State of New South Wales v Shaw

The Court of Appeal of New South Wales heard an appeal and cross-appeal concerning a dispute between the State of New South Wales and probationary teachers, Mr. Shaw and others. The teachers alleged that their employment contracts had been repudiated by the State, leading to claims for damages. The primary dispute revolved around whether the State had breached implied terms within the employment contracts and whether the contracts had been effectively repudiated.

The central legal issues before the Court of Appeal were whether a term of mutual trust and confidence, or a term of good faith, was implied as a matter of legal necessity into the employment contracts of probationary teachers. The court also considered whether the evaluative provisions of the Teachers’ Handbook were incorporated into the employment contracts and, if so, whether any breach of these provisions or implied terms constituted a repudiation of the contracts by the State, and whether such repudiation was accepted by the teachers.

The Court of Appeal found that neither a term of mutual trust and confidence nor a term of good faith was implied into the employment contracts as a matter of legal necessity. The court also determined that the Teachers’ Handbook did not form part of the employment contracts in the manner contended by the plaintiffs. Consequently, the court concluded that there was no breach of any implied term and that the State had not repudiated the contracts. The general rule that costs follow the event was also applied.

Accordingly, the Court of Appeal allowed the State's appeal and dismissed the teachers' cross-appeal. The orders of the District Court, which had entered judgment for the plaintiffs and ordered the defendant to pay their costs, were set aside. Instead, judgment was entered for the defendant (the State) against the plaintiffs, and the respondents/cross-appellants (the teachers) were ordered to pay the costs of the appellant/cross-respondent (the State) both of the appeal and of the proceedings in the District Court.