Parent company liability for personal injury wrongs in Australia: Lessons from the UK and the US

Sylvester G Tan

It is well-known, since the late-19th century, that companies are separate legal entities and that shareholders are protected by limited liability. However, the corporate landscape has changed significantly since then. Nowadays, parent companies have abused the limited liability principle by setting up subsidiaries within their corporate groups to undertake high-risk activities. These parent companies often undercapitalise their subsidiaries in order to deliberately evade liabilities for personal injury. Consequently, vulnerable individuals who have suffered personal injury as a result of high-risk activities are unable to obtain redress from the subsidiary. Therefore, the key question is whether such victims can obtain remedies directly from the parent companies instead. To answer this question, this thesis will examine the Australian courts’ approaches to parent company liability regarding personal injury wrongs. Firstly, it will examine whether the Australian courts have been willing to pierce the corporate veil under company law to impose liability on parent companies for personal injury wrongs. Secondly, it will examine whether the Australian courts have been willing to impose a direct duty of care on parent companies under tort law toward individuals who have suffered personal injury due to the parent companies’ involvement within their subsidiaries’ operations. Additionally, this thesis will compare the Australian courts’ approaches to parent company liability against those of the UK and the US courts, which are much more significantly developed than in Australia. This thesis will argue that the approaches of these two jurisdictions have led to greater successes in ensuring justice for personal injury victims. This is because these jurisdictions have adopted principled and equitable doctrines toward parent company liability in personal injury situations involving tort victims. Accordingly, this thesis will conclude that the Australian courts can draw useful lessons from the approaches taken in the UK and the US to improve its own regime.

Parent company liability for personal injury wrongs in Australia: Lessons from the UK and the US

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