Proximity

Insight | February 2017

Proximity
Image: ‘Two Houses’ by Beata Dagiel

When we discuss proximity in law, there is frequently divided opinion as to (i) just what is meant, and (ii) in what context such a term can be properly applied. By definition, tort cases almost always rely upon proximity when establishing the claimant-defendant relationship, the relative distance between the two parties, and finally any subsequent obligatory considerations shared. Though for the sake of clarity, let us begin first with the Oxford Dictionary definition of proximity:

Noun [mass noun] nearness in space, time or relationship

Origin: Late 15th century from the French ‘proximité and Latin proximatas, proximus (meaning nearest).

While this explanation appears relatively straightforward, the complexities of human interaction often magnify the context of its use, insomuch as subjective opinion will almost always complicate matters, and leave final judgments in degrees of contention. This is largely due to a collective inability to agree precisely where proximity fits, and how it connects with other strands of legal principle.

Early illustrative proof of the need for exactness would undoubtedly be the speech given by Lord Pearce in Hedley Byrne Co Ltd v Heller and Partners which reads:

“[P]roximity will not be established unless at least the following conditions are satisfied….the plaintiff must be (i) the person directly intended by the maker of the statement to act upon the statement (ii) in a specific transaction of which the maker knows and (iii) for the purpose for which the statement is made. Exceptionally conditions (i) and (iii) may be relaxed provided the plaintiff is a person of whose actual existence (if not name) the maker knows, to whom he knows the statement will be communicated, and who it is likely with a high degree of certainty will act upon the statement in a specific transaction of which the maker knows.”

Or the even earlier words of Lord Atkin’s ‘neighbour’ speech in Donoghue v Stevenson:

“[S]uch close and direct relations that that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act.”

Or, an even simpler definition would be that:

“The claimant must be in an established relationship with the defendant and able to prove that any existing duty of care applied to them, whether through action, inaction or words”

Whichever phrase suits best, the typical contexts for proximity can range from customer and seller, through to diner and chef. In fact, the list of possible scenarios could quickly prove lengthy, yet despite changes in issue, the essence of proximity remains undiluted.

However, the general context of proximity deviated when through the course of accident and tragedy, the witnesses to those sudden and unforeseen events began to claim that the distress and trauma of such emotionally crippling scenes commanded financial assistance from the courts through damages. In those instances, the fluid definition of proximity was echoed  by Lord Wilberforce in McLoughlin v O’Brian, who said:

“Where the relationship between the person killed or physically injured and the person who suffers nervous shock is close and intimate, not only is there the requisite proximity in that respect, but it is readily defensible on grounds of policy to allow recovery.”

Taken further still, the emergence of ‘secondary’ nervous shock forced the principle of proximity into new territory, this time allowing those indirectly receiving terrible news to seek a claim for award under the umbrella of proximation, albeit subject to specific criteria, as defined by Lord  Oliver in Alcock v Chief Constable of South Yorkshire Police, who remarked:

“What remains in issue is whether the defendant owed any duty in tort to the plaintiffs to avoid causing the type of injury which each plaintiff complains. In essence this involves answering the twin questions of (a) whether injury of this sort to each particular plaintiff was a foreseeable consequence of the acts or omissions constituting the breach of duty to the primary victim and (b) whether there existed between the defendant and each plaintiff that degree of directness or proximity necessary to establish liability.”

Here, we see a variance in application of the principle of proximity, and one that demonstrated a generosity of scope over that regulated within everyday examples of arms-length dealings. Whether this broadening stemmed from the degree of harm, or was simply the choice of the courts to extend empathy toward genuine loss, is not easily traceable, but there are now notable differences.

Contrastingly, in the United States, the ‘dangerous proximity test’ is one used to determine criminal liability at federal and state levels. The two key principles being (i) that the defendant was dangerously close to completing the crime, or (ii) so close as to a result that the danger was great. The test itself, was first laid down in 1901, and later adopted by a Judge Learned Hand and read:

“(P)reparation is not an attempt. But some preparations may amount to an attempt. It is a question of degree. If the preparation comes very near to the accomplishment of the act, the intent to compete it renders the crime so probable that the act will be a misdemeanour, although there is still a locus poenitentiae, in the need of a further exertion of the will to complete the crime.”

While under the Turkish laws of contract, the ‘principle of proximity’ comes into effect where non-specification of parties applicable laws during cross-border transactions leaves the courts with the option to default to the nearest jurisdiction, with the effect of establishing implied and express contractual terms, as was explained by Dr. Gülin Güngor in 2008.

So again and as before, proximity is regularly used to help establish liability, reduce conflict and this time bring levity to matters that might otherwise become bogged down in their own rhetoric. With diverse applications of this flexible principle proving it an inarguable necessity, it concludes that the footnote of this article is really one that suggests proximity is far from a fair weather friend to law and jurisprudence; and that perhaps it deserves to play a greater role in resolving more disputes than is currently afforded access to?

Stovin v Wise (1996)

English Tort Law

Stovin v Wise
Image: ‘Driving Around Coorg’ by Prashant Prabhu

This appeal case discusses the actions (or inactions) of public bodies, when operating under the guidance of statute and a prerequisite (albeit narrow) duty of care towards the general public.

After a number of road traffic accidents had occurred in a well-known intersection, the focus of  complaint by drivers at the time, centred around a small patch of land on one of the number of corners, which obscured vision and thereby contributed to the now growing number of injurious collisions.

When consideration was taken by the highways agency operating under the local authority to try and remove the affected area, the decision was taken to write to the land owners British Rail, and request that either the State body take steps to remove the blockage, or that permission might be granted for the local authority themselves to carry out the work, at cost to the State under s.79 of the Highways Act 1980.

Under the power of such statute, the local authority were at their own discretion, able remove the land at cost to themselves, in order to circumvent any undue objections, and while acting in the interest of public safety. Unfortunately, while the local authority did write to the corresponding public body, and a meeting was held to examine how best to proceed, the letter was ignored by the recipients, and the sender was later moved to another council department, without explaining to anyone that the matter was under review, and that further action was needed.

When the claim for negligence and breach of statutory duty was initiated by the victim of the accident, damages were awarded, and shared liability placed upon the driver and local authority (in varying degrees), after which an appeal was made by the defendant public body.

During the hearing, judge Lord Hoffman’s view of operational policy translated that:

“The distinction between policy and operations is an inadequate tool with which to discover whether it is appropriate to impose a duty of care or not.”

In other words, just because the highways agency and local authority were obligated to provide safe roads and road surfaces to the general public, private land that prevented an unobscured field of view did not render those same bodies liable for a duty of care, even if they had decided to take steps outside of prescribed statute to remove the obstruction at cost to themselves.

This case ties strongly with the constitutional concept of ‘justiciability’, which is to say that because public bodies are created by statute through the democratic process, the court recognises the limitations of their capabilities, and subsequently hesitates to challenge them.

Caparo Industries plc v Dickman (1989)

English Tort Law

Caparo Industries plc v Dickman
‘Daydreaming Bookkeeper’ by Norman Rockwell

When predatory investors choose to act upon the advice or information given outside the remit of those assigned to prescribe it, they do so under risk of their own suffering, and within the rules of industry and commerce. On this occasion, the cross-appellants argued that their reliance upon the annual statement provided by a company’s accountants, led to increased investment, despite the fact that the statement turned out to be inaccurate.

When the appellants, a public limited company, fell victim to poor financial trading, their stock market share values began dropping, and were in turn bought up in considerable number by the cross-appellants. While buying as outside investors, they secured an almost thirty percent share of the failing company, after which they became registered investors, and acted quickly to gain a majority controlling hold of the firm. These additional purchases were made after learning from the annual shareholder statement, that the company was due a healthy pre-tax profit. However, after the purchases had been made, it became apparent that the accounts had been poorly prepared, and showed instead a considerable loss of profit.

During the appeal, it was claimed that the accountants owed a duty of care to the now primary shareholders of the company when drafting the legally required statement, and that such care rendered them liable for the losses inherited by the investors. In this instance, a duty of care was determinable by the relationship between (or proximity to) both accountants and investors. Citing Hedley Byrne & Co Ltd v Heller and Partners, the distinction was made between expert advice (albeit subjective) from a banker, and an annual submission from a firm of accountants; and despite an implied culpability on the part of the accountants, an error was made upon which a negative investment took place.

What distinguished the two activities, was that the former was expressly undertaken to prevent loss upon lending of monies, whereas at no point did the accountants have knowledge of a planned takeover bid, despite suggestions made by the investors during the hearing. This clear divide presented the notion that duty of care is always applicable, as the two events were less similar than first appeared, however the accountants were only held liable for the losses made as shareholders, and not those of outside investors.

In conclusion, the Court held that if it were reasonable to place conscious liability upon all acts of certain parties, it would be impossible to distinguish responsibility from neglect, and in this instance there was clear frustration at an unforeseen outcome, but one must always be mindful that the very nature of financial investment is itself, riddled and prone to loss.