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Corporate Structure Unravels Asbestos Damages Claim

Published: 12 May 2014, in categories: Personal Injury Updates | Legal Updates | News and Updates

In a case which reveals that entitlement to compensation for personal injury can sometimes depend on analysis of complex corporate structures, a man who must bear the consequences of asbestos exposure at work in the 1970s has had his compensation hopes dashed by the Court of Appeal.

The man, aged 60, had worked in ‘quite shocking’ conditions as a labourer and truck driver, handling vast quantities of raw asbestos packaged in nothing more protective than hessian sacks. By the time his case came to court, he already suffered from acute respiratory problems and lived under the shadow of a greatly increased risk of developing lung cancer or mesothelioma.

He had begun work as a teenage labourer for a transport firm in 1969. That company was later taken over by another, for whom he worked as a lorry driver until 1978. By 1975, following a series of corporate deals, a holding company had indirectly acquired all the shares in both companies.

Neither of the man’s former employers were ‘worth powder and shot’ to sue and neither apparently had in place appropriate liability insurance. However, a judge ruled in 2013 that their parent company could be held legally responsible for his injuries.

However, in allowing the highly diversified holding company’s appeal, the Court found that it had not had day-to-day control over the management of its subsidiaries. Despite the 'intermingling' of the various businesses – including the use of common depots and other resources – there was no evidence that the holding company either knew, or should have known, of the health risks being run by its subsidiaries.

The holding company had not itself been involved in the transport business or anything other than owning shares in other companies. Although the subsidiaries may have operated as divisions of a single group, that did not mean that their legal personalities, separate from that of their overall parent company, were not retained and respected. In those circumstances, the evidence fell far short of establishing that the holding company owed a duty of care to the employees of its subsidiaries.

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