Revisiting the Direct Liability of Parent Entities Following Chandler v Cape Plc

Abstract

The Court of Appeal of England and Wales in Chandler v Cape plc [2012] 1 WLR 3111; [2012] EWCA 525 held that a parent company owed a duty of care to an employee of its wholly-owned subsidiary. The leading judgment of Arden LJ, however, overlooked similar jurisprudence in Australia, particularly the judgment of the New South Wales Court of Appeal in CSR Ltd v Wren (1997) 44 NSWLR 463. This article analyses and compares the judgments in these two cases in order to illustrate how Arden LJ’s approach to the knowledge and control of the parent company in Chandler increases the risk that parent entities will be liable in tort for the harmful activities of their subsidiaries. Although Chandler is not binding on Australian courts, the risk of cross-jurisdictional pollination in the development of the common law encourages caution in the exercise of control by a parent entity over its subsidiaries. This article concludes by considering the private international law rules that impede parent liability claims against multinational corporate groups for wrongs occurring in foreign jurisdictions.

Keywords: corporations law, corporate groups, group liability, tort, private international law, Chandler v Cape plc