Wagon Mound (No. 2) | |
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Court | Privy Council |
Citation(s) | [1966] UKPC 10, [1967] AC 617; [1967] 2 All ER 709 |
Case history | |
Prior action(s) | Miller Steamship Co Pty Ltd v Overseas Tankship (UK) Ltd (1963) SR (NSW) 948 |
Court membership | |
Judge(s) sitting | Lord Reid, Lord Morris of Borth-y-Gest, Lord Pearce, Lord Wilberforce, Lord Pearson |
Overseas Tankship (UK) Ltd v The Miller Steamship Co or Wagon Mound (No. 2), [1] 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 (even if the chance of the loss occurring was very small).
Wagon Mound (No. 2) should not be confused with the previous case of the Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd or Wagon Mound (No. 1), [2] which introduced remoteness as a rule of causation to limit compensatory damages.
Overseas Tankship chartered a freighter ship named the Wagon Mound which was taking on bunker oil at Mort's Dock in Sydney. The engineers on the Wagon Mound were careless and a large quantity of oil overflowed onto the surface of the water. After several hours the oil drifted and was around two ships owned by the Miller Steamship Co that were being repaired nearby. Sparks from the welders caused the leaked oil to ignite destroying all three ships.
At the trial in the Supreme Court of New South Wales, Walsh J found that (1) that the officers of the Wagon Mound would regard the oil as very difficult, but not impossible, to ignite on water (2) ignition of the oil on waters had very rarely happened, and (3) it was a possibility that would only eventuate in very exceptional circumstances. Walsh J held that Overseas Tankship were not liable for negligence, but that the large quantity of oil was a public nuisance and the Overseas Tankship were liable to pay damages for nuisance. [3]
Overseas Tankship obtained leave to appeal directly to the Privy Council on the verdict of nuisance and the Miller Steamship Co obtained leave to appeal on the verdict of negligence.
The Privy Council upheld both the appeal and the cross-appeal. They held that it was not sufficient that the damage to the Miller Steamship vessels was the direct result of the nuisance if that damage was unforeseeable. In relation to negligence the Privy Council held that a reasonable person in the position of the ship's engineer would have been aware of the risk of fire. Since the gravity of the potential damage from fire was so great there was no excuse for allowing the oil to be discharged even if the probability or risk of fire was low. A reasonable person, the Council held, would only neglect a risk of such a potentially great magnitude if he or she had a reason to do so, e.g. if it were cost prohibitive. Lord Reid said at 718–719,
It follows that in their Lordships view the only question is whether a reasonable man, having the knowledge and experience to be expected of the chief engineer of the Wagon Mound, would have known that there was a real risk of the oil on the water catching fire in some way.
The words "real risk" are the requirement of remoteness of damage but the test of foreseeability does not depend upon the actual risk of occurrence. The test is really whether the engineer ought to have foreseen the outbreak of fire, i.e. the type of consequence ought to have been foreseen.
This idea of a balance between magnitude and seriousness of risk is similar to that proposed by Learned Hand in United States v. Carroll Towing Co. 159 F.2d 169 (2d Cir. 1947) on the subject of legal causation. Such a formulation of the issue has struck some in the field as an argument along the lines typically made in the Law & Economics camp usually seen to be represented by the American Judge Richard Posner. [4]
The holding in this case was harshly criticized for its "overloading of the foreseeability concept" by renowned torts scholar Leon A. Green. [5]
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.
Tort law in Australia is substantively similar to that of other common law jurisdictions, especially at a foundational level. This is due to the legal system of Australia having been derived from the UK, like most other common law nations around the globe.
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.
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.
Rylands v Fletcher (1868) LR 3 HL 330 is a leading decision by the House of Lords which established a new area of English tort law. It established the rule that one's non-natural use of their land, which leads to another's land being damaged as a result of dangerous things emanating from the land, is strictly liable.
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 law, remoteness between a cause of action and the loss or damage sustained as a result is addressed through a set of rules in both tort and contract, which limit the amount of compensatory damages available for a wrong.
Wagon Mound refers to a number of subjects:
(Charles) Leycester Devenish Meares was an Australian judge and patron of the arts. He was also chairman and benefactor of the national child safety organisation Kidsafe.
The Leycester Meares Award for innovative design in children's play equipment is awarded annually in his honour at the Australian Kidsafe Awards.
In RePolemis & Furness, Withy & Co Ltd (1921) is an English tort case on causation and remoteness in the law of negligence.
Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd, commonly known as Wagon Mound , is a landmark tort law case, which imposed a remoteness rule for causation in negligence. The Privy Council 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.
Economic loss is a term of art which refers to financial loss and damage suffered by a person which is seen only on a balance sheet and not as physical injury to person or property. There is a fundamental distinction between pure economic loss and consequential economic loss, as pure economic loss occurs independent of any physical damage to the person or property of the victim. It has also been suggested that this tort should be called "commercial loss" as injuries to person or property can be regarded as "economic".
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 specifically concerning the 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.
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.
Nuisance in English law is an area of tort law broadly divided into two torts; private nuisance, where the actions of the defendant are "causing a substantial and unreasonable interference with a [claimant]'s land or his/her use or enjoyment of that land", and public nuisance, where the defendant's actions "materially affects the reasonable comfort and convenience of life of a class of Her Majesty's subjects"; public nuisance is also a crime. Both torts have been present from the time of Henry III, being affected by a variety of philosophical shifts through the years which saw them become first looser and then far more stringent and less protecting of an individual's rights. Each tort requires the claimant to prove that the defendant's actions caused interference, which was unreasonable, and in some situations the intention of the defendant may also be taken into account. A significant difference is that private nuisance does not allow a claimant to claim for any personal injury suffered, while public nuisance does.
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.
Canada Steamship Lines Ltd v R[1952] UKPC 1, also referred to as Canada Steamship Lines Ltd v The King, is a Canadian contract law case, also relevant for English contract law, concerning the interpretation of unfair terms contra proferentem. The case was decided by the Judicial Committee of the Privy Council on appeal from the Supreme Court of Canada, as the cause for appeal arose before the abolition of such appeals in 1949. Although arising in civil law under the Civil Code of Lower Canada, it has been influential in similar cases under English law, but is now recognised as providing "guidelines" rather than an "automatic solution".
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.
Chapman v Hearse is a significant case in common law related to duty of care, reasonable foreseeability and novus actus interveniens within the tort of negligence. The case concerned three parties; Chapman who drove negligently, Dr Cherry who assisted him on the side of the road, and Hearse who, in driving negligently, killed Dr Cherry while he was assisting Chapman. In the Supreme Court of South Australia, Hearse was found liable for damages to Dr Cherry's estate under the Wrongs Act 1936. Hearse sought to reclaim damages from Chapman due to his alleged contributory negligence; Chapman was found liable to one quarter of the damages. Chapman appealed the case to the High Court of Australia on August 8, 1961 but it was dismissed as the results of his negligence were deemed reasonably foreseeable. A duty of care was established between Chapman and the deceased and his claim of novus actus interveniens was rejected. Dr Cherry was considered a ‘rescuer’ and his respective rights remained.