The Wagon Mound (2) [1967] 1 AC 617 Case Summary

KEY POINTS

A person is considered negligent if they fail to address a risk that they are aware of or should be aware of, and this risk is not a mere possibility but a genuine threat that would impact a reasonable person's decision-making process.
Common law principles governing negligence apply universally, including “in the streets.” These principles are rooted in the actions that a reasonable person, mindful of their neighbor's safety, would take given the knowledge that a person in the defendant's position is assumed to have.
Mere remote possibilities of injury are insufficient; there must be a substantial probability that a reasonable person would consider before holding someone liable for actionable negligence. Not only should the event be reasonably foreseeable, but the likelihood of resulting injury must also be something a reasonable person would anticipate..

The Appellants, acting as charterers, were responsible for a vessel being bunkered at Caltex Wharf, resulting in a significant oil spill into Mort's Bay. The spill, caused by their negligence, spread to the waters under Sheerlegs Wharf, where repair work, including welding, was in progress on vessels owned by the Respondents. Subsequently, a fire broke out, damaging the Respondents' vessels.
After considering scientific evidence, the court found that a piece of molten metal from the wharf or the adjacent vessel ignited material on the oil-covered water, causing the fire. The Respondents claimed negligence against the Appellants, arguing foreseeability of the fire damage.

Appeal and cross-appeal were both upheld. Respondents to pay damages on the ground of nuisance as established in this case.

The significance of Wagon Mound (No 2) lies in its contribution to the development of the law of negligence. It introduced a more flexible and expansive approach to foreseeability, allowing for a broader range of consequences to be considered in determining liability.
This decision has influenced subsequent cases and has become a key reference point in discussions about the scope of negligence in tort law.

Defendant carelessly let oil spill into the water, which spread to where X was repairing Plaintiff’s ship. It was thought unlikely that the oil would catch fire and so X carried on its work. As a result of the continuation of the work, some molten metal set alight the oil, which destroyed Plaintiff’s ship.
Plaintiff sued Defendant for negligently causing Plaintiff’s ship to catch fire.
HL allowed the claim. HL said that the fire was reasonably foreseeable and therefore Defendant was negligent in spilling the oil and destroying Plaintiff’s ship.
(Tony Weir points out that if the oil setting alight was foreseeable, then X, repairing the boat despite the possibility of the oil setting alight, should surely also be held to have been negligent in causing the destruction of the ship).

Just because a risk is small doesn’t mean that it should not be eliminated: whether the risk is so small as to be not worth changing one’s conduct depends on its size, the cost of removing the risk, etc.
Bolton v Stone was a case of a risk that was so minimal that inaction was justified. It does not follow that all small risks should be ignored.
The risk CAN be ignored where “a reasonable man, careful of the safety of his neighbour, would think it right to neglect it.” This was not the case here.
Bolton v Stone didn’t change the general principle that “a person must be regarded as negligent if he does not take steps to eliminate a risk which he knows or ought to know is a real risk and not a mere possibility which would never influence the mind of a reasonable man”

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