• In the case of Commonwealth of Australia v Verwayen [1990] 64 ALJR 540, the question of whether an estoppel was created by the pursuance of litigation.

Facts of Commonwealth of Australia v Verwayen [1990] 64 ALJR 540

  • Two navy ships collided during a combat exercise in 1964, and C, a naval officer, was injured as a result
  • He did not sue for negligence as it was widely believed that armed forces members could not sue the government for the negligence of another member
  • This belief changed in 1984, so the C promptly sued the government for the negligence of another member of the armed forces
  • At first, the government had written back admitting negligence and said they would not rely on the statute of limitations, which would have resulted in the C being prevented from claiming due to time-constraints
  • Less than a year later following reviewed policy, the government tried raising both defences (denying their fault and the limitation period)

Issues in Commonwealth of Australia v Verwayen [1990] 64 ALJR 540

  • Had the government waived their defences through the letter they sent ten months prior to raising both defences?
  • Would the doctrine of estoppel prevent the government from going back on their letter of assurances?

Held by the High Court of Australia

  • Appeal dismissed, four judges to three. Two judges agreed the government had waived their defences. The other two agreed with issue two, there was an estoppel in place. Either way, the government was not allowed to go back on their assurances and use the defences they had first refused.

Judge Dawson

  • Dismissed the appeal by way of estoppel
  • “His expectation was met with an assurance that the statute would be waived. The respondent’s delay in commencing the action was explicable upon reasonable grounds and the appellant’s decision not to insist upon the period of limitation and to contest the case on its merits could readily be seen as prompted by a humane attitude befitting the Commonwealth towards a former member of its armed services. The appellant continued to encourage the respondent in his belief that there would be no insistence upon the statute by joining in applications for an expedited hearing and, a year after the commencement of the action, by reiterating that it would “not (be) pressing the statutory limitation period as a defence”. The subsequent abrupt change in policy on the part of the appellant, unexplained as it was, constituted the breach of a firm assurance deliberately given on more than one occasion over a considerable period of time” [21]
  • “When the appellant made an admission of liability in its defence, the respondent was relieved, subject to proof of damage, of any obligation to prove negligence. It was by way of defence against the change brought about by the appellant’s amendment of its pleading that the respondent raised the question of waiver in reply. The waiver, or estoppel, was not pleaded as part of the cause of action but to preclude the appellant from departing from the assumption which it had induced” [24]

Judge Toohey

  • Dismissed the appeal by way of the government waiving their defences
  • “waiver, in this sense, involves unequivocal renunciation or abandonment of a defence, it may occur at any stage of the adjudicative process” [28]
  • “Whether Mr Verwayen should now be given the opportunity to supplement the material relevant to detriment is a matter I need not pursue for he has succeeded in making good his claim of waiver” [30]

Dissenting, Chief Justice Mason

  • Chief Justice Mason upheld the appeal, in dissent of the majority of the court
  • Chief Justice Mason’s view on what is waiving: “According to its strict legal connotation, waiver is an intentional act done with knowledge whereby a person abandons a right by acting in a manner inconsistent with that right” [21]
  • His view on what is estoppel: “There are titles such as promissory estoppel, proprietary estoppel and estoppel by acquiescence. Yet all of these categories and distinctions are intended to serve the same fundamental purpose, namely “protection against the detriment which would flow from a party’s change of position if the assumption (or expectation) that led to it were deserted” [28]

Chief Justice Mason was of the view that the defences of the government were not waived, nor was estoppel at play

  • “To hold the Commonwealth to its representations, thereby depriving it of defences which were available to it by statute or the general law, would be a disproportionate response to the detriment suffered by the respondent in reliance upon the assumption that the defences would not be pleaded … In the result I conclude that the respondent’s case of waiver and estoppel has not been made out” [49 and 50]