The doctrine of remoteness of damage in tort law determines whether a defendant should be held liable for all the consequences flowing from their negligent act, or only for those consequences that are not too remote. The statement posits that 'foreseeability' is the correct test for remoteness, rather than 'proximity'.

Historically, the 'directness' test was prevalent, as established in the English case of Re Polemis & Furness, Withy & Co Ltd (1921). In this case, stevedores negligently dropped a plank into the hold of a ship, causing a spark that ignited petrol vapour, leading to the destruction of the ship. The court held that the defendants were liable for all direct consequences of their negligent act, regardless of whether those consequences were foreseeable. The directness test proved to be too broad, often leading to disproportionate liability.

However, the 'foreseeability' test gained prominence and largely replaced the directness test with the landmark decision in Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound No. 1) (1961). In this case, furnace oil spilled from the defendant's ship into Sydney Harbour, spreading to the plaintiff's wharf. The oil ignited due to molten metal falling from the wharf, causing extensive damage. The Privy Council held that the defendants were not liable because the damage by fire was not a foreseeable consequence of spilling the oil. The court established that a defendant is only liable for damage of a kind that was reasonably foreseeable at the time of the breach of duty.

The rationale behind the foreseeability test is to limit liability to consequences that a reasonable person would have anticipated, thereby ensuring a fairer and more practical approach to compensation. It aligns with the concept of negligence itself, which is based on the foreseeability of harm. If a particular type of harm is not foreseeable, it is considered too remote for the defendant to be held responsible.

'Proximity', on the other hand, is a concept primarily used in determining the existence of a 'duty of care' in negligence, as articulated in Donoghue v Stevenson (1932) and further developed in Caparo Industries plc v Dickman (1990). Proximity refers to the closeness of the relationship between the claimant and the defendant, which can be physical, circumstantial, or causal. While proximity is crucial for establishing whether a duty of care exists, it is not the appropriate test for determining the remoteness of damage once a breach of that duty has occurred and damage has resulted. The question of remoteness arises after a duty, breach, and causation have been established, asking whether the type of damage suffered was a foreseeable consequence of the breach.

Therefore, the statement correctly asserts that foreseeability is the appropriate test for remoteness of damage, providing a more just and logical limit to liability in tort law, as demonstrated by the shift from Re Polemis to The Wagon Mound (No. 1).