A judge has made his final decision on the case of English Electric Company Ltd v Alstom UK. The case centred upon which company was the correct Defendant and who should be responsible for the mesothelioma compensation paid to a gentleman suffering from mesothelioma. Asbestos compensation claims are rarely straightforward – we hope that this case highlights why it is important to have an experienced asbestos disease solicitor on your side. Please read more below:

What happened in the original case?

In early 2013, Mr Edmond Critchley was diagnosed with mesothelioma, a cancer that is caused by exposure to asbestos. Following his diagnosis, he decided to pursue a compensation claim. In April 2014 he issued court proceedings against Associated Electrical Industries (AEI).

AEI had employed Mr Critchley between July 1965 and October 1967 and negligently exposed him to asbestos. AEI admitted to being Mr Critchley’s employer and paid him mesothelioma compensation and costs of £850,672.45. Sadly, Mr Critchley passed away from the mesothelioma shortly after.

Why did problems arise?

AEI had a complicated corporate history – as do many companies that trade over many years. In 1970, AEI had become part of the same corporate group as English Electric Company Limited. As part of an internal reorganisation, AEI then transferred its turbine and generator business over to English Electric. As part of this transfer, English Electric had agreed to indemnify (compensate any of AEI’s ex-workers for harm/loss) against any claims arising after April 1970.

Things became more complicated in March 1989 when Alstom UK acquired the turbine business from English Electric. A clause in the agreement between Alstom UK and English Electric stated that Alstom UK would henceforth assume responsibility for the satisfaction of all liabilities and indemnify (compensate any of English Electric’s ex-workers for harm/loss) against all proceedings, claims and demands.

English Electric Company Limited v Alstom UK

Following Mr Critchley’s mesothelioma claim, English Electric brought a claim against Alstom UK. As per their contract with AEI (who had paid the mesothelioma compensation to Mr Critchley) English Electric stated that they were liable to AEI for any claims arising post-April 1970. This meant that they would have to pay AEI for the compensation paid to Mr Critchley in his asbestos claim. However, because of English Electric’s subsequent agreement with Alstom UK, they argued that Alstom UK were liable for the compensation AEI had paid.

Alstom UK defended the claim. They argued that AEI was not liable to Mr Critchley in the first place as they were not his employer. They argued that Mr Critchley was actually employed by a subsidiary of AEI known as AEI (Manchester) Ltd.

English Electric rejected this argument. They stated that, even if he was in some sense employed by the subsidiary, this subsidiary was acting for AEI and therefore AEI were responsible in any event.

What happened in the case?

The judge in the case commented that the case turned on pure questions of fact, including, “what can or should be inferred from certain undisputed facts or pieces of evidence.”

Evidence was presented by two expert accountants, along with minutes from meetings regarding the reorganisation of the companies and subsidiaries.

Mr Critchley’s Employment Records:

Mr Critchley’s HMRC employment records caused further conflict – they showed AEI as the original employer, but the more detailed deduction cards made several references to ‘AEI (Manchester) Ltd.’ During Mr Critchley’s original case, his solicitors had also applied to join the subsidiary company into the court proceedings, but AEI later admitted liability.

The judge considered the evidence and found real weight in the fact that Mr Critchley himself viewed AEI as his employer. He also though that significant weight should be given to the fact that AEI had previously admitted to being his employer and that they maintained this admission even when Mr Critchley proposed an alternative claim against the subsidiary company. The judge was of the opinion that such an admission would not have been made lightly, as it was clear liability would be established against it, given that Mr. Critchley had undoubtedly been exposed to asbestos.

The Judge also considered the company structure and concluded that the AEI subsidiary was not intended to act as a separate trading company. Instead, it was clear that the AEI subsidiary was supposed to be a division of AEI itself.

An expert accountant said that the accounts of the subsidiary showed the turnover and assets to have disappeared. This would indicate that it was unlikely for the subsidiary to have any significant number of employees of its own. To support this, there was no payroll costs shown on the accounts. Alstom UK attempted to argue that this was because the costs were recharged back to AEI. However, there was no real evidence to support this.

What was the conclusion?

The judge concluded that, whilst there were areas of uncertainty in the documents, they were not sufficient to displace the finding that AEI was the correct employer and the defendant in the original mesothelioma claim. He found that AEI were liable to Mr Critchley. Therefore, Alstom UK lost the case and will now be liable to pay English Electric.

Thankfully, this court case happened after Mr Critchley’s claim had ended so did not cause unnecessary stress for Mr Critchley or his family.

It important to have a solicitor on your side:

Unfortunately, these employer/corporate issues often arise in asbestos disease claims. This case clearly demonstrates the need for a claimant to have expert asbestos disease lawyers dealing with their claim.

How can we help?

If you require assistance in pursuing an asbestos compensation claim, please contact us. We can help you whether you have mesothelioma or other asbestos disease. You can contact us on our Freephone number 0800 038 6767. Alternatively, head over to the ‘contact us’ page, complete the form, and we will be in touch.

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