Legal Case Summary
Overseas Tankship (UK) Ltd v The Miller Steamship Co or Wagon Mound (No. 2) [1967] 1 AC 617
The relevance of seriousness of possible harm in determining the extent of a party’s duty of care.
Facts
The defendant’s ship, ‘The Wagon Mound’, negligently released oil into the sea near a wharf close to Sydney Harbour. An unfortunate chain of events led to the oil becoming mixed with cotton debris, which was subsequently ignited by the sparks coming off some nearby welding works. This caused a large and destructive fire which spread quickly and severely damaged several nearby boats and the dock.
Notably, whilst this particular incident had already been considered in the equally impactful case of Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound) (No. 1) [1961] AC 388, the instant case concerned the test for breach of duty of care, rather than of remoteness in causation.
Issue
Had the defendant breached his tortious duty of care in negligently allowing the oil to spill.
Decision/Outcome
The Privy Council held that the defendant was in breach, as despite the likelihood of the oil spilling had been low, the defendant had been aware that were such an event to happen, the harm that it could cause was very significant. Moreover, a reasonably professional person on the ship would have been able to tell that the risk of fire existed. Further, the risk could have been easily mitigated at minimal cost to the defendant. Thus, the approach to establishing duties of care in tort requires consideration of both the extent and gravity of a possible injury.
Updated 19 March 2026
This case summary remains legally accurate. Wagon Mound (No. 2) [1967] 1 AC 617 is still good law and continues to be applied by English and Welsh courts. The principle that the magnitude (seriousness) of potential harm is a relevant factor in the breach of duty analysis remains well established and has been consistently affirmed in subsequent case law, including Tomlinson v Congleton Borough Council [2003] UKHL 47 and Customs and Excise Commissioners v Barclays Bank plc [2006] UKHL 28. The risk calculus approach — weighing the probability of harm, its potential severity, and the cost of precautions — is also reflected in the framework confirmed in Caparo Industries plc v Dickman [1990] 2 AC 605 and remains the applicable standard. No statutory changes have displaced these common law principles in this area. The article’s brief treatment of the distinction between breach and remoteness is sound, though readers should note that the remoteness test itself (reasonable foreseeability of damage) was authoritatively established in Wagon Mound (No. 1) [1961] AC 388, which this summary correctly distinguishes from the No. 2 case.
