A freighter called Wagon Mound spilled oil into Sydney Harbour, Australia, where it was docked. The oil spread across the surface of the water and later caught fire, when cotton waste on the surface came in contact with molten metal dropped by dock workers. The resulting fire damaged the wharf and two ships. In a separate action, the wharf operator sued Overseas Tankship Ltd. (Overseas) (defendant) under a negligence theory. See Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co., Ltd.,  A.C. 388 (P.C. Aust.) [Wagon Mound No. 1]. On appeal, the Privy Council in that case held that imposing negligence liability for a careless act was improper where damages were not reasonably foreseeable. The present action was brought by Miller Steamship Co. (Miller) (plaintiff). Miller owned the ships that were badly damaged in the fire. Miller sued Overseas, the Wagon Mound’s owner, under theories of negligence and nuisance. The trial court found in favor of Overseas, concluding that the likelihood of the oil igniting was so slight that the damage to Miller’s ships was not reasonably foreseeable. The Supreme Court of New South Wales affirmed. Miller appealed to the Privy Council.