English Court Finds Cape Is Liable For Subsidiary's Asbestos-Related Activities

English Court Finds Cape Is Liable For Subsidiary's Asbestos-Related Activities

LONDON - (Mealey's) After determining that Cape PLC had a duty to share knowledge that it had about the risks of asbestos with its subsidiary and information on how to provide employees with a safe working environment, an England and Wales appeals court on April 25 found that Cape PLC, as the parent company, was responsible for the activities of its subsidiary and was liable for an employee's asbestosis (David Brian Chandler v. Cape PLC, No. [2012] EWCA Civ 525, England and Wales App.).   

(Judgment. Document #64-120515-003X.)

Asbestolux  

David Brian Chandler was employed by Cape Building Products Ltd. (Cape Products) at a property where the company manufactured bricks and incombustible asbestos board known as Asbestolux.

Cape PLC, the parent company of Cape Products, admitted that the two activities were completed in different areas of the plant but that asbestos still spread throughout the building. In 2007, Chandler was diagnosed with asbestosis, which he alleged was caused by exposure to asbestos while working for Cape Products.  However, Cape Products was no longer in existence. 

Joint Liability 

Chandler filed a claim for compensation in the England and Wales High Court, Queen's Bench Division, against Cape PLC.  Chandler alleged that Cape PLC and Cape Products were joint tortfeasors, that they owed him a duty of care and that they were jointly and severally liable to pay him damages.

Before the trial ended, Justice Wyn Williams said quantum of damages was agreed, subject to liability, at 120,000 pounds.  Justice Williams said that if it was found that Cape PLC was liable, it was agreed that Cape PLC would submit a provisions award of damages in that amount.  Justice Williams found that Cape PLC was liable to Chandler on the basis of the common law concept of assumption of responsibility. 

Cape PLC appealed to the England and Wales Court of Appeal.   

Direct Knowledge 

The appeals court said Cape PLC had knowledge of the activities at Cowley Works, the site of two of its factories, where Chandler worked.  The appeals court also said Cape PLC had a superior knowledge of the management of asbestos risks at the relevant time.  Considering Cape PLC's knowledge of the activities at Cowley Works and the risks associated with asbestos, the appeals court found that Cape PLC assumed a duty to advise Cape Products with the knowledge on how to provide employees with a safe working environment.   

The appeals court noted that Justice Williams found that Cape PLC was responsible for providing Cape Products with instructions in other matters.  The appeals court found that Cape PLC owed a direct duty to Cape Product's employees.

"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.  Those circumstances include a situation where, as in the present case, (1) the businesses of the parent and subsidiary are in a relevant respect the same; (2) the parent has, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; (3) the subsidiary's system of work is unsafe as the parent company knew, or ought to have known; and (4) the parent knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees' protection.  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 court will look at the relationship between the companies more widely. The court may find that element (4) is established where the evidence shows that the parent has a practice of intervening in the trading operations of the subsidiary, for example production and funding issues," Lady Justice Mary Howarth Arden wrote for the court.  

The case was heard by Lady Justice Arden and Justices Alan George Moses and Andrew Ewart McFarlane.

Counsel 

Chandler is represented by Robert Weir QC, Sudhanshu Swaroop and Simon Levene, instructed by Leigh Day & Co in London.

Cape PLC is represented by Jeremy Stuart-Smith QC and Charles Feeny, instructed by Clarke Wilmot Solicitors in London. 

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