Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd
| Wagon Mound (No. 1) | |
|---|---|
 |
|
| Court | Privy Council |
| Decided | 18 January 1961 |
| Citation(s) | [1961] UKPC 2, [1961] AC 388, [1961] 1 All ER 404 |
| Transcript(s) | Full text of judgment |
| Case history | |
| Prior action(s) | Supreme Court of NSW |
| Case opinions | |
| Viscount Simonds | |
| Court membership | |
| Judge(s) sitting | Viscount Simonds, Lord Reid, Lord Radcliffe, Lord Tucker and Lord Morris of Borth-y-Gest |
Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd or "Wagon Mound (No. 1)" [1961] UKPC 2 is a landmark tort law case, which imposed a remoteness rule for causation in negligence. The Privy Council held that a party can only be held liable for damage that was reasonably foreseeable. Contributory negligence on the part of the dock owners was also relevant in the decision, and was essential to the outcome, although not central to this case's legal significance.
The Wagon Mound (No 1) should not be confused with the successor case of the Overseas Tankship v Miller Steamship or "Wagon Mound (No 2)", which concerned the standard of the reasonable man in breach of the duty of care.
Overseas Tankship had a ship, the Wagon Mound, docked in Sydney Harbour in October 1951. The crew had carelessly allowed furnace oil (also referred to as Bunker oil) to leak from their ship. The oil drifted under a wharf thickly coating the water and the shore where other ships were being repaired. Hot metal produced by welders using oxyacetylene torches on the respondent's timber wharf (Mort's Dock) at Sheerlegs Wharf fell on floating cotton waste which ignited the oil on the water. The wharf and ships moored there sustained substantial fire damage. In an action by Mort's Dock for damages for negligence it was found as a fact that the defendants did not know and could not reasonably have been expected to know that the oil was capable of being set alight when spread on water. The dock owners knew the oil was there, and continued to use welders.
The Privy Council found in favour of the defendant, agreeing with the expert witness who provided evidence that the defendant, in spite of the furnace oil being innately flammable, could NOT reasonably expect it to burn on water. The leading case on proximate cause was Re Polemis, which required that the harm be the direct result of the conduct regardless of how remote. As this case was binding in Australia, its rule was followed by the Supreme Court of New South Wales (NSW), and the defendant appealed to the Privy Council. The Board indicated Morts would probably have been successful if they had claimed damages for direct damage by the oil to the slipway but this was minor and not part of the damages claimed (although success on this count may have saved Morts Dock and Engineering the costs of all the litigation for both parties across all three levels of court). Viscount Simonds, in his delivery for the Privy Council, said that the Counsel for Morts had discredited their own position by arguing that it couldn't have been bunkering oil because it wouldn't burn on water. The Privy Council's advice soundly disapproved the rule established in Re Polemis, as being "out of the current of contemporary thought" and held that to find a party liable for negligence the damage must be reasonably foreseeable. The council found that even though the crew were careless and breached their duty of care, the resulting extensive damage by fire was not foreseeable by a reasonable person, although the minor damage of oil on metal on the slipway would have been foreseeable.
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