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United Kingdom House of Lords Decisions |
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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Clawley v. Carlton Main Colliery Co., Ltd [1918] UKHL 392 (15 July 1918) URL: http://www.bailii.org/uk/cases/UKHL/1918/56SLR0392.html Cite as: [1918] UKHL 392, 56 ScotLR 392 |
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Page: 392↓
(On Appeal from the Court of Appeal in England.)
(Before the
Subject_Master and Servant — Workmen's Compensation Act, 1906 (6 Edw. VII, cap. 58), Sched 1, secs. 16, 17 — Redemption of a Weekly Payment — Weekly Payment which has been Made under Agreement Representing only Part of the Master's Liability.
The question was whether the master is entitled under the Workmen's Compensation Act 1906 (Sched. 1, sec. 17), to redeem by payment of a sum down a weekly payment which has been made for six months but which does not represent the full compensation due to the servant under the Act.
Held that the payment contemplated by section 17 is one which exhausts the master's liability, therefore the section was inapplicable to the case.
Their Lordships' considered judgment sets out the facts.
Page: 393↓
The appellant is a collier who in the employment of the respondents on the 13th August 1910 had an accident which resulted in lameness. His wages had been £1, 16s. 4d. a week. For three years the respondents paid him half wages (18s. 2d. a week) on the basis of total incapacity. He partially recovered, and they ceased to make these payments in July 1913. The appellant thereupon made application in the County Court for compensation under the Act, claiming 18s. 2d. a week. After some correspondence a settlement was arrived at by letters of the 3rd and 4th October 1913 on the following terms—(1) That the company should find Clawley a house to live in near the colliery; (2) that they should find him work in the screens at which he could sit down; (3) that they should pay him wages at which he could earn £1, 7s. 6d. a week, and that they would pay him in addition 8s. 10d. per week compensation.
Clawley accepted work and continued to work on these terms till November 1916, except that he did not occupy the house offered under the first term of the agreement. On the 21st November 1916 the Colliery Company applied under clause 17 of the first schedule to redeem the weekly payment of 8s. 10d. Clawley denied their right to redeem unless by agreement. The County Court Judge found that the incapacity was permanent “to the extent at least of the weekly payment of 8s. 10d.,” and awarded that it should be redeemed at the fixed rate, which was agreed at, £221, 6s., but added a declaration that the redemption was without prejudice to the continued validity of the other terms of the agreement of October 1913, and also without prejudice to any further liability of the Colliery Company to pay further compensation if at any time it should be found that the incapacity had increased. The Colliery Company appealed against the declaration that the redemption was without prejudice to the other terms of the agreement and the further liability, and the workman entered a cross-appeal against the award of redemption on the ground that it was not a weekly payment which was redeemable.
The Court of Appeal were divided in opinion. They all agreed that the declaration as to the continuance in force as to the other terms of the agreement and as to possible further liability was wrong and must be set aside, but they differed on the question whether the weekly payment was capable of being redeemed under clause 17. Bankes, L.J., held that it was not capable of being redeemed, as in his opinion the term “weekly payment” in clause 17 should be confined to cases where the weekly payment represents the full measure of the compensation to which the workman is entitled. Lord Cozens-Hardy, M.R., and Warrington, L.J., held that the weekly payment in question was capable of redemption as the language of clause 17 was general, and in their opinion not confined to cases in which the payment represented the whole amount of liability. The order of the Court of Appeal was that the appeal of the Colliery Company should be allowed, that the award be wholly set aside, and that (subject to the workman being afforded an opportunity, if he so desired, of applying to review the weekly payment under clause 16 of the first schedule) the proceedings to redeem should be remitted to the County Court Judge to determine whether the incapacity of the workman was or was not permanent within the meaning of the word in clause 17 of the first schedule, and to make an award accordingly final and complete. There were further directions as to costs.
In my opinion Bankes, L.J., was right in the construction which he placed upon clause 17 of the schedule. It is obvious that the redemption under clause 17 was to be a final settlement of all liability on the part of the employer. This it would be if the weekly payment represented the whole compensation to which the workman was entitled under the Act. But where the weekly payment does not represent the whole but only the balance of liability which remains after taking into account any benefits or advantages which the workman may receive from the employer and which may or may not be continued, a final settlement by redemption of the weekly payment would be grossly unjust to the workman. The true measure of compensation in such a case is the weekly payment plus so much of the benefits or advantages conceded by the employer as will make up the difference between the statutory liability and the agreed weekly payment, and to cancel the whole liability by redemption of a part only would result in the workman being deprived of a part of the compensation to which he is entitled. This injustice the County Court Judge tried to correct by preserving intact the other terms of the agreement. It appears to me that this was not competent on an application under clause 17. The County Court Judge had no power to make such an award. He could not make binding the other terms of the agreement if they were in their nature not enforceable as is the case here; indeed the award does not profess to give any efficacy to the other terms which they had not already—it merely says that the redemption is not to prejudice the other parts of the agreement. The benefits or advantages in respect of which the weekly payment was less than it otherwise would have been may not be secured by any agreement at all, and where there is an agreement it may be, as here, of such a nature as not to be readily enforceable at law. The difficulties of working out redemption under clause 17 in any case in which the weekly payment does not represent the whole measure of liability affords a strong reason for the reading of that clause which commended itself to Bankes, L. J.
The wording of the clause points strongly to this conclusion. The clause applies only
Page: 394↓
The redemption is to be of a weekly sum which has been actually paid for not less than six months. This renders it impossible to have an award for redemption of the weekly sum plus so much of the other benefits or advantages as makes up the amount of the statutory liability, and yet no redemption on any other basis would be fair.
Cases might conceivably occur in which a portion of the statutory liability of the employer had been obliterated by an executed consideration, it might be by the payment of a lump sum, the conveyance of the fee of a cottage, or the purchase of a Government annuity for the workman, and there might be a payment of a weekly sum representing the margin of statutory liability which had not been so extinguished. In such a case redemption of the weekly payment would totally extinguish all that was left of the statutory liability. The application of clause 17 even to such a case was, however, contested by the counsel for the appellant, and the facts of the present case are so remote from the case supposed that it is not necessary to decide anything upon it.
On the view which I have above expressed as to the meaning of clause 17 it is unnecessary to remit for consideration the question whether the incapacity should be considered as permanent within the meaning of clause 17.
For these reasons, in my opinion, the judgment of the Court of Appeal and the award should be set aside and the application to redeem remitted to the County Court Judge, as it is possible that an application for revision may be made. The appellant should have his costs of this appeal and also of the proceedings which have taken place in the County Court and in the Court of Appeal.
The question before us arises on an application made in November 1916 by the respondents to redeem the weekly payment of 8s. 10d. under the provisions of the Workmen's Compensation Act 1906, schedule 1 (17). That clause of the schedule provides that where any weekly payment has been continued (as was here the case) for not less than six months “the liability therefor may, on application by or on behalf of the employer, be redeemed by the payment of a lump sum of such an amount as, where the incapacity is permanent, would, if invested in the purchase of an immediate life annuity from the National Debt Commissioners through the Post Office Savings Bank, purchase an annuity for the workman equal to 75 per cent. of the annual value of the weekly payment, and as in any other case may be settled by arbitration.” The learned County Court Judge in a very careful and full judgment found that the incapacity of the appellant was permanent to the extent at least of the weekly payment of 8s. 10d. in the sense that his earning capacity had been thus diminished permanently to an extent measured at the lowest by 8s. 10d, and might thereafter prove to have become diminished still further, so that on review under the provisions of the Act increased compensation might have to be paid, and he made a declaration to this effect. Subject to this he ordered that the respondents should be at liberty to redeem the weekly payment of 8s. 10d. for £221, 6s., an amount agreed on as correct, but merely on the footing that there was a right conferred by the Act to redeem that payment standing by itself. He also declared that the redemption was to be without prejudice to the continuing validity of the remaining terms of the agreement, and to any further liability of the respondents to pay larger compensation to the appellant if at any time it should be found that the capacity of the appellant had been diminished below the average weekly earning capacity of £1, 7s. 6d. in consequence of the injury.
Page: 395↓
The respondents appealed to the Court of Appeal, and that Court reversed this judgment, and held that, subject to the appellant being afforded an opportunity of applying to review the weekly payment, the proceedings should be remitted to the County Court to determine whether the incapacity of the appellant was or was not permanent within the meaning of clause 17 of the schedule, and to make a complete award accordingly. They held that the finding must be set aside because the County Court Judge had not found that the incapacity was permanent, and also because as an award under clause 17 must be final and conclusive he had no jurisdiction to insert in it a declaration as to future liability. They further held by a majority (Lord Cozens-Hardy, M.R., and Warrington, L.J.) that the 8s. 10d. was a weekly payment within clause 17, notwithstanding that it formed part only of the entire compensation to which the appellant was entitled, and that it was therefore redeemable. Bankes, L.J., dissented, thinking that the case was one in which no order for redemption could be made, inasmuch as an order for redemption once made was final and extinguished every claim, and that the weekly payment under consideration was not one which was of the nature contemplated by clause 17. This point was directly raised on a cross-appeal by the appellant.
In order to come to a conclusion as to which of the views was the true one it is necessary to look at the Act as a whole. Section 1 enacts that if the workman suffers, as here, personal injury by accident in his employment, he is to be entitled to compensation in accordance with the first schedule. That schedule provides, clause 1 ( b), that where total or partial incapacity results from the injury a weekly payment during the incapacity not exceeding 50 per cent. of the workman's average earnings is to be the compensation, but that the weekly payment is not to exceed £1. Clause 3 provides that in fixing the amount of the weekly payment regard is to be had to any payment, allowance, or benefit which the workman may receive from the employer during the period of the incapacity, and that in the case of partial incapacity the weekly payment is not to exceed the difference between the amount of the average weekly earnings of the workman before the accident and the average weekly amount which he is earning or is able to earn in some suitable employment or business after the accident, but shall bear such relation to the amount of that difference as under the circumstances of the case may appear proper. By clause 16 of the schedule any weekly payment may be reviewed at the request either of the employer or the workman, and the amount, in default of agreement, shall be settled by arbitration. Clause 17 I have already quoted as providing, where any weekly payment has been continued for six months, for redemption.
After considering the statute as a whole I have come to the conclusion that Bankes, L.J., was right in holding that weekly payment og 8s. 10d. was not such a payment as was redeemable under the provisions of clause 17 of the schedule. It will be observed that what is to be redeemed is “the liability for such a payment.” Now although the language used is far from clear, I do not think that it ought to be held as importing that the whole of the liability of the respondents is to be extinguished by redemption of what is merely a part of it, or that clause 17 should apply where the provisions of clause 3 have operated, under which the amount of the weekly payment has been diminished to allow for other benefits received. The Act read as a whole plainly signifies that the workman is to have the full compensation contemplated by the initial part of the schedule. No doubt it assumes that a weekly payment may form an element in this compensation. But clause 3 plainly indicates that it is not necessary to exhaust it. Other benefits received from the employer may be taken into account, if received, in diminishing it at least temporarily, and the payment is always made subject to review under section 16. Can it have been intended to enable the employer to get rid of his liability for any addition to the weekly payment to which the workman may be entitled under clause 3, and which has been omitted merely because its place is for the time taken by the other benefits? I am of opinion that so to hold is to deprive the workman of what is clearly his right under the Act, and that it should not be so held if any other construction be possible. Reading the statute as a whole, I think that the expression in clause 17, “liability therefor,” must mean a liability to the actual amount paid weekly only in cases where the amount of the weekly payment covers the liability. I do not think it was intended to extinguish by payment of a sum that may be quite inadequate the liability for the residue of the compensation which the earlier words confer by a clear title.
I find myself compelled by the intention to be collected from the Workmen's Compensation Act read as a whole, to interpret the words in clause 17 giving power to extinguish liability for a weekly payment which has continued for six months as confined to the case where the weekly payment is the full equivalent of the total compensation. On this point I agree with what was said in the Court of Appeal by Bankes, L.J.
I am therefore of opinion that we ought to discharge the orders both of the County Court Judge and of the Court of Appeal and remit the case to the County Court Judge to be dealt with, if it be desired, on the footing that redemption is inadmissible unless a weekly payment representing the entire compensation to which the workman is entitled has been adjusted. I refrain from expressing any opinion on the point which has not yet arisen and has not been argued—whether before redemption is treated as admissible the whole of such a full weekly payment must have been paid for six months.
Page: 396↓
The County Court Judge made an order redeeming the 8s. 10d., and adding a declaration that the redemption was without prejudice to the continuing validity of the remaining terms of the agreement. In other words, he redeemed part and preserved the rest of the benefits which the agreement reserved to the workman. The Court of Appeal set aside that decision and remitted the matter to the County Court Judge in terms which it is for the moment unnecessary to state. The workman appeals.
The question turns upon the provisions of certain clauses in the Act, and in particular of clauses 16 and 17 of the first schedule. Of these clauses 17 is chief.
The first question I propose to consider is whether clause 17 applies at all to this agreement as it stands.
The frame of the Act is that (section 1 (1)) the employer is liable to pay compensation in accordance with the first schedule, and (section 1 (3)) if any question arises in any proceedings under the Act as to the liability to pay compensation, the question, if not settled by agreement, shall, subject to the provisions of the first schedule, be settled by arbitration in accordance with the second schedule. The question therefore may be, and in this case it was, settled by agreement.
If the matter had not been settled by agreement the compensation would under Schedule 1 (1) ( b) have taken the form of a weekly payment. That weekly payment would have had three characteristics—first, it could not exceed 50 per cent. of the average weekly earnings (Schedule 1 (1) ( b)) (in the present case that would be 18s. 2d.); secondly, in fixing its amount regard would be had to any payment, allowance, or benefit which the workman might receive from the employer (Schedule 1 (3)); and thirdly, it would be not fixed but capable of alteration according to altered circumstances. It could be reviewed, and on review might be ended, diminished, or increased (Schedule 1 (16)). Mr Shakespeare has argued—and I see no reason to dissent from the argument—that the words “weekly payment” in clause 17 have exactly the same meaning as if the word “compensation” were substituted for them. That clause authorises redemption of “the liability therefor,” that is to say, redemption of the liability for the weekly payment (the compensation) with all the three characteristics above stated. The redemption under clause 17 must, I think, be a redemption of all or nothing. If it is impossible to redeem all there can be no redemption at all.
If the compensation is fixed not by proceedings under the Act but by agreement (which the Act allows), and the agreement is that a certain weekly payment shall be made and nothing more, there is no more difficulty in a redemption under clause 17 in that case than if the amount had been fixed by arbitration. But that is not here the case. The agreement is that the workman shall have (1) the right to a house, (2) employment at 27s. 6d. a week, and (3) a weekly payment of 8s. 10d. The two former are not capable of redemption, although, of course, they could be terminated as they were created by agreement. The 8s. 10d. is capable of redemption, but there are two objections to that, viz.—first, that redemption of that benefit without redemption of the rest is not within the Act if I am right in thinking that redemption must be of all or nothing; and secondly, that the 8s. 10d. is not either by agreement or by arbitration the statutory weekly payment by way of compensation. It is a contingent contractual sum to which the parties have agreed as being satisfactory to both so long as certain other benefits are enjoyed. It does not follow that the man's working capacity is reduced to 27s. 6d. a week, or that the parties have agreed that it is so reduced because the employer has agreed to find him work at that wage. It may be that it is reduced to 20s. a week, and that the weekly payment by way of compensation would be 16s. 4d. Further, the benefits which the workman enjoys under the agreement are not (when translated into money, if they can be so translated) the amount required to make good to him his loss of earning power. They amount in the aggregate to the pecuniary equivalent of his whole earning power as if he had lost none. To redeem upon the footing of those benefits would be to redeem upon the footing of 100 per cent., not of 50 per cent., of his previous wages. In my judgment clause 17 does not apply at all to the redemption of this agreement as it stands.
But it does not follow that the employer is excluded from the statutory benefit of redemption from his statutory liability. I have already pointed out that the weekly payment by way of compensation is not a fixed thing, but a thing variable according to altered circumstances. And the concluding words of section 3 of the Act prevent
Page: 397↓
From the foregoing it follows that the order of the County Court Judge was, in my opinion, erroneous, for he redeemed part and preserved the rest. The Court of Appeal set aside that order, and while indicating that it was open to the workman (not the employer) to apply for review under clause 16, remitted the matter to the County Court Judge to determine whether the incapacity of the workman was “permanent” and “to make an order accordingly final and complete.” Their order therefore proceeds upon the footing that although the workman might apply under clause 16 for review, it was competent to the Judge to redeem the agreement as it stands. For the reason I have given I think this also is erroneous.
In my judgment both orders below should be discharged and the matter remitted to the County Court Judge. If the employer proceeds with the application as it stands and without making any application to review or to fix the statutory compensation, the Judge will no doubt deal with it accordingly. If either employer or workman makes some application such as above a different result may ensue. It will be for the County Court Judge to decide what the statutory compensation is, and whether in the language of clause 17 “Any weekly payment has been continued for not less than six months.” Neither question arises upon this appeal. As to the latter I expressly reserve my opinion upon it, and guard myself by saying that I must not be taken to assent to the Lord Chancellor's expression of opinion that “the redemption is to be of a weekly sum which has been actually paid for not less than six months.” The proceedings up to the present time seem to me to have been misconceived. As regards the costs, I agree with the order proposed by the Lord Chancellor, including the order as to costs.
I have also purposely abstained from saying anything as to the meaning of “permanent.” The question does not at present arise for decision.
Their Lordships set aside the orders of the Court of Appeal and the County Court Judge, and remitted back to the latter, with expenses to appellant.
Counsel for the Appellant— D. Hogg, K.C.— Shakespeare. Agents— Corbin, Greener, & Cook, for Raley & Sons, Barnsley, Solicitors.
Counsel for the Respondents— Bairstow, K.C.— A. Neilson. Agents— Barlow, Barlow, & Lyde, for Wilmshurst & Stones, Huddersfield, Solicitors.
