Historic judgment as asbestos victim wins damages from employer's parent company

An asbestosis sufferer from London has won an historic case at the Court of Appeal against one of the World’s former largest asbestos manufacturers, Cape PLC. The landmark judgment sets a new legal precedent for holding parent companies accountable.

In the judgment, handed down today (Wednesday 25 April 2012), the Court of Appeal upheld a decision by the High Court in April 2011 to find Cape PLC, as the parent company, responsible for the activities of its subsidiary, Cape Building Products Limited.

In her judgment Lady Justice Arden said:

“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.”

David Chandler, 71, now lives near Melbourne Australia with his wife Marjorie. He was employed by Cape Building Products Limited (previously Uxbridge Flint Brick Company), a subsidiary of Cape PLC, between 1959 and 1961 where he suffered heavy asbestos exposure from the dust escaping from a factory at the Iver Lane site in Uxbridge.

Mr Chandler was diagnosed with asbestosis in 2007. Unable to pursue a claim against Cape Building Products, due to an 'asbestosis exclusion clause' in its insurance policy, Mr Chandler’s lawyers, Leigh Day & Co, pursued the claim instead against Cape PLC.

Historically parent companies have been able to avoid any liabilities arising from work undertaken at its subsidiaries by hiding behind what is known as the 'corporate veil'. This treats both parent and subsidiary as separate entities where one company cannot be found responsible for the actions of another.

However, today’s decision means that parent companies can be held liable for the practices of their subsidiaries irrespective of the ‘corporate veil’.

The judgment will not only have far reaching ramifications for companies in this country with subsidiaries in the UK but also multinational companies headquartered in the UK with subsidiaries in developing countries where their operations have greater potential to cause direct harm to workers, the local environment and consumers.

In the past many factors have made it virtually impossible for victims overseas to sue the subsidiaries of multinational companies in their local courts, these include corruption, insolvency, fear of persecution and lack of legal funding.

In this ground breaking case Leigh Day & Co provided evidence that Cape PLC were directly involved in, and knew about, the health & safety effects on the workers at Cape Building Products Limited from asbestos exposure.

This included the fact that Cape PLC employed group medical and safety officers who oversaw health & safety matters of the asbestos workers of its subsidiaries and that it had close involvement with governmental organisations concerned with asbestos safety.

The Judge also found it significant that the boards of both parent and subsidiary companies shared Directors showing Cape PLC were aware of what was going on at its subsidiaries factories.

Vijay Ganapathy, senior solicitor in Leigh Day's Industrial Disease Department, who represented Mr Chandler, said:

“This historic judgment gives hope to thousands of victims not just of industrial disease but also those injured or who have been denied justice in the past through the complexity and sometimes cruelly contrived nature of corporate structuring.

“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.

“Cape's asbestos legacy is particularly shocking, with so many subsidiaries involved in asbestos work, causing exposure to many hundreds, if not thousands of people over many years. What is more surprising, is that this work continued despite what the Court of Appeal described as a 'superior knowledge' of the danger to their workers“