Scottish Court of Session Decisions

The Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58) 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 … be settled by arbitration. …”

This was an appeal by way of Stated Case from a decision of the Sheriff-Substitute ( Blair) at Dumbarton in an arbitration under the Workmen's Compensation Act 1906 between John Brown & Company, Limited, engineers and shipbuilders, Clydebank, appellants, and Archibald Callan Hunter, labourer, Garscube Road, Glasgow, respondent.

The Case stated—“The respondent was a labourer in the employment of the appellants. His average weekly wages were 25s. He was injured on the 24th of March 1911 by an accident arising out of and in the course of his employment.

The injury consisted of the loss of the third, fourth, and fifth fingers of the respondent's left hand, and the disablement of the thumb and forefinger of the same hand. It was caused by the wheels of an overhead electric crane running over said hand.

Compensation at the rate of 12s. 6d. a week has been regularly paid since the date of the accident, and is still being paid to the respondent in consequence of said injury. These facts are admitted by both appellants and respondent.

On 7th December 1911 the respondent lodged a petition in the Sheriff Court of Dumbarton narrating the said facts, and stating the question which had arisen between the parties is, what is the amount of compensation due to the respondent, and craving an award for the compensation due to the respondent under the Workmen's Compensation Act 1906. This petition, which was by way of initial writ, and contained only a bare statement of claim, was called in Court at Dumbarton on 19th December following, when the appellants lodged a written note of defence maintaining that the application was incompetent and premature in respect that there were no question in dispute between the parties in terms of section 1 (3) of the Workmen's Compensation Act 1906, so as to entitle the workman to present a petition for arbitration. In the note of defence it was admitted that the respondent was injured in the appellants' employment on 24th March 1911, that he was still incapacited as the result of that accident, that the appellants were paying the respondent compensation at the rate of 12s. 6d. per week, being one-half of his average weekly wage of 25s., and that the respondent had accepted, and was still accepting, this compensation. The appellants therefore craved that the application should be dismissed as incompetent and premature, with expenses.

Nothing was said in the note of defence by the appellants about the respondent having signed the form of receipt now objected to and hereinafter set forth.

I heard parties’ procurators on these pleadings on 19th December 1911, when the respondent's agent submitted, for the first time in these proceedings, and in answer to the note of defence, a copy of receipt which he alleged the respondent had signed on receiving his first payment of compensation, in the following terms:—‘Received from Messrs John Brown & Company, Limited, engineers and shipbuilders, the sum of 12s. 6d., being compensation due to me in terms of the Workmen's Compensation Act 1906 in respect of injuries which I received through an accident while in their employment; and I acknowledge that my employers and I have agreed that compensation shall be paid to me under this agreement only while the said John Brown & Company, Limited, are of opinion that my incapacity continues, and when they are of opinion that my incapacity has ceased, this agreement shall end. Reserving to me my rights otherwise to recover further compensation should I claim to be entitled to it. Archd. C. Hunter.’

A copy receipt was lodged in this process, but the original was not. It was and still is in the possession of the appellants, and it has never been produced by them. The appellants requested me to dismiss the petition on the ground stated in their note of defence. Respondent craved a proof.

I refused the appellants' motion, and fixed a diet of proof, which took place on 11th January 1912. The respondent led evidence. The appellants refused to cross-examine the respondent's witnesses, and led no evidence on their own behalf.

On 15th January 1912 I issued an interlocutor finding proved, inter alia, the facts admitted on both sides. I further found proved the following facts—(1) that the respondent on 15th May 1911 attended at the shipyard to receive his first payment of compensation; (2) that he was one of a long line of men also waiting to receive compensation; (3) that when he was opposite the pay window the appellants' clerk handed him a sum of money amounting to £4, 9s. 3d., stating that it was compensation for seven weeks and two days, and placed the printed form of receipt already mentioned before him, and asked him to sign it, which he did; (4) that its terms were not read over or explained to him in any way, nor was his attention directed to the fact that its terms made the appellants the sole judges of whether and when the respondent had recovered from his injuries; (5) that the respondent signed the receipt under essential error, in the belief that he was acknowledging only the sum handed to him by the appellants' clerk; (6) that on the 7th of June 1911 the respondent lodged in this Sheriff Court a memorandum of agreement, to be recorded in the Special Register, to the following effect—‘That on the 7th of April 1911 the appellants agreed to pay to the respondent compensation under the Workmen's Compensation Act

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1906, at the rate of 12s. 6d. per week, beginning the first payment as at 31st March 1911, and to continue the payment thereof until the same is ended, diminished, redeemed, or suspended in terms of the said Act,’ and the appellants lodged a minute in answer, objecting to the genuineness of that memorandum of agreement; (7) that on the 17th day of June 1911 the respondent lodged another memorandum of agreement made on the 15th of May 1911, to be recorded in said register, whereby the appellants agreed to pay compensation under the Workmen's Compensation Act 1906 at the rate of 12s. 6d. per week, beginning the first payment as at 31st March 1911, and to continue the payments thereof until the same is ended, diminished, redeemed, or suspended, in terms of the said Act; and the appellants lodged a further minute objecting to the genuineness of that second memorandum of agreement; and (8) both petitions to record presented by the respondent were thereupon abandoned, because of the terms of the receipt granted to the appellants, and set up by them as their objection to the genuineness of the memorandum sought to be recorded. The appellants at the diet of proof intimated that they had no intention of binding the respondent down to the terms of the said receipt. I asked them to put in a minute to that effect. They declined.

It was further proved that the respondent thereafter continued to receive his compensation without interruption. Accordingly I issued an award, and found that the receipt in question was a form of contracting out not authorised by the said Act; that it was signed by the respondent under essential error; that the only agreement entered into by the respondent was to receive compensation in terms of the Act; that the only way in which the respondent could protect himself against the appellants constituting themselves the sole judges as to when his compensation should terminate was by an award, especially in face of the fact that the appellants declined to put in a minute superseding all or any effect which the said receipt might have, and also in face of the fact that when the respondent had lodged a simple memorandum to record, the appellants disputed the genuineness thereof, and set up the afore-mentioned receipt as the real agreement between the parties; that the respondent had not recovered from the effects of his injury, and that he was entitled to compensation at the rate of 12s. 6d. per week from the date of said accident, so far as not already paid, and to continue until further orders of the Court; and I further found the appellants liable in five guineas of modified expenses.

The validity of this form of receipt under the Workmen's Compensation Act is a constant source of discussion between the appellants and their workmen in compensation cases in the Sheriff Court, and it is earnestly desired by both parties that this question should be definitely settled by the judgment of the Court of Session.”

The questions of law were—“(1) Was the receipt in question, as a receipt, a proper and competent form of receipt within the meaning of the Workmen's Compensation Act 1906? (2) Was the said receipt, so far as it purports to be an agreement, a competent and proper agreement in terms of the Workmen's Compensation Act? (3) In the circumstances, and in respect that the appellants paid and have continued to pay half wages to the respondent, was the procedure adopted by the respondent in asking for an award, and the award following thereon, competent?”

Argued for the appellants—The condition-precedent to arbitration was a dispute which must arise in proceedings under the Act as to liability to pay compensation. There was here no dispute, as the employers were paying compensation— Caledon Shipbuilding and Engineering Company, Limited v. Kennedy, June 26, 1906, 8 F. 960, 43 S.L.R. 687; Gourlay Brothers & Company (Dundee), Limited v. Sweeney, June 26, 1906, 8 F. 965, 43 S.L.R. 690. The dispute as to the memorandum of agreement was not a question in the sense of section 3 (1) of the Workmen's Compensation Act 1906 (6 Edw. VII, c. 58). Reference was also made to the case of John Brown & Company, Limited v. Orr, 1910 S.C. 526, 47 S.L.R. 437.

Argued for the respondent—The workman was entitled to have his right to compensation determined. There were only two ways of doing this, viz., (1) by recording a memorandum of agreement, (2) by arbitration. The former had been tried and failed, and the latter was therefore the only method left. There was here a dispute as to the duration of payment, or as to the way in which compensation should be ended— Rendall v. Hill's Dry Docks and Engineering Company, Limited, [1900] 2 QB 245. The mere payment by the employer did not satisfy the condition under the Act that the man must make a claim within a certain time. In Gourlay Brothers & Company (Dundee), Limited v. Sweeney ( cit. sup.), and in Caledon Shipbuilding and Engineering Company, Limited v. Kennedy ( cit. sup.), there had been no attempt to record a memorandum of agreement, but here the fact that the recording of a memorandum had been objected to by the employers showed that there was a dispute— Field v. Longden & Sons, [1902] 1 KB 47, per Collins, M.R., at p. 54.