Question 1 2019
Question 1
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] , 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.’
Part A
The statement in the question above requires a detailed analysis of the law with regards to the tortious
liability of a Parent Company towards its subsidiaries. Disagreeing with the statement above, the essay
shall highlight the judicial approach referring to the Pre and Post Chandler V Cape case law and the
approach taken by UK Courts over the years and whether it has become stringent or relaxed.
Tortious liability has appeared to be, over the years through case law an area that has provided an
opportunity to escape and avoid the principle in Salomon v Salomon, a Parent Company can avoid
liability without giving compensation due to the limited liability principle. Two types of Creditors can be
seen; Voluntary, who suffer no loss at the Company bankruptcy and Involuntary Creditors who do not
have the same protection since they have no idea whether they their losses will be accounted for.
The Case of Connelly v RTZ Corporation PLC (1998) opened up the possibility that actions can be brought
against a parent company based in London for actions of subsidiaries aboard. A parent Company could
owe a duty of care to workers of Subsidiaries Company depending on amount of control exerted over
subsidiary company. Similarly in Lubbe v Cape Industries (2000), the HOL held that due to lack of legal
representation and expert advice in the subsidiary in South Africa, since it would amount to injustice,
the parent company in London was held to be liable.
In the landmark decision in Chandler v Cape PLC (2012), the claimant was employee of a wholly owned
subsidiary company of Cape who suffered an injury related to asbestos. The Subsidiary company had
shut down so the HC and the COA held that an assumption of responsibility by the Parent company over
health and safety policy at subsidiary company gave rise to a special relationship between the
employees and the parent company and gave rise to a duty of care. The four part test held that a duty of
care would arise in a circumstances where; the parent company and subsidiary are in relevant respect in
the same line of business, Parent company had or ought to have superior knowledge on some relevant
aspect of health and safety in particular industry as did the subsidiary company, parent company knew
Question 1
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] , 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.’
Part A
The statement in the question above requires a detailed analysis of the law with regards to the tortious
liability of a Parent Company towards its subsidiaries. Disagreeing with the statement above, the essay
shall highlight the judicial approach referring to the Pre and Post Chandler V Cape case law and the
approach taken by UK Courts over the years and whether it has become stringent or relaxed.
Tortious liability has appeared to be, over the years through case law an area that has provided an
opportunity to escape and avoid the principle in Salomon v Salomon, a Parent Company can avoid
liability without giving compensation due to the limited liability principle. Two types of Creditors can be
seen; Voluntary, who suffer no loss at the Company bankruptcy and Involuntary Creditors who do not
have the same protection since they have no idea whether they their losses will be accounted for.
The Case of Connelly v RTZ Corporation PLC (1998) opened up the possibility that actions can be brought
against a parent company based in London for actions of subsidiaries aboard. A parent Company could
owe a duty of care to workers of Subsidiaries Company depending on amount of control exerted over
subsidiary company. Similarly in Lubbe v Cape Industries (2000), the HOL held that due to lack of legal
representation and expert advice in the subsidiary in South Africa, since it would amount to injustice,
the parent company in London was held to be liable.
In the landmark decision in Chandler v Cape PLC (2012), the claimant was employee of a wholly owned
subsidiary company of Cape who suffered an injury related to asbestos. The Subsidiary company had
shut down so the HC and the COA held that an assumption of responsibility by the Parent company over
health and safety policy at subsidiary company gave rise to a special relationship between the
employees and the parent company and gave rise to a duty of care. The four part test held that a duty of
care would arise in a circumstances where; the parent company and subsidiary are in relevant respect in
the same line of business, Parent company had or ought to have superior knowledge on some relevant
aspect of health and safety in particular industry as did the subsidiary company, parent company knew
