8/30/23, 2:18 PM Case Analysis: Lee vs.

Lee’s Air Farming Ltd 1960 - Lawjure

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8/30/23, 2:18 PM Case Analysis: Lee vs. Lee’s Air Farming Ltd 1960 - Lawjure

Case Analysis: Lee vs. Lee’s Air Farming Ltd

1960
by Lawjure  November 15, 2022< https://www.lawjure.com/2022/11/15/>
 No Comments< https://www.lawjure.com/case-analysis-lee-vs-lees-air-farming-ltd-1960/#respond>

Facts of the Case

In 1945 the Lee formed the company named Lee’s Air Farming Ltd. Mr. Lee

was the sole managing Director of the company which was incorporated by

him.

Lee Being the managing director of company he appointed himself as a pilot

of the company and he was employed by the company as its chief.

In March 1956 Lee died in a flying accident when he was going for a business

of the company.

Lee exercised unrestricted power to control the affairs of the company and

made all the decision relating to contract of the company.

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8/30/23, 2:18 PM Case Analysis: Lee vs. Lee’s Air Farming Ltd 1960 - Lawjure

Company entered into various contract with insurance agencies for insurance

of the employees.

The personal policies taken by Lee on his name in which some of the

premiums of policies were paid from bank account of the companies but

afterward it was debated in the lee account in company book.

Mrs. Lee sued for compensation as the widow of the worker under New

Zealand worker Act 1922. In which she said lee was employee of a company.

Issue Raised in the Case

Mrs. Lee was able to claim the compensation, under compensation act 1922?

Respondent Company claimed that as Lee was the owner of company and lee

was having maximum number of share in the company due to which he was

not employee of the company so Mrs. Lee is not entitled for compensation.

Respondent claimed that Mr. Lee couldn’t be owner of the company because

there is no relation of master and servant between him and company.

Would the decision have been different if he was killed carrying out

more directorial task?

Was there have Separate Legal entity?

Relevant Law and Principle

The law was focused in this case was Separate Legal Entity and workers

compensation Act 1922.

Argument of the Case

The insurance company argued that Mr. Lee was the governing general

director of company and have maximum number share in the company so he

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8/30/23, 2:18 PM Case Analysis: Lee vs. Lee’s Air Farming Ltd 1960 - Lawjure

can’t be an employee in company.

Respondent argued that a worker was defined as any person who has entered

into or work under a contract of service with a company as an employer but

Mr. Lee was director of the company.

Mrs. Lee argued that she is capable for the compensation under the under

New Zealand worker Act 1922.

Appellant also argued that his husband died when he was going for the work

of company

Appellant also defending respondent argument said that Mr. Lee is also

employee of the company according to the workers act 1922.

Judgement

The New Zealand court appeal refused to hold that Mr. Lee was a worker or

employee, holding that a man could not in effect, employee himself. By

stating this statement court refused for the compensation to the Mrs. Lee.

However, the Privy Council allowed Mrs. Lee claim by saying following

statement;

Mr. Lee was separate person from the company and he had only incorporated

the company and therefore compensation was payable to the widow of Mr.

Lee

As a company is a separate legal entity so a member of a company can enter

into a contract with that company in which he is holding shares the widow of

Mr. Lee was entitled to compensation under the workmen’s compensation act.

The director was not restrained from becoming the employee of that very

company (Lee vs. Lee Air Farming Ltd.)

Obiter Dictum

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8/30/23, 2:18 PM Case Analysis: Lee vs. Lee’s Air Farming Ltd 1960 - Lawjure

The Judicial committee of Privy Council insist that company is a separate legal

entity, so that Director could still be under a contract of employment with the

company he solely owned. In simple words if he is single owner of the

company then also he will be under contract of employment and owner is also

employee of company. In opinion separate legal entity is an important

features of the company because it separate company identity with its

member and separate legal entity is like double sided sword which can be

used as good and bad faith. It also act as veil between the company and its

member.

Ratio Decidendi

Lee vs. Lee Air Farming Ltd. Case was decided on the basis on principle given

in Salmon case. The court gave reasoning during judgement that we can’t

avoid point that the Mr. Lee is sole managing director of company and he was

controlling all work of the company but then also Mr. Lee and this company

they both were separate and distinct legal personality. Because of this two

powers Mr. Lee was capable to act as master and servant of the company.

This compensation is claimed as the capacity of servant. Because Lee was a

separate from the company, he formed and his widow was held to get the

compensation.

Conclusion

In conclusion separate legal entity is an important features for companies as

it help in separating company identity with its member. So from the above

discussion it is concluded that company is a separate legal person.

Corporation personality defines company is a separate legal entity and its sole

owner, shareholder and director can also be an employee of the company who

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