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. 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. According to the evidence of Mr Alan Algarth Hodgson, a chemist who worked at the Barking factory, Dr Gaze was interested in dust suppression methods. That exception was held by Rix J in. In Chandler v Cape plc, the Court of Appeal considered whether a parent company was liable for the exposure of its subsidiary company's employee to asbestos dust. There was no evidence that Cape took control of Cape Products' operational procedures for the health and safety of its employees. Cape paid a rent and a share of the rates, and there is nothing to suggest that the rent was not fixed at the market rate. Cape was involved if at all only in surveillance of disease, not operational procedures. There was also disagreement . 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". (d) Contemporary evidence said to demonstrate that Cape was involved with the health and safety of group employees: (e) Cape's involvement in the asbestos business of Cape Products: (f) Events subsequent to the relevant period, i) Whether Cape was proved to have assumed responsibility for the safety of the employees of its subsidiary, Cape Products, so as to give rise to a relevant duty of care owed by Cape to Mr Chandler to prevent the exposure of which he complained; and. In the present case, Cape was clearly in the practice of issuing instructions about the products of the company, for instance, about product mixes. This was written from his medical practice but the words "Cape (West Ham)" (ie Barking) have been added by someone in manuscript. The case concerned health and safety matters, but the This is the first time an employee has successfully established liability to him from the parent company. By this time, the subsidiary entity had been dissolved. Mr Stuart-Smith submits that the judge should not have relied on events subsequent to the relevant period. 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. Explore our blogs for the latest news and insights across a range of key legal topics. The court will look at the relationship between the companies more widely. 10 Martin Petrin, ‘Assumption of Responsibility in Corporate Groups: Chandler v Cape Plc’ (2013) 76(3) Modern Law Review 603. On this basis, I do not need to consider Mr Weir's fallback submission that, in assuming a specific health and safety role in relation to Cape Products, Cape would not be acting outside the normal parent and subsidiary relationship. At a board meeting on 1 November 1966 the board discussed a problem that had arisen in Northern Ireland over sales there. In this case, submits Mr Weir, Cape Products as a subsidiary of Cape acquired assets from Cape. 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. 8 Chandler v Cape Plc [2012] EWCA Civ 525, [2012] 1 WLR 3111. There is evidence that it was indeed shared. v) Cape's board minutes for 25 April 1961 and 16 May 1961 confirm Cape Products' status as a member of the group. Cape's board minutes show that Cape approved the separate administration of Cape Products' operations "in accordance with company policy" of Cape. The judge inevitably found as a fact -and there is no appeal from this – that Cape was fully aware of the "systemic failure" which resulted from the escape of dust from a factory with no sides. There was a medical officer working in conjunction with Dr Gaze. The relationship could have remained one of landlord and tenant on arm's length terms but that did not happen. Dr Gaze, a qualified chemist, had been employed by Cape at its Barking factory from the 1940s. Finally, I must deal with Mr Stuart-Smith's submission that the judge had gone beyond Cape's concession in the pleadings (above, paragraph 34). There was no evidence produced by Cape Products. Please upgrade your browser to improve your experience. Cape gave evidence to the Health and Safety Executive for the purposes of an inquiry into asbestos in the 1976-7 that it had had a group medical adviser since at least 1946 and that, in addition to complying with statutory requirements for health and safety enacted in 1946: As to the nature of this surveillance, it is clear that from 1945 Cape had kept statistics for asbestosis, lung cancer and mesothelioma among employees or former employees at Uxbridge. 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. It was due to dust in the atmosphere in the part of the Cowley Works in which Mr Chandler worked and which was not used for asbestos production. As an occupier of the premises, Cape Products was subject to the obligations imposed by the Asbestos Regulations 1931 and the Factories Act 1937 ("the 1937 Act"). Mr Stuart-Smith accepts that there can be an assumption of responsibility by an independent contractor in favour of the employees of his employer. Judgment (PDF) Press summary (PDF) Accessible versions. Cape Products modified the empty factory for Cape's use in the production of Asbestolux (board minutes of 20 November 1954). Judgment … So it was not difficult to see what the judge has drawn from the document. The case also addressed long-standing issues under the English conflict of laws as to when a company would be resident in a foreign jurisdiction such that the English courts would recognise the foreign court's jurisdiction over the company. Whether a party has assumed responsibility is a question of law. However, this included an exception for pneumoconiosis. Normal incidents of the parent/subsidiary relationship would include: obtaining the approval to capital expenditure; having common directors; transferring bank accounts to the same bank, producing the same product and the fact that the parent controlled certain aspects of the subsidiary's activities. To briefly recapture the facts of the case (see for further detail our He died of mesothelioma in 1982. . [Buy ICLR report: [2012] ICR 1293] There is no evidence that what went wrong here was that Cape Products failed to maintain some dust extraction machines in the asbestos factory and in any event it is difficult to see how such machines could have avoided the escape of dust given the open sides of the factory. To help you navigate regulatory requirements across regions, we have collated a range of key cross-border content. Hearing dates : 8-9 February 2012 Chafiq Ayadi, v European Commission, [2013] EUECJ C-183/12 (06 June 2013) Chaggar v Chaggar & Anor [2018] EWHC 1203 (QB) (18 May 2018) Chagger v Abbey National Plc & Anor [2009] EWCA Civ 1202 (13 November 2009) Chagos Islanders v Attorney General Her Majesty's British Indian Ocean Territory Commissioner [2003] EWHC 2222 (QB) (09 October 2003) To help you stay up-to-date with key regulatory developments in a time of accelerating change, we have collated a range of crucial horizon scanning content. It follows from my reasoning that Mr Weir's submission is correct. As stated at paragraph 10 of the witness statement, the laboratory had to be moved. Cape started out as a tenant of Cape Products' site. 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). Moreover, as Mr Weir submits, the judge's findings regarding Dr Smither are not disputed. Therefore Cape had knowledge of the system of work in force at the Uxbridge factory. He took the lead in discussions with the inspector of factories, and the discussions were related to finding out what the regulatory requirements were in this and in another, possibly analogous industry. Judgment details. Dr Smither prepared a report following a visit to South Africa that was considered by the board of Cape in September 1962. The judge's conclusion that Dr Smither had succeeded Dr Wyers was all of a piece. 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. Cape Products operated independently of Cape. This appeal is brought by Cape plc ("Cape"), the parent company of Mr Chandler's former employer. He became an international authority in this field. In common with other group companies, Cape Products employed its own works doctor and had its own works safety committee on which workers were represented. See Chandler v Cape [2012] EWCA (Civ) 525. The judge gleaned information from the transcripts. ____________________. This time the Court of Appeal held the parent liable in the tort of negligence. Mr Weir relies on the minutes of the meeting of the Asbestos Research Council held at the London offices of Cape on 11 September 1957. Mr Chandler worked out of doors loading bricks produced by a brick manufacturing arm of Cape Products. There was only one witness who gave oral evidence, namely Dr Kevin Browne. A parent company was held to owe a direct duty of care to an employee of … However, the court did consider obiter the second limb of Caparo and, in particular, the application of the factors identified in Chandler v Cape [2012] 1 WLR 3111 in order to establish whether there was a relationship of sufficient proximity between UPLC (as a UK domiciled parent company) and the claimants, namely: Mr Chandler’s estate brought a claim against Cape plc alleging it had owed (and breached) a duty of care to Mr Chandler. 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 began working for Cape as works doctor at Barking before he took up employment with Cape on 1 June 1962. However, in this context, the judge observed that Cape: In that passage, submits Mr Stuart-Smith, the judge wrongly reversed the burden of proof. The judge also relied on the evidence of Mr Hodgson. As to the involvement of Dr Smither, Mr Stuart-Smith submits that there are three aspects to be considered:-. There is no evidence that those duties were delegated to anyone. In summary, this case demonstrates that in appropriate circumstances the law may impose on a parent company responsibility for the health and safety of its subsidiary's employees. 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. Throughout the relevant period, there were directors of both companies in common which would have increased the flow of information between them. 1962, for instance to be seen, in any event, have used the material for the and... 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