Lee v Lee's Air Farming Ltd
A person who owns and controls a company can also be its employee, because the company is a separate legal person with which he can contract.
Facts
Mr Lee formed a company in New Zealand to carry on a business of aerial crop spraying. He held all but one of the shares, and was appointed governing director for life, and was also employed by the company as its chief pilot. He was killed when his plane crashed during crop spraying. His widow claimed compensation under the Workers' Compensation Act, which applied only to workers employed under a contract of service. The insurers argued that he could not be an employee of a company he controlled.
Legal principle
The Privy Council held that Mr Lee was a worker employed by the company, so his widow was entitled to compensation. Lord Morris said that the company was a separate legal entity, and that there was no reason why it could not enter into a contract with Mr Lee, under which he would work as its pilot. The fact that he was the controlling shareholder and director, who would give the orders on the company's behalf, did not prevent a contract of service between him and the company.
Related cases on separate legal personality and the corporate veil
- Adams v Cape Industries plc [1990] Ch 433
- Chandler v Cape plc [2012] EWCA Civ 525, [2012] 1 WLR 3111
- Re Darby, ex p Brougham [1911] 1 KB 95
- DHN Food Distributors Ltd v Tower Hamlets London Borough Council [1976] 1 WLR 852
- Gilford Motor Co Ltd v Horne [1933] Ch 935
- Jones v Lipman [1962] 1 WLR 832
- Macaura v Northern Assurance Co Ltd [1925] AC 619
- Okpabi v Royal Dutch Shell plc [2021] UKSC 3, [2021] 1 WLR 1294
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