Overseas Tankship (UK) Ltd v The Miller Steamship Co Ltd  1 AC 617, commonly referred to as The Wagon Mound (No 2), established a key legal principle regarding the relevance of the seriousness of possible harm in determining the extent of a party's duty of care in negligence.
The facts of the case revolved around the defendant's ship, The Wagon Mound, negligently releasing oil into the sea near a wharf close to Sydney Harbour. An unfortunate sequence of events led to the oil mixing with cotton debris, which was then ignited by sparks from nearby welding works. This resulted in a destructive fire that severely damaged several boats and the dock.
Although this incident had been previously considered in Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd  (Wagon Mound No 1), the focus in this case shifted to the test for breach of the duty of care, rather than the issue of remoteness in causation.
The central issue was whether the defendant had breached their tortious duty of care by negligently allowing the oil to spill. The Privy Council held that a breach had indeed occurred. Despite the low likelihood of the oil spilling, the defendant was aware that if such an event were to happen, the potential harm could be significant. Additionally, a reasonably professional person on the ship could have recognised the risk of fire, and this risk could have been easily mitigated at minimal cost to the defendant.
The key takeaway from the decision is that when establishing duties of care in tort, it is necessary to consider both the extent and gravity of a possible injury. In this case, the seriousness of the potential harm played a pivotal role in determining that the defendant had breached their duty of care in allowing the oil spill to occur.
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