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The Wagon Mound No.2 [1967] 1 AC 617 Privy Council

The defendant's vessel, The Wagon Mound, leaked furnace oil at a Wharf in Sydney Harbour due to the failure to close a valve. Some cotton debris became embroiled in the oil and sparks from some welding works ignited the oil. The fire spread rapidly causing destruction of some boats and the wharf.


Held:

The defendants were in breach of duty. Although the likelihood of harm was low, the seriousness of harm was high and it would have cost nothing to prevent it.

Lord Reid:

In the present case the evidence shows that the discharge of so much oil on to the water must have taken a considerable time, and a vigilant ship's engineer would have noticed the discharge at an early stage. The findings show that he ought to have known that it is possible to ignite this kind of oil on water. and that the ship's engineer probably ought to have known that this had in fact happened before. The most that can be said to justify inaction is that he would have known that this could only happen in very exceptional circumstances. But that does not mean that a reasonable man would dismiss such a risk from his mind and do nothing when it was so easy to prevent it. If it is clear that the reasonable man would have realised or foreseen and prevented the risk then it must follow that the appellants are liable in damages. The learned Judge found this a difficult case: he says that this matter is "one upon which different minds would come to different conclusions". Taking a rather different view of the law from that of the learned Judge, their Lordships must hold that the respondents are entitled to succeed on this issue.
 
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