Lee v Lee’s Air Farming
Encyclopedia
Lee v Lee’s Air Farming Ltd [1961] AC 12 is a UK company law case, concerning the veil of incorporation and separate legal personality. The Privy Council reasserted that a company is a separate legal entity, so that a director could still be under a contract of employment with the company he solely owned.
. 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 under the Workers’ Compensation Act 1922, 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.'
Facts
Mrs Lee’s husband formed the company through Christchurch accountants, which worked in Canterbury, New ZealandNew Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
. 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 under the Workers’ Compensation Act 1922, 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.'
Advice
The Privy Council advised that Mrs Lee was entitled to compensation, since it was perfectly possible for Mr Lee to have a contract with the company he owned. The company was a separate legal person. Lord Morris of Borth-y-Gest saidSee also
- Salomon v A Salomon & Co Ltd
- DHN v Tower Hamlets
- Adams v Cape Industries plcAdams v Cape Industries plcAdams v Cape Industries plc [1990] Ch 433 is the leading UK company law case on separate legal personality and limited liability of shareholders...