Parent companies can be held liable for the health and safety of their subsidiaries’ employees, the Court of Appeal has ruled in a case that will impact asbestos sufferers.
Devereux Chambers’ Robert Weir QC was instructed by Leigh Day & Co senior solicitor Vijay Ganapathy to represent David Chandler in his defence of the appeal by Cape, formerly one of the world’s largest asbestos manufacturers.
Jeremy Stuart-Smith QC of 4 New Square was instructed by Greenwoods Solicitors for the appellant.
Upholding the first-instance ruling Lady Justice Arden stated: “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.”
The claimant had been employed Cape subsidiary Cape Building Products between 1959 and 1961, during which time he suffered heavy asbestos exposure from the dust escaping from a factory
However, Cape Building Products no longer existed and had no policy of insurance that would indemnify it against claims for asbestosis. Consequently, the claim was launched against Cape on the basis that it was jointly and severally liable to pay him damages.
Historically parent companies have been able to avoid liabilities arising from work undertaken at their subsidiaries using the ’corporate veil’. This treats both parent and subsidiary as separate entities where one company cannot be found responsible for the actions of another.
Arden LJ stated: “A subsidiary and its company are separate entities. There’s no imposition or assumption of responsibility by reason only that a company is the parent company of another company.”
The judgment concluded: “There was, in my judgment, a direct duty of care owed by Cape to the employees of Cape Products. There was an omission to advise on precautionary measures even though it was doing research and that research hadn’t established, nor could it establish, that the asbestosis and related diseases weren’t caused by asbestos dust.”
Welcoming the ruling Ganapathy said: “It’s no longer an excuse for parent companies to hide behind an aged legal principle in circumstances where they know that workers are at risk, but still chose to do nothing to help them.
“This is of particular relevance in asbestos disease cases as many sufferers face insurmountable challenges in identifying and locating insurers for their former employers. As parent companies are much more likely to survive over the decades it takes for asbestos disease to develop, it should give hope to those now suffering that past negligence will not go unpunished.”