Overseas Tankship (UK) Ltd v Miller Steamship Co (The Wagon Mound No 2) [1967] 1 AC 617
Facts
The owners of vessels damaged by a harbour fire sued the operators of the Wagon Mound. Furnace oil had escaped from that ship, spread over the water and eventually ignited. The trial evidence addressed how rarely oil in those conditions would burn and whether the possibility should nevertheless have been appreciated. The dispute reached the Privy Council after separate conclusions on negligence and nuisance below. Unlike the earlier Wagon Mound proceedings, these claims involved evidence capable of establishing that the fire danger, although unlikely, was a real one against which simple precautions were available.
Legal Issue
Did a real but unlikely fire risk require precautions, and was the different outcome from the earlier Wagon Mound litigation consistent with foreseeability principles?
Held
The Privy Council concluded that the defendants should not have ignored the fire danger. The relevant inquiry was not whether ignition was probable, but whether a reasonable person would have taken precautions against a real risk in light of the potential damage and the ease of prevention. The defendants had no sufficient justification for allowing oil to escape into the harbour. Their negligence liability therefore followed from the particular risk assessment, not from an absolute duty to prevent any damage remotely connected with the vessel. The decision also considered foreseeability in nuisance. The different evidential findings explain why the negligence result differed from the earlier Wagon Mound case.
⭐ Legal Principle
Foreseeability is not confined to events that are more likely than not. A real risk of serious damage may make a failure to take easy precautions negligent even when the chance of harm is low. The assessment remains sensitive to the circumstances and does not extend to fanciful possibilities.
Significance
The Wagon Mound No 2 is useful for distinguishing the existence of a foreseeable risk from the separate evaluation of reasonable precautions. Students sometimes convert a small probability into no foreseeability at all. Lord Reid's analysis shows why that shortcut fails when substantial harm is easily avoidable. The Privy Council was deciding an Australian appeal, but the authority is central to English negligence teaching. Keep its small-risk analysis distinct from the direct-consequence rule formerly associated with Re Polemis.
Common exam questions about this case
Must foreseeable harm be more likely than not?
No. Foreseeability of a real risk is different from a prediction that the harm will probably occur. The court considered a low-probability fire whose serious consequences could be avoided easily. A balance-of-probabilities test of historical facts should not be substituted for that prospective assessment of risk.
Which factors made precautions reasonable here?
The fire risk was real, the possible consequences were serious and stopping the spill presented little practical burden. There was no sufficient benefit justifying the danger. Those features explained breach; merely observing that oil escaped and a fire followed would leave out the required assessment of reasonable care.
Why is Re Polemis not the governing explanation?
Re Polemis used a direct-consequence approach to remoteness, which The Wagon Mound No 1 displaced. No 2 did not revive that approach. Its negligence outcome depended on evidence that the kind of fire damage was a real foreseeable risk and that reasonable precautions should have been taken.