Overseas Tankship (UK) Ltd v Miller Steamship Co (The Wagon Mound No 2) [1967] 1 AC 617
Facts
Oil escaped from the defendants' vessel, the Wagon Mound, into Sydney Harbour. The oil spread across the water and later caught fire after operations nearby supplied an ignition source. The fire damaged vessels belonging to the claimants. Although furnace oil on water was difficult to ignite, the evidence in these proceedings showed that ignition was not an imaginary possibility. The litigation concerned different claimants and evidence from the earlier Wagon Mound decision. The Privy Council considered whether the small but real risk of a serious fire was one that reasonable care required the shipowners to address.
Legal Issue
Could the defendants reasonably disregard a small but real risk of serious fire when preventing the oil spill presented no substantial difficulty or disadvantage?
Held
The Privy Council held that the negligence claim could succeed. A reasonable person would not disregard a real risk of a serious fire merely because its likelihood was small, where preventing the spill involved little difficulty and there was no sufficient reason to run the risk. Lord Reid distinguished risks that are far-fetched from small risks which remain real and call for precautions in context. The evidence concerning ignition differed from that in The Wagon Mound No 1, so the result did not reverse that case's requirement of foreseeability of the relevant kind of damage. The proceedings also addressed nuisance, but the principal teaching point is the evaluation of the small, avoidable fire risk.
⭐ Legal Principle
A small but real risk may require precautions where the potential harm is serious and prevention is straightforward. The Wagon Mound No 2 does not require guarding against every imaginable possibility; it examines the risk alongside the difficulty, cost and justification of avoiding it.
Significance
The decision links probability, seriousness and precaution in the breach inquiry. Compare Bolton v Stone, where a very small risk could reasonably be left unaddressed in its circumstances. Also distinguish The Wagon Mound No 1: different evidence about foreseeable fire risk explained the later result, rather than abandonment of foreseeability. Ask what risk could reasonably have been appreciated before the incident and what practical measures were available to address it.
Common exam questions about this case
Why did the low probability of fire not defeat negligence?
The danger was small but real, the possible damage was serious, and avoiding the spill involved little difficulty. Those factors made disregard of the risk unreasonable. The court did not impose liability simply because an accident happened; it examined what a reasonable person would have done before the fire.
How is this consistent with The Wagon Mound No 1?
The evidence about ignition and foreseeability differed between the proceedings, which involved different claimants. The later decision did not discard the earlier requirement concerning foreseeable kinds of damage. A careful comparison identifies the different findings rather than assuming that opposite outcomes necessarily mean a legal rule was reversed.
Does every slight risk require preventative action?
No. The risk must be considered with its seriousness and the burden and justification of precautions. A remote possibility can sometimes reasonably be disregarded. Here the real danger of a major fire and the ease of avoiding the spill made inaction unreasonable in the particular circumstances.