Area - Company is a separate legal entity
Facts – Lee who was a qualified pilot incorporated a company called “Lee's Air Farming Ltd." and was holding all shares except one. He was also holding the position of the Managing Director (MD) of the Company. He appointed himself as a chief pilot at a salary. He had controlled all the affairs of the company. While piloting the company’s plane, he was killed in an air crash. As the workers of the company were insured, workers were entitled for compensation on death or injury His widow filed a claim for insured amount for the death of her husband because he had died in the course of his employment.
Issue - The question was while holding the position of MD, could Lee be treated as an employee for the purpose of insurance claim?
Judgement – The Privy Council held that Lee and his company were separate legal person. As a Managing Director of the company, he had the authority, on the behalf of the company, to appoint himself on the position of chief pilot on a salary basis.
“In effect the magic of corporate personality enabled him (Lee) to be the master and servant at the same time and enjoy the advantages of both.’’
Therefore. the widow of the deceased was held entitled to get the compensation.
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