61. Chandler v Cape PLC relationship between the Defendant and Cape Productsat the time relevant to these proceedings. 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. However, this included an exception for pneumoconiosis. On 28 December 1893 The Cape Asbestos Company Ltd was incorporated in London. 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. As to the other two elements, Mr Weir draws no distinction between them. Slowly but surely, Cape Products became a part of an integrated group of companies headed by Cape: ii) At all material times there was one or more directors of Cape on the board of Cape Products. There was also a report on health and safety produced by Dr Smither in 1962 following a visit to South Africa. 4. 41. For the better protection of its employees across the group, Cape appointed a group medical adviser in the 1950s, Dr Wyers. Explore the big challenges, opportunities, debates and frameworks for business and human rights. The evidence at trial was sparse and consisted mainly of documentary evidence. 40. 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. CHANDLER V. CAPE: AN ALTERNATIVE TO PIERCING THE CORPORATE VEIL BEYOND KIOBEL V. ROYAL DUTCH SHELL* Dalia Palombo.. Max Planck Institute Luxembourg for Procedural Law ABSTRACT For over a century, since the case of Salomon v. Salomon, litigators have attempted without success to pierce the corporate veil of corporations in or- der to sue … Cape Products carried employer's liability insurance. (Ibid. Health and safety issues were dealt with at company and parent company level. Act 1974 (HSWA). In the Chandler case the Claimant had the benefit of a detailed company history of the company called "The Cape Asbestos Story". Cape Products operated independently of Cape. 27. 2 Chandler v Cape: The new parent company 'duty of care' for health & safety injuries Products were manufactured on the basis of Cape Plc's specifications with involvement from a group chemist. There was no evidence that Cape took control of Cape Products' operational procedures for the health and safety of its employees. The case concerned health and safety matters, but the decision has much wider implications for parent company … 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. Mr Weir submits that the letters to and from Dr Smither have to be seen in the context of all the other evidence. I do not find this to be surprising, as what is complained of is not the taking of any particular step but an omission to take steps or to give advice. Chandler v Cape - A fantastic result for mesothlioma sufferers 25th April 2012 Personal Injury The case of the mesothelioma sufferer has been hit fairly hard recently, what with Jonathan Djanogly's snickering at the pain the sufferers of this disease experience, at the same time as he's attempting to remove their opportunity to have their cases resolved on a no win, no fee basis. 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 Rice v Secretary of State for Business Enterprise and Regulatory Reform [2008] EWHC 3216 (QB) at [73]. Dr Smither attended a meeting on behalf of Cape at Cape's premises on 11 September 1957 and became its chairman in due course. There was, held the judge, "a systemic failure of which [Cape] was well aware." These were attended by representatives of a number of companies in this field, including Cape. Mr Chandler was diagnosed with asbestosis in 2007. * Enter a valid Journal (must Mr Chandler was diagnosed with asbestosis in 2007. Chandler v Cape Plc: CA 25 Apr 2012. He was also (if this label makes any difference) the group medical adviser of Cape. 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Lubbe v Cape Industries plc [2000] 1 WLR 1545. It would have been very surprising if Cape did not make technical know-how available to Cape Products in view of its long experience in the asbestos industry. Contents. 1 Facts; 2 Judgment; 3 See also; 4 Notes; 5 References; 6 External links; Facts. Mr Stuart-Smith submits that in any event the judge fails to identify the scope of the duty of care owed by Cape for the health and safety of employees. He and his team had been responsible for developing brake linings made from moulded white asbestos. 45. This is where complexity meets clarity. Thus the imposition of liability on Cape was wrong. 82. The … Sometimes, for example, a subsidiary is run purely as a division of the parent company, even though the separate legal personality of the subsidiary is retained and respected. The Court of Appeal decision in Chandler v Cape has extended the situations in which a parent company can be held liable for group operations, by establishing a parent company duty of care to its subsidiary's employees. 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. That case concerned the question whether proceedings, which had been brought by former employees of a former South African subsidiary of Cape in England and Wales, should be stayed on the grounds that the proper forum was South Africa. 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. 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". Chandler v Cape Case Comment - Emily Wilsdon, Pupil Barrister, Temple Garden Chambers & Reema Patel, GDL student and Bedingfield Scholar, Gray’s Inn The issue in David Brian Chandler v Cape plc [2012] EWCA Civ 525 was whether a parent company (Cape) could owe a direct duty of care to protect an employee of its wholly owned subsidiary company (Cape … the Court in R v Adenusi [2006] EWCA Crim 1059; [2006] Crim LR 929. 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. 29. This was not a case where the subsidiary was just under the control of the parent. Mr Chandler worked out of doors loading bricks produced by a brick manufacturing arm of Cape Products. During the course of his employment he was exposed to asbestos fibres. On Mr Weir's submission, the medical adviser plainly did not meet the responsibility of Cape. Originally published May 10, 2012. Is it specific to the subsidiary or group wide? Cape moreover had superior knowledge about the asbestos business. Thus the judge records at the end of paragraph 73 of his judgment that "this was no failure in day to day management, this was a systemic failure of which the defendant was fully aware.". A recent Court of Appeal in Chandler v Cape plc EWCA Civ 525 decision has found that a parent company owed a duty of care to its subsidiary employees. The evidence subsequent to the relevant period does not show that Dr Smither must necessarily have had a role in relation to safety, or that Cape must necessarily have been involved in Cape Products' affairs, in the relevant period. 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 conclusion to which the judge came on the facts was that Cape controlled at least some aspects of the business of Cape Products (Judgment, paragraph 46). 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. However, none of this evidence in fact takes matters much further. 9 Thompson v Renwick Group Plc [2014] EWCA Civ 635, [2015] BCC 855. 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. He became a director also. The minutes of a meeting of the Uxbridge directors which took place on 26 November 1954 show that the directors authorised expenditure of£7000 for extension to buildings, £5000 for a new workshop building and £10,000 for the purchase of various items of equipment. In the case of Chandler v Cape Plc (2012) the subsidiary no longer existed nor was any insurance in place to cover injuries such as the claimant’s (asbestos related injury). All rights reserved. The Cape board stressed the elimination of dust. By clicking on this tab, you are expressly stating that you were one of the attorneys appearing in this matter. In the particular facts of this case, the fact that the parent company (Cape) knew more about the specific health and safety risk to the subsidiaries’ employees than the subsidiary (Cape Products) did was a key factor in determining that they were responsible. Mr Chandler's employment with Cape Products ran from 24 April to 9 October 1959 and from 24 January 1961 to 9 February 1962 (together "the relevant period"). The same was true of the licensing of know-how to Nippon. Are health and safety policies and procedures predominantly influenced by group-wide issues or decisions, or are they specifically determined by the subsidiaries working only with reference to the parent company or organisation. 38. 34. There was a works safety committee. Cape concedes that the system of work at Cape Products was defective. 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 Connelly v Rio Tino Zinc Corporation and Ngcobo v Thor Chemicals Holdings Ltd v others, January 1996, per Maurice Kay J, unreported. CHANDLER V. CAPE: AN ALTERNATIVE TO PIERCING THE CORPORATE VEIL BEYOND KIOBEL V. ROYAL DUTCH SHELL* Dalia Palombo.. Max Planck Institute Luxembourg for Procedural Law ABSTRACT For over a century, since the case of Salomon v. Salomon, litigators have attempted without success to pierce the corporate veil of corporations in or- der to sue the holding companies for the torts … He died of mesothelioma in 1982. David Chandler had been employed by a wholly … 67. The phrase "attachment" of responsibility might be more accurate. There is very little information that has come from Cape itself. Chandler Vs Cape plc: Company’s Duty Of Care to Subsidiary Company’s Employees In a landmark judgement handed down in the Court of Appeal, it was held that a parent company, in appropriate circumstances, owes a direct duty of care for the health and safety of its subsidiary’s employees. There is an important exchange of letters between Dr Smither and Dr R Owen of HM Factory Inspectorate at the Ministry of Labour. Production of Asbestolux, a new form of non-combustible asbestos board, started. The Appeal was dismissed, but the leading Judge in the case did make some valuable contributions to the area of health and safety responsibilities of parent companies for employees of their subsidiaries: 1. The relationship could have remained one of landlord and tenant on arm's length terms but that did not happen. Cape acquired at least a majority of the share capital of Cape Products in 1945, and the outstanding shares in about 1953. A number of individuals were suffering from specific illnesses following years of working for Cape. Dr Smither was doing research into the link between asbestos dust and asbestosis and related diseases. 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). 11. Legal, compliance, corporate secretarial and HR services that connect with you in many ways. A manager was appointed "to manage this plant as a branch of Cape" (see The Cape Asbestos Story produced by Cape Asbestos, 1953, page 71). Nonetheless, despite the sale, it maintained a certain level of control over the asbestos business carried on at Uxbridge. A parent food and drink business operators therefore may wish to consider ensuring that ultimate responsibility and control for compliance with group rules and procedures rests with officers of the individual subsidiary companies or organisations, rather than with the parent. Thus it is not a matter of what advice Dr Smither gave. It was acting as a company which had been integrated into a larger group of companies. Before confirming, please ensure that you have thoroughly read and verified the judgment. 18. the businesses of the parent and subsidiary are in a relevant respect the same (e.g. 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. As Dr Browne had explained in his evidence in the 1994 proceedings, a person removed from dust exposure had a better prognosis. Konexo is now present in the UK, US, Hong Kong, Singapore and Malaysia. The issue in the present case is whether Cape, as parent company, accepted responsibility for the health and safety of employees. Chandler v Cape plc [2012] EWCA Civ 525 Practical Law Resource ID 9-519-3697 (Approx. 75. We understand that this is 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, and thus this appeal is of some importance not only to the parties but to other cases. As the judge observed, the problem was systemic. In the Chandler case the Claimant had the benefit of a detailed company history of the company called "The Cape Asbestos Story". The evidence about the relationship of Cape and Cape Products is mainly circumstantial. Adams v Cape Industries plc [1990] … Reference is made in the evidence to steps taken to monitor dust after the enactment of the Asbestos Regulations in 1969, but no information is provided about the steps taken before that date. For example (and leaving aside for the moment the fact that this evidence post-dated the relevant period), there was evidence that there had been a poor reaction to selling certain asbestos products and Dr Gaze and Dr Smither were involved in the solution. Whether a duty of care could be established from Cape plc to Mr Chandler  was dependent on the three stage test of (i) foreseeability of damage, (ii) proximity, and (iii) whether it was fair, just and reasonable for a duty of care to Mr Chandler to exist. Act 1974 and has been displayed in cases such as Associated Octel [1996] in the House of Lords. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. It was however the duty of the management on site to provide proper ventilation under the l937 Act. This was an additional strand of evidence and could not be determinative on its own. Chandler v. Cape: An Alternative to Piercing the Corporate Veil Beyond Kiobel v. Royal Dutch Shell. For example, if it could be shown that the parent company or organisation retained effective control over the health and safety policies, procedure, and expenditure of the subsidiary (i.e. They had contemporaneous minutes of board meetings and a long line of previous litigation involving Cape Plc with witness statements from those cases. 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: 24. 50. The parent company is not likely to accept responsibility towards its subsidiary's employees in all respects but only for example in relation to what might be called high level advice or strategy. On 14 April 2011, Wyn Williams J held that Cape was liable to Mr Chandler on the basis not of any form of vicarious liability or agency or enterprise liability, but on the basis of the common law concept of assumption of responsibility. Chandler filed a claim for compensation in the England and Wales High Court, Queen's Bench Division, against Cape PLC. The House did not therefore have to consider the basis of which such an action might succeed. 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. v) Cape's board minutes for 25 April 1961 and 16 May 1961 confirm Cape Products' status as a member of the group. FACTS Until 1979 the first defendant, Cape, an English company, presided over a group of subsidiary companies engaged in the mining in South Africa, and marketing, of asbestos. That’s Konexo. Chandler v Cape Plc [2012] EWCA Civ 525; [2012] 3 All ER 640 . 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 EWCA (Civ) 525. The court has first to say what the duty was before there can be any "causing or permitting" of any breach. 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". 59. 64. However, Mr Stuart-Smith submits that this was only an application to strike out a pleading and therefore all Wright J had to find was that the point was arguable. 5. 79. Mr Hodgson stated that Dr Gaze was Chief Chemist at the Barking laboratory while he was there. In Chandler, the U.K. Court of Appeal held the holding company directly responsible for the human rights violations committed by its subsidiary without the need to … This control does not need to involve the health and safety issues and does not imply that there is day to day involvement in this subsidiary. But there is a live issue as to the adequacy of the judge’s direction on this aspect. This appeal is brought by Cape plc ("Cape"), the parent company of Mr Chandler's former employer. This principle is born out of section 3 of the Health and Safety at Work etc. Although liability of parent companies … 49. 69. According to Dr Browne, Dr Gaze's responsibility extended to health and safety issues raised by research and development. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. What has been less clear is the potential for parent food and drink business operators to be liable for risks or actual harm being caused to the health and safety of employees working for their subsidiary companies or organisations. Please log in or sign up for a free trial to access this feature. Established liability to him from the parent or subsidiary carry out health and safety of employees found that he exposed... Andrew Bennett Associate Tel: 0845 497 6210 andrewbennett @ eversheds.com report a.: an alternative to Piercing the Corporate Veil Beyond Kiobel v. Royal Dutch Shell the! Accept Mr Stuart-Smith accepts chandler v cape there can be separated into a larger group companies... Proposition and I would reject it located at Barking and was involved with the health and at. 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