This paper discusses the histrionics and evolution of nervous shock across multiple jurisdictions.
When we discuss legal proximity 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 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.”Hedley Byrne Co Ltd v Heller and Partners
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.”Donoghue v Stevenson
While a 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”Neil Egan-Ronayne (Legal Consultant)
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 essentially undiluted.
That said, 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.”McLoughlin v O’Brien
Taken further, the emergence of ‘secondary’ nervous shock forced the principle of proximity into new territory by 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.”Alcock v Chief Constable of South Yorkshire Police
Here, we see a variance in application of the principle of proximity and one demonstrating a generosity of scope over that regulated within everyday examples of arms-length dealings; and 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, however 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, with 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.”Judge Learned Hand
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 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 this flexible principle proving it an inarguable necessity, it leaves one pondering if proximity is far from a fair weather friend to law and jurisprudence, but rather an overlooked principle deserving to play a broader role in future legal disputes?
As with Topp v London County Bus (South West) Ltd, the principle of proximity proves the distinguishing criteria, however this earlier case pushed further the scope of award for damages, with an emerging appreciation for psychiatric nervous shock or trauma.
When the husband and father of four young children is involved in a collision with a commercial articulated vehicle (that had itself just collided with another articulated vehicle), the resulting injuries leave the youngest of the girls dead within minutes, and the father seriously injured, while lapsing in and out of consciousness. After being notified of the crash almost two hours later, his wife (and mother to the children) is escorted to the nearest hospital, where she is confronted with the aftermath of the accident, and left in a state of deep shock and profound distress; the effects of which were to be felt for many months afterwards.
Having chosen to pursue a tortious claim through the owners of the commercial vehicles, the original judges found that proximity and foreseeability precluded eligibility for damages, and so while admission of the daughter’s manslaughter provided financial remedy, the anguish and emotional turmoil of the mother did not.
However, upon appeal, the scope of award for incidents such as this was, for the first time, given consideration enough to result in a new precedent in English tort law, and significant allowances for the impact of psychological trauma upon secondary victims previously considered too remote for inclusion.
Duty of care under accusations of negligence, particularly within the carelessness of speech, forms the basis of a claim between a corporate entity and a merchant bank. On this occasion, the appellant advertising agency had taken steps to ascertain the financial credibility of a new client; which while careless in its execution, left them at a considerable loss when the information proved worthless.
In 1957, the appellants received instruction from a new client requiring a number of advertisements, which was later followed by a request for a structured advertising programme with estimated costs of around £100,000 p.a. Given the short-term trading history between them, the appellants asked their bank to consult their client’s bank so as to establish their financial standing.
The reference, which was by no means official, read that their client was ‘a respectably constituted company whose trading connection is expanding speedily’ and that ‘We consider the company to be quite good for its engagements’. Upon this positive note, the appellants proceeded to organise scheduled television and newspaper slots at cost to themselves, on the strength of the bank’s statement.
Several months later, the appellants concerns for the financial integrity of their client grew to the point where a second reference was requested. This time, an oral banker’s report was provided for by the respondents, that while detailed enough to warrant a sound response, was issued under the express notice that it was given with no responsibility for the outcome of the enquiry. Within this report was knowledge that the client was a subsidiary of a parent corporation in the throes of liquidation, but the bank similarly emphasised that they had confidence in the director and his integrity as a businessman.
With written confirmation of the report sent by the bank to the appellants, the terms expressed were relied upon when in light of their client’s liquidation, the appellants suffered losses of around £17,000. It was this somewhat unsurprising event that triggered a claim for damages, based upon negligence by the respondents when offering statements that were contributory to the appellant’s extension of credit.
In the first instance, the court awarded in favour of the respondents, and when taken to the Court of Appeal, the outcome remained unchanged on grounds that such principles were unreasonably applied to the unrehearsed statements of a banker, and not an official credit report. Presented to the House of Lords, the principles of negligence peripheral to any contract, were examined for exactness, whereupon the dicta of Sir Roundell Palmer in Peek v Gurney initially proposed that:
“[I]n order that a person may avail himself of relief founded on it he must show that there was such a proximate relation between himself and the person making the representation as to bring them virtually into the position of parties contracting with each other…”Peek v Gurney
There was also mention of Candler v Crane, Christmas & Co, in which a proposed corporate takeover involved the presentation of company accounts to the prospective buyers, accounts that by all intentions had been carelessly prepared, and on which the investors had relied when purchasing the firm. While in Robinson v National Bank of Scotland Ltd, a guarantor was left facing huge debts when it was argued he had been falsely induced into signing by the lenders, prior to the borrowers lapsing into bankruptcy. In this matter, Haldane LJ commented:
“[W]hen a mere inquiry is made by one banker of another, who stands in no special relation to him, then, in the absence of special circumstances from which a contract to be careful can be inferred, I think there is no duty excepting the duty of common honesty…”Robinson v National Bank of Scotland Ltd
While in Shiells v Blackburne, Loughborough LJ stressed that:
“[I]f a man gratuitously undertakes to do a thing to the best of his skill, where his situation or profession is such as to imply skill, an omission of that skill is imputable to him as gross negligence.”Shiells v Blackburne
In Cann v Willson, the claimants sought the professional opinion of valuers when borrowing against the worth of their home; and having provided what was suggested as a moderate valuation, the claimant defaulted on the required payments, whereupon the sale of the property failed to cover the debt owed. On this occasion, the court awarded in favour of the claimant on grounds of negligence, want of skill, breach of duty and misrepresentation.
In Nocton v Lord Ashburton, Shaw LJ propagated the principle that:
“[O]nce the relations of parties have been ascertained to be those in which a duty is laid upon one person of giving information or advice to another upon which that other is entitled to rely as the basis of a transaction, responsibility for error amounting to misrepresentation in any statement made will attach to the adviser or informer, although the information and advice have been given not fraudulently but in good faith.”Nocton v Lord Ashburton
This translated to a recognition by the House that while there was no question that a duty of honesty was inherent to the words of the bankers, there was no evidence to suggest fraudulent or misrepresentative intention, particularly when at the time the advice or report was issued, the respondents had expressed their abject unwillingness to be held to account for the actions of the company discussed. This left the appellants with no substance upon which to claim damages and so the appeal was uniformly dismissed, while the House held that:
“[I]f someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference.”
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.
In this case, the principle of negligence beyond the strictness of contractual duty becomes pivotal to a claim for damages, when a consumer becomes victim to sickness through the consumption of a contaminated beverage.
In 1928, two friends entered a café in central Scotland and proceeded to order some ice-cream and ginger beer. Unknown to the appellant, one of the bottles provided contained the decomposed remains of a snail, which when poured onto the ice-cream, left the appellant in a state of shock and later subjected to gastro-enteritis, having partially drunk the ginger beer beforehand.
This resulted in litigation on grounds concerning (i) the manufacturer’s inability to safely store the bottles prior to their filling, (ii) a lack of care when considering the potential for those drinks to be consumed by unwitting customers, (iii) failure to implement a suitable quality control/inspection system prior to distribution, and (iv) failure to use clear, as opposed to dark opaque bottles, to avoid such events.
Although the common law position was comparable between English and Scottish law, the claim was unique in that it circumvented the contractual obligations often found in negligence claims. In the first instance, the court had allowed the claim, while the Second Divisional court dismissed it by a majority, before the appellant sought relief in the House of Lords.
Here, a number of recent cases were explored to ascertain the extent of liability in matters where there are no contractual obligations. Erring on the side of restraint as to how far a claim such as this might extend, comments mades by Parke B in Longmeid v Holliday suggested that:
“It would be going much too far to say, that so much care is required in the ordinary intercourse of life between one individual and another, that, if a machine not in its nature dangerous, . . . . but which might become so by a latent defect entirely unknown, although discoverable by the exercise of ordinary care, should be lent or given by one person, even by the person who manufactured it, to another, the former should be answerable to the latter for a subsequent damage accruing by the use of it.”Longmeid v Holliday
However, in George v Skivington the sale of harmful shampoo, which had been used not by the purchaser but a third party, had allowed claim for negligence caused upon a duty of care by the manufacturer when mixing the ingredients; while in Francis v Cockerell, a racecourse spectator injured through the collapse of a viewing stand, was able to recover not from the builder himself, but the agent of the venue.
On this occasion, the appellant relied upon the words of Lord Brett MR in Heaven v Pender, who clarified that:
“[W]henever one person is by circumstances placed in such a position with regard to another that every one of ordinary sense who did think would at once recognize that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger…”Heaven v Pender
Therefore, it was argued that regardless of contractual elements, there was by virtue of reasonableness and decency, an inherent encumbrance upon the respondent manufacturer to both evaluate and consider the position of the consumer when preparing and sealing his drinks; and that anything less than that consideration was tantamount to fundamental neglect and tortious liability.
Contrastingly, in Pender Esher LJ had also argued that:
“The question of liability for negligence cannot arise at all until it is established that the man who has been negligent owed some duty to the person who seeks to make him liable for his negligence. What duty is there when there is no relation between the parties by contract? A man is entitled to be as negligent as he pleases towards the whole world if he owes no duty to them.”George v Skivington
While in Bates v Batey & Co Ltd, the manufacturers of ginger beer were not deemed liable for an injury caused to an unsuspecting consumer from a defect unknown, and yet discoverable through reasonable investigation.
Having evaluated the reluctance of the courts to extend in some instances, while offering generous judgment in others, it was (albeit by a narrow margin) decided that despite no contractual duties to envisage the effects of a contaminated product upon an innocent purchaser, there was an almost ethical prerequisite to remain diligent in the preparation and storage of such substances.
And so, despite the Second Division of the Court of Session in Scotland’s refusal to acknowledge the appellant’s rights, the House reversed the finding and restored the order of the first judge.