Lee v Lee’s Air Farming Ltd
Lee v Lee’s Air Farming Ltd [1961] AC 12
⚖️ Court:
Privy Council (the highest appellate court for New Zealand at the time)
📜 Facts:
Mr. Lee was the sole shareholder, director, and also the chief pilot (employee) of Lee’s Air Farming Ltd, a company involved in aerial top-dressing (crop dusting).
Mr. Lee was killed in a flying accident while working as a pilot for the company.
His widow claimed workers’ compensation.
The issue was whether Mr. Lee, despite being the controlling shareholder and director, was also an employee of the company entitled to compensation.
❓ Legal Issue:
Can a person be both the sole controller (director/shareholder) of a company and simultaneously be its employee under the law?
🏛️ Decision:
The Privy Council held yes, the company is a separate legal entity distinct from Mr. Lee.
Therefore, Mr. Lee could legally be an employee of the company even though he was its sole shareholder and director.
His widow was entitled to workers’ compensation.
⚙️ Key Legal Principles Established:
Separate Legal Personality: The company is a distinct legal person separate from its shareholders and directors (reinforcing the principle from Salomon v Salomon & Co. Ltd).
Multiple Roles: One person can hold multiple roles — shareholder, director, and employee — simultaneously.
Employment Relationship: The fact that Mr. Lee controlled the company did not prevent an employment contract existing between him and the company.
📌 Importance:
This case confirms the corporate veil and the legal distinction between a company and its members.
It affirms that individuals can wear multiple hats in the company context and still claim rights (such as employee benefits).
Frequently cited in cases involving disputes over control and employment status.
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