UK: England and Wales: parent company owed duty of care to employee of subsidiary

Earlier this month, in Chandler v Cape plc [2011] EWHC 951 (QB), the trial judge held that a parent company (Cape plc) owed a duty of care to one of the employees of a subsidiary company (Cape Products). A copy of the judgment is not yet available on BAILII but has been published by Devereux Chambers: see here (Word). A short summary of the case has been published by LexisWeb: see here. Before considering whether a duty of care was owed, in accordance with the three stage test in Caparo Industries Plc v Dickman [1990] 2 AC 605, the trial judge made these important points (para. [66]):

... it is necessary to dispel certain possible misunderstandings which might arise in cases of this type or upon a cursory reading of this judgment. First, the fact that the Claimant was owed a duty of care by Cape Products does not prevent such a duty arising between the Claimant and other parties. No doubt, the fact that a duty situation exists between the Claimant and his employer is a factor to be taken into account when deciding whether another party owes the Claimant such a duty. But, to repeat, the existence of the duty between the Claimant and his employer cannot preclude another person being fixed with a duty of care. Second, the fact that Cape Products was a subsidiary of the Defendant or part of a group of companies of which the Defendant was the parent cannot mean by itself that the Defendant owes a duty to the employees of Cape Products. So much is clear from Adams v Cape Industries plc [1991] 1 AER 929. Equally, the fact that Cape Products was a separate legal entity from the Defendant cannot preclude the duty arising. Third, this case has not been presented on the basis that Cape Products was a sham – nothing more than a veil for the activities of the Defendant. Accordingly, this is not a case in which it would be appropriate to 'pierce the corporate veil' ".