What happened
Brian Kenneth Shirt, an inexperienced water-skier, was using a circuit on the shallow Tuggerah Lakes in January 1967 that was habitually followed by other skiers. He fell while travelling at speed, struck his head on the lake bed in water between three feet six inches and four feet deep, and suffered quadriplegic paralysis. Shirt claimed that his decision to ski in that location was induced by his interpretation of a wooden sign erected by Wyong Shire Council employees after the Council had dredged a channel adjacent to a jetty used by The Entrance Aquatic Club. The sign bore the words "deep water" in red paint on a white background. Shirt understood the sign, which faced the jetty and was positioned at the outer edge of the dredged channel, to mean that the water beyond and beside the sign was deep and therefore safe. In fact the signs had been placed to warn swimmers and children near the jetty of the sudden drop into the deepened channel; they were never intended to address water-skiing.
The Council had undertaken the dredging between November 1965 and May 1966 at the request of the Club, which had previously maintained a smaller channel. Upon completion an engineer employed by the Council, Mr McPhan, erected four such signs—one near the Saltwater Creek outlet and three along the new channel. The lake itself was saucer-shaped and very shallow overall, with depths increasing only gradually toward the centre. The features of the lake were obvious to casual observers. At trial the jury accepted Shirt's account of his reliance on the sign and returned a verdict against the Council. The trial judge directed a verdict in favour of representatives of the Club. The NSW Court of Appeal (Glass and Samuels JJ.A., Reynolds J.A. dissenting) upheld the verdict against the Council but ordered a new trial on the Council's cross-claim against the Club. The Council appealed to the High Court, contending that no breach of its conceded duty of care had been established because the risk was not reasonably foreseeable. Two Club representatives sought special leave to appeal the Court of Appeal's order on the cross-claim.
The High Court (Stephen, Mason, Murphy and Aickin JJ., Wilson J. dissenting) dismissed the Council's appeal, holding that it had been open to the jury to find that a reasonable person in McPhan's position would have foreseen a real risk that the ambiguous sign could mislead an inexperienced skier into skiing in dangerously shallow water and suffering injury. The application for special leave by the Club representatives was refused.
Why the court decided this way
Mason J. (with whom Stephen, Murphy and Aickin JJ. agreed) began from the conceded existence of a duty of care to persons water-skiing in the relevant part of the lake. The live question was therefore breach. His Honour reviewed the authorities on foreseeability, particularly The Wagon Mound (No 2), Bolton v Stone, Koufos v C Czarnikow Ltd and the differing Australian views expressed by Barwick CJ in Caterson and by Windeyer and Walsh JJ in Mount Isa Mines Ltd v Pusey. Mason J. concluded that the Privy Council's unanimous decision on appeal from New South Wales in The Wagon Mound (No 2) correctly stated the law and should be followed notwithstanding earlier Australian observations favouring a narrower "not unlikely to occur" formulation.
The reasoning proceeds in two distinct stages. First, a tribunal must ask whether a reasonable person in the defendant's position would have foreseen that the conduct carried a risk of injury to the plaintiff or a class including him. A risk is foreseeable if it is not far-fetched or fanciful; remoteness or extreme unlikelihood does not remove it from the category of real risks. Mason J. emphasised that foreseeability and probability are distinct concepts. The risk created by the ambiguous placement and wording of the sign satisfied this threshold: a reasonable person could conclude that the sign might be read as indicating deep water beyond it, that an inexperienced skier might be induced to ski there believing it safe, and that skiing in three feet six inches of water carried the possibility of a high-speed fall and impact with the lake bed causing serious injury.
Only after affirmatively answering the foreseeability question does the second stage arise: what would a reasonable person do in response? That inquiry requires balancing the magnitude of the risk and its degree of probability against the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities the defendant may have. Mason J. noted that the burden of erecting a clearer sign, repositioning it or adding supplementary warnings was not shown to involve considerable expense or disadvantage. In those circumstances the jury was entitled to conclude that a reasonable person would have taken steps to eliminate or reduce the risk. Because the appeal was not brought on the ground that the verdict was against the weight of evidence, it was sufficient that the finding of breach was one open on the evidence even if minds might differ.
Murphy J. wrote separately to reject any "not unlikely to happen" limitation, observing that most traffic and industrial accidents arise from circumstances where the chance of harm is slight and that adopting Barwick CJ's formulation in Caterson would drastically shrink the scope of negligence liability. Wilson J., in dissent, took a narrower view of what constituted a "real risk" that would occur to the mind of a reasonable person in McPhan's position in May 1966. His Honour considered the signs were unambiguously directed at swimmers near the jetty, bore no relation to the established water-skiing circuit, and that the possibility of misconstruction by a skier was not a real risk but a far-fetched speculation. The majority's acceptance that the jury could find otherwise determined the outcome.
Before and after state of the law
Before Wyong Shire Council v Shirt the law on foreseeability in the breach context was unsettled in Australia. The Privy Council in The Wagon Mound (No 2) had rejected the notion that a risk, though foreseeable, could be disregarded merely because it was remote if a reasonable person would not brush it aside as far-fetched. Their Lordships characterised the risk in Bolton v Stone as "real" even though the chance of a cricket ball striking a person outside the ground was infinitesimal. Lord Reid's speech was open to differing readings; a single sentence had been seized upon in the NSW Court of Appeal as suggesting that only risks "likely to happen" or "not unlikely to happen" were relevant. Barwick CJ in Caterson had expressed preference for the "not unlikely to occur" test, while Dixon CJ and Walsh J at first instance in The Wagon Mound (No 2) appeared to lean toward a narrower conception. This Court in Chapman v Hearse had acknowledged the importance of the point but refrained from deciding it. Windeyer and Walsh JJ in Mount Isa Mines Ltd v Pusey had applied the Wagon Mound (No 2) approach.
Shirt resolved the Australian debate in favour of the broader Privy Council formulation. After Shirt a risk is foreseeable for breach purposes if it would occur to the mind of a reasonable person and would not be brushed aside as far-fetched or fanciful. Probability remains relevant only at the second stage when deciding what response is reasonable. The judgment thereby clarified that the law does not require the plaintiff to prove the accident was "likely" or even "not unlikely"; it is enough that the risk is real. The explicit balancing exercise—magnitude, probability, burden of precautions and other responsibilities—supplied a structured framework that replaced vaguer appeals to "reasonableness" simpliciter. Mason J.'s two-stage inquiry became the authoritative statement of the calculus of negligence in this jurisdiction. Murphy J.'s additional observations reinforced that a stricter test would be inconsistent with the breadth of liability recognised in ordinary traffic and industrial cases.
Key passages with plain-English translation
Mason J.'s central passage (the origin of what is now universally called the Shirt test) reads:
"In deciding whether there has been a breach of the duty of care the tribunal of fact must first ask itself whether a reasonable man in the defendant's position would have foreseen that his conduct involved a risk of injury to the plaintiff or to a class of persons including the plaintiff. If the answer be in the affirmative, it is then for the tribunal of fact to determine what a reasonable man would do by way of response to the risk. The perception of the reasonable man's response calls for a consideration of the magnitude of the risk and the degree of the probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have. It is only when these matters are balanced out that the tribunal of fact can confidently assert what is the standard of response to be ascribed to the reasonable man placed in the defendant's position."
In plain English: negligence law works in two clear steps. Step one—is there a risk of harm that a sensible person in the defendant's shoes would have spotted? The risk does not have to be probable; it simply must not be ridiculous or imaginary. Step two—if the answer is yes, decide what a sensible person would actually do about it. That decision weighs four practical things: how bad the possible injury could be, how likely it is, how much trouble and money it would take to stop it, and what other duties the defendant has to juggle. Only after weighing those can a court say the defendant fell short.
A second key passage clarifies the first limb:
"A risk of injury which is remote in the sense that it is extremely unlikely to occur may nevertheless constitute a foreseeable risk. A risk which is not far-fetched or fanciful is real and therefore foreseeable. But, as we have seen, the existence of a foreseeable risk of injury does not in itself dispose of the question of breach of duty. The magnitude of the risk and its degree of probability remain to be considered with other relevant factors."
Plain English: Just because something is very unlikely does not mean you can ignore it. If a sensible person would still think "that could happen", the risk counts as foreseeable. But foreseeing the risk is only the beginning of the inquiry; you must then decide whether the sensible person would have done something about it, taking into account how serious it is, how likely, and how easy it would be to prevent.
Mason J.'s treatment of The Wagon Mound (No 2) is also critical. After quoting Lord Reid's statement that Bolton v Stone recognised it is justifiable to neglect a small real risk if a reasonable person would think it right to do so, Mason J. observed that their Lordships "positively rejected the view that a risk of injury which is remote is of necessity not a real risk and that it falls outside the concept of foreseeability". This passage grounds the rejection of any probabilistic floor below which risks automatically cease to be foreseeable.
What fact patterns trigger this precedent
Shirt is engaged whenever a court must decide whether a defendant who owes a duty of care has breached it by failing to respond to a risk of personal injury. The paradigm case is one in which the risk is low-probability but the potential harm is grave and the cost of avoidance is modest. Typical triggers include ambiguous or poorly placed warning signs, incomplete safety barriers, inadequate supervision of recreational activities, or failure to guard against misuse of premises or equipment by inexperienced users. The precedent is especially relevant where the defendant has created the hazard or undertaken works that alter the environment (as the Council did by dredging and erecting signs). It applies equally to public authorities and private defendants.
The two-stage structure is triggered as soon as the plaintiff identifies a specific risk that materialised. The first question—is the risk far-fetched or fanciful?—is usually answered generously; Shirt makes clear that "remote" or "extremely unlikely" risks still qualify. The real battleground is almost always the second stage: the calculus. Fact patterns in which the burden of precaution is high (great expense, operational difficulty, or conflict with other statutory duties) tend to favour the defendant. Conversely, where the precaution is cheap and simple (moving a sign a few metres, adding clarifying text, or installing a second warning), courts are more readily persuaded that a reasonable person would have acted. The precedent is not confined to water-skiing or lakes; it has been applied to scaffolding, scaffolding collapses, road signage, school excursions, industrial machinery and medical advice. Any situation in which a defendant argues that the accident was "improbable" or that "no one could have foreseen that exact sequence" engages Shirt's insistence that foreseeability is not coterminous with probability.
How later courts have treated it
Within the judgment itself the majority treated The Wagon Mound (No 2) as authoritative and chose to follow it in preference to the narrower observations of Barwick CJ in Caterson and the views earlier expressed by Dixon CJ and Walsh J. The Court gave great weight to the Privy Council's unanimous decision on appeal from New South Wales, noting that this Court in Chapman v Hearse had left the point open but that subsequent decisions by Windeyer and Walsh JJ in Mount Isa Mines Ltd v Pusey had already moved toward the Wagon Mound (No 2) understanding. Murphy J. went further, dismissing Bolton v Stone as influenced by English cricket policy and therefore not a safe guide in Australia. Wilson J.'s dissent, while endorsing the language of The Wagon Mound (No 2), read "real risk" more stringently and would have held that no such risk was foreseeable on the 1966 facts known to McPhan.
The majority's articulation has supplied the framework against which all subsequent Australian negligence cases measure breach. The judgment's explicit separation of the foreseeability inquiry from the probabilistic balancing exercise has been treated as settling the law in this jurisdiction. Courts have consistently cited the two-stage test and the four balancing factors without requiring the risk to meet any minimum threshold of likelihood. The decision has been regarded as endorsing a practical, fact-sensitive assessment rather than a rigid formula, precisely as Mason J. warned that words from one case must not become tyrants over the facts of another. The refusal of special leave on the cross-claim has equally been taken as confirming that procedural fairness precludes appellate courts from deciding cases on causes of action not litigated at trial.
Still-open questions
Although Shirt resolved the immediate controversy over the content of foreseeability, the judgment itself leaves certain matters unresolved. Mason J. noted that this Court in Chapman v Hearse had acknowledged the importance of the point but refrained from deciding it; the present decision therefore fills a gap rather than overruling prior authority. The precise boundary between a risk that is "far-fetched or fanciful" and one that is merely "remote" or "extremely unlikely" is not exhaustively defined and remains a matter of evaluative judgment on which minds may differ, as the division in the Court itself illustrates. Mason J. expressly recognised that the question whether a particular risk was foreseeable "is a question on which minds may well differ, as indeed they have done. It is not a question which a judge is necessarily better equipped to answer than a layman."
The relationship between the Shirt calculus and the standard of care owed by public authorities in the performance of statutory functions was not before the Court and is left untouched. Murphy J.'s broader policy critique of the "not unlikely" test and his dismissal of Bolton v Stone as policy-driven raise, but do not answer, the extent to which courts may have regard to underlying policy concerns when calibrating the content of the reasonable person's response. The judgment does not address how the calculus operates when the defendant's conflicting responsibilities arise from statute or when the plaintiff is engaged in a dangerous recreational activity with obvious inherent risks. Finally, the precise evidentiary threshold required to render a jury's finding of breach "open" on the evidence, as opposed to perverse, is left to case-by-case application. These questions have continued to occupy courts applying the Shirt framework, but the judgment itself provides only the foundational two-stage inquiry and the four balancing considerations.