Ikuta, Daisuke; (2017) The Legal Measures against the Abuse of Separate Corporate Personality and Limited Liability by Corporate Groups: The scope of Chandler v Cape plc and Thompson v Renwick Group plc. UCL Journal of Law and Jurisprudence , 6 (1) , Article 3. 10.14324/111.2052-1871.079.

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Abstract

While the scope of ‘veil lifting’ has been severely restricted in UK case law, two recent notable judgments, Chandler v Cape Plc and Thompson v Renwick Group Plc, have held that a parent company could owe tortious liability for the health and safety of its subsidiary’s employees. This article contends that the legal principle recognised in Chandler and Thompson could successfully prevent corporate group abuses of separate corporate personality and limited liability, when combined with ‘veil lifting’ and protection against misrepresentation in UK law. With reference to the theoretical justification of limited liability, there are three circumstances in which limited liability should not apply: ex ante opportunism, ex post opportunism and in relation to involuntary creditors. Most cases in the former two categories can be dealt with by applying existing UK legislation and case law concerning misrepresentation and ‘veil piercing’. The final category can be dealt with by Chandler’s direct tortious liability regime if it is appropriately refined. This paper proposes an integrated understanding of Caparo’s three requirements for establishing a duty of care, namely foreseeability, proximity and fairness, and four-group categorisation, namely reliance on superior knowledge, confusing representation, business integration and fairness for other reasons, in which the parent’s direct tortious liability should be recognised.

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