Overseas Tankship vs Morts Dock [Wagon Mound Case : 1]
Reference : [1961] AC 388
Jurisdiction : Australia
Plaintiff : Morts Dock & Engineering Co. Ltd.
Defendant : Overseas Tankship (UK) Ltd.
Facts :
In Sydney Harbour, Morts Dock & Engineering Co., Ltd. (Plaintiff) owned and operated a wharf, upon which they performed repair work on ships mostly involving welding and burning. The ship Wagon Mound was owned by Overseas Tankship (UK) Ltd. (Defendant) was moored on the wharf next to Plaintiff’s. While working on the ship, the crew negligently failed to turn off one of the furnace taps. This caused furnace oil (bunker oil) to leak.
As the ship set sail, the tide caused the oil to drift into the waters near Morts’ dock, where they were welding metal using oxyacetylene torches. Morts’ wharf caught fire after a spark fell on a rag or cotton waste floating in the oil. They brought a suit against Overseas Tankship (UK) Ltd claiming damages for the fire that destroyed the wharf.
Issues :
1. Could the crew of the Wagon Mound be held liable for the damage to the wharf caused by the fire?
2. Was the fire that destroyed the Plaintiff’s wharf a foreseeable consequence of the Defendant’s negligence?
Decisions :
The Privy Council ruled in favor of the defendant, Overseas Tankship (UK) Ltd., concluding that they were not liable for the fire damage. Although the crew had been negligent in allowing the oil to spill, the court found that a reasonable person could not have foreseen the oil igniting on water. Furnace oil, while flammable, would not be expected to ignite on water, where the risk was considered remote and unlikely.
Therefore, since the fire damage was not a foreseeable outcome of the spill, the defendant could not be held liable for the destruction of the plaintiff’s wharf. Although they would have been held liable had the plaintiff brought a suit for damages directly caused by the oil spill itself.
This decision marked a departure from the earlier case of Re Polemis, which imposed liability for all direct consequences of negligence, even if those consequences were unforeseeable. In Wagon Mound, however, the court established a new standard, requiring that damage must be a foreseeable result of the negligent act for liability to arise. This case introduced the principle of “reasonable foreseeability”, indicating that the defendants are only liable for harm that a reasonable person would have anticipated as a likely consequence for their actions.
Author :
1. Raiyan Talukder
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