Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd. (The Wagon Mound No. 1)
A defendant is liable in negligence only for damage of a kind that a reasonable man could have foreseen, not for all direct consequences.
Facts
The appellants' ship, the Wagon Mound, negligently discharged a large quantity of furnace oil into Sydney harbour. The oil spread about 600 feet to the respondents' wharf, where welding repairs were in progress. About 60 hours later molten metal ignited floating cotton waste, setting the oil alight and destroying the wharf and equipment. It was found that the appellants could not reasonably foresee that the oil would catch fire on water.
Issues
- Is a negligent defendant liable for all the direct consequences of his act, or only for consequences of a kind that were reasonably foreseeable?
- Was damage by fire a reasonably foreseeable consequence of spilling the oil?
Arguments
The respondents argued, relying on Re Polemis, that the defendants were liable for all damage directly traceable to their negligent spillage of oil, foreseeability being irrelevant once negligence was established. The appellants argued that since fire damage to the wharf was not reasonably foreseeable, the loss was too remote to be recoverable.
Held
The Privy Council held that Re Polemis should no longer be regarded as good law and that the proper test of remoteness is reasonable foreseeability of the kind of damage suffered. It is unjust that a defendant should answer for grave, unforeseeable consequences merely because they are 'direct'. A man is responsible only for the probable consequences of his act, judged by the standard of the reasonable man. As fire damage was not foreseeable here, the appellants were not liable for it.
Ratio decidendi
The test for remoteness of damage in negligence is reasonable foreseeability of the kind or type of damage; a defendant is not liable for unforeseeable consequences even if they directly result from the negligent act.
Significance
Landmark decision overruling the directness test of Re Polemis and establishing reasonable foreseeability as the governing test of remoteness. Though a Privy Council decision (persuasive in England), it was treated as good law by the House of Lords in Hughes v. Lord Advocate and the Court of Appeal in Doughty v. Turner, and is followed across the common law world.
Related
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Source: /Users/tiwari/Documents/All Law Books/raw/Law of Torts/Chapter 6 Remoteness of Damage.md
