PRIVY COUNCIL APPEAL

Press, Volume XCIX, Issue 29334, 13 October 1960, Page 13

PRIVY COUNCIL APPEAL

City Widow Wins Compensation Case (A . Press AMociattan^Copyn^nt) LONDON, October 11. , The widow of a pilot killed in a flying accident in Canterbury, New Zealand, in March, 1956, today won her appeal to the Judicial Committee of the Privy Council from a ruling of the New Zealand Court of Appeal that she was not entitled to compensation in respect of . his death under the Workers’ Compensation Act. Mr A. C. Perry, of Christchurch, appeared for Mrs Lee at the hearing of the appeal in London.

The pilot, Mr Geoffrey Woodhouse Lee, was flying an Auster aircraft in an aerial top-dress-ing operation when the aircraft stalled ■ and crashed, bursting in to flames. The appeal was heard by Lords Simonds (chairman), Morris, Tucker, Reid, and Denning. The case for the respondent was led by Mr Martin Jukes, Q.C., of the English Bar. Mrs Catherine Lee. of Christchurch. his widow, claimed £2430 compensation on behalf of herself and four infant children, alleging that the accident occurred in the course of his employment by Lee’s Air Farming Ltd., a company formed by Mr Lee in 1854 of which he was controlling shareholder and governing director. The widow also claimed £5O funeral expenses. Appeal Court Ruling The Court of Appeal ruled that Mr Lee could not be governing director and also a servant of the company. At the hearing of the Privy Council appeal in July their Lordships were told that the Act provided for the compulsory insurance by an employer against liability under the Act. Premiums paid by the company for 1954-55 calculated' on the amount of salary due to Mr Lee were accepted and the present contest, while technically between the widow and the company, was in effect between the widow and the insurers. Lord Morris of Borth-Y-Gest, delivering their Lordships’ reserved judgment, said the substantial question was whether Mr Lee was a “worker” within the meaning of the Act. On the view taken by the Court of Appeal it was difficult to know what his status and position were when he was piloting an aeroplane belonging to the company on the top-dressing operation. Paid Wages Mr Lee was paid wages for so doing, and the company kept a wages book in which these were recorded. The work was being done at the request of farmers whose contractual rights and obligations were with the company alone.

It could not be suggested that when engaged in these activities Mr Lee was discharging his duties as governing director.

It was said that Mr Lee could not both be under the duty of giving orders and also be under the duty of obeying them, said Lord Morris. This approach did not give effect to the circumstance that it would be the comcany and not Mr Lee that would be giving the orders. The fact that so long as Mr Lee continued to be governing director, with amplitude of powers, it would be for him to act as the agent of the company to give the orders, did not alter the fact that the company and Mr Lee were two separate and distinct legal persons. Their Lordships therefore considered that Mr Lee was a “worker.” Tfee appeal would be allowed and the company must pay the costs before their Lordships. and in the Court of Appeal and the Compensation Court. Importance Of Decision The decision on the appeal is of considerable interest to the commercial community. It reestablishes the legal entity of a company as distinct from its directors, shareholders and employees. riie decision confirms the right of a company to employ a person who might also be a governing director of a company and to pay him wages and insure him as a worker under the Workers' Compensation Act. Decisions to the contrary have been given in New South Wales by the Workers’ Compensation Commission; in England, in the High Court under the National Health Act; and in New Zealand (Brown v. O’Kiwi Farms, Ltd,)