Scottish Court of Session Decisions

John MacElhinney, appellant, being dissatisfied with an award of the Sheriff-Substitute ( Robertson) at Kilmarnock in an arbitration brought by him for compensation under the Workmen's Compensation Act 1906 (6 Edw. VII, cap. 58) against the Portland Forge Company, Limited, respondents, appealed by Stated Case.

The Case stated—“Parties were heard … on the defenders' pleas to competency and relevancy. The defenders had no plea to the merits. The facts admitted were as follows:—1. The pursuer is a furnaceman and underhand, residing at 8 West Langlands Street, Kilmarnock. Defenders are forgers, and carry on business at Portland Forge, Kilmarnock. 2. On 2nd January 1919 the pursuer was working in the defenders' employment at their said works as furnaceman, and had been engaged there for at least eight months previous thereto in defenders' employment, and intermittently over a period of years prior thereto. 3. On said 2nd January 1919 the pursuer, when engaged in the course of his employment in the yard at defenders' works shifting waggons, was accidentally caught between the buffers of two waggons and sustained injuries to his left arm, as a result of which it was amputated at the shoulder. 4. The pursuer claimed and received compensation from the defenders under the Workmen's Compensation Act. Said compensation was paid in weekly payments from the date of the accident till 9th June 1919, when the pursuer and defenders entered into an agreement, which was recorded in the Sheriff Court Books at Kilmarnock on 30th June 1919. Said agreement was in the following terms:—‘The claimant received from the respondents the sum of ninety pounds sterling, and the respondents in addition guaranteed and hereby guarantee to the claimant constant employment as a steam-hammerman in their service at the usual weekly wage for that class of work, provided that claimant turns out to his work regularly and at the proper hours fixed by the respondents, and also provided that the claimant performs his work to the satisfaction of the respondents, and provided further that in the event of any dispute arising between the parties as to the right of the respondents to terminate the claimant's employment, all such disputes shall be submitted and referred to, and the same are hereby submitted and referred to, the manager of the Labour Employment Exchange in Kilmarnock and his successor in office, whose decision shall be final and binding on the parties, which sum of ninety pounds, guarantee of employment, together with the weekly payment of compensation already received by the claimant, the claimant agreed to accept and accepted in full settlement and discharge of all claims of whatever nature, present and future, competent to him against the respondents in respect of the foresaid injury.’ 5. That following upon said guarantee of employment the pursuer started work in the defenders' service on 16th June 1919 and remained in the defenders' service till 27th April 1921. With the exception of eight days' employment at repair work in May 1921 they have not since employed him. That the pursuer challenged and challenges the right of the defenders to terminate his employment under said agreement, and that the defenders have refused to pay him compensation in terms of the Act. That the arbiter designed in the aforesaid agreement had declined to act.

In addition to the foregoing facts, which were not disputed, the parties made conflicting averments regarding the termination of the pursuer's employment with the defenders. The pursuer averred that the defenders at 27th April 1921 terminated his employment and discharged him. The defenders denied this. They averred that on 27th April aforesaid their works were closed owing to the coal strike and they were obliged to suspend all their men. That they did not, however, discharge the pursuer but employed him at some repair work for eight days in May 1921, since when they have had no employment for him.

The pursuer craved an award of the statutory compensation to which he was entitled in consequence of his having been permanently incapacitated for work owing to accident arising out of and in the course of his employment. He claimed compensation for the period from 27th April 1921.

The appellant's averment was as follows:—The pursuer challenged and challenges the right of the defenders to terminate his employment under said agreement. The arbiter named therein having declined to act in the dispute between the parties as to the right of the defenders to terminate

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the pursuer's employment the said agreement has thereby come to an end, and the pursuer as from the date of the termination of his employment is restored to his full statutory rights.

The respondents pleaded—The only question in dispute between the parties having been determined by the agreement under the Workmen's Compensation Act, duly recorded, the action is incompetent.

In these circumstances I regarded the existence of the agreement as a bar to further proceedings under the Act, and sustained the respondents' plea to the competency of the action.”

The question of law was—“On the facts as stated was I entitled to hold that the appellant's application was incompetent in respect that he was barred by the existence of the aforesaid agreement from proceeding against the respondents by way of arbitration under the Workmen's Compensation Act 1906?”

In a note to his award the arbitrator stated—“The pursuer's arm was amputated in consequence of an injury sustained by him through accident in the course of his employment with the defenders and which is stated in his first plea, though nowhere in his averments, to have arisen out of his said employment. He claimed under the Act, and received compensation in weekly payments till 9th June 1919, when the pursuer and defenders entered into an agreement under the Act, which was duly recorded in the Sheriff Court Books at Kilmarnock on 20th June 1919. It thereupon became enforceable as a recorded decreet-arbitral, Schedule 11 (9) and 11, 17 ( a). Its terms are set forth in the fourth article of the pursuer's condescendence. They comprise three heads—(1) a lump sum of £90 paid to pursuer; (2) a guarantee by the defenders of ‘constant employment’ to the pursuer on conditions stated; (3) a provision ‘that in the event of any dispute between the parties as to the right of the respondents to terminate the claimant's employment, all such disputes shall be submitted and referred to, and the same are hereby submitted and referred to, the manager of the Labour Employment Exchange in Kilmarnock and his successor in office … which sum of £90, guarantee of employment, together with the weekly payments of compensation already received by the claimant, the claimant agreed to accept and accepted in full settlement and discharge of all claims of whatever nature, present and future, competent to him against the respondents in respect of the foresaid injury.’ It is not pretended this was not a valid agreement. It is not relevantly averred that the defenders have wrongfully terminated his employment. But they are not now employing him and the selected arbiter has refused to act. In these circumstances the pursuer brings an application for an arbitration under the Act as if there had been no agreement He pleads—‘The agreement condescended on having ceased to be operative through the refusal of the arbiter to entertain and determine the dispute between the parties under the agreement, the pursuer is entitled to proceed by arbitration under the Act’; and that was his position at the hearing. I can find no authority for such a proposition in the Act, or in the decisions interpreting the Act. There are cases such as Ellis v. Lochgelly Iron and Coal Company, Limited, 1909 S.C. 1278, where it has been held that the effect of a discharge is a question arising in the proceedings as to the liability to pay compensation in the sense of section 1 (3) of the Act, and that the arbitrator is within his jurisdiction in determining it. But that is where the discharge or agreement is attacked as being vitiated by such a flaw as would make it void or voidable at common law, vide per Lord Kyllachy, Colville & Sons, Limited v. Tigue, 8 F. 179, at p. 183. Otherwise the existence of the agreement is a bar to arbitration— Dunlop v. Rankin & Blackmore, 4 F. 203; Colville & Sons, Limited v. Tigue, sup. cit. What has happened here is that the workman and his employers have entered into an agreement some of the provisions of which appear to be unenforceable. But he and they are equally responsible for this, and if he has any claim it is for breach, and it would appear to be a claim of damages if that is competent—see Lawrie v. Brown & Company, Limited, 1908 S.C. 705. He has not here relevantly averred a breach. ‘Constant’ does not, I think, mean ‘perpetual,’ but merely regular or uninterrupted. The agreement itself negatives the contention that it means perpetual, by referring disputes as to termination to arbitration. But if the action is, as I humbly think, incompetent, I need not do more than sustain the defenders' plea to that effect.

Argued for appellant—The arbitrator was wrong in holding that the application was incompetent. The mere existence of an agreement was not sufficient to bar an application under the Act—Ellis v. Lochgelly Iron and Coal Company, 1909 S.C. 1278, 46 S.L.R. 960. The real question here was not one of competency, but whether the employers were entitled in the circumstances to plead the agreement as a discharge of their statutory obligation under the Act. They were not entitled to do so. The provision as to arbitration was part of the consideration for which the appellant had granted the discharge, and there was an implied condition that it should be operative, which had failed owing to circumstances not contemplated by the parties. The agreement was not therefore existing and enforceable— F. A. Tamplin Steamship Company, Limited v. Anglo-Mexican Petroleum Products Company, Limited, [1916] 2 A.C. 397, per Earl Loreburn at p. 403, and could not be pleaded in defence to proceedings under the Act— Colville & Sons v. Tigue, 1905, 8 F. 179, 43 S.L.R. 129. The fact that the agreement was recorded could not affect the case, as it was not an agreement registrable under the statute— M'Ewan v. William Baird & Company, Limited, 1910 S.C. 436, per Lord Kinnear at p. 442, 47 S.L.R. 430. The appellant was therefore entitled to fall back on his statutory right. Further, the employers were not entitled to found on the agreement when, prima

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facie, they were in breach themselves by their failure to implement their guarantee of employment.

Counsel for the respondents was not called upon.