Commonwealth v Verwayen

170 CLR 394
95 ALR 321

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(Judgment by: BRENNAN J)

Between: COMMONWEALTH
And: VERWAYEN

Court:

Judges: Mason C.J.

Brennan J.Deane J.
Dawson J.
Toohey J.
Gaudron J.
McHugh J.

Subject References:
Estoppel

Judgment date: 5 September 1990

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Judgment by:
BRENNAN J

The plaintiff issued a writ out of the Supreme Court of Victoria on 2 November 1984 claiming damages against the Commonwealth for injuries sustained by him, a leading electrical mechanic in the Royal Australian Navy and one of the complement of H.M.A.S. Voyager, in a collision between H.M.A.S. Melbourne and H.M.A.S. Voyager on 10 February 1964. By his statement of claim, the plaintiff alleged that he had suffered injury, loss and damage as the result of the negligence of the officers and crew of each ship. At the time of the collision, the two ships were engaged in training manoeuvres off Jervis Bay. Negligence was also alleged against officers and servants of the Commonwealth in allowing the ships to go to sea whilst in an unseaworthy condition.

The Commonwealth delivered a defence admitting the allegations of negligence but not admitting the allegations of injury, loss and damage. The action proceeded towards trial of the single issue of damages. The parties joined in several applications to the Court to expedite the hearing. Then, on 29 May 1986, an order was made by Master Brett giving the Commonwealth leave to amend the defence. By the amended defence, the plaintiff's allegations of negligence were denied and two specific grounds of defence were pleaded: first, by par.4, that the naval personnel participating in and/or directing the "combat exercises" in which H.M.A.S. Voyager and H.M.A.S. Melbourne were engaged owed no duty of care to the plaintiff; second, by par.5, that the plaintiff's action was barred by s 5 of the Limitation of Actions Act 1958 (Vict.) ("the Limitation Act"). The plaintiff delivered a reply raising waiver and estoppel against the specific pleas in the Commonwealth's amended defence. Particulars were furnished setting out, inter alia, the contents of a letter dated 27 November 1985 from the Minister Assisting the Minister for Defence to the plaintiff stating "... the Commonwealth has admitted negligence and is not pressing the statutory limitation period as a defence. ... I can assure you that all reasonable steps are being taken to expedite these matters ..." Moreover, conversations between the respective solicitors allegedly expressed an agreement to waive the defence under the Limitation Act. By his reply, the plaintiff pleaded that, in reliance on the defendant's agreement to waive and its waiver of the defence under the Limitation Act, he "issued and continued proceedings in this matter and has been otherwise disadvantaged." He furnished particulars of the allegation that he was "otherwise disadvantaged" as follows:

"The Plaintiff has lost rights pursuant to Section 23A of the Limitation of Actions Act 1958. The Plaintiff has issued and continued proceedings in the Supreme Court of Victoria. The Plaintiff has incurred expense by reason of costs associated with this action. The Plaintiff suffers from increased stress as a result of continued protraction of these proceedings leading to an aggravation of his psychiatric state of health."

When the matter came for trial before O'Bryan J., his Honour decided, over the plaintiff's objection, to hear argument on certain questions of law raised by the pleadings, taking the view that the facts relevant to these questions "were not in issue or would not be seriously disputed at trial." His Honour first considered whether on the facts relating to the collision - which had been set out in a notice to admit and which the plaintiff was taken to have admitted - any duty of care was owed by the defendant. On the facts thus admitted, his Honour found:

"that Melbourne and Voyager and their officers and crew were engaged in a naval training exercise at sea, during peace-time, whereby conditions of a nature which might be experienced during war-time against an enemy were simulated."

However, his Honour held that the defence pleaded in par.4 of the amended defence was not sound in law.

Next, his Honour held that Limitation Act applied to the plaintiff's claim. That provision read as follows:

"No action for damages for negligence ..., where the damages claimed by the plaintiff consist of or include damages in respect of personal injuries to any person, shall be brought after the expiration of three years after the cause of action accrued."

Then his Honour proceeded to consider whether the defendant had waived or was estopped from relying on the defence under s 5(6) of the Limitation Act. It was and is common ground that the Commonwealth had adopted a clear policy of admitting liability and not raising any applicable Limitation Act in any case in which a seaman injured in the collision between H.M.A.S. Melbourne and H.M.A.S. Voyager sued for damages. Then the policy changed and the Commonwealth decided to contest liability and rely on statutes of limitation in these cases. The question was and is whether this midstream change of policy came too late to relieve the Commonwealth from the liability which had theretofore been admitted in the plaintiff's case. The conduct of the defendant on which the plaintiff relied to raise waiver and estoppel was not in dispute. The relevant correspondence was produced. His Honour said:

"As there is no factual issue for a jury to determine, it is proper and convenient that the Court now determine the questions of law at issue."

It is by no means clear that the relevant facts as to detriment were agreed. In the course of argument before his Honour, counsel for the plaintiff had said that the plaintiff "undertook loan commitments for the purpose of carrying on his action". Counsel had also alleged that the amending of the defence (which "take(s) away the carrot, so to speak") would have "severe consequences upon the (plaintiff's) ill-health produced by the defendant's negligence." Having reserved consideration of the questions of waiver and estoppel, his Honour found:

"One may assume that the defendant by its authorised agents expressly or impliedly offered or promised the prospective plaintiff, shortly before the Writ was issued, that it would not rely upon a limitation defence. The problems for the plaintiff are that the offer or promise was not made by the defendant when the parties stood in a relevant legal relationship and that the offer or promise was unsupported by any form of consideration known to the law. Further, the plaintiff did not alter his position detrimentally in reliance upon the promise otherwise than by incurring legal costs."

And further -

"if the offer or promise relied upon was given as to future conduct, the necessary contractual relationship was absent, but if the promise was given as to the present, detriment was absent.

...

... as a consequence of the promise the plaintiff was not materially disadvantaged because the legal costs he incurred will be recoverable by an appropriate costs order."

His Honour's finding that legal costs were the only material detriment did not accord with the assertion that the plaintiff had suffered exacerbation of his ill-health and that that was a material detriment. His Honour rejected estoppel as an answer to the plea based on the Limitation Act as the plaintiff had suffered no detriment other than costs; he rejected waiver on the ground advanced in Kerrison v. Martin and Heyward (1975) VR 401, where the Full Court had said (at p 405):

"However it is, we think, clear that any such unilateral waiver without consideration can be terminated at any time. Upon the waiver terminating, the other party would we think have a reasonable time in which to do the act which that other party had omitted to perform."

His Honour held:

"In the present case the waiver relied upon is, in my opinion, unilateral and voluntary and the defendant was entitled to withdraw the offer or promise when it did by giving notice of an application to amend the defence."

Rejecting both waiver and estoppel, his Honour upheld the defence under s 5(6) of the Limitation Act and ordered that judgment be entered for the defendant. On appeal by the plaintiff to the Full Court the majority (Kaye and Marks JJ.) allowed the appeal with costs, ordered the judgment for the defendant to be set aside and remitted the matter for trial by jury on the issues of negligence and damages. Their Honours dismissed the defendant's cross-appeal. King J. would have ordered an inquiry into the out-of-pocket costs and expenses suffered by the plaintiff by reason of the Commonwealth's change of mind and would have ordered the Commonwealth to pay any sum found to be due by the inquiry but, subject to that, he would have dismissed the appeal.

The present appeal is not an appeal against Master Brett's order allowing the Commonwealth to amend its defence. The amendment stands and the questions raised on the appeal are whether the Commonwealth is precluded from relying on pars 4 and 5 of its amended defence by reason of estoppel or waiver.

Election, estoppel and waiver are cognate concepts: each relates to the sterilization of a legal right otherwise than by contract. A "right" may include a liberty or an immunity, according to the circumstances. In Sargent v. A.S.L. Developments Ltd. (1974) 131 CLR 634 , Mason J. said (at p 655):

"Any discussion of the principles governing the circumstances in which a party's words or conduct may preclude him from exercising a legal right which he possesses is beset with difficulties. They have their origin in the differences to be found in the various doctrines (election, waiver and estoppel) which may come into operation and in the differing concepts which each doctrine has at times been thought to embrace."

Election consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights: Evans v. Bartlam [1937] 2 All ER 646 , at pp 652,653; Tropical Traders Ltd. v. Goonan (1964) 111 CLR 41 at p 55; Kammins Co. v. Zenith Investments (1971) AC 850 at p 883. A doctrine closely related to election, and sometimes treated as a species of election, is the doctrine of approbation and reprobation. This doctrine precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he exercised as, for example, where a person "having accepted a benefit given him by a judgment, cannot allege the invalidity of the judgment which conferred the benefit": Evans v. Bartlam, per Lord Russell of Killowen at p 652. An election is binding on the party who makes it once it is made overtly - or, at all events, not later than on the communication of the election to the party or parties affected thereby: Newbon v. City Mutual Life Assurance Society Ltd. (1935) 52 CLR 723 at p 733; Scarf v. Jardine (1882) 7 App Cas 345 at pp 360-361. It is binding whether or not others who are affected by the election have acted in reliance on it. In this respect, election is to be distinguished from estoppel: Khoury v. Government Insurance Office (NSW) (1984) 165 CLR 622 at p 633.

Estoppel by representation of a fact (estoppel in pais) precludes a party who, by his representation, has induced another party to adopt or accept the fact and thereby to act to the other party's detriment from asserting a right inconsistent with the fact on which the other party acted: Thompson v. Palmer (1933) 59 CLR 641 . Equitable estoppel or, as I prefer to call it, an equity arising by estoppel precludes a person who, by a promise, has induced another party to rely on the promise and thereby to act to his detriment from resiling from the promise without avoiding the detriment: Waltons Stores (Interstate) Ltd. v. Maher (1988) 164 CLR 387 at p 427. An equity of this kind, by imposing a liability either to avoid detriment to the other party or to honour the promise, trenches upon the liberties or immunities of the person who is bound. An estoppel, whether in pais or arising in equity, is binding so soon as it is acted on to the detriment of the other party.

Waiver is a term of shifting meaning. Lord Wright in Smyth and Co. v. Bailey and Co. [1940] 3 All ER 60 said (at p 70):

"The word 'waiver' is a vague term used in many senses. (Stroud's Judicial Dictionary lists at least 13.) It is always necessary to ascertain in what sense and with what restrictions it is used in any particular case. It is sometimes used in the sense of election as where a person decides between two mutually exclusive rights. Thus, in the old phrase, he claims in assumpsit and waives the tort. It is also used where a party expressly or impliedly gives up a right to enforce a condition or rely on a right to rescind a contract, or prevents performance, or announces that he will refuse performance, or loses an equitable right by laches."

To identify the relevant legal doctrine, it is necessary to identify the sense in which we intend to use the term "waiver". In this case, there is no contract to admit liability (a proposition considered in Newton, Bellamy and Wolfe v. S.G.I.O. (1986) 1 Qd R 431) and we can put aside until we consider estoppel the kind of waiver which depends on the suffering of detriment by a person who relies on the waiver. We are concerned here with a unilateral release or abandonment of a right. In Banning v. Wright [1972] 1 WLR 972 at pp 978-979; [1972] 2 All ER 987 at p 998, Lord Hailsham of St Marylebone L.C. pointed out that "waiver" is derived from the same root as the word "waif" - a thing, or person, abandoned. Lord Hailsham, after citing the speech of Lord Wright (supra), continued:

"In my view, the primary meaning of the word 'waiver' in legal parlance is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted."

In accord, see Halsbury's Laws of England, 4th ed. (1976), vol 16, par 1471. His Lordship must not be taken to be saying that waiver necessarily occurs before pleadings are closed. Clearly enough, rights are frequently waived during a trial. What his Lordship is saying is that a right which is susceptible of waiver can be "confessed" by a party against whom it might prima facie be exercisable but that party's liability can be "avoided" by showing that the right has been abandoned. In other words, upon waiver, the party waiving the right ceases to be able thereafter to assert it effectively. When a right has been waived in the sense defined by Lord Hailsham (and it is in this sense that it is used in this judgment), it is unnecessary to consider whether any other party has acted in reliance on the release or abandonment: the right is abandoned once and for all.

These distinct doctrines serve different purposes: election (in either species) ensures that there is no inconsistency in the enforcement of a person's rights; estoppel or equitable estoppel ensures that a party who acts in reliance on what another has represented or promised suffers no unjust detriment thereby; waiver recognizes the unilateral divestiture of certain rights. True it is that the divisions in nature and purpose between one of these doctrines and another have not always been expressed in the way in which I have stated them and there have been occasions when the sterilization of a right has been dubiously attributed to one doctrine rather than to another. Indeed, Lord Diplock in Kammins Co. (at p 883) regarded waiver which debars a person from raising a particular ground of defence as an instance of the operation of the law of contract or of the doctrine of estoppel, and in The "Kanchenjunga" (1990) 1 Lloyd's Rep 391 Lord Goff of Chieveley was concerned with "waiver" arising by "election". Yet it is clear that the doctrine of waiver has long been applied to grounds of defence without reference to estoppel and, shortly after Kammins Co., Banning v. Wright defined waiver as a doctrine distinct from estoppel. In Craine v. Colonial Mutual Fire Insurance Co. Ltd. (1920) 28 CLR 305 Isaacs J. (at p 327) distinguished waiver from estoppel, although he appeared to regard waiver as synonymous with election and the doctrine of approbating and reprobating: see p 326. The sterilizing of a right might, in some circumstances, be attributable to either a waiver or an election, but the doctrines are distinct, for a right may be waived though there is no alternative right inconsistent with it. As it is erroneous to treat waiver in the sense relevant to this case as synonymous with, or as a species of, estoppel, it is convenient to examine these doctrines separately. There is a difference in their respective applicability to the pleas in pars 4 and 5 of the amended defence.

Waiver

The general principle was stated by Alderson B. in Graham v. Ingleby (1848) 1 Ex 651 at p 657 (154 ER 277 at p 279):

"it is evident that a party who has a benefit given him by statute, may waive it if he thinks fit. There are many cases in which no action can be commenced except after certain notice of action. That is a requirement by statute; but if a plaintiff went to trial, and the defendant did not then object to the want of notice, could he afterwards set aside the whole proceedings because no notice was given? It is clear that he could not."

In Wilson v. McIntosh (1894) AC 129, a caveat had been lodged against an application to bring land under the Real Property Act 1862 (NSW) (26 Vict. No 9) and, the time limited for the caveator to take proceedings to establish her title having passed, the caveat lapsed and the applicant was entitled to have the caveat removed. But the applicant proceeded to state his case and secured an order that the caveator should state her case, which she did. The applicant, having neglected to take any steps to set the matter down for hearing, applied to have the caveat removed on the ground that it had expired. The Privy Council ordered that the motion for removal be refused. Lord Justice Davey said (at p 133):

"Their Lordships are of opinion that the maxim 'Quilibet potest renunciare juri pro se introducto' applies to this case, that it was competent for the applicant to waive the limit of the three months and the lapse of the caveat by sect. 23, and that the respondent did waive it by stating a case and applying for and obtaining an order upon the appellant to state her case, both which steps assumed and proceeded on the assumption of the continued existence of the caveat."

The maxim quoted by Lord Justice Davey is translated in Broom's Legal Maxims, 10th ed. (1939), p 477, as follows:

"Any one may, at his pleasure, renounce the benefit of a stipulation or other right introduced entirely in his own favour."

(See Bonner v. Wilkinson (1822) 5 B and Ald 682 at p 686 (106 ER 1340 at p 1341).) The learned author comments:

"According to the well-known principle expressed in this maxim, a defendant may, as a rule, decline to avail himself of a defence which would be at law a valid and sufficient answer to the plaintiff's demand, and waive his right to insist upon that defence."

As it is a characteristic of a right susceptible of waiver that it is introduced solely for the benefit of one party, a condition precedent to the jurisdiction of a court to grant relief cannot be waived: Park Gate Iron Co. v. Coates (1870) LR 5 CP 634. It follows that, if the jurisdiction of a court to entertain proceedings is conditioned on the commencement of the proceedings within a specified time, a defendant cannot waive the time requirement and thereby confer jurisdiction on the court. Conversely, where a case is fought on the issue whether a time limitation in a particular statute is or is not a condition precedent to jurisdiction, an argument that another statute overrides the time limitation can be raised on appeal though conceded in the court below: Adams v. Chas. S. Watson Pty. Ltd. (1938) 60 CLR 545 at pp 547,548. However, a defence under Limitation Act does not create a condition precedent to jurisdiction. It is merely a right conferred on a defendant to defeat a claim brought outside the time limited by the Limitation Act. In Australian Iron and Steel Ltd. v. Hoogland (1962) 108 CLR 471 at pp 488-489, Windeyer J. said:

"It seems that, under the common law system of pleading, when a limitation is annexed by a particular statute to a right it creates, the plaintiff should allege in his declaration that the action was brought within time. On the other hand it is for the defendant to plead the Statute of Limitations as a defence to an action on a common law cause of action, as if he does not it is assumed that he intends to waive it: see Chapple v. Durston ((1830) 1 C and J 1 at p 9 (148 ER 1311 at p 1314)). However, when issue is joined on a plea of the Statute, the burden of proving that the action is within time is on the plaintiff: see cases referred to by Dixon J., as he then was, in Cohen v. Cohen ((1929) 42 CLR 91 at p 97). And, even when a time limit is imposed by the statute that creates a new cause of action or right, it may be so expressed that it is regarded as having a purely procedural character, as a condition of the remedy rather than an element in the right; and in such cases it can, it seems, be waived, either expressly or in some cases by estoppel: Wright v John Bagnall and Sons Ltd. ( [1900] 2 QB 240 ); Lubovsky v Snelling ((1944) KB 44)."

In Chapple v. Durston (1830) 1 C and J 1 at p 9 (148 ER 1311 at p 1314) Vaughan B., noting that the Statute of Limitations bars the remedy not the right (as does Limitation Act), said:

"If he intends to insist upon it, he should plead it to prevent surprise, and if he does not, it should be presumed he intends to waive it."

As the right created by s 5(6) is introduced solely for the benefit of a defendant, who must plead the right before it is effective, the right is capable of waiver by a defendant.

However, waiver does not apply to an element in a plaintiff's cause of action. An element in a cause of action simply does not answer the description of a right which has been introduced solely for the benefit of a defendant. It follows that the defence of Limitation Act is amenable to waiver but the issue of negligence is not.

The next question is whether the defence of s 5(6) was waived, that is to say, abandoned so that it was beyond the capacity of the Commonwealth thereafter to defeat the plaintiff's claim by invoking s 5(6). A failure to plead the Statute of Limitations does not, without more, establish a waiver of the statute. Subject to the Rules of Court, a pleading is always capable of amendment, at least until judgment is pronounced. It is no more than a party's definition of the issues which that party intends to litigate: see Laws v. Australian Broadcasting Tribunal (1990) 64 ALJR 412 at pp 418-419; 93 ALR 435 at pp 446,447. In the present case, however, there was much more than a failure to plead the Limitation Act. By the clearest communication and by its conduct, the Commonwealth declared its intention to abandon the defence. But does a clear and unequivocal declaration by a defendant that it will not raise a defence under Limitation Act amount to a waiver?

As the "right" (that is, the defence) conferred by s 5(6) is introduced solely for the benefit of a defendant and as a plaintiff can plead the abandonment of the right "by way of confession and avoidance if the right is thereafter asserted", there must be a time after which the defence can no longer be exercised. At what time must the defence be either raised or waived?

The time when waiver of a right occurs depends on the relationship between a party possessed of such a right and the party whose interests may be affected by exercise of the right. When the party possessed of the right knows that a new legal relationship is to be constituted between him and the party whose interests are liable to affection by exercise of the right and that the right, if exercised, might affect that new relationship, the party possessing the right must enforce the right before the new relationship is constituted or he will be held to have waived the right. The new relationship is typically created by the pronouncing of a judgment in which the existing rights of the parties are merged or by the making of an order, but it may be created in other ways. However created, it is on or before the constitution of the new relationship that the right must be exercised: the right is not waived until the last moment at which its exercise is capable of affecting the new relationship: see Ward v. Raw (1872) LR 15 Eq 83 at p 85. Once the new relationship is constituted without exercise of the right, it is immaterial that the relationship would not have been differently constituted had the right been exercised.

As a right is waived only when the time comes for its exercise and the party for whose sole benefit it has been introduced knowingly abstains from exercising it, a mere intention not to exercise a right is not immediately effective to divest or sterilize it. Vaughan B. in Chapple v. Durston was precise in speaking of a defendant's failure to plead a time bar not as a waiver but as the foundation for a presumption that the defendant "intends to waive it ". Waiver of a time limitation which bars a remedy occurs only when the time for granting the remedy arrives, that is, the moment before judgment. Until that time arrives, the time limitation is not waived. If a party is to be held to an intention to waive the limitation, it can be only by contract or estoppel or, where the intention to waive appears from a failure to plead the limitation, by refusal of leave to amend the pleading (if leave be necessary and refusal of leave be justified).

In the present case, leave to amend was granted to the Commonwealth to plead Limitation Act; there was no prior contract binding on the Commonwealth not to plead it. The time for waiving the defence had not arrived. If the Commonwealth is to be held to its original intention not to waive the defence conferred by Limitation Act, it must be by reason of an equity arising from estoppel.

Waiver has no application to the general denial of negligence and to the specific denial in par.4 of the amended defence. Those paragraphs of the defence relate to the essential element in the plaintiff's cause of action, not to a right introduced for the benefit of a defendant. Again, if the Commonwealth is to be held to its original intention to admit liability for negligence, it must be by reason of an equity arising from estoppel.

Equitable estoppel

The Commonwealth made no misrepresentation of fact. Until the Commonwealth changed its policy, its intention was as it had represented its intention to be: to admit liability, not to rely on Limitation Act and to seek an assessment of damages. The Commonwealth's representations of fact were true when they were made, but the promises made by the Commonwealth - promises made gratuitously - were not to withdraw its admission of negligence and not to rely on Limitation Act and thus to submit to judgment for the plaintiff at the trial. Although waiver, in the sense earlier discussed, does not bind a party to fulfil such promises, there is at least a theoretical possibility that an equity arising from estoppel could be invoked to debar a defendant from resiling from a promise not to contest an issue at the trial or not to raise a defence. Sometimes an equity arising from estoppel has been described as a waiver. That was the type of "waiver" referred to by Neill J. in The "Athos" (1981) 2 Lloyd's Rep 74 at p 88, in a passage cited by Hirst J. in The "Uhenbels" (1986) 2 Lloyd's Rep 294 at p 297:

"The second type of waiver debars a person from raising a defence to a claim against him which would otherwise be available to him. This type of waiver arises when that person either agrees with the claimant not to raise that particular defence, or so conducts himself as to be estopped from raising it. The ordinary principles of estoppel apply to it. The statement or conduct which is said to found the estoppel must be clear and unequivocal and the other party must either have acted to his detriment or otherwise have conducted his affairs in reliance on that statement and conduct." (Emphasis added.)

The ordinary principles of equitable estoppel which might apply to a promise of this kind were discussed in Waltons Stores v. Maher.

The judgments of a majority of the Court in Waltons Stores v. Maher held that equitable estoppel yields a remedy in order to prevent unconscionable conduct on the part of the party who, having made a promise to another who acts on it to his detriment, seeks to resile from the promise: see pp 404,405,419. The remedy is to effect what Scarman LJ. called "the minimum equity to do justice" in Crabb v. Arun District Council (1976) Ch 179 at p 198: see Waltons Stores v. Maher, per Mason C.J. and Wilson J. at pp 404-405; per Brennan J. at pp 419, 423, 427. The remedy is not designed to enforce the promise although, in some situations (of which Waltons Stores v. Maher affords an example), the minimum equity will not be satisfied by anything short of enforcing the promise.

If this were a case where justice could not be done unless the Commonwealth were held to its promises, the equity would have to be satisfied by entry of an interlocutory judgment for the plaintiff and an order for the assessment of his damages. But that is not the minimum equity needed to avoid the relevant detriment. The relevant detriment in a case of equitable estoppel is detriment occasioned by reliance on a promise, that is, detriment occasioned by acting or abstaining from acting on the faith of a promise that is not fulfilled. The relevant detriment does not consist in a loss attributable merely to non-fulfilment of the promise. The principle is analogous to the principle of estoppel in pais: see Thompson v. Palmer, at pp 520,547. In the present case, it may be (as counsel for the plaintiff alleged) that the plaintiff's ill-health was exacerbated by the defendant's amendment of its defence. That allegation was not considered by the learned trial judge who found that the only detriment suffered consisted in the incurring of costs. But it was not suggested that any exacerbation of the plaintiff's ill-health flowed from some act done or omission made by him in reliance on the defendant's promise to admit or earlier admission of liability. Nor is the loss of the plaintiff's chance of success a detriment occasioned by any act done or omission made by the plaintiff in reliance on the defendant's promise to admit or earlier admission of liability. Those "detriments" flowed from the defendant's failure to fulfil its promise, but not from any act done or omission made by the plaintiff in reliance on the making of the promise. They are not relevant detriments.

The only relevant detriment which the plaintiff suffered, according to his pleadings and the argument of his counsel, was financial loss in continuing with the action until the defence was amended to deny negligence and to raise Limitation Act. In these circumstances, to hold the Commonwealth to its promise to admit liability in negligence would be to go beyond the minimum equity. It may be that the relevant financial detriment exceeded in amount the costs which were awarded to the plaintiff by the Master by the order giving leave to amend the defence. This question of fact was not investigated by O'Bryan J. nor by the majority of the Full Court who noted the plaintiff's counsel's concession before that Court that he had not wished to call evidence before the trial judge on the questions of waiver and estoppel and who concluded that the facts relating to waiver and estoppel were not in dispute before O'Bryan J. As I read their Honours' reasons for judgment, however, the facts relating to detriment were not regarded as critical provided only that some detriment was established. King J., however, was concerned by the absence of agreed facts as to detriment. He said ((1989) VR 712 at p 735):

"In Waltons' Case justice was satisfied only by awarding damages in lieu of enforcing Waltons' promise; in the present case it may be that it can be given by ordering that the respondent pay the difference between the appellant's costs thrown away on a solicitor-and-client basis and the party-party basis which I understand was ordered by the master."

His Honour would have ordered an inquiry into the plaintiff's out-of-pocket costs and expenses thrown away by the defendant's change of plea. The procedure adopted in the Courts below was not effective to determine the extent of the relevant detriment suffered by the plaintiff.

In strict theory, a party who is entitled to equitable relief to make good some detriment suffered in reliance on a promise has a cause of action rather than an answer to a plea raised by a defendant- promisor in proceedings to enforce another cause of action. But when an equity by way of estoppel is raised as an answer to a plea in a defence which a defendant-promisor seeks to raise contrary to his promise, it may be appropriate to give effect to the defence on terms that the defendant-promisor satisfy the plaintiff's equity. It would be an appropriate order in this case, where (if my view were to prevail) the plaintiff would ultimately be liable to fail on the ground pleaded in par.5 of the amended defence, that is, Limitation Act. As the extent of the plaintiff's detriment was not determined, the appropriate order would follow the order proposed by King J. However, mine is a minority view. The majority would hold that, by appropriate amendment of the reply , the Commonwealth can be made to fulfil its promises to admit negligence and not to raise the defence of Limitation Act.

On either view, no consideration need be given to the question whether there was any duty of care owed to the plaintiff by the naval personnel participating in and/or directing the "combat exercises" in which the collision occurred. I am thus relieved from determining whether or not the simulation of wartime conditions in training exercises, which necessarily entails personal hazards, precludes the existence of a duty of care - a question that was not necessary to decide in Groves v. The Commonwealth (1982) 150 CLR 113 : see pp 119,134,136.

I would allow the appeal, set aside the order of the Full Court and in lieu thereof order:

1.

that the matter be remitted to the trial judge to ascertain what detriment was suffered by the plaintiff in continuing with the action until the defence was amended and what amount would be fair compensation for that detriment; and

2.

that, upon payment by the defendant to the plaintiff of the amount so ascertained, the action stand dismissed.

The plaintiff should pay the costs of the proceedings after amendment of the defence, and the parties should have leave to submit appropriate minutes of order setting off the amounts due between them.