Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co., Ltd. [Wagon Mound No. 1]
Privy Council
[1961] A.C. 388 (P.C. Aust.)
A ship owned by Overseas Tankship (defendant), docked near Morts Dock's (plaintiff's) wharf in Sydney Harbour, leaked oil that drifted toward Morts's wharf, temporarily halting the welding and burning work Morts performed there; after Morts's supervisor inquired and was told the oil was not flammable, he had employees resume welding and burning, and days later the wharf was destroyed when floating debris in the oil caught fire. The trial court found Overseas neither knew nor could reasonably have known the oil was capable of igniting when spread on water, and that the oil itself caused only slight initial damage to the wharf, yet still ruled for Morts; Overseas appealed.
Whether a negligent party is liable for all direct consequences flowing from its negligent act regardless of foreseeability, or only for those consequences that were reasonably foreseeable at the time the act occurred.