Caltex Oil (Australia) Pty Ltd v Dredge Williamstad

(9 December 1976)

Caltex Oil (Australia) Pty Ltd (Caltex) was located on the northern shore and was
owed the terminal oil at Banksmeadow which connect to an oil refinery at Kurnell of
Australia Oil Refining Pty. Ltd (AOR) on the southern shore via a pipeline ran under the
Botany Bay. The pipeline was used for delivery the crude oil from Caltex to AOR refinery
and then delivered refined oil back to Caltex. The pipeline was owned by AOR. Under the
terms of the agreement, although the product passed through in the pipeline belonged to
Caltex but AOR was responsible for the risk of damage or loss to the oil as it carried through
its pipeline.
Issues
On the night of 25th-26th October 1971, the Dredge Willemstad was being used to
dredge a water channel in Botany bay and it damaged the pipeline. And the cause was related
to The operators of the dredge and the track plotter chart supply by Decca Survey Australia
Ltd (Decca) which is incorrect and the operators of the dredge failed to identify the error in
the track plotter chart and also failed to check their position by conventional means.
Relevant laws
In this case are relate to Law of tort and it is about the negligence of the third party
Economic loss flowing from damage to the property of a third party. For the plaintiff
to succeed, they must show that the defendant knew that the plaintiffs property was in such a
close physical proximity to the property of the third party, that the plaintiff would suffer an
economic loss as a result of the negligent infliction of damage to a third partys property.
[28.300] (Law of Tort).
AOR sued both the dredge and Decca to recover damages, including compensation
for the damage caused to the pipeline and the products in the pipeline. It is apparently the
negligent act of Dredge and Decca was caused physical damage to AOR. It is reasonable for
AOR to be recovered for the damage.
Caltex also sued the operators of the Dredge and Decca in negligence to recover
compensation for the costs of transport to deliver petroleum products until the pipeline is
repaired.
Caltex has suffered with financial loss, but that is not caused by injury or physical
damage Because the pipeline belongs to AOR and the product in it is a risk by AOR too,
therefore Caltex was not entitled to recover damages according to economic loss but the
defendants negligence was caused to their financial loss. So we need to follow these steps
below to figure out in Caltex case. Was Caltex could be recovered from their loss?

.
The duty of care in pure economic
In this case it is related to Negligent that basically carelessness by one party which
has led to an injury or loss to another party who was owed a duty of care. The tort of
negligence refers to how the law imposes a duty on all persons to exercise reasonable are in
their actions, or even a required action, so that their daily activities will not foreseeably harm
another. If in fact, another party is injured or suffers some loss as a result or careless behavior,
and it was reasonably likely the harm might occur, then the wrongdoer must pay
compensation to the injured party. (Textbook)
Did the defendants breach of duty of care? There are two questions to consider.

The degree of foreseeable risk created by the defendants conduct.

The reasonableness or otherwise of the defendants response to that risk

The question is the defendants negligent act is foreseeable to harm to others. Did the
defendant can foreseeable the harm to Caltex. The answer is yes, they can see that they
known there is the pipeline under the bay and they know what will affect to the other parties
business if it's damaged.
The employee of Dredge was careless and unskillful navigate the track plotter chart and
Decca was failed cause provided the inaccurate system there for both of them was owed a
duty of care to Caltex for their negligents act.
As the old law was damages are not recoverable for economic loss which is not
consequential upon injury to the plaintiffs person or property. However, the current law is
accepted that the defendant has knowledge or means of knowledge that they will be likely to
suffer economic loss as a consequence of his negligence, and owes the plaintiff a duty to take
care not to cause him such damage by his negligent act.

Argument
Hearing of Caltex Oil case was done in the year 1976 in Sydney starting from the
month of July. Decision on this case was finally taken on December 9 th in 1976. The Dredge
who is defendant spoilt a pipeline while it was kept for dredging. This pipeline was placed on
the Botany Bay bed. Botany Bay connected two oil terminals i.e Kurnell in southern shore
and Banksmeadow in northern shore. The pipeline was utilized for the purpose of oil transfer
by the Plaintiff or Caltex, but was not owned by them. As the pipeline was spoilt, the Plaintiff

has to incur huge economic loss. This damage incident occurred in the year 1971 on 25 26
night of October. It is not in uncertainty that the dig was off its fitting course and that the
careless route of the dig was a reason for the harm to the channels. The dig had the capacity
explore by traditional means, as well as by the utilization of gear supplied by Decca Study
Australia Ltd. ("Decca"), by which the dig's position could be altered with incredible
exactness by accepting and plotting radio signs transmitted from the shore. To empower
Decca's framework to be utilized, there was readied a track plotter diagram demonstrating the
territory to be dug, and on which the vessel's track could be seen and if vital recorded. A
worker of Decca had drawn on the track plotter outline parallel lines demonstrating the
western limit of region A, past which digging should not to be completed, for fear that it
jeopardize the pipeline, and indicating additionally the pipeline itself. The lines were
erroneously drawn, in that they were set at the wrong point to the diagram; the mistake was of
around sixty degrees. This blunder implied that a pilot who cruised his dig up to a position
which, as indicated by the markings on the diagram, would have been 100 feet toward the
pipeline's east, would, on the off chance that he were on the northern side of the digging
territory, have been much further far from the pipeline than that, however in the event that he
were on the southern side of the digging zone would actually have crossed the pipeline.
Three distinct inquiries succumb to choice: (1) whether the educated trial judge ought
to have given judgment in the activities in rem against Commander Henneman; (2) whether
the scholarly trial judge was right in holding that the harm was brought on, inter alia, by
carelessness for which Decca was capable; (3) whether Caltex was qualified for recover
harms for monetary misfortune.
Prior to the start of listening, application were made for leave to alter the appearances
by erasing the name of Chief Henneman and for a request striking his name from the
procedures. In backing of these applications Skipper Henneman swore a sworn statement that
he didn't on 25th and 26th October 1971 or at whatever other time have any budgetary
enthusiasm of any nature in the dig. At the listening to some proof was given that
Commander Henneman was ready the dig on the night of 25th-26th October 1971, however
there was no confirmation that he was on the extension at any applicable time or that he had
impact in the dig's route.
No proof was given by any individual who was on the dig's scaffold on the night
being referred to in respect to what happened on that event. There was accordingly no

immediate proof that Decca's framework was being used on that night. Then again, various
certainties demonstrated in confirmation did as I would see it offer ascent to the surmising
that the framework was being utilized. Evidence the two deluding lines were not checked on
the track plotter graph when it was given over by Decca's staff to the surveyor utilized by the
dig's charterers, and that they were therefore stamped on the outline by Mr. Austin, a
representative of Decca. That diagram as initially got by the dig was insufficient, so far as
those proposing to utilize it were concerned, in light of the fact that it didn't demonstrate the
western limit of the range to be dug (in spite of the fact that it must be included that Decca
can't be reprimanded for this, since Decca had not been requested that plot that limit). The
scholarly trial judge in like manner gathered that the deck officers of the dig would have
needed that limit settled with accuracy before they would dig close to the pipeline. It appears
to me a sensible surmising that the lines were checked on the outline by Mr. Austin, at the
solicitation of those worried with the dig's route. At the end of the day, it is a sensible
surmising that it was expected by somebody worried with the dig's route to utilize the track
plotter diagram, and the Decca framework, in the dig's route.
Conclusion
On the inquiry whether the loss of Caltex, which is reflected in the expenses and costs
caused by it in masterminding option techniques for getting conveyance of the oil when it had
been refined, was recoverable, Sheppard J. felt himself bound by the lion's share's choice of
the New South Wales Court of Bid in French Weave Deals Pty. Ltd. v. N. Gold &Sons Pty.
Ltd. He held that harms for the misfortune were in law excessively remote or that no
obligation was owed in appreciation of such misfortune. A litigant is at risk to pay harms in
admiration of the sort of damage the predictability of which was the vital component
empowering an observing to be made that an obligation of consideration existed. A
respondent is not at risk to pay harms for bringing about a sort of damage which is not
predictable. Such harm can be portrayed as excessively remote or it might be said that there is
no obligation of consideration to maintain a strategic distance from the danger of that sort of
damage.

References

AustLii. (1976). Hight Court of Australia. Caltex oil Pty Ltd v Dredge "
Willemstad", 2-9.
Parker, S. D. (2016). Business and Law in Australia. Law of Torts, 877.