Catherine20Lee20Appellant1.docx
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Catherine20Lee20Appellant1.docx
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Catherine20Lee20Appellant1
CatherineLeeAppellant;vLee'sAirFarmingLtd.Respondents.
JudicialCommittee
11October1960
[1960]3W.L.R.758
[1961]A.C.12
ViscountSimonds,LordReid,LordTucker,LordDenningandLordMorrisofBorth-Y-Gest.
1960Oct.11.
OnAppealfromtheCourtofAppealofNewZealand.
Company—Director—Governingdirector—Whetherservantofcompany—Accidentwhileworkingforcompanyforwages—Whethercompanyliableforcompensation—"Worker"—Workers'CompensationAct,1922(No.39)(NewZealand),ss.2,3
(1).
MasterandServant—Companydirector—Whetherservantofcompany—Governingdirectoremployedaschiefpilot.
NewZealand—Workers'compensation—Company—Accidenttogoverningdirectorwhileemployedbycompany—Whethercompanyliableforcompensation—"Worker"—Workers'CompensationAct,1922(No.39),ss.2,3
(1).
Workmen'sCompensationGoverningdirector—Accidentwhileworkingforcompanyforwages—Liabilityofcompanyforcompensation—NewZealand.
*13
Section3
(1)oftheWorkers'CompensationAct,1922,ofNewZealand,providesthatif"personalinjurybyaccidentarisingoutofandinthecourseoftheemploymentiscausedtoaworker,hisemployershallbeliabletopaycompensation,"and"worker"isdefinedinsection2as"anypersonwhohasenteredintoorworksunderacontractofservice...withanemployer...whetherremuneratedbywages,salary,orotherwise."
Theappellant'shusband,whohadformedtherespondentcompanyforthepurposeofcarryingonthebusinessofaerialtop-dressing,wasthecontrollingshareholderofthecompany,andwasbyitsarticlesofassociationappointedgoverningdirectorandemployedatasalaryasitschiefpilot.Inhiscapacityasgoverningdirectorandcontrollingshareholderheexercisedfullandunrestrictedcontroloveralltheoperationsofthecompany.Pursuanttoitsstatutoryobligationsthecompanyhadinsureditselfagainstliabilitytopaycompensationinthecaseofaccidenttohim.Whilepilotinganaircraftbelongingtothecompanyinthecourseofaerialtop-dressingoperationstheaircraftcrashedandhewaskilled.Onaclaimbytheappellantagainsttherespondentcompanyforcompensation,allegingthatatthetimeoftheaccidentherhusbandwasa"worker"employedbytherespondentcompanywithinthemeaningoftheWorkers'CompensationAct,1922,asamended:
-
Held,thatthedeceasedwasa"worker"withinthemeaningoftheAct.Hispositionassolegoverningdirectordidnotmakeitimpossibleforhimtobeaservantofthecompanyinthecapacityofchiefpilot,forheandthecompanywereseparateanddistinctlegalentitieswhichcouldenter,andhadentered,intoavalidcontractualrelationship,whichwasnotinvalidatedbythecircumstancesthatthedeceasedwassolegoverningdirectorinwhomwasvestedthefullgovernmentandcontrolofthecompanyandalsothecontrollingshareholder.Theywereseparatelegalentitiesalsosoastoenablethecompanytogiveorderstothedeceased.Onepersonmayfunctionindualcapacities,andactinginonecapacitygiveorderstohimselfinanothercapacity.Thecontractualrelationshipwasthatofmasterandservant,andacontractofservicewasenteredintoandoperatedandthedeceasedwasa"worker"withinthestatutorydefinition.
Salomonv.Salomon&Co.[1897]A.C.22;13T.L.R.46,H.L.;InlandRevenueCommissionersv.Sansom[1921]2K.B.492,C.A.;andFowlerv.CommercialTimberCo.Ltd.[1930]2K.B.1,C.A.considered.
Brownv.OkiwiFarmsLtd.[1957]N.Z.L.R.1073mustberegardedasturningonitsownfacts.
JudgmentoftheCourtofAppealofNewZealand[1959]N.Z.L.R.393reversed.
APPEAL(No.18of1960),byspecialleave,fromajudgmentoftheCourtofAppealofNewZealand(December18,1958)holdingonacasestatedbytheCompensationCourtofNewZealand*14undertheWorkers'CompensationRules,1939,thatonthefactssetoutinthecasetheappellant'sdeceasedhusbandcouldnotholdtheofficeofgoverningdirectoroftherespondentcompanyandalsobeaservantofthecompany.
ThefollowingfactsaretakenfromthejudgmentoftheJudicialCommittee:
ThejudgmentoftheCourtofAppealofNewZealand,fromwhichthisappealwasbrought,wasgivenastheiropinionuponacasestatedbythejudgeoftheCompensationCourt.Itwasprovidedbyrule5ofChapterVIIIoftheWorkers'CompensationRules,1939,that"InanyactionorotherproceedingthecourtorajudgethereofmaystateacasefortheopinionoftheCourtofAppealonanypointoflawarisingintheactionorproceeding."ThisprocedurewasadoptedbythejudgeoftheCompensationCourtintheactionwhichwasbroughtbytheappellantinrespectofthedeathofherhusband.Sheclaimed£2,430compensationonbehalfofherselfandherfourinfantchildrenandshealsoclaimedasumforfuneralexpenses.TheclaimwasmadeinrelianceupontheprovisionsoftheWorkers'CompensationAct,1922,asamendedbylaterstatutes.Theappellant'slatehusbanddiedinanaircraftaccidentinCanterbury,NewZealand,onMarch5,1956,whileengagedinthecapacityofanaircraftpilotinaerialtop-dressingoperations.Theclaimoftheappellantresteduponherallegationthatatthetimeofhisdeathherhusbandwasa"worker"inthathewasemployedbytherespondentcompany.Therespondentcompanydeniedthatthedeceasedwasa"worker"withinthemeaningoftheWorkers'CompensationAct,1922,anditsamendments.Itwasprovidedbysection3
(1)oftheActasfollows:
"3.-
(1)IfinanyemploymenttowhichthisActappliespersonalinjurybyaccidentarisingoutofandinthecourseoftheemploymentiscausedtoaworker,hisemployershallbeliabletopaycompensationinaccordancewithprovisionsofthisAct."
Undertherelevantpartofthestatutorydefinitiontheterm"worker"meant"anypersonwhohasenteredintoorworksunderacontractofserviceorapprenticeshipwithanemployer,whetherbywayofmanuallabour,clericalwork,orotherwise,andwhetherremuneratedbywages,salary,orotherwise."Thedenialoftherespondentcompanythatthedeceasedwasa"worker"wasbasedonthefactthatthedeceasedwasatthetimeoftheaccidentthecontrollingshareholderandgoverningdirectoroftherespondentcompany.In1954thedeceasedhadinstructedafirmofpublicaccountantsinChristchurchtoformacompanyforthepurposeofconductinganaerialtop-dressing*15business.OnAugust5,1954,"Lee'sAirFarmingLimited,"therespondentcompany,wasincorporated.Thenominalcapitalofthecompanywas£3,000dividedintothreethousandsharesof£1each.Thedeceasedwasallotted2,999shares;theremainingshareaccordingtothememorandumofassociationwastobetakenbyasolicitor.Thearticlesofassociationincludedthefollowing:
"32.SubjectashereinafterprovidedGeoffreyWoodhouseLeeshallbeandheisherebyappointedgoverningdirectorandsubjecttotheprovisionsofclause34hereofshallholdthatofficeforlifeandthefullgovernmentandcontrolofthecompanyshallbevestedinhimandhemayexerciseallthepowersandauthoritiesanddiscretionsvestedinthedirectorsgenerallyandthatnotwithstandingheisthesoledirectorholdingofficeandhemayexerciseallthepowersofthecompanywhicharenotbystatuterequiredtobeexercisedbythecompanyingeneralmeetingandanyminuteenteredintheminutebookofthecompany'sproceedingssignedbythegoverningdirectorshall,inanymatternotexpresslyrequiredbystatutetobedonebythecompanyingeneralmeetinghavetheeffectofaresolutionofthecompany.
"33.ThecompanyshallemploythesaidGeoffreyWoodhouseLeeasthechiefpilotofthecompanyatasalaryof£1,500perannumfromthedateofincorporationofthecompanyandinrespectofsuchemploymenttherulesoflawapplicabletotherelationshipofmasterandservantshallapplyasbetweenthecompanyandthesaidGeoffreyWoodhouseLee.
"34.Thegoverningdirectormayretirefromofficeupongivingonemonth'snoticeinwritingofhisintentionsotodo,andtheofficeofgoverningdirectorshallbevacatedifthegoverningdirector(a)ceasestobeadirectorbyvirtueofsection148oftheAct;or(b)becomesbankruptorentersintoacompositionwithhiscreditors;or(c)becomesprohibitedfrombeingadirectorbyreasonofanyordermadeundersection216or268oftheAct;or(d)becomesofunsoundmindorbecomesaprotectedpersonundertheAgedandInfirmPersonsProtectionAct,1912;or(e)becomesincapableofcarryingoutthedutiesofadirector.
"35.Thegoverningdirectormayatanytimeconvenegeneralmeetingofthecompany.
"36.Thegoverningdirectorshallnotbedisqualifiedbyhisofficefromholdinganyofficeorplaceofprofitinthecompany*16orfromcontractingwiththecompanywhetherasvendor,purchaserorotherwise,norshallanysuchcontractorarrangementoranycontractorarrangemententeredintobyoronbehalfofthecompanyinwhichthegoverningdirectorshallbeinterestedbeavoidednorshallthegoverningdirectorbeliabletoaccountforanyprofitrealisedbyanysuchcontractorarrangementbyreasonofthegoverningdirectorholdingsuchofficeorofthefiduciaryrelationstherebyestablished.
"DIRECTORS
"37.Ifandwheneverthereshallceasetobeagoverningdirectorthenumberofdirectorsofthecompanyshallnotbemorethanfourorlessthantwowhoshallforthwithbeappointedorelectedbythecompanyingeneralmeeting.
"38.Adirectorneednotholdanysharequalificationinthecapitalofthecompany."
"43.Nodirectorshallbedisqualifiedbyhisofficefromholdinganyofficeorplaceofprofitunderthecompanyorunderanycompanyinwhichthiscompanyshallbeashareholderorotherwiseinterestedorfromcontractingw
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