Q1.

I agreed with the above statement that UK law is moving away from the
position of holding parent company liable for injuries negligently inflicted
by its subsidiaries. As we can see the cases that have been ruled on following
Chandler v Cape, suggest that UK courts are becoming more hesitant to
impose a duty of care on parents companies.

Under some specific situations, it is possible that the parent company could
be held liable for not ensuring the safety of employees working for its
subsidiary. This could occur, for example, if the parent company was
involved in creating or providing guidance for the subsidiary's policies on
health, safety, and environmental matters - Connelly v RTZ. Also in Lubbe v
Cape, the court held that Cape could be held liable for the conduct of its
subsidiary, and that the subsidiary did not have separate legal identity that
could protect the parent company from liability. According to Muchilinksi
(2002) Salomon is limited to protecting shareholders rather than the parent
company.

Furthermore, the Court of Appeal affirmed the decision of the High Court in
Chandler v Cape which found that a parent company had an obligation to
ensure the safety of a subsidiary company employee by providing guidance
or implementing a secure work system.The Court of Appeal stated that the
case didn't establish a rule that a parent company is automatically liable for
the actions of its subsidiaries simply because it's the parent. Instead, the
court emphasized that whether the parent company owes a duty of care to
affected parties depends on the level of involvement the parent company had
in the subsidiary's conduct.The Court used the same approach as the High
Court previously did to determine whether a duty of care existed. This
approach involves a three-part test, which was established in the case Caparo
v Dickman. The test considers foreseeability, proximity, and fairness.The
Court also established guidelines for determining the duty of care of a parent
company towards the safety and well-being of employees working for a
subsidiary company where first the parent company that owns the subsidiary
also works in the same industry, which means they should have had similar
knowledge about health and safety issues. Second, the parent company was
aware, or should have known that the subsidiary's operations were unsafe,
and lastly that the subsidiary and its employees were depending on the
parent company to ensure their health and safety.The decision of the Court
of Appeal in the case of Chandler v Cape has created a fresh and potentially
less complicated pathway for employees of a subsidiary, and conceivably
even the subsidiary company itself, to pursue legal action against the parent
company for injuries related to health and safety. But as mentioned above,
court still hesitant to impose duty of care on parent company in recent years.

In Thompson v Renwick Group, it was held that the parent company could
be liable only if it could be demonstrated that the parent company was not
solely functioning as a pure "holding company," as it would then be fair, just,
and reasonable ( Caparo v Dickman) to do so." It was stated that the court of
appeal in Thompson confirmed that the exceptional to orthodox view of
holding parent company liable for its subsidiary’s act or omission only in
truly exceptional circumstance (Responsibility in Groups of Companies and
the Future of International Human Rights and Environmental Litigation
(2015) 74(1) Cambridge Law Journal 30-34). Okpabi v Royal Dutch Shell
followed the same approach as the Thompson case, where the parent
company will only be considered liable if it has committed misfeasance.
Should be noted that, in Chandler proposed that the parent company should
be held liable even if it fails to act( non-feasance). Even though,the rule in
Okpabi, provides clarity and certainty for parent companies about their legal
obligations and potential liabilities in relation to their subsidiaries, this is the
stricter approach taken by court.

Moreover, the court suggested in AAA v Unilever that a duty of care is owed
by the parent company if they have essentially taken control of the
management of the subsidiary's operations or specific activity of the
subsidiary that resulted in the injury. The Courts have firmly stated that,
despite holding the parent company own its duty of care, it cannot be
claimed that the corporate veil was lifted.

In conclusion, even though court willing to hold parent company liable for
its subsidiary’s act or omission in specific circumstances, but court still
hesitant to impose duty of care on parent company as can see in recent cases
discussed above, hence it’s proving that UK law is moving away from the
position of holding parent company liable for injuries negligently inflicted
by its subsidiaries.

Question?

I disagreed that the case of Prest v Petrodel Resources Ltd has made the law
more certain but actually it’s make more confusion.

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In the case of Prest v Petrodel Resources Ltd , Lord Sumption, Lady Hale,
Lord Wilson, and Lord Mance referred to 'veil-piercing' as an established
principle, while Lord Neuberger and Lord Clarke referred to it as a doctrine.
However, Lord Walker had doubts about the existence of an independent
doctrine of 'veil-piercing', as there were no clear examples supporting its
existence. Instead, he viewed 'veil-piercing' as a term used to indicate cases
where the court imposed liability on the company controller, based on
statutory provisions or common law grounds such as equity and trust.
In the case of Prest, which involved a marital dispute, the Supreme Court
chose not to pierce the corporate veil because the company had been set up
prior to the dispute. Within the case, Lord Sumption identified two distinct
principles related to 'veil-piercing' which are evasion and concealment.
According to Lord Sumption’s evasion principle,"veil-piercing" is applicable
only in situations where a person intentionally uses a company they control
to avoid or undermine their existing legal obligations or liabilities. Lord
Neuberger agreed with Lord Sumption’s formulation of evasion principle-
Lightman 2013.

Lord Sumption argued in the Prest that the injunctions issued against the
company and Mr. Gilford in the Gilford Motor were based on the principles
of evasion and concealment respectively. He also referred to the Jones v
Lipman, in which he categorized the order of specific performance against
the company as an instance of "piercing the corporate veil" under the
evasion principle.

The narrow approach is not only less effective in Prest but even since before
Prest, this can be seen in case of Adam v Cape where the veil can be pierce
in exceptional circumstances only, when a company was a "mere facade"
concealing the true facts of the situation. This sets a high threshold for
piercing the corporate veil, which makes it difficult for claimants to succeed
in such claims. In DHN Food v Towler, Lord Denning argues that group of
companies are considered as single economic entity hence parent company
should be liable for the subsidiary’s debts. This argument was disapproved
by House of Lords in Woolfson and stated that veil will be pierce only if
there was mere facade.

On the another hand, the concealment principle by Lord Sumption, does not
involve piercing the corporate veil. Instead, its purpose is to identify the
actual individuals behind a company's legal structure using common law
principles. For example, in the Gilford Motor, Lord Sumption used the
phrase "mere cloak or sham" to indicate that Lord Hanworth's injunction
granted to Mr. Horne did not involve piercing the corporate veil. Although
both Lord Sumption and Lord Hanworth did not explain the exact workings
of the concealment principle in that case, it has been suggested that the
injunction was based on agency law, which views the company as the agent
of Mr. Horne. Thus, concealment do not involve piercing the corporate veil.

Lord Sumption has identified cases in which the act of piercing the veil is
deemed unnecessary, and can be replaced by alternative legal methods to
address the issue. It was stated in Alan Dignam textbook ‘In effect it seems
veil lifting is a limited exceptional action but we are not really sure why’
‘Indeed, as we will observe with tortious, there has been a recent trend
within significant veil lifting/piercing cases to declare that lifting/piercing is
being emphatically rejected as a solution and then find some other way to
achieve the same outcome’.

Prest contradicts the rules regarding the threshold for piercing the veil. Lord
Sumption suggested doctrine of piercing veil should be the last resort
howerver Court of Appeal in VTB disgareed and held it is not necessary for
the doctrine of piercing veil to be a last resort for the court to apply it.There
does not appear to be a clear ratio insofar as it relates to the doctrine of
piercing the corporate veil and consequently it remains to be seen - lightman
2013.

In conclusion, prest remain uncertain but nevertheless, courts are taking a

very cautious approach in veil lifting despite prest.

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