Tort Law

Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering Co. Ltd. (The Wagon Mound No. 1)

[1961] AC 388

Facts

• The defendants operated the vessel Wagon Mound in Sydney Harbour.
• Through the carelessness of the ship’s crew, a large quantity of furnace oil escaped into the harbour.
• The oil spread across the water and reached the plaintiffs’ timber wharf.
• The plaintiffs were carrying out ship repairs involving welding and cutting equipment.
• Their manager initially stopped welding because of concern that the oil might ignite.
• After receiving advice that furnace oil floating on water was not likely to burn, work resumed with safety precautions.
• Molten metal from the welding fell onto floating debris or cotton waste.
• The material began burning.
• The flames ignited the oil.
• A major fire developed and caused extensive damage to the wharf and nearby vessels.
• The trial court found that the defendants could reasonably foresee pollution or fouling damage from the oil.
• However, they could not reasonably have foreseen that furnace oil spread upon water would ignite and cause fire.
• Under the earlier rule in Re Polemis, a negligent defendant could be liable for every direct consequence even if the precise kind of damage was unforeseeable.

• Whether the defendants were liable for fire damage that directly followed from the oil spill but was not reasonably foreseeable.
• Whether remoteness should depend upon directness or reasonable foreseeability.
• Whether foreseeability of pollution damage made the defendants liable for a different kind of damage caused by fire.

• A negligent defendant is liable only for damage of a kind or type that was reasonably foreseeable.
• The rule in Re Polemis, based upon direct consequences, was rejected.
• The defendant does not need to foresee:
o the exact sequence of events;
o the precise mechanism of injury;
o the full extent of damage; or
o every detail of the accident.
• However, the general kind of damage must be within the reasonable contemplation of the defendant.
• Foreseeability of one kind of damage does not automatically create liability for a fundamentally different and unforeseeable kind.
• Remoteness places a principled limit upon the consequences for which a negligent person must compensate.

• The crew was negligent in allowing furnace oil to escape.
• It was foreseeable that oil could:
o contaminate the water;
o foul the wharf;
o interfere with slipways; or
o cause cleaning expenses.
• The plaintiffs, however, sought compensation for extensive fire damage.
• The trial judge expressly found that a reasonable person in the defendants’ position would not have known that the oil could ignite while spread upon water.
• Fire damage was therefore not merely a more severe version of foreseeable pollution damage.
• It was a different type of harm depending upon an unexpected characteristic of the oil.
• The plaintiffs argued that the fire directly followed from the spill and should therefore be recoverable under Re Polemis.
• The Privy Council rejected that approach.
• It considered it unjust to make a person liable for every direct physical consequence, however unpredictable, once any negligence was shown.
• Liability should correspond with consequences that a reasonable person ought to have contemplated.
• Since fire was not a reasonably foreseeable type of damage, it was too remote.

• The Privy Council held that the defendants were not liable for the fire damage.
• Although the oil spill was negligent, the relevant kind of harm was not reasonably foreseeable.
• Re Polemis was rejected as inconsistent with the proper principles of negligence.
• The decision established reasonable foreseeability of the type of damage as the principal test of remoteness.