Scottish Court of Session Decisions

The Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58) enacts—Second Schedule—“(9) Where the amount of compensation under this Act has 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, by the committee or arbitrator or 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 without fee, and thereupon the memorandum shall for all purposes be enforceable as a [sheriff] court judgment: Provided that …( d) where it appears to the [sheriff-clerk], on any information which he considers sufficient, that an agreement as to the redemption of a weekly payment by a lump sum … ought not to be registered by reason of the inadequacy of the sum or amount, or by reason of the agreement having been obtained by fraud or undue influence, or other improper means, he may refuse to record the memorandum of the agreement sent to him for registration, and refer the matter to the [sheriff], who shall, in accordance with Act of Sederunt, make such order (including an order as to any sum already paid under the agreement) as under the circumstances he may think just; and ( e) the [sheriff] may, within six months after a memorandum of an agreement as to the redemption of a weekly payment by a lump sum … has been recorded in the register, order that the record be removed from the register on proof to his satisfaction that the agreement was obtained by fraud or undue influence or other improper means, and may make such order (including an order as to any sum already paid under the agreement) as under the circumstances he may think just. (10) An agreement as to the redemption of a weekly payment by a lump sum if not registered in accordance with this Act shall not, nor shall the payment of the sum payable under the agreement, exempt the person by whom the weekly payment is payable from liability to continue to make that weekly payment, … unless … he proves that the failure to register was not due to any neglect or default on his part.”

The National Insurance Act 1911 (1 and 2 Geo. V, cap. 55) enacts—Section 11—“(1) Where an insured person has received or recovered, or is entitled to receive or recover, … from his employer… any compensation … under the Workmen's Compensation Act 1906 … in respect of any injury or disease, the following provisions shall apply: … ( c) Where an agreement is made as to the amount of such compensation as aforesaid, and the amount so agreed is less than ten shillings a-week, or as to the redemption of a weekly payment by a lump sum, under the Workmen's Compensation Act 1906, the employer shall, within three days thereafter, … send to the Insurance Commissioners, or to the society or committee concerned, notice in writing of such agreement giving the prescribed particulars thereof. … (2)

Page: 668↓

Where an insured person appears to be entitled to any such compensation, … and unreasonably refuses or neglects to take proceedings to enforce his claim, it shall be lawful for the society or committee concerned either ( a) at its own expense to take in the name and on behalf of such person such proceedings…’

John Gormley, puddler, Coatbridge, appellant, being dissatisfied with an award in the Sheriff Court at Airdrie in an application by him for compensation under the Workmen's Compensation Act 1906 against the Scottish Iron and Steel Company, Limited, Coatbridge, respondents, appealed by Stated Case.

The Case stated—“This is an arbitration under the Workmen's Compensation Act 1906, in which the Sheriff as arbitrator is asked to award the pursuer and appellant compensation for the following periods From 22nd March to 19th April inclusive, from 27th April to 30th May inclusive, from 5th to 13th June inclusive, from 18th to 25th June inclusive, and from 5th to 26th July inclusive, all in the year 1917, at the rate of £1 sterling per week, and from 6th November 1917, during the period of the pursuer and appellant's incapacity, at the rate of 25s. sterling per week, or such other rate as may be found to be due to him by the defenders and respondents, with interest thereon at the rate of 5 per cent. per annum on the first and successive weekly instalments till paid, and with expenses.

The pursuer and appellant makes the following averments:—1. That on or about the 2nd day of October 1916 the pursuer and appellant was engaged in his usual occupation in the Victoria Works belonging to the defenders and respondents, and was injured in his left eye through a burning accident. 2. On the day on which the accident occurred the pursuer and appellant gave notice thereof to the defenders and respondents in terms of the Workmen's Compensation Act 1906, and an application was made for compensation under the Act, and the defenders and respondents paid the pursuer and appellant compensation up to the 12th day of December 1916, when the defenders and respondents made a final payment and took a final discharge from the pursuer and appellant. The said final payment and discharge were not intimated to the pursuer and appellant's approved society under the National Health Insurance Act in terms of section 2 (1) ( c) of that Act. 3. Owing to the said accident the pursuer and appellant was incapacitated for work for the period from 22nd March to 19th April, when he entered the Eye Infirmary in Glasgow and his injured eye was operated upon there. He was further incapacitated for the following periods owing to the said accident:—From 27th April to 30th May, from 5th to 13th June, from 18th to 25th June, and 5th to 26th July, and from 6th November onwards, all in the year 1917. The said periods of incapacity for work arise from the inflammation in the pursuer and appellant's said left eye, and are directly attributable to the accident on 2nd October 1916, which is not admitted by the defenders and respondents. 4. The average wage of the pursuer and appellant in the employment of the defenders and respondents prior to the date of the said accident was over £2 per week.

The defenders and respondents plead, inter alia—1. That the pursuer and the appellant having recovered from the accident returned to work on 13th December 1916, that a memorandum of agreement terminating compensation was signed by pursuer and appellant and recorded in the special register kept at Airdrie on 27th December 1916, and that intimation thereof to the pursuer and appellant's approved society is not required by section II (1) ( c) of the National Health Insurance Act. 2. That the pursuer and appellant had made no claim on the defenders and respondents subsequent to the recording of said memorandum. A claim had been made against defenders and respondents by the Amalgamated Society of Steel and Iron Workers of Great Britain, having their registered office at Gordon Chambers, 90 Mitchell Street, Glasgow, against whom a claim had been made by the pursuer and appellant for sickness benefit for the periods referred to, that the present action is in reality raised by the said society and not by the pursuer and appellant, and that the action is incompetent and should be dismissed with expenses against said society.

The case was heard before me on this date (1st February 1917), when it was admitted by the parties that the amount of compensation paid to the pursuer and appellant was at the rate of one pound sterling per week from the date of said accident to the date of the said agreement, a period of ten weeks, that the said sum of six pounds mentioned in said agreement was of said date paid to the pursuer and appellant by the defenders and respondents, and that the pursuer and appellant granted the said final discharge in the following terms:—‘Received from The Scottish Iron & Steel Co. Limited, 105 St Vincent Street, Glasgow, the undernoted sums, being compensation due me under The Workmen's Compensation Act 1906, during my total incapacity for work caused through accident while in your employment on 2nd October 1916 in Victoria Works.

Date of Payment, 1916.	Amount, 16 weeks at 20s.	Signature of Claimant.
Oct. 16	£2 0 0	Maggie Gormley for J. Gormley
Oct. 23	1 0 0	Maggie Gormley for J. Gormley
Oct. 30	1 0 0	Maggie Gormley for J. Gormley
Nov. 6	1 0 0	Maggie Gormley for J. Gormley
Nov. 13	1 0 0	Maggie Gormley for J. Gormley
Nov. 20	1 0 0	John Gormley
Nov. 27	1 0 0	John Gormley
Dec. 4	1 0 0	John Gormley
Dec. 11	1 0 0	John Gormley
Dec. 12	6 0 0	John Gormley
	£16 0 0

Date returned to work, 13th December 1916.

Final Discharge.

Received the sum of Sixteen pounds, being the amounts detailed on this form in full settlement and discharge of all claims I may have against The Scottish Iron & Steel Co. Limited, under The Workmen's Compensation Act 1906, The Employers

Page: 669↓

Liability Act 1880, or at common law, in respect of injury sustained by me on or about the second day of October 1916.

Date 12–12–16.

£16 0 0 (Signature) (Signed) John Gormley.

Witness (Signed) John Henderson.

Address Victoria Iron Works.

Witness (Signed) William Leitch.

Address Victoria Iron works, Coatbridge.’

Thereafter the memorandum of agreement was recorded as aforesaid in the following terms:—‘The claimant claimed compensation from the respondents in respect of injury to his left eye by burning caused by accident in the employment of the respondents at the Victoria Iron Works, Coatbridge, on or about 2nd October 1916. The question in dispute, which was the amount of compensation, was determined by agreement. The agreement was made on or about the 12th day of December 1916, and was as follows:—That the respondents pay the claimant the sum of Six pounds sterling in addition to the compensation already paid to him, which sum the claimant agrees to accept in full settlement of all claims competent to him against the respondents. It is requested that this memorandum be recorded in the special register of the Sheriff Court of Lanarkshire at Airdrie. (Signed) John Gormley, claimant. To the Sheriff Clerk, Court House, Airdrie’; and when I found this application for an award of compensation under the Workmen's Compensation Act 1906 was incompetent in respect that by an agreement between the parties of 12th December 1916, of which a memorandum was recorded in the special register kept at Airdrie on 27th December 1916, the pursuer and appellant had discharged all claims competent to him under the said Act, and dismissed the application, and found the pursuer and appellant liable in expenses.”

The question of law was—“Whether in the circumstances the action is incompetent?”

The note of the Sheriff-Substitute ( Lee) appended to his award was—“The pursuer was injured in his left eye by an accident while working as a puddler in the employment of the defenders on 2nd October 1916. The defenders paid compensation at the full weekly rate of £1 till 11th December, and on 12th December they made a further payment to the pursuer of £6, on which the pursuer granted a final discharge acknowledging to have received the sum of £16 (the aggregate of the payments already referred to) ‘in full settlement and discharge of all claims I may have against the Scottish Iron and Steel Company, Limited, under the Workmen's Compensation Act 1906, in respect of injury sustained by me on or about the second day of October 1916.’ A memorandum of this agreement was recorded at Airdrie on 27th December 1916. The pursuer now applies for an award of further compensation in respect of various periods of alleged incapacity from the injury during March, April, May, June and July 1917, and for a continuing award from 6th November 1917.

A memorandum having been recorded the agreement which it embodies is binding upon the parties, and where the agreement includes a final discharge of claims under the Act future arbitration proceedings are effectually barred. The only exception to this is in the provisions of Schedule II (9) ( e), but even if this agreement can properly be regarded as an agreement as to the redemption of a weekly payment by a lump sum, the pursuer cannot found on Schedule II (9) ( e), because its operation is limited to a period of six months from the date of recording, and that period is long past. In any case there is no averment of any good ground for removing the record from the register.

The pursuer accordingly founds solely on the fact that the final payment and discharge were not intimated to his approved society under the National Health Insurance Act 1911, section 2 (1) ( c). This Act certainly provides for notice being given by the employers within three days of any agreement as to the redemption of a weekly payment by a lump sum, but there is nothing. in the provision or elsewhere in the Act to make an agreement invalid as between the workman and the employer in respect of failure to give notice. The failure may give the approved society an action of damages against the employer, though it is noticeable that this is not specially provided for in the same way as in the case of an insured person neglecting or refusing to take proceedings to enforce an apparent claim. But whatever may be the rights or remedy of the approved society, any plea founded on the failure to give notice seems to me to be clearly jus tertii to the workman, who is not entitled to claim that because the statutory notice was not given to a third party he has the right to ignore an agreement duly entered into and recorded in terms of the Workmen's Compensation Act.

In my opinion, however, this is not an agreement of the kind specified in section 2 (1) ( c) of the National Health Insurance Act 1911, and it did not require to be notified to the approved society. It is arguable that this was not an agreement for the redemption of a weekly payment at all, because it appears on the face of the agreement that incapacity had ceased and the workman was to return to his work the next day. It was an agreement acknowledging that compensation for the period of incapacity had been duly paid and that that period having ended the workman's claim in respect of the injury had been fully settled. That is not the redemption of a weekly payment, which surely implies that incapacity still continues, and with it the obligation on the employer to continue weekly payments of an ascertained amount. That certainly appears to me to be the sense in which the term ‘redemption of a weekly payment’ is used in both the Workmen's Compensation Act and the National Insurance Act. But there is a further limitation which seems to have escaped the pursuer's notice, and which affords I think a complete answer to his contention. The redemption of which notice to the approved society is required by the National Insurance Act is limited by the

Page: 670↓

words ‘under the Workman's Compensation Act 1906.’ The words of the section are, ‘where an agreement is made … as to the redemption of a weekly payment by a lump sum under the Workmen's Compensation Act 1906 the employer shall… send notice in writing,’ &c. Now an agreement as to redemption under the Workmen's Compensation Act can only be the agreement authorised by Schedule I (17) of the Act, which by its specific terms does not come into operation until a weekly payment of constant amount has been continued for not less than six months— per Fletcher Moulton, L.J., in Calico Printers' Association, Limited v. Higham, 5 B. 97. As the agreement in the present case was made only ten weeks after the injury was sustained it cannot have been under Schedule I (17). Agreements to redeem within six months are not disallowed by this section, but they are not agreements made under it, and consequently are not agreements of which the employer is bound to give notice to the approved society under the provisions of the National Insurance Act 1911.

For the reasons stated, I am of opinion that this application must be dismissed as incompetent.”

Argued for the appellant—An insurance society had a title to sue if a workman being entitled to compensation unreasonably refused or neglected to sue—National Insurance Act 1911 (1 and 2 Geo. V, cap. 55) section 11 (2). If, as in the present case, their title was challenged, the challenge ought to have been stated before the arbitrator, and if not stated then could not be taken on appeal. But, in any event, the society had a title to sue, for the workman had neglected to enforce his claim in the sense of that section by accepting an inadequate sum. The society was entitled to notice of the agreement—National Insurance Act 1911, section 11 (1) ( c)—the object being to enable them to object to the recording of the agreement on the ground of inadequacy—Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58), Second Schedule, sections 9 ( d) ( e) and 10. Inadequacy merely opened the right to object to the recording of the agreement; it was not a ground for removal of the recorded agreement from the register so that the want of notice to the society deprived it of the only right it possessed to protect itself. Further, section 10 of the Second Schedule applied, for the recording of the agreement was irregular in respect that an essential step, viz., giving notice to the society, had been omitted. Further, the respondents were barred from pleading the recorded memorandum against the society, for it was due to their neglect that the society had not been able to state objections to the recording. The case should be remitted to the arbitrator for the statutory procedure to be carried out regularly— Baird & Company v. Ancient Order of Foresters, 1914 S.C. 965, 51 S.L.R. 819. The society did not claim to sue as interested parties in the sense of section 9 of the Second Schedule— Bonney v. Hoyle & Sons, Limited, [1914] 2 KB 257. An agreement made before a claim for compensation had been made or weekly payments had been paid need not be but might be recorded under the Act— Ryan v. Hartley, [1912] 2 KB 150. In the present case the agreement was either an agreement for less than 10s. a week or for redemption of weekly payments by a lump sum and as such required notice to be given.

Argued for the respondents—The proceedings were really at the instance of the insurance society. It had no title. It was not a party interested— Benney's case ( cit). Neither had it a title under the National Insurance Act 1911, section 11 (2), for the workman had discharged his whole claims and therefore was not a person who “appeared to be entitled” to compensation— Rushton v. Skey & Company, Limited, [1914] 3 KB 706. The agreement in question was not one of which notice required to be given, for the agreement was not one for a payment of less than 10s. a week; neither was it an agreement for the redemption of weekly payments by a lump sum, for that meant redemption at the instance of the employer under section 17 of the First Schedule. Further, and in any event, a discharge of all competent claims was a different thing from a redemption of weekly payments to become payable. Further, even if notice had been given, the society could not have challenged the recording of the memorandum, for notice had to be given whether it was proposed to record the memorandum or not. The application was incompetent.

At advising—