Lord Atkin defines duty of care, as "you must take reasonable care to avoid acts or omissions, which you can reasonably foresee would likely to injure your neighbour. " To decide whether there is an existence of a duty of care, it involves applying one or more of the following: foresight, proximity and consideration of justice and reasonableness. Foreseeability means that the defendant must have foreseen some damage towards the claimant.
A case that shows foreseeability and the neighbour test is Donoghue v. Stevenson  A. C 562; 20 M. L. R. 1 it was held in this case, that there could be a remedy in tort as a manufacture has a duty of care to the consumer, also if it is foreseeable that the claimant may be injured then the defendant will be held liable. Proximity will vary from case to case, as it will be examined differently in each individual case. An example of a case, which shows this, is Bourhill v. Young  A. C. 92 in this case the claimant was not within the area of impact so there was no proximity, so the House of Lords held the claimant was owed no duty of care.
Justice and reasonableness is seen as the reasonable man test. Would someone else do in the same situation do the same? This was shown by the case Caparo Industries PLC v. Dickman  2 A. C. 605 in which Lord Roskill commented; "It has now to be accepted that there is no simple formula or touchstone" in our scenario was Henry driving negligently? If Henry was found to be driving negligently, the neighbour test can be applied and it can be found using the above criteria first set out in this question, using the above it is clear that he owed the children a duty of care.
Although the issue here is not whether the children can sue, it is Mrs N and Anthony and whether they can sue for Nervous Shock? Nervous shock is a psychiatric injury, which has to be proved. It is important to note that nervous shock is not related directly with physical injury. A case that shows this is Dulieu v. White  2 K. B. 669 in this case the claimant was pregnant and working behind a bar, when the defendant negligently drove his horse in to the bar. The claimant suffered shock resulting in the premature birth of her child.
There are two types of victims in nervous shock. There are primary victims and secondary victims. A primary victim is a person who is a participant. Described by Lord Oliver "as someone who suffers from what he sees or hears, such as person who is within the range of foreseeability". The claimant in Dulieu v. White is a prime example of a primary victim. In the scenario of question 1 the children are primary victims and could sue for nervous shock. Mrs N and Anthony could not sue as primary victims as they are not within the range of foreseeability.
White v. Chief constable of South Yorkshire Police  1 ALL ER 1 is a good example of foreseeability and to show that Mrs N and Anthony have no claim as rescuers, as they have not been exposed to physical danger. A secondary victim is someone who witnesses the accident (but is not a direct participant) or arrives at the immediate aftermath of the accident. Secondary victims are required to satisfy additional criteria, which was set out in Alcock v. Chief Constable of South Yorkshire 
1 A. C. 310, which requires proof of a special emotional link with the person injured at the accident. McLoughlin v. O'Brien  AC 410 shows the emotional link; Mrs McLoughlin was at home, when her family was involved in a accident. An hour later she was informed of the accident by the police and was taken to the hospital. Where one daughter had died and her other daughter and husband were covered in dirt and oil with cuts and bruises, and her son was screaming hysterically. She then suffered depression as a result of seeing the immediate aftermath.
Mrs N is a secondary victim, because when she got there she saw the immediate aftermath of the accident, although it may be argued that because she did not see her children she did not see the immediate aftermath. In the case of Anthony he can not be classed as a secondary victim, because he did not witness the accident or arrive at the immediate aftermath, so he can not sue as a secondary victim. After the Alcock case the House of Lords stated the requirements for a duty of care in nervous shock are: 1.
A close relationship of love and affection with the victim so that it was foreseeable that if anything happened they may suffer nervous shock a case which shows this is McLoughlin v. O'Brien  2. Proximity to the aftermath or the accident, and was close in terms of space and time. Alcock v. Chief Constable of South Yorkshire  3. They suffered nervous shock through seeing or hearing the accident or its immediate aftermath. A person who was informed of the accident by a third party would have no claim. White v. Chief constable of South Yorkshire Police  1 ALL ER 1.
Does Mrs N satisfy all the requirements set out by Alcock? It is assumed that because she is the mother of the children she may suffer nervous shock. So therefore she satisfies the first requirement of foreseeability. It also could be said that because Mrs N heard the "loud crash" and "police running down the road" that she arrived at the immediate aftermath, so it could be argued that she satisfies the second requirement of proximity. Although it may be counter-argued that because Mrs N, did not actually see her children, as they were already on their way to hospital whether there was any proximity.
A case that shows this is Palmer v. Tees Health authority (1999) this case found that the claimant did not satisfy the immediate aftermath test. If this were found to be the case then Mrs N would not be able to sue for nervous shock. McLoughlin v. O'Brien would counteract the argument of the Palmer v. Tees Health Authority. Mrs N satisfies the third need of suffering nervous shock after seeing and hearing the accident and immediate aftermath, and she was not informed through a third party. If Mrs N were found to satisfy all three requirements she would be able to sue for nervous shock.