Asbestos compensation can be won from a parent company

What if you worked for a company many years ago and were exposed to asbestos?

You contract an asbestos related industrial disease and seek compensation. You then find the company you worked for no longer exists, and the insurance policy it had for liability to its employees did not cover asbestos exposure. What are you to do?

The answer might be to check if your company was a subsidiary of another company.

The story in a case called Chandler v Cape PLC went like this. Mr Chandler worked for an asbestos manufacturer Cape Building Products Ltd which was a wholly owned subsidiary of Cape PLC between 1959 and 1962. In 2007 Mr Chandler discovered he had contracted asbestosis from exposure to asbestos dust. The problem was that by that time the employer company, Cape Building  Products Ltd, no longer existed. That is not a problem if the company was insured at the time of the employment, but here its employee liability insurance policies excluded asbestosis. The answer was to bring a negligence claim against Cape PLC, the parent company, on the basis it owed and had breached a duty of care to Mr Chandler.

The High Court found for Mr Chandler, and the Court of Appeal agreed. This is a powerful case for Claimants in asbestos and other industrial disease compensation cases.

Don’t get carried away though, as a close relationship between the companies must be proved. The Court of Appeal used these guidelines:

1) the business of the parent and subsidiary were in a relevant respect the same;
2) the parent had, or ought to have had, superior knowledge on some relevant aspects of health and safety in the particular industry;
3) the parent company knew the subsidiary’s system of work was unsafe, or ought to have known;
4) the parent had known or ought to have foreseen that the subsidiary or its employees would rely on the parent using that superior knowledge for the employee’s protection.

So what you must show is the organisations were one and the same, and the parent knew exactly what was going on in the subsidiary. So a very close relationship is necessary between the companies.

These cases are hard fought as insurance companies which received a premium, and companies using asbestos, many years ago are still paying out compensation for the long term damage done by asbestos. They are determined to bring their liabilities to an end, so every now and then test cases are run. If an appeal is possible I am sure Cape PLC will take their chance and run its argument again.

The trouble for Cape is that it was a company heavily involved in asbestos, with knowledge of its dangers. Setting up subsidiary companies to concentrate in different business areas may have made sense in business terms, but in legal terms it did not create a barrier to liability for injury.

The full case report is at http://www.bailii.org/ew/cases/EWCA/Civ/2012/525.html

The case title in the Court of Appeal is David Brian Chandler v Cape PLC [2012] EWCA Civ 525

About Mark Thompson

Personal injury and accident specialist solicitor
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