Lee V. Lee's Air Farming Ltd

LEE V LEE'S AIR FARMING LTD (1960)

(for illustration purpose)

This case is concerning about the veil of incorporation and separate legal personality. Mr Lee is the owner and sole working director of a company engaged in the business of aerial crop spraying. Mr Lee held 2999 of 3000 shares, was the sole director and employed as the chief pilot. He also took an insurance for his employees. While he was performing his job, he was killed in an accident while piloting the aircraft in the course of employment. His widow, the plaintiff, attempted to collect what was rightfully due to a widow of a man killed on the job. The actual defendant was the insurance company. The company was insured (as required) for worker compensation.

ARGUMENT :

• The insurance company does not want to pay the employer since the employer is the employee.
• Nevertheless, Mrs. Less sticks with the application of Doctrine of Separate Legal Entity.

VERDICT :

• The Lee's Air Farming case confirmed the Salomon principle. Lee's Air Farming Ltd. was not a mere sham. It was a legitimate corporation, established for legitimate purposes, and had carried on a legitimate business. His employment by the corporation was well-documented, through government records of tax deductions, workmens' compensation contributions, etc., and was not something his widow had attempted to piece together after the fact of his death. There was no reason in law why a person could not perform corporate functions and employee functions within the same corporation.
• Mrs. Lee won the case and the compensation was paid.
  

References :

• http://wiki.answers.com/Q/What_was_Lee_v_Lee%27s_Air_Farming_Ltd_case
• General Principles of Malaysian Law, 5th Edition, Oxford Fajar, Lee Mei Pheng