Overseas Tankship v Miller Steamship

From Wikipedia, the free encyclopedia

Overseas Tankship (UK) Ltd v Miller Steamship Co Pty (1966), [1966] 2 All E.R. 709; [1967] 1 A.C. 617; [1966] 3 W.L.R. 498 (P.C.) - also known as Wagon Mound #2 - is a famous decision by the Judicial Committee of the Privy Council on remoteness of damages in a negligence tort action. It should not be confused with the earlier case The Wagon Mound (Overseas Tankship v Morts Dock & Engineering) [1961] 1 All ER 404. The court ruled that loss will be recoverable where the extent of possible harm is so great that a reasonable man would guard against it (even if the chance of the loss occurring was very small).

1 Background
2 Opinion of the Council
3 Implications and analysis
4 See also

[edit] Background

The defendant owned a freighter ship named the Wagon Mound which was moored at a dock. The plaintiff owned two ships that were moored nearby. At some point during this period the Wagon Mound leaked furance oil into the harbour while some welders were working on a ship. The sparks from the welders caused the leaked oil to ignite destroying all three ships.

The appeal to the Privy Council was on the basis of whether the defendant should be liable.

[edit] Opinion of the Council

The council found that a reasonable person in the shoes of the ship's engineer would have been aware of the risk of fire. Since the gravity of the potential damage was so great there was no excuse for allowing the oil to be discharged even if the risk of fire was small. A "reasonable man" would only neglect a risk of such a potentially great magnitude if he had a reason to do so, e.g. if it was cost prohibitive.

[edit] Implications and analysis

This idea of a balance between magnitude and seriousness of risk is similar to that proposed by Learned Hand in United States v. Carroll Towing Co. 159 F.2d 169 (2d Cir. 1947) on the subject of legal causation. Such a formulation of the issue has struck some in the field as an argument along the lines typically made in the Law & Economics camp usually seen to be represented by Judge Posner.