This study examines the development and consequences of a crisis in a government primary school in the Australian Capital Territory. The A.C.T. system is founded upon participation in policy development at the school level - problems when they arise are usually resolved at the local level. A challenge to the school's policy is described, as is the reaction of the Board. The consequences flowing from the mechanism used to resolve the conflict are discussed in terms of the particular school and the system generally. The tensions inherent in a participatory approach to policy development at the school level are examined. The constructive as well as destructive elements are discussed.