Tuesday, April 13, 2010

Lee -v- Lee’s Air Farming Limited [1960] 3 All ER 420

Mr Lee had formed a company, Lee's Air Farming Limited and held nearly all its shares. He was the managing director, but by profession a pilot. The company was formed to conduct an aerial top-dressing business. He appointed himself the chief pilot for the company. In the Court of Appeal of New Zealand, North J said: "These powers were moreover delegated to him for life and there remained with the company no power of management whatsoever. One of his first acts was to appoint himself the only pilot of the company, for, although article 33 foreshadowed this appointment, yet a contract could only spring into existence after the company had been incorporated. Therefore, he became in effect both employer and worker. True, the contract of employment was between himself and the company: see Booth v Helliwell, but on him lay the duty both of giving orders and obeying them. In our view, the two offices are clearly incompatible. There could exist no power of control and therefore the relationship of master-servant was not created." Held: Appeal allowed. "one person may function in dual capacities. " and "Ex facie there was a contract of service. . . . the real issue is whether the position of the deceased as sole governing director made it impossible for him to be the servant of the company in the capacity of chief pilot of the company. . . there was no such impossibility. There appears to be no greater difficulty in holding that a man acting in one capacity can give orders to himself in another capacity than there is in holding that a man acting in one capacity can make a contract with himself in another capacity. The company and the deceased were separate legal entities. The company had the right to decide what contracts for aerial top-dressing it would enter into. The deceased was the agent of the company in making the necessary decisions."

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