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DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY

SABBAVARAM, VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE: WAGON MOUND’S CASE

SUBJECT: LAW OF TORTS

NAME OF THE FACULTY:

Prof. DR. P. SRIDEVI
(B.sc ML P.hd)
Dean of Academic Affairs and Research

Name of the Candidate: S.KRISHNA VAMSI

Roll No. : 2017095
Semester: 1
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ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my teacher Dr. P Sridevi madam who
gave me the golden opportunity to do this wonderful project on the topic (Wagon Mound’s case),
which also helped me in doing a lot of Research and I came to know about so many new things I
am really thankful to them.
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ABSTRACT

Case analysis of: Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering Co Ltd.

Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd, commonly known
as "Wagon Mound (No.1)", is landmark tort law case, which imposed a remoteness rule for
causation in negligence. The Privy Counsil held that a party can only be held liable for damage
that was reasonably foreseeable. Contributory negligence on the part of the dock owners was
also relevant in the decision, and was essential to the outcome, although not central to this case's
legal significance.

The Wagon Mound (No 1) should not be confused with the successor case of the
Overseas Tankship v Miller Steamship or "Wagon Mound (No 2)", which concerned the
standard of the reasonable man in breach of the duty of care.

In a lengthy judgment Viscount Simnds, writing for the court, holds that the test created
in Polemis is bad law and that it should be overtuned. He states that liability is in respect of the
damage caused by the action alone. If the liability for injuries depends on the foreseeability of
the plaintiff as an injured party, then the liability for damages should depend on the forseeabiity
of the resulting damages. Thus, the Polemis test is overturned. The court finds that it was not
reasonable that Overseas Tankship would expect their spilling of oil to result in the large fire that
happened and therefore they are not liable for the damages sustained by Morts.

The Lords gave Morts the opportunity to sue in nuisance but there is no record of them
testing this action in that tort. The common law rules of causation have had their importance
lessened by the promulgation of statute law in Australia. Contributory negligence is now
essential for many determinations and is covered by statutes such as the Civil Liability Act
(1936) South Australia which has more recent counterparts in a number of jurisdictions including
New South Wales.
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TABLE OF CONTENTS

 SYNOPSIS …………………………………………………………………………….... 5

 FACTS OF THE CASE ……………………………………………………………...… 6

 TRAIL COURT JUDGE’S FINDINGS ………………………………………….….... 7

 ISSUES RAISED ……………………………………………………………...………... 8

o ISSUES EXPLANATION

 RULES APPLICABLE ………………………………………………………………... 9

 RELATED CASELAWS ……………………………………………………………... 11

 JUDGMENT ………………………………………………………………………...… 14

 SIGNIFICANCE …………………………………………………………….……...… 15

 BIBLIOGRAPHY …………………………………………………………………...... 16
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SYNOPSIS

IDENTIFICATION OF THE PROBLEM:

In this case of Overseas Tankship (UK) Ltd. v. Morts Dock & Engineering Co Ltd. the
problem is that the defendant’s employee without knowing the consequences, by his negligence
the shaft was dropped into the water and caused damage to the plaintiff’s property. This case is
classic example for test for reasonable foresight.

IDENTIFICATION OF THE ISSUE:

The issue in this case is that whether the Morts Dock & Engineering Co Ltd. is liable for
the employers negligence or not and the compensation for plaintiff is paid by the defendant or
not.

OBJJECTIBVE OF THE CASE:

The objective of the study is that the test of directness has been considered to be incorrect
and was rejected by the Judicial Committee of the Privy Council in Overseas Tankship (U.K)
Ltd. v. Morts Dock and Engg. Co Ltd. (Wagon Mound Case), an appeal from the New South
Wales and it was held that the test of reasonable foresight is the better test.

SCOPE OF THE STUDY:

The scope of the study is limited.

RESEARCH METHODOLOGY:

The research is secondary. The research takes help of various websites, books, related cases and
journals to complete the study.

HYPOTHESIS:

If the consequences of a wrongful act could have been foreseen by a reasonable man, they are
not too remote. If, on the other hand, a reasonable man would not have foreseen the
consequences, they are too remote.
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FACTS OF THE CASE

1. Overseas Tankship had a ship, the Wagon Mound, docked in Sydney Harbour in October
1951. The crew had carelessly allowed furnace oil (also referred to as Bunker oil) to leak
from their ship.
2. The oil drifted under a wharf thickly coating the water and the shore where other ships
were being repaired. Hot metal produced by welders using oxyacetylene torches on the
respondent's timber wharf (Mort's Dock) at Sheerlegs Wharf fell on floating cotton waste
which ignited the oil on the water.
3. The wharf and ships moored there sustained substantial fire damage. In an action by
Mort's Dock for damages for negligence it was found as a fact that the defendants did not
know and could not reasonably have been expected to know that the oil was capable of
being set alight when spread on water. The dock owners knew the oil was there, and
continued to use welders.
4. The leading case on proximate cause was Re Polemis,1 which required that the harm be
the direct result of the conduct regardless of how remote.
5. As this case was binding in Australia, its rule was followed by the New South Wales
Court of Appeal.2 The defendant appealed to the Privy Council.
6. The finding that the damage by fire was foreseeable was reached on the. following
considerations: (1) There was a real risk of fire although remote; (2) The risk was great in
the sense that if the oil caught tire serious damage to ships and property was very likely;
(3) A qualified Chief Engineer of the defendant would have been the gravity of the risk;
(4) Action to eliminate the risk presented no difficulty, disadvantage or risk; (5) From the
very beginning the discharge of oil was an offences and was causing loss to the defendant
financially; and (6) A reasonable man in the position of a Chief Engineer would have
realized and foreseen and prevented the risk.

1
Re Polemis & Furness, Withy & Co Ltd [1921] 3 KB 560.
2
Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (1959) 61 SR (NSW) 688 (3 December 959), Court
of Appeal (NSW, Australia).
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TRAIL COURT JUDGE’S FINDINGS

In this suit, which was restricted to damage to the wharf (there was another suit by me
owner of the ship that was being repaired which is discussed later), the trial Judge’s finding was
that the defendant did not know and could not reasonably be expected to have known that the oil
was capable of being set a fire when spread on water. He, however, found that the destruction of
the wharf by fire was a direct though unforeseeable consequence of the negligence of the
defendant and gave judgment for the plaintiff. The Supreme Court of New South Wales affirmed
the decision of the trial Judge. In further appeal by the defendant the Privy Council allowed the
appeal. In holding foreseeability to be the correct test, the Judicial Committee observed that the
Polemis case should not be regarded as good law “for it does not seem consonant with current
ideas of justice or morality that for an act of negligence, however slight or vernal. 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”. After pointing out
that the test of directness looked at the happenings.
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ISSUES RAISED

1. Whether Morts Dock Company is liable for negligence of employee?

2. Which principle is applied for proving the liability of the wrongdoer?

ISSUES EXPLANATION

Issue 1: Whether Morts Dock Company is liable for negligence of employee?

The crew had carelessly allowed furnace oil (also referred to as Bunker oil) to leak from
their ship. The oil drifted under a wharf thickly coating the water and the shore where other ships
were being repaired. Hot metal produced by welders using oxyacetylene torches on the
respondent's timber wharf (Mort's Dock) at Sheerlegs Wharf fell on floating cotton waste which
ignited the oil on the water. The wharf and ships moored there sustained substantial fire damage.
In an action by Mort's Dock for damages for negligence it was found as a fact that the defendants
did not know and could not reasonably have been expected to know that the oil was capable of
being set alight when spread on water. The dock owners knew the oil was there, and continued to
use welders.

Issue 2: Which principle is applied for proving the liability of the wrongdoer?

The test of foreseeability in preference to the test of directness and so as to be established by the
decision of the Privy Council in Overseas Tankship Ltd. v. Morts Dock and Engineering Co.
popularly known as Wagon Mound No I3: “ In this case. during bunkering operations in Sydney
harbour, a large quantity of oil was negligently allowed to spill from the Wagon Mound, a ship
under the defendant‘s control as chambers, 1hc oil spread to the plaintiff’s wharf where another
ship was being repaired. Dining welding operations in the course of repairs, a drop of molten
metal fell on a heating: waste setting it on tire and this ignited the floating oil resulting in the
destruction of the wharf by fire as also the vessel that was being repaired.

3
(1961) 1 ALL ER 404: (1961) 2 WLR 126: 105 SJ 85 (PC).
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RULES APPLICABLE

Test for reasonable foresight is applicable

If the consequences of a wrongful act could have been foreseen by a reasonable man,
they are not too remote. If, on the other hand, a reasonable man would not have foreseen the
consequences, they are too remote. A defendant will only be liable for damages which are
reasonably foreseeable (in other words, not 'too remote'). Damage is only 'not reasonably
foreseeable' if it was thought to physically impossible or so 'far fetched' that a reasonable person
would completely disregard it. As always, only the general type of the damage needs to be
foreseeable, not the manner of its occurrence or its extent.

 The eggshell-skull rule still applies, meaning that:

o The defendant would be liable for any subsequent injuries directly caused by the
initial injury owing to the fragility or state of the victim.
o The subsequent injuries do not have to be reasonably foreseeable.

The foreseeability test went only so for before the Wagon Mound case.17 There seems to be no
clear authority for the view that the kind of damage, which the plaintiff actually suffered, must
be foreseeable, though some kind of damage to the plaintiff must be foreseeable to establish the
initial duty of care.

Under this test, a defendant is liable for all damages which should have been foreseen as the
result of his tort by the exercise of ordinary or reasonable foresight. In determining
foreseeability, the question to be asked is whether the damage alleged is reasonably foreseeable
by a reasonable man. If the damage is reasonably foreseeable by a reasonable man exercising
ordinary prudent care, the tortfeasor is liable. If the damage is not reasonably foreseeable by a
reasonable man, or if the damage is a far flung, or remote damage, the tortfeasor is not liable.
In other words, under this test, a defendant is liable for all damages which are reasonably
foreseeable by a reasonable man as the consequence of the tort in question. While on the other
hand, a defendant will not be liable for damages that are not reasonably foreseeable or are too
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remote or far flung to be a consequence of the tort. The test of reasonable foreseeability of
damage as laid down in the Wagon Mound’s case applies the foresight of a reasonable man in
determining the:
1. Culpability, that is, blameability or responsibility of a defendant for damages if any; and
accordingly his liability to compensate the plaintiff; or

2. Remoteness of damage because the damage is far flung or unrelated and therefore excuse the
defendant from liability.

The definition of a reasonable man:

In simple terms, the reasonable man in any given case, is the reasonable man in the shoes of the
tortfeasor, that is, a reasonable man or person in the position or station in life as the tortfeasor in
the case at hand. See Adigun V. A.G. Oyo State (1987) 1 NWLR pt.53, p.678 at 720 per Eso
JSC. The test of reasonable foreseeability of damage or remoteness of damage in detemining
responsibility is an objective test, whereby the law puts a hypothetical reasonable man into the
shoes of the defendant.
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RELATED CASELAWS

 Hughes v. Lord Advocate4

The post office employees opened a manhole for the purpose of maintaining underground
telephone equipment. The manhole was covered with a tent. One evening, it was left
surrounded by paraffin lamps but otherwise unguarded. A child of eight years entered the
tent and started playing with one of the lamps. The lamp fell into the manhole and caused
a violent explosion resulting in the fall of the boy also in the hole and severe injuries to
him from burns. It was foreseeable that a child could get burnt by tampering with “the
lamp, but the explosion could not be foreseen. The House of Lords held that since the
kind of damage was foreseeable although the extent was not, the defendants were liable.
Lord Reid said‘: appellant s injuries were mainly caused by burns and it cannot be said
that injuries from burns were unforeseeable As a warning to traffic, the workmen had set
lighted red lamps round the tent which covered the manhole and if boys did enter the dark
tent it was very likely that they would take one of these lamps with them. If the lamp fell
and broke, it was not at all unlikely that the boy would be burnt and the bums might well
be serious. No doubt, it was not to be expected that the injuries would be as serious as
these which the appellant in fact sustained. But the defendant is liable, although the
damage may be a good deal greater in extent than was foreseeable." This is referred with
Smith v. Leech, Brain & Co. Ltd.5

 Doughty v. Turner Manufacturing Co. Ltd.6

The plaintiff was employed by the defendants. Some other workmen of the defendants let
an asbestos cement cover slip into a cauldron of hot molten liquid. It resulted in an
explosion and the liquid thereby erupted, causing injuries to the plaintiff, who was
standing nearby. The cover had been purchased from reputed manufacturers and nobody
could foresee that any serious consequences could follow by the falling of the cover into
the cauldron. Held, that the damage resulting from the explosion was not of the kind as
could reasonably have been foreseen, and, therefore, the defendants were not liable.

4
(1963) A.C. 837; (1963) 1 All. E.R. 705; (1962) 3 W.L.R. 779.
5
(1961) 3 All. E.R. 1159; (1962) 2 Q.B. 405.
6
(1964) 1 Q.B. 518; (1964) 1 All E.R. 98.
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 S.C.M. (United Kingdom) Ltd. v. WJ. Whittall and Sons.7

In that case, due to the negligence of the defendants’ workmen, an electric cable
alongside the road was damaged. As a result of the same, there was a seven hour power
failure in the plaintiff’s typewriter factory. The plaintiff alleged that as a consequence of
power failure, there was damage to materials and machines and consequent loss of
production, and the same could have been foreseen by the defendants. It was held that as
the defendants knew that the said electric cables supplied electric current to the factories
in the neighbourhood, they could foresee that if the current was cut off, there would be
consequent loss of production, and, therefore, they were liable for the damage caused to
the plaintiff.

In suits in which damages are claimed, the onus is on the plaintiff to prove all items! of
the damages. In such a case, it is held that any fact which enables the Court to determine the
amount of damages, which ought id be awarded, is relevant. The duty to assess the damages,
however, is entirely upon the Court and more or less resorting to rules, which regulate the
practice of the Courts. A judge, it is held,8 has to decide and determine every question which
would ultimately enable the parties to obtain the final judgment in case in question, such as, the
proper measure of damages to be applied, remoteness of damages and the amount which the
plaintiff is actually entitled to as damages.

It is further said that no Court can assess the damages with anything like mathematical
precision and accuracy in all cases. In cases admitting of proof, the amount, it is held, must be
worked out with reasonable certainty. The difficulty in assessing damages, it is said, is no ground
for refusing to fix or for giving nominal damages, based on the material brought on record by the
plaintiff, that the Court cannot refuse the assessment of damages simply because the plaintiff has
failed to adduce the best evidence available.9

7
(1971) 1 Q.B. 337.
8
Shaikh Gafoor v. State of Maharashtra, AIR 2008 (NOC) 1637 (Bom.)
9
ibid
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 Shaikh Gafoor v. State of Maharashtra10

The plaintiff could not cultivate his land due to accumulation of water, released from
excavation and construction of canal by the State in the vicinity of agricultural land of the
plaintiff. The water percolating to the suit land, caused damage to the crops. The plaintiff
produced 7*12 extract, showing that crops like bajra, sunflower and cotton were grown
on the said land.

Taking judicial notice of the fact that in the region in question, ordinarily two crops were
raised by the agriculturists, La, autumnal crop and vernal crop and considering all the
facts as also giving some discount for estimation of yield per acre, the Bombay High
Court held the plaintiff entitled to damages at the rate of Rs. 40,000/per year in respect of
5 acres of land found to have remained uncultivated, at the, rate of Rs. 8000/ ~ per acre.

10
AIR 2008 (NOC) 1637 (Bom.).
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JUDGMENT

The Privy Council found in favor of the defendant, agreeing with the expert witness who
provided evidence that the defendant, in spite of the furnace oil being innately flammable, could
not reasonably expect it to burn on water. The Board indicated Morts would probably have been
successful if they had claimed damages for direct damage by the oil to the slipway but this was
minor and not part of the damages claimed (although success on this count may have saved
Morts Dock and Engineering the costs of all the litigation for both parties across all three levels
of court). Viscount Simonds, in his delivery for the Privy Council, said that the Counsel for
Morts had discredited their own position by arguing that it couldn't have been bunkering oil
because it wouldn't burn on water. The Privy Council's advice soundly disapproved the rule
established in Re Polemis, as being "out of the current of contemporary thought" and held that to
find a party liable for negligence the damage must be reasonably foreseeable. The council found
that even though the crew were careless and breached their duty of care, the resulting extensive
damage by fire was not foreseeable by a reasonable person, although the minor damage of oil on
metal on the slipway would have been foreseeable.

Viscount Simonds delivered the judgment of the Board and said:

“It is, no doubt, proper when considering tortious liability for negligence to analyze its
elements and to say that the plaintiff must prove a duty owed to him by the defendant, a breach
of that duty by the defendant, and consequent damage. But 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. ... Who knows or can be assumed to know all the processes of nature? But if it would
be wrong that a man should be held liable for damage unpredictable by a reasonable man
because it was "direct" or "natural," equally it would be wrong that he should escape liability,
however "indirect" the damage, if he foresaw or could reasonably foresee the intervening events
which led to its being done.

It is a principle of civil liability, subject only to qualifications which have no present

relevance, that a man must be considered to be responsible for the probable consequences of his
act. To demand more of him is too harsh a rule, to demand less is to ignore that civilized order
requires the observance of a minimum standard of behavior.”
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SIGNIFICANCE

Up until this time the leading case had been Re Polemis, where the central question was
that of the directness of the chain of events between the triggering act being examined for
negligence and the result. The Council decided that rather than go with precedent (authority)
they would determine a principle from a range of cases, in a similar way as Lord Atkin did
in Donoghue v Stevenson, and their principle was primarily a single test for foreseeability which
they argued was a logical link between the damage and the liability (culpability). Stated
differently, foreseeability was the logical link between, and the test for, breach of the duty of
care and the damages. This is the supreme test, and may be rephrased as "the liability of a
consequence, was natural or necessary or probable." The Lords made reference to hindsight,
indicating it is nothing like foresight and should play no role in assessing negligence. There is
authority to challenge this view of hindsight; in Page v Smith, Lord Lloyd stated: "In the case of
secondary victims, i.e. persons who were not participants in an accident, the defendant will not
be liable unless psychiatric injury is foreseeable in a person of normal fortitude and it may be
legitimate to use hindsight in order to be able to apply the test of reasonable foreseeability."11

The Lords gave Morts the opportunity to sue in nuisance but there is no record of them
testing this action in that tort. The common law rules of causation have had their importance
lessened by the promulgation of statute law in Australia. Contributory negligence is now
essential for many determinations and are covered by statutes such as the Civil Liability Act
(1936) South Australia which has more recent counterparts in a number of jurisdictions including
New South Wales.

11
Page v Smith [1995] 2 All ER 736 (p 767 j, post).
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BIBLIOGRAPHY

WEBSITES

 www.westlaw.com
 www.heinonline.com
 www.indiankanoon.com
 www.lexisnexis.com

BOOKS

 R.K.Bangia, Law of Torts, Twenty-fourth Edition, Allahabad Law Agency Publishers

 P.S.A. Pillai, Law of Torts, Ninth Edition, Eastern Book Company.