 This is Waylon Chow and welcome to negligence, torts, and professional liability, module 3B, Part B. In this part, we'll look at the rules to determine the existence of a duty of care, specifically, reasonable foreseeability, proximity, and policy. We'll focus on the question, am I obligated to you to act carefully? To answer that question, we need to look at three different things. First is reasonable foreseeability, second is proximity, and third is policy. If you remember way back in module 1.2, one of the sources of law in Canada is case law created by the courts. The negligence tort was essentially created by a court case which involved a Mrs. Donahue, a bottle, and a snail. Mrs. Donahue, here's a picture of an actress that portrayed Mrs. Donahue, or her full name was Mae Donahue, in a very insignificant movie on this case. Mae Donahue was a young woman who was married, and this was in the late 1920s in Scotland, and she had arranged to meet with a friend. The historical records are not clear as to who this friend is, but some people speculate it was a man that she was having an affair with. But anyhow, she did meet this friend at a cafe in Glasgow, Scotland called the Well Meadow Cafe. At this cafe, the friend ordered food and drink for the both of them. So the significant fact there is that the contract for the purchase of the food and drink was between the friend and the Well Meadow Cafe. Some of that drink was a bottle of ginger beer which was consumed by Mae Donahue. And after she had finished drinking the whole bottle of ginger beer, a snail poured out of the bottle. So this was a dead, disgusting decomposed snail that had been in the drink that she had just consumed. So she immediately, or at least soon after, felt very ill, and eventually she was admitted into a hospital at the Glasgow Royal Infirmary. And then sometime after she left hospital, she did get better. She sued the manufacturer of the ginger beer, which was a David Stevenson. The name of this case was Donahue and Stevenson. And the legal obstacle that Mae Donahue encountered when she started this case was that usually you needed a contractual or some other kind of special relationship with someone in order to be able to sue them. Now remember, the person who contracted to buy the drink was her friend. It was not Mae Donahue. Mae Donahue does not have a contractual relationship with the manufacturer, Mr. Stevenson. So this case eventually made its way up to the highest court in the UK, which is called the House of Lords. And at the House of Lords, Mae Donahue was successful. The judge created this principle called the neighbor principle, which essentially allowed her to sue and to claim liability for the injuries that she suffered from drinking the ginger beer. The judge that wrote the judgment was called Lord Atkin. And what he said was very important. So I will read it word for word here. He said, you must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbor. Who then in law is my neighbor? 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 so affected when I am directing my mind to the acts or omissions that are called in question. So essentially he was saying, even if you don't have a special relationship or contract with someone, if you can reasonably foresee that what you do or don't do would likely injure another person who we would call your neighbor, then you owe a duty of care to them. From the Donahue and Stevenson case, we get the principle of reasonable foreseeability. The question to be applied here is was it reasonably foreseeable that the plaintiff could be harmed by the defendant's carelessness? So the thing to keep in mind about this legal test is that it is what we call an objective test. In other words, the question or a more specific question we ask is what a reasonable person have known that its activities might harm the plaintiff. So this comes from the neighbor principle from Donahue and Stevenson. So this is an objective test meaning that we are imagining what a reasonable person would have known. It's not a subjective test in that we are not asking whether or not the defendant, the person involved, the person being sued, whether or not the defendant actually knew that their activities might harm the plaintiff. Let's have a look at this quick quiz question. Please pause this video at this time so that you may consider the question and also feel free to look at the previous slide. Callum may owe a duty of care to Emma if the answer is B. It was reasonably foreseeable that Callum's acts or omissions could harm Emma. So the key words in that answer were reasonably foreseeable. The other three choices were wrong. A. said Callum knew that his acts or omissions would harm Emma. What Callum actually knew is not relevant. C. Callum intended to harm Emma. Intention to harm is also not relevant and also D. Emma was not being careless. So that's not relevant in determining duty of care. That could be relevant in determining whether or not Emma is contributorily negligent, which we will talk about later on when we talk about defenses to negligence torts. The second requirement that is needed for a duty of care is proximity. Proximity is some kind of close and direct connection between the plaintiff and the defendant. That connection can arise in a number of different ways. It can be a physical connection. It can be social, commercial, a direct causal connection or reliance. The third thing that a court looks at in determining whether or not there is a duty of care is the topic or issue of policy. So even if the reasonable foreseeability test is passed and also the proximity test is passed, a court can still deny a duty of care on policy grounds. Now what do we mean by policy? So the question that we ask here is if a duty of care is imposed, what would be the effect on the legal system and society in general? So in essence, what we're looking at are the larger effects of this case. So what are the effects beyond this case of finding a duty of care? Some examples of policy considerations that a court would look at. First is what we call opening the floodgates. So when a court says we don't want to find duty of care here because we fear that it would open the floodgates to litigation, what they're referring to is that if we find a duty of care in this one case, there are a large number of people in a similar situation who would use that case as the legal basis to launch their own lawsuits and thus swamping the courts with a whole flood of lawsuits. A second policy consideration that a court may look at is whether or not imposing a duty of care will interfere with a political decision. The third is will finding a duty of care hurt a certain kind of valuable type of relationship, a relationship that we value in society? And a last example of a policy consideration is if we do find a duty of care, will that provide an incentive for others in similar situations to act carefully so as to avoid liability? To understand how a court applies policy considerations in determining duty of care, let's look at the case of Cooper and Hobart of the Supreme Court of Canada. The facts that I case involve an investor named Mary Cooper. So she had invested in a mortgage corporation called Aaron Mortgage Corp. And the managers of Aaron were a bunch of crooks and they stole much of the money that was in that mortgage corporation. Mary Cooper's investment was essentially worthless. So Mary Cooper sued the Registrar of Mortgages. So Registrar of Mortgages is a part of the Ontario government and is responsible for regulating mortgage companies. And so Mary sued the Registrar for negligence in allowing Aaron to carry on business even after it knew that Aaron was in violation of the Mortgage Brokers Act. The legal issue in this case was, did the Registrar owe a duty of care to Mary Cooper? The applicable law was the standard three-part test that we need to apply to have a duty of care. The first part is, is it reasonably foreseeable that the defendant's negligence would harm the plaintiff? The second is, is there sufficient proximity between the plaintiff and the defendant? And the third is, looking at the policy considerations and whether or not there are policy considerations that are sufficient enough to deny a duty of care. The court applied the law to the facts and found that there was no duty of care owed by the Registrar to Mary Cooper. The court's analysis involved applying the three steps or the three elements of the duty of care to the facts of this case. The first element of reasonable foreseeability was applied and the court found that it was reasonably foreseeable that the Registrar's negligence in regulating Aaron would cause investors such as Mary Cooper to lose their money. The second element of the duty of care test, which is proximity, the court said that since the Registrar's job was to serve the general public, not individual investors like Mary Cooper, there was no close and direct connection between the Registrar and Mary Cooper and therefore there was insufficient proximity. So since there was no proximity, that was enough to say that there was no duty of care owed by the Registrar to Mary Cooper. The court however did not stop there. They still went ahead and looked at the policy considerations. The court concluded that based on policy considerations, they needed to find that there was no duty of care owed in this case. The specific policy considerations that the court emphasized were that, number one, they didn't want to interfere with the Registrar's role, which they viewed as being largely political and judicial. The second policy consideration that the court cited was that by finding a duty of care, or if they did find a duty of care, it would open floodgates for thousands of other affected investors to sue the Registrar. So the Supreme Court thought that that wasn't a good thing. And the third policy consideration was that the court cited was that if there was any payment made to Cooper by the Registrar, that money would be coming from tax dollars since the Registrar was a part of the Ontario government. So that's what the court said. Now let's think about the policy considerations that could be used to find a duty of care. What are some of the positive, larger effects of finding a duty of care in this case? I would say that a large positive effect of finding a duty of care, which is the opposite of what the court said here, is that if we do make the Registrar liable here, we impose a duty of care, that would cause the Registrar and other government regulators to be more careful in doing its job of regulating mortgage companies or whatever the responsibilities of the regulator are. And in so doing, that is a good thing. That is a good thing that is good for investors and good for the general public.