Scottish Court of Session Decisions

The Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58), Schedule II (9), with proviso ( d), quoted supra in rubric.

Proviso ( 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.”

The Act of Sederunt, 26th June 1907, provides—Section 11 (1)—“… The sheriff-clerk shall forthwith send a copy [ of the memorandum] … to the party or parties interested (other than the party from whom he received it) in a registered letter containing a request that he may be informed within a reasonable specified time whether the memorandum and … agreement set forth therein are genuine, or are objected to, and if within the specified time he receives no intimation that the genuineness is disputed, or that the recording is objected to, then he shall, but not sooner than seven days after the dispatch of such letter of request, record the memorandum in the special register to be kept by him for the purpose, unless he himself refuses to record it under paragraph 9 ( d) of the said Second Schedule, but if the genuineness is disputed, or the recording is objected to, he shall send a notification of the fact to the party from whom he received the memorandum, along with an intimation that the memorandum will not be recorded without a special warrant from the sheriff.”

Section 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, or the sheriff-clerk refuses under sub-section ( d) of said paragraph to record such memorandum, the person disputing the genuineness, or the employer or the sheriff-clerk, as the case may be, 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.”

Bernard M'Guire, labourer, Govan, pursuer, brought an action against G. Paterson & Company, plasterers, Rutherglen, defenders, for reduction of a memorandum of agreement recorded in the register kept by the sheriff-clerk of Lanarkshire, and for declarator that no agreement as to compensation to be paid to the pursuer, under the Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58), had been concluded between the pursuer and the defenders.

The following narrative is taken from the opinion of Lord Salvesen ( infra):— “This is an action of reduction of a memorandum of agreement dated 9th, and recorded in the register kept by the sheriff-clerk at Glasgow on 19th, November 1909, which bears that the pursuer accepted the sum of £6 sterling in full settlement of all claims in respect of an accident which happened to him while in the defenders' employment. The pursuer also seeks a declarator that no agreement as to compensation to be paid to the pursuer under the Workmen's Compensation Act 1909, in respect of the injuries so sustained, has been concluded between the parties. On the facts averred, the sole ground of reduction is that the parties were in error at the time when the agreement was made as to the extent of the pursuer's injuries; that at the time it was thought that recovery would be complete within ten weeks from the date of his ceasing work, whereas, as matters have turned out, parts of his fingers have had to be amputated, and he is permanently incapacitated for work. It appears that in making the settlement of his claims the pursuer had the assistance of a law agent, that no undue representations were made to him by or on behalf of the defenders, and that they as well as he believed that the injuries were slight.”

The following narrative is taken from the opinion of Lord Salvesen ( infra):— “This is an action of reduction of a memorandum of agreement dated 9th, and recorded in the register kept by the sheriff-clerk at Glasgow on 19th, November 1909, which bears that the pursuer accepted the sum of £6 sterling in full settlement of all claims in respect of an accident which happened to him while in the defenders' employment. The pursuer also seeks a declarator that no agreement as to compensation to be paid to the pursuer under the Workmen's Compensation Act 1909, in respect of the injuries so sustained, has been concluded between the parties. On the facts averred, the sole ground of reduction is that the parties were in error at the time when the agreement was made as to the extent of the pursuer's injuries; that at the time it was thought that recovery would be complete within ten weeks from the date of his ceasing work, whereas, as matters have turned out, parts of his fingers have had to be amputated, and he is permanently incapacitated for work. It appears that in making the settlement of his claims the pursuer had the assistance of a law agent, that no undue representations were made to him by or on behalf of the defenders, and that they as well as he believed that the injuries were slight.”

The pursuer averred, inter alia—“(Cond. 3) On 20th October 1909 the pursuer consulted a law agent, who on the same day intimated a claim for compensation to the defenders. Thereafter on 9th November 1909 the pursuer and his agent had a meeting with a representative of the insurance company with which the defenders are insured, and on that date the pursuer received from the said representative of the insurance company the sum of £6, and granted therefor a receipt…. (Cond. 4) In so far as the said receipt bears to be a discharge of all claims competent to the pursuer, it was granted by him without any consideration. The sum of £6 paid to the pursuer represented compensation at the rate of 12s. 9d. per week for ten weeks, and no consideration whatever was paid to the

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pursuer in respect of a discharge by him of claims that might be competent to him after the expiry of that time. Further, at the time when the said receipt was granted both the pursuer and his agent and also the insurance company's representative were in total ignorance of the true nature of the pursuer's injuries. All of them thought that the injuries were only superficial, and that the pursuer would not require to be off work for more than ten weeks altogether. In point of fact, at the date when the said receipt was signed the pursuer was suffering from septic poisoning of the hand. The entries in the infirmary books show that such was the fact, though the pursuer had not been so informed by the doctor and was unaware of it. After the said date the pursuer continued to attend the infirmary regularly until 30th December 1909, when he entered the hospital of Govan Poorhouse to undergo an operation. The thumb, forefinger, and part of the second finger of the pursuer's right hand have since been removed, and he is now totally and permanently incapacitated for work. The said incapacity arises from the accident condescended upon. (Cond. 6) Following upon the granting of the said receipt by the pursuer, the memorandum of agreement of which reduction is now sought was drawn up, and on the application of the defenders it was recorded in the register on 19th November 1909. No such agreement was arrived at between the pursuer and the defenders. In accepting the said sum of £6 the pursuer understood that the defenders' liability was admitted, and that, as the representative of the insurance company stated, he was getting ten weeks' compensation, whereas the insurance company's representative did not admit the defenders' liability to compensate the pursuer, and looked upon the £6 as an ex gratia payment. There was accordingly no consensus in idem placitum between the parties. Further, at the date of the said alleged agreement the parties were in error as to the nature of the pursuer's injuries, and it was not till after the said memorandum of agreement had been recorded that the fact that the pursuer's hand was poisoned came to the knowledge of the parties…. (Cond. 7) The sum of £6, which according to the said recorded memorandum the pursuer is said to have accepted in full settlement of all claims in respect of the said accident, was quite inadequate compensation for the injuries sustained by him. No sufficient information was laid before the registrar, or asked for by him, to enable him to judge of the adequacy of the said sum as consideration for a discharge of all the pursuer's claims in respect of the said accident. Had the registrar been in possession of such information he would have refused to record the said memorandum, as he was entitled to do under section 9 ( d) of the Second Schedule to the Workmen's Compensation Act 1906.

The memorandum of agreement was as follows—“At Glasgow, the 19th day of November 1909, the memorandum of agreement after inserted is recorded in terms of the Workmen's Compensation Act 1906, and is as follows—Workmen's Compensation Act 1906.—Bernard M'Guire, labourer 32 South Wellington Street, Glasgow, claimant, v. G. Paterson & Company, plasterers, 73 Farmeloan Road, Rutherglen, respondents. The claimant claimed compensation from the respondents in respect of injury to right hand through being burned by lime caused by accident in the employment of the said G. Paterson & Company, 73 Farmeloan Road, Rutherglen, at job Hillfoot Terrace, Rutherglen, on or about the 4th day of October 1909. The question in dispute was as to the amount of compensation payable to claimant for final settlement, and was determined by agreement. The agreement was made on the 9th day of November 1909, and was as follows—that respondents agreed to pay, and the claimant agreed to accept, the sum of six pounds sterling in full settlement of all claim in respect of said accident. It is requested that this memo, be recorded in the Special Register of the Sheriff-Court of Lanarkshire, at Glasgow.— Alex. Blackwood, Law Agent for Bernard M'Guire. 9th November 1909.—To the Sheriff Clerk, Court-House, Glasgow. Lodged 11th November 1909. Eo die.—Intimated to respondents to reply by 18th November 1909.”

The defenders pleaded that the action was irrelevant.

On 18th January 1912 the Lord Ordinary ( Ormidale) sustained the defenders' plea to the relevancy, and dismissed the action.

Opinion— “The memorandum of agreement which it is sought to reduce in this action was recorded ‘in terms of the Workmen's Compensation Act 1906,’ and bears to be under that Act.

It narrates that the claim was in respect of an injury caused to the pursuer by accident in the employment of the defenders, that the question in dispute was as to the amount of compensation payable to the claimant for final settlement, and was determined by agreement, the agreement being that the defenders agreed to pay, and the pursuer agreed to accept, £6 in full settlement of all claims in respect of said accident.

The request to record that agreement was signed by the law agent of the claimant—the pursuer in the present action.

In addition to the conclusion for reduction of the memorandum there is a conclusion for declarator that no agreement as to compensation to be paid to the pursuer under the Workmen's Compensation Act 1906, in respect of the injuries received by him while in the defenders' employment, has been concluded between the pursuer and the defenders.

It is not now suggested that the agreement was obtained by any improper means. That matter was made the subject of an application, in terms of the Workmen's Compensation Act, in the Sheriff Court, in which the Court was asked to grant warrant to remove the memorandum from the register, in respect that the same was obtained by improper means, the pursuer having granted the discharge under essential error as to the nature and effect of the injury from which he was suffering,’ induced by the defenders.

It is not now suggested that the agreement was obtained by any improper means. That matter was made the subject of an application, in terms of the Workmen's Compensation Act, in the Sheriff Court, in which the Court was asked to grant warrant to remove the memorandum from

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the register, ‘in respect that the same was obtained by improper means, the pursuer having granted the discharge under essential error as to the nature and effect of the injury from which he was suffering, induced by the defenders.

The Sheriff, proceeding on a joint minute of admissions, refused the application by award dated 22nd July 1910. The pursuer did not bring the award under review of the Court of Session. The facts as to the application and the award are not in dispute, and both parties founded on the joint minute of admissions to which I have referred.

The pursuer maintained that the parties in concluding the alleged agreement were in mutual error as to an essential fact, viz.—The nature of the pursuer's injuries, and further, that there was no consensus in idem, placitum, in respect that while the pursuer understood that his claim to compensation under the Act was admitted by the defenders, the defenders did not regard his claim as a competent claim under the Act at all, but agreed to make the payment of £6 ex gratia, and without admitting liability, that the agreement therefore was in fact not an agreement to settle an admitted claim under the Act, but an agreement that no claim should be made under the Act.

The pursuer's averments, on which the pleas of no consensus in idem placitum and of mutual error are founded, are contained in condescendence 6.

I am of opinion that these averments are not relevant to infer the conclusions of the summons.

The pursuer's averments as to consensus in idem placitum come to no more than this, that while agreeing to settle the pursuer's claim as a claim under the Act, the defenders did not admit that the claim was a competent claim under the Act. But both parties were none the less at one as to what the agreement was intended to effect. There was no difference of view as to either the subject-matter, the terms, or the consideration. The defenders were under no mistake as to what the pursuer's claim was, and for the purpose of settling it they agreed to pay a certain amount of compensation. In so doing they assumed that it was, and treated it as, a claim properly arising under the Act, and it seems to me a matter of no relevancy whatever what mental reservation they made as to its competency. There was no expressed reservation of any kind. For the purposes of the claim they admitted liability, and so entitled the workman to take all the steps competent to him under the Act, including the recording of a memorandum of the agreement. That they were bound by the memorandum was assumed and admitted by both parties in the proceedings in the Sheriff Court.

In the face of its express terms it seems to me impossible to pronounce a decree of declarator in the terms concluded for, solely on the ground that the defenders, though consenting to be parties to the agreement, declined to admit the validity of the pursuer's claim.

The other ground on which the pursuer founded was that there was mutual error as to a material fact which existed at the date of the agreement, namely, that whereas the parties thought that the workman was merely suffering from superficial injuries done to his hand by lime burning, he was in fact suffering from septic hand—that the true nature of the injury was therefore unknown. It seems to me that at the best for the pursuer the ignorance of the parties was only as to the extent of the injuries he was suffering from, but the pursuer is not entitled to go back upon an agreement to accept a certain sum as in full settlement of his claim merely because he now finds that the injury has proved more serious than he anticipated, and that he under-estimated the compensation which he might have demanded. It is not said that the defenders were acting in mala fide in coming to terms with the pursuer.

It seems to me a hard case for the pursuer, but I cannot give him the relief which he seeks in this action. The fact that a man has made a bad bargain is no reason for holding that he has made no bargain at all.

In dismissing the action on the ground that the pursuer's averments are irrelevant I have assumed that it is competent, but I do not decide that it is.”

The pursuer reclaimed, and argued—The memorandum should be reduced at common law, because both parties were in error at the time the agreement was concluded as to the extent of the appellant's injuries, which had proved much more serious than was then anticipated. Moreover, there was no consensus in idem placitum between the parties in respect that whilst the appellant regarded the payment as a payment under the Act, the respondents regarded it as ex gratia. The reduction was not barred by the Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58), because the agreement was not an agreement concluded under that Act, since the respondents had not admitted that they were liable under the Act. Therefore there was nothing in the Act to prevent a reduction— Robertson v. S. Henderson & Sons, Limited, June 2, 1904, 6 F. 770, per Lord Kinnear at p. 774, 41 S.L.R. 597, at p. 600; Hughes v. Thistle Chemical Company, 1907 S.C. 607, per Lord President at p. 1614, 44 S.L.R. 476, at p. 481; Rendall v. Hill's Dry Docks and Engineering Company, [1900] 2 QB 245. Moreover, the memorandum ought never to have been registered. By section 9 ( d) of the Second Schedule of the Act the sheriff-clerk ought to have refused to register the memorandum on account of the inadequacy of the payment and referred the matter to the Sheriff— Mortimer v. Secretan, [1909] 2 KB 77, per M.R. at p. 79. The Sheriff would then have delayed registration until the matter had been inquired into— M'Ewan v. Wm. Baird & Company, Limited, 1910 S.C. 436, 47 S.L.R. 430. in England, by rule 49 of the English Workmen's

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Compensation Rules (1907–1909) the registrar was bound to apply his mind to the question of the adequacy of the payment. The relative inquiry form 36 (a) made it quite clear that the registrar had to consider the question. If he failed to do so the workman was entitled to have the memorandum set aside—“ Segura” (Owners of Ship) v. Blamfield, February 24, 1911, 4 B.W.C.C. 192, per M.R. The same duty was incumbent on the sheriff-clerk in Scotland, for by failing to consider the question of the adequacy of the payment the sheriff-clerk in this case deprived the appellant of the security provided by the Act. In the case of Robert Forester & Company, Limited v. Fleming, June 20, 1908, 16 S.L.T. 139, employers were held to be barred from reducing a memorandum, but that was because they had already founded on it in previous proceedings. The appellant had no other remedy than this action of reduction, because the provisions of sub-section ( e) of section 9 only applied to cases where the agreement had been “obtained by fraud or undue influence or other improper means,” and that was not the case which the appellant made here.

Argued for the respondents—The memorandum should not be reduced. Even if a reduction were competent at common law the memorandum ought not to be reduced, because the agreement was binding on both parties, and the payment made under the memorandum bore to be “in full settlement of all claims in respect of said accident.” The only question was, did the parties understand what the memorandum meant? They both understood it, and it was not suggested that the appellant's law agent, who signed it, had not been authorised to do so— North British Railway Company v. Wood, July 2, 1891, 18 R. (H.L.) 27, 28 S.L.R. 130; Do nan v. Allan & Son, November 22, 1900, 3 F. 112, 38 S.L.R. 70. But a reduction at common law was not competent, because the agreement was concluded under the Workmen's Compensation Act 1906. The appellant's own argument to the effect that the memorandum should not have been registered, because the sheriff-clerk had failed to inquire as to the adequacy of the payment, inferred that it was an agreement under the Act. This was also shown by the fact that the payment had been calculated on the basis of what the respondents were liable for under the Act, redemption of past-due as well as future compensation being competent thereunder. With regard to the appellant's argument that the sheriff-clerk ought to have made inquiries as to the adequacy of the payment, even if he had done so, he could not have obtained any more information on the point than he already possessed in the minute. But the sheriff-clerk was not bound to make such inquiries. By sub-sec. 9 ( d) of the Second Schedule of the Act a duty was put on the workman, where the payment was considered inadequate, to place information on the point before the sheriff-clerk. Sub-sec. 9 ( d) did not direct the sheriff-clerk ex proprio motu to institute an inquiry. Rule 49 of the English Workmen's Compensation Rules (1907-1909) only directed the registrar to send certain notices to the parties. It did not require him to make an inquiry, but whatever might be the duty imposed on registrars in England by the English rules, these rules did not apply to sheriff-clerks in Scotland, who were governed by the Act of Sederunt, 26th June 1907, and sec. 11 of the Act of Sederunt did no more than direct the sheriff-clerk, if the genuineness of the memorandum was disputed, to send a notification of the fact to the opposite party— Mortimer v. Secretan ( cit. sup.); and “ Segura” (Owners of Ship) v. Blamfield (cit. sup.) were English cases, and the English rules did not apply to Scotch cases.

At advising—