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Historically, the idea of a duty of care was slow to develop. Rather an award of compensation was based on the idea of assumpsit , or the voluntary assumption of an obligation. Clearly, in the absence of an express or implied assumption of responsibility there could be no liability. By the early 19th century the law countenanced liability on the basis of negligent performance of a duty imposed by the law. The early discussion of negligence law consisted in listing these situations. The major breakthrough came with Donoghue v Stevenson in 1932 with the seminal speech by Lord Atkin,
"The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer's question, who is my neighbour? Receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be - persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being affected when I am directing my mind to the acts or omissions in question."
So the question is: who will be affected by the action? However, this is insufficient in itself as different people will have different levels of appreciation of their actions. One negligent driver may only consider the pedestrian on the sidewalk whereas another driver may realise that if they injure that pedestrian the family will be affected as well. Indeed they may even contemplate that accidentally killing a breadwinner will not only lead to suffering for the family but perhaps the repossession of the family home as they cannot maintain the mortgage payments. In order to prevent disparity between the cases, the House of Lords in Donoghue stipulated that the duty is to be judged by a "reasonable man". If the reasonable man would foresee a certain injury then a duty of care exists to exists to prevent that injury.
It is easy to foresee common occurrences but what about less common ones.
In Haley v London Electricity  AC 778, the House of Lords held that while a hammer put in front of a trench would be sufficient warning to a sighted individual, it was not enough in respect of the blind claimant. The court asked whether it was unusual for blind people to be using the pavement and concluded that it was not (1 in 500 people at the time was blind). Thus it was reasonably foreseeable that leaving an obstacle on the pavement may cause a blind person to fall.
However, it is important to note that reasonable foreseeability does not suffice for all types of damage. The courts have accepted that even where damage was foreseeable, policy concerns require that the duty of care be limited.
There is a distinction between loss consequent on property damage and pure economic loss. Pure economic loss would be buying a defective product/house. There is no damage to it, it simply doesn't work. The courts generally do not allow recovery for pure economic loss.
Hedley Byrne v Heller (1964) AC 465, concerned a negligent misstatement. The appellant was an advertising firm that asked the respondents to do a creditworthiness check on a client. They reported saying that the client was able to pay. The client then went into liquidation. The House of Lords said that the Claimant could recover for pure economic loss provided two criteria were satisfied:
An assumption of responsibility by the Defendant
Reasonable reliance by the Claimant.
However, this concerns a fairly simple two-party situation: maker of statement & recipient. How about the situation where the statement is passed from A to B, does the maker have a duty to B? This may be particularly problematic where the words are broadcast to a large audience i.e. the author of a book quotes a piece of financial advice given to them personally.
In Smith v Eric Bush; Harris v Wyre  1 AC 831, the purchaser of a house paid a fee to his bank (who were offering a mortgage) to have the house valued by a surveyor. The purpose of the report was so that the bank knew whether to lend the mortgage however it was passed on to the purchaser (though not in Harris, but the purchaser assumed that if the lending was going ahead the survey had been positive). The surveyor's report was negligent and the house was worth less. It was held that a duty of care did exist as the Defendant surveyors ought to have known that the Claimant would rely on the report without seeking independent advice.
In Caparo v Dickman Industries  2 AC 605, the House of Lords considered a situation involving economic loss to the Claimant. Caparo owned shares in a company and decided to make a takeover bid based on the company's accounts. However the auditors had been negligent in preparing the accounts and the company had in fact made a loss in the preceding year. Caparo sued on the basis that the auditors should have foreseen the possibility of a takeover or that shareholders would rely on the document to make investment decisions. Caparo lost on the basis that the purpose of the document was not to be a basis for investment, though the purpose was to allow shareholders to hold the company directors to account for poor profits. As a matter of policy, the House held that criteria beyond the simple foreseeability test were required.
It laid down a tri-partite test:
Fairness, justice and reasonableness in applying a duty of care.
It is important to note that this tri-partite test does not just apply to economic loss but to all simple cases of negligence as well. However, embarking on a consideration of proximity and fairness, justice, reasonableness will be pointless in the vast majority of traditional cases as they will be taken as a given. For example, in most cases, the fact that injury was foreseeable means that there was proximity and that it is fair, just and reasonable.
Proximity - in Caparo there was insufficient proximity between the auditors and Caparo. This is because Caparo did not fall within the reason for producing the report. The report was produced to allow shareholders to hold the company to account and not to inform investment decisions. Arguably, however, using the reasoning in Hedley Byrne, the auditors should have realised that people would use the document for investment decisions. However, this is where the fair, just and reasonable requirement was used to prevent floodgates.
Fair, just and reasonable - This is a policy consideration which is applied in an ad hoc manner as and when needed. In Marc Rich , the defendant was negligent in allowing a ship to leave port even though it was not seaworthy. The vessel sank. Though the damage in question was property damage, the House of Lords held that a duty of care did not exist as the relationship between the shippers and cargo owners was already governed the internal Hague Convention. The House held that to impose a duty of care would upset the apportionment of responsibility between the parties as laid down in that legislation. Similarly, in Hill v Chief Constable of West Yorkshire  AC 53, a claim was brought by the families of victims of the Yorkshire ripper against the police on the basis that they had failed to apprehend the attacker sooner. The House refused to impose a duty of care on the basis that this would result in defensive police work. Police investigations inevitably involve a number of decisions which require discretion and to allowing the police to be open to liability in respect of these decisions would often be unfair and would divert resources from fighting crime. Lord Keith added: "Closed investigations would require to be re-opened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted." It would not be fair to judge well-meaning police using hindsight.
An important reason for saying that a duty of care is not fair, just and reasonable is because of a risk of floodgates (the risk of over-burdening the Defendant or Defendants in the same position). This is usually where a large number of claims arise out of a single incident. In such cases the penalty paid by the Defendant would be wildly disproportionate to the negligent act they committed. In Caparo, if the auditors had had a duty of care which extended beyond the purpose of the document, there would have been a indeterminate number of claims which could potentially have been brought (e.g. if the company's profits had gone up an individual may have brought a claim claiming that they would have made a profit had they bought company shares, which they did not do because of that report.)
As a matter of policy, the courts have restricted the duty of care in cases where the injury suffered is psychiatric in nature. Cases of psychiatric injury, though viewed sceptically for many years, have now been accepted into the law of negligence though it is necessary that the condition is a recognisable psychiatric condition, as opposed to ordinary stress and anxiety after witnessing something traumatic. . These cases may be branched into two-party cases (where the Claimant is traumatised by a direct action) and three-party cases, such as this where the Claimant witnesses the injury to another person caused by the defendant. Due to the risk of floodgates in the latter case of so-called 'secondary victims', a number of additional proximity requirements apply, known as the proximities of relationship, perception and time and space.
Proximity of relationship - the Claimant must be able to establish "a close tie of love and affection" with the person who was injured. This will irrebutably be the case in relationships such as parent-child and husband-wife, though not siblings as the quality of relationship was said in Alcock to differ greatly. In these cases the Claimant must prove this relationship: an endeavour which Weir has called "very messy in practice" and causing "perplexity to advisors and embarrassment to litigants".
Proximity in Time and Space - the Claimant need not be at the scene of the accident but the trauma must occur within a reasonable period after. In Galli-Atkinson v Seghal the Claimant went looking for her daughter and found a road cordoned off by police. She was then told her daughter had been killed by a car. She went to the mortuary and saw her daughter's disfigured body; this series of events was sufficiently linked in time and space to allow her to recover compensation.
Omissions and Liability for Third Parties
As a rule, there is no liability for omissions. A good way to visualise the distinction between acts and omissions is to ask whether the Defendant makes the situation worse or simply fails to make it better; the latter being an omission. However the distinction is not always clear cut, such as where the Defendant omits to put their foot on the brake of a car. The cases tend to fall into a number of general categories:
The Defendant's creation of a source of danger (even blamelessly)
The defendant's undertaking of responsibility for the Claimant
The Defendant's occupation of a position of responsibility (e.g. parent, employer, owner of land).
In Barrett v ministry of Defence  1 WLR 1217, a sailor got extremely drunk with colleagues on a naval base. He was found unconscious and taken by stretcher to his room where he was put in bed to sleep it off. No-one stayed with him and he later choked on his own vomit. The court found the Defendant liable on the basis that, when taken to his room, there was an assumption of responsibility and by failing to stay with him the duty of care was breached.
Liability for Third Parties
In cases involving liability for the actions of third parties, the allegation is sometimes based on an omission i.e. a failure to control the third party. However, other times the claim is that the Defendant provided the opportunity for the third party to injure the Claimant. The general rule is that there is no liability on the Defendant since the deliberate actions of the third party constitute an intervening act which break the chain of causation between the Defendant and the damage.
Two criteria seem to emerge from the cases. These criteria are not completely distinct but overlap:
That there is some relationship between the parties
That the damage is more than foreseeable, it is very foreseeable or even natural.
In Carmarthenshire County Council v Lewis  AC 549, a teacher at a nursery maintained by the appellants left a four year old boy unattended for 10 minutes. The boy wandered out into the road causing a driver to swerve and hit a lamp post and die. The court held that the appellants had been negligent and that this negligence had foreseeably caused the accident. The next question was whether they had a duty to motorists involved in the accident. The House of Lords held that the appellants did owe a duty of care to motorists and seemed to use a foreseeability test. An alternative rationale for the case is that the appellants assumed responsibility to motorists on a nearby road to prevent the child from obstructing traffic.
Similarly, in Hill v Chief Constable of West Yorkshire  AC 53, the House of Lords considered whether individual members of the police force owed a duty of care to the families of the Yorkshire Ripper murder victims. In holding that they don't the court noted that the victim, Miss Hill, was one of a vast number of females within a certain age who seemed to be the targets of the murderer. As such, there was no indication that she may be the victim, and thus no relationship between her and the police arose.
In Home Office v Dorset Yacht  AC 1004, a group of borstal trainees (inmates of a youth prison) were working under supervision. Seven of the inmates escaped and ended up driving a yacht into the Claimant's yacht. The Claimant sued the Home Office who is in charge of borstal officers. It was held that the officers' failure to prevent the escape was negligent and that a duty of care was owed to yacht owners nearby as it was very foreseeable/probable that the escapees may want to use a yacht to escape. The standard of foreseeability is higher than in traditional negligence cases, indeed Lord Reid said that the consequence must be "natural and probable, as distinct from merely foreseeable."