Lee v. Lee’s Air Farming, Ltd. (1960) 3 All E.R. 420 42

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Lee v. Lee’s Air Farming, Ltd. (1960) 3 All E.R. 420 42

Facts of The Case

Catherine Lee’s husband Geoffrey Lee formed the company through Christchurch accountants, which worked in Canterbury, New Zealand. It spread fertilisers on farmland from the air, known as top dressing. Mr Lee held 2999 of 3000 shares, was the sole director and employed as the chief pilot. He was killed in a plane crash. Mrs Lee wished to claim damages of 2,430 pounds under the Workers’ Compensation Act 1922 for the death of her husband, and he needed to be a ‘worker’, or ‘any person who has entered into or works under a contract of service… with an employer… whether remunerated by wages, salary or otherwise.’ The company was insured (as required) for worker compensation.

The Court of Appeal of New Zealand said Lee could not be a worker when he was in effect also the employer. North J said “the two offices are clearly incompatible. There would exist no power of control and therefore the relationship of master-servant was not created.”

ISSUES RAISED IN THE CASE

Was Mrs. Lee 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.

ARGUMENT

The insurance company argued that Mr. Lee was the governing general director of the company and has a maximum number of shares in the company so he can’t be an employee in the 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 of compensation under the New Zealand worker Act 1922.
Appellant also argued that his husband died when he was going for the work of company
Appellant also defended the respondent argument said that Mr. Lee is also an employee of the company according to the workers act 1922.

JUDGEMENT

A company is treated as a separate legal person distinct from its members, owners, shareholders, and directors. Mrs. Lee’s claim for compensation under the Workers Compensation Act, 1922 was rejected by Lee Air Farming limited. The court of law drew the following analysis:
Mrs. Lee’s claim for compensation was initially rejected by the New Zealand High Court stating that the governing director and the worker cannot be the same person. The court stated that since the person giving orders and the person taking orders are the same person, Mr. Lee cannot be regarded as an employee. Further, the court relied heavily on the judgement of Salomon v. Salomon & Co. Ltd. Citing the judgement the court stated that the company, being a separate legal entity, is distinct from its members. Therefore, the contention of the trade creditors could not be maintained and Solomon & Co. Ltd cannot be regarded as agent or trustee for Solomon. The court held that since there was a valid contract of service between Mr. Lee and Lee Air Farming Limited and neither had Mr. Lee acted fraudulently, Mrs. Lee is entitled to claim compensation on the ground of him being a worker.

REFERENCES

https://en.wikipedia.org/

This Article is written by Sarthak Dwivedi of Vikramajit Singh Sanatan Dharma College, Kanpur Intern at Legal Vidhiya.

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