Answer BOTH of the following:
a) ‘A parent company should be liable for any injuries negligently inflicted by its
subsidiaries. Unfortunately, despite the decision in Chandler v Cape plc [2012] EWCA
Civ 525, UK law is moving away from this position.’ Discuss.
b) ‘The case of Prest v Petrodel Resources Ltd [2013] UKSC 32 has made the law
regarding the piercing of the corporate veil much more certain, but much less
effective.’ Discuss.
Introduction
- The concept of separate legal personality originates from the case of Salomon v
Salomon 1897.
- The case of Salomon v Salomon 1897 provides that the shareholder and the
company are two different entities. The law states that the shareholder cannot be
held personally liable for the actions of the company.
- Over the years, this principle has been extended to multinational
companies/parent subsidiaries. This is to say that in a parent subsidiary
equation the parent company will not be held liable for the actions of the
subsidiary. This principle can be seen in cases such as DHN Towers v Hamlet
1976, Woolfson v Strathclyde RC 1978 HOL and others.
- This concept also extends to personal injury cases such as Adams v Cape, 1996
COA, Chandler v Cape 2012.
- The case of Prest v Petrodel Resources Ltd [2013] has reasserted the principle of
separate legal personality, but made it known to look at the true intentions of
the actor.
A) In a situation where there is a parent and subsidiary company concerning
personal injury cases, the law has established several cases that deal with
this issue.
o Conelly v RTZ (1997) (HOL) Mr Conelly worked in a subsidiary company of
RTZ in Namibia of Uranium Mines , later developed health problems
(Cancer) wanted to sue RTZ ( Parent Company)in London as it owed a duty
of care to its subsidiaries. Courts held that the matter could not be heard
in Namibia as there was an issue of complexity, cost and evidence. London
was held to be the best forum. As much as the courts were able to
, establish jurisdiction when it came to a claim in the English Courts the
action was time barred under the Limitation Act 1980.
o Lubbe v Cape 2000(HOL) there was a subsidiary company in South Africa
mining asbestos which lead to injuries. Over 3000 claims were brought
against the parent company in London for death and personal injury. HOL
London was the most appropriate forum as it was easier to establish
evidence and had better expert evidence to substantiate claims. But here
the parties decided for an out of court settlement for £ 21 million
o Chandler v Cape 2012 CA was able to clarify the law in this case the
claimant, Mr Chandler, was employed for a short time by Cape Building
Products Limited ("Cape Products") in the later 1950s and early 1960s.
During the course of his employment he was exposed to asbestos fibres.
Mr Chandler was diagnosed with asbestosis in 2007. Cape Products was
dissolved some time ago and, in any event, its insurance policy contained
a very broad exclusion that would have prevented recovery for this illness
against its insurer. In view of this, Mr Chandler began proceedings against
Cape Products' parent company, Cape PLC. As a general proposition,
parent companies are not liable for the negligence of their subsidiaries on
the basis that each has a distinct legal personality and it should, as a rule,
not be possible to "pierce the corporate veil". In this case, however, the
Court of Appeal held that the parent company, Cape PLC, was
liable (although, technically, the corporate veil was not pierced). The
courts held that the parent was liable to the subsidiary through a duty of
care, among the factors that were considered were as follows:
o Are the businesses of the parent and subsidiary in a relevant respect the
same?
o Does the parent have, or ought it to have, superior knowledge on some
relevant aspect of health and safety in the particular industry?
o Does the parent know (or ought it to know) that the subsidiary's system of
work is unsafe in some way?
o Does the parent know (or ought it to have foreseen) that the subsidiary or
its employees would rely on its using that superior knowledge for the
employees' protection?
a) ‘A parent company should be liable for any injuries negligently inflicted by its
subsidiaries. Unfortunately, despite the decision in Chandler v Cape plc [2012] EWCA
Civ 525, UK law is moving away from this position.’ Discuss.
b) ‘The case of Prest v Petrodel Resources Ltd [2013] UKSC 32 has made the law
regarding the piercing of the corporate veil much more certain, but much less
effective.’ Discuss.
Introduction
- The concept of separate legal personality originates from the case of Salomon v
Salomon 1897.
- The case of Salomon v Salomon 1897 provides that the shareholder and the
company are two different entities. The law states that the shareholder cannot be
held personally liable for the actions of the company.
- Over the years, this principle has been extended to multinational
companies/parent subsidiaries. This is to say that in a parent subsidiary
equation the parent company will not be held liable for the actions of the
subsidiary. This principle can be seen in cases such as DHN Towers v Hamlet
1976, Woolfson v Strathclyde RC 1978 HOL and others.
- This concept also extends to personal injury cases such as Adams v Cape, 1996
COA, Chandler v Cape 2012.
- The case of Prest v Petrodel Resources Ltd [2013] has reasserted the principle of
separate legal personality, but made it known to look at the true intentions of
the actor.
A) In a situation where there is a parent and subsidiary company concerning
personal injury cases, the law has established several cases that deal with
this issue.
o Conelly v RTZ (1997) (HOL) Mr Conelly worked in a subsidiary company of
RTZ in Namibia of Uranium Mines , later developed health problems
(Cancer) wanted to sue RTZ ( Parent Company)in London as it owed a duty
of care to its subsidiaries. Courts held that the matter could not be heard
in Namibia as there was an issue of complexity, cost and evidence. London
was held to be the best forum. As much as the courts were able to
, establish jurisdiction when it came to a claim in the English Courts the
action was time barred under the Limitation Act 1980.
o Lubbe v Cape 2000(HOL) there was a subsidiary company in South Africa
mining asbestos which lead to injuries. Over 3000 claims were brought
against the parent company in London for death and personal injury. HOL
London was the most appropriate forum as it was easier to establish
evidence and had better expert evidence to substantiate claims. But here
the parties decided for an out of court settlement for £ 21 million
o Chandler v Cape 2012 CA was able to clarify the law in this case the
claimant, Mr Chandler, was employed for a short time by Cape Building
Products Limited ("Cape Products") in the later 1950s and early 1960s.
During the course of his employment he was exposed to asbestos fibres.
Mr Chandler was diagnosed with asbestosis in 2007. Cape Products was
dissolved some time ago and, in any event, its insurance policy contained
a very broad exclusion that would have prevented recovery for this illness
against its insurer. In view of this, Mr Chandler began proceedings against
Cape Products' parent company, Cape PLC. As a general proposition,
parent companies are not liable for the negligence of their subsidiaries on
the basis that each has a distinct legal personality and it should, as a rule,
not be possible to "pierce the corporate veil". In this case, however, the
Court of Appeal held that the parent company, Cape PLC, was
liable (although, technically, the corporate veil was not pierced). The
courts held that the parent was liable to the subsidiary through a duty of
care, among the factors that were considered were as follows:
o Are the businesses of the parent and subsidiary in a relevant respect the
same?
o Does the parent have, or ought it to have, superior knowledge on some
relevant aspect of health and safety in the particular industry?
o Does the parent know (or ought it to know) that the subsidiary's system of
work is unsafe in some way?
o Does the parent know (or ought it to have foreseen) that the subsidiary or
its employees would rely on its using that superior knowledge for the
employees' protection?
