Cape installed the necessary plant into the empty factory. It is possible, submits Mr Stuart-Smith, that after 1962 Cape began to take a greater controlling interest over its subsidiaries but the board minutes did not refer to health and safety issues. It shows that Cape chose to invite Dr Smither to the meeting and it shows that Cape were fully engaged on the question of health and safety issues concerning asbestosis. Judgment … ii) Whether Cape was proved to be in breach of the relevant duty. The same was true of the licensing of know-how to Nippon. According to the judge, he was succeeded in 1957 by Dr W. H. Smither, but that date is challenged on this appeal. Cape was involved if at all only in surveillance of disease, not operational procedures. It was held at first instance that Cape plc owed Mr Chandler a duty of care. 10 Martin Petrin, ‘Assumption of Responsibility in Corporate Groups: Chandler v Cape Plc’ (2013) 76(3) Modern Law Review 603. This is indeed confirmed by an extract from a letter written by Dr Smither in November 1962 quoted by Silber J, sitting in the Manchester District Registry, in. Facts. In turn, the Cape board took an interest in issues relating to the management by subsidiaries of their own business. This is the first time an employee has successfully established liability to him from the parent company. The case of Chandler v Cape7 provides four descriptive factors that may indicate the presence of a duty of care owed by the parent company, which (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. The judge also relied on the evidence of Mr Hodgson. (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. 3 (B) Depending on the facts, a parent company may be liable for the operations of its subsidiary. A recent Court of Appeal in Chandler v Cape plc [2012] EWCA Civ 525 decision has found that a parent company owed a duty of care to its subsidiary employees. However, as Mr Weir points out, the problem in the present case was not due to non-compliance with recognised extraction procedures. [New search] Therefore, for major food and drink parent companies or subsidiaries, the decision of the Court of Appeal last week in Chandler v Cape PLC [2011] (a case in which the parent was accused of having responsibility for the health and safety of employees of a subsidiary company) has been eagerly awaited. If the court finds that there was a medical adviser and a chief chemist, that is sufficient because the cause of Mr Chandler's disease was not a matter of medical advice. The court has first to say what the duty was before there can be any "causing or permitting" of any breach. Mr Chandler worked out of doors loading bricks produced by a brick manufacturing arm of Cape Products. There is very little information that has come from Cape itself. 2 pages) The principal issue is whether Cape owed a direct duty of care to the employees of its subsidiary to advise on, or ensure, a safe system of work for them. 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). Facts. Mr Chandler’s estate brought a claim against Cape plc alleging it had owed (and breached) a duty of care to Mr Chandler. However, this included an exception for pneumoconiosis. Cape Products was dissolved some years ago. 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. It follows from my reasoning that Mr Weir's submission is correct. This court is required to be satisfied for itself that the facts justified the imposition of liability. 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 The story in a case called Chandler v Cape PLC went like this. A manager was appointed "to manage this plant as a branch of Cape" (see. 8 Chandler v Cape Plc [2012] EWCA Civ 525, [2012] 1 WLR 3111. This was because: (i) the parent company and subsidiary had relatively similar businesses; (ii) the parent company knew (or ought to have known) that the subsidiary’s system of work was unsafe; and (iii) the parent company knew (or ought to have foreseen) that the subsidiary or its employees would rely on its using that superior knowledge the employee’s protection. A parent company was held to owe a direct duty of care to an employee of … Products were for instance to be manufactured in accordance with its product specification. Cape Products, then known as Uxbridge Flint Brick Company Ltd, had two factories on a single site at Cowley Works, Uxbridge, some 30 miles away. Whether a party has assumed responsibility is a question of law. 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). Thus Cape was taking active steps to protect employees of Cape Products and those steps were under the influence of Cape. On Mr Stuart-Smith's submission, the judge should have concluded that responsibility for health and safety at Uxbridge remained with the management at Uxbridge. As the judge said at the end of paragraph 62 of his judgment, asbestos dust was permitted to escape from the building where asbestos was manufactured without any attempt to contain it, save by extraction fans situated in close proximity to the production machinery which, on Cape's admission, were inadequate for their intended purpose. The scope of the duty can be defined in either way. The decision made in Lubbe v Cape Plc [2000] UKHL 41 by the House of Lords and the historic choice in Chandler v Cape plc [2012] EWCA Civ 525 holds that, an immediate obligation might be owed in tort by a primary business to that of the person injured. Likewise, the fact that Cape Products sought to acquire a machine from the Barking factory merely went to group planning and said nothing about health and safety of employees. It was not possible to call a number of witnesses but this is not a case where an adverse inference should be drawn because of that. 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). These were attended by representatives of a number of companies in this field, including Cape. Keep up to speed on legal themes and developments through our curated collections of key content. One of these factories had been used for making cement pipes but that use had been terminated and so that factory was empty. 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". 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. He became a director also. In the present case, Cape exercised financial control over expenditure in just the same sort of way that one would normally expect to see a subsidiary looking to a parent for approval. The evidence about the relationship of Cape and Cape Products is mainly circumstantial. 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. Accordingly the cases on this appeal of each party are most easily understood by setting out all of their arguments together on the law and the facts. He was 89 years old at the date of the trial. iii) Furthermore, most of the board meetings of Cape Products for which we have been shown minutes were held at Cape's Head Office in central London, rather than at the Cowley Works. For the purposes of (4) it is not necessary to show that the parent is in the practice of intervening in the health and safety policies of the subsidiary. The respondent, Mr Chandler, has recently contracted asbestosis as a result of a short period of employment over fifty years ago with Cape Building Products Ltd ("Cape Products"). Therefore Cape had knowledge of the system of work in force at the Uxbridge factory. Here, discussion turned at 42 ff as to whether one should merely apply Chandler v Cape [2012] EWCA Civ 525, or whether this case involves the assertion of a new category of common law negligence liability. This appeal is brought by Cape plc ("Cape"), the parent company of Mr Chandler's former employer. He submits that the fact that Cape is the parent company of Mr Chandler's employer does not of itself give rise to duties to protect the respondent from injury at work. Mr Chandler worked for an asbestos manufacturer Cape Building Products Ltd which was a wholly owned subsidiary of Cape PLC between 1959 and 1962. This appeal is brought by Cape plc ("Cape"), the parent company of Mr Chandler's former employer. The judge says that there was systemic failure. In those circumstances, this court is substantially in the same position as the judge to the review the evidence. Cape plc appealed, but its appeal was dismissed. For the better protection of its employees across the group, Cape appointed a group medical adviser in the 1950s, Dr Wyers. Before Judges Coburn and Lisa. 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. The focus of Mr Stuart-Smith's submissions on the facts is on what he calls four areas of error by the judge: (1) the judge's failure to identify features of the relationship between parent and subsidiary which were unusual or outwith the characteristics of that relationship, which are on his submissions preconditions to a finding of an assumption of responsibility; (2) the judge's failure, as he submits it to be, to determine the extent of the duty owed by Cape to Mr Chandler and whether breach of that duty could have caused the excessive asbestos exposure to which he was subjected; (3) erroneous findings of fact by the judge and (4) the reversal of the onus of proof by the judge. 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. According to Dr Browne, Dr Gaze's responsibility extended to health and safety issues raised by research and development. Browse and register for our upcoming events and explore materials from past events. The court will look at the relationship between the companies more widely. We know that Cape Products could not incur capital expenditure without parent company approval. 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. 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. The case results in case law catching up with the group/subsidiary corporate structures that are now relatively common. 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. Such documentation as exists demonstrates the absence of control or advice at any significant level. See Chandler v Cape [2012] EWCA (Civ) 525. In my judgment, the position is as follows: England and Wales Court of Appeal (Civil Division) Decisions. Explore the legal landscape via our range of videos, podcasts and webinar recordings. Dr Smither is shown as a medical officer and as a representative of Cape. Cape acquired at least a majority of the share capital of Cape Products in 1945, and the outstanding shares in about 1953. 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 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. Cape were collecting data and they must have done something with it. (Ibid. However, in this context, the judge observed that Cape: In that passage, submits Mr Stuart-Smith, the judge wrongly reversed the burden of proof. They refer to discussions taking place at Uxbridge for the expansion of Asbestolux production. Mr Browne said later that he was chief safety officer. There is no imposition or assumption of responsibility by reason only that a company is the parent company of another company. In our October 2011 update we reported on the High Court decision in Chandler v Cape plc 1. 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. The case concerned health and safety matters, but the There was an omission to advise on precautionary measures even though it was it was doing research and that research had not established (nor could it establish) that the asbestosis and related diseases were not caused by asbestos dust. The court can therefore hold that there has been an assumption of responsibility without piercing the corporate veil. [Help], IN THE COURT OF APPEAL (CIVIL DIVISION)ON APPEAL FROM THE HIGH COURT OF JUSTICE (QUEENS BENCH DIVISION)WYN WILLIAMS J He died of mesothelioma in 1982. Explore our blogs for the latest news and insights across a range of key legal topics. (Judgment, paragraph 73). He and his team had been responsible for developing brake linings made from moulded white asbestos. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hudson County, FV-09-524-06B During the course of his employment, Mr Chandler was exposed to asbestos fibres and in 2007, Mr Chandler was diagnosed with asbestosis. Explore our latest insights to keep abreast of key legal developments. Case ID. In this case, submits Mr Weir, Cape Products as a subsidiary of Cape acquired assets from Cape. For instance, the board minutes of Cape Products for 26 June 1961 refer to the mixing of chrysotile fibre into the products of Cape Products "in accordance with agreed group policy". However, the court did consider obiter the second limb of Caparo and, in particular, the application of the factors identified in Chandler v Cape 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: Cape was entitled in law to organise its operations so that they were carried out by the members of its group. The court does not have to find that the relevant party has voluntarily assumed responsibility (see also on this point, Likewise, it has been held on two occasions that it is arguable that a parent company may owe a duty of care to employees of subsidiaries: see. 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. Indeed, all the people concerned in the management of Cape Products are now deceased. By this time, the subsidiary entity had been dissolved. 10 Martin Petrin, ‘Assumption of Responsibility in Corporate Groups: Chandler v Cape Plc’ (2013) 76(3) Modern Law Review 603. ____________________. The issue in the present case is whether Cape, as parent company, accepted responsibility for the health and safety of employees. The concession made by Cape (paragraph 34 below) means that we can assume that by the start of the relevant period there was some recognition of the health dangers of asbestos production. On Mr Weir's submission, the imposition of a duty of care does not "collapse the principle of limited liability". Re:link. The medical adviser reported to the board. 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. The board minutes of Cape for 31 October 1961 additionally gave approval for increased Asbestolux production. There was no finding that any policy was suggested by Cape, still less that it was inadequate. The evidence at trial was sparse and consisted mainly of documentary evidence. Whether or not he was formally appointed group medical adviser in the relevant period, it is clear that he was engaged on research, based on empirical research done at Cape and its asbestos-producing subsidiaries, about the relationship between asbestos production and asbestosis. Chandler v Cape: Piercing the Corporate Veil: Lessons in Corporate Governance; Authors. 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. The Court of Appeal has now upheld the High Court decision confirming that the holding company owes a direct duty of care to the employees of its subsidiary. 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. (Asbestolux appears to have been a generic product, not one protected by intellectual property rights). This was a case of a gross level of exposure to asbestos. Cases cited: Salomon v Salomon & Co Ltd [1897] A.C. 22 (HL) Petrodel Resources Ltd v Prest [2013] UKSC 34; [2013] 2 A.C. 415 (SC) VTB Capital Plc v … In these circumstances, there was, in my judgment, a direct duty of care owed by Cape to the employees of Cape Products. Mr Chandler's case did not, however, stand on that alone, but on the responsibility exercised by Cape for protecting employees from harm from the asbestos atmosphere. Please enter your email address and if we recognise it, we will send you an email to reset your password. Dr Smither began working for Cape as works doctor at Barking before he took up employment with Cape on 1 June 1962. [2011] EWHC 951 (QB), LADY JUSTICE ARDENLORD JUSTICE MOSESandLORD JUSTICE MCFARLANE Likewise, the transfer of bank accounts to a group bank account did not indicate that Cape undertook responsibility for the health and safety of Cape Products' employees. I do not find this to be surprising, as what is complained of is not the taking of any particular step but an. Lord Wilson, Lord Hodge, Lady Black, Lord Briggs. In this case, the claimant, Mr Chandler, was employed by a subsidiary of Cape plc for just over 18 months from 1959 to 1962. 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). On 31 July 1962, for instance, Cape's board discussed action proposed to solve a production difficulty at the Uxbridge factory. There was also a report on health and safety produced by Dr Smither in 1962 following a visit to South Africa. Accordingly, the judge was able to draw inferences from the fact that Dr Gaze was chief chemist scientist. 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). In doing so, the court relied on Connelly v Rio Tino Zinc Corporation (1999) CLC 533 and Ngcobo v Thor Chemicals Holdings Ltd v Others (unreported). At a board meeting on 1 November 1966 the board discussed a problem that had arisen in Northern Ireland over sales there. He became an international authority in this field. 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: at [66]) The case is also important in connection with the issue of lifting of the corporate veil. Cape in effect accepts that Cape Products failed in its duty to Mr Chandler. Mr Weir rejects the suggestion that the judge reversed the burden of proof. Mr Stuart-Smith submits that the judge should not have relied on events subsequent to the relevant period. That company is no longer in existence. [Buy ICLR report: [2012] 1 WLR 3111] Cape appeals against that decision. With respect to the evidence to the Advisory Committee on Asbestos submitted by Cape in l976 and 1977, Mr Stuart-Smith submits that this should largely be discounted as it was written long after the relevant period and referred loosely to the past. By 1959 reference is made in the minutes of Cape Products Limited to a "Group Central Laboratory" helping to resolve problems due to the rejection of certain goods produced at Uxbridge. Some people are claiming this is an attack on the separate legal personality principles, fundamental … Dr Smither prepared a report following a visit to South Africa that was considered by the board of Cape in September 1962. 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 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. 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. 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. As to the involvement of Dr Smither, Mr Stuart-Smith submits that there are three aspects to be considered:-. Dr Smither's letter and the inspector's reply both show that there was some understanding even in 1961 of a connection or potential connection between dust exposure and the development of asbestosis. That is, there was no imposition or assumption of responsibility to the employee by reason only that the defendant was the parent company: parent companies have a separate legal personality and it should, as a rule, not be possible to “pierce the corporate veil”. 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. 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