Preshil, Melbourne's oldest and most prominent ''alternative'' school, is the creation of two extraordinary educators — its founder Greta Lyttle, and her niece Margaret Lyttle, who was principal for 50 years, until 1994.

Since Margaret Lyttle's retirement, Preshil school has struggled with the question of how to replace her and what its educational philosophy should be.

"The 'Preshil tradition' understood its parents as encouraging, self-actualising, love-yourself, love-your-neighbour type of people, " state MP Gavin Jennings says.

But in the last 10 years it seems that the cohort of parents who think and act that way across the community has diminished.

For a few years in a row, the growing cohort were parents of children who had experienced difficulties at other schools.

A lot of people see themselves as passionate custodians of the Preshill philosophy.

But they have grappled to come to terms with the contemporary position of the school.

In his report to the 2010 annual general meeting, then school council chairman Peter Gahan lamented that internal dissension had cost the school deeply in terms of lost enrolments and that it had lost money in 14 of the previous 15 years at an average of $240,000 a year.

In January 2010, Kerri McCulloch was appointed head of the Preshil junior campus.

In July 2010, Marilyn Smith was appointed principal of Preshil.

On 9 March 2011, a letter addressed to Smith and signed by 16 staff at the Arlington junior campus, lauded Kerri McCulloch's professionalism and warned that "the school has been through so many upheavals in the last few years and it is clearly not in the best interest of the school community to suffer another one".

The letter was an expression of support for McCulloch as head of the junior school, who had "united the staff and created a positive working atmosphere... and has brought a progression through the school so that there is now a consistency from one class to the next".

On July 29 2011, according to a second letter obtained by The Age, staff took their concerns to the school council.

Declaring morale to be "at an all time low", this letter, anonymous but for the sign-off "concerned staff ", said they had lost confidence in the school's leadership, singling out principal Smith for poor decisions, an inability to communicate and treating staff with contempt.

It was sent by email to school council president Naomi Rosh-White and other school councillors.

Staff welfare is no longer a concern and the Preshil community are now becoming aware that the school has become a very unpleasant workplace, " the letter read.

A staff member who wanted to remain anonymous says Preshil engaged a forensic information technology specialist to try to trace the sender of the email.

It is understood that staff at Preshil's senior campus have raised concerns with the administration over the response to the July 29 "concerned staff" email.

There is a belief that more energy and resources were devoted to trying to track down the source or sources of the email than considering whether its concerns had any validity or warranted more than cursory dismissal.

In August 2011, Ms McCulloch told school council president Naomi Rosh-White the current school president that Ms Smith's treatment of her ''behind closed doors was very different to my public treatment''.

According to Ms McCulloch's legal complaint, no action was taken.

On September 7 2011 — 12 months after McCulloch's first bullying allegation — a clash between Ms Smith and Ms McCulloch ended in a dispute over whether Ms McCulloch verbally resigned or said she was considering resigning.

Ms Smith later wrote to Ms McCulloch telling her in effect that if she had not resigned, then Preshil was terminating her employment.

Parents were issued with an email telling them that McCulloch was on extended leave, had travelled to Italy to further her studies and would not be returning to Preshil.

A whistleblower teacher sent an email to the parents to tell them that this was not true.

The teacher who wrote the whistleblowing email has not spoken to or contacted The Age, but a source close to her says she was pressured into issuing a retraction in which she conceded her actions in writing directly to the school community were wrong.

The whistleblower teacher has since resigned from Preshil, the source says.

There have been about eight resignations from the senior and junior campuses during 2011.

Preshil has 44 teachers and 308 students.

In October 2011 Kerri McCulloch took Preshil to the Federal Court alleging "adverse action" — a variation of unfair dismissal under the Fair Work Act.

Ms McCulloch was seeking reinstatement and compensation.

''I am satisfied, as the evidence now stands, that there is a serious issue to be tried whether Preshil took adverse action against Ms McCulloch because she complained to the school council president and Ms Smith about her perceived (or actual) treatment by Ms Smith, '' Federal Court judge Shane Marshall said.

The trial was to proceed on Monday 28 November before Justice Marshall, but, days before the trial, the case was settled.

Alternative school in court over principal bullying claims, Ian Munro, The Age, 7 November 2011: http://www.theage.com.au/national/education/alternative-school-in-court-over-principal-bullying-claims-20111106-1n21k.html Historical link preserved from the original page.

Class struggle, Ian Munro, The Age, 2 December 2011: http://www.theage.com.au/victoria/class-struggle-20111202-1oa6y.html Historical link preserved from the original page.