header-logo header-logo

29 June 2012 / Malcolm Dowden
Issue: 7520 / Categories: Features , Company
printer mail-detail

Parents know best?

96588636_fmt_4

Malcolm Dowden considers the liability of a parent company

A parent company is not responsible for acts or omissions of its subsidiary simply by virtue of its status as parent. However, a parent company can be fixed with liability if its knowledge of, and ability to, intervene in the affairs of the subsidiary are sufficient to create a duty of care towards any person suffering damage or injury due to the subsidiary’s acts or omissions. Crucially, if a parent company has “superior knowledge” about the nature and management of particular risks, and is aware of a “systemic failure” on the part of its subsidiary, then the court may be willing to find a duty of care. It is more likely to do so if the subsidiary has been dissolved, has limited financial strength, and/or does not have insurance cover in relation to the relevant type of damage or injury.

Duty of care test

Caparo Industries v Dickman [1990] 1 All ER 568 established a three stage test to establish a duty of care:

  • Damage should be foreseeable;
  • The relationship between the
If you are not a subscriber, subscribe now to read this content
If you are already a subscriber sign in
...or Register for two weeks' free access to subscriber content

MOVERS & SHAKERS

Gateley Legal—Jack Kelly

Gateley Legal—Jack Kelly

Gateley Legal expands Midlands residential development team

Gibson Dunn—Richard Surtees

Gibson Dunn—Richard Surtees

Gibson Dunn adds employee benefits and executive compensation practice in London with partner Richard Surtees

Laytons ETL—Alec Cameron

Laytons ETL—Alec Cameron

Laytons ETL appoints new partner and head of intellectual property disputes

NEWS
A series of recent decisions has clarified important principles across property law, from perpetuities to lease renewals and public rights over land
Employers cannot rely on wellbeing services alone to defend workplace stress claims after a High Court decision awarding almost £1m to an overworked employee
Andy Burnham's brand of 'Manchesterism' could offer fresh thinking on legal aid and access to justice if it reaches Westminster, according to Roger Smith, NLJ columnist and former director of JUSTICE
The constitutional fallout from a change of prime minister, rather than the politics, is under scrutiny as questions arise over the limits of executive authority in a leadership transition
The legal profession is undergoing a fundamental shift from selling services to creating technology-enabled products, according to Professor Luke Mason, Head of School of Law at Regent's University London
back-to-top-scroll