Overseas Tankship (U.K.) Ltd v Morts Dock and Engineering Company Ltd (The Wagon Mound)

JurisdictionUK Non-devolved
Judgment Date1961
Date1961
Year1961
CourtPrivy Council
[JUDICIAL COMMITTEE] OVERSEAS TANKSHIP (U.K.) LTD. APPELLANTS; AND MORTS DOCK & ENGINEERING CO. LTD. RESPONDENTS. (THE WAGON MOUND.) ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES. 1961 Jan. 18. VISCOUNT SIMONDS, LORD REID, LORD RADCLIFFE, LORD TUCKER and LORD MORRIS OF BORTH-Y-GEST

Damages - Negligence - Remoteness - Damage directly caused by negligent act - Dangerous thing - Furnace oil - Spilled on harbour waters - Fire - Causation - Damage to wharf - Foreseeability of consequences the effective test of liability - One criterion for determining liability and compensation. - Australia New South Wales - Negligence - Furnace oil spilled on harbour waters - Fire - Foreseeability of consequences the test of liability - Remission of claim founded on nuisance. - Ship's Names - Wagon Mound.

The decision in In re Polemis and Furness Withy & Co. [1921] 3 K.B. 560; 37 T.L.R. 940, C.A., that the defendant was responsible for all the consequences of his negligent act — held in that case to have been the direct result of the act — whether reasonably foreseeable or not, is not good law (post, p. 422).

The essential factor in determining liability for the consequences of a tortious act of negligence is whether the damage is of such a kind as the reasonable man should have foreseen. Liability does not depend solely on the damage being the “direct” or “natural” consequence of the precedent act; but if a man should not be held liable for damage unpredictable by a reasonable man because it was “direct” or “natural,” equally he should not escape liability, however “indirect” the damage, if he foresaw or could reasonably have foreseen the intervening events which led to its being done. Foreseeability is thus the effective test — the “direct” consequence test leads to nowhere but the never-ending and insoluble problems of causation (post, pp. 423, 426).

There is not one criterion for determining culpability (or liability) and another for determining compensation; unforeseeability of damage is relevant to liability or compensation — 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 (post, pp. 424, 425).

Dicta of Lord Russell of Killowen in Bourhill v. Young [1943] A.C. 92, 101; [1942] 2 All E.R. 396, H.L.(Sc.), and of Denning L.J. in King v. Phillips [1953] 1 Q.B. 429, 441; [1953] 2 W.L.R. 526; [1953] 1 All E.R. 617, C.A. applied.

Dictum of Lord Sumner in Weld-Blundell v. Stephens [1920] A.C. 956, 983; 36 T.L.R. 640, H.L. disapproved.

Sharp v. Powell (1872) L.R. 7 C.P. 253 considered.

Per curiam: It does not seem consonant with current ideas of justice or morality that for an act of negligence, however slight or venial, which results in some trivial foreseeable damage the actor should be liable for all consequences however unforeseeable and however grave, so long as they can be said to be “direct” (post, p. 422).

While an oil-burning vessel, of which the appellants were the charterers, was taking in bunkering oil in Sydney Harbour a large quantity of the oil was, through the carelessness of the appellants' servants, allowed to spill into the harbour. During that and the following day the escaped furnace oil was carried by wind and tide beneath a wharf owned by the respondents, shipbuilders and ship repairers, at which was lying a vessel which they were refitting, and for which purpose their employees were using electric and oxyacetylene welding equipment. Some cotton waste or rag on a piece of débris floating on the oil underneath the wharf was set on fire by molten metal falling from the wharf, and the flames from the cotton waste or rag set the floating oil afire either directly or by first setting fire to a wooden pile coated with oil and thereafter a conflagration developed which seriously damaged the wharf and equipment on it.

In an action by the respondents to recover from the appellants compensation for the damage it was found by the trial judge on the evidence that the appellants “did not know and could not reasonably be expected to have known that it [the furnace oil] was capable of being set afire when spread on water”; and that apart from the damage by fire the respondents had suffered some damage in that oil had congealed upon and interfered with the use of their slipways, which was “damage which beyond question was a direct result of the escape of the oil”:—

Held, on the footing that the damage was the direct result of the escape of the oil, that, applying the test of foreseeability, the appellants who, as found by the trial judge, could not reasonably be expected to have known that the oil would catch fire, were not liable for the damage.

In re Polemis and Furness Withy & Co. Ltd. (supra) not followed.

Smith v. London and South Western Railway Co. (1870) L.R. 6 C.P. 14; H.M.S. London [1914] P. 72; 30 T.L.R. 196; Weld-Blundell v. Stephens (supra); Rigby v. Hewitt (1854) 5 Exch. 240; Greenland v. Chaplin (1850) 5 Exch. 243; Hadley v. Baxendale (1854) 9 Exch. 341; Cory & Son Ltd. v. France, Fenwick & Co. Ltd. [1911] 1 K.B. 114; 27 T.L.R. 18, C.A.; Glasgow Corporation v. Muir [1943] A.C. 448; 59 T.L.R. 266; [1943] 2 All E.R. 44, H.L.(Sc.); Hay or Bourhill v. Young (supra) and Woods v. Duncan [1946] A.C. 401; 62 T.L.R. 283; [1946] 1 All E.R. 420, H.L. considered.

The “strict liability” rule in Rylands v. Fletcher (1868) L.R. 3 H.L. 330; (1866) L.R. 1 Exch. 265, H.L. not considered (post, p. 427).

Order of the Supreme Court of New South Wales, so far as it related to damage caused by negligence, reversed, but action remitted for that court to deal with it so far as it relates to damage caused by nuisance.

APPEAL (No. 23 of 1960) from an order of the Full Court of the Supreme Court of New South Wales (Owen, Maguire and Manning JJ.) (December 3, 1959) dismissing an appeal by the appellants, overseas Tankship (U.K.) Ltd., from a judgment of Kinsella J. exercising the Admiralty Jurisdiction of that court (April 23, 1959) in an action in which the appellants were defendants and the respondents, Morts Dock & Engineering Co. Ltd., were plaintiffs.

The following facts are taken from the judgment of the Judicial Committee: In the action the respondents sought to recover from the appellants compensation for the damage which its property known as the Sheerlegs Wharf, in Sydney Harbour, and the equipment thereon had suffered by reason of fire which broke out on November 1, 1951. For that damage they claimed that the appellants were in law responsible.

The relevant facts can be comparatively shortly stated inasmuch as not one of the findings of fact in the exhaustive judgment of the trial judge had been challenged.

The respondents at the relevant time carried on the business of ship-building, ship-repairing and general engineering at Morts Bay, Balmain, in the Port of Sydney. They owned and used for their business the Sheerlegs Wharf, a timber wharf about 400 feet in length and 40 feet wide, where there was a quantity of tools and equipment. In October and November, 1951, a vessel known as the Corrimel was moored alongside the wharf and was being refitted by the respondents. Her mast was lying on the wharf and a number of the respondents' employees were working both upon it and upon the vessel itself, using for that purpose electric and oxy-acetylene welding equipment.

At the same time the appellants were charterers by demise of the s.s. Wagon Mound, an oil-burning vessel, which was moored at the Caltex Wharf on the northern shore of the harbour at a distance of about 600 feet from the Sheerlegs Wharf. She was there from about 9 a.m. on October 29 until 11 a.m. on October 30, 1951, for the purpose of discharging gasolene products and taking in bunkering oil.

During the early hours of October 30, 1951, a large quantity of bunkering oil was, through the carelessness of the appellants' servants, allowed to spill into the bay, and by 10.30 on the morning of that day it had spread over a considerable part of the bay, being thickly concentrated in some places and particularly along the foreshore near the respondents' property. The appellants made no attempt to disperse the oil. The Wagon Mound unberthed and set sail very shortly after.

When the respondents' works manager became aware of the condition of things in the vicinity of the wharf he instructed their workmen that no welding or burning was to be carried on until further orders. He inquired of the manager of the Caltex Oil Company, at whose wharf the Wagon Mound was then still berthed, whether they could safely continue their operations on the wharf or upon the Corrimal. The results of the inquiry coupled with his own belief as to the inflammability of furnace oil in the open led him to think that the respondents could safely carry on their operations. He gave instructions accordingly, but directed that all safety precautions should be taken to prevent inflammable material falling off the wharf into the oil.

For the remainder of October 30 and until about 2 p.m. on November 1 work was carried on as usual, the condition and congestion of the oil remaining substantially unaltered. But at about that time the oil under or near the wharf was ignited and a fire, fed initially by the oil, spread rapidly and burned with great intensity. The wharf and the Corrimal caught fire and considerable damage was done to the wharf and the equipment upon it.

The outbreak of fire was due, as the judge found, to the fact that there was floating in the oil underneath the wharf a piece of débris on which lay some smouldering cotton waste or rag which had been set on fire by molten metal falling from the wharf: that the cotton waste or rag burst into flames. that the flames from the cotton waste set the floating oil afire either directly or by first setting fire to a wooden pile coated with oil, and that after the floating oil became ignited the flames spread rapidly over the surface of the oil and quickly...

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