Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd

Wagon Mound (No. 1)
Wagon Mound (No. 1)
Court	Privy Council
Decided	18 January 1961
Citation(s)	[1961] UKPC 2, [1961] AC 388; [1961] 1 All ER 404
Case history
Prior action(s)	Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (The Wagon Mound) (No 1) (1959) 61 SR (NSW) 688
Court membership
Judge(s) sitting	Viscount Simonds, Lord Reid, Lord Radcliffe, Lord Tucker and Lord Morris of Borth-y-Gest
Case opinions
Decision by	Viscount Simonds

Last updated April 30, 2019

Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd,^[1] commonly known as Wagon Mound (No. 1), is a landmark tort law case, which imposed a remoteness rule for causation in negligence. The Privy Council ^[2] held that a party can be held liable only for loss 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.

Landmark court decisions, in present-day common law legal systems, establish precedents that determine a significant new legal principle or concept, or otherwise substantially affect the interpretation of existing law. "Leading case" is commonly used in the United Kingdom and other Commonwealth jurisdictions instead of "landmark case" as used in the United States.

In English law, remoteness is a set of rules in both tort and contract, which limits the amount of compensatory damages for a wrong.

Negligence is a failure to exercise appropriate and or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.

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.

Oxy-fuel welding and cutting acetylene V propane

Oxy-fuel welding and oxy-fuel cutting are processes that use fuel gases and oxygen to weld or cut metals. French engineers Edmond Fouché and Charles Picard became the first to develop oxygen-acetylene welding in 1903. Pure oxygen, instead of air, is used to increase the flame temperature to allow localized melting of the workpiece material in a room environment. A common propane/air flame burns at about 2,250 K, a propane/oxygen flame burns at about 2,526 K, an oxyhydrogen flame burns at 3,073 K and an acetylene/oxygen flame burns at about 3,773 K.

Mort's Dock is a former dry dock, slipway, and shipyard in Balmain, New South Wales, Australia. It was the first dry dock in Australia, opening for business in 1855 and closing more than a century later in 1959. The site is now parkland. The surviving remnants were added to the New South Wales State Heritage Register on 14 January 2011.

The leading case on proximate cause was Re Polemis ,^[4] which held that a defendant can be deemed liable for all consequences flowing from his negligent conduct regardless of how unforeseeable such consequences are. As this case was binding in Australia, its rule was followed by the New South Wales Court of Appeal.^[5] The defendant appealed to the Privy Council.

Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania and numerous smaller islands. It is the largest country in Oceania and the world's sixth-largest country by total area. The neighbouring countries are Papua New Guinea, Indonesia and East Timor to the north; the Solomon Islands and Vanuatu to the north-east; and New Zealand to the south-east. The population of 25 million is highly urbanised and heavily concentrated on the eastern seaboard. Australia's capital is Canberra, and its largest city is Sydney. The country's other major metropolitan areas are Melbourne, Brisbane, Perth and Adelaide.

The New South Wales Court of Appeal, part of the Supreme Court of New South Wales, is the highest court for civil matters and has appellate jurisdiction in the Australian state of New South Wales.

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 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.

In law, a reasonable person, reasonable man, or the man on the Clapham omnibus is a hypothetical person of legal fiction crafted by the courts and communicated through case law and jury instructions.

Viscount Simonds delivered the judgment of the Board and said:

It is, no doubt, proper when considering tortious liability for negligence to analyse its elements and to say that the plaintiff must prove a duty owed to him by the defendant, a breach of that duty by the defendant, and consequent damage. But there can be no liability until the damage has been done. It is not the act but the consequences on which tortious liability is founded. ... Who knows or can be assumed to know all the processes of nature? But if it would be wrong that a man should be held liable for damage unpredictable by a reasonable man because it was "direct" or "natural," equally it would be wrong that he should escape liability, however "indirect" the damage, if he foresaw or could reasonably foresee the intervening events which led to its being done.

It is a principle of civil liability, subject only to qualifications which have no present relevance, that a man must be considered to be responsible for the probable consequences of his act. To demand more of him is too harsh a rule, to demand less is to ignore that civilised order requires the observance of a minimum standard of behaviour.^[1]

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."^[6]

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.

Related Research Articles

In criminal and civil law, strict liability is a standard of liability under which a person is legally responsible for the consequences flowing from an activity even in the absence of fault or criminal intent on the part of the defendant.

Bolton v. Stone[1951] AC 850, [1951] 1 All ER 1078 is a leading House of Lords case in the tort of negligence, establishing that a defendant is not negligent if the damage to the plaintiff was not a reasonably foreseeable consequence of his conduct. The plaintiff was hit by a cricket ball which had been hit out of the ground; the defendants were members of the club committee.

Hadley v Baxendale [1854] EWHC J70 is a leading English contract law case. It sets the leading rule to determine consequential damages from a breach of contract: a breaching party is liable for all losses that the contracting parties should have foreseen, but is not liable for any losses that the breaching party could not have foreseen on the information available to him.

English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.

Overseas Tankship (UK) Ltd v The Miller Steamship Co or Wagon Mound , is a landmark tort case, concerning the test for breach of duty of care in negligence. The Judicial Committee of the Privy Council held that loss will be recoverable where the extent of possible harm is so great that a reasonable man would guard against it.

Causation is the "causal relationship between the defendant's conduct and end result". In other words, causation provides a means of connecting conduct with a resulting effect, typically an injury. In criminal law, it is defined as the actus reus from which the specific injury or other effect arose and is combined with mens rea to comprise the elements of guilt. Causation only applies where a result has been achieved and therefore is immaterial with regard to inchoate offenses.

In English tort law, an individual may owe a duty of care to another, to ensure that they do not suffer any unreasonable harm or loss. If such a duty is found to be breached, a legal liability is imposed upon the tortfeasor to compensate the victim for any losses they incur. The idea of individuals owing strangers a duty of care – where beforehand such duties were only found from contractual arrangements – developed at common law, throughout the 20th century. The doctrine was significantly developed in the case of Donoghue v Stevenson, where a woman succeeded in establishing a manufacturer of ginger beer owed her a duty of care, where it had been negligently produced. Following this, the duty concept has expanded into a coherent judicial test, which must be satisfied in order to claim in negligence.

Causation in English law concerns the legal tests of remoteness, causation and foreseeability in the tort of negligence. It is also relevant for English criminal law and English contract law.

Re Polemis & Furness, Withy & Co Ltd (1921) is an English tort case on causation and remoteness in the law of negligence..

Hughes v Lord Advocate[1963] UKHL 31 is an important Scottish delict case decided by the House of Lords on causation. The case is also influential in negligence in the English law of tort.

Smith v Littlewoods Organisation Ltd [1987] UKHL 18 was a House of Lords decision on duty of care in the tort of negligence. It was concerned in particular with potential liability for the wrongdoing of third parties.

Burnie Port Authority v General Jones Pty Ltd, is a tort law case from the High Court of Australia, which decided it would abolish the rule in Rylands v Fletcher, and the ignis suus principle, incorporating them generally into the tort of negligence.

Royscot Trust Ltd v Rogerson[1991] EWCA Civ 12 is an English contract law case on misrepresentation. It examines the Misrepresentation Act 1967 and addresses the extent of damages available under s 2(1) for negligent misrepresentation.

Smith v Leech Brain & Co [1962] 2 QB 405 is a landmark English tort law case in negligence, concerning remoteness of damage or causation in law. It marked the establishment of the eggshell skull rule, the idea that an individual is held responsible for the full consequences of his negligence, regardless of extra, or special damage caused to others.

Cambridge Water Co Ltd v Eastern Counties Leather plc [1994] 1 All ER 53 is a case in English tort law that established the principle that claims under nuisance and Rylands v Fletcher must include a requirement that the damage be foreseeable; it also suggested that Rylands was a sub-set of nuisance rather than an independent tort, a debate eventually laid to rest in Transco plc v Stockport Metropolitan Borough Council.

Lamb v Camden LBC[1981] EWCA Civ 7, [1981] QB 625 is a leading case in English tort law. It is a Court of Appeal decision on negligence and the test of reasonable foreseeability of damage, especially where the damage has been caused by third parties not the defendant him or herself.

Deloitte & Touche v Livent Inc 2017 SCC 63 is a leading case of the Supreme Court of Canada concerning the duty of care that auditors have toward their clients during the course of a professional engagement.

Doughty v Turner Manufacturing is a 1964 English case on the law of negligence.

References

1 2 Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (Wagon Mound No. 1) [1961] UKPC 2 , [1961] AC 388; [1961] 1 All ER 404(18 January 1961), Privy Council (on appeal from NSW).
↑ Note: The Privy Council is an English court that, at the time of this case, was the final appeal court of Australia
1 2 Overseas Tankship (UK) Ltd v The Miller Steamship Co (Wagon Mound No. 2) [1966] UKPC 10 , [1967] AC 617; [1967] 2 All ER 709(25 May 1966), Privy Council (on appeal from NSW).
↑ Re Polemis & Furness, Withy & Co Ltd [1921] 3 KB 560.
↑ Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (1959) 61 SR (NSW) 688 (3 December 1959), Court of Appeal (NSW, Australia).
↑ Page v Smith [1995] 2 All ER 736 (p 767 j, post)

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[PC-1] 1 2 Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (Wagon Mound No. 1) [1961] UKPC 2 , [1961] AC 388; [1961] 1 All ER 404(18 January 1961), Privy Council (on appeal from NSW).

[2] Note: The Privy Council is an English court that, at the time of this case, was the final appeal court of Australia

[Wagon_Mound_#2_PC-3] 1 2 Overseas Tankship (UK) Ltd v The Miller Steamship Co (Wagon Mound No. 2) [1966] UKPC 10 , [1967] AC 617; [1967] 2 All ER 709(25 May 1966), Privy Council (on appeal from NSW).

[4] Re Polemis & Furness, Withy & Co Ltd [1921] 3 KB 560.

[5] Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (1959) 61 SR (NSW) 688 (3 December 1959), Court of Appeal (NSW, Australia).

[6] Page v Smith [1995] 2 All ER 736 (p 767 j, post)