2d 780 (1982) Brief Fact Summary. However, Mr Sim's evidence states that Cape took considerable steps to ensure that the method of working with asbestos was as safe as possible. Mr Stuart-Smith submits that the judge should not have relied on events subsequent to the relevant period. 7 Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415. Thus it is not a matter of what advice Dr Smither gave. The same minutes refer to a proposal for Cape Products to take over a machine from the Barking factory although it appears this proposal did not come to fruition. Dr Smither was doing research into the link between asbestos dust and asbestosis and related diseases. It was in a substantial way of business and its resources far exceeded those of Cape Products. The effect of the change was that the asbestos operations at Uxbridge became the responsibility of Cape Products, and on Mr Stuart-Smith's submission, no one else. JORDAN CHANDLER, Plaintiff-Appellant, v. EVAN CHANDLER, Defendant-Respondent. The evidence also showed that as at the date of its evidence it had a group manual which provided for regular medical checkups for employees having regular contact with asbestos and asbestos products, and other employees at the discretion of the manager. Facts. As the judge observed, the problem was systemic. On Mr Stuart-Smith's submission, the fact that there was a group policy about the product mix for Asbestolux merely reflected a concern on the part of Cape about the quality and content of group products and said nothing about employees' health and safety. Mr Stuart-Smith accepts that if the parent company were to take over the entirety of the subsidiary's operations, then a duty of care would be owed. As stated at paragraph 10 of the witness statement, the laboratory had to be moved. The Court of Appeal has upheld a decision of the High Court which found that a parent company owed a direct duty of care to an employee of one of its subsidiaries. (Judgment, paragraph 73). The issue in the present case is whether Cape, as parent company, accepted responsibility for the health and safety of employees. Mr Stuart-Smith accepts that there can be an assumption of responsibility by an independent contractor in favour of the employees of his employer. The evidence at trial was sparse and consisted mainly of documentary evidence. For the better protection of its employees across the group, Cape appointed a group medical adviser in the 1950s, Dr Wyers. They refer to discussions taking place at Uxbridge for the expansion of Asbestolux production. Thus Cape was taking active steps to protect employees of Cape Products and those steps were under the influence of Cape. On Mr Weir's submission, the imposition of a duty of care does not "collapse the principle of limited liability". at [66]) The case is also important in connection with the issue of lifting of the corporate veil. Cape Products had its own directors who owed separate fiduciary duties to it. ____________________, HTML VERSION OF JUDGMENT Michael Hutchinson; On 25 April, the Court of Appeal handed down an historic ruling concerning the liability of parent companies to an employee of one of its subsidiaries. By installing its business there, it must have implicitly undertaken a duty of care to ensure that its business was carried on without risk to the employees in the other business of Cape Products carried on at the Cowley Works. (Ibid. According to the judge, he was succeeded in 1957 by Dr W. H. Smither, but that date is challenged on this appeal. [Buy ICLR report: [2012] 1 WLR 3111] There was also a report on health and safety produced by Dr Smither in 1962 following a visit to South Africa. The judge accepted that this evidence is many years after the relevant period. Chandler v Cape plc [2012] EWCA Civ 525 is a decision of the Court of Appeal which addresses the availability of damages for a tort victim from a parent company, in circumstances where the victim suffered industrial injury during employment by a subsidiary company. Throughout the relevant period, there were directors of both companies in common which would have increased the flow of information between them. In the first letter, dated 26 October 1961, Dr Smither wrote to Dr R Owen of HM Factory Inspectorate at the Ministry of Labour to the following effect: The second letter is the reply of Dr Owen dated on 6 November 1961 addressed to Dr Smither at Cape: This reply prompted a further letter from Dr Smither dated 7 November 1961. As the judge held, working on past performance and viewing the matter realistically, Cape could, and did on other matters, give Cape Products instructions as to how it was to operate with which, so far as we know, it duly complied. Judgment … Chandler v Cape: Piercing the Corporate Veil: Lessons in Corporate Governance Introduction On 25 April, the Court of Appeal handed down an historic ruling concerning the liability of parent companies to an employee of one of its subsidiaries. (a) Origins of Cape Products' asbestos business: (b) Relationship between Cape and Cape Products: ii) At all material times there was one or more directors of Cape on the board of Cape Products. However, in the case of Cape plc, the Court of Appeal identified parallel duties of care between the parent company and subsidiary employees and the subsidiary company and its employees. Supreme Court in Vedanta Resources PLC v Lungowe.3 There the Court held that there is a duty of care by a parent company towards those affected by the actions of its subsidiary and that the corporate veil was not relevant for these purposes. However, its parent company, Cape, formerly the well-known asbestos producer Cape Asbestos plc, is still in existence. It is also common ground that the fact that Cape is the parent does not preclude the existence of the duty. Contract lawyers from Linklaters. Cape was involved if at all only in surveillance of disease, not operational procedures. I accept Mr Stuart-Smith's submission that Cape was not responsible for the actual implementation of health and safety measures at Cape Products. Hutcheson plc v Watson [1995] 1 BCLC 218 Adams v Adams Industries Plc [1990] Ch 433 Lubbe v Cape Plc [2000] UKHL 41 Chandler v Cape plc [2012] EWCA Civ 525 3 (B) Depending on the facts, a parent company may be liable for the operations of its subsidiary. He found that there had been an assumption of responsibility for the reasons set out in paragraphs 72 to 77 of this judgment: The grounds of appeal are (1) that the judge applied the wrong test for the imposition of liability on a parent company; (2) that the judge failed to identify the scope of the duty of care which he found; (3) that the judge wrongly made specific findings of fact and on occasions wrongly reversed the onus of proof and (4) that the judge misunderstood a concession made in the pleadings. Citation409 So. The judge gleaned information from the transcripts. On 31 July 1962, for instance, Cape's board discussed action proposed to solve a production difficulty at the Uxbridge factory. Sufficient evidence had been produced to make it clear to him that the existence of a group policy on health and safety should be inferred from the known facts unless Cape could show that it did not exist. In turn, the Cape board took an interest in issues relating to the management by subsidiaries of their own business. Asbestos was produced on the same site in a factory with open sides, and dust from that factory migrated into the area where Mr Chandler worked. Nonetheless, events occurring after the relevant period in my judgment are relevant to confirm or explain the cogency of events before or during the relevant period. Cape appeals against that decision. 8 Chandler v Cape Plc [2012] EWCA Civ 525, [2012] 1 WLR 3111. Product development, with a group chief chemist, was carried out in the Central Laboratory at Barking. As to the involvement of Dr Smither, Mr Stuart-Smith submits that there are three aspects to be considered:-. 7 Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415. Welcome to the Knowledge Portal. The works doctor was not a party to the correspondence although reference is made to him. Explore the legal landscape via our range of videos, podcasts and webinar recordings. Chandler was injured by breathing asbestos dust while being employed by a subsidiary of Cape. Mr Hodgson, a chemist employed by Cape at its Barking factory from 1953 to 1971 signed a witness statement in 2002 in proceedings brought by the widow of a former employee against a company which was a successor to Cape Products (as well as being a member of the Cape group). In my judgment, the position is as follows: England and Wales Court of Appeal (Civil Division) Decisions. [2011] EWHC 951 (QB), LADY JUSTICE ARDENLORD JUSTICE MOSESandLORD JUSTICE MCFARLANE (Chandler v Cape plc, supra at 1, at [2]). iv) On 17 July 1956, Cape decided to sell the assets of its asbestos business at Uxbridge to Cape Products and to change the name of Cape Products to its existing name: there could be no other reason for a sale followed by a change of name other than that Cape wished Cape Products to be seen as part of the larger Cape group. In that way, their cases can be seen, as they need to be seen, in the round. Mr Stuart-Smith contends for a threshold test, namely that, in determining whether there has been an assumption of responsibility, the court is restricted to matters which might be described as not being normal incidents of the relationship between a parent and subsidiary company. The board resolution suggests that, where the grant of a licence affected the interests of the group, Cape Products was making corporate decisions with regard to those interests, as well as those of itself as a separate legal entity. For these reasons I would dismiss the appeal. At 35 Sales LJ notes ‘Having set out the relevant factual background in relation to the proximity issue (i.e. ii) Whether Cape was proved to be in breach of the relevant duty. Browse and register for our upcoming events and explore materials from past events. Case ID. There is nothing wrong in that but it suggests that the company policy of Cape on subsidiaries was that there were certain matters in respect of which they were subject to parent company direction. In the landmark decision of Chandler v Cape plc [2012] EWCA Civ 525, the Court of Appeal upheld a High Court decision that a parent company owed a direct duty of … The recent decision in Chandler v Cape plc (2) was, in the words of Lady Justice Arden of the Court of Appeal, "one of the first cases in which an employee has established at trial liability to him on the part of his employer's parent company". whether the appellants have any properly arguable case against Unilever in the light of Chandler v Cape Plc and related authorities), the legal analysis can proceed much more shortly. Lady Hale. To briefly recapture the facts of the case (see for further detail our Mr Browne said later that he was chief safety officer. v) Cape's board minutes for 25 April 1961 and 16 May 1961 confirm Cape Products' status as a member of the group. It can be separated into a number of threads although some of the evidence belongs to more than one thread. They related to (1) the role of Dr Smither, (2) the role of Dr Gaze, (3) the exchange of correspondence between Dr Smither and the factory inspector, (4) the fact that Cape Products had acquired its asbestos business from Cape and (5) that, when it suited it Cape intervened in the management of Cape Products' business. Chandler v Cape plc EWCA Civ 525 is a decision of the Court of Appeal which addresses the availability of damages for a tort victim from a parent company, in circumstances where the victim suffered industrial injury during employment by a subsidiary company. The background to this application can be found in Weekly Updates 14/12, 18/16, 26/16 and 30/17 (Chandler v Cape Plc and Cape Distribution v Cape International). The court has first to say what the duty was before there can be any "causing or permitting" of any breach. Products were for instance to be manufactured in accordance with its product specification. Mr Chandler’s estate brought a claim against Cape plc alleging it had owed (and breached) a duty of care to Mr Chandler. Mr Stuart-Smith submits that the fact that Cape is the parent company involves certain levels of control. They were interested in these things and their research was a continuation of the same theme. Mr Chandler worked for an asbestos manufacturer Cape Building Products Ltd which was a wholly owned subsidiary of Cape PLC between 1959 and 1962. So it was not difficult to see what the judge has drawn from the document. One of these factories had been used for making cement pipes but that use had been terminated and so that factory was empty. Cape in effect accepts that Cape Products failed in its duty to Mr Chandler. That exception was held by Rix J in. the Court in R v Adenusi [2006] EWCA Crim 1059; [2006] Crim LR 929. I would emphatically reject any suggestion that this court is in any way concerned with what is usually referred to as piercing the corporate veil. Such a claim is more likely to succeed if advanced by former employees, but claims made by residents are still arguable (eg Lubbe v Cape). The judge should not, in any event, have used the material for the period 1962-70. It was also common ground at the trial that there was nothing to justify the piercing of the corporate veil in this case (see Judgment, paragraph 66). The letter stated: Although none of these letters bear any statement as to the capacity in which Dr Smither was acting, they demonstrate that he visited Cape Products' factory to discuss a particular case of asbestosis (it is not clear whether the employee was employed in the asbestos production or brick making side of Cape Products' business). 9 Thompson v Renwick Group Plc [2014] EWCA Civ 635, [2015] BCC 855. Mr Weir submits that this is a case about weaving strands of evidence together in order to ascertain what the position was as between parent and subsidiary with regard to the former's responsibility for the health and safety of employees. According to Dr Browne, Dr Gaze's responsibility extended to health and safety issues raised by research and development. iii) Reversal of the onus of proof: Mr Stuart-Smith complained that the judge had reversed the onus of proof in paragraph 44 of his judgment (the material passage is set out in paragraph 50 above). On 26 June 1961, the board of Cape Products agreed to enter a licence with a Japanese company, Nippon Asbestos Company ("Nippon"), for the manufacture and sale of Asbestolux, "without prejudice to approval by the board of the parent company". In Chandler v Cape plc [2012] EWCA Civ 525, the claimant contracted asbestosis through exposure to asbestos dust during the course of his employment with Cape Building Products Ltd. He and his team had been responsible for developing brake linings made from moulded white asbestos. A manager was appointed "to manage this plant as a branch of Cape" (see. In particular, in the case of M&A transactions involving the sale or purchase of a subsidiary entity, parties will need to think about contingent and residual liability issues arising for parent companies. Moreover, as Mr Weir submits, the judge's findings regarding Dr Smither are not disputed. Cape installed the necessary plant into the empty factory. It is clear that Dr Smither was involved in discussion over the safe installation of asbestos products by the consumer, the Northern Ireland Hospital Authority. Please enter your email address and if we recognise it, we will send you an email to reset your password. The subsidiary went into liquidation. Chandler v Cape Plc [2012] EWCA Civ 525; [2012] 3 All ER 640 The issue of the case was the following: if an argument can be made that the parent company owes a duty of care to its subsidiary’s employees then damage caused by that subsidiary would become the responsibility/liability of the parent company. It is convenient to deal with this ground first, since Mr Owen QC, for the appellant, realistically accepts The court can therefore hold that there has been an assumption of responsibility without piercing the corporate veil. The background to this application can be found in Weekly Updates 14/12, 18/16, 26/16 and 30/17 (Chandler v Cape Plc and Cape Distribution v Cape International). The relationship could have remained one of landlord and tenant on arm's length terms but that did not happen. The judge's conclusion that Dr Smither had succeeded Dr Wyers was all of a piece. UKSC 2017/0185. 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