## Facts

- Morts Dock & Engineering Co., Ltd. (Morts) owned and operated a wharf in Sydney Harbour where it performed ship repair work.
- Morts routinely used welding and burning techniques on vessels at the wharf.
- A ship owned by Overseas Tankship (U.K.) Ltd. (Tankship) was at a nearby wharf in Sydney Harbour.
- While Tankship’s vessel was there, oil leaked into the harbour due to Tankship’s negligence.
- After Tankship’s ship departed, tidal movement carried the leaked oil to Morts’ wharf area.
- Because oil was present on the water near the wharf, Morts’ employees stopped welding and burning operations out of concern about possible ignition.
- Morts’ supervisor made inquiries about whether the oil on the water was flammable; after being told it was not, he directed employees to resume welding and burning.
- Several days later, a rag or other floating debris in the oil caught fire, and the resulting fire spread and destroyed Morts’ wharf.
- The trial judge found Tankship did not know, and could not reasonably have been expected to know, that this type of oil could be ignited when spread over water in the manner that occurred.
- The trial judge also found the oil itself caused some minor damage when it spread onto Morts’ property.
- Morts sued Tankship for the losses, obtained judgment at trial, and Tankship appealed.

## Issues

1. Whether a negligent defendant is liable in negligence for fire damage that was a direct result of an oil spill but was not reasonably foreseeable to a person in the defendant’s position.
2. Whether remoteness of damage in negligence is determined by the “direct consequence” approach (associated with *Re Polemis*) or by reasonable foreseeability of the kind of damage.

## Decision

- The Privy Council allowed Tankship’s appeal.
- The Privy Council held Tankship was not liable for the wharf’s fire damage because that kind of damage was not reasonably foreseeable on the trial judge’s findings.
- The court rejected the “direct consequence” approach as the test for remoteness in negligence and applied reasonable foreseeability of the kind of harm.
- The court indicated that foreseeable loss of a different kind (such as ordinary oil fouling/contamination damage) stands on a different footing from the unforeseeable fire loss.

## Legal Principles

- In negligence, a defendant is liable only for damage of a kind that a reasonable person in the defendant’s position would have foreseen as a likely result of the breach.
- Physical causation alone (including that the loss followed directly from the negligent act) does not make the loss recoverable if the kind of damage was not reasonably foreseeable.
- The remoteness inquiry focuses on the type or kind of harm that was foreseeable, not on the precise chain of events by which it occurred.
- Findings about what the defendant knew or should reasonably have known at the time of the negligent act are central to deciding whether the harm is too remote.

## Conclusion

The Privy Council held that negligence does not extend to all direct consequences of a wrongful act; liability is limited to damage of a kind that was reasonably foreseeable. Because Tankship could not reasonably have foreseen that the spilled oil would ignite on water and cause a major fire, the fire damage to Morts’ wharf was too remote and was not recoverable.


Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co., Ltd. [Wagon Mound No. 1], [1961] A.C. 388 (1961)