Overseas Tankship v Morts Dock - 1961

Legal Case Summary

Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (The Wagon Mound) [1961] AC 388

Tort law – Remoteness Rule – Causation – Negligence – Reasonably Foreseeable – Foreseeability – Contributory Negligence – Duty of Care - The Wagon Mound Case

Facts

The crew members of the Overseas Tankship (UK) Ltd were working on a ship, when they failed to turn off one of the furnace taps. This caused oil to leak from the ship into the Sydney Harbour. Morts Dock & Engineering Co (The Wagon Mound) owned the wharf, which they used to perform repairs on other ships. The leaking oil on the water surface drifted to the site where Morts were welding metal. A supervisor enquired to find out whether the oil was flammable, which he was assured that it was not. However, a spark from welding and mixed with debris, caught fire from the spilt oil and this caused a fire to spread rapidly. This caused significant damage to Mort’s wharf.

Issues

The issue in this case was whether the crew could be liable for the damage to the wharf that was caused by the fire. In addition, would this also be the case even if it was unforeseeable, but a result of a negligent act.

Decision/Outcome

The court held that Overseas Tankship (UK) Ltd could not be held liable to pay compensation for the damage to the wharf. This case disapproved the direct consequence test in Re Polemis and established the test of remoteness of damage. This asks whether the damage would be reasonably foreseeable. In this case, the damage caused to the wharf by the fire and the furnace oil being set alight could not be foreseen by a reasonable person.