Overseas Tankship v Miller Steamship (Wagon Mound Case)

Legal Case Summary

Overseas Tankship (UK) Ltd v The Miller Steamship Co or Wagon Mound (No. 2) [1967] 1 AC 617

The relevance of seriousness of possible harm in determining the extent of a party’s duty of care.

Facts

The defendant’s ship, ‘The Wagon Mound’, negligently released oil into the sea near a wharf close to Sydney Harbour. An unfortunate chain of events led to the oil becoming mixed with cotton debris, which was subsequently ignited by the sparks coming off some nearby welding works. This caused a large and destructive fire which spread quickly and severely damaged several nearby boats and the dock.

Notably, whilst this particular incident had already been considered in the equally impactful case of Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound) (No. 1) [1961] AC 388, the instant case concerned the test for breach of duty of care, rather than of remoteness in causation.

Issue

Had the defendant breached his tortious duty of care in negligently allowing the oil to spill.

Decision/Outcome

The Privy Council held that the defendant was in breach, as despite the likelihood of the oil spilling had been low, the defendant had been aware that were such an event to happen, the harm that it could cause was very significant. Moreover, a reasonably professional person on the ship would have been able to tell that the risk of fire existed. Further, the risk could have been easily mitigated at minimal cost to the defendant. Thus, the approach to establishing duties of care in tort requires consideration of both the extent and gravity of a possible injury.