This section contains the nature of the case and procedural background.

Morts Dock (P) operated a wharf for shipbuilding and repair in Sydney, Australia. On the day in question, the ship named Corrimel was moored along the wharf and was being refitted. Her masts were being welded as it was lying on the wharf. Respondents employees were doing the work. The freighter Wagon Mound, over whom appellants were charterers by demise, was moored about 600 feet away. It carelessly discharged a large quantity of furnace oil which spread across the harbor and washed against P's wharf. The damage was minor, and no claim was made. Appellants made no attempt to disperse the oil. Respondent’s work manager became aware of the situation and immediately ordered stopped welding until further notice. After further inquiry from the manager of an oil company, led him to believe that it was safe to carry on the welding as the oil was not flammable. Even so, he still directed safety to prevent inflammable material from falling into the oil. The oil was ignited when cotton waste floating on its surface was set afire by molten metal dropped from the wharf by respondent’s workmen. The fire seriously damaged P's wharf and two ships alongside. P sued D for damages. The trial court found that D could not have reasonably known that the oil would catch fire under such circumstances. The court also held that the spilled oil also congealed on slipways and that even though the damage was slight, it did establish some damage. That damage was a direct result of the spillage. P was awarded judgment and D appealed. The Supreme Court of New South Wales affirmed. D appealed to the Privy Council.

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