Scottish Court of Session Decisions

The Workmen's Compensation Act 1906 (6 Edw. VII, c. 58), enacts—sec. 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 II (9) [as applied to Scotland by section 13 of the Act]—“Where the amount of compensation under this Act has been ascertained … by agreement, a memorandum thereof shall be sent in manner prescribed by [Act of Sederunt] … by any party interested to the [sheriff-clerk], who shall, subject to such [Act of Sederunt], on being satisfied as to its genuineness, record such memorandum in a special register: … Provided that … ( b) where a workman seeks to record a memorandum of agreement, … and the employer … proves that the workman has in fact returned to work and is earning the same wages as he did before the accident, and objects to the recording, … the memorandum shall only be recorded, if at all, on such terms as the [sheriff] under the circumstances may think just.”

The Act of Sederunt of 26th June 1907, to regulate the procedure under the Workmen's Compensation Act 1906, enacts — sec. 12 — “When the genuineness of a memorandum under paragraph 9 of the Second Schedule appended to the Act is disputed, or when an employer objects to the recording of such memorandum under sub-section ( b) of said paragraph, … the person disputing the genuineness, or the employer … shall lodge a minute stating clearly all the grounds for his action, and the memorandum shall thereupon be dealt with as if it were an application to the sheriff for settlement by arbitration of the questions raised by the minute.”

The Niddrie and Benhar Coal Company, Limited, appealed by way of stated case against a decision of the Sheriff-Substitute ( Guy) at Edinburgh in proceedings at the instance of Daniel Hanley, St John's Hill, Edinburgh, against them, under the Workmen's Compensation Act 1906.

The case stated by the Sheriff-Substitute set forth—“The facts proved or admitted, and the procedure which took place in the arbitration, so far as bearing on the questions of law after mentioned, are as follows:— On 8th December 1909 the respondent lodged with the Sheriff-Clerk a memorandum of agreement between him and the appellants, with a request that it should be recorded in the Special Register kept for the purpose. The memorandum narrated that the respondent claimed compensation from the appellants in respect of personal injury caused by accident in the employment of a contractor employed by the appellants at a new shaft near Musselburgh on 31st May 1909; that the question in dispute, which was the amount of compensation, was settled by agreement; that the agreement was made on 16th June 1909; and that it was to the effect that the respondent should receive compensation from the appellants at the rate of 14s. 3d. per week. A copy of the memorandum was intimated to the appellants by the Sheriff-Clerk in terms of paragraph 11 (1) of the Act of Sederunt of 26th June 1907. Within the period of notice the appellants intimated to the Sheriff-Clerk that they objected to the memorandum being recorded on the ground that it was not genuine. The respondent having then applied to the Sheriff for a special warrant to the Sheriff-Clerk to record the memorandum, the appellants lodged a minute, in terms of paragraph 12 of said Act of Sederunt, setting forth their grounds for disputing the genuineness of

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the memorandum. These grounds were stated in the minute as follows:— ‘The said The Niddrie & Benhar Coal Company, Limited, object to the recording of said memorandum of agreement on the ground that it is not genuine, in respect that the period during which compensation at said rate was to be paid was limited by agreement to the period of the claimant's total incapacity for work, and that this was a material term of the agreement entered into between the parties. It is explained and averred that prior to the memorandum of agreement being presented for registration the claimant had signed a final discharge of his claims against the respondents in respect of said accident. The respondents contend that the present application to record a memorandum of agreement is incompetent. It is further explained and averred that in terms of paragraph 12 of the Act of Sederunt of 26th June 1907 this question falls to be settled by arbitration.’

“Answers were lodged by the respondent to said minute, and were as follows:— ‘Denied that the period during which compensation at the rate specified in the memorandum of agreement was to be paid was limited by agreement to the period of the claimant's total incapacity for work. Explained that compensation at said rate, being half the claimant's average weekly wage, was paid to him by the respondents, and was accepted by him as the compensation to which he was entitled under the Workmen's Compensation Act 1906, beyond which no agreement was come to between the parties. Explained further that the claimant is still totally incapacitated. In addition to the strain received to his back, his heart was seriously affected by the accident. Not known and not admitted that prior to the memorandum of agreement being presented for registration the claimant had signed a final discharge of his claims against the respondents in respect of the accident referred to in said memorandum of agreement. The respondents are called upon to produce alleged discharge. If such discharge were signed by the claimant, it was signed by him in essential error. The receipt dated 8th September 1909 produced by the respondents was signed by the claimant under essential error induced by the respondents. At that date he was still incapacitated, and was not earning full wages. No consideration was paid for the discharge of future claims. The claimant is illiterate and cannot read or write, and only signs his name with difficulty. He was told by the respondents, and he understood and believed, that he was only signing for the compensation due at that date, and signed the receipt on that footing. It should therefore be set aside as a discharge of future claims. . … Admitted that this question falls to be settled by arbitration in terms of paragraph 12 of the Act of Sederunt of 26th June 1907. The present proceedings are in terms of said paragraph.’

On these documents being lodged I allowed a proof, to be taken on 17th March 1910. I heard the proof on that date, and on the same day I issued my award, in which I found in fact that the agreement set forth in the memorandum sought to be recorded—viz., that the respondent should receive compensation from the appellants at the rate of 14s. 3d. per week—was made on 16th June 1909 and was genuine, and I therefore granted warrant to the Sheriff-Clerk to record the memorandum in the Special Register, and found the appellants liable to the respondent in expenses.

On 15th March 1910 (i.e., two days before the diet of proof) the appellants lodged with the Clerk of Court an application in which they asked the Court ‘To grant an order finding that the defender's right to compensation under the Workmen's Compensation Act 1906 ceased as at the 8th September 1909, or at such subsequent date as to the Court may seem just, or alternatively, in the event of the pursuers being unsuccessful in this crave, to grant such award of partial compensation as to the Court may seem just.’ The usual statutory warrant to serve this application on the respondent, and appointing him to answer on 24th March 1910, was obtained. When the appellants lodged said application they also lodged with the Clerk of Court a minute of motion in this application to record the memorandum, in which they stated that they ‘had instituted arbitration proceedings to determine the question of whether or not the claimant (respondent) had as at 8th September 1909 recovered his earning capacity, and in the event of the Court finding that the memorandum of agreement is genuine they respectfully move the Court to delay the recording of the same pending the result of the arbitration proceedings.’ This minute of motion was not laid before me by the appellants until the proof took place in the application to record on 17th March, when the appellants' agent moved me in terms thereof. He did not produce to me the said application for arbitration. It was admitted by respondent's agent that the initial writ had been sent to him on the day before the proof in order that he might accept service, but that he declined to do so, and returned it by post the same day to the appellants' agents. The respondent stated at the proof that the application had not been served on him. It was thus not before me. Looking to the stage which the application to record had reached before said motion was made, to the position of the application for arbitration, and to the fact that a considerable time must elapse before an award could be obtained in said application for arbitration, and that the appellants had had ample opportunity to lodge the said application for arbitration in time to have it dealt with along with the application to record, and to have the proof in both applications taken at the same time, I refused the motion contained in said minute.

On said 17th March proof was led in regard to the alleged final discharge granted to appellants by the respondent, and referred to in the before-mentioned minute of objections to the genuineness

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of the memorandum of agreement, with the object of having the validity of the said discharge determined, and of having a warrant to record said memorandum of agreement refused because of said discharge. It was admitted by the appellants that they had not attempted to record any memorandum of agreement ending the compensation based upon said discharge, nor taken any arbitration proceedings to have the said compensation ended except those which they had initiated two days before the proof as before mentioned. I did not refuse to hear such evidence, but at the close of the proof I ruled that it was not appropriate to the present proceeding to have the validity or invalidity of said discharge tried and determined, and that such a question was only appropriate to an application by the appellants to record a memorandum of agreement ending the compensation based upon said discharge, or to an application by the appellants to review and end the weekly payment, or to a suspension, when competent, of any charge which the respondent might give upon the recorded memorandum of agreement, and accordingly I refused in said proceeding to determine the validity or invalidity of said discharge.”

The questions of law were—“(1) Were the appellants entitled to have the validity or invalidity of said discharge determined as findings in fact and in law in the said application for warrant to record the memorandum of agreement? and (2) Did the before-mentioned application of the appellants for arbitration to review and end the weekly payment entitle them to resist unconditional registration of the said memorandum of agreement pending the result of the said arbitration proceedings?”

Argued for the appellants—The Sheriff ought to have determined the validity of the discharge in the application to record the memorandum. Under the Act of Sederunt of 26th June 1907 it was competent to consider the genuineness of the memorandum, and this was tantamount to a question of genuineness under Schedule II (9) of the Act. It was a living agreement that was contemplated by the statute, and the question as to whether the agreement had been discharged was a relevant matter for consideration — Ellis v. Lochgelly Iron and Coal Company, Limited, 1909 S.C. 1278, 46 S.L.R. 960; M'Ewan v. Wm. Baird & Company, Limited, 1910 S.C. 436 ( per Lord Kinnear at p. 443), 47 S.L.R. 430. Further, the respondent had invited the Sheriff qua arbiter to deal with the validity or invalidity of the discharge. The arbiter therefore was bound to determine the matter, because it came before him of consent. If respondent objected he should have stated in his pleadings that the appellants' position was irrelevant. The effect of the course adopted by the Sheriff would be, if the respondent were successful, that the workman would get compensation up to the date of the application to review, subject to the right of the appellants to suspend. In any event the application for review entitled the appellants to oppose the application to record. This was decided in M'Ewan v. Wm. Baird & Company, Limited ( cit. sup.). That case and the present were practically on all fours except with regard to the informality of citation. As a matter of fact, however, both the Sheriff and the workman knew of the application for review. The respondent's argument would inflict great hardship on the master, because the workman could charge for all the intervening period, and the master would probably find it impossible to recover the money. It was really a question of bar, because if the workman had not received compensation for some weeks he would be barred from pleading prejudice by a further delay of a few weeks especially when he had signed a complete discharge — M'Vey v. William Dixon, Limited, 1910 S.C. 544, 47 S.L.R. 463; Charing Cross, Euston, and Hampstead Railway Company v. Coutts, [1909] 2 KB 640, per L. J. Buckley at p. 646.

Argued for the respondent—There were only two answers to an application by the workman to record a memorandum — (1) that it was not genuine; (2) that it was not entitled to be recorded on the grounds set forth in Schedule II (9) b and d. There was no doubt that this was a genuine document and it was impossible for the appellants to bring themselves within either proviso of Schedule II (9). Thus the Sheriff had no option to withhold the recording of the memorandum— M'Ewan v. Wm. Baird & Company, Limited ( cit. sup.), per Lord Johnston at 1910 S.C. p. 445. The proper method for the appellants to adopt was to record the discharge, because the discharge was really a varying or redemption of the weekly payments. In Ellis v. Lochgelly Iron and Coal Company, Limited, cit. sup., there was no agreement between the parties as to compensation. The respondent brought himself in terms within the principle of Coakley v. Addie & Sons, Limited, 1909 S.C. 545, 46 S.L.R. 408, approved in M'Ewan v. Wm. Baird & Company, Limited, cit. sup., and in Donaldson Bros. v. Cowan, 1909 S.C. 1292, 46 S.L.R. 920. The discharge could have no effect unless the employer applied to end the compensation because of the discharge. Any delay was the employers' fault, and they must suffer. Lochgelly Iron and Coal Company, Limited v. Sinclair, 1909 S.C. 922, 46 S.L.R. 665, stated the employers' remedy against a workman who lay by and then recorded a memorandum.

At advising—