Scottish Court of Session Decisions

Archibald Park, fitter, Coatbridge, pursuer, brought an action against Anderson Brothers, engineers, Coatbridge, defenders, for reduction of “( first) a pretended receipt and discharge signed by the pursuer on or about 13th October 1915 and purporting to discharge the defenders of all claims whatsoever that the pursuer might have against the defenders for the personal injury by accident sustained by him on or about 10th December 1914, and ( second) a pretended memorandum of agreement purporting to record an agreement by the pursuer to discharge his whole claims whatsoever arising as aforesaid which pretended memorandum of agreement is recorded in the special register kept by the Sheriff-Clerk of Lanarkshire at Airdrie under and in terms of the Workmen's Compensation Act 1906 under date 22nd October 1915.”

The following narrative is taken from the opinion of Lord Ormidale infra:—“On 10th December 1914 the pursuer met with an accident arising out of and in the course of his employment with the defenders. The accident was caused by the fall of a crane, which in falling struck and fractured his left leg just above the ankle. After being in hospital for seven weeks he was discharged. At this time he was, he avers, “still” under treatment by Dr Murray, his own doctor. He was advised by him to return to hospital and have his leg re-set. This he did and was finally discharged in July 1915. He received weekly payments of compensation down to 13th October 1915 when he signed a receipt for £20 in full satisfaction and discharge of all his claims in respect of his injuries and of all moneys due “under the agreement between him and the defenders.” A memorandum of agreement purporting to be signed by the pursuer on the same date was transmitted to the sheriff-clerk and duly recorded. About a month later the pursuer resumed work and continued to work with various employers until the end of 1920. His leg then began to trouble him. He again consulted Dr Murray who found that the leg was ulcerating and that the screws of a plate which had been attached to the leg bones were coming through the skin. He went into hospital on 27th March 1921 and the plate was removed. The pursuer was discharged on 29th April 1921. The present action was not raised until August 1923, but it appeared from an explanation given at the bar that the pursuer was not to blame for the delay.”

The pursuer averred, inter alia—“(Cond. 6) On or about 13th October 1915 the pursuer went to the office of the defenders' insurance company, the London and Lancashire Insurance Company, Royal Exchange Square, Glasgow, who were making the weekly payments of compensation for and on behalf of the defenders. There a representative of the company stated to him that Dr Adams reported that the pursuer would be ready for work in about two months' time, but did not disclose to him certain material facts that were within the knowledge of the company and their representative, viz., that metal plates had been screwed to the bone of the pursuer's leg at the seat of the fracture, and that it was not unlikely that the leg would cause trouble in the future, and that an operation would be required to remove said metal plates before a permanent cure of the injury could be effected. Withholding said material facts from the knowledge of the pursuer the company's said representative, acting for and on behalf of and with the authority of the defenders, offered the pursuer the sum of £15 in full settlement of his claim. This offer was refused by the pursuer, and was then increased to £20. Relying on the statement made by the company's representative, and believing as he was justified in doing that the whole material facts in relation to the present and future condition of his injured leg had been disclosed to him, the pursuer accepted the offer of £20 and signed a receipt for that sum in full settlement. The pursuer received payment of said sum two or three days later. The said sum was grossly inadequate, as will appear from the circumstances after mentioned. (Cond. 8) From inquiries which the pursuer has made he has now ascertained that when he went into the said Alexander Hospital

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about the middle of May 1915 it was found necessary to open up the tissues of the leg, and that plates were screwed on to the bones of his leg in order to effect a reunion of the fracture. The pursuer was of course aware that he had undergone an operation upon his leg, but he was not informed at the time nor subsequently and at no time was he aware, that metal plates had been used at said operation and had been left in the leg. The retention of said plates in the pursuer's leg was calculated to give trouble in the future, constituted a source of organic weakness, and was a source of danger either of immediate sepsis or at a later period of chronic abscess formation. These facts, although at no time known to the pursuer, were all along within the knowledge of the defenders and of the said insurance company and of their medical advisers. The only person who examined and advised the pursuer at the time of the alleged settlement as to the condition of his leg was the defenders' doctor, who did not disclose the above facts to the pursuer. The pursuer believes and specifically avers that the facts as to the condition of his leg were known to the representative of the said insurance company and were concealed by him from the pursuer. Relying upon the honesty and integrity of the said insurance company's representative, and having no reason to suspect that facts relevant and material to a consideration of a just settlement of his claims were being withheld from him, the pursuer was induced to grant the pretended discharge now sought to be reduced. It was the duty of the representative of the insurance company if he chose to make any disclosure to the pursuer to disclose to him the whole facts, and not to make as in fact he did a partial and misleading disclosure. The said representative was aware that the pursuer was not being independently advised. Had all the material facts been placed before the pursuer he would have taken steps to be separately advised by his legal and medical advisers, and he would then have been in a position to realise whether the plates which had been left in the leg were likely to affect his wage-earning capacity in the future, and generally as to his whole position in relation to the projected settlement. (Cond. 9) The memorandum of agreement under reduction was recorded in the Sheriff Court Books of Lanarkshire on or about 22nd October 1915. It was presented to the sheriff-clerk for registration by the defenders or some person acting on their behalf and was not presented for registration by the pursuer. No notice of the presentation of the memorandum was sent by the sheriff-clerk or any other person to the pursuer at the time when the memorandum was presented as aforesaid for registration. The first the pursuer learned of the recording of any agreement was in July 1921, when he applied for compensation in respect of his being in hospital and off work, caused through the said accident and the operation following thereupon. With reference to the defenders' averments in answer it is explained that about the time of the signing of the discharge the pursuer asked the clerk of the insurance company for a payment to account, and was told by him that the matter would require to go before the Sheriff. If the pursuer did sign an application to have the agreement recorded, which is denied, he did so in ignorance of the purpose of the document. The whole matter was transacted at one interview in the office of the insurance company, and no explanation was given to the pursuer as to the meaning, purpose, or effect of his signing any document or application, nor had he any independent legal advice in the matter. The pursuer did not understand that if he signed an application to have the agreement recorded, which in fact he denies, the matter would thereby be excluded from all review in the future. Throughout the interview referred to the representatives of the insurance company took advantage of the pursuer's inexperience to his prejudice and an attempted defeat of his legal rights.

The pursuer pleaded—“1. The pursuer having signed the pretended receipt under essential error, and/or having been induced to sign the said pretended receipt by the concealment by the defenders or their agents of material facts which they had a duty to disclose, is entitled to have the same reduced with expenses. 2. The memorandum under reduction having followed on the said pretended receipt, signed under essential error and/or induced as condescended on, should be reduced with expenses.”

The defenders pleaded, inter alia—“1. The action being incompetent should be dismissed. 2. The pursuer's averments being irrelevant the action should be dismissed.”

On 1st February 1924 the Lord Ordinary ( Ashmore) pronounced the following interlocutor:—“Repels the first plea-in-law for the defenders under reservation of the defenders' second plea-in-law: Assigns Tuesday, the 19th day of February 1924, as a diet for the adjustment of issues.”

Opinion.—“At the discussion in the procedure roll counsel for the defenders argued that the action is incompetent. The argument seems to me to be inconsistent with the decision of the Inner House in Machinnon v. Fairfield Shipbuilding and Engineering Company, Limited, 1920, 2 S.L.T. 118, and 1921, 2 S.L.T. 270.

It is unfortunate, especially having regard to the ambiguity of the statutory provisions and the absence of judicial authority, that there is no report of the opinions of their Lordships in the Inner House, but the reports which are given in the Scots Law Times seem to justify the inference drawn from them by counsel for the pursuer on the question of competency.

The pursuer in Mackinnon's case like the pursuer in this case brought an action of reduction against his employers for the purpose of setting aside (1) a receipt which he had granted discharging all his claims in respect of personal injury sustained by him as the result of an accident, and (2) a memorandum of agreement bearing to be signed by him and recorded under the Workmen's Compensation Act 1906.

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The defenders in Mackinnon's case maintained that the action was incompetent, and the Lord Ordinary (Lord Anderson) sustained that plea and dismissed the action. His Lordship in giving judgment said—‘I must assume, in the absence of any averments by the pursuer to the contrary, that he received due notice of the proposed registration in terms of the statute and Act of Sederunt.’

The pursuer reclaimed, and on the case being heard before the Second Division the Court allowed the record to be amended. The following amendment was made by the pursuer:—‘No notice of the presentation of the memorandum was sent by the sheriff-clerk or by any person to the pursuer at the time when the memorandum was presented as aforesaid for registration.’

The defenders also amended, adding the following plea-in-law:—‘The action is incompetent in respect that the arbiter, under the Workmen's Compensation Act, has privative jurisdiction in all matters relating to the liability or non-liability of an employer to pay compensation, including, inter alia, the determination of the validity of receipts, discharges, and memoranda of agreement signed by workmen with reference thereto.’

The Court allowed these amendments, recalled in hoc statu the interlocutor reclaimed against, and remitted the cause back to the Lord Ordinary to proceed as accords. Thereupon the Lord Ordinary in view of the amendment, and in respect that it was conceded that the ground of his previous judgment had failed, held the action competent and relevant and allowed proof.

In the present case the pursuer avers that the memorandum of agreement which he seeks to reduce was presented for registration by the defenders, and that no notice of this presentation was sent to him by the sheriff-clerk or any person. Moreover, although the application to have the memorandum recorded bears to be signed by him, he denies that he signed it.

Having regard to the pursuer's averments and the case of Mackinnon I will repel the defenders' first plea-in-law—that is, their plea that the action being incompetent ought to be dismissed.

I heard counsel also on the relevancy of the pursuer's averments, but in hoc statu I will reserve judgment on that question. Meantime in accordance with the motion made by the pursuer's counsel—a motion which counsel for the defenders intimated that he would oppose but as to which there was no discussion—I will also reserve the question of whether proof or jury trial is appropriate in the circumstances.”

The pursuer proposed the following issue:—“Whether the pursuer was induced to sign the receipt and discharge dated 13th October 1915 by the concealment by the defenders or their agents of material facts which they had a duty to disclose.”

On 27th February 1924 the Lord Ordinary pronounced the following interlocutor:—“Sustains the second plea-in-law for the defenders: Dismisses the action, and decerns.…”

Opinion— “In this case the pursuer is seeking to set aside a receipt which he granted to the defenders in October 1915, bearing that he accepted a sum of £20 in full settlement of his claims for injuries sustained by him as the result of an accident which happened to him when working in the defenders' employment.

The general question now arising for determination relates to the relevancy of the pursuer's averments to the effect that he granted the receipt under essential error induced by the concealment on the part of the defenders of material facts which it was their duty to disclose.

Before I deal with the case in its legal aspect it will be convenient to state briefly the circumstances under which the action has been brought.

On 10th December 1914 the pursuer's left leg was fractured just above the ankle. He was taken to hospital, where the bone was set, and in seven weeks he was discharged. He continued under treatment, however, by his own doctor (Dr Murray) until May 1915, when on his doctor's advice he returned to the hospital to have the bone re-set. He was discharged from the hospital for the second time in July 1915.

On 28th September 1915 he was examined by Dr Adams on behalf of the defenders.

He was paid compensation under the Workmen's Compensation Act by the defenders, through an insurance company, down till 13th October 1915. On that day he went to the office of the insurance company for the usual weekly payment of compensation, and the following passage, taken verbatim from the pursuer's pleadings, gives the pursuer's account of what passed:—‘There a representative of the company stated to him (the pursuer) that Dr Adams reported that the pursuer would be ready for work in about two months' time, but did not disclose to him certain material facts that were within the knowledge of the company and their representative, viz., that metal plates had been screwed to the bone of the pursuer's leg at the seat of the fracture, and that it was not unlikely that the leg would cause trouble in the future, and that an operation would be required to remove said metal plates before a permanent cure of the injury could be effected.’

On the occasion referred to the representative of the insurance company, acting on behalf of the defenders, offered the pursuer £15 to settle his claims. The pursuer refused that offer but agreed to accept £20, and signed the receipt therefor which he now desires to have set aside.

Within two months after granting the receipt the pursuer resumed work with the defenders, and continued in their employment till July 1916, when he went to work elsewhere.

Towards the end of 1920 he began to suffer pain in his leg, and on examination it was found necessary to remove one of the metal plates.

The pursuer avers that he had not been aware that metal plates had been left in his

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leg in 1915. He also avers that these plates constituted a source of danger, that this was all along within the knowledge of the defenders and the insurance company and their medical adviser, and that it was the duty of the representative of the insurance company, if he chose to make any disclosure to the pursuer, to disclose the whole facts and not to make what the pursuer characterises as ‘a partial and misleading disclosure.’

I think that I have sufficiently indicated the nature of the case averred by the pursuer, and I proceed to regard the averments in their legal aspect.

In the first place the pursuer does not aver that there was any misrepresentation or any concealment of anything that Dr Adams had reported to the defenders.

In other words, so far as appears fromthe pursuer's averments, the statement made to the pursuer, viz., that Dr Adams had reported that the pursuer would be ready for work in about two months' time, represented accurately and fully what Dr Adams had in fact reported.

In that state of the pursuer's averments this case falls to be distinguished from the case of Crossan v. Caledon Shipbuilding and Engineering Company, Limited (1906, 43 S.L.R. 852) on which counsel for the pursuer founded.

In Crossan's case there was only a partial and fragmentary statement of what the doctor had reported and the withholding of that which was not stated made that which was stated absolutely false. There was a clear misrepresentation of what the doctor had actually stated in his written report.

Accordingly the circumstances in this case are conspicuously different from those in the case of Crossan, and assuming that in this case the representative of the insurance company when he professed to communicate what Dr Adams had reported was bound to communicate to the pursuer all that was material in the report made by Dr Adams as to the duration and prospects of the pursuer's recovery, I am of opinion that there is no relevant averment that a full and fair communication was not made.

In the second place, assuming the averments made by the pursuer as to the information possessed by the defenders to be true, it does not seem to me to follow that the defenders were bound to disclose that information to the pursuer. There is nothing in the circumstances as stated by the pursuer which raised any special duty on the part of the defenders to disclose that information. It is not even averred that the defenders knew or had any reason to think that the pursuer was ignorant that metal plates had been left in his leg and might have to be removed in the future, and in the absence of any averment to that effect I think that the defenders might reasonably assume that the pursuer himself would have got information as to these matters from his own medical man or otherwise. Moreover, the question is not what a sympathetic or ontspoken person would or might have said, but what the defenders, whatever their personal qualities or whatever their attitude towards the pursuer, were legally bound to tell the pursuer.

It must also be kept in view that according to the pursuer's averment the defenders had no precise or definite knowledge that the pursuer would have trouble from his leg in the future. What the pursuer says they knew was that ‘it was not unlikely’ that the leg would cause trouble in the future.

The pursuer's averment on this branch of the argument reads as follows:—‘Relying on the statement made by the comany's representative, and believing, as he was justified in doing, that the whole material facts in relation to the present and future condition of his injured leg had been disclosed to him, the pursuer accepted the offer of £20 and signed a receipt for that sum in full settlement.’

The assumption underlying the foregoing averment as to an absolute duty of disclosure of the kind referred to resting on the defenders seems to me to be unfounded and indeed extravagant, and I think that the arguments for the pursuer as to such a duty being incumbent on the defenders, viewed from a legal standpoint, are untenable and are inconsistent with the authorities— Welsh v. G. & R. Cousin, 1899, 2 F. 277; North British Railway Company v. Wood, 1891, 18 R. (H.L.) 27 Irvine v. Kirkpatrick, 1850, 7 Bell's App. 186.

In my opinion the pursuer's averments do not disclose any essential error on the part of the pursuer which was induced by the defenders or any misrepresentation by them or any concealment of any material fact which it was their duty to disclose.

For the reasons which I have given I will sustain the second plea-in-law for the defenders (their plea of irrelevancy) and dismiss the action.”

The pursuer reclaimed, and argued—(1) The action was competent. The statutory requirements relating to the registration of the memorandum of agreement had not been complied with. Moreover, the cause of action did not arise until after the statutory period of six months had elapsed— Mackinnon v. Fairfield Shipbuilding and Engineering Company, Limited, 1920, 2 S.L.T. 118, per Lord Anderson (Ordinary) at 119 and 120, 1921, 2 S.L.T. 270. The cases of John Brown & Company, Limited v. Orr, 1910 S.C. 526, 47 S.L.R. 487; Hughes v. Thistle Chemical Company, 1907 S.C. 607, 44 S.L.R. 476; and Binning v. Easton & Sons, 1906, 8 F. 407, 43 S.L.R. 312, were also referred to. (2) The action was relevant. The relation which existed between a workman and his employers was special and the ordinary rules of contract were modified. The defenders concealed from the pursuer material facts. The partial disclosure which they made amounted in substance to concealment— Royal Bank of Scotland v. Greenshields, 1914 SC 259, 51 S.L.R. 260, per Lord Mackenzie at 1914 S.C. 271, 51 S.L.R. 266; Crossan v. Caledon Shipbuilding and Engineering Company, Limited, 1906, 43 S.L.R. 852, per Lord Stormonth Darling (Ordinary)

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at 855, Lord Chancellor (Loreburn) at 857 and 858, and Lord Robertson at 859; Redgrave v. Hurd, (1881) L.R., 20 Ch. Div. 1; Gloag, Contract, p. 506; Bell's Prins., section 14. The cases of Welsh v. Cousin, 1899, 2 F. 277, 37 S.L.R. 199; North British Railway Company v. Wood, 1891, 18 R. (H.L.) 27, 28 S.L.R. 921; and Irvine v. Kirkpatrick, 1850, 7 Bell's Apps. 186, per Lord Brougham at 230, were also referred to.

Argued for the respondents—(1) The action was incompetent. Section 9 ( e) of the Second Schedule of the Workmen's Compensation Act 1906 (Edw. VII, cap. 58) created a statutory bar to the action. Both before and after the expiry of the statutory six months an action of reduction was incompetent— John Brown & Company, Limited v. Orr ( cit.). The authorities showed that the general rule was that the statutory provisions were exhaustive of the remedies of the workman. Prior to 1906 actions of reduction were competent because under the Workmen's Compensation Act 1897 (60 and 61 Vict. cap. 37) the only remedy was rectification of the register—Second Schedule (8) of that Act. (2) The action was irrelevant. There was no averment that the defenders knew of the presence of the plates. The defenders were entitled to assume that the pursuer knew of the presence of the plates and their possible consequences. There was no concealment of facts. The concealment alleged was not a concealment of fact but of medical prognosis— M'Guire v. Paterson & Company, 1913 S.C. 400, 50 S.L.R. 289; Hanley v. Niddrie & Benhar Coal Company, Limited, 1910 S.C. 875, 47 S.L.R. 726; Ellis v. Lochgelly Iron & Coal Company, Limited, 1909 S.C. 1278, 46 S.L.R. 960; Mathieson v. Hawthorns & Company, Limited, 1899, 1 F. 468, 36 S.L.R. 356; North British Railway Company v. Wood, 1891, 18 R. (H.L.) 27, 28 S.L.R. 921; Russell v. Rudd, [1923] A.C. 309, per Lord Shaw at 328; Archbold v Lord Howth, (1866) L.R. Ir., 1 C.L. 608; Kerr, Fraud (5th ed.), p. 73. The cases of Crossan v. Caledon Shipbuilding & Engineering Company, Limited ( cit.), Welsh v. Cousin ( cit.), and Redgrave v. Hurd ( cit.), were also referred to.

At advising—