Heptonstall v Gaskin (No 2)

[2005] NSWSC 30

CITATION:	Heptonstall v Gaskin & Ors (No 2) [2005] NSWSC 30
HEARING DATE(S):	03/02/05
JUDGMENT DATE :	9 February 2005
JUDGMENT OF:	Hoeben J at 1
DECISION:	Leave given to Plaintiff to amend his Amended Statement of Claim to plead against third defendant implied term as to mutual trust and confidence in the contract of employment between them.

CATCHWORDS:	Application to amend Statement of Claim - implied term as to mutual trust and confidence in contract of employment - whether law of Australia contemplates such a term - whether amendment futile - principles applicable to application.
LEGISLATION CITED:	Employment Rights Act 1996 (UK) Supreme Court Rules Teaching Services Act 1980
CASES CITED:	Eastwood & Anor v Magnox Electric plc, McCabe v Cornwall County Council & Anor (2004) 3 WLR 322 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Gogay v Hertfordshire County Council (2000) IRLR 703 Hollingsworth v Commissioner of Police (1999) 47 NSWLR 151 at 190 Johnson v Unisys Ltd (2001) 1 AC 518 Malik and Mahmud v BCCI (1998) AC 21 Mannall v State of NSW [2001] NSWCA 327 NRMA Insurance Ltd v A.W. Edwards Pty Ltd (NSWCA 11 November 1994 p7) State of NSW v Jeffery and Anor [2000] NSWCA 171 State of NSW v Paige (2002-2004) 60 NSWLR 371 State of NSW v Seedsman [2000] NSWCA 119 Sullivan v Moody; Thompson v Connon (2001) 207 CLR 562 Thomson v Orika Australia Pty Ltd [2002] FCA 939 para 141 Webster v Lampard (1993) 177 CLR 598 at 602 White v Chief Constable of South Yorkshire Police (1999) 2 AC 455 Woolcock St Investments Pty Ltd v CDG Pty Ltd (2004) 78 ALJR 628 at 651-2
PARTIES:	Gregory Heptonstall - Plaintiff Brian Gaskin - First Defendant Sharlene Hutcherson - Second Defendant State of New South Wales - Third Defendant
FILE NUMBER(S):	SC 20239/00
COUNSEL:	Mr DT Kennedy SC/Mr MJ Walsh - Plaintiff Mr P Menzies QC/Mr RH Weinstein - Defendants
SOLICITORS:	MacMahon Associates - Plaintiff IV Knight, Crown Solicitor - Defendants

LOWER COURT JURISDICTION:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

HOEBEN J

Wednesday, 9 February, 2005

20239/00 – Gregory HEPTONSTALL v Brian GASKIN & Ors (No 2)

JUDGMENT

1 HIS HONOUR: This application is made by the plaintiff to further amend his Amended Statement of Claim to plead certain implied terms in the contract of employment between him and the third defendant.

2 The third defendant opposes the application on the basis that the amendment would be futile since it would be liable to be struck out pursuant to Pt 15 r 26 of the Supreme Court Rules as not disclosing a reasonable cause of action.

Background

3 The matter has been the subject of earlier decisions by Master Harrison (1 August 2003) and Justice Whealy (26 March 2004). By way of background I set out and respectfully adopt the summation of facts of Whealy J in his decision.

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

“83. Breaches of discipline
An officer or temporary employee of a Teaching Service who:
(a) commits any breach of this Act or the regulations,

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

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

“26. Embarrassment etc

(1) Where a pleading:

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

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings, or

(c) is otherwise an abuse of the process of the Court,
the Court may at any stage of the proceedings, on terms, order that the whole or any part of the pleading be struck out.
(2) The Court may receive evidence on the hearing of an application for an order under sub-rule (1).”

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

Result of proceedings before Whealy J

4 His Honour found in favour of the third defendant, both in relation to the negligence pleadings and in relation to the breach of contract pleadings, as they were then framed. In doing so his Honour relied upon Sullivan v Moody; Thompson v Connon (2001) 207 CLR 562 and State of NSW v Paige (2002-2004) 60 NSWLR 371. Although the relationship between the plaintiff and the third defendant is well recognised as giving rise to a duty of care, his Honour found that the particular duty relied upon would give rise to markedly inconsistent obligations with the provisions of the Teaching Services Act 1980. His Honour was unable to reconcile the particular duty postulated by the plaintiff with the obligations of the third defendant under that Act to investigate, recommend charges and take part in subsequent disciplinary proceedings. Those functions required, if the task was to be carried out properly, a thorough and careful investigation into the circumstances without apprehension as to possible adverse consequences for the person who was the subject of the disciplinary proceedings.

5 Whilst noting that there was no express provision in the Act or Regulations which made the interests of students paramount, his Honour thought that the protective nature of the disciplinary procedures was starkly at odds with the proposition that in conducting those procedures, there was a duty of care owed by the Department and its staff to the teacher concerned.

6 His Honour noted the difference between the facts in Paige’s case (involving a dismissal) and those which he had under consideration (ie actions which took place whilst employment was continuing) but found that the principles there set out by Spigelman CJ were equally applicable. Specifically, the imposition of a duty of the kind pleaded would not only have an inhibiting effect on expeditious investigation under the statute but would also involve incoherence with the law of employment and with principles of administrative law. As his Honour pointed out, it would be a surprising result if no duty of care existed in a situation where the alleged breach resulted in the termination of employment, but such a duty did exist in a case such as the present where inappropriate handling of a disciplinary investigation of a teacher occurred in circumstances where the charges were dismissed.

7 The above is merely a summary of his Honour’s reasons for the purpose of putting the present application in context.

Present application

8 It had originally been conceded, on behalf of the plaintiff, that if it were found that no duty of care existed in relation to the matters raised in paras 35, 36 and 37 of the Amended Statement of Claim, it would follow that the terms sought to be implied in para 32 of that pleading ought likewise be found not to arise. This was so because legal duties arising by way of implication in the contract between the plaintiff and the third defendant – breaches of which would sound in damages – would be inconsistent with the proper discharge of the third defendant’s responsibilities pursuant to the Teaching Services Act.

9 Before Whealy J that concession was withdrawn by the plaintiff in his further submissions dated 1 March 2004. Those submissions drew attention to a line of authority in the United Kingdom that an obligation of mutual trust and confidence was to be implied in a contract of employment. The existence of such an implied term had been authoritatively stated by the House of Lords in Malik and Mahmud v BCCI (1998) AC 21.

10 When these submissions were made the third defendant pointed out that the pleadings before Whealy J did not assert or particularise such an implied term of mutual trust and confidence. The plaintiff had not up until that time made any application to amend his pleading to allege either the existence of such an implied term or the breach thereof.

11 His Honour accepted the third defendant’s submission and noted that he had not heard argument in relation to whether leave should be granted to the plaintiff to further amend the Amended Statement of Claim to assert such an implied term and the breach thereof. His Honour therefore struck out the contractual pleadings as they were before him, but gave leave to the plaintiff to make application to amend further his Amended Statement of Claim in relation to such an implied term. It is that application by the plaintiff which is now before the Court.

Relevant principles

12 The principles applicable to a strike out application pursuant to Pt 15 r 26 of the Supreme Court Rules remain apposite since the basis of the third defendant’s objection to the proposed amendment is its futility. The relevant law is set out in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR at 125. The striking out of a pleading allegedly containing no reasonable cause of action should only occur in circumstances where the claim is “manifestly groundless”, “so obviously untenable” that it cannot possibly succeed or so “manifestly faulty that it does not admit of argument”.

13 Put another way the test is “not whether the plaintiffs would probably succeed in their action against the defendant. It was whether the material before the Master demonstrated that the action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail.” (Webster v Lampard (1993) 177 CLR 598 at 602.)

14 A further principle to be observed relates to cases where the outcome was likely to turn upon developing doctrine. In relation to the question of the relationship between tortious liability and contractual liability, Kirby P with whom Powell JA agreed, said:

“The more complex and arguable is the legal point and the more dependent it may seem upon debatable factual premises, the less likely is it that the peremptory relief sought by a party will be appropriate to the circumstances of the case, particularly where it will have the consequence of terminating proceedings altogether or terminating them for ever against one party.” ( NRMA Insurance Ltd v A.W. Edwards Pty Ltd (NSWCA, 11 November 1994, p 7). See also Woolcock St Investments Pty Ltd v CDG Pty Ltd ((2004) 78 ALJR 628 at 651-2, paras 123-124.)

Proposed amendments

15 In a document headed “Second Further Amended Statement of Claim” the plaintiff seeks to add paras 5A, 9A, 9B, 9C and 9D. Those paragraphs involve narrative issues and I do not see them to be controversial, nor were they the subject of argument before me.

16 The matters of controversy are paras 32-35 of that document as follows:-

“32. The plaintiff says that there were implied terms and conditions of the contract of employment between himself and the Department of Education to maintain a relationship of mutual trust and confidence between the plaintiff and his employer, including that the Department of Education would not act in a manner likely to destroy or seriously damage the said relationship of mutual trust and confidence, which included that in relation to allegations of impropriety any investigations of such allegations and any disciplinary proceedings or directions consequent upon such allegations or investigations would be carried out:-
(1) expeditiously and with due diligence;
(2) fairly and objectively; and,
(3) that all relevant information would be supplied by those investigating the allegations and departmental charges to relevant officers within the Department of Education who were responsible for deciding whether the plaintiff ought be charged;
(4) that a thorough investigation would be carried out before charges were laid against the plaintiff;
(5) that statements from relevant witnesses would be obtained prior to recommending that the plaintiff be charged with disciplinary offences;
(6) that relevant officers within the Department of Education would have regard to all relevant information before charges were laid against the plaintiff;

(7) that the Department of Education would institute, maintain and supervise a system of investigation and charging of members of the teaching profession which was fair and without bias;

(8) that all relevant information would be brought to the attention of the prescribed officer appointed to investigate any charge;
(9) that the Department of Education would lay down adequate guidelines for the fair and objective investigation of allegations against members of the teaching profession, and have in place guidelines in relation to the circumstances in which charges should be made and prosecuted; and;
(10) that the Department of Education would have proper and adequate systems in place for investigating improper handling of allegations of sexual misconduct by teachers;
(11) that the Department of Education as the employer of the Plaintiff would act fairly and in good faith by following procedures and guidelines which, in part, were designed to protect the interests of the Plaintiff in regard to any complaints by students forming allegations of inappropriate conduct by the plaintiff in the course of his employment, including Department of School Education document 97/018 (S.017) 10 March 1997 and clarification of issues raised in relation to the Director-General's Memorandum 97/023;
(12) that the Department of Education would not delegate decision making in regard to investigation, suspension or disciplinary matters regarding the Plaintiff other than provided by the statutory regime in the Teaching Services Act 1980 ;
(13) that the Department of Education would properly investigate any allegations made against its employee, the Plaintiff, as to the discharge of his duties as a teacher ;
(14) that the Department of Education would at all times act fairly in its dealings with its employee the Plaintiff including any investigative process and disciplinary hearing ;
(15) that the Department of Education would accord to its employee the Plaintiff procedural fairness in regard to any investigations of allegations of misconduct by the Plaintiff in the course of his employment;
(16) that the Department of Education would perform an assessment of any risk posed by its employee the Plaintiff prior to taking any interim action including suspension or transferring the Plaintiff from the school ;
(17) that the Department of Education would properly inform the Plaintiff of allegations made against him and afford to the Plaintiff the opportunity of responding to same;
(18) that the Department of Education would make known to the Plaintiff the outcome of any risk assessment undertaken in regard to the Plaintiff when any allegation was made against him ;
(19) that the Department of Education would deal with any allegations against the Plaintiff in the individual circumstances of his matter after proper consideration of those circumstances, rather than to apply to some general treatment of the Plaintiff .
33. In the alternative, the plaintiff relies upon the matters pleaded in paragraphs 32(1)--(19) as implied terms and conditions of the said contract of employment.

34. The plaintiff says that the Department of Education, by its servants and agents, was in breach of the said implied terms and conditions of the contract of employment between himself and the Department of Education to maintain a relationship of mutual trust and confidence between the plaintiff and his employer the Department of Education, by acting in a manner likely to destroy or to seriously damage the said relationship of mutual trust and confidence, in relation to allegations of impropriety, any investigations of such allegations and any disciplinary proceedings or directions consequent upon such allegations or investigations, in that it:

(1) failed to carry out its investigations and disciplinary procedures expeditiously and with due diligence;
(2) failed to fairly and objectively investigate the allegations and to report to relevant officers within the Department of Education in relation to the allegations and to the charges; and
(3) failed to provide relevant information to the said relevant officers within the Department of Education;

(4) failed to carry out a thorough investigation before charges were laid against the plaintiff;

(5) failed to obtain statements from relevant witnesses prior to recommending the plaintiff be charged;
(6) failed to bring all relevant information to the attention of those persons responsible for determining whether charges ought be laid;
(7) failed to institute, maintain and supervise a proper system of investigation and charging of members of the teaching profession which was fair and without bias;
(8) failed to provide all relevant information to the prescribed officer appointed to investigate the charges brought against the plaintiff;
(9) failed to lay down any or any adequate guidelines for the fair and objective investigation of allegations against members of the teaching profession or to have in place guidelines in relation to the circumstances in which charges should be made and prosecuted; and
(10) failed to put in place any or any proper systems for investigating improper handling of allegations of sexual misconduct by teachers;

(11) the Department of Education as the employer of the Plaintiff failed to act fairly and in good faith by following procedures and guidelines which, in part, were designed to protect the interests of the Plaintiff in regard to any complaints by students forming allegations of inappropriate conduct by the plaintiff in the course of his employment, including Department of School Education document 97/018 (S.017) 10 March 1997 and clarification of issues raised in relation to the Director-General's Memorandum 97/023;
(12) the Department of Education delegated decision making in regard to investigation, suspension or disciplinary matters regarding the Plaintiff other than provided by the statutory regime in the Teaching Services Act 1980 ;

(13) the Department of Education failed properly to investigate any allegations made against its employee, the Plaintiff, as to the discharge of his duties as a teacher ;

(14) the Department of Education failed at all times act fairly in its dealings with its employee the Plaintiff including any investigative process and disciplinary hearing;
(15) the Department of Education failed to accord to its employee the Plaintiff procedural fairness in regard to any investigations of allegations of misconduct by the plaintiff in the course of his employment ;
(16) the Department of Education failed to perform an assessment of any risk posed by its employee the Plaintiff prior to taking any interim action including suspension or transferring the Plaintiff from the school;
(17) the Department of Education failed to properly inform the Plaintiff of allegations made against him and afford to the Plaintiff the opportunity of responding to same;
(18) the Department of Education failed to make known to the Plaintiff the outcome of any risk assessment undertaken in regard to the Plaintiff when any allegation was made against him;
(19) the Department of Education failed to deal with any allegations against the Plaintiff in the individual circumstances of his matter after proper consideration of those circumstances, rather than to apply to some general treatment of the Plaintiff.
35. In the alternative the Plaintiff says the Department by its servants or agents was in breach of the said implied terms and conditions pleaded in paragraph 33 in the circumstances as set out in paragraph 34 (1)-(19).”

Plaintiff’s argument

17 It is submitted on behalf of the plaintiff that decisions in the United Kingdom make it clear that as a matter of law there is now to be implied into a contract of employment a term of mutual trust and confidence. Such an approach is the law of Australia, or alternatively is arguably the law of Australia.

18 It seems beyond argument that the implication of such a term is now part of the law of the United Kingdom: Malik and Mahmudv BCCI (1998) AC 21, Johnson v Unisys Ltd (2001) 1 AC 518, Gogay v Hertfordshire County Council (2000) IRLR 703 and Eastwood & Anor v Magnox Electric plc, McCabe v Cornwall County Council & Anor (2004) 3 WLR 322.

19 Because of the provisions of the Employment Rights Act 1996 (UK) with its remedies for unfair dismissal, a distinction has been drawn by the House of Lords between psychiatric injury brought about by an employer’s actions during the actual course of employment and psychiatric injury brought about by dismissal from employment or by circumstances directly related to that dismissal. That is the essential distinction between Malik and Mahmud, Gogay and McCabe on the one hand and Johnson v Unisys on the other. As was explained by Lord Nicholls in McCabe (paras 4-6; 27-32) the particular statutory context which exists in the United Kingdom brought about the development of the “trust and confidence” implied term in a contract of employment. Without such a term, deserving plaintiffs would have no legal right to claim against employers in respect of conduct which occurred before they were dismissed and which was not directly related to that dismissal.

20 The background to the implication of such a term in the United Kingdom is important. It contrasts with the situation in Australia. In Australia the same result has been brought about by the tort of negligence. Such cases as State of NSW v Seedsman [2000] NSWCA 119, State of NSW v Jeffery & Anor [2000] NSWCA 171 and Mannall v State of NSW [2001] NSWCA 327 make that clear. A similar reliance upon the tort of negligence was not possible in the United Kingdom as a result of the decision of the House of Lords in White v Chief Constable of South Yorkshire Police (1999) 2 AC 455. There the House of Lords held that an employer’s duty of care for the safety of employees and to take reasonable steps to protect them from physical harm did not extend to protecting them from psychiatric injury when there was no breach of the duty to protect from physical injury; and that the general rules restricting the recovery of damages for pure psychiatric harm applied to claims by employees.

21 Accordingly there has been no need in Australia to rely upon a “trust and confidence” implied term in the contract of employment to enable employees to succeed in claims against employers for purely psychiatric injury suffered in the course of employment. This difference in approach to that in the United Kingdom is apparent in Tame v NSW (2002) 211 CLR 317 and Gifford v Strang Patrick Stevedoring Pty Limited (2003) 214 CLR 269.

22 What is not at all clear is whether a “trust and confidence” implied term in the contract of employment forms part of the law of Australia. In Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144 the full Federal Court left open the question of the existence of such an implied term (p 154). Similarly, Spigelman CJ in Paige (para 135) left that same question open. In a somewhat different context the full bench of the Industrial Relations Commission of NSW in court session implicitly approved the implication of such a term (Hollingsworth v Commissioner of Police (1999) 47 NSWLR 151 at 190) as did Alsopp J in Thomson v Orika Australia Pty Ltd [2002] FCA 939 para 141. The implication of such a term in employment contracts in Australia remains controversial and awaits clarification by an appellate court.

23 Given the way in which the “trust and confidence” implied term has evolved in the United Kingdom against a legislative background and an approach to tort law different to that in Australia I doubt whether such an implied term in a contract of employment does form part of the law of Australia. I cannot, however, say that such is not the case and I certainly cannot say that the existence of such an implied term is not arguable.

24 The plaintiff also submits that until factual findings are made as to the conduct of the plaintiff and the third defendant, it would be premature to refuse the amendment so as to prevent the matter being properly argued. The development of the law in Australia in relation to the implied term of “trust and confidence” requires that the present matter go to trial, at least on the contractual basis of the claim. If it then became necessary for an appellate court to consider the question, it would be able to do so against the background of decided facts and not on the basis of assumed but unproven facts which would be the situation if the question went on appeal as a result of the proposed pleading being struck out. (Woolcock St Investments Pty Ltd v CDG Pty Ltd (2004) ALJR 628 at para 123-124).

Argument of third defendant

25 The third defendant submits that even if a “trust and confidence” term were to be implied into the contract of employment between the plaintiff and the third defendant it could not operate to enable the plaintiff to succeed in this case. Such an implied term would be inconsistent with the proper operation of the Teaching Services Act and would adversely affect the coherence which presently exists between the law of tort, the law of employment and administrative law principles.

26 The third defendant submits that the particulars in support of the “trust and confidence” implied term were identical to those pleaded to support the claim in negligence, which in turn depended upon the existence of a duty of care owed to the plaintiff by the third defendant. In the circumstances of this case, the finding by Whealy J against the plaintiff on that question which included a finding of conflict with the Teaching Services Act was sufficient to demonstrate that even if the amendment were allowed it would be doomed to failure.

Resolution of the issue

27 The submission by the third defendant has force. The particularisation of breach of the “trust and confidence” implied term sought to be relied upon is identical to the particulars of negligence which were previously struck out. That, however, is not a complete answer to the plaintiff’s claim if the amendment is allowed.

28 The particulars of negligence were struck out because the fundamental premise on which they depended, ie the existence of a duty of care, was found not to exist. If the “trust and confidence” implied term is found to form part of the contract of employment between the plaintiff and the third defendant then some of those particulars may have application depending upon the facts ultimately found.

29 The strongest argument on behalf of the third defendant is whether an implied “trust and confidence” term can operate in the context of the Teaching Services Act and the investigatory steps required to be carried out pursuant to that Act. On one approach the very carrying out of those investigatory steps involves a breach of the suggested implied term. Of equal force is the submission that the coherence of the law of employment both in relation to tort, wrongful dismissal and administrative law as it presently stands could be significantly undermined by the operation of an implied “trust and confidence” term in the contract of employment.

30 Despite those persuasive arguments and the reservations which I hold as to whether a “trust and confidence” implied term forms part of the law of Australia, I am unable to say that if the amendment is allowed, the plaintiff’s claim against the third defendant is so obviously untenable that it cannot possibly succeed or that it is so manifestly faulty that it does not admit of argument.

31 I am also mindful that the amendment does raise not only a novel question of law but an important one in that it relates to employment contracts generally. The strong support for the existence of a “trust and confidence” implied term in contracts of employment by the highest court of the United Kingdom has to be given due weight. Whether such an implied term forms part of the law of Australia is a decision which should be made by an appellate court not by a judge at first instance on an interlocutory application. To better enable an appellate court to consider the question it is best that the matter go to trial so that findings of fact can be made. An appellate decision on the question would thus be made on real, as distinct from assumed or hypothetical facts.

32 In those circumstances, I am of the opinion that the better course is to allow the plaintiff’s proposed amendment as set out in the document entitled “Second Further Amended Statement of Claim”. It is implicit in that finding and from the way in which the argument has proceeded before me that I reject any application by the third defendant to strike out the proposed amendment pursuant to Pt 15 r 26 of the Supreme Court Rules.

33 I make the following orders:

(i) I grant leave to the plaintiff to amend further his Statement of Claim in accordance with the document entitled “Second Further Amended Statement of Claim”.

(ii) Since I have not heard argument as to costs, I reserve the question of costs pending further submissions from the plaintiff and the third defendant.

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