Many parent companies with a focus on cost and efficiencies centralise certain group functions. In doing so, they may not have realised that there may be exposure to liability arising from the implementation of these functions in their subsidiaries.
They also may have sought comfort in the feeling that they would be protected by the corporate veil, in that, a shareholder is treated as a separate legal entity from the company and is not normally personally liable for the debts of the company.
The English courts in two decisions some years ago (the last being an unreported decision 1996) had indicated that it was arguable that a parent company could owe a duty of care which is an obligation to avoid acts or omissions which can be reasonably foreseen to be likely to cause harm to employees of its subsidiaries.
This issue was the subject of a recent decision by the English Court of Appeal in Chandler v Cape PLC (2012 EWCA).
This arose from a claim by Chandler who had been an employee of one of Cape's subsidiaries, Cape Products, and had contracted asbestosis as a result of being exposed to asbestos during the subsidiary's operations.
The subsidiary was already dissolved before the claimant was diagnosed with the illness and there was no insurance to cover him so that he was only left with the parent company as a target.
He therefore brought a claim against the parent company Cape PLC on the basis that the system of work at the subsidiary had been unsafe and that the parent company was liable as it owed a duty of care to him as it had accepted responsibility for the health and safety of the employees of the subsidiary and had control over that part of the subsidiary's business.
'via Blog this'
No comments:
Post a Comment