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1ST DIV. simpliciter. I gather from his note that the
reasons which led him to take this course were
King v.
Edinburgh
(1) that in no decided case has it been held that
Collieries the mere intimation of a claim constituted an
Co. Ltd. election by the workman between claiming
December 21, compensation under the Act and taking pro-
ceedings independently of it; (2) that the
claim was not admitted by the employers;
and (3) that the pending of the arbitration is
not material because it was applied for by the
employers pursuant to the workman's statutory
claim.

1923.

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in none of the cases in which the question of election has been discussed (in some of which the sufficiency of a claim to constitute election would have afforded a short and conclusive solution of the question presented for decision) has it been held, or indeed suggested, that the mere intimation of a claim involves election by the workman. With regard to the SheriffSubstitute's other grounds for dismissing the employers' plea simpliciter, there is, in my opinion, nothing relevant in the circumstance that the employers disputed liability, and that accordingly a difference arose in the proceedings which followed the claim-unless, indeed, it could be said that the workman's option as between statutory claim and action at law depends on his success in the one or the other. But this would be to read the option out of the Act altogether. I have already stated my reasons for regarding the pending of the pro

happens, an arbitration-as being material.

It is, in my opinion, plain on the terms of the Act that "when the statute gives to a workman an option between two different proceedings before two different tribunals, it means that he may take either the one or the other as he thinks fit, but that he cannot take both. I do not see (said Lord Kinnear in Burton v. Chapel Coal Co., 1909 S.C. 430) "that any other meaning can be ascribed to the words of the Act. The work-ceedings under the claim-including, as it man may, at his option, do one thing or another; it is necessarily involved, in my opinion, that For the reasons shortly indicated in the earlier he is not to do both." There may be difficulty part of this opinion, I think the Sheriff-Subin a particular case-due to the no doubt stitute, instead of dismissing the employers' intentionally untechnical draftsmanship of the plea simpliciter, should have given the workman Act-in determining at what point the work- a reasonable time in which to make up his mind man's election is, or must be, actually made; between the alternatives of withdrawing his and for reasons to be explained in a moment I claim for compensation under the Act and insistagree with the Sheriff-Substitute so far as to ing in his action independently o the Act, or hold that the mere intimation of a claim for insisting in his claim and suffering dismissal compensation under the Act is not enough to of the action. In short, a stage had been prove that the workman has elected. But the reached in which the employers were entitled workman is not, in my opinion, entitled, under to insist on the workman using his statutory circumstances such as those presented in this option, and the workman was bound to exercise case, to pursue at one and the same time both it. The withdrawal of the claim for compenkinds of proceedings against the employer-sation under the Act would, of course, have those of which the first step is a claim under the Act, and those which begin with service of a summons independently of it. A person who is put to his option may delay exercising it, but he has no right whatever to approbate and reprobate meanwhile. Now, it is precisely this which a dismissal of the employers' plea simpliciter sanctions and approves in the circumstances of the present case.

My reasons for agreeing with the SheriffSubstitute in holding that the mere intimation of a claim for compensation under the Act is not enough to constitute election are (first) that the second part of section 1 (2) (b) seems to me to be exegetical of the first, and points to the exclusion of double liability on the part of the employer (whether for payment or for proceedings to recover payment) as being the reason for putting the workman to his option; (second) that a claim-apart from its function as the first step in proceedings under the Act-is, by section 2 (1), made a condition of preserving the workman's right to compensation under the Act from perishing by delay; and (third) that

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the result of nullifying the effect of the difference which arose in the proceedings of which it was the first step, and of making it impossible for the workman to recover anything in the arbitration. But this would leave intact and unaffected his right under section 1 (4) to recur to such of his rights under the Act as that enactment gives him, if he proved unsuccessful in his action. For his right so to recur is independent of any claim within the meaning of section 2 (1) or section 1 (2) (b), and depends solely upon the action having been raised within the time limited for taking proceedings by a claim under the Act (namely six months). The action was timeously raised in the present case. If the workman had withdrawn his claim to the statutory compensation as provided to him by section 1 (1), (2), and (3), it might be a harmless, though in my opinion an unnecessary, proviso to reserve his contingent right to recur to the form of statutory compensation available to him in the action under section 1 (4)—(Stewart v. Perth Station Committee, 1923 S.C. 356). The workman's statutory rights under section

REPORTS-1924, SCOTS LAW TIMES.

1 (1), (2), and (3) on the one hand, and under section 1 (4) on the other hand, are distinct and independent. Under section 1 (4) there is no arbitration and no award. With regard to the questions in the case, I think it was premature to find that the action was not barred, and premature to repel the employers' plea.

Lord Skerrington. No case was cited to us where it was decided on a construction of section 1, subsection (2) (b), of the Workmen's Compensation Act, 1906, or of the identical provisions in the Act of 1897, that an injured workman must be deemed to have exercised the option conferred upon him by the Act merely because he had made a claim upon his employers for payment of a specified weekly sum by way of statutory compensation for his injuries. It would be very unfortunate and indeed anomalous if that were the law. Why should a workman's legal rights be prejudiced merely because he made an offer to his employer which the latter was free to reject and did in fact reject? In the case with which we are concerned the workman's solicitors wrote to the employers claiming compensation as for total incapacity at the rate of 35s. per week. This was plainly a claim for statutory compensation. It was therefore implied that if the claim should be admitted by the employers any other claims which the workman might have in respect of his injuries independently of the Act would be discharged. Equally I think that it was implied that there would be no such discharge if the workman's offer was not accepted. On principle, therefore, I think that the contention of the employers fails. Further, there is no authority in its favour although twenty-five years have elapsed since the passing of the Act of 1897. Lastly, there are weighty dicta which are unfavourable to it both in Scottish and in English casesBurton v. Chapel Coal Co. (1909 S.C. 430); Cribb v. Kynoch, Ltd. ([1908] 2 K.B. 551). As Lord Dundas observed in the case of Burton: It is unnecessary for the decision of this case to attempt to lay down any general or exhaustive definition of what might or might not, under varying circumstances and conditions, be held, in cases of this sort, to amount to a conclusive exercise of the workman's option."

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125

come when he ought to be called upon by the 1st Div. Court to make his election, and that the action King v. ought to be dismissed if he refused to do so Edinburgh within a reasonable time to be fixed by the Collieries. Court. I do not doubt that in a fitting case Co. Ltd. the Court would have power to call upon a December 21, workman to make his election, but I am not satisfied that there is any reason why we should adopt that course in the present case.

Lord Cullen.—I concur in the opinion of the Lord President.

Lord Sands.-This is a stated case in an action, alternatively at common law and under the Employers' Liability Act, 1880, by a workman against his employers in respect of personal injury attributed to the alleged negligence of the employers. The defenders plead that the action is excluded by reason of the fact that the pursuer has elected to claim against them, in respect of the alleged injury, under the Workmen's Compensation Act, 1906, and that by section 1 (2) (b) of that Act such election bars any other remedy. Under this subsection the workman may "at his option either claim compensation under this Act or take proceedings independently of this Act."

In this case, by a letter of his law-agents to the representatives of the defenders, dated 14th June 1922, it was intimated on behalf of the pursuer that "he claims compensation for total incapacity since the date of the accident." The language and the context make it impossible to interpret this as referring to anything else but a claim under the Workmen's Compensation Act, 1906.

To affirm that a person may, at his option, take one or other. of two courses does not necessarily imply final election. It may imply no more than one at a time. I take it to be a correct statement of the law that a wife who charges her husband with infidelity may, at her option, take proceedings either for judicial separation or for divorce. (This does not happen to be a statutory provision, but it might quite well be a clause in a statutory code.) This rule forbids simultaneous actions, but it does not forbid commencement and abandonment of one and recourse to the other. In judging whether an option is of one kind or the other, regard must be had to the finality in itself of the step taken. Condonation is a good example of a final and irrevocable option.

For the foregoing reasons I think that the arbitrator came to a correct conclusion, and that the two questions of law should be answered In my view the provision of the option in the in the affirmative. So far as I recollect no section we are called upon to construe forbids alternative argument was presented by the simultaneous insistence in two sets of proceedappellants' counsel to the effect that, assuming ings. It has been authoritatively determined the appellants to be wrong in their contention that it implies final election if the one form or that the pursuer "definitely elected to claim the other be adopted and sued out to judgment compensation under the Workmen's Compensa- (subject, of course, to the special provision in tion Act, 1906," the time had nevertheless 1 (4))-Burton v. The Chapel Coal Co., 1909

1923.

126

REPORTS-1924, SCOTS LAW TIMES.

1ST DIV. S.C. 430. It has not been determined that if the
initial steps are taken either by intimation of
King v.
Edinburgh a claim or by service of a summons, the election
Collieries is final without any locus pœnitentiæ. But
Co. Ltd. whilst the question has not been made matter
December 21, of express decision, the reports of the judgments
in the cases, both in England and in Scotland,
appear to me negative of the view that the
Court contemplated that mere initiation of steps
towards one remedy or the other imported final Insurance

1923.

election.

The particular question which we are called upon to decide in the present case is whether an intimation of claim (an intimation necessary to be given within six months if the right to this form of remedy were not to be surrendered) must be held to import a final election. In my view, whilst the provision in the section is capable of bearing this severe construction, it is not a necessary construction or one encouraged in any way by judicial dicta, and therefore I answer the question in the negative.

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If, in the present case, the pursuer had applied for arbitration and, whilst insisting in those proceedings, .had raised the present action, I desire to reserve my opinion as to the competency of such an action. In the circumstances of the present case, however, the application for arbitration having been made by the defenders, I do not think that the pursuer is foreclosed from withdrawing any claim to have compensation awarded in the arbitration proceedings and from insisting in the present action.

Counsel for Appellants, Robertson, K.C., Russell; Agents, W. & J. Burness, W.S., and W. T. Craig, Solicitor, Glasgow.-Counsel for Respondent, Wilton, K.C., Scott; Agents, G. M. Wood & Robertson, W.S.

SECOND DIVISION.

M. D.

(The Lord-Justice Clerk, Lords Ormidale, Hunter, and Anderson.)

21st December 1923.

32. The S.S. "Spathari."

Borthwick v. The British General
Assurance Company Limited.
Demetriades & Company v. The
Northern Assurance Company

Limited.

Cambitsis v. Norwich Union Fire Insurance Society Limited.

Insurance - Marine - Voidability — Duty to disclose Marine Insurance Act, 1906 (6 Edw. VII. cap. 41), sections 17 to 21-Marine insurance policy effected by registered owner of British ship-Non-disclosure

by assured of arrangement whereby he registered as

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owner for temporary purpose and with limited interest and under obligation at conclusion of voyage to transfer ship to a Greek subject — Active misrepresentation that the vessel was entitled to be registered as British owned, whereas she was notGreek-owned vessels not at time insurable in ordinary market and on ordinary terms-Ship scuttled and a total loss-Held that assured was not entitled to recover under the policy in respect that the undisclosed arrangement in question was a fact material to the risk and in respect of active misrepresentation. Marine Voidability — Duty to disclose Marine Insurance Act, 1906 (6 Edw. VII. cap. 41), sections 17 to 21-"Material circumstance known to the assured "-Marine insurance policy over ship effected by British owner who was shipbroker and. marine surveyor-Non-disclosure by assured of facts material to risk, namely, an arrangement whereby he registered for temporary purpose and with limited interest and under obligation to transfer ship to Greek subject at conclusion of voyage-Active misrepresentation that the vessel was entitled to be registered as British owned, whereas she was not-Ship scuttled and a total loss-Held that the undisclosed facts were facts the materiality of which the assured as a person engaged in shipping or insurance busi-ness knew or ought to have known, and also that there had been active misrepresentation. Insurance Marine Voidability Duty to disclose Marine Insurance Act, 1906 (6 Edw. VII. cap. 41), sections 17 to 21 - Marine insurance policy over cargo in British-owned ship effected by Greek subject-Non-disclosure by assured of fact that ship had been purchased by him and that British owner was registered as owner for temporary purpose, and with limited interest and under obligation to transfer ship to assured at conclusion of voyageActive misrepresentation that the vessel was entitled to be registered as British owned, whereas she was not-Greek-owned vessels not at time insurable in ordinary market and on ordinary terms Ship scuttled and cargo lost-Held that there were (1) failure to disclose facts material to the risk and (2) active misrepresentation disentitling the assured to recover under the policy.

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(Reported ante, 1922, S.L.T. 641.) Reclaiming Note against an Interlocutor of Lord Sands.

Robert Forrester Borthwick, shipbroker,. 212 St Vincent Street, Glasgow, raised an action against the British General Assurance Co. Ltd. for payment of a sum of £650, being the sum due under a policy of insurance on the steamship called "Zachris Tophelius," renamed

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Spathari," executed at Glasgow on 15th April 1921. The ship was sunk on or about 29th April 1921. An action was also raised by H. Demetriades & Co., shipbrokers, 212 St Vincent Street, Glasgow, against the Northern Insurance Co. Ltd. on a policy over certain cargo carried on the " Spathari."

Nicolas Cambitsis, Glasgow, brought a similar action against the Norwich Union Fire Insurance Society Ltd. in respect of certain other cargo.

A proof was allowed and taken. The facts found proved, so far as material to this report,.

REPORTS-1924, SCOTS LAW TIMES.

are contained in the opinion of the Lord Ordinary which appears in the previous report. The pleas in law for the parties and the terms of the Marine Insurance Act, 1906 (6 Edw. VII. cap. 41), sections 17, 18, 19, will also be found in the previous report.

The Marine Insurance Act, 1906 (6 Edw. VII. cap. 41), enacts :

Section 20. (1) Every material representation made by the assured or his agent to the insurer during the negotiations for the contract, and before the contract is concluded, must be true. If it be untrue the insurer may avoid the contract.

(2) A representation is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take

the risk.

Section 21. A contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of shewing when the proposal was accepted, reference may be made to the slip or covering note or other customary memorandum of the contract, although it be unstamped.

On 31st October 1922 the Lord Ordinary (Sands) assoilzied the defenders from the conclusions of the actions.

The pursuers reclaimed.

127

The

December 21,

1923.

to have been disclosed. The letter of 10th 2ND DIV. February 1921 disclosed to the insurers (1) that the ship had been a foreign ship, (2) the S.S."Spaname of the new owner (Borthwick), (3) the thari." change of the name to "Spathari," (4) registration under the British flag, (5) that she had been overhauled, (6) her value at £9000, (7) her destination in Greece, and (8) that she was to trade in the Greek Archipelago. Having this information before them, if the insurers did not choose to enquire as to any other facts material to them they must now be held to have satisfied themselves. By abstaining from enquiry the insurers had waived their right to receive further information (Mann, Macneal & Steeves Ltd. v. Capital and Counties Insurance Co., [1921] 2 K.B. 300 at pp. 306, 309; Glasgow Assurance Corporation v. Symondson, 1911, 16 Com. Cas. 109 at p. 120; Marine Insurance Act, 1906 (6 Edw. VII. cap. 41), section 21). The preceding negotiations with the Levant syndicate were bona fide, and the ship was a British ship with Borthwick registered as owner. There was no need to disclose anything further because under clause 1 of the conditions of the policy it was agreed that in the event of the ship being transferred to another owner the policy became null and void as from the date of the transference. As the insurance Argued for the Pursuer Borthwick: The Lord slip or contract was signed on 16th February Ordinary was right in holding that there was 1921, and Demetriades did not become manager no conspiracy to scuttle the Spathari," but until 19th February, his Greek managership had erred in holding that the insured under did not require to be disclosed (Cory v. Patton, all the policies were not entitled to recover. 1872, 7 Q.B. 304). The beneficial interest Borthwick was only interested in the insurance was in Borthwick; he was the real owner on the hull, Demetriades was interested in and stood to lose most (£2000). (Counsel also respect of his disbursements, etc., for the ship, referred to Carter, 1766, 3 Burrow 1905; Marine and so far as cargo was concerned both Insurance Act, 1906, sections 33, 41, 18 (4); Demetriades and Cambitsis were interested. Joel v. Law Union Insurance Co., [1908] 2 K.B. There was no real difference between all the 431, 863; Haywood v. Rodgers, 4 East 590.) pursuers' interests unless it could be said that Even if it were held that scuttling had taken there was a higher onus on the owner of the place, the only inference from the evidence was hull to make disclosures of facts. Thus certain that a criminal act had been committed by facts might never be known to a cargo-owner, the captain or one of the crew. The owner and it might be that the latter was under no had not been proved to be privy to it. Any duty even to enquire as to whether certain such act by the captain or one of the crew was, facts were or were not known to the shipowner. however, covered by the barratry clause ("Elias On behalf of Borthwick it was maintained that Issaias," 14 Lloyd's List L.R. 395, Vol. XV. | sufficient facts and circumstances were disp. 186). closed to the insurers in respect that everything Argued for the consignors of cargo usually disclosed was disclosed to them. The (Demetriades and Cambitsis): The materiality insured had exhausted their duty to volunteer of the facts was not the only matter to be information. The facts which the insurers decided; a duty to disclose had to be shewn, maintained ought to have been disclosed and there the defenders failed. The insurers to them were not material. Even, how-must be held to have waived their right to ever, if it were held that material facts further information as against the cargo-owners. had not been disclosed, the circumstances under which the insurance was effected threw the onus upon the insurer to enquire as to the facts which were now alleged to be material and which, it was now maintained, ought

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There might exist an obligation on the ship-
owner to disclose facts, which obligation did
not in any way affect the consignors of cargo.
The general practice as to the facts disclosed
had been followed, and the insurers did not

The

December 21, 1928...

128

REPORTS—1924, SCOTS LAW TIMES.

2ND DIV. draw the attention of the consignors to any requirements of theirs as to facts to be disS.S." Spa- closed and were barred from now raising an thari." objection. If there were to be an innovation on practice, notice of it ought to have been given. Cambitsis was in the most favourable position, as he alone was a consignor. The onus was upon the defenders, and they had not discharged it. The master or crew here were acting directly against the interests and instructions of their principal, and that distinguished this case from Lloyd v. Grace Smith & Co. Ltd. ([1912] A.C. 716) cited by the defenders. These pursuers were accordingly not debarred from the benefit of their contract. Mann, Macneal & Steeves Ltd. (cit.) ruled here. The Lord Ordinary erred in holding against these pursuers that material facts had not been disclosed which these pursuers were bound to disclose, and to that extent his judgment should be recalled.

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Argued for the Defenders: One of the losses insured against was " perils of the sea. Under the Marine Insurance Act of 1906, First Schedule, Rule 7, that term referred only to fortuitous accidents or casualties of the sea. Here, however, the ship was scuttled, the scuttling having been done by Malley the engineer. Something beyond the ordinary action of wind and waves had thus occurred, and the sinking of the ship was clearly not due to a peril of the sea. Barratry" under Rule 11 of the First Schedule to the Act of 1906 included every wrongful act wilfully committed by the master or crew to the prejudice of the owner or charterer. Scuttling having been proved, the onus was thrown back upon the insured to shew that the ship was sunk by a wrongful act of the master or crew under the barratry clause, but barratry had not been pleaded and the plea was accordingly not open to the insured. An owner of a ship could not recover as for a loss by barratry in respect of acts done by the charterer's agents. This was conclusive against all three pursuers here (Arnould on Marine Insurance, 10th ed., section 851; Lucena v. Crawford, 1806, 2 B. & P. N.R. 269 at p. 315; Mackenzie v. Whitworth, 1 Exch. Div. 36; Samuel & Co., [1923] 1 K.B. 592). The insured had to bring themselves within the conditions of the policy, but in respect that they had left the Court in doubt as to the cause to which the loss was attributable, the pursuers failed to prove their case (La Compañia Martiartu v. Royal Exchange Assurance, [1923] 1 K.B. 650; Williams v. East India Company, 1802, 3 East 192; The "Elias Issaias," cited contra, did not apply). It was proved that the loss was due to scuttling, and the insured had failed to shew that it had happened without connivance on their part; on the contrary, it was proved that there was

Dis

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a conspiracy amongst the pursuers to scuttle the ship. Further, the policy was void owing to misrepresentation and concealment. closure of the facts contemplated by sections 18 and 19 of the Act of 1906 had not been made. Borthwick was never owner in any sense of the word. No funds were provided by him from beginning to end, these being alone supplied by Demetriades. The arrangement with Borthwick was not real but simulate and for the sinister purpose of shewing colourably that the vessel was British when in point of fact she was not. The truth of the matter was that the vessel was Greek owned. The representation that the vessel was a British ship had thus been proved to be untrue in the sense of section 20 of the Act of 1906. To represent a ship as British meant that she was to fly the British flag and was wholly British owned (Merchant Shipping Act, 1894 (57 & 58 Vict. cap. 60), sections 1, 9, 71). It meant that no unqualified person was entitled to be interested in the ship, and that there was not any " beneficial interest arising under contract or equitably in a foreigner in the sense of section 57 of the Merchant Shipping Act, 1894. It was not competent to put a trustee for foreign owners on the register, whilst here the ownership was in a GreekDemetriades-and it had never been taken away as there was no sale by him in the ordinary way, e.g. no price was ever paid by Borthwick. Besides, there could be no waiver of a right to ask for further facts when the Greek interest was never disclosed. It was only to get the ship insured that she was put on the British Register. Although Borthwick was made ostensible owner, the arrangement with the Levant syndicate was to be carried through, so that from the time he became ostensible owner he could not sell or transfer except in accordance with an already existing agreement. Demetriades, also, paid all disbursements with the exception of insurance. On the other hand, if the back letter were genuine, Demetriades was entitled to part of the purchase price and had, under contract, an actual beneficial interest in the ship. Demetriades also was manager, but was not paid for being so, and in fact everything was entered in his books just as if he were owner. A fraud was really being perpetrated against the insurers, and Borthwick was a party to it as he knew he was not the owner in any sense of the term. All these facts were not disclosed and they were material, and the failure of the insured to disclose them enabled the insurers to void the policy (Horne v. Poland, [1922] 2 K.B. 364; "Gunford" Ship Co. Ltd., 1911 S.C. (H.L.) 84). Cambitsis at the most was entitled to commission, but as that was not insured by the policy he had no claim at all. As shewing the recent

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