Overseas Tankship (UK) Ltd v Miller Steamship Company Pty (Wagon Mound) (No. 2)

JurisdictionUK Non-devolved
Judgment Date1966
Date1966
CourtPrivy Council
[PRIVY COUNCIL] OVERSEAS TANKSHIP (U.K.) LTD. APPELLANT AND THE MILLER STEAMSHIP CO. PTY. AND ANOTHER RESPONDENTS ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES 1966 Feb. 28; March 1, 2, 3, 7, 8, 9, 10, 14, 15, 16, 17; May 25 LORD REID, LORD MORRIS OF BORTH-Y-GEST, LORD PEARCE, LORD WILBERFORCE and LORD PEARSON.

Australia - New South Wales - Negligence - Oil spilled on harbour waters - Fire - Foreseeability of consequences test of liability - Whether justifiable to neglect real risk of small magnitude - Whether reasonable man would neglect risk. - Australia - New South Wales - Nuisance - Public - Oil spilled on harbour waters - Fire - Whether negligence essential element in nuisance - Whether foreseeability essential element of liability in nuisance. - Damages - Remoteness - Polemis rule - Damage directly caused by negligent act - Oil spilled on harBour waters - Fire - Foreseeability - Whether justifiable to neglect real risk of small magnitude. - Negligence - Duty of care to whom? - Foreseeability of injury - Real risk of small magnitude - Whether justifiable to neglect - Oil spilled on harbour waters - Fire - Foreseeability of consequences test of liability - Whether reasonable man would neglect risk. - Nuisance - Public - Oil spilled on harbour waters - Fire - Whether negligence essential element - Whether foreseeability essential element in liability in nuisance. - Ships' names - Wagon Mound.

The respondents had two vessels undergoing repairs at a wharf in Sydney Harbour. The owners of the wharf in the course of doing the repairs were carrying out oxy-acetylene welding and cutting, work which was apt to cause pieces of hot metal to fly off and fall into the sea. The appellant was charterer by demise of a vessel, the Wagon Mound, which in the early hours of October 30, 1951, had been taking bunkering oil from another nearby wharf. By the carelessness of her engineers a large quantity of that oil overflowed from the Wagon Mound on to the surface of the water and drifted to and accumulated round the former wharf and the respondents' two vessels. On November 1, 1951, at about 2 p.m., that oil was set alight. The fire spread rapidly and caused extensive damage to that wharf and to the respondents' two vessels.

The respondents brought this action against the appellant for damages suing alternatively in nuisance and negligence. Walsh J., in the Supreme Court of New South Wales, accepted that the most probable explanation of the fire was that a hot piece of metal fell on some object supporting a piece of inflammable material in the oil-covered water which was ignited. He found that the damage to the respondents' vessels was “not reasonably foreseeable by those for whose acts the appellant was responsible.” Further findings were that reasonable people in the position of officers of the Wagon Mound would regard furnace oil as very difficult to ignite upon water and that if they had given attention to the risk of fire from the spillage they would have regarded it “as a possibility, but one which could become an actuality only in very exceptional circumstances.” Having made these findings, Walsh J. held that liability in nuisance did not depend on forseeability and that the appellant was liable in nuisance but not in negligence. Judgment was accordingly given for the respondents on the claim based upon nuisance and for the appellant on the claim based on negligence. On appeal by the appellant against the judgment based on nuisance, and by the respondents, by cross-appeal, on the issue of negligence:—

Held, (1) that creating a danger to persons or property in navigable waters (equivalent to a highway) fell in the class of nuisance in which foreseeability was an essential element in determining liability and that it was not sufficient that the injury suffered by the respondents' vessels was the direct result of the nuisance if that injury was in the relevant sense unforeseeable (post, pp. 639G–640B, D).

Dictum of Lord Denning M.R. in Morton v. Wheeler (C.A., No. 33 of 1956, January 31, 1956 unreported) applied.

Dicta of Devlin J. in Farrell v. John Mowlem & Co. Ltd. [1954] 1 Lloyd's Rep. 437, 440 not followed.

Per curiam. Negligence is not an essential element in nuisance. But although negligence may not be necessary, fault of some kind is almost always necessary and fault generally involves foreseeability (post, 639C, F).

(2) That, on the facts, a reasonable man having the knowledge and experience to be expected of the appellant's chief engineer would have known that there was a real risk of the oil on the water catching fire and the fact that the risk was small did not in the circumstances justify no steps being taken to eliminate it (post, pp. 643A–C, 644A–C). Accordingly both the appeal on the claim based on nuisance and the cross-appeal upon the claim based on negligence would be allowed.

Bolton v. Stone [1951] A.C. 850; [1950] 1 T.L.R. 977; [1951] 1 All E.R. 1078, H.L.(E.) explained.

Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd. (The Wagon Mound) [1961] A.C. 388; [1961] 2 W.L.R. 126; [1961] 1 All E.R. 404, P.C. distinguished.

Per curiam. It does not follow that, no matter what the circumstances may be, it is justifiable to neglect a risk of small magnitude. A reasonable man would only neglect such a risk if he had some valid reason for doing so; e.g., that it would involve considerable expense to eliminate the risk. He would weigh the risk against the difficulty of eliminating it (post, p. 642E).

APPEAL (No. 7 of 1964) from the judgment of Walsh J.F1 (October 10, 1963), in the Supreme Court of New South Wales in commercial cases Nos. 3000 and 3001 of 1955. The actions out of which this consolidated appeal and cross-appeal arose were brought by the respondents, Miller Steamship Co. Pty. Ltd. and R. W. Miller & Co. Pty. Ltd., against the appellant, Overseas Tankship (U.K.) Ltd., in respect of damage by fire suffered on November 1, 1951, by two ships, one owned by the first respondent and the other owned by the second respondent. Walsh J. heldF1 that the appellant was liable in nuisance, but not liable in negligence. He entered a verdict for the first respondent in the sum of £80,000 and a verdict for the second respondent in the sum of £1,000 and judgment was entered accordingly. The appellant appealed against Walsh J.'s decision based on nuisance and the respondents appealed against his decision based on negligence.

The facts are fully stated in the judgment of the Judicial Committee.

1966. Feb. 28, Mar. 1, 2, 3, 7, 8, 9, 10, 14, Mark Littman Q.C. and Brian Davenport for the appellant on the appeal. There is a general principle of civil liability applicable to contract and tort that the doer of the damage must suffer. If that principle was carried through to its logical consequence the doer would be liable for all the results of his wrongful act. The law has not gone so far. The law imposes a limitation on the liability on the basis that it is unfair to hold the wrongdoer liable for the consequences which are highly unpredictable and to hold the wrongdoer responsible for what was not his fault because it was unforeseeable. The question is “where is the line to be drawn?” The possible test is to draw the line between those consequences which are direct and immediate and those which are remote. The test to determine the existence of a public nuisance is whether the defendant has done an act from which it was reasonably foreseen that physical injury to the public would result: Harrold v. WatneyF2; Castle v. St. Augustine's LinksF3; Dollman v. Hillman. Ltd.F4; Read v. Lyons.F5

Walsh J. was in error in holding that the appropriate tests for determination of the question of remoteness of damage was whether the damage was a “direct” consequence of the appellant's act. In public nuisance as in other torts the appropriate test is whether or not damage of the type in fact suffered was reasonably foreseeable.

Damages depend on the same principle throughout the law of contract and tort: The Notting HillF6; The ArgentinoF7. The overwhelming weight of authority is that there is a general principle governing contract and tort that only those consequences that are foreseeable in the ordinary course of nature would be regarded as not too remote for liability in damages. Such differences as there are in the cases on contract and on tort are not fundamental. In the cases on contract, “natural” consequences is synonymous with “probable” or “foreseeable.” In the cases on tort the same words mean something different, “natural” means according to the course of nature, that is, involving “hindsight” and not “foresight.” The basis of the appellant's case for the proposition that the test of remoteness of damage in public nuisance is whether it was foreseeable is Sharp v. Powell,F8 where judgment was given for the defendant in an action in public nuisance on the ground that “the injury was not of such a character as the defendant could have contemplated as the ordinary or likely consequence to result from his permitting his van to be washed in the public street.” In Sharp v. PowellF8 there was no causal connection between that which was done in breach of the statute, namely, washing the car in the street, and that which caused the injury to the plaintiff, namely, the ice on the road. The ice on the road was caused by a blocked drain of which the defendant had no knowledge, direct or assumed; the ice on the road was not the direct consequence of washing the car. To be responsible for the nuisance the defendant has either to create the nuisance or to continue the nuisance after it is already there, by conduct which he should have foreseen would continue the nuisance. Sharp v. PowellF8 was really a case of negligence. The relevance of the case to the present issue is that no one concerned thought there was any difference between nuisance and negligence. The close relation between nuisance...

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