[1] However, Justices Deane and Dawson came to this conclusion under the doctrine of estoppel, which provides that a defendant can not contradict a previous representation or promise made that has established an assumed state of legal affairs.

Parker had previously been a Chief Electrician in the Navy however he had been discharged and was a civilian working as a Technical Officer at the Naval Dockyard, Williamstown.

[5] Gibbs CJ put it succinctly, noting that a civilian could recover damages caused by the negligence of a member of the military.

[5]: 119  Each member of the high Court reached the same conclusion on essentially the same reasoning, expressly leaving open the question of whether the position was different if it involved, war-like activities or training in conditions simulating war.

There were however two issues that had to be overcome, (1) the question of whether the collision occurred when training in conditions simulating war,[6] and (2) that 20 years had passed since the incident such that the limitation period had expired.

In March 1985 the Commonwealth filed its defence which admitted that the collision was caused by the negligence of naval officers and crew and did not plead that the action was commenced outside of the time limit.

[7] In November 1985 the government changed its policy to defend proceedings on the basis that it did not owe a civil duty of care to servicemen engaged in operational training.

[9] In December 1987 O'Bryan J noted that Verwayen was below deck and not performing any combat activity and held that the duty of navigating a naval vessel with reasonable skill was no different during the training exercise to the duty existing at other times at sea such that there was no public policy reason why Verwayen should be prevented from claiming in negligence,[7]: 14  that the Limitation of Actions Act 1958 (Vic)[2] applied, that the waiver of the limitation defence was unilateral and voluntary such that the government could withdraw the waiver.

The respondent, we repeat, signed a certificate of readiness and joined more than once in an application by the appellant for a speedy hearing of an assessment of damages."

They also held that there was "nothing in the admitted facts to suggest that at the time of collision Voyager was engaged in a military manoeuvre as such or otherwise doing anything which could remotely be described as training for battle."

King J dissented on the basis that Verwayen could be put in the same position he was in as if the promise had not been made by the Commonwealth paying his legal costs.

The Commonwealth also argued that did not owe a duty of care to Mr Verwayen because at the time of the collision the warships were engaged in naval training exercises simulating combat conditions.

[15] The majority of the High Court dismissed the appeal, holding that the Commonwealth was barred from pleading a limitation defence to Verwayen's claim in negligence.

Gageler and Lim describe the judgement as an illustration of collective irrationality, in that while four judges agreed as to the result, the respondent prevailed despite having a majority against him on each issue.

[17] Deane J noted that as an equitable remedy, "an estoppel in equity may not entitle the party raising it to the full benefit of the assumption upon which he relied.

What divided the Court was the extent to which Mr Verwayen had established that he had suffered increased stress, anxiety and ill health as a result of his reliance on the assumption.

Dawson J held that "By falsely raising his hopes, the [Commonwealth] led [Mr Verwayen] to continue with the litigation and forgo any exploration of the possibility of settlement thereby subjecting himself to a prolonged period of stress in an action in which the damages claimed were for, amongst other things, a high level of anxiety and depression.

I would hold that the appellant was estopped from insisting upon the statute of limitations, and would observe that the equity raised by the [Commonwealth's] conduct was such ... that it could only be accounted for by the fulfilment of the assumption upon which [Mr Verwayen's] actions were based"[1]: 462  Deane J went further, adopting an expectation based approach to relief, holding that the assumption should be made good unless that would cause injustice to the person who made the representation.

[18]: 824 Toohey J did not deal with the question of estoppel, but hold that the remedy is a means of avoiding detriment and that in this case it may be achieved by compensating Mr Verwayen for his costs in pursuing the action.