Whether a party has assumed responsibility is a question of law. In the present case, Cape was clearly in the practice of issuing instructions about the products of the company, for instance, about product mixes. (Judgment, paragraph 73). 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. Chandler v Cape: The new parent company 'duty of care' for health & safety injuries 3 July 2012. Dr Gaze became a director of Cape in September 1961. 9 Thompson v Renwick Group Plc [2014] EWCA Civ 635, [2015] BCC 855. Mr Stuart-Smith did not produce any case establishing this proposition and I would reject it. The Supreme Court of Alabama ruled that if a grantor gives a deed to a third party to complete delivery and the grantor later dies before delivery is finalized, then the deed will be deemed validly delivered despite surrendering all rights to retrieve it. at [66]) The case is also important in connection with the issue of lifting of the corporate veil. In this case, the claimant, Mr Chandler, was employed by a subsidiary of Cape plc for just over 18 months from 1959 to 1962. There is an important exchange of letters between Dr Smither and Dr R Owen of HM Factory Inspectorate at the Ministry of Labour. The case concerned health and safety matters, but the Please enter your email address and if we recognise it, we will send you an email to reset your password. 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. Chandler v Cape: Piercing the Corporate Veil: Lessons in Corporate Governance Introduction 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. It is necessary to look at the scope of the policy to see the extent of any intervention. It is likely that courts will look at group structures holistically. Contract lawyers from Linklaters. He had been the works doctor at Cape Products from 1974, and from 1978 group medical adviser in succession to a Dr Smither. 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. More about our Environment & Climate Change capabilities. 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. Throughout the relevant period, there were directors of both companies in common which would have increased the flow of information between them. 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. There was also disagreement . They refer to discussions taking place at Uxbridge for the expansion of Asbestolux production. The judge should not, in any event, have used the material for the period 1962-70. Cape moreover had superior knowledge about the asbestos business. The same was true of the licensing of know-how to Nippon. 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. Cape Products was dissolved some years ago. 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 [2012] EWCA (Civ) 525. 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. This court is required to be satisfied for itself that the facts justified the imposition of liability. Mr Weir rejects the suggestion that the judge reversed the burden of proof. Browse and register for our upcoming events and explore materials from past events. 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. These were attended by representatives of a number of companies in this field, including Cape. For the better protection of its employees across the group, Cape appointed a group medical adviser in the 1950s, Dr Wyers. As Dr Browne had explained in his evidence in the 1994 proceedings, a person removed from dust exposure had a better prognosis. 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. 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. Dr Gaze, a qualified chemist, had been employed by Cape at its Barking factory from the 1940s. 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). Amplifying point (1) above, Mr Stuart-Smith submits that the judge erred in that he did not hold that Mr Chandler was required to prove features in the evidence which went beyond or as he put it were "outwith" the usual characteristics of the relationship between parent and subsidiary. The threads may for convenience be labelled as follows: Cape was involved in the production of asbestos from the nineteenth century and had several factories in the UK. 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). 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) ii) Erroneous finding as to the date on which Dr Gaze was appointed group chief chemist for Cape: Contrary to Mr Stuart-Smith's submission, there was evidence for the judge's finding on this point. (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. [2011] EWHC 951 (QB), LADY JUSTICE ARDENLORD JUSTICE MOSESandLORD JUSTICE MCFARLANE Chandler v Cape Plc 1. 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. What the judge is referring to is merely the evidential burden of proof. The form of the concession was as follows: Counsel did not address the same points in the same depth. It can be separated into a number of threads although some of the evidence belongs to more than one thread. Explore our latest insights to keep abreast of key legal developments. (Ibid. You can browse, search or filter our publications, seminars and webinars, multimedia and collections of curated content from across our global network. Mr Chandler worked for an asbestos manufacturer Cape Building Products Ltd which was a wholly owned subsidiary of Cape PLC between 1959 and 1962. 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. 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. 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 Court of Appeal stated that Cape plc assumed responsibility to Mr Chandler and owed a direct duty of care to Mr Chandler which it breached. The Cape board stressed the elimination of dust. Mr Stuart-Smith accepts that if the parent company were to take over the entirety of the subsidiary's operations, then a duty of care would be owed. Judgment details. 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) 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. In this case, submits Mr Weir, Cape Products as a subsidiary of Cape acquired assets from Cape. Product development, with a group chief chemist, was carried out in the Central Laboratory at Barking. While working for Cape, Dr Smither carried out research into the link between asbestos and lung disease. 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"). At 35 Sales LJ notes ‘Having set out the relevant factual background in relation to the proximity issue (i.e. 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). Cape Products had its own directors who owed separate fiduciary duties to it. There was a medical officer working in conjunction with Dr Gaze. By installing its business there, it must have implicitly undertaken a duty of care to ensure that its business was carried on without risk to the employees in the other business of Cape Products carried on at the Cowley Works. 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. 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. 1948) case opinion from the US Court of Appeals for the First Circuit The subsidiary went into liquidation. 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. iv) On 17 July 1956, Cape decided to sell the assets of its asbestos business at Uxbridge to Cape Products and to change the name of Cape Products to its existing name: there could be no other reason for a sale followed by a change of name other than that Cape wished Cape Products to be seen as part of the larger Cape group. 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. Products were for instance to be manufactured in accordance with its product specification. A manager was appointed "to manage this plant as a branch of Cape" (see. His witness statement, in conjunction with the other evidence, naturally led the judge to find that Dr Gaze was group chief scientist and that he worked in the group laboratory. Neutral citation number [2019] UKSC 20. They were interested in these things and their research was a continuation of the same theme. Mr Weir submits that the letters to and from Dr Smither have to be seen in the context of all the other evidence. If the position was that working methods were changing, there was no evidence of it. Our toolkits curate in-depth content on a particular legal theme or topic. Mr Browne said later that he was chief safety officer. 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. The board minutes of Cape for 31 October 1961 additionally gave approval for increased Asbestolux production. Chandler v Cape: Piercing the Corporate Veil: Lessons in Corporate Governance; Authors. Cape appeals against that decision. Keep up to speed on legal themes and developments through our curated collections of key content. Cape plc appealed, but its appeal was dismissed. Welcome to the Knowledge Portal. Cape started out as a tenant of Cape Products' site. ii) Whether Cape was proved to be in breach of the relevant duty. During the course of his employment, Mr Chandler was exposed to asbestos fibres and in 2007, Mr Chandler was diagnosed with asbestosis. After the Second World War, Cape looked for other factory premises because there was insufficient room at its Barking factory for increased production of a major asbestos product, Pluto board. Mr Chandler worked out of doors loading bricks produced by a brick manufacturing arm of Cape Products. 2d 780 (1982) Brief Fact Summary. This evidence was consistent with the case that the judge had found throughout the relevant period of employment. 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. 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. On appeal from the Superior Court of New Jersey, Chancery Division, Family Part, Hudson County, FV-09-524-06B Such documentation as exists demonstrates the absence of control or advice at any significant level. The court will look at the relationship between the companies more widely. UKSC 2017/0185. This was a case of a gross level of exposure to asbestos. Chandler v Cape plc [2012] EWCA Civ 525 Practical Law Resource ID 9-519-3697 (Approx. Lady Hale. This was an additional strand of evidence and could not be determinative on its own. It is convenient to deal with this ground first, since Mr Owen QC, for the appellant, realistically accepts 10 Martin Petrin, ‘Assumption of Responsibility in Corporate Groups: Chandler v Cape Plc’ (2013) 76(3) Modern Law Review 603. 7 Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415. 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. 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. (Asbestolux appears to have been a generic product, not one protected by intellectual property rights). Citation409 So. 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. _____ Submitted May 23, 2006 - Decided June 8, 2006. Given Cape's state of knowledge about the Cowley Works, and its superior knowledge about the nature and management of asbestos risks, I have no doubt that in this case it is appropriate to find that Cape assumed a duty of care either to advise Cape Products on what steps it had to take in the light of knowledge then available to provide those employees with a safe system of work or to ensure that those steps were taken. According to the judge, he was succeeded in 1957 by Dr W. H. Smither, but that date is challenged on this appeal. There is very little information that has come from Cape itself. 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. Dr Smither prepared a report following a visit to South Africa that was considered by the board of Cape in September 1962. This time the Court of Appeal held the parent liable in the tort of negligence. 10 Martin Petrin, ‘Assumption of Responsibility in Corporate Groups: Chandler v Cape Plc’ (2013) 76(3) Modern Law Review 603. He became an international authority in this field. 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. 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 board resolution suggests that, where the grant of a licence affected the interests of the group, Cape Products was making corporate decisions with regard to those interests, as well as those of itself as a separate legal entity. Therefore Cape had knowledge of the system of work in force at the Uxbridge factory. 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. 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. According to Dr Browne, Dr Gaze's responsibility extended to health and safety issues raised by research and development. 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. However, none of this evidence in fact takes matters much further. Chandler v Cape: Piercing the Corporate Veil: Lessons in Corporate Governance; Authors. He was also (if this label makes any difference) the group medical adviser of Cape. 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"). JORDAN CHANDLER, Plaintiff-Appellant, v. EVAN CHANDLER, Defendant-Respondent. It was a centre of activities on asbestos production issues. Hearing dates : 8-9 February 2012 Cape Products modified the empty factory for Cape's use in the production of Asbestolux (board minutes of 20 November 1954). 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. [New search] 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. As to the references in the correspondence to a "scheduled department", this appears to be one to which access was restricted unless the employee was wearing protective clothing. Health and safety issues were dealt with at company and parent company level. Chandler v Cape Plc [2012] EWCA Civ 525; [2012] 3 All ER 640 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. Accordingly, the judge was able to draw inferences from the fact that Dr Gaze was chief chemist scientist. 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. Cape in effect accepts that Cape Products failed in its duty to Mr Chandler. In that way, their cases can be seen, as they need to be seen, in the round. The judge says that there was systemic failure. We would like to show you a description here but the site won’t allow us. 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: This, on Cape's admission, was a case of blatant exposure. 8 Chandler v Cape Plc [2012] EWCA Civ 525, [2012] 1 WLR 3111. 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 … Vedanta Resources PLC and another (Appellants) v Lungowe and others (Respondents) Judgment date. Thus it is not a matter of what advice Dr Smither gave. I accept Mr Stuart-Smith's submission that Cape was not responsible for the actual implementation of health and safety measures at Cape Products. Added to those factors was the role played by Dr Smither. The works doctor was not a party to the correspondence although reference is made to him. (Chandler v Cape plc, supra at 1, at [2]). As the judge observed, the problem was systemic. To help you navigate and control risk in a challenging legal landscape, we have collated a range of key advice and guidance. 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. Cited – Mundy v Hook CA 18-Jul-1997 The court was asked whether an agreement was an assured shorthold tenancy agreement with the 1988 Act. There are a number of the board minutes preceding or in the relevant period in which Cape takes decisions about the expansion of Cape Products business. Adams v Cape Industries plc [1990] Ch 433 is a UK company law case on separate legal personality and limited liability of shareholders. There was no evidence produced by Cape Products. 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. 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. 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. At a board meeting on 1 November 1966 the board discussed a problem that had arisen in Northern Ireland over sales there. Chandler claimed that Cape should compensate him because it had undertaken responsibility for health and safety in … 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. Slowly but surely, Cape Products became a part of an integrated group of companies headed by Cape: The judge noted that Cape Products continued to be a separate company, and thus inferentially that the intention disclosed in. BAILII, ‘Chandler v cape Plc [2012] EWCA civ 525 (25 april 2012)’ (2012) accessed 20 December 2016 Cases. 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. He was 89 years old at the date of the trial. 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. In this case, the claimant, Mr Chandler, was employed by a subsidiary of Cape plc for just over 18 months from 1959 to 1962. You are using an outdated browser. Dr Smither began working for Cape as works doctor at Barking before he took up employment with Cape on 1 June 1962. They related to (1) the role of Dr Smither, (2) the role of Dr Gaze, (3) the exchange of correspondence between Dr Smither and the factory inspector, (4) the fact that Cape Products had acquired its asbestos business from Cape and (5) that, when it suited it Cape intervened in the management of Cape Products' business. Dr Smither was also a member of an industry-led expert body, the Asbestos Research Council, set up in the 1950s to lead research into the health and safety issues arising from asbestos. It is also common ground that the fact that Cape is the parent does not preclude the existence of the duty. 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. There were also common directors but every director has an independent responsibility for running the company and so the mere fact that there were common directors does not, on Mr Stuart-Smith's submission, imply a watering down of the subsidiary's obligations to its employees. The question is simply whether what the parent company did amounted to taking on a direct duty to the subsidiary's employees. 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. Asbestolux production Black, Lord Briggs had also contracted an asbestos-related disease while working for Cape as works was... 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