Chandler v Cape Plc [2012]

Chandler v Cape Plc [2012] EWCA Civ 525 is a significant case that deals with the availability of damages for a tort victim against a parent company in circumstances where the victim suffered industrial injury during employment by a subsidiary. The case establishes the possibility of imposing a duty of care on a parent company for the health and safety of its subsidiary's employees under certain circumstances.

David Chandler was employed by a wholly-owned subsidiary of Cape Plc for 18 months between 1959 and 1962. In 2007, he discovered that he had developed asbestosis due to exposure during his employment. The subsidiary no longer existed, and Chandler brought a claim against Cape Plc, alleging that it owed a duty of care to him. The subsidiary had no insurance covering claims for damages. The case revolved around whether Cape Plc assumed responsibility for the health and safety of the subsidiary's employees.

The High Court held that Cape Plc owed Chandler a duty of care based on the common law concept of assumption of responsibility. Cape Plc had knowledge of the subsidiary employees' working conditions, and the risk of asbestos exposure was evident. Wyn Williams J found that Cape Plc had control over some activities of the subsidiary and retained responsibility for health and safety issues.

Cape Plc appealed, but the Court of Appeal dismissed the appeal. Arden LJ concluded that Cape Plc assumed responsibility to Chandler and was answerable for the injury suffered. The court clarified that the case did not involve piercing the corporate veil but rather focused on whether the parent company assumed a direct duty of care to the subsidiary's employees.

The case does not involve piercing the corporate veil, emphasising the separate legal entities of a parent company and its subsidiary. The imposition of a duty of care on a parent company depends on circumstances, including a commonality of business, superior knowledge, an unsafe system of work, and foreseeability of reliance on the parent's knowledge by the subsidiary or its employees. The court may find a duty of care even if the parent does not routinely intervene in the subsidiary's health and safety policies but has a practice of intervening in other aspects of the business.

This case is significant as it marks the first instance where an injured employee of a subsidiary successfully established that the parent company owed a duty of care. The decision has implications for cases involving industrial injuries and has been cited in discussions about corporate responsibility for health and safety practices. It provides a potential avenue for employees of subsidiaries to seek compensation from parent companies in certain circumstances. The case highlights the evolving nature of tort law concerning the liability of parent companies for the actions of their subsidiaries.
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