Wagon Mound I
Citation: Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd. [1961] AC 388 (Privy Council)
Facts
Defendants negligently discharged furnace oil from their ship (the Wagon Mound) into Sydney Harbour. The oil spread to a nearby wharf where workers were welding. Sparks from the welding ignited cotton waste floating on the oil, which set the oil on fire and destroyed the plaintiff’s wharf and two ships.
Issue
Is a defendant liable for all direct consequences of a negligent act (the Polemis rule), or only for consequences that were reasonably foreseeable?
Holding
A defendant is liable only for damage of the type that was reasonably foreseeable as a consequence of the negligent act. The Polemis “direct causation” rule was expressly rejected.
Rule
Foreseeability test for proximate cause: liability extends only to the type of harm that a reasonable person would have foreseen as a consequence of the negligent act. The exact manner and extent of harm need not be foreseen — only the general type.
Applied here: fire damage from the ignition of oil in Sydney Harbour was arguably not foreseeable (the Privy Council found defendants could not reasonably have foreseen that the oil would ignite in these circumstances).
Significance
- Replaced the Polemis “direct causation” rule (liability for all direct consequences) with the foreseeability rule as the dominant framework for proximate cause in English and Commonwealth law
- Influential in American tort law; the Restatement Third adopts a similar foreseeability-based approach under “scope of liability”
- Contrasted with the Palsgraf approach (which uses “duty” as the limiting concept rather than foreseeability at the proximate cause stage)
- Distinguished from the eggshell plaintiff rule: once a foreseeable type of harm occurs, the full extent is recoverable even if unforeseeable in magnitude