Paulson v State of New South Wales

[2025] NSWCA 181

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Paulson v State of New South Wales [2025] NSWCA 181

Hearing dates:

On the papers

Date of orders:

08 August 2025

Decision date:

08 August 2025

Before:

Free JA; Griffiths AJA

Decision:

(1) The summons filed 21 August 2024 seeking leave to appeal is dismissed.

(2) The applicant to pay the respondent’s costs.

Catchwords:

APPEALS – appeal from summary dismissal – leave to appeal required under s 101(2)(e) of Supreme Court Act 1970 (NSW) where decision is interlocutory – no question of principle, no clear injustice which is more than merely arguable, leave to appeal be refused, with costs

Legislation Cited:

Government Sector Employment Act 2013 (NSW), ss 47, 69

Supreme Court Act 1970 (NSW), s 101

Uniform Civil Procedure Rules 2005 (NSW), r 13.4

Cases Cited:

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

Chengv Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118

Macatangay v State of New South Wales (No 2) [2009] NSWCA 272

McGinn v Cranbrook School [2016] NSWCA 226

Paulson v Industrial Relations Secretary (Department of Justice) [2017] NSWIRComm 1037

Paulson v Industrial Relations Secretary (Department of Justice) [2018] NSWIRComm 1004

Paulson v State of New South Wales [2023] NSWDC 251

Paulson v State of New South Wales (No 2) [2023] NSWDC 413

Paulson v State of NSW (District Court (NSW), Ainslie-Wallace ADCJ, 21 May 2024, unrep)

Wickstead v Browne (1992) 30 NSWLR 1; [1992] NSWCA 272

Category:

Principal judgment

Parties:

Craig Paulson (Applicant)
State of New South Wales (Respondent)

Representation:

Counsel:
J Capsanis, solicitor (Applicant)
M Whitbread (Respondent)

Solicitors:
JP Capsanis & Co Lawyers (Applicant)
Karen Smith, Crown Solicitor (Respondent)

File Number(s):

2024/00224623

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Date of Decision:

21 May 2024

Before:

Ainslie-Wallace AJ

File Number(s):

2022/386075

JUDGMENT

1. THE COURT: The applicant (Craig Paulson) seeks leave to appeal from a decision dated 21 May 2024 by the primary judge (Ainslie-Wallace ADCJ). Her Honour summarily dismissed proceedings brought by the applicant in the District Court claiming damages for breach of a contract of employment against the respondent (the State of New South Wales). The summary dismissal followed the applicant’s failure to file an amended statement of claim within 28 days as previously ordered. The applicant subsequently filed a notice of motion seeking an extension of time to file a proposed amended statement of claim. The primary judge did not grant the extension of time and leave to file the proposed amended statement of claim was refused.

2. The parties consented to the application for leave to appeal being dealt with on the papers.

3. For the following reasons, leave to appeal will be refused, with costs.

Relevant background summarised

4. The applicant commenced employment with the respondent in or around 2000 and held various positions in the Department of Justice until his employment was terminated on 20 October 2014 for alleged misconduct following an internal investigation.

5. The applicant pursued several avenues of redress, including commencing proceedings in the Industrial Relations Commission (the Commission) to challenge the termination of his employment. The hearing of his application to the Commission was delayed as he agitated his claims in other forums, before finally being heard by the Commissioner in March and May of 2017.

6. On 7 July 2017, Commissioner Murphy found the applicant’s dismissal was “harsh”, noting that some of the allegations of misconduct on the part of the applicant were substantiated and others were not (see Paulson v Industrial Relations Secretary (Department of Justice) [2017] NSWIRComm 1037 at [258]-[259]). The Commissioner found that reinstatement or re‐employment was not practicable and ordered that the applicant be awarded compensation based on 13 weeks’ pay: [276]-[280]. The applicant sought leave to appeal from this decision, which was refused by the Full Bench of the Commission on 25 January 2018 (see Paulson v Industrial Relations Secretary (Department of Justice) [2018] NSWIRComm 1004).

Proceedings in the District Court

7. On 22 December 2022, the applicant filed a statement of claim in the District Court seeking damages for breach of contract. The basis for that claim rested on two terms sought to be implied in the contract of employment that were said to arise from s 47 of the Government Sector Employment Act 2013 (NSW). This pleading was not served upon the respondent until 3 January 2023.

8. On 10 March 2023, the respondent filed a notice of motion seeking summary dismissal of proceedings pursuant to r 13.4(1) of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

9. On 10 July 2023, Ainslie-Wallace ADCJ delivered her first judgment in this matter: Paulson v State of New South Wales [2023] NSWDC 251 (Paulson (No 1)). Her Honour found that the applicant had failed adequately to address, in both his written and oral submissions, the necessary criteria for implying the terms he sought in the employment contract either as a matter of law, or as a matter of fact. After referring to various authorities concerning implied terms (by fact or law), her Honour noted at [27] that the plaintiff had failed to identify the “necessity” for implying the asserted terms as a matter of law, nor had he demonstrated why the asserted terms satisfied the criteria for implying a term as a matter of fact, with particular reference to the criteria identified in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at [18], namely that the implied term must be necessary to give business efficacy to the contract (which will not be satisfied if the contract is effective without it).

10. Her Honour added that, in any case, the applicant’s claim must be rejected because “even if the asserted terms were implied in (sic) plaintiff’s contract, any action for breach of the contract of employment based on those terms is statute barred” (at [33]). Her Honour rejected the applicant’s contention that the implied terms survived the termination of his contract of employment and that his cause of action accrued not when his employment was terminated on 20 October 2014 but rather when Commissioner Murphy determined on 7 July 2017 that his dismissal had been "harsh". Her Honour explained at [32] why she rejected this contention:

This submission must be rejected. Nothing in the determination of the Commissioner bore on when the plaintiff’s right (if any) to sue for breach of the contract of employment arose. The Commissioner’s decision concerned the consequences of the defendant’s actions in terminating the plaintiff’s employment. The determination of the Commissioner was predicated on the fact that the plaintiff had been dismissed. That the Commissioner considered that termination of the plaintiff’s employment was “harsh” based on the misconduct found by him, but his decision does not speak to the lawfulness of the defendant’s action. The terms of s47 are that the defendant “may” terminate for misconduct, which it did.

11. Turning to the orders sought in the respondent’s notice of motion filed 10 March 2023, the primary judge observed that the power summarily to dismiss proceedings should be used “sparingly” and is “reserved for cases where the cause of action is such that it ‘cannot possibly succeed’”. Her Honour said at [36] that there was “considerable force” in the respondent’s submission that the statement of claim revealed no arguable cause of action based on the response from the applicant’s solicitor to the respondent’s requests for clarification of the claims asserted in that pleading, but she was not prepared summarily to dismiss the proceedings. Rather, her Honour ordered that the statement of claim filed 22 December 2022 be struck out and the applicant was given leave to file an amended statement of claim within 28 days.

12. On 6 October 2023, the primary judge delivered her second judgment in this matter, which dealt with the costs of the respondent’s notice of motion filed 10 March 2023: Paulson v State of New South Wales (No 2) [2023] NSWDC 413. Her Honour ordered that the applicant pay the respondent’s costs on an indemnity basis. Her Honour noted that the applicant had persisted with his claim “in circumstances where there was scant, if any, support in law or fact to support it and in circumstances where, on any view, the claim was statute barred” (at [18]).

13. The applicant did not file an amended statement of claim within the stipulated time.

14. On 21 May 2024, the primary judge delivered her third judgment: Paulson v State of NSW (District Court (NSW), Ainslie-Wallace ADCJ, 21 May 2024, unrep) (Paulson (No 3)). The judgment arose from the applicant’s notice of motion filed 29 December 2023 seeking an extension of time to file and serve an amended statement of claim. In the affidavit in support of that notice of motion, and by way of seeking to explain the delay in the filing of the notice of motion, the applicant’s solicitor, Mr Capsanis, deposed that when he received Paulson (No 1) (delivered on 10 July 2023) he read the paragraph in the body of the reasons which foreshadowed her Honour’s orders, but not the formal order set out on the cover sheet which stipulated a 28 day period for filing an amended pleading.

15. Mr Capsanis further deposed that it was only on 22 August 2023 that he first became aware of the 28 day time limit. Yet, despite this, it was not until 5 October 2023 that he sent a draft amended statement of claim to the respondent. And the proposed notice of motion, seeking an extension of time, and supporting affidavit were only sent to the respondent on 24 October 2023 and only filed in the District Court on 29 December 2023. The primary judge noted that the applicant’s solicitor offered no explanation for the delay between the date on which he became aware of the 28 day time limit and the filing of the notice of motion. At the hearing before the primary judge Mr Capsanis acknowledged that it would be highly unusual for a court to make an order of this kind without any time limit.

16. A copy of the proposed amended statement of claim was annexed to Mr Capsanis’ affidavit below, which he claimed addressed the flaws identified by the respondent in Paulson (No 1). The amended statement of claim contained 11 particulars which the primary judge found merely repeated the applicant’s submissions and were rejected for the same reasons set out in Paulson (No 1).

17. The primary judge also observed that the proposed amended statement of claim was not the final iteration because the applicant proposed to add an additional pleading. He proposed to add words to the effect that the respondent was under “an implied legal duty” to employ him following the determination by the Commission in 2017. Her Honour said that, even if allowed, the further amendment could not provide a remedy in the proposed terms, as the contract had been terminated prior to the Commission’s decision and had “no work to do once the contract was at an end” (at [13]).

18. It is desirable to reproduce paragraphs [15] and [16] of the primary judge’s reasons dated 21 May 2024 which explain why an extension of time to file a proposed amended statement of claim was refused:

The failure of the plaintiff to file an Amended Statement of Claim within the time ordered while explained as an oversight by his solicitor was attended with significant delay in bringing the motion for an extension of time. The delay of itself speaks strongly against leave being granted.

However, to grant leave would be futile because the Amended Statement of Claim even if it contained the proposed further claims discloses no reasonable cause of action and is otherwise statute barred.

19. The primary judge ordered that the proceedings be dismissed, and the applicant pay the respondent’s costs of and incidental to his notice of motion filed 29 December 2023.

Leave to appeal is required

20. The applicant now seeks leave to appeal on the basis of a draft notice of appeal comprising the following grounds (without alteration):

1 The primary judge erred in holding that two terms sought to be implied into the contract of employment between the plaintiff (appellant) and the defendant (respondent) said to arise out of s 47 of the Government Sector Employment Act 2013 which came into force in February 2014 did not give rise to the purported implied terms

2 The primary judge erred in holding that in any event the plaintiff’s (appellant’s) claim is statute barred.

3 The primary judge erred in not holding that the defendant (respondent) was also subject to an implied legal duty independently of any implied or express contractual term to employ the plaintiff (appellant) following upon the decision of Commissioner Murphy delivered on 7 July 2017

21. There seems to be some confusion whether or not leave to appeal is required in this instance. In the respondent’s submissions filed 26 June 2025, the respondent submitted at [35] that it is not clear whether a decision concerning summary dismissal of a proceeding is “an ‘interlocutory’ judgment as it finally dealt with and determined the Applicant’s claim”. Notwithstanding this, the respondent adopted the position at [36] of its written submissions that if leave is required, it should be denied.

22. It is well-established that orders for summary dismissal are interlocutory and require leave to appeal: see Wickstead v Browne (1992) 30 NSWLR 1 at 11; [1992] NSWCA 272 and McGinn v Cranbrook School [2016] NSWCA 226 at [9] and [20]. In the latter case, Gleeson JA (with whom Beazley P and Simpson JA agreed) referred at [9] to the analysis of the Court in Macatangay v State of New South Wales (No 2) [2009] NSWCA 272 at [11]-[12] explaining why an order summarily dismissing proceedings pursuant to UCPR, r 13.4 is interlocutory.

23. Accordingly, leave to appeal is clearly required: s 101(2)(e) of the Supreme Court Act 1970 (NSW).

Disposition

24. As the Court has repeatedly stated, to obtain leave to appeal, an applicant for leave to appeal usually needs to demonstrate that there is an issue of principle, a question of public importance or a clear injustice which is more than merely arguable (see Cheng v Motor Yacht Sales Australia Pty Ltd t/as The Boutique Boat Company (2022) 108 NSWLR 342; [2022] NSWCA 118 at [15] per Bell CJ with whom Ward P and Basten AJA agreed, and the authorities referred to therein).

25. For the following reasons, we consider that the applicant has failed to meet these standards.

26. There is some infelicity in the drafting of the first draft ground, but in substance it challenges the primary judge’s rejection (on a summary dismissal standard) of the applicant’s contention that implied terms should be read into his contract of employment arising from s 47 of the Government Sector Employment Act 2013 (NSW) (GSE Act).

27. Relevantly, s 47 of the GSE Act provides as follows:

47   Termination of employment

(1)  The head of a Public Service agency may, by instrument in writing, terminate the employment of a Public Service non-executive employee of the agency on any of the following grounds if the employment is ongoing employment—

…

(h) a finding of misconduct has been made against the employee under section 69,

…

28. It is provided in s 69 that “misconduct” extends to the following:

misconduct extends to the following—

(a) a contravention of this Act or an instrument made under this Act,

(b) taking action that constitutes a detrimental action offence,

(c) taking detrimental action against another person in circumstances where—

(i) the person taking the detrimental action suspects, believes or is aware, when taking the action, that any person has made, may have made, may make or proposes to make a disclosure about alleged misconduct by an employee of a government sector agency, and

(ii) the suspicion, belief or awareness, whether correct or incorrect, is a contributing factor to the taking of the detrimental action,

(d) a conviction or finding of guilt for a serious offence.

…

29. Paragraphs 4, 5 and 10 of the statement of claim filed 22 December 2022 pleaded:

4. Under the Act, the head of the Public Service Agency may terminate the employment of a Public Service non-executive employee on any of the grounds set out in Section 47(1) of the Act if the employment is ongoing.

5. At all material times, it was an implied term of the contract of employment between the plaintiff and the defendant that the defendant will comply with the Act regarding any termination of the plaintiff’s employment. It was a further implied term that the defendant would not cause or permit the plaintiff to be exposed to a termination of employment if it knew or ought to have known such exposure was not in conformity with section 47 of the Act (the “implied terms of the contract of employment”)

….

10. In the circumstance, as a result of the Commissioner’s decision:-

(a) The defendant now knew or ought to have known that the defendant had not acted in conformity with the Act in respect of the defendant’s termination of the plaintiff’s employment and that the defendant had breached the implied terms of the contract of employment; and

(b) The defendant, in breach of the implied terms of the contract of employment, has failed to take any or all reasonable steps and measure to ensure the reinstatement and re-employment of the plaintiff as a Sheriff’s Officer.

30. The respondent sought clarification of the asserted implied terms, particularly [5] and [10], to which the applicant’s solicitor responded as follows. Regarding [5] he said:

i. With reference to the specific implied terms relied upon, the material times commenced from the effective (commencement) date of the Government Sector Employment Act 2013 (the “Act”) on 25 June 2013, and continued until the plaintiff’s application for leave to appeal against Commissioner Murphy’s decision was refused by the Full Bench of the Industrial Relations Commission on 25 January 2018.

ii. They were implied into the contract by fact as they were terms necessary and appropriate for matters sought to be effected in the Government Sector as set out in Clause 4 Objects of the Act and would be understood by the parties as applicable. They were implied by law by reason of statute, namely the Act, which inter alia prescribed legal obligations upon or affected the parties.

31. Regarding [10], he said:

… Compliance with the Act meant that Section 47 of the Act necessitated the employer to reinstate or reemploy the plaintiff effective on the decision of Commissioner Murphy as the termination, in effect, wasn’t in accordance with Section 47 of the Act. The jurisdiction of the Industrial Commission did not extend to an order for reemployment or reinstatement if it was impracticable. The Industrial Commission had no power to order reinstatement or reemployment based on a breach of section 47 of the Act.

32. That was the state of the applicant’s claims in respect of implied terms at the time of Paulson (No 1), when the primary judge found at [27] that there was “no basis in conformity with authority which would cause the terms to be implied into the [applicant’s] contract of employment with the [respondent]”, struck out the statement of claim and gave leave to the applicant to replead his cause of action.

33. When the applicant eventually advanced his proposed amended statement of claim, as considered in Paulson (No 3), he had amended his claims in respect of implied terms only in minor and inconsequential ways. Paragraph 5 was in the same terms as it had been in the statement of claim of 22 December 2022, and was supported by particulars which merely repeated the submissions that had been made and rejected by the primary judge in Paulson (No 1). Paragraph 10 of the proposed amended statement of claim read (with amendments underlined):

10. In the circumstance, upon and as a result of the Commissioner’s decision:-

(a) The defendant now knew or ought to have known that the defendant had not acted in conformity with the Act in respect of the defendant’s termination of the plaintiff’s employment and that the defendant was now in breach of the implied terms of the contract of employment; and

(b)    The defendant, in breach of the implied terms of the contract of employment, has failed to take any or all reasonable steps and measure to ensure the reinstatement and re-employment of the plaintiff as a Sheriff’s Officer or other relevant capacity following upon the decision of Commissioner Murphy referred to in paragraph 9 above.

34. In Paulson (No 3) the primary judge concluded that the claims embodied in paragraph 5 of the proposed amended statement of claim must be rejected for the same reasons as her Honour had given in Paulson (No 1). The slight variation in paragraph 10 was also found to be insufficient to change the result in respect of the unsustainability of the implied terms alleged by the applicant.

35. In none of the multiple outlines of written submissions filed for the applicant (being those which were included in the White Book, as well as those filed 4 April 2025, his further submissions dated 21 May 2025 and his submissions in reply filed 22 July 2025) does the applicant identify any error of principle in the primary judge’s reasons for rejecting the asserted implied terms. Rather, those submissions substantially reiterate the scant submissions made below on the applicant’s behalf, which were properly rejected by her Honour, first in Paulson (No 1) and again in Paulson (No 3) when the applicant did little more than repeat the assertions that had already been rejected two years earlier.

36. Moreover, we discern no error of law or fact, let alone an error involving an issue of principle, which would warrant a grant of leave to appeal on this ground.

37. The draft second ground of appeal challenges the primary judge’s conclusion that the applicant’s claim is statute barred. The applicant contends that the alleged implied terms survived the termination of his contract of employment as well as the limitation period. In his written submissions dated 21 May 2025, the applicant contends that, notwithstanding that his employment was terminated on 20 October 2014, “the right of the Applicant to be re-employed and the duty of the Department to re-employ him only commenced to run upon a conclusion by the Industrial Relations Commission on 7 July 2017 that the Applicant had been unfairly dismissed”. This is the same argument which was rejected by the primary judge for reasons which are summarised at [10] above and with which we agree.

38. We also agree with the submission of the respondent that there is no substance in the applicant’s argument that the implied terms that he alleges survive the termination of the contract in the sense that any cause of action for breach of those terms only arose at some later time. The implied terms alleged by the applicant are terms that conditioned the termination of the agreement. If these terms were implied, and were breached, the applicant’s cause of action accrued at the time of the purported termination.

39. The applicant has not attempted in his various submissions to identify any error of fact or law in the primary judge’s analysis and determination of this issue. Nor is there any issue of principle or question of general public importance which arises. Furthermore, the second draft ground of appeal only has utility if leave is granted in respect of either draft ground 1 or draft ground 3 and that requirement is not satisfied here.

40. Draft ground 3 challenges the primary judge’s rejection of the applicant’s claim that he was owed an implied legal duty, independently of any implied contractual term, to employ the applicant following the decision of Commissioner Murphy of 7 July 2017.

41. This aspect of the applicant’s claim did not feature in the proposed amended statement of claim considered in Paulson (No 3). This was rather the product of what was effectively an addendum to that proposed amendment, which arose when the applicant recorded in his submissions to the primary judge that his proposed amended statement of claim should also be understood as including a pleading “to the effect that the respondent was also subject to an implied legal duty independently of any implied or express contractual term to employ the applicant following upon the decision of Commissioner Murphy delivered on 7 July 2017”. That was apparently the full extent of the articulation of this new claim, which had not featured in the statement of claim struck out in Paulson (No 1).

42. The primary judge reasoned in Paulson (No 3) that allowing an extension of time and a grant of leave to allow this claim to be advanced would be futile. Her Honour explained at [13] that the asserted implied duty “cannot provide a remedy to the Plaintiff because by the time the Commissioner delivered his decision the contract of employment between the Plaintiff and the Defendant had been terminated and any suggested imputation of a term, even if appropriate, would have no work to do once the contract was at an end”.

43. This passage suggests that her Honour may have been treating the applicant’s argument as depending upon a term being implied into his contract of employment. If so, we would respectfully disagree with her Honour’s approach. While the explanation of this obscure new part of the applicant’s claim before her Honour was sparse, as it is before us, it appears that the applicant was not making an argument that involved an implied contractual term. If that is right, then the argument need not logically depend upon a contract still having been on foot at the time of the decision of Commissioner Murphy.

44. But as a matter of substance her Honour was undoubtedly correct in concluding that there was no utility in granting leave for this claim to be advanced, and in summarily dismissing the applicant’s proceedings as a consequence. If, as we perceive it, the applicant was in this limb of his proposed amended statement of claim disavowing any case for an implied contractual term, there was no sensible legal basis for any other form of “implied legal duty” being imposed on the respondent to re-employ the applicant. It could not viably be argued that the GSE Act imposed such a legal duty, including through the effect of the decision of Commissioner Murphy. Commissioner Murphy expressly concluded that reinstatement and re-employment of the applicant were impracticable, and the appropriate outcome in lieu of those remedies was an award of compensation. Given that context nothing in the Commissioner’s orders could sensibly be understood as giving rise to a legal duty on the part of the respondent to re-employ the applicant.

45. We are therefore not persuaded that there is a sufficient basis to grant leave in respect of draft ground 3.

Conclusion

46. For all these reasons, the summons seeking leave to appeal will be dismissed, with costs.

**********

Decision last updated: 08 August 2025