(b) That's right, although, for a long time, following the precedent of Re Polemis & Furness, Withy & Co Ltd [1921] 3 KB 560, Australian courts applied the rule that a person was liable in law for all the direct consequences of their negligent conduct. Because only a new intervening cause would break a chain of causation, it often happened that a defendant was held liable for very far-reaching consequences that could not have been foreseen in advance.
The courts were uncomfortable about applying this strict approach, but felt obliged to follow Re Polemis. But when a new case came before the Privy Council, the Lords took the opportunity to change the rule.
In this case, the Privy Council held that Re Polemis was not good law, and that defendants should be held liable for the natural consequences of their negligent conduct only to the extent that those consequences were reasonably foreseeable. This decision thus places important limits on a defendant's liability, and makes the operation of the law of negligence much fairer.
Under civil liability legislation, the court is to consider 'whether or not and why responsibility for the harm should be imposed on the negligent party' (see for example, s 5D of the Civil Liability Act 2002 (NSW)). While this gives a court wide discretion on this issue it is likely that the courts will continue to follow the previous common law approach.