Court Privy Council Prior action(s) Supreme Court of NSW | Transcript(s) Full text of judgment Date decided January 18, 1961 | |
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Citation(s) [1961] UKPC 2, [1961] AC 388, [1961] 1 All ER 404 Judge(s) sitting Viscount Simonds, Lord Reid, Lord Radcliffe, Lord Tucker and Lord Morris of Borth-y-Gest Similar Overseas Tankship (UK) Ltd v, Bolton v Stone, Blyth v Birmingham Waterwor, Summers v Tice, Vaughan v Menlove | ||
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.
Contents
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.
Facts
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.
Judgment
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.
Viscount Simonds delivered the judgment of the Board and said:
Significance
Up until this time the leading case had been Re Polemis, where the central question was that of the directness of the chain of events between the triggering act being examined for negligence and the result. The Council decided that rather than go with precedent (authority) they would determine a principle from a range of cases, in a similar way as Lord Atkin did in Donoghue v Stevenson, and their principle was primarily a single test for foreseeability which they argued was a logical link between the damage and the liability (culpability). Stated differently, foreseeability was the logical link between, and the test for, breach of the duty of care and the damages. This is the supreme test, and may be rephrased as "the liability of a consequence ... was natural or necessary or probable." The Lords made reference to hindsight, indicating it is nothing like foresight and should play no role in assessing negligence. There is authority to challenge this view of hindsight; in Page v. Smith, Lord Lloyd stated: "In the case of secondary victims, i.e. persons who were not participants in an accident, the defendant will not be liable unless psychiatric injury is foreseeable in a person of normal fortitude and it may be legitimate to use hindsight in order to be able to apply the test of reasonable foreseeability."
The Lords gave Morts the opportunity to sue in nuisance but there is no record of them testing this action in that tort. The common law rules of causation have had their importance lessened by the promulgation of statute law in Australia. Contributory negligence is now essential for many determinations and are covered by statutes such as the Civil Liability Act (1936) South Australia which has more recent counterparts in a number of jurisdictions including New South Wales.