Overseas Tankship (UK) Ltd v. Morts Dock & Engineering Co. (The Wagon Mound No. 1)

Oil spilled by the appellants' employees later caught fire and damaged the respondents' dock. The Privy Council had to decide one question. Does a wrongdoer in negligence (careless breach of a duty of care) pay for every direct result? Or only for harm a reasonable person could foresee?

Quick Revision

Read the full judgment: BAILII

Parties

• Overseas Tankship (U.K.) Ltd. — appellants (the defendants); the party whose employees' oil spillage led to the events (the case is known as The Wagon Mound).
• Morts Dock & Engineering Co. Ltd. — respondents (the plaintiffs); the party whose dock and slip-ways were damaged.
• Viscount Simonds — delivered the judgment of the Judicial Committee.

Procedural History

1. The appeal came from the Supreme Court of New South Wales (headnote).
2. The trial judge made the findings of fact. The judgment names Manning J. as the judge whose analysis of negligence law the Board praised.
3. The Full Court of the Supreme Court decided the case in favour of the respondents. It felt constrained to do so by Re Polemis and the Court of Appeal decisions that followed it.
4. Before the Board, the respondents argued that Polemis had such long standing that it should not be reviewed. The Board rejected this.
5. The Board allowed the appeal on negligence and remitted the nuisance claim to the Full Court.

Facts

1. The judgment states that the facts were set out above (in the report before the judgment). That part is not in the judgment text. Only the facts and findings the opinion itself records appear below.
2. The judgment records a spillage of oil by the appellant's employees. The oil was furnace oil, and the spillage was later set alight.
3. The trial judge said that furnace oil exists to burn. He also made the all-important finding, in these words: "did not know and could not reasonably be expected to have known that it was capable of being set afire when spread on water".
4. The finding rested on much evidence, including that of Professor Hunter, a distinguished scientist.
5. At the trial, the respondents strongly said that the appellants had discharged petrol into the bay. Their only ground was that the spillage burned, so it could not be furnace oil.
6. Before the Board, an attempt was made to limit the finding of fact. The Board held that the finding was meant to cover precisely the event that happened.
7. The trial judge also found some other damage apart from fire. The oil got on the respondents' slip-ways, congealed and interfered with their use of the slips.
8. He described that damage as slight, and no compensation was claimed for it. He held that it was damage that was a direct result of the escape of the oil.
9. The fire damage was the damage in suit. Manning J. (court not stated) said that if the man in the street were asked the cause of the fire at Mort's Dock, he would blame the spillage of oil by the appellant's employees.

Issues Raised

1. Is the rule in Re Polemis good law, so that a negligent defendant is liable for all direct consequences whether or not they were reasonably foreseeable?
2. Does the proposition that reasonable foreseeability goes to culpability (blame) and not to compensation hold, so that foreseeability matters to breach but not to the extent of liability?
3. Does it matter that the defendant is also liable for some foreseeable damage, such as the slight slip-way fouling, when the damage in suit is unforeseeable fire damage?
4. Was the fire damage reasonably foreseeable, given the trial judge's finding of fact?
5. If the appellants are not liable in negligence, are they liable in nuisance instead?

Arguments Contended

The reported judgment does not set out counsel's arguments in full. Only the points below are recorded.

For the appellants

• Not separately recorded. The Board's own finding is that the trial judge's finding of unforeseeable fire covered the event that happened.

For the respondents

• At the trial, they maintained that petrol had been discharged, because the spillage burned and so could not be furnace oil.
• Before the Board, they tried to limit the trial judge's finding of fact. The Board rejected this.
• Their counsel urged that Polemis was a decision of such long standing that it should not be reviewed.
• In the alternative, they claimed that the appellants were liable in nuisance if not in negligence.

Court's Reasoning

The judgment is a single opinion of the Board, delivered by Viscount Simonds. The paragraphs are not numbered, so no paragraph citations are given.

Opinion of the Board (Viscount Simonds)

1. Noted: The trial judge found that the appellants did not know and could not reasonably have known that furnace oil on water could be set afire. The evidence was strong, and the respondents' own petrol theory supported it.
2. Noted: The Board would consider the fire damage on one footing. Some slight damage from the oil, the fouling of the slip-ways, was a direct result of the escape of oil.
3. Noted: The Board thanked Manning J. for his analysis of the problems of liability in negligence.
4. Noted: In H.M.S. London (1913), Sir Samuel Evans P. said that the law of legal causation was much discussed and hard to reconcile. Half a century later, the Board hoped to point to landmarks that would simplify the law.
5. Noted: The Full Court decided for the respondents only in deference to Re Polemis. Manning J. said it was very hard to apply Polemis with confidence and hoped the House of Lords or Privy Council would speak.
6. Held: Polemis has been so much discussed and qualified that it cannot claim such long standing that it must not be reviewed.
7. Noted: The Board would not spend time on whether Polemis was a contract or a tort case. That matters only to a court bound by it, and the Board is not bound.
8. Noted: In Polemis there was some confusion. The case arose from a charterparty and went to arbitration. The charterers first relied on the exception of fire in the charterparty.
9. Noted: The records show alternative claims in contract and negligence. Before Sankey J. and the Court of Appeal, the case proceeded as a claim in negligence independent of the contract.
10. Noted: The Court of Appeal held the charterers liable for all consequences of their negligent act, though those consequences could not reasonably have been anticipated.
11. Noted: The negligent act in Polemis was carelessness by stevedores in letting a sling knock a board into the hold. The board caused a spark, the spark ignited petrol vapour, and the ship was destroyed.
12. Noted: The arbitrators found that the spark could not reasonably have been anticipated, though some damage to the ship might have been. They did not say what damage.
13. Held: The Court of Appeal in Polemis plainly asserted that a negligent defendant is responsible for all consequences, whether reasonably foreseeable or not.
14. Noted: The generality of that proposition is perhaps qualified. Each Lord Justice called the fire the direct result of the act. So the negligent actor is not responsible for consequences that are not direct, whatever that may mean.
15. Noted: Three authorities influenced Polemis: Smith v. London & South Western Railway, H.M.S. London and Weld-Blundell v. Stephens.
16. Noted: In Smith's case, Channell B. said the person guilty of negligence is equally liable for its consequences, whether he could have foreseen them or not.
17. Held: Smith's case cited no authority for its sweeping proposition. It dealt with more extensive damage of the same kind, not unforeseeable damage of a different kind.
18. Noted: None of the seven judges in Smith's case qualified the consequences. Negligence as an independent tort was then of recent growth and its implications had not been fully examined.
19. Noted: H.M.S. London followed Smith. Sir Samuel Evans cited Blackburn J.: what defendants might reasonably anticipate matters only to whether they were negligent, and cannot alter their liability if they were.
20. Noted: That proposition gives one criterion for liability and another for compensation. The Board said it goes to the root of the matter and would discuss it later.
21. Noted: Lord Sumner repeated it in Weld-Blundell v. Stephens. The majority there held that the plaintiff's liability for damages in libel actions did not result from the defendant's breach of duty.
22. Noted: Lord Dunedin decided Weld-Blundell on the ground that there was no evidence that the libel actions were the natural and probable consequences of the negligence.
23. Noted: Lord Wrenbury said he could not follow the proposition that the libel damages resulted from anything Stephens did in breach of duty.
24. Noted: Lord Sumner said what a reasonable man ought to anticipate matters to negligence, that is, want of due care. He added that this goes to culpability, not to compensation.
25. Noted: Before that passage, Lord Sumner had asked about natural, probable and necessary consequences and preferred direct cause. He rejected the claim as too remote on that test.
26. Held: Foreseeability was irrelevant to his result, so the passage was unnecessary to his decision. The Board called it a dictum (a remark not needed for the decision) that perpetuated an error and introduced much confusion into the law.
27. Noted: The Board then looked at older authorities. In Rigby v. Hewitt and Greenland v. Chaplin, Pollock C.B. doubted that a negligent person answers for all consequences that could not possibly have been foreseen.
28. Noted: Pollock C.B. spoke for himself only. The point was not argued.
29. Noted: In Sharp v. Powell, the defendant's servant, in breach of the Police Act, washed a van in a public street. Waste water ran towards a grating that ice had blocked, and froze on the causeway.
30. Noted: The plaintiff's horse slipped on the ice and broke its leg. The defendant was held not liable, as there was no evidence that he knew the grating was blocked.
31. Noted: Bovill C.J. said a wrongdoer answers for ordinary consequences. He is not liable for damage that is not the natural or ordinary result. The exception is where he knows, or can know, that an existing cause makes it likely.
32. Held: In that passage, natural consequences, foreseeability and proximate cause are blended. Nothing suggests liability whether foreseeable or not, or a separate test for culpability and compensation.
33. Held: Unless the Chief Justice distinguished a wrongful act from negligence, Sharp v. Powell cannot be reconciled with Polemis. It was not dealt with in Polemis, except in a citation from Weld-Blundell.
34. Noted: In Cory & Son v. France Fenwick, Vaughan Williams L.J. and Kennedy L.J. approved the passage of Pollock C.B. in Greenland v. Chaplin.
35. Noted: Polemis doubted whether the citation was correct. The Board said that was irrelevant, because the judges approved what they cited and the approval has high authority.
36. Noted: The idea of a dichotomy between culpability and compensation had not occurred to Lord Wensleydale in Lynch v. Knight or to Cockburn C.J. in Clark v. Chambers.
37. Noted: The scores of negligence cases suggest that courts were feeling their way to a coherent doctrine. They were at times in danger of being led astray by scholastic theories of causation and their ugly and barely intelligible jargon.
38. Noted: The Board assumed that Polemis laid down the law of tort. Yet it had been universally accepted that damages in contract and tort, especially negligence, were generally the same.
39. Noted: Hadley v. Baxendale was not cited or referred to in Polemis. That is surprising, since the claim there was laid in both contract and negligence.
40. Held: Had the contract claim been pursued, the charterers could not have been held liable for consequences that were not reasonably foreseeable.
41. Noted: Sir Frederick Pollock said that Blackburn and Willes JJ. would have been shocked by a decision that the charterers were liable in tort (Pollock on Torts, 15th ed.).
42. Noted: The Board did not say that the measure of damages is in all respects the same in tort and contract. It said the point shows how far Polemis was out of the current of contemporary thought.
43. Noted: Had the authorities stopped with Polemis, the Board might have hesitated to overrule it. But it has been followed in England and parts of the Commonwealth, rejected with determination in Scotland, and never expressly examined by the House of Lords or Privy Council.
44. Noted: Judges in lower courts have sometimes unwittingly declared themselves against its principle. Asquith L.J. had loyally followed Polemis in Thurogood v. Van den Berghs & Jurgens.
45. Noted: In Victoria Laundry v. Newman Industries, Asquith L.J. held that a full indemnity for breach of contract is too harsh. The injured party recovers only loss that was reasonably foreseeable at the time of the contract.
46. Held: Nothing in that case suggests the measure of damage differs in tort and contract. A negligent act carries no more moral fault than a perhaps deliberate breach of contract, so the negligent actor should not pay a severer penalty.
47. Noted: In Minister of Pensions v. Chennell, Denning J. said foreseeability is vital in contract and negligence. He cited Palsgraf v. Long Island Railway, Donoghue v. Stevenson, Bourhill v. Young, Aldham v. United Dairies and Woods v. Duncan.
48. Noted: Denning J. doubted whether Polemis survives these cases. He said that if it does, it is only for neglect of duty that is the immediate or precipitating cause of unforeseeable damage. The Board called this an obscure and precarious condition.
49. Noted: The Board would refer only to later House of Lords cases. In Glasgow Corporation v. Muir, Lord Thankerton said that a person need foresee only the reasonable and probable consequences of failure to take care.
50. Noted: Lord Macmillan in Muir said the judge decides what the reasonable man would have contemplated. Here there is no suggestion of one criterion for culpability and another for compensation.
51. Noted: In Bourhill v. Young, Lord Russell of Killowen said that what the defendant ought to have contemplated plays a double role. It matters to remoteness of damage, and it also matters to whether a duty exists.
52. Held: That statement appears in flat contradiction to the rule in Polemis and to Lord Sumner's dictum.
53. Noted: In Woods v. Duncan, Viscount Simon set three conditions for negligence liability: failure to take due care, a duty of due care, and that the failure caused the injury in the proper sense.
54. Noted: Viscount Simon held the first and third conditions met, but the second was not, because the damage came from an extraordinary and unforeseeable combination of circumstances. To him, unforeseeability was one and the same for liability and compensation.
55. Noted: Lord Russell asked whether the defendants could reasonably foresee that the choking of a test cock might endanger lives on board. Lord Macmillan asked whether they ought to have foreseen the result, and linked foreseeability with causation.
56. Noted: Lord Macmillan said the chain of causation would appear to be composed of missing links.
57. Held: Polemis has been severely shaken, though lip-service has been paid to it. The Board said: "In their Lordships' opinion it should no longer be regarded as good law."
58. Noted: Few cases are likely to change result for that reason. The Board hoped the law would be simplified and palpable injustice avoided in some cases.
59. Why: It does not fit current ideas of justice or morality that slight negligence causing trivial foreseeable damage should make the actor liable for all unforeseeable and grave consequences. That would follow so long as they are direct.
60. Held: A man must be considered responsible for the probable consequences of his act. To demand more is too harsh a rule. To demand less ignores that civilised order requires a minimum standard of behaviour.
61. Noted: This concept led to varied expressions that can be harmonised, except the rule in Polemis. A man answers for the natural, necessary or probable consequences of his act because a reasonable man ought to have foreseen them.
62. Noted: The two grounds, foreseeability and natural or probable consequence, are coterminous and often overlap. Where they do not, Polemis gave the wrong answer.
63. Why: Some limitation on liability must be imposed. The reasonable-foreseeability test corresponds with the common conscience of mankind. The direct consequence test leads only to never-ending and insoluble problems of causation.
64. Noted: The Board quoted Sir Frederick Pollock that the lawyer cannot afford to venture with philosophers into the controversies about cause. The Polemis rule forces the lawyer to do this, for example when nova causa or novus actus interveniens (a new intervening cause) is pleaded.
65. Noted: The Board tested the rule in operation through The Liesbosch. The House of Lords there neither denied Polemis nor secured it, but distinguished it because the injuries were immediate physical consequences.
66. Held: It is not easy to see why immediate physical consequences should be distinguished, or where the line falls.
67. Noted: Denning L.J. in Roe v. Minister of Health said foreseeability is disregarded only when negligence is the immediate or precipitating cause. The Board said this new word may disguise that he loyally enforced an unworkable rule.
68. Noted: The Full Court applied Polemis and held unforeseeability no defence. It then asked whether the fire was a direct consequence.
69. Noted: Manning J. said each occurrence in the chain was improbable. He said the man in the street would still blame the spillage of oil by the appellant's employees for the fire.
70. Held: That reasoning is irrelevant, or at most shows the Polemis rule works strangely. The Board added: "After the event even a fool is wise." Foresight of the reasonable man alone decides responsibility.
71. Held: The Polemis rule substitutes direct for reasonably foreseeable consequence and gives an illogical and unjust conclusion.
72. Noted: The Board turned to Lord Sumner's dictum that foreseeability goes to culpability, not compensation. It said with great respect that "this proposition is fundamentally false".
73. Noted: In analysing negligence, the plaintiff must prove a duty, a breach and consequent damage. The Board said, "It is not the act but the consequences on which tortious liability is founded."
74. Held: There is no negligence in the air, and no liability in the air. If A sues for fire caused by B's carelessness, the only liability in question is liability for fire damage.
75. Held: It is vain to isolate liability from its context and then ask for what damage the defendant is liable. Culpability depends on foreseeability of the damage that actually happened, the damage in suit.
76. Held: If that damage was unforeseeable so as to displace liability at large, it cannot be restored so as to make compensation payable.
77. Noted: It was argued that a different position arises where B's careless act causes some foreseeable damage to A. The Board held that to hold B liable for unforeseeable consequences if, but only if, he is liable for other trivial damage is neither logical nor just.
78. Why: Suppose A and C suffer similar unforeseeable damage, but only A suffers foreseeable damage. A law that held B liable to A but not to C for the same damage could not be defended.
79. Held: The same fallacy lies at the root. That B is liable for foreseeable damage is as irrelevant as trespass on Whiteacre is to trespass on Blackacre.
80. Held: Each claim rests on its own bottom. It fails if it can be shown that the damage could not reasonably be foreseen.
81. Noted: This is the plain common sense stated by Lord Russell in Bourhill v. Young. Denning L.J. said in King v. Phillips that the test of liability for shock is foreseeability of injury by shock. The Board substituted the word fire for shock and endorsed the statement.
82. Noted: The Board had been concerned to displace the proposition that unforeseeability is irrelevant if damage is direct. The essential factor is whether the damage is of a kind the reasonable man should have foreseen.
83. Noted: That accords with Lord Atkin in Donoghue v. Stevenson: liability for negligence rests on a general public sentiment of moral wrongdoing for which the offender must pay.
84. Held: It departs from that principle if liability depends solely on damage being direct or natural. Who knows all the processes of nature?
85. Held: Equally, a man should not escape liability however indirect the damage, if he foresaw or could reasonably foresee the intervening events. The Board cited Woods v. Duncan. In short, foreseeability becomes the effective test.
86. Noted: The Board said it follows and develops the law of negligence laid down by Baron Alderson in Blyth v. Birmingham Waterworks Co.
87. Noted: The Board did not consider the rule of strict liability in Rylands v. Fletcher. Nothing said reflects on that rule.
88. Held: On nuisance, the Board would not reach a conclusion on the material before it, without the considered view of the Supreme Court. The respondents should not be finally shut out from this plea.
89. Held: On the issue of nuisance alone, the case should be remitted to the Full Court to be dealt with as it thinks proper.

Authorities

• In re Polemis and Furness Withy & Co. Ltd. [1921] 3 KB 560 (CA) — the direct consequence rule; no longer good law.
• Smith v. London & South Western Railway Co. (1870) LR 6 CP 14 — influenced Polemis; cited no authority and dealt with damage of the same kind.
• H.M.S. London [1914] P 72 — followed Smith; the Blackburn J. passage on culpability and compensation was discussed.
• Weld-Blundell v. Stephens [1920] AC 956 (HL) — Lord Sumner's dictum on culpability and compensation called fundamentally false.
• Rigby v. Hewitt (1850) 5 Exch 240 and Greenland v. Chaplin (1850) 5 Exch 243 — Pollock C.B.'s doubt that a negligent person answers for unforeseeable consequences.
• Sharp v. Powell (1872) LR 7 CP 253 — icy causeway; not reconcilable with Polemis.
• Cory & Son Ltd. v. France Fenwick & Co. Ltd. [1911] 1 KB 114 (CA) — approved Pollock C.B.'s view.
• Lynch v. Knight (1861) 9 HLC 577 (HL) and Clark v. Chambers (1878) 3 QBD 327 — no dichotomy between culpability and compensation.
• Hadley v. Baxendale (1854) 9 Exch 341 — not cited in Polemis; contract remoteness would have limited the charterers.
• Thurogood v. Van den Berghs & Jurgens Ltd. [1951] 2 KB 537 (CA) — Asquith L.J. loyally followed Polemis.
• Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd. [1949] 2 KB 528 (CA) — recovery limited to loss reasonably foreseeable at the time of the contract.
• Minister of Pensions v. Chennell [1947] KB 250 — Denning J. doubted that Polemis survives.
• Palsgraf v. Long Island Railway (1928) 248 NY 339 — foreseeability in respect of the person injured (cited within Denning J.'s passage).
• Donoghue v. Stevenson [1932] AC 562 (HL) — foreseeability in negligence; Lord Atkin on the moral sentiment behind liability.
• Bourhill v. Young [1943] AC 92 (HL) — Lord Russell: foreseeability plays a double role; contradicts Polemis.
• Aldham v. United Dairies (London) Ltd. [1940] 1 KB 507 — foreseeability of intervening causes (cited within Denning J.'s passage).
• Woods v. Duncan [1946] AC 401 (HL) — conditions for negligence; foreseeability and causation.
• Glasgow Corporation v. Muir [1943] AC 448 (HL) — a person need foresee only reasonable and probable consequences.
• The Liesbosch [1933] AC 449 (HL) — distinguished Polemis as immediate physical consequences.
• Roe v. Minister of Health [1954] 2 QB 66 (CA) — Denning L.J.'s immediate or precipitating cause.
• King v. Phillips [1953] 1 QB 429 — test of liability for shock is foreseeability; applied to fire.
• Blyth v. Birmingham Waterworks Co. (1856) 11 Exch 781 — Alderson B.'s statement of negligence; the Board says it follows and develops it.
• Rylands v. Fletcher (1868) LR 3 HL 330 (HL) — strict liability rule; expressly not considered.
• Also referred to: Pollock on Torts, 15th ed.; Professor Goodhart's Essays.

Judgement

1. The Board would advise Her Majesty that the appeal be allowed.
2. The respondents' action, so far as it relates to damage caused by the negligence of the appellants, is dismissed with costs.
3. The action, so far as it relates to damage caused by nuisance, is remitted to the Full Court to be dealt with as it may think fit.
4. The respondents must pay the appellants' costs of this appeal and in the courts below.

Legal Principle / Ratio

A negligent defendant is liable only for damage of a kind that a reasonable person should have foreseen. Liability does not turn on whether the damage is direct. Re Polemis is no longer good law.

Key holding: "Thus foreseeability becomes the effective test." Under the ratio decidendi (the legal reason for the decision), the fire damage was not reasonably foreseeable, so the negligence claim failed.

Subsequent Treatment

This section comes only from the two later judgments saved with this case. Neither later judgment has numbered paragraphs, so each point is tied to the judge's opinion.

Hughes v. Lord Advocate (House of Lords, 21 February 1963)

Hughes v. Lord Advocate

Bench: Lord Reid, Lord Jenkins, Lord Morris of Borth-y-Gest, Lord Guest and Lord Pearce. Citation as given in The Wagon Mound No. 2: [1963] AC 837.

• Lord Jenkins quoted the Lord Ordinary, who had cited The Wagon Mound to hold that injuries from a paraffin explosion could not be reasonably foreseen (Lord Jenkins' opinion).
• The House of Lords allowed the appeal and rejected that view. A boy was burned when a paraffin lamp fell into an open manhole and exploded.
• Lord Pearce cited The Wagon Mound [1961] AC 388 for one rule. A defender is not liable for an accident of a different type and kind from anything he could have foreseen (Lord Pearce's opinion).
• He added that demanding too great precision in foreseeability would be unfair to the pursuer. He held that the explosion was a variant of the foreseeable burning and was within the risk created by the negligence (Lord Pearce's opinion).
• Lord Reid said a defender is liable although the damage is much greater in extent than was foreseeable. He escapes only if the damage differs in kind from what was foreseeable (Lord Reid's opinion).
• Lord Jenkins, Lord Morris and Lord Guest also held that an explosion and a burn are the same kind of accident. None of the three relied on The Wagon Mound in their own opinions.

Overseas Tankship (U.K.) Ltd v. Miller Steamship Co. Pty Ltd (The Wagon Mound No. 2), Privy Council Appeal No. 7 of 1964

Wagon Mound No. 2

Delivered by Lord Reid on 25 May 1966. Bench: Lord Reid, Lord Morris of Borth-y-Gest, Lord Pearce, Lord Wilberforce and Lord Pearson. The appeal came from the Supreme Court of New South Wales.

• The Board called the earlier case The Wagon Mound No. 1. It said the plaintiffs there failed because it was not foreseeable that such oil on water could be set alight.
• It noted that the nuisance issue in No. 1 was remitted to the Supreme Court, and it understood that the matter was not pursued there.
• It said that No. 1 and Hughes v. Lord Advocate settled the rule. Damages in negligence are recoverable only if the negligence caused the injury and the injury was of a class or character foreseeable as a possible result.
• Earlier negligence cases that excluded foreseeability must be taken as disapproved. Ambiguous ones must be read in the light of these two cases.
• The Board held that foreseeability also governs damages in nuisance. It is not enough that the injury was the direct result of the nuisance if it was unforeseeable in the relevant sense.
• Where the nuisance is creating a danger in navigable waters, fault is essential, so foreseeability decides liability as well.
• It explained that the evidence differed from No. 1. There the finding was that the fire was not foreseeable at all. Here the findings showed that some risk of fire would have been present to a reasonable chief engineer.
• It said the plaintiffs in No. 1 were embarrassed because their own manager had resumed welding while the wharf was surrounded by oil. That could have raised contributory negligence (the plaintiff's own fault), then a complete defence in New South Wales.
• The trial judge, Walsh J. (judgment of 10 October 1963), had found for the respondents in nuisance and against them in negligence. His finding 5, that fire damage was not reasonably foreseeable, was an inference influenced by his view of the law.
• The Board discussed Bolton v. Stone. It said a small real risk may be neglected only for a valid reason, such as heavy expense. Here discharging the oil was an offence and a financial loss, so there was no such reason.
• The Board held that the respondents also succeed in negligence. It held that a real risk is not unforeseeable just because it is remote. A reasonable man would not neglect such a risk when removing it cost nothing. The appeal and the cross-appeal were both allowed.
• The judgment for the respondents of £80,000 and £1,000 was affirmed, and the appellant had to pay two-thirds of the respondents' costs.

Other cases discussed in The Wagon Mound No. 2: Sharp v. Powell; Pearson v. Cox; Clark v. Chambers; Harrold v. Watney; Farrell v. Mowlem; Morton v. Wheeler (Lord Denning M.R.); Benjamin v. Storr (special damage); Bolton v. Stone; The Notting Hill; The Argentino; Hadley v. Baxendale. Cases discussed in Hughes: Muir v. Glasgow Corporation (not followed on the point that an unforeseeable way of happening excludes liability); Miller v. South of Scotland Electricity Board; Harvey v. Singer Manufacturing Co.; Haynes v. Harwood; Carmarthenshire County Council v. Lewis; Roe v. Minister of Health.

Other later cases (not summarized): none identified beyond the two above.

Comparative Analysis

Based only on the two later judgments.

• The Wagon Mound No. 1 decided that the fire was not foreseeable at all. The Wagon Mound No. 2 dealt with different findings, in which some risk of fire was foreseeable, and so reached a different result.
• Hughes v. Lord Advocate treated the kind of injury, burns, as the test. The exact way it happened, an explosion, did not have to be foreseen.
• Both later cases keep the No. 1 test of foreseeability. Neither returns to the direct-consequence test.
• The Wagon Mound No. 2 extended the test to nuisance. No. 1 had left nuisance undecided and sent it back to the Full Court.
• The Wagon Mound No. 2 said it was not obvious that Hughes fits the first rule in Hadley v. Baxendale as commonly read. It did not decide that question, so the tort and contract measure of damages is still left open.

Critical Analysis

Analysis based on the judgment text.

• The facts of the spill are not in the judgment text, so the reader must look elsewhere in the report for them.
• The Board said that few cases are likely to change result. It hoped the law would be simplified.
• Foreseeability of damage of what kind is left open by the opinion. It speaks of the damage in suit and of damage of a kind the reasonable man should have foreseen.
• The Board did not decide whether tort and contract damages are identical in all respects.
• Strict liability under Rylands v. Fletcher was left undecided. Nuisance was left to the Full Court and later dealt with in The Wagon Mound No. 2.

Significance

• The Board overruled the direct-consequence rule of Polemis and replaced it with reasonable foreseeability as the test for remoteness of damage.
• The Board noted that Polemis was out of step with contract remoteness under Hadley v. Baxendale. It did not say the measure is the same in tort and contract.
• It rejected the view that foreseeability is relevant to breach but not to compensation.

Exam-Important Points

• Rule first: a negligent defendant is liable only for reasonably foreseeable damage. The direct test of Re Polemis is overruled.
• Trap: foreseeable slip-way fouling did not make the defendant liable for unforeseeable fire damage.
• Trap: Lord Sumner's dictum on culpability and compensation was called fundamentally false.
• The nuisance claim was left open and remitted to the Full Court. Do not say the case ended all liability.
• The Board did not consider Rylands v. Fletcher.

Prepared from the full text of the judgment. The judgment has no numbered paragraphs, so no paragraph numbers are cited.