First Principles of Business Law

6. Causation

6.3.2. Reasonable foreseeability of consequences

In The Wagon Mound (No 1) the court found that the defendants 'did not know and could not reasonably be expected to have known that [the oil] was capable of being set afire when spread on water.

But this same incident gave rise to another case, The Wagon Mound (No 2). In this case, the plaintiffs were the owners of two ships damaged after the fuel oil that the defendant spilt into Sydney Harbour caught fire. These plaintiffs were able to prove new facts which, they argued, allowed the court to find that the harm caused was reasonably foreseeable. Consider the following argument:

The plaintiff argues: "The defendant regarded fuel oil on water as difficult to ignite, but not impossible. Their experience was that such ignition happened rarely, but it was a possibility that could happen, even if only in exceptional circumstances. On these facts, the harm caused by spilling oil into the harbour was reasonably foreseeable."

Do you agree?