Scottish Court of Session Decisions

The Workmen's Compensation Act 1897 (60 and 61 Vict. cap. 37) enacts—Section 1 (3)—“If any question arises in any proceedings under this Act as to the liability to pay compensation under this Act … or as to the amount or duration of compensation under this Act, the question, if not settled by agreement, shall, subject to the provisions of the First Schedule to this Act, be settled by arbitration, in accordance with the Second Schedule to this Act.” Schedule I, section 12—“Any weekly payment may be reviewed at the request either of the employer or of the workman, and on such review may be ended, diminished, or increased,… and the amount of payment shall, in default of agreement, be settled by arbitration under this Act.” Schedule II, section 8 (as made applicable to Scotland by section 14 ( a))—“Where the amount of compensation under this Act shall have been ascertained, or any weekly payment varied, or any other matter decided, under this Act, either by a committee or by an arbitrator or by agreement, a memorandum thereof shall be sent, in manner prescribed by [Act of Sederunt], … to the [Sheriff Clerk] for the district in which any person entitled to such compensation resides, who shall, subject to such [Act of Sederunt], on being satisfied as to its genuineness, record such memorandum in a special register without fee, and thereupon the said memorandum shall for all purposes be enforceable as a [Sheriff Court] judgment: Provided that the [Sheriff] may at any time rectify such register.”

Section 14—“In the application of this Schedule to Scotland … ( b) any award or agreement as to compensation under this Act may be competently recorded for execution in the Books of Council and Session or Sheriff Court Books, and shall be enforceable in like manner as a recorded decree arbitral.”

Two cases, actions of suspension of a charge proceeding upon a registered memorandum of agreement under the Workmen's Compensation Act 1897, were advised together.

I. The Lochgelly Iron and Coal Company, Limited v. sinclair.—The Lochgelly Iron and Coal Company, Limited, Glasgow, brought a note of suspension of a charge, dated 5th February 1907, at the instance of Daniel Sinclair, miner, Dunfermline, against them. The charge, which was made by virtue of an extract registered memorandum of agreement under the Workmen's Compensation Act 1897, and warrant thereon by the Sheriff of the County of Lanark, dated at Glasgow 20th December 1906, was “to make payment of the sum of £87, 18s. 9d. sterling, being 105 weeks' compensation ending 30th January 1907 at the rate of 16s. 9d. per week, agreed to be paid by you …”

Execution having been sisted upon consignation and the note passed, a record was made up.

The following narrative of the circumstances in which the suspension was brought, as set forth in the averments of the complainers, is taken from the opinion of the Lord President:—“The respondent, a workman in the employment of the complainers' company, was injured by an accident in the course of his employment on 12th October 1904. The complainers agreed to pay him, and did pay him, 16s. 9d. per week as compensation. No written agreement was entered into, and no memorandum of the verbal agreement was recorded at the time or soon after. The complainers continued payment to the respondent down to 25th January 1905, when they ceased payment, the respondent having, according to their allegation, completely recovered. The respondent left the mine of the complainers at the time of the accident and has never returned to them. On the compensation ceasing to be paid as agreed, the respondent took no steps to record a memorandum of agreement, but on 27th April 1905 he raised an action against the complainers in the Court of Session concluding for damages at common law. The complainers defended upon the ground that the action was excluded by the fact that the respondent had elected to take and had taken compensation under the Act. A proof was led, and on 8th July 1905 the complainers got decree of absolvitor. Nothing more was done till March 1906, when the respondent applied to the Sheriff-Clerk at Dunfermline for a special warrant to record a memorandum of the agreement, and on 18th May 1906 the Sheriff-Substitute granted warrant to record said memorandum. After a further delay the respondent eventually recorded said memorandum in the register at Dunfermline on 20th November, and in the Sheriff Court Books of the County of Lanark (the county in which the complainers have their registered office) on 20th December 1906. Upon 5th February 1907 he charged the complainers to pay, under the said

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memorandum, 105 weeks' compensation, i.e., from 25th January 1905 up to 31st January 1907.”

The complainers pleaded, inter alia—“(3) The charger's incapacity having ceased at 25th January 1905 he is not entitled to charge for any compensation under the Workmen's Compensation Act after that date. (4) Separatim, the charger is not entitled to charge under said recorded memorandum of agreement for any sum of compensation prior to the date of recording said agreement.”

The respondent pleaded, inter alia—“(1) The complainers' averments are irrelevant and insufficient to support the prayer of the note. (2) The complainers' averments if and in so far as material being unfounded in fact the prayer of the note should be refused.”

On 15th November 1907 the Lord Ordinary ( Guthrie) pronounced this interlocutor—“Finds that the respondent was not entitled to charge the complainers to make payment to him of any weekly payments as compensation in terms of the statutory agreement entered into between them, for any period prior to 18th May 1906; to that extent sustains the reasons of suspension and suspends the charge accordingly: Quoad ultra repels said reasons; recals the sist of execution formerly granted, and decerns; and finds no expenses due to or by either party.”

Opinion.—In connection with an accident on 12th October 1904 the respondent was paid compensation for total incapacity by the complainers, in accordance with an unrecorded agreemententered into between them under the Workmen's Compensation Act 1897. Warrant to record the agreement was granted on 18th May 1906. No application for review has been made by the complainers under section 12 of the First Schedule of the Act of 1897.

The complainers have been charged by the respondent to pay £87, 18s. 9d., being one hundred and five weeks' compensation from 25th January 1905, the last date of payment, to 30th January 1907. The respondent was not in the complainers' service after the accident.

The complainers maintain that they are not liable in payment of any part of the sum charged for, or otherwise that there can be no claim against them for the period prior to 18th May 1906, the date of the heriff-Substitute's warrant to record the agreement. The respondent's case is that even if wholly or partially recovered after 25th January 1905, the complainers remained, and remain, liable under the statutory agreement for the weekly payments, until review, under section 12 of the First Statutory Schedule. Or otherwise he maintains that he acquired a right from the date of the warrant to record, which endures till statutory review.

In my opinion the respondent's alternative contention is well founded.

By section 8 of the Second Schedule of the 1897 Act provision is made for recording a memorandum of agreement. The section proceeds-‘thereupon the said memorandum shall, for all purposes, be enforceable as a Sheriff-Court judgment.' I see no warrant for holding that a charge can be given on an agreement prior to the date of the warrant to record— Steel v. Oakbank Oil Company, 5 F. 244; Cavaney v. Pumpherston Oil Company, 5 F. 963; Nimmo v. Fisher, 1907 S.C. 890.

After recording, or warrant to record, it appears to me that the right to payment continues till review under section 12 of the First Schedule, except in three cases—( first) where the same employer has actually paid a sum equal to the amount of the weekly payment, whether that payment be made in name of statutory compensation or as wages. If paid as wages it will be held, so far as it goes, to include the statutory compensation— Beath & Keay v. Ness, 6 F. 168; ( second) where it is proved that there was an agreement, express or implied, between the employers and the workman that the weekly payments should cease; or ( third) where it is proved that the workman admitted that the incapacity has wholly ceased.

“In any case, no payment of any kind was made by the complainers to the respondent subsequent to 25th January 1905, and I do not find any averment of agreement, express or implied, between the complainers and respondent that the weekly payments should cease, or any relevant averment of admission that the incapacity had wholly ceased. The authorities do not seem to me to establish the proposition, which I cannot find in the statute, that an employer's liability would terminate on proof that if the workman had chosen he might have earned the same wages as before the accident, or even on proof that in point of fact he did earn such wages from other employers, unless in the latter case it might be held that such conduct on the part of the workman involved what Lord Stormonth Darling called a ‘practical admission’ by the workman that his incapacity had totally ceased. [See Nimmo & Company, Limited v. Fisher, 1907 S.C. p. 890.]”

The complainers reclaimed, and the respondent took advantage of their note to reclaim also.

Argued for the complainers (reclaimers)—The agreement was in respect of total incapacity. Not only had total incapacity ceased by 25th January 1905, but the respondent had totally recovered by that date. On the cessation of total incapacity the agreement terminated. Where there was a genuine dispute as to an agreement either ever having existed or being now subsisting, the Court to avoid injustice would give an opportunity of review by a common law process— Colville & Sons, Limited v. Tigue, December 6, 1905, 8 F. 179, 43 S.L.R. 129; Blake v. Midland Railway Company, [1904] 1 KB 503; Hughes v. Thistle Chemical Company, 1907 S.C. 607, 44 S.L.R. 476; Dempster v. William Baird & Company, Limited, 1908 S.C. 722, 45 S.L.R. 432. A suspension was a competent and appropriate method of review, and had been allowed in Beath & Keay v. Ness, November 28, 1903, 6 F. 168,

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41 S.L.R. 113, and James Nimmo & Company, Limited v. Fisher, 1907 S.C. 890, 44 S.L.R. 631. An application to end the weekly payments would not give them relief, as it would only operate from the date of the finding, although it was true that the contrary had been held in England in Morton & Company v. Woodward, [1902] 2 KB 276. The mere fact that formal steps were not taken by an employer to get rid of an agreement, did not necessarily imply that the agreement still subsisted— Colville & Sons, Limited v. Tigue, Dempster v. William Baird & Company, Limited ( cit. sup.)

Argued for the respondent—(1) The Lord Ordinary was right in refusing suspension in respect of the period subsequent to 18th May. The memorandum of agreement registered did not specify total incapacity, and was not necessarily in respect of total incapacity—Under Schedule (1) ( b) a workman might be entitled to fifty per cent. of his average weekly earnings even for partial incapacity. A workman was entitled under an agreement to compensation until the machinery of the Act ended or altered the compensation— Steel v. Oakbank Oil Company, December 16, 1902, 5 F. 244, 40 S.L.R. 205; Pumpherston Oil Company v. Cavaney, June 23, 1903, 5 F. 963, 40 S.L.R. 724. A suspension was only competent in exceptional circumstances as the receipt of full wages from the same employer, as in Beath & Keay v. Ness and Fisher v. Nimmo ( cit. sup.) It was incompetent in a suspension to inquire into the capacity of a workman— Fife Coal Company, Limited v. Lindsay, 1908 S.C. 431, 45 S.L.R. 317. [The Lord President referred to Fife Coal Company, Limited v. Davidson, 1907, S.C. 90, 44 S.L.R. 108.] (2) The Lord Ordinary was wrong in granting suspension in respect of the period prior to 18th May 1906. “There upon” in section 8 of the second schedule did not mean “as regards payments subsequently becoming due,” which was the sense in which the Lord Ordinary had interpreted it, but merely “on this being done.” The section drew no distinction between sums due prior to the date of recording and sums subsequently due, and no distinction could properly be drawn— Finnie & Son v. Fulton (opinion of Lord Mackenzie in Outer House), the report of which immediately follows. Reference was also made to Mackay v. Rosie, 1908 S.C. 174, 45 S.L.R. 178.

II. Finnie & Son v. Fulton.—The facts of the case are given in the opinion ( infra) of the Lord Ordinary ( Mackenzie), who on 28th May 1908 refused suspension.

Opinion—This is a suspension of a charge to pay compensation under a Memorandum of Agreement under the Workmen's Compensation Act 1897.

The material dates are as follows:—The accident happened on 23rd March 1906 and totally incapacitated the respondent for work. The complainers agreed to pay him during his total incapacity a sum of 9s. per week. They paid this sum down to 21st June 1907. Having obtained a doctor's report the complainers on 28th June 1907 refused to pay further compensation on the ground that the respondent was fit for work. On 26th July 1907 intimation was made to the complainers that respondent proposed to record a memorandum of the original agreement of March 1906. On 20th August 1907 the memorandum was recorded in the special register. The memorandum was recorded in the Sheriff Court Books for execution on 18th October 1907. On 27th November 1907 the complainers were charged to make payment.

The charge sought to be suspended was to make payment of the sum of £9, 18s., being twenty-two weeks' compensation from 28th June to 22nd November 1907 at the rate of 9s. a-week.

The complainers’ case is that the respondent's total incapacity ceased not later than 28th June 1907; that the basis of the agreement was the total incapacity of the respondent; that when this ceased the agreement expired and that the respondent could not two months after its expiry record it in the special register. They therefore want a proof in this Court to determine the question of fact, viz., whether the respondent's total incapacity has ceased, and if so, at what date. This appears to me to be contrary to the provisions of the Act and also to what was decided in this Court in the case of the Fife Coal Company v. Lindsay, 1908 S.C. 431 The Act provides, sec. 1 (3), that ‘if any question arises in any proceedings under this Act as to the liability to pay compensation under this Act, or as to the amount or duration of compensation under this Act, the question if not settled by agreement shall, subject to the provisions of the first schedule to this Act, be settled by arbitration in accordance with the second schedule to this Act.’ The Act provides that all questions as to a workman's capacity or incapacity can be determined in the summary method provided by the statute. The Court accordingly in Lindsay's case held that it was not open to the employer to resort to procedure by way of suspension. The complainers here sought to distinguish the present from Lindsay's case because they say that the respondent was certiorated by the fact of his complete recovery before the memorandum of agreement was recorded, and that in Lindsay's case the memorandum was put on record before the workman was certiorated of this fact. In putting their point in this way, however, the complainers appear to me to assume in their favour the fact which they ask a proof to enable them to establish. This in my opinion they cannot do. Various considerations were urged on behalf of the complainers as reasons why the present proceedings should be allowed to go on, and, amongst others, as is not unusual in these cases, the injustice that would be worked in consequence of the decisions in Steel, 5 F. 244, and Cavaney, 5 F. 963. Even if it were the case that the complainers are obliged to pay to the respondent more than the amount which if everything had been done in terms of the statute he would have been entitled to

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demand, that is just what happened in Lindsay's case. As Lord Low there pointed out, the Court was powerless to prevent the result because the question is not one of common law or of equity but of statutory enactments. Reference was made to a recent decision of the First Division in the South Hook Fire Clay Company case, and I have been furnished with a copy of the opinions delivered. That case, however, only decided that in a case where no memorandum of agreement was ever recorded the arbitrator was not right in holding that he could only terminate the compensation as from the date of his interlocutor. It is not an authority for the complainers’ argument that it is this Court and not the arbitrator that should review the compensation. Nor do I think that such cases as Beath & Keay v. Ness, 6 F. 168, and Nimmo & Company v. Fisher, 1907 S.C. 890, are sufficient to support the complainers’ contention.

I may say that I am unable in a suspension of a charge to draw a distinction between the sums due for the period prior to the date of the warrant for recording the memorandum of agreement and those for the period subsequent thereto. The agreement which was recorded was one by which the employers agreed to pay the workman compensation at the rate of 9s. a week in respect of bodily injury caused to him by an accident which happened on the 23rd day of March 1906. They were therefore bound to pay that sum as from that date. The memorandum of agreement was not recorded until 20th August 1907 in the special register, nor was it recorded in the Sheriff Court Books for execution till 18th October 1907. When, however, it was recorded it appears to me to be a warrant for recovering the sums unpaid prior to the date of recording as well as the sums falling due subsequent thereto.

“I am accordingly of opinion that the suspension is incompetent and that the note should be refused with expenses.”

The complainers reclaimed, and argued— (1) As regards the sums alleged to be due subsequent to the date of recording the memorandum.—The agreement had expired before it was put on record owing to change of circumstances, and the charge therefore fell. The agreement was to pay during total incapacity, and that had ceased. If there was no subsisting agreement at the date of recording, suspension was competent at common law— Hughes v. Thistle Chemical Company, 1907 S.C. 607, 44 S L.R. 476; Binning v. Easton & Sons, January 18, 1906, 8 F. 407, 43 S.L.R. 312. The complainers were entitled to prove that the respondent's incapacity had ceased, and the mere fact that an agreement had been recorded would not exclude inquiry— Blake v. Midland Railway,Company [1904], 1 K.B. 503; Strannigan v. Baird & Company, Limited, June 7, 1904, 6 F. 784, 41 S.L.R. 609. The ordinary common law remedies had only been excluded in so far as the Act had substituted a statutory procedure. There were four stages of that procedure, viz. ( a) arbitration, ( b) recording, ( c) revision, and ( d) determination of the compensation. If the statutory procedure failed to do substantial justice at any of these stages the ordinary common law remedies were available. The present case was one not provided for by the Act, and the complainers therefore were entitled to the ordinary common law remedy of suspension. The case of the Fife Coal Company, Limited v. Lindsay, 1908 S.C. 431, 45 S.L.R. 317, relied on by the respondent, was distinguishable, for the respondent here had been certiorated of the fact of his recovery before he recorded the memorandum. Reference was also made to Johnston v. Mew, Langton & Company, June 11 1907, 23 T.L.R. 607. (2) As to sums alleged to be due prior to the date of recording—This question was not dealt with in Lindsay's case, and the complainers were therefore entitled to suspend at common law. To hold otherwise would operate injustice which the Act could not have intended. A workman was bound to register his agreement at once, and so long as he refrained from recording it he must be presumed to be satisfied. Sums prior to the date of recording could not be recovered, for an arbiter had no power to decern for arrears due under an agreement— Colville & Sons, Limited v. Tigue, December 6 1905, 8 F. 179, 43 S.L.R. 129.

Argued for the respondent—The Lord Ordinary was right. The case was governed by that of Lindsay ( cit.), which decided that an employer could not stop payment at his own hand and then prove that the workman had recovered. There was no relevant averment for suspension here as there was in William Baird & Company, Limited v. M'Whinnie, 1908 S.C. 440, 45 S.L.R. 338. The agreement was still binding, for no proper steps had been taken to set it aside, and having been recorded it operated as a Sheriff Court decree enforceable in like manner—Workmen's Compensation Act 1897 (60 and 61 Viet. cap. 37), Second Schedule, secs. 8 and 14 ( b). The complainers had a special remedy under the statute, and could not avail themselves of the ordinary common law remedies—Workmen's Compensation Act 1897, sec. 1 (3), and First Schedule, sec. 12. That being so, the present suspension was incompetent and should be refused— Cochrane v. Traill & Sons, March 16, 1900, 2 F. 794, 37 S.L.R. 662.

At advising—