Lubbe v Cape plc

Last updated

Lubbe v Cape Plc
Tremolite Asbestos 250.jpg
CourtHouse of Lords
Decided20 July 2000
Citation(s)[2000] UKHL 41, [2000] 1 WLR 1545, [2000] 4 All ER 268
Case history
Prior action(s)[2000] 1 Lloyd's Rep 139
Court membership
Judge(s) sittingLord Bingham of Cornhill, Lord Steyn, Lord Hoffmann, Lord Hope of Craighead and Lord Hobhouse of Woodborough
Keywords
Tort, corporate veil, duty of care, forum non conveniens , group of companies

Lubbe v Cape Plc [2000] UKHL 41 is a conflict of laws case, which is also highly significant for the question of lifting the corporate veil in relation to tort victims. In this case it was alleged, and postulated by the House of Lords, that in principle it is possible to show that a parent company owes a direct duty of care in tort to anybody injured by a subsidiary company in a group.

Contents

Facts

Mrs Lubbe was exposed to asbestos while working for a South African subsidiary company of the UK parent company, Cape plc. The South African subsidiary had no money left and Cape Plc had no assets in South Africa. Her case was one of 3000 claims. The case was initiated in the high court in London. After her death, Mr Lubbe continued the court action as her personal representative and the administrator of her estate. [1] He alleged that the parent, Cape Plc, owed a direct duty of care in tort to him as a worker in the company group. Cape Plc was applying to stay the actions on the basis of forum non conveniens , submitting that they were an abuse of process on grounds that intention to launch a multi party action was not disclosed to the court. Mr Lubbe argued that the claims should not be stayed since, in South Africa, the legal aid necessary to continue the claim had been withdrawn, no contingency fee arrangement was available and no other source of funding would be available. The Court of Appeal refused Mr Lubbe's arguments and continued the stay, and Mr Lubbe appealed to the House of Lords.

Judgment

The House of Lords held unanimously that although South Africa was the more appropriate forum for hearing the claim, it was highly likely that legal representation for the claimants would be unavailable. The expert evidence suggested a denial of justice would result, exacerbated by the lack of procedures in South Africa to accommodate multi-party actions. This meant that lifting the stay was appropriate and the action continued in the English courts.

Lord Bingham made the following remark about the tort issue, [2]

20. The issues in the present cases fall into two segments. The first segment concerns the responsibility of the defendant as a parent company for ensuring the observance of proper standards of health and safety by its overseas subsidiaries. Resolution of this issue will be likely to involve an inquiry into what part the defendant played in controlling the operations of the group, what its directors and employees knew or ought to have known, what action was taken and not taken, whether the defendant owed a duty of care to employees of group companies overseas and whether, if so, that duty was broken. Much of the evidence material to this inquiry would, in the ordinary way, be documentary and much of it would be found in the offices of the parent company, including minutes of meetings, reports by directors and employees on visits overseas and correspondence. 21. The second segment of the cases involves the personal injury issues relevant to each individual: diagnosis, prognosis, causation (including the contribution made to a plaintiff's condition by any sources of contamination for which the defendant was not responsible) and special damage. Investigation of these issues would necessarily involve the evidence and medical examination of each plaintiff and an inquiry into the conditions in which that plaintiff worked or lived and the period for which he did so. Where the claim is made on behalf of a deceased person the inquiry would be essentially the same, although probably more difficult.

On a side issue, however, matters of public interest and policy were not relevant to determining which forum was best, and only private interests would be taken into account. [3]

Significance

The dicta of Lord Bingham were applied for the first time in Chandler v Cape plc . [4]

See also

Notes

  1. Lubbe and Others and Cape Plc. and Related Appeals (2000) UKHL 41 (20th July, 2000), accessed 5 December 2020
  2. [2000] 1 WLR 1545, 1556
  3. Spiliada Maritime Corp v Cansulex Ltd ( The Spiliada ) [1987] AC 460
  4. [2012] EWCA Civ 525, and see E McGaughey, 'Donoghue v Salomon in the High Court' (2011) 4 Journal of Personal Injury Law 249, on SSRN

Related Research Articles

Negligence is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.

Intentional infliction of emotional distress is a common law tort that allows individuals to recover for severe emotional distress caused by another individual who intentionally or recklessly inflicted emotional distress by behaving in an "extreme and outrageous" way. Some courts and commentators have substituted mental for emotional, but the tort is the same.

Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations may "pierce" or "lift" the corporate veil.

<i>Hedley Byrne & Co Ltd v Heller & Partners Ltd</i>

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 is an English tort law case on economic loss in English tort law resulting from a negligent misstatement. Prior to the decision, the notion that a party may owe another a duty of care for statements made in reliance had been rejected, with the only remedy for such losses being in contract law. The House of Lords overruled the previous position, in recognising liability for pure economic loss not arising from a contractual relationship, applying to commercial negligence the principle of "assumption of responsibility".

In tort law, a duty of care is a legal obligation that is imposed on an individual, requiring adherence to a standard of reasonable care to avoid careless acts that could foreseeably harm others, and lead to claim in negligence. It is the first element that must be established to proceed with an action in negligence. The claimant must be able to show a duty of care imposed by law that the defendant has breached. In turn, breaching a duty may subject an individual to liability. The duty of care may be imposed by operation of law between individuals who have no current direct relationship but eventually become related in some manner, as defined by common law.

<span class="mw-page-title-main">English tort law</span> Branch of English law concerning civil wrongs

English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.

Economic torts, which are also called business torts, are torts that provide the common law rules on liability which arise out of business transactions such as interference with economic or business relationships and are likely to involve pure economic loss.

<i>Caparo Industries plc v Dickman</i>

Caparo Industries PLC v Dickman[1990] UKHL 2 is a leading English tort law case on the test for a duty of care. The House of Lords, following the Court of Appeal, set out a "three-fold test". In order for a duty of care to arise in negligence:

<i>Adams v Cape Industries plc</i>

Adams v Cape Industries plc [1990] Ch 433 is a UK company law case on separate legal personality and limited liability of shareholders. The case also addressed long-standing issues under the English conflict of laws as to when a company would be resident in a foreign jurisdiction such that the English courts would recognise the foreign court's jurisdiction over the company. It has in effect been superseded by Lungowe v Vedanta Resources plc, which held that a parent company could be liable for the actions of a subsidiary on ordinary principles of tort law.

<i>Burnie Port Authority v General Jones Pty Ltd</i> Judgement of the High Court of Australia

Burnie Port Authority v General Jones Pty Ltd is a tort law case from the High Court of Australia, which decided it would abolish the rule in Rylands v Fletcher, and the ignis suus principle, incorporating them generally into the tort of negligence.

<i>Williams v Natural Life Health Foods Ltd</i>

Williams v Natural Life Health Foods Ltd[1998] UKHL 17 is an important English tort law, company law and contract law case. It held that for there to be an effective assumption of responsibility, there must be some direct or indirect conveyance that a director had done so, and that a claimant had relied on the information. Otherwise only a company itself, as a separate legal person, would be liable for negligent information.

<i>Chandler v Cape plc</i>

Chandler v Cape plc [2012] EWCA Civ 525 is a decision of the Court of Appeal which addresses the availability of damages for a tort victim from a parent company, in circumstances where the victim suffered industrial injury during employment by a subsidiary company.

<i>Connelly v RTZ Corp plc</i>

Connelly v RTZ Corporation plc[1997] UKHL 30, [1999] CLC 533 is a conflicts of laws case, important for UK company law and English tort law, concerning the claim of a worker in Namibia attempting to sue an employer headquartered in the United Kingdom for breach of the duty of care to ensure proper health and safety in the workplace.

<i>Spring v Guardian Assurance plc</i> United Kingdom labour law court case

Spring v Guardian Assurance plc[1994] UKHL 7, [1995] 2 AC 296 is a UK labour law and English tort law case, concerning the duty to provide accurate information when writing an employee reference.

<span class="mw-page-title-main">Floodgates principle</span>

The floodgates principle, or the floodgates argument, is a legal principle which is sometimes applied by judges to restrict or limit the right to make claims for damages because of a concern that permitting a claimant to recover in such situations might open the metaphorical "floodgates" to large numbers of claims and lawsuits. The principle is most frequently cited in common law jurisdictions, and in English tort law in particular.

<i>Maharanee of Baroda v Wildenstein</i>

HRH the Maharanee of Baroda v Wildenstein, was a decision of the English Court of Appeal relating to the conflict of laws, and specifically whether the English courts should take jurisdiction in relation to a claim which had no substantial connections with England on the basis that the defendant was served with proceedings during a brief visit to the country.

<i>Lungowe v Vedanta Resources plc</i> Legal case heard by the UK Supreme Court

Lungowe v. Vedanta Resources plc [2019] UKSC 20 is a UK company law and English tort law case, concerning business liability for human rights violations, environmental damage and the duty of care owed by a parent company.

<i>Société Nationale Industrielle Aérospatiale v Lee Kui Jak</i>

Société Nationale Industrielle Aérospatiale v Lee Kui Jak[1987] UKPC 12, [1987] AC 871 is a judicial decision of Privy Council on appeal from Brunei which was for many years, and arguably still is, the leading authority in relation to anti-suit injunctions under the English common law.

<i>Hill v Chief Constable of West Yorkshire</i>

Hill v Chief Constable of West Yorkshire[1987] UKHL 12, [1989] AC 53 was a judicial decision of the House of Lords in relation to the claim by the mother of Jacqueline Hill against West Yorkshire Police that their negligence in failing to apprehend the killer resulted in her daughter's death.

<span class="mw-page-title-main">Koegas mine</span> Mine in Northern Cape, South Africa

The Koegas mine was a crocidolite mine in Northern Cape, South Africa. It lies near to the town of Prieska and drew much of its workforce from there and Griquatown; though significant proportions also came from Botswana, Zimbabwe and Malawi. The mine was opened by Cape Asbestos Company Limited in 1893. Its small-scale operations were unprofitable and it temporarily ceased work in 1903. Production resumed in 1907 and the First World War led to a boom. The mine eventually became the largest crocidolite mine in the world. After a difficult period during the Great Depression the Second World War and post-war economic boom led to an increase in production, with up to 5,000 miners on site. Extraction and milling of asbestos continued until 1979.

References