MAC: Mines and Communities

The Thor Case

Published by MAC on 2003-08-03

The Thor Case

by Richard Meeran

During the 1980s, Thor manufactured mercury-based chemicals in Margate, South East England. Health and safety at the Margate factory came under considerable criticism over a prolonged period from the Health and Safety Executive due to elevated levels of mercury in the blood and urine of the workers. About 1986, the company terminated mercury-based processes in Margate and shifted its Margate mercury operations (including key personnel and plant) to Cato Ridge, Natal, South Africa. In February 1992, mercury poisoning of South African workers came to light. Three workers died and many others were poisoned to varying degrees. An inquiry by the Department of Manpower followed by a criminal prosecution in the local (Pietermaritzburg) Magistrates’ Court led to the equivalent of a £3,000 fine. Compensation claims against the parent company and its Chairman were commenced in the English High Court on behalf of 20 workers. The claims alleged that the English parent company was liable because of its negligent design, transfer, set-up, operation, supervision and monitoring of an intrinsically hazardous process.

Thor unsuccessfully applied to stay the action on forum non conveniens grounds and its appeal was struck out by the Court of Appeal. [Footnote 1]. This was the first recorded case of this type. In 1997, following a series of hearings concerning the acceptability of Thor’s disclosure of documents and an unsuccessful strike-out application by Thor, the claim was settled for £1.3 million.

A further 21 claims were commenced by workers from the same factory. In July 1998, Thor’s application to stay proceedings on forum non conveniens grounds was dismissed. In January 1999, the Court of Appeal granted Thor permission to continue with its defence of the proceedings.

It then emerged from company documents filed in December 1999 that Thor's parent company, ‘TCL’ had undertaken a demerger which involved transfer of subsidiaries valued at £19.55 million to a newly formed company, ‘Tato Holdings Limited’ (‘Tato’). Two weeks before the start of the three month trial, an application to the Court was then made, on behalf of the Claimants, for a declaration under S 423 Companies Act 1986 that the dominant purpose of the demerger was to defraud creditors, such as the Claimants and it was thus void. Thor and its chairman disputed that this was the purpose, but the Court of Appeal held that in the absence of information to the contrary, the inference that the demerger of Thor was connected with the present claims was ‘irresistible’. The Court ordered Thor to pay £400,000 into court within seven days and to disclose documents concerning the demerger. The case was settled on the first day of trial.

2: The RTZ Case

A claim for compensation was brought in England by Edward Connelly, a laryngeal cancer victim employed at RTZ’s Rossing uranium mine in Namibia. It was alleged that key strategic technical and policy decisions relating to Rossing were taken by the English-based RTZ companies. For example directors of their English companies were directly responsible on the ground, for substantially increasing the output of uranium and the consequent dust levels without ensuring that effective precautions were taken to protect workers against the hazards of uranium dust exposure.

In March 1995, RTZ succeeded, initially, in persuading the Court that Namibia was the ‘natural forum’ for the case. Thereafter, the argument was limited to the relevance of Mr Connelly’s inability to obtain funding to bring a claim in Namibia whereas in the UK funding was available, in the form of legal aid or lawyers willing to act on a ‘no win, no fee’ basis.

The case went to the Court of Appeal twice before reaching the House of Lords. On the first occasion, in August 1995, the Court of Appeal held that, in determining whether Namibia was an ‘available forum’, s.31 of the 1988 Legal Aid Act precluded the court from having regard to the fact that the plaintiff was unable to obtain funding to litigate in Namibia, but had legal aid to litigate in England. Mr Connelly applied to lift the stay on the grounds that the funding of his English action had switched to ‘no win, no fee’ conditional fee agreements (the UK variant of contingency fees) having been made lawful in August 1995. His application was rejected at first instance in October 1995. However, in May 1996 the Court of Appeal, referring specifically to Article 6 European Convention on Human Rights and Article 14 International Covenant on Civil and Political Rights, allowed the appeal. Bingham MR stated:

But faced with a stark choice between one jurisdiction, albeit not the most appropriate in which there could in fact be a trial, and another jurisdiction, the most appropriate, in which there never could, in my judgement, and interests of justice tend to weigh, and weigh strongly in favour of that forum in which the Plaintiff could assert his rights.

The House of Lords held, by a 4-1 majority, that Mr Connelly’s inability, in practice, to litigate in Namibia meant that the case should be allowed to proceed in England. In the lead judgment, Lord Goff stated:

The question, however, remains whether the plaintiff can establish that substantial justice will not in the particular circumstances of the case be done if the plaintiff has to proceed in the appropriate forum where no financial assistance is available.

A further claim was subsequently brought by the widow of another (oesophageal) cancer victim employed at Rossing, Peter Carlson. Mr Carlson worked at Rossing during the same period, and for a substantial period in the same areas of the mine, as Mr Connelly. Almost immediately after the House of Lords reversed the stay, RTZ applied to strike out the Connelly claim (including on limitation grounds) and to stay the Carlson action on the ground of forum non conveniens. In December 1998 the court struck out Mr Connelly’s claim on limitation grounds but dismissed RTZ’s application to stay the Carlson action on the grounds that Mr Carlson’s widow could not obtain funding to achieve substantial justice in Namibia.

3: The Cape plc case

The asbestos mined in South Africa has caused a chain of injuries world-wide. Victims, include asbestos miners and millers, people involved in transportation of asbestos, stevedores loading/unloading ships, ship workers, workers at factories in South Africa, the UK and the US, as well as people living in the vicinity of these operations. Whereas victims in the US and the UK can and have been compensated, victims in South Africa have not.

Cape plc, formerly ‘The Cape Asbestos Company Limited’, was involved in mining blue and brown asbestos in the Northern Cape and Northern Provinces respectively from 1890 until 1979. Until 1948, the operations in the North Western Cape were carried out directly by the parent company but for the remainder of the period, through wholly-owned subsidiaries. Having closed down its UK factory in Barking, due to the level of asbestosis in the workforce, in 1968, Cape continued to operate in South Africa until the 1980s.

In February 1997, compensation claims were commenced in the English High Court on behalf of three workers at the Penge mine in the Northern Province who had also lived near the mine and two residents of Prieska who had lived in the vicinity of Cape's mine in that town. The former suffered from asbestosis and the latter from mesothelioma, an asbestos-related cancer of the lining of the lung. The claims were based principally on the negligent control of the company’s world-wide asbestos business from England and failure to take measures to reduce asbestos exposures to a safe level. Claims were also lodged on behalf of four Italian workers, employed at Cape’s Turin manufacturing operation, purportedly run by another wholly-owned subsidiary, Capamianto.

Cape applied to stay the South African claims on forum grounds. In January 1998, following an eight day hearing spread over six months, their application was granted, but on appeal in July 1998, the Court of Appeal reversed this decision. The Court paid particular heed to the fact that ‘the alleged breaches of…duty of care…took place in England rather than South Africa’, and the fact that since the company no longer had any connection with South Africa (and hence the South African courts only acquired jurisdiction by virtue of Cape’s offer to submit to the jurisdiction), to grant a stay would effectively be allowing Cape to ‘forum shop in reverse’. The court also indicated that on the basis of the pleaded case there were good arguments in favour of the application of English or South African law but that, prima facie, the ’duty’ owed by an English Company should be determined by English law.

Following an oral hearing in December 1998, the House of Lords dismissed Cape’s petition. In January 1999 two further actions comprising almost 2,000 claims were commenced in England against Cape plc by South African claimants exposed to asbestos in the same geographical regions of South Africa.

Cape applied to stay the 2,000 claims on forum grounds contending that the emergence of the group was a sufficiently material change to warrant a different conclusion from that of the Court of Appeal in the first five cases. Cape also sought a stay of the first five cases on the grounds that the Court of Appeal had been misled as to the true nature of the case. At first instance, the court granted a stay of all the actions including the five Lubbe claims. Buckley J said he was also ‘comforted’ by decisions of the US Courts in which ‘public interest’ considerations had influenced the decision of the courts to stay proceedings in favour of the alternative forum. The specific reference to the Bhopal case was perhaps surprising given that it is widely known that the settlement of these cases in India was approved by the Indian courts on the grounds of expediency, and did not result in compensation being paid to more than a small number of claimants and even then in paltry amounts. The Connelly funding point was a major issue, but Buckley J held that legal aid was likely to be available to the claimants to litigate in South Africa.

Subsequently legal aid was withdrawn in South Africa for all damages claims. Furthermore, it emerged that Cape had offered a public interest law centre money to fund the Claimants’ case against itself. Nevertheless, in November 1999, the Court of Appeal dismissed the claimants’ appeal, holding that South African lawyers would undertake the case on a no win no fee basis and specifically endorsing the ‘public interest’ ruling of Buckley J. The claimants appealed to the House of Lords and the Republic of South Africa was given permission to intervene on the public interest issue. . In July 2000, in a unanimous, landmark decision, in favour of the claimants, all five Law Lords held that the case should be allowed to continue in the English High Court. Applying the principle it had developed exactly three years earlier in Connelly v RTZ, the Court held that a case of such magnitude required expert legal representation and experts on technical and medical issues, none of which could be funded in South Africa.

Reversing the finding of the Court of Appeal, the Lords declined to follow the US authorities (Gilbert, Piper and Bhopal) which had introduced and applied their own, conveniently partial criterion of ‘public interest’ as a reason for denying access to foreign claimants. Nor did the Lords adopt the interpretation of ‘public interest’ advanced by the claimants and the Republic of South Africa. Rather, the Court held that ‘in applying this principle [of forum non conveniens] judicial amour propre and political interest or responsibility have no part to play.’

copyright Richard Meeran, Leigh Day and Company, London 2003

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