Scottish Court of Session Decisions

In an application under the Workmen's Compensation Act 1897, by John Dornan, labourer, Glasgow, against James Allan senior & Son, iron founders, Glasgow, the employers pleaded that the claim had been discharged, and produced a discharge which was signed by the claimant, and ran as follows:—“N.B.— This is a final Dicharge,. No. 4727. Class B. I, John Dornan, 337 Garscube Road, Glasgow, do hereby acknowledge receipt of the sum of two pounds seven shillings and fourpence paid to me by Messrs James Allan senior & Son, ironfounders, Glasgow, in full satisfaction and discharge of any claim competent to me in consequence of personal injury sustained by me on or about 29th August 1899 in the course of my employment with the said firm.”

The Sheriff-Substitute (Guthrie) repelled this defence, and awarded compensation to the claimant at the rate of 11s. 10d. a-week from 12th September 1899 till 6th March 1900, less £2, 7s. 4d. paid to account in respect of the injuries received by him while in the employment of Messrs Allan on 29th August 1899. Against this decision James Allan senior & Sons appealed.

In the case stated for appeal at their instance the Sheriff-Substitute found the following facts to have been admitted or proved—“(1) That the respondent was hurt in the course of his employment in the appellants' works in Possil Road, Glasgow, on 29th August 1899, and that notice of the injury was given on 15th September; (2) That the respondent signed the receipt and discharge (No. 3/1 of process) on 27th September 1899; (3) That the appellants' foreman, John M'Cusker, on that day called for respondent, as he was in the

Page: 71↓

habit of doing, and presented to respondent the said receipt and discharge, and asked him to sign it, in return for a payment of £2, 7s. 4d., being equivalent to four weeks' compensation under the Act, telling him that Dr Mechan, surgeon of the Employers' Association, had reported that he would be fit to work in six weeks from the date of the accident, that is to say, in about a fortnight from the date of the conversation; (4) That the respondent did not, before signing the document, consult the surgeon (Dr Gunn) who attended at least once a week, as surgeon of the Friendly Society to which he (the respondent) belonged; (5) That the respondent read over the document and signed it, and received the money; (6) That Dr Mechan did report to the appellants as stated by M'Cusker to the respondent; (7) That it was not alleged or proved that any other representation inducing the respondent to sign the discharge was made by M'Cusker; (8) That Dr Mechan's report was erroneous, and the respondent was unfit for his usual work till 6th March 1900, a period four times as long as was indicated by Dr Meehan's report; (9) That both parties in entering into the agreement for the discharge relied on Dr Meehan's report; (10) That notice of 15th September was given to the appellants in due time, and that in any event the appellants in the circumstances suffered no detriment by delay; (11) That the respondent's average wages in the appellants' employ were 23s. 8d. a week.”

The Sheriff-Substitute found in law that the discharge could not be set aside on the ground of error induced by misrepresentation of the appellants, but that both parties relied on Dr Mechan's report, and were under essential error, and that the discharge was void and null.

The question of law for the decision of the Court was—“Whether, in entering into the agreement for the settlement of respondent's claim for compensation, the facts and circumstances are sufficient to show that the parties were under essential error, to the effect of rendering the discharge in question null and void?”

Argued for the appellants—On the facts stated the Sheriff-Substitute should have come to a different conclusion. There was here no false misrepresentation or undue concealment of any kind. The findings of the Sheriff-Substitute excluded any idea of fraud. This was not a case of essential error. In order to constitute essential error so as to set aside a contract, (1) it was necessary that the error should go to the root of the contract; and (2) it must have been induced by misrepresentation— Wood v. North British Railway Company, July 2, 1891, 18 R. (H.L.) 27; Mackie v. Strachan, Kinwood & Company, July 15, 1896, 23 R. 1030; Mathieson v. Hawthorns & Company, Limited, January 27, 1899, 1 F. 468. A contract might also be set aside if there was no consensus in idem as regards its subject-matter— Dickson v. Halbert, February 17, 1854, 18 D. 586. But nothing of that kind occurred here. There was no misrepresentation or concealment. The one party knew as much as the other. There was nothing to show that the doctor's report was not reliable. Both parties had relied upon this bona fide report of the doctor as a sound opinion. The report turned out to be erroneous, but at the time the contract was made there was no error as to existing facts. If the doctor had not made a report at all, and the appellants' foreman had told the respondent that he had, that would have been an error in fact. Here the only error was in the expectation of parties, and an error of opinion would never void a contract. A person might buy an investment on a broker's bona fide report submitted to him by the seller that its value would rise, but if the stock thereafter fell in value the investor would not get out of his engagement to buy by saying that he had depended on the broker's report. Reliance upon an opinion which turns out to be erroneous did not constitute essential error. The point argued by the other side as to the Sheriff having no power to deal with a case of this kind was not raised in the present case, and was now brought forward for the first time. The Court could pronounce a decision only on the question of law adjusted by the Sheriff, and would not send back the case in order to enable the respondent to raise a new question which had not been suggested when the case was before the Sheriff— Rae v. Fraser, June 28, 1899, 1 F. 1017.

Argued for the claimant and respondent—Under schedule 1, sections (13) and (14) of the Act, the employee was not allowed to assign away his right to a weekly payment until after a lapse of six months, and the employer could only settle for a lump sum after the expiry of the six months. The present discharge was therefore in contravention of the provisions of the Act, and section 1, sub-section (3), gave the Sheriff no power to deal with the matter. The Court should therefore send the case back to the Sheriff to proceed with the arbitration as if no such discharge had been granted. On the assumption that the matter had been competently dealt with by the Sheriff-Substitute, his judgment was right. He had, indeed, found it proved that there was no misrepresentation, but he had also found that the parties had acted under a common error as to a matter not of opinion but of fact. The circumstances showed that the parties had entered into the contract on the footing that the claimant would recover within six weeks. Instead of recovering within six weeks he had taken six months to recover. The error was therefore essential. The fact that recovery was to be made within six weeks formed the basis of the contract. It was an essential error, both parties entering into the agreement on an assumption which turned out to be erroneous. This erroneous belief as to a matter of fact invalidated the contract— Purdon v. Rowat's Trustees, December 19, 1856, 19 D. 206; Mercer v. Anstruther's Trustees, March 6, 1871, 9 Macph. 618;opinion of Lord Ardmillan, 649; Menzies v. Menzies, March 17, 1893, 20 R. (H.L.) 108, opinion of Lord Watson, 142.

Page: 72↓

At advising—