## Facts

- The charterers of the vessel, The Wagon Mound, allowed oil to leak into the water at Mort's Dock.
- Employees failed to take action to remove the oil following the spillage.
- The oil subsequently caught fire, causing substantial damage to claimants' vessels undergoing repair at the dock.
- At trial, it was found that the chance of oil igniting on water was very small and thus the fire was not reasonably foreseeable.
- The Privy Council reversed this, concluding that a reasonable person, specifically the chief engineer of The Wagon Mound, would have recognized the risk of fire from the oil.
- The evidence demonstrated that it was unreasonable to ignore the fire risk, particularly since eliminating it would have involved little to no expense.
- Discharging oil into the harbor was found to be unjustified and led to significant financial loss for the claimants.

## Issues

1. Whether, in the tort of nuisance, liability requires that the type of damage sustained is reasonably foreseeable.
2. Whether strict liability in nuisance applies even when the resulting damage was unforeseeable.
3. What standard of care is expected in assessing risks and determining reasonable preventative measures.

## Decision

- The Privy Council held that, for liability in nuisance, the damage must be reasonably foreseeable; it is not sufficient that the damage is a direct consequence.
- The court rejected the notion of strict liability for unforeseeable damage in nuisance, requiring foreseeability as a condition for recovery.
- It was determined that a reasonable person would not have dismissed the risk of fire where it could have been easily and inexpensively prevented.
- The court found it unreasonable for the defendant to overlook eliminating an obvious risk, especially as doing so involved no difficulty, disadvantage, or significant expense.

## Legal Principles

- Liability in nuisance is not absolute; foreseeability of harm is necessary where fault is considered.
- Reasonableness is a key element in assessing whether a defendant should have taken precautions against a risk.
- Minor risks may only be disregarded by a reasonable person when there is justification, such as high mitigation costs, but not when risk removal is straightforward.
- The magnitude of risk should be balanced against the burden of taking preventative measures.
- Differences in factual findings can result in different legal outcomes, even from the same root incident.

## Conclusion

The Wagon Mound (No. 2) [1967] 1 AC 617 established that, in nuisance cases, liability for damage requires that the harm be reasonably foreseeable and that measures to avoid risk should be taken where prevention is practical and inexpensive, reinforcing reasonableness as the basis for liability.


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