118; R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 at 553; Kioa v West (1985) 159 CLR 550 at 584-585, 594, 612-616.) 221 As I have said above, it is not appropriate to state the standard in public law terms of procedural fairness. The issue is what would a reasonable investigator, mindful of the risk of mental trauma, have done by way of conducting the inquiry. 222 I have outlined his Honour's relevant findings in pars [28] to [37] above. The thrust of those findings is not that the failure to give a more elaborate hearing, of itself, had any impact on the Respondent. It is that a more elaborate hearing, and an opportunity to comment on certain matters, may have led to a different outcome. His Honour's conclusion was based, in large measure, on his own observation of the Respondent as a witness. This Court is slow to interfere with findings of that kind. 223 I have a great deal of difficulty identifying an appropriate standard of care for an investigation of this kind. It is by no means clear to me that a reasonable investigator would have done or not done all the various things that his Honour identified as constituting a denial of procedural fairness. Nothing would suggest that the "inquiry route" rather than the "explanation route" must be chosen. As emphasised in Hill v Green, supra, there were many options for a more elaborate hearing, short of a full "inquiry" under Regulation 15(2)(b). 224 It is of particular significance to note that the range of disputation was very limited. The basic facts were common ground. The factors that his Honour believed justified an oral hearing concerned the "motivation and intention" or the "attitude and intentions" of the Respondent (see pars [28] and [33] above), that the Respondent was not given an opportunity to fully understand the case against him [35] and, accordingly, that the investigator was not adequately informed of all the relevant facts. (See pars [29]-[34] and [37] above.) 225 In assessing the significance of a more elaborate hearing, from the point of view of the conduct of what a reasonable investigator would have done, it is material to consider the whole of the circumstances in which the investigator found himself. The particulars of the charge referred to ten separate particulars concerning allegations of improper conduct of a sexual nature against four female students. In a number of respects the complaint was a failure to report the allegations. In other respects the complaint was the fact that the allegedly offending teacher had been told about the allegations and, in some cases, had been told the name of the student making the allegation. Most of the particulars stated expressly: "This was a failure to follow Departmental policy". 226 The Respondent was supplied with a Departmental document setting out the case against him with respect to each particular in the charge. It attached the various departmental documents establishing procedures for handling allegations of child sexual assault. 227 After having been notified that the prescribed officer proposed to proceed by the explanation route rather than the inquiry route, the solicitors for the Respondent made a submission suggesting that a full inquiry was required. The submission was to the effect that there would be a denial of procedural fairness if that option was not pursued. It was rejected. No steps were taken to challenge that decision. 228 The Respondent by his solicitors made a detailed submission with respect to each charge. The submissions made express reference to the various published policies of the Department and addressed each of the particulars of charge, explaining the Respondent's conduct and noting, for example, that copies of relevant policies were not, in some cases, available at his school. Many of the submissions, it appears, were accepted because certain particulars were not upheld. However, some particulars were found proven. Submissions were invited on penalty. 229 In the submissions on penalty, the Respondent's solicitors identified the adverse finding in terms of a failure to carry out the Departmental procedures and submitted that that was a very different thing from negligence. They noted that particular weight was given to the effects of the disclosure to the teacher concerned of the name of the complainants. The submission was made that this would not have endangered the particular girls. 230 It is clear that significant questions of judgment were involved in determining whether or not a more elaborate hearing process was required. The prescribed officer could see that the range of factual disputation was in a very narrow compass, that the Respondent was legally represented and that detailed submissions on fact and law had been made at each relevant stage of the inquiry process. 231 As indicated above, in my opinion his Honour erred in expressing his conclusions in public law concepts. Even if it be the case that there was a denial of natural justice for administrative law purposes, a matter which need not be determined, the focus in this case must be whether or not a more elaborate oral hearing process should have been chosen by a reasonable investigator mindful of the risk of mental trauma from an adverse finding. That is quite a different standard. It is not one applied by his Honour. Nor is it a matter upon which this Court was addressed in any detail. The submissions in this Court proceeded on the assumption that the public law test applied by his Honour was an appropriate one for determining breach of a duty of care. 232 In the absence of proper submissions in this regard I do not find it appropriate to determine this question. It is not necessary to do so in view of the conclusion I have come to above with respect to duty. Even if I were wrong in that regard it would not be necessary to do so by reason of my conclusions on the issue of causation below. If this were the only particular of breach that were made out, his Honour's finding of negligence would, in any event, need to be set aside. 233 The fifth matter was the acceptance of the withdrawn resignation. I will deal with the legal issues more fully below in relation to the contract case. Again, I find it difficult to articulate a relevant standard of care. What was involved was a legal error as to whether the resignation remained open for acceptance. As the Privy Council said in Rowling v Takaro Properties, supra at 502 quoted above, such an error is most unlikely to be a breach of a duty of care. The case put by the Appellant to this Court, that I reject below, was reasonably arguable. I do not believe such an error can be a breach of duty. 234 On the one hand, there was a basis for believing that the common law rule that a resignation could not be withdrawn was applicable. On the other hand, the Appellant did not seek to contradict the Respondent's case that the common law had been modified in practice with respect to the Teaching Service. 235 This aspect of breach should be determined by giving significant weight to foreseeability of risk and the low probability of the risk materialising. Putting aside questions of causation, the idea that to accept a withdrawn resignation, rather than to direct a resignation, would result in psychiatric damage strikes me as far-fetched and fanciful or of such low probability, that a reasonable decision-maker would not take the risk into consideration. 236 This fifth matter, whether alone or in combination with other matters, did not constitute a breach of the duty I have assumed to exist. 237 The end result is that his Honour's findings of breach should be rejected, save in one respect which it is not appropriate to decide.

Causation 238 Causation arises in the alternative to my conclusions on each of duty and breach. The Appellant submitted that there was no evidence about which particular acts caused damage. Specifically, it could not be established that the damage was attributable to any, or all, of the five respects in which the conduct of the investigation and disciplinary process was found to be negligent. It was submitted that there was no evidence as to what would have been the effect on the Respondent if charges had been proceeded with in a correct manner, e.g. if the Prescribed Officer had pursued the inquiry route rather than the explanation route and had not otherwise failed to accord procedural fairness. 239 The difficulty of proving that psychiatric damage was caused by the manner of dismissal, rather than the fact of dismissal, has often been emphasised. (See Johnson v Unisys Ltd supra at [29], [48] and [77].) The same difficulty arises here. 240 There can be no doubt that the Department was entitled to investigate the possibility that the Respondent had committed a breach of discipline. His Honour accepted that the Appellant would not be liable for the consequences of a process that was carried out in accordance with the requirements of procedural fairness. This is the equivalent of liability for the "fact of a dismissal", referred to in Johnson v Unisys. As the observations in that case suggest, it is necessary to disentangle the effects of the process itself, from the effects of the acts found not to accord with the conduct of a reasonable investigator mindful of the risk of mental trauma. 241 I have rejected the findings of breach save in one respect. The following analysis would apply with greater force if issues of causation were confined to the single breach, relating to procedural fairness. I proceed to consider causation on the basis that his Honour's findings of breach were correct. 242 I have set out in pars [42]-[43] above his Honour's findings on causation. To reiterate, causation was established on the basis that "the reason for the depressive disorder which the plaintiff suffers is the course of treatment of him by the Department of Education which I have found was a breach of its duty of care". 243 In this passage his Honour identifies the relevant "treatment" as those aspects that his Honour found to be a breach, namely the five matters set out in par [24] above. The finding of causation treats the five breaches cumulatively. I will proceed on the assumption, contrary to my views expressed above, that all five breaches were made out. 244 These matters found to be breaches were not, however, the only events that occurred in what - to use his Honour's phrase - can compendiously be described as "the course of treatment" of the Respondent by the Department. There were numerous other aspects of such treatment, including aspects about which the Respondent complained but which did not lead his Honour to make a finding in his favour. The Respondent sought to rely on the conduct extending over a period from 1992 to 1998. His Honour, however, confined his findings to those particulars of breach which occurred between early 1997 and early 1998. 245 Subsequently, when his Honour came to determine the appropriate amount for non-economic loss pursuant to s151G of the Workers Compensation Act, his Honour said: "Although the psychological evidence would suggest that the depressive condition was in existence as a result of the events of 26 August 1997, and that symptoms date from that time, the question of fixing a precise date for the injury is by no means straight forward. It seems to me that the crystallisation of these matters should properly be regarded as occurring early in 1998, so that the appropriate date is the adjustment to statutory figures as at 1 October 1997." 246 The reference to 26 August 1997 is a reference to the charge. There was evidence that the Respondent commenced to suffer after he was charged. I have referred above to the report of the consultant psychologist, Ms Knox, of 13 February 1998. 247 His Honour found that the charge itself 'astonished' perhaps 'angered' and 'staggered' the Respondent. "As the matter progressed, it became clear to him that something drastic was going to happen to him. At that time, also, the medical evidence would suggest that he was beginning to experience the symptoms of depression." 248 The trial judge's consideration of breach and causation did not distinguish conduct that occurred before the charge from conduct that occurred after the charge. 249 However, in the context of finding that the Respondent's resignation was made "in the heat of the moment" and was able to be withdrawn (which I will discuss below) his Honour found that the onset of the Respondent's depression was the act of charging. His Honour referred to the Respondent's medical evidence: "… each of those experts … trace the condition diagnosed to the handling of the investigation and disciplinary proceedings concerning the plaintiff. The most complete early report is clearly that of Ms Knox, the consultant psychologist, who very specifically dates the symptoms of depression back to the charging on 26 August 1997." 250 His Honour referred to the resignation of October 1997 as occurring: "… in circumstances where he was experiencing the symptoms of depression in the way described by Ms Knox, that is, he was, at that stage, suffering from the psychiatric condition categorised as depression as referred to on p10 of her report." 251 This is merely illustrative of the difficulty of distinguishing the effects of the fact that there was a charge and investigation process, on the one hand, from the inappropriate or negligent conduct of the charge and investigation process, on the other hand. Notwithstanding that the courts must determine issues of causation on the basis of "commonsense", there nevertheless must be some basis for linkage between the damage and the conduct found to be negligent, as distinct from a linkage between the damage suffered and conduct of a general character, of which the allegedly negligent conduct was merely a component. The negligent conduct must have at least materially contributed to the injury suffered. Material contribution is not a difficult hurdle to overcome. It does, however, require some ability to distinguish the effects of the conduct found to be deficient, from the effects of other conduct occurring simultaneously. 252 None of the expert evidence before his Honour, nor so far as I am able to determine any other evidence, enabled the court to distinguish the effects of the process of charge and investigation as such, from the effects upon the Respondent of the particular defects in the process that his Honour identified. 253 The expert evidence, that I have set out in pars [39]-[41] above, attributed the Respondent's condition in general terms to the entirety of the Respondent's treatment, without being able to identify in any manner an effect that arose from any particular matter, let alone from the defects in the procedures that his Honour found to have occurred. This is so whether those defects are considered individually or cumulatively. As an example, Professor MacFarlane referred generally to the depression being attributable "to the administrative procedures of the Department of Education". 254 The trial judge was not bound to confine his consideration to the expert reports. (See e.g. EMI (Australia) Ltd v Bes [1970] 2 NSWR 238 at 241-242; Fernandez v Tubemakers of Australia [1975] 2 NSWLR 190 at 194.) It was open to him, on the basis of the whole of the evidence, to conclude that there was a sufficient causal relationship between the particular defects he identified and the mental trauma. Although he did not do so in the course of his express consideration of causation, there are statements of that character. 255 I refer in particular to his Honour's reasoning to the effect that a full inquiry would not have led to an adverse result. (See pars [28]-[37] above). The thrust of this reasoning is that a process that gave procedural fairness would have led to the dismissal of the charge. If that is the way this analysis should be understood then, in substance, it may be seen as a finding that there was a causal link between this particular breach and the mental trauma. 256 This conclusion requires an intermediate step in the reasoning, namely, that mental trauma would not have occurred if the charge had been dismissed. However, this step appears to be inconsistent with the finding that the injury had occurred at the time of the charge. 257 There are a number of features of the element of causation that are unsatisfactory, particularly the generalised character of the expert evidence. What is required is a finding of fact that a causal connection is probable, not merely possible. (See the authorities collected in Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262 at [79]-[91].) 258 In my opinion, the Respondent did not establish on the balance of probabilities that the acts constituting breaches of the duty of care - as distinct from the process of charge and investigation - caused the mental trauma he suffered. I would allow the appeal on this alternative basis.

Contract 259 The Respondent advanced alternative and incompatible cases in contract. The first claim alleged wrongful dismissal constituted by the act of accepting the withdrawn letter of resignation. The alternative basis was that the contract of employment had never been terminated. His Honour found in favour of the Respondent on the second basis. 260 The parties proceeded as if the contract of employment had in fact been terminated. No services were performed. Superannuation payments were received. To approach this case as if the Respondent had always been employed is artificial. However, that is what the trial judge did. The submissions in this Court proceeded on this assumption. There was no appeal from his Honour's finding that the Appellant was estopped from asserting that there had been a constructive dismissal. The Respondent did not seek to agitate a wrongful dismissal case by way of cross appeal, notice of contention or in submissions. I will confine myself to the submissions actually made in this Court. 261 One of the submissions made by the Appellant was that the allegations of breach in tort and contract were in some way "the same in substance", in that they were based on disciplinary proceedings that denied the Respondent natural justice. This submission should be rejected. The breach of contract case was neither put nor decided on any such basis. 262 I have outlined above the four grounds of appeal relating to the claim based on contract. No submissions were directed to the first such ground - that his Honour erred in finding that the Appellant was in breach. Nor did his Honour expressly make any such finding. The submissions were directed to two alternative bases on which his Honour's conclusion that the Respondent remained an employee, should be overturned. First, that the Appellant was entitled to defer the Respondent's resignation and then act on it. This raised s78 of the Act. Secondly, that the Appellant was entitled to rely on s97 of the Act.

Acceptance of the Resignation 263 Alternative submissions were put to the Court designed to establish the ultimate proposition that it was open to the Director- General to act on the resignation that the Respondent had purported to withdraw. 264 First, the Appellant submitted that the act of resignation was a unilateral act not capable of withdrawal. In this regard, the Appellant referred to the consideration by the trial judge of the authorities that suggest a qualification to the effect that a resignation made in the heat of the moment or in a state of emotional stress can be withdrawn. It submitted that, even if that is the law in Australia, it should be restricted to circumstances where a resignation was withdrawn quickly after an employee had recovered composure. The Appellant submitted that the present case was not such. 265 Alternatively, the Appellant relied on the terms of s78 of the Act, which I have set out above, and submitted that that section contained no words limiting the time for acceptance by the Director-General of a resignation. His Honour found that the resignation was no longer extant, by reason of the construction of s78 of the Teaching Services Act which his Honour adopted. I will deal with the s78 point first. 266 His Honour found that s78 "provides for the circumstances in which a resignation operates so as to deem the vacation of an officer's position". His Honour said: "… the provisions of s78 do not permit the Director General to indefinitely defer consideration of a notice of resignation." 267 His Honour went on to hold that the "indefinite deferral, pending the disposition of disciplinary proceedings", was a constructive refusal to accept the resignation. His Honour concluded that, by reason of this "constructive refusal", the resignation had lapsed at some point prior to its purported acceptance. The Appellant submitted that his Honour's construction of s78 included, in effect, a time limitation and this was incorrect. Accordingly, it was submitted, the conclusion that the resignation had lapsed in some manner was wrong. 268 His Honour's conclusion that the resignation had been rejected under s78 was only one of the bases upon which his Honour concluded that the resignation could not be accepted when it was. Section 78 operates to identify the time that a "position" is vacated, relevantly, as the time the resignation is accepted. If a resignation is not "accepted", then this consequence does not ensue and that is so whether a resignation has been rejected or not, or not yet, accepted. I do not see any room in this statutory scheme for a constructive rejection. 269 Section 78 is found in Div 4 of Pt 4 of the Act which is concerned with appointments to positions and appeals. The Director-General is empowered by s59B to make an appointment of a person where there is a "vacancy in a position". Persons who are "eligible" to be appointed in accordance with the criteria set out in s59D, are "to be considered for the position" (s59C). With respect to positions other than those to which s59C applies, other provision is made by s59D, but once again with respect to a "vacancy in a position". Provision is then made for appeals from any decision of the Director-General, including a decision to fill vacant positions, to which s59C applies. (See s50(1)(d)) 270 It is an important aspect of this statutory regime that the point of time at which there is a "vacancy in a position" is determinable with certainty. This requirement does not permit for the intrusion of an indeterminate matter such as the identification of a point of time at which mere delay constitutes a "constructive refusal". 271 I would also reject the Appellant's submissions that s78, of itself, operates in some way to empower the Director-General to defer acceptance of the resignation. Section 78 does not contain any implication that a resignation once proffered is in some manner frozen until the Director-General makes a decision. I will consider below whether s78 has the precisely opposite effect to that for which the Appellant contended. 272 I turn to the Appellant's alternative argument: that the resignation was a unilateral act not capable of withdrawal. 273 The notice of resignation signed by the Respondent on 13 October 1997 was stated to take effect from 2 March 1998. The Respondent filled out a printed form that, at the top, referred to "Teachers Resignation / Retirement". In a box on the form headed "Reason for Resignation", the Respondent had written in his own hand "Retirement". For present purposes, nothing appears to turn on any distinction between "resignation" and "retirement". The Court's attention was not directed to any statute or regulation in which this distinction is drawn. 274 The evidence as to the practice and procedure with respect to the printed forms of this character was in a very narrow compass. A footnote on the printed form itself states: "Detailed advice is contained in the Handbook (2.20)". No evidence was before the Court as to the contents of the Handbook. 275 The uncontradicted evidence of the Respondent was that the practice of the Department was to permit teachers to withdraw such notices. He said: "It was of course open to me to withdraw that resignation if things had turned out differently"

and "Any teacher has the right to withdraw retirement or resignation I believe up until the date or the day before". 276 It appears that the practice was to forward the completed document to the relevant regional office. The District Superintendent for the Northern Beaches District Office of the New South Wales Department of School Education wrote on 20 October 1997 to the Manager, Employee Relations. She said: "I attach a Retirement Form that I have received for processing from Peter Paige, Principal, … I note that Mr Paige is flagged on the AS 400 with you as contact person. Greg Watkins, our Senior Industrial Officer, has advised today not to forward the retirement form to Teacher Services until Mr Paige's case has been finalised by the Employee Relations Unit. I hereby enclose Mr Paige's Retirement Form for you to forward to Teacher Services for processing when the timing is appropriate." 277 Subject to any contractual or statutory provision to the contrary, the act of resignation from employment, or from membership of an organisation, is a unilateral act that takes effect in accordance with its terms and does not depend upon acceptance by the person or body to whom the resignation is directed. This common law principle is a reflection of the significance the common law has always attached to personal autonomy. Where this principle applies, unilateral withdrawal of a resignation or notice of termination is not possible. 278 The historical position that resignation from offices was not complete until acceptance, has often been modified. Although it is still common to talk of resignations in a contractual context being "tendered" and "accepted", such formulations are "merely linguistic courtesies". (See Marks v The Commonwealth (1964) 111 CLR 549 at 571 per Windeyer J.) 279 There are, however, particular offices to which special considerations attach, so that a resignation does not take effect until acceptance. It was not suggested that the office of principal of a public school was of this kind. Nor did the Appellant seek to rely on any general principle relating to service in an office under the Crown. (See e.g. Marks v The Commonwealth, supra, at 557 per Kitto J; cf at 586-588 per Windeyer J.) 280 There are four alternative bases upon which it might be concluded in the present case that the principle that a resignation cannot usually be withdrawn does not apply: i. That s78 constitutes a statutory modification of the common law so that acceptance is required before a resignation takes effect.

ii. That the exception to the common law principle suggested in some case law, permitting withdrawal of a resignation made in the heat of the moment, applies in the present case.

iii. That the practice that had developed in the Department to permit the withdrawal of a resignation, a practice which may have contractual force, can be relied upon by the Respondent.

iv. That the resignation did not have effect because it had not reached a person with authority to receive it on behalf of the Crown. 281 The common law principle that a resignation may not be withdrawn can be modified by statutory provision. (See e.g. McCarry "Termination of Employment Contracts by Notice" (1986) 60 ALJ 78 esp at 80 and the examples set out by Windeyer J in Marks v The Commonwealth at 571-572.) If a statute provides that a resignation does not take effect until acceptance, then the common law principle that a resignation is a unilateral act does not apply and a resignation may be withdrawn. 282 In the context of public sector employment it is often the case that the provisions of a contract and of a statute exist side by side. The distinction between persons who occupy an office and those persons who are employees is often of significance. (See generally McCarry, Aspects of Public Sector Employment Law, Law Book Company, 1988, Ch 2.) The creation by the Teaching Services Act of "positions" is a statutory equivalent of the common law concept of an "office", that may exist side by side with a separate regime regulating conditions of employment. The issue is whether s78, expressed in terms of a vacancy in a "position", extends to encompass the termination of the contractual relationship. 283 In the specific context of a contract of employment, the principle that a resignation cannot usually be withdrawn serves important purposes. In a judgment that has often been referred to with approval, (Birrell v Australian National Airlines Commission (1984) 5 FCR 447) Gray J said (at 458): "The purpose of providing in a contract for a period of notice of termination is to enable the party receiving the notice to make other arrangements. An employee given notice by his or her employer has a period of time in which to seek another job; an employer who receives notice has time to arrange for a substitute employee. It would be harsh if arrangements so made during the running of the notice could be disrupted, and parties could be held to their contracts by unilateral withdrawal of the notice at the last minute. Such withdrawal, if possible, could lead to an employee being bound by contracts of employment to employers, or an employer being bound by contracts of employment with two employees, each being required to give notice to one or the other in order to be extricated from this position, or possibly to suffer the requirement to forfeit or pay wages for a period of time. In my view, I should lean against the adoption of any principle which could lead to such unfortunate consequences, and I should follow the authorities which tend to establish that withdrawal of a notice of termination of a contract of employment can only be effected by consent of both parties." 284 The submissions in this Court were not directed to the interrelationship between the occupation of the "position" under the Teaching Services Act and the status of persons as Crown employees. Similar issues arise elsewhere in the public service under different statutory regimes. In such a context, this Court ought not, in the absence of submissions directed to the issue, determine whether or not the occupation of a "position" and the employment relationship are in some manner coincident, so that s78 ought to be construed to modify the common law principle with respect to withdrawal of a resignation." 285 The second basis referred to above for the conclusion that the resignation in the present case could be withdrawn, is derived from the case of Martin v Yeoman Aggregates Limited [1983] ICR 314, in which a person who terminated the employment of an employee in the heat of the moment and in a highly emotional state was held to be entitled to withdraw a dismissal when he did so within five minutes. Gray J said in Birrell at 459 that this case did not extend"beyond permitting the withdrawal of words uttered in the heat of the moment, when those words are retracted swiftly". The circumstances in which a withdrawal of a resignation may be permitted have been further considered (see e.g. Ngo v Link Printing Pty Limited (1999) 94 IR 375 at 378; Achal v Electrolux Pty Limited (1993) 50 IR 236 at 238-239). 286 By reason of the significant purposes served by the common law principle, the qualification should be restricted to circumstances in which the act of resignation was not, in truth, a manifestation of the personal autonomy of the individual. 287 The application of the relevant case law in the instant case, involving the withdrawal of a resignation some months after it was proffered, appears to me to go further than any of the previous authorities and should not be accepted. However, it is not necessary to decide this case on this point. 288 There may be circumstances in which a contractual restriction on resignation will be inferred. (See e.g. Redhead Grange Incorporated v Brett Davidson [2002] NSWSC 90 at [5]-[9].) No express contractual modification was suggested in the present case. However, there was a practice that may or may not have had contractual force. 289 The Respondent's evidence, to the effect that the practice was to permit resignations to be withdrawn was, as I have indicated above, uncontradicted. Where such a course of dealing has arisen in a specific context the common law position may be modified. It may operate contractually. Alternatively, there may be a basis for an estoppel. 290 In my opinion, the Respondent's evidence was evidence of the practice and not merely evidence of his belief. It is suggestive of a modification of the common law principle to which I have referred. Plainly, it is a matter upon which the Appellant could have called evidence, but did not. If the only issue were the existence or otherwise of such a practice the uncontradicted evidence of the Respondent should be accepted. However, that is not the only issue. 291 The Respondent also bore the onus of proving what, if any, impact the practice had upon his legal position, whether by means of establishing a particular term of the contract or by way of estoppel. In my opinion, the evidence did not go far enough to have either consequence. 292 I turn therefore to the fourth matter identified above. A document containing a resignation may be withdrawn if it does not reach the employer in the manner for which the contract of employment provides. 293 In Finch v Oake [1896] 1 Ch 409, the Court held that resignation from a voluntary association took effect without acceptance and accordingly could not be unilaterally withdrawn. (See also Sayali v Rangi [1986] 4 ACLC 239 at 242.) However, Lindley LJ said obiter at 415-416: "He wrote to the committee stating that he desired to withdraw from the society. If this letter had never reached the secretary it might have been treated as non-existent. But the letter did reach the secretary, and for a month afterwards the plaintiff allowed it to remain without any retraction or explanation." 294 The issue did arise in Riordan v War Office [1959] 1 WLR 1046. In that case an employee at an industrial establishment of the War Department had filled out the blank printed form of resignation and handed it to his stores superintendent. He subsequently rang to ask that it be withdrawn. Some three days later the commanding officer decided to accept it notwithstanding the attempt to withdraw. Diplock J (as his Lordship then was) applied the principle that such a resignation could not be withdrawn save by mutual consent and considered the issue of when notice was given. His Lordship said (at 1054-1055): "If it was only given when the commanding officer received it on April 16, then in my view the plaintiff was entitled to withdraw it up to that time. The regulation under which the notice purported to be given does not say to whom the notice was to be given, although the form provided by the War Office is addressed to the officer commanding. The question turns upon whether the stores superintendent received it as agent for the commanding officer or whether he received it from the plaintiff to transmit it to the commanding officer on the plaintiff's behalf … It seems to me that the notice must have been received by the stores superintendent as an agent for the commanding officer, and the plaintiff in handing it to him intended to give it to him in that capacity. He was the plaintiff's superior officer and the natural person to whom such notice would be given by an employee in the plaintiff's position." 295 The issue, as I have identified it above is whether or not the resignation reached the employer in the manner for which the contract of employment provided. This is close to the formulation of Lord Lindley in Finch v Oake to the effect that the resignation had "never reached the secretary". It is not quite the same as the formulation of Diplock J in Riordan v The War Office in which his Lordship distinguished between the delivery of the resignation to a person as the agent of "the commanding officer" and a delivery to the "store superintendent" only for the purposes of transmission to the commanding officer "on the plaintiff's behalf". The intermediary was, in the circumstances of that case, either an agent of the employer for receipt or an agent of the employee for transmission. 296 I do not understand Diplock J to have intended that characterisation of the agency undertaken by the intermediary is an exhaustive statement of the circumstances in which one could conclude, in Lord Lindley's expression, that the resignation "had never reached" the agent of the employee. Determining for whom a particular person was acting does not necessarily determine whether a resignation has reached the employer in the manner for which the contract provides. 297 In the present case the District Superintendent said that she had received from the Respondent the document, to which she referred as a "Retirement Form", for a purpose she described as "processing". It appears from the letter, that in the normal course, she would have forwarded the document to a unit of the department referred to as Teacher Services. However, in view of the disciplinary proceedings against the Respondent, which had somehow been "flagged" on the relevant file, she forwarded the Form to the Employee Relations Unit. It would be held there in some form of escrow, so that that manager could "forward the document to Teacher Services when the time is appropriate", also for a process described as "processing". 298 The evidence was scant about the functions performed by the different parts of the education of bureaucracy in this regard. Nevertheless, it does appear that the unit referred to as Teacher Services was the body to which a resignation was required to be directed i.e. the equivalent of the commanding officer in Riordan v The War Office. No doubt, in many circumstances the District Superintendent could accurately be described as the agent of the employer for purposes of receipt of a resignation. In a case in which the District Superintendent had passed the document on to Teacher Services then, if it were material to decide the date of the receipt, it may well be backdated to the date of receipt by the District Superintendent. No doubt for other purposes under the contract, the receipt by the District Superintendent would constitute receipt by the employer. The Retirement Form suggests that a period of notice of one month is regarded as appropriate. It may very well be that the period of one month commences from the date of delivery to the District Superintendent. In all these cases, the issue is the identification of the terms of the contract and their proper construction. 299 The general proposition I have identified above is that a resignation may be withdrawn before it reaches the employer in the manner for which the contract of employment provides. This is the relevant term of the contract. Whether a document has reached the employer in the manner required is a matter to be determined objectively and not on the basis of a belief that an employee may have that he or she had delivered the resignation to the correct person. The intention of the Respondent is not, in my opinion, determinative. 300 The intervention of the District Superintendent in diverting the resignation from its proper course and despatching it to some sort of escrow in the unit responsible for the disciplinary proceeding prevented, in my opinion, the document reaching the employer in accordance with the terms of the contract relevant to the issue of withdrawal of a resignation. By reason of the "flagging" of the Respondent's position on the relevant documentation, the District Superintendent was diverted from the function that she may otherwise have performed as the relevant agent for receipt of the resignation and was transformed into an agent of the employer for purposes of deferring the resignation indefinitely. In my opinion, this conduct had the effect that the resignation was not received by the employer for purposes of determining whether or not it could be withdrawn. The position may be different if the employee is seeking to assert that the resignation was received by the employer. 301 My conclusion is reinforced by the conduct of the investigation on behalf of the Director General, that ignored the existence of the letter of resignation. The prescribed officer conducting the investigation made a recommendation on 9 December 1997 that the Respondent "be allowed to tender his resignation". By letter of 23 December 1997, the Director General of Education wrote that he proposed not to accept that recommendation, but exercised his power "to direct Mr Paige to resign". This letter was forwarded after the Respondent had withdrawn his resignation on 16 December 1997. The recommendation of the prescribed officer and the decision of the Director General, ignored the letter of resignation and treated it as having been of no effect. In my opinion, they treated it as if it had not been received by the employer. It appears that the practice and procedure with respect to employment of teachers was such that no resignation was regarded as having been received until such time as if it was received by or on behalf of the unit of the department called Teacher Services. 302 In my opinion, the appropriate inference in this case is that the individuals in the department who had received the document of resignation prior to its withdrawal, did not receive it in the manner for which the contract of employment provided. It had not reached any person with the appropriate authority at the time it was withdrawn. Accordingly, there was no inhibition on the withdrawal." 303 The Appellant's submissions in this respect should be rejected.

Section 97 304 The Appellant submitted that as a matter of substance what had occurred in the process of accepting the resignation was to "dispense" with the Respondent's services within the meaning of s97 of the Teaching Services Act. On that basis it was submitted that s97(2) operated in accordance with its terms and no compensation was payable by reason of the Respondent's services "being dispensed with". 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". 306 The Act presently under consideration was before this Court 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. 307 Brennan J, with whom Mason CJ and Deane J agreed, left open (at 437), whether the relationship between a member of the teaching service and the Crown was contractual or statutory. His Honour also said at 440-441: "If an officer is wrongfully prevented from performing the duties of his position and thereby earning the salary specified in his conditions of employment, he is entitled to damages for wrongful dismissal: see Williamson v The Commonwealth (1907) 5 CLR 174; Lucy v The Commonwealth (1923) 33 CLR 229; McVicar v Commissioner for Railways (NSW) (1951) 83 CLR at 528. It follows that Mr Suttling had a legal right to be allowed to perform the duties of the position of Senior Education Officer Class 2 at Strathfield for the period of his appointment and thereby to earn the salary specified in his conditions of appointment unless the premature termination of the appointment was effected in exercise of some overriding power." 308 His Honour set out the provisions that may have constituted such an overriding power, including s97, that was then in the same form as it is now. The consideration of s97 in Suttling is not determinative of the present case because, as Brennan J said at 442, even if the Crown's right to dispense with services is not restricted, that is not determinative of whether or not there is a power to summarily dismiss a Crown employee. There was nothing capable of constituting a dismissal and reappointment on the facts of that case. 309 In the course of his reasoning in Suttling in this Court, McHugh JA, with whom Glass JA agreed (Kirby P dissenting), referred to s97 of the Act at 447G-448A: "I take the view that the Education Commission Act, s97, does not itself create a statutory equivalent to the prerogative right of dismissal. The function of that section is more limited. It is designed to overcome the argument which succeeded in Gould v Stuart [1896] AC 575. It ensures that the terms of the Education Commission Act are held to be not inconsistent with the continued existence of a right to dismiss at pleasure. The recognition by s97(1) of the continued existence of this rule does not mean, however, that, in appropriate cases, it cannot be varied by contract." 310 The argument in Gould v Stuart [1896] AC 575 to which his Honour was referring was the finding that in that case the prerogative right of dismissal had been abrogated by statute. (See McHugh JA in Suttling at 445 E.) 311 His Honour went on to refer to the statutory provisions authorising the Director-General to terminate the employment, indicating that none were applicable on the facts of the case. His Honour concluded that even if the appointment was terminable at the pleasure of the Crown, "the appointment was not properly terminated" (450G). Nothing in the judgment in the High Court detracts from this conclusion. 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. 319 The facts and matters pertinent to the consideration of whether or not to exercise the power conferred by s85(2) differ from those that may be relevant to accepting a resignation with consequences at common law, and differ once again from the exercise of a Crown prerogative which, although affirmed in its existence by s97, raises important issues relating to the executive arm of government. The scope of considerations pertinent to the decision-making process under the three different regimes varies so much that there is no proper basis for the submission that the Director-General of Education, even if he had the authority to "exercise the Crown prerogative", would necessarily have done so. The Appellant called no evidence. 320 This conclusion is reinforced in the present situation, where the recommendations to the Director-General - he giving no explanation of his own thought processes - proffered reasons for not acting on his original decision to direct a resignation involving matters of importance to the Teaching Service in its relations with the particular community served by the school in question and also with the teachers of the school. The change of approach was, it appears, at least in part, based on a recognition that the best interests of the administration of the education system would be served by permitting the Respondent to resign in circumstances of dignity, where he could return to the school, have the appropriate farewells and allow his resignation to take effect. These were interests of the Service to be served by the adoption of what may have appeared to be a more lenient course. Furthermore, the Director-General was advised that the Respondent's rights to review the decision particularly before the Industrial Relations Commission and, possibly, on appeal to GREAT Tribunal, would be adversely affected, again, it appears, with perceived advantage to the educational bureaucracy. 321 There is no foundation of an evidentiary character for the proposition put to this Court that the Director-General was so determined to get rid of the Respondent that either he, or the Crown at his instigation, would have taken whatever steps were available to effect that result. 322 That is, in any event, an extraordinary submission to be made with respect to the exercise of a statutory or prerogative power. This is not only so because there was no evidence of any such determination, although that would be enough. It is because the submission is made on a basis that the holder of a statutory office, or representative of the Crown, would act in any way necessary to achieve a result, irrespective of the procedural or substantive requirements that attach to the power being exercised. This is not an appropriate assumption to be made in the case of the State of New South Wales. 323 The Appellant's submissions on s97(1) should be rejected. 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. Accordingly, s97(2) is of no assistance to the Appellant.

Conclusion 326 For the above reasons the appeal should be allowed with respect to the finding in negligence. 327 The contract case was put before this Court on a narrow and, in some respects, artificial basis. The submissions that challenged the trial judge's finding that the Respondent's employment was never terminated should be rejected. No appeal was pursued in this Court to interfere with his Honour's award of damages on this basis. I would not wish to be taken to approve the trial judge's award of stigma damages. That issue was not raised in this Court. 328 The orders I propose are:

2. Set aside his Honour's order for judgment in the sum of $307,439.

3. Judgment for the Respondent in the sum of $213,004. 4. Order the Appellant to pay one half of the Respondent's costs of the appeal.

5. Affirm his Honour's order as to costs of the hearing. 329 MASON P: I have had the advantage of reading the reasons of Spigelman CJ and Giles JA in draft. 330 I agree that the appeal should be upheld in relation to the negligence claim. I agree with the reasons of Spigelman CJ. 331 Those reasons also explain the (limited) issues fought at trial on the two alternative contract claims. 332 I agree with the Chief Justice's reasons explaining why s97 of the Teaching Services Act 1983 (the Act) does not assist the appellant. 333 Graham DCJ found in the respondent's favour that his contract of employment was never lawfully terminated, with the consequence that the appellant's breach consisted of non-payment of salary and other entitlements as they fell due up until 1 March 2001. This, despite the fact that the respondent ceased working on 2 March 1998, being his previously notified date of resignation, and thereafter received superannuation benefits accordingly. And (in light of this Court's conclusions in the tort claim) despite his proven disabilities for which the State bears no legal responsibility. The damages awarded included a "stigma damages" component. Nevertheless, there is no appeal on quantum of contractual damages. 334 On 13 October 1997 the respondent signed a notice of resignation which was stated to take effect from 2 March 1998. He filled out a printed form that referred to his "position" as Principal at Cromer High School which stated "Retirement" as his "Reasons for Resignation". He forwarded the form to the District Superintendent for the Northern Beaches District Office of the Department of School Education. She received it "for processing". She in turn sent it to the Manager, Employee Relations by letter of 20 October 1997. The letter continued: Greg Watkins, our Senior Industrial Officer, has advised today not to forward the retirement form to Teacher Services until Mr Paige's case has been finalised by the Employee Relations Unit. I hereby enclose Mr Paige's Retirement Form for you to forward to Teacher Services for processing when the timing is appropriate.

335 On 16 December 1997 the respondent purported to withdraw his "notice of retirement" by letter to the Officer-in-Charge, School Staffing Unit. 336 It is common ground that the respondent was an officer permanently employed in the Education Teaching Services. Subject to statutory modification, his rights and obligations as an employee stemmed from this employment relationship with its common law incidents (see generally Suttling v Director-General of Education (1985) 3 NSWLR 427). 337 It is also common ground that a normal incident of an employment relationship is that it is unilaterally terminable by either party upon due notice (see generally Marks v The Commonwealth (1964) 111 CLR 549 at 570-1, Birrell v Australian National Airlines Commission (1984) 5 FCR 447 at 457-8). 338 Why then did the resignation notice not bring about the effective termination of the respondent's employment (with its attendant emolument rights) as at 2 March 1998? No one suggests that the period of notice was inadequate. 339 As Spigelman CJ points out, four arguments have been suggested as to why the general principle was displaced. I deal with them in an alternative sequence and state the propositions slightly more fully than the Chief Justice's summation of them.

(i) The resignation never took effect because notice was not given to the Department 340 In my view, the respondent's letter of 13 October 1997 reached his employer. 341 I agree with Giles JA, adding the following observations. First, such a conclusion gives effect to the respondent's apparent intention. Nothing in the form indicates that the respondent was treating it as held in suspense or escrow. It was sent to his District Superintendent without evident qualification on the respondent's part. Second, his solicitor's letter of 14 January 1998 states that "Before he was charged, Mr Paige had notified the Department that he wished to retire on 1 March 1998" (Blue 91). Third, the letter of 11 December 1997 purporting to "withdraw" the notice of retirement implicitly accepts that it had previously been delivered to the employer and therefore may be treated as an admission to that effect (Lustre Hosiery Ltd v York (1935) 54 CLR 134 at 143). 342 The Chief Justice describes the issue as being whether or not the resignation reached the employer in the manner for which the contract of employment provided. I do not see the need for such a restricted qualification, either in the cases or in principle. A contract of employment may be silent as to the procedure to be followed in relation to termination, or that procedure may be by-passed deliberately or through oversight. The general rules as to agency and the receipt of notice in the course of agency are capable of adaptation to the issue (see eg Permanent Trustee Australia Co Ltd v FAI General Insurance Co Ltd (2001) 50 NSWLR 679).

(ii) Since the notice of resignation was tendered in "the heat of the moment" it was capable of being withdrawn, as occurred on 16 December 1997 343 If such a principle exists, it did not apply in the present case. I agree with the reasons of Spigelman CJ and Giles JA.

(iii) Section 78 of the Teaching Services Act 1983 modified the common law so that the resignation could not take effect unless and until it was accepted by the Director-General: this did not occur until it was too late because it was constructively rejected and/or withdrawn before acceptance 344 Section 78 provides: 78 Vacation of position An officer of a Teaching Service shall be deemed to have vacated the officer's position if: (a) the officer dies, or (b) the officer resigns the officer's position by writing signed by the officer and delivered to the appropriate Director-General and the officer's resignation is accepted by that Director-General. 345 Giles JA refers to several provisions in the Act which distinguish between the teacher's employment and the "position" or "office" to which he or she may be appointed at a particular time. I respectfully agree with his conclusion that "an officer, that is, a person employed in a Teaching Service, will normally hold a position, but the position may change. The promotions system, with its appellate rights, is a monument to the distinction". 346 I am less comfortable with his Honour's conclusions as to the limited impact of s78 in cases where an officer tenders his or her resignation from the Teaching Service in unequivocal terms. It is a matter on which I would have hoped the Court might have received fuller assistance from the appellant, especially since s78 has counterparts in other public sector employment legislation in this State (eg s37 of the Public Sector Management Act 1988). 347 In the events which have occurred, a proper understanding of s78 has become central to the resolution of the contract claim in light of the approach adopted by Giles JA and myself on all other matters. It is unfortunate that the appellant (or its insurer) has not thought fit to approach the office of the Crown Solicitor for access to accumulated wisdom on a rather vital provision. 348 The upshot is that the Court has largely had to grapple as best it may with the issues thrown up by s78 and the possible distinction in this context between the contractual relationship of employment (with statutory overlay) and the statutory regime governing "positions" and "offices" in the Teaching Service. 349 I share Giles JA's reluctance to equate public sector employment with enslavement "with hope only in either death or manumission" by the Director-General. But s78 obviously has some work to do. In Marks at 571-3 Windeyer J gives several examples of Commonwealth enactments expressed in similar terms to s78, describing them (at 573) as examples of situations where vacation by resignation of an office or place may require or await consent. If one of its functions is to prevent disciplinary proceedings being thwarted by a non-directed resignation (cf s85), then it may be that it governs any attempt by the holder of a position to resign from the Teaching Service unilaterally. 350 The harshness of the potential impact of s78 can be controlled to some degree by administrative law principles which would undoubtedly impose a duty of reasonably prompt attention and exclude the intrusion of irrelevant considerations or conduct unreasonable in the Wednesbury sense. Thus controlled, it is possible that s78 may not have to be read down further, as suggested by Giles JA. I prefer to leave that matter until it arises squarely. 351 If one turns to the facts of the present case, it is clear that the respondent purported to give notice of intention to resign from his employment and his position concurrently. His notice of resignation/retirement referred to his position as Principal of Cromer High School. I find it impossible to accept that he intended the Department to have the option of accepting the laying down of the position while retaining him as an employee. The converse is also negated implicitly by the terms of the notice, as well as by a matter to which Giles JA adverts, namely the inevitable falling vacant of a position that accompanies an effective resignation. 352 It is possible that the presence of s78 or some practice surrounding its operation was the basis of the respondent's belief that there was some capacity to revoke his notice of resignation. Unfortunately, this is mere speculation in light of the evidence. 353 The respondent's expressed intentions do not of course control the common law principle about the unilateral effect of due termination by notice or the operation of s78 itself. What is however sufficiently clear is that the respondent tendered notice of his resignation/retirement from both his employment in the Teaching Service and his position as Principal of Cromer High School. The two roles were coincident to him at this (terminal) stage of his career. His notice did not purport to offer the Director-General the choice of splitting the notice into two parts. 354 Section 78 is quite explicit in stipulating that the resignation from the position could not take effect until it had been both delivered to the Director-General of Education and accepted by that Director-General. Neither event happened before the resignation was withdrawn. In the absence of submissions to the contrary based upon the legislation (as distinct from the common law principle), I am prepared to hold that it was open for the respondent to withdraw the resignation in the circumstances of this case where the "processing" of the resignation was deliberately held back by the respondent's superiors pending disciplinary action by the Director-General. I do not have to decide what would be the situation if the notice were withdrawn before being dealt with by the Director-General within a reasonable time and in the normal course. Neither happened here. The "Department's" delay and deliberate stalling gave the respondent a locus penitentiae which he accepted by withdrawing the resignation (cf McGarry, "Termination of Employment Contracts by Notice" (1986) 60 ALJ 78 at pp80-1).

(iv) There was a Departmental practice permitting withdrawal of resignation. 355 I agree with Spigelman CJ and Giles JA that this has not been established on the evidence. 356 I agree with the orders proposed by the Chief Justice. 357 GILES JA: I have had the advantage of reading the reasons of Spigelman CJ in draft.

358 I agree that the appeal should be upheld in relation to the respondent's claim in negligence, and with one qualification with his Honour's reasons in that respect. The qualification is that, assuming the duty of care, I do not think that the respondent established that proceeding by the explanation route rather than the inquiry route was a breach of the duty of care. Since the claim in negligence fails for many other reasons, it is unnecessary to elaborate. 359 For the reasons which follow, in my opinion the appeal should also be upheld in relation to the respondent's claim in contract. My reasons assume familiarity with those of Spigelman CJ. 360 The claim in contract was pleaded in the alternative. Common to both alternatives was the allegation that the respondent was employed by the appellant pursuant to a contract of employment between them. This allegation was admitted. As one alternative, it was alleged that on 23 January 1998 the appellant terminated the contract of employment and that by doing so it breached the contract. As the other alternative, it was alleged that the contract of employment had not been lawfully terminated at any time, as a separate allegation that the purported termination on 23 January 1998 was void and of no legal effect, and that the appellant breached the contract by failing to pay the respondent his salary and other benefits on and from 2 March 1998. All these allegations were not admitted. 361 The breaches of contract alleged for the claim in contract were quite different. One was (wrongful) termination of the contract of employment. The other was failure to perform the contract of employment by paying the respondent his salary and other benefits. 362 Graham DCJ found for the respondent on the second alternative. The breach of contract depended on the continuance of the contract of employment. 363 The respondent had alleged that the purported termination on 23 January 1998 was ineffective, but had alleged more widely that the contract of employment had not been terminated at any time. As the hearing was conducted, one of the issues was whether the contract of employment had been terminated by reason of the respondent's resignation of 13 October 1997, so that he was not entitled to be paid his salary and other benefits on and from 2 March 1998. The appellant's arguments included that the resignation could not be withdrawn and took effect as of 1 March 1998, thereby terminating the contract of employment. Although linked with whether there was an extant resignation which the Director-General could accept, in truth this was independent of any question of acceptance of the resignation on 23 January 1998. 364 Graham DCJ did not accept the appellant's argument in this respect, for two reasons. Underlying both reasons was acceptance that generally in a contractual context a resignation once conveyed can not be withdrawn: that it is a unilateral act effective in accordance with its terms, and that although reference is sometimes made to acceptance of a resignation it is not necessary for effectiveness that the party to whom the resignation is conveyed accept the resignation. The general principle is explained by Spigelman CJ. It does not appear to have been in contention at the trial, and was not in contention in the appeal. 365 The first of Graham DCJ's reasons was that the respondent's resignation fell within an exception to this general principle, whereby there may be withdrawal of a resignation "given in heat or in a state of emotional stress or as a result of being jostled into a decision by the employer": his Honour cited from Achal v Electrolux Pty Ltd (1993) 50 IR 236 at 238. 366 The second of Graham DCJ's reasons was that s 78 of the Teaching Services Act 1983 modified the general principle by making acceptance of the resignation by the Director-General necessary for its effectiveness. That led on to whether there had been acceptance of the resignation by the Director-General, and his Honour held that there had not because it had not been open to the Director-General to defer acceptance and there had been a constructive refusal to accept the resignation. 367 The appellant's ground of appeal, "The trial judge erred in finding that at all material times the Respondent remained an employee of the Appellant" raised these reasons for consideration. In addition, the reasons of Spigelman CJ raise for consideration two other reasons why the general principle might not have applied. 368 I do not think that the respondent's resignation fell within the exception concerning heat of the moment or emotional stress. 369 The respondent explained that as the investigation into his conduct evolved - " … it started to become to me that it just wasn't going to be a slap on the wrist for me. I was being manoeuvred into a position where something fairly drastic was going to happen and it was in a moment of weakness on my part that I said to myself to hell with this, why should I carry on in this sort of situation, I'll retire on my next birthday and that was some time in October, I think."

370 The respondent then sent in his resignation. Later in his evidence he said that it was in his mind that he could withdraw the resignation if he "didn't want to go ahead", that his resignation was not a final decision, but a possibility, because he "knew I could withdraw it at a later date if I wanted to", and that he would "wait and see what happened … but not just as far as the charges were concerned. There were a lot of other things." Later again he said that he thought that he could withdraw his resignation at his discretion. 371 The resignation was withdrawn by a letter of 16 December 1997. The respondent explained why he withdrew it. There had been a "very, very successful" final presentation night at his school, and many of his staff and parents pressed him not to retire. He had recently received the recommendation that he be allowed to resign, which had made him angry. The respondent said that it was a combination of those matters plus the fact that he finally seemed to "be reaching the top of the hill", that is, that a number of things he had worked for at the school were coming to fruition and he was proud of them. He described these matters, which justified his pride. 372 The respondent's resignation was not a resignation which, in the circumstances in which it occurred, should be regarded as other than a voluntary act, or should be regarded as something to which it would be unconscionable to hold him. It was a conscious choice, for reasons which seemed good at the time and according to the respondent in the belief that it could be withdrawn. There was nothing to show that the appellant had engendered that belief. The choice was maintained for two months. The decision to withdraw the resignation was not because it had been the product of stress or emotional disturbance, but because of a change of mind. The change of mind was in large part by reason of later events. On the widest reasonable view of the exception, it did not apply. 373 Spigelman CJ has considered s 78 of the Teaching Services Act, but has found it unnecessary to come to a final view. My conclusions as to the other reasons mean that I must do so. 374 It is convenient to repeat s 78 - "78. An officer of a Teaching Service shall be deemed to have vacated his position if - (a) he dies; or

(b) he resigns his position by writing signed by him and delivered to the appropriate Director-General and his resignation is accepted by that Director-General." 375 "Officer" is relevantly defined in s 4(1) as meaning a person employed in a Teaching Service other than a temporary employee. There is no definition of "position", save that in s 4(1) it is said that it "includes office". There is no definition of "office". It is clear, however, that there is a distinction between being an officer and having a position. There are different classes of positions and different positions, and officers are appointed, promoted or transferred to positions, see for example ss 38(1)(f), (g), (h); 59D; 59E; 60; 71; 74; 75; 76 and 96. An officer, that is, a person employed in a Teaching Service, will normally hold a position, but the position may change. The promotions system, with its appellate rights, is a monument to the distinction. 376 A range of provisions prior to s 74 are concerned with the filling of positions by officers in the Teaching Service, by appointment, promotion or transfer. By s 74, declining an offered appointment or promotion does not prejudice an officer's rights in resect of any future appointment or promotion, but by s 75 an officer's refusal of a direction for removal from one position to another without valid and sufficient reason gives grounds for dismissal from the Teaching Service. Section 76 deals with the consequences of invalidity or incapacity by which an officer can not perform the duties of his or her position, the consequences including either compulsory retirement or consensual transfer to another position. Section 78 then provides for an officer's deemed vacation of a position, by death or by accepted resignation. 377 The evident purpose, in my view, is that in the interests of the proper functioning of the Teaching Service the Director-General have control, subject to appellate rights, over what officer holds what position. Subject to appellate rights, an officer can not dictate what position the officer will fill. Nor can an officer dictate that the officer will not change the officer's position, in that refusal to change when directed exposes the officer to dismissal. Nor short of death can an officer dictate that the officer will vacate the officer's position, leaving the officer a person employed in the Teaching Service to whom another position must be given, because there must be the Director-General's concurrence expressed through acceptance of a resignation from the position. Section 78 addresses only an officer's position, not the officer's employment in the Teaching Service. It would be another and more significant step if the Director-General could in effect forbid an officer to leave the officer's employment in the Teaching Service as distinct from the position held by the officer in the Teaching Service. 378 An officer can cease to be employed in the Teaching Service by resigning in the usual way. If the officer resigns from the officer's employment the position will fall vacant, but because the officer is no longer an officer and not because the officer resigned the position. For the deemed vacation of a position it is necessary that there be acceptance of a resignation from the position, but that does not mean that the employment in the Teaching Service comes to an end. Acceptance of a resignation is not necessary to bring the employment to an end. If it were, every employee would be enslaved, with hope only in either death or manumission by the Director-General. 379 In my opinion, s 78 is better understood in this way than as a recognition of the common law principle that resignation from an office in the service of the Crown only takes effect upon acceptance, see the discussion by Windeyer J in Marks v The Commonwealth (1964) 111 CLR 549 at 567-76. Members of a Teaching Service are deemed to be employed by the Government of New South Wales in the service of the Crown (s 42), but employment in a Teaching Service is far distant from the holding of an office as an assignable item of property on which that principle is founded. As Windeyer J says of resignation from an office (at 570), "that there cannot be unilateral resignation has in modern times become attenuated". The rights of persons such as the respondent must be ascertained from the legislation. Having a position is distinct from and additional to being an officer, and s 78 has appropriate effect confined to resignation from a position. 380 Spigelman CJ addresses two other reasons for not accepting the appellant's argument that the resignation could not be withdrawn and took effect as of 1 March 1998. 381 The first reason is that the general principle was modified in the particular relationship between the respondent and the appellant. His Honour says that there was uncontradicted evidence from the respondent to the effect that the practice was to permit resignations to be withdrawn, regarding the evidence as evidence of practice and not merely of the respondent's belief. But his Honour considers that the evidence did not go far enough for a legal consequence favourable to the respondent. I agree in the result, but on rather different reasoning. 382 As I have indicated, the respondent alleged and the appellant admitted employment pursuant to a contract of employment. There was not a jot of evidence to establish the terms and conditions of the contract of employment. 383 The respondent's resignation was by completion of a printed form bearing the notations "Detailed advice is contained in the Handbook (2.20)" and, a few lines later, "At least one month's notice should be given. If retiring at the end of the school year the notice is required by 1st September". When in the course of the respondent's evidence he said that "[a]ny teacher has the right to withdraw a retirement or resignation I believe up until the date or the day before", Graham DCJ drew attention to the reference to the Handbook and asked if he was to be referred "to anything in there that might shed any light on the belief or practice". Counsel for the respondent said, "We'll see if we can find one", and elicited that the respondent was "not relying on any advice in any handbook". That is where the matter was left. 384 Apart from this assertion of a belief, in the evidence already mentioned the respondent said that it was in his mind when he gave his resignation that he could withdraw it if he did not want to go ahead; that his resignation was not a final decision, but a possibility, because he knew he could withdraw it at a later date if he wanted to; and that he thought that he could withdraw his resignation at his discretion. Except that it appears not to have come from the Handbook, there was no evidence of the basis for his state of mind. Whether it was founded on a practice, and if so precisely what practice, was not established. It was not established despite Graham DCJ's inquiry. That the state of mind was well-founded is belied by the second of the notes on the form to which I have referred, the point of which could only have been that the period of notice was needed and the employer would act upon the resignation. 385 In my opinion, this is altogether too fragile a basis for concluding that, as part of the terms and conditions of the contract of employment or in any other way, in the relationship between the respondent and the appellant the general principle was modified so that the respondent's resignation was not effective as a unilateral act and was capable of withdrawal. If there were a practice, its legal effect would be open to argument (although I do not suggest that the evidence otherwise would bring a legal consequence favourable to the respondent.) But the practice was not established. 386 The second reason is that the respondent's resignation could be withdrawn because it did not reach his employer. His Honour considers that the resignation did not reach the employer because it did not reach the employer in the manner for which the contract provided. I am respectfully unable to agree. 387 The printed form had a further notation that it was to be sent direct to "Data Control Officer" at a GPO box number. There was no evidence as to this officer. The respondent sent the resignation to his district superintendent. In the letter of 20 October 1997 set out by Spigelman CJ the district superintendent referred to the resignation as received "for processing", and said that she had been advised [obviously by a superior] not to forward it to Teacher Services for processing "until Mr Paige's case has been finalised by the Employee Relations Unit". In my view the district superintendent received the letter as an emanation of the employer. "Processing" to my mind suggests that, as does the determination without reference to the respondent to place the resignation in some kind of limbo: if she did not represent the employer, the district superintendent would hardly have acceded to the direction not to have it processed. More important, the district superintendent was the respondent's superior officer in the hierarchy and the person with whom he naturally dealt in, amongst other things, conveying his resignation. She was the equivalent to the stores superintendent in Reardon v The War Office (1959) 1 WLR 1046. In agency terms, she received the resignation not as an agent for the respondent to pass on to the respondent's employer but as the employer, and I am unable to see anything whereby sending his resignation to his district superintendent was not in accord with what little we know of the respondent's contract of employment. In my opinion, the resignation reached the respondent's employer. 388 In the result, therefore, I consider that the appeal should be upheld in relation to the claim in contract because the respondent's resignation took effect in accordance with its terms despite his purported withdrawal. There was no breach of contract in failing to pay the respondent his salary and other benefits on and from 2 March 1998. The appellant does not need s 97 of the Teaching Services Act, but for completeness I should say that I agree with what Spigelman CJ has said in that respect. 389 I propose the orders - (1) Appeal allowed; (2) Set aside the verdict and judgment for $307,493. (3) Respondent to pay the appellant's costs of the trial and the appeal, and to have a certificate under the Suitors Fund Act if otherwise qualified.

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