Holding Company Liability For Health And Safety

The Court of Appeal has recently overturned a County Court decision and confirmed that a group holding company was not liable to an employee of one of its subsidiaries who had contracted asbestosis.

David Thompson was exposed to asbestos dust at work in the mid-1970s. He was employed by two companies in the Renwick group during this time, but neither had sufficient assets to be worth suing and neither had responsive liability insurance. He therefore sought to claim damages from the holding company, The Renwick Group plc.

In order for his claim to be successful, he had to establish that the holding company owed a direct duty of care to the employees of its subsidiaries in health and safety matters.

The Court quickly dismissed the idea that a holding company can be held to have assumed such a duty simply by appointing an individual as director of the subsidiary with responsibility for health and safety. In carrying out his role, the director would not be acting on behalf of the holding company but pursuant to the fiduciary duty he would owe as a director of the subsidiary.

So Mr Thompson would have to find other evidence to show that the holding company had taken on a direct duty of care to him.

In 2012, the Court of Appeal found that Cape plc had taken on such a duty to its subsidiaries' employees in circumstances where:

the businesses of the holding company and subsidiary were in a relevant respect the same; the holding company had, or ought to have, superior knowledge on some relevant aspect of health and safety in the particular industry; the subsidiary's system of work was unsafe as the holding company knew, or ought to have known; and the holding company knew or ought to have foreseen that the subsidiary or its employees would rely on its using that superior knowledge for the employees' protection (where, for example, the holding company has a practice of intervening in the trading operations of the subsidiary). However, the Court of Appeal thought the facts in Mr Thompson's case against The Renwick Group were very different. In order for him to have any prospect of succeeding in his claim, he would have to show that the holding company was engaged in a business involving the...