Reavis v Clan Line Steamers (No.1)

Factual and Procedural Background

The Plaintiff managed a coloured orchestra recruited with difficulty from artistes in the United States and West Indies, which performed successfully from 1918 in America and from 1919 in the United Kingdom, generating significant profits from performances and copyright sales. In October 1921, a disaster occurred causing the death and incapacitation of several orchestra members, leading to diminished public attendance, financial losses amounting to £7,500 by December 1921, and ultimately the cancellation of future contracts and disbandment of the orchestra. The Plaintiff claimed damages for loss of profits and the destruction of this profit-yielding asset, attributing the losses to the Defendants' negligence.

The procedural context involves a dispute over the relevancy of the Plaintiff’s claim for loss of profits due to the loss of services of orchestra members and whether such a claim is recognized under Scots law. The court appointed proof on certain issues while sustaining or repelling various pleas in law by the Defendants. The Plaintiff reclaimed against an interlocutor partially sustaining Defendants’ pleas and allowing proof on other parts.

Legal Issues Presented

1. Whether Scots law recognizes a right of action by an employer (the Plaintiff) against a third party (the Defendants) for loss of services resulting from the negligent death or injury of employees (orchestra members).
2. Whether the Plaintiff can claim damages for loss of a profit-yielding asset constituted by the contracted services of the orchestra members.
3. The competency and finality of interlocutors relating to pleas on relevancy and appointment or refusal of proof under the Court of Session Acts and related procedural rules.

Arguments of the Parties

Plaintiff's Arguments

• The orchestra was a unique and valuable profit-yielding asset due to its exceptional character, limited and distant recruitment sources, and world-wide reputation.
• The loss of members through the Defendants’ negligence destroyed this asset and caused significant financial damage, including loss of future profits from booked contracts and planned world tours.
• The Plaintiff claimed a right to damages for loss of services secured by contract, arguing that such claims are recognized in English law and contended that Scots law should align with this principle.
• Relied on passages from Lord Fraser’s work suggesting that actions for loss of services are consistent with Scots law and are in daily use.

Defendants' Arguments

• Disputed the legal basis for the Plaintiff’s claim for loss of services due to negligent death or injury of employees, asserting that Scots law does not recognize such a right of action.
• Argued procedural points including that the interlocutor allowing proof had become final and that interlocutors disposing in part of the merits must also decide on expenses to be reclaimable.
• Contended that the interlocutor partially sustaining pleas to relevancy did not dispose in part of the merits of the cause and that the Plaintiff’s reclaiming note was incompetent or out of time.

Table of Precedents Cited

Court's Reasoning and Analysis

The court critically examined the Plaintiff’s claim for loss of profits arising from the loss of orchestra members due to the Defendants’ negligence. It rejected the characterization of the orchestra as a proprietary asset, emphasizing that the Plaintiff’s business depended on hiring skilled musicians rather than owning them as property. The court found no legal distinction in Scots law between injury that merely damages a business and injury that destroys it.

Central to the analysis was whether Scots law recognizes an employer’s right of action against a third party for negligent death or injury to servants resulting in loss of services. The court referred to authoritative Scots precedents, especially Allan v. Barclay, which rejected such claims, and distinguished these from actions for malicious enticement or harboring of servants, which are recognized. The court disagreed with the Plaintiff’s reliance on English law and certain academic views that suggested Scots law allowed such claims, noting that English law’s acceptance of loss of services claims is anomalous and not grounded in Scots legal principles.

Further, the court noted that liability must be founded on a duty owed to the claimant, which does not exist between the Defendants and the Plaintiff for loss of the services of injured or deceased employees. The court also observed uncertainty whether the contractual relationship between the Plaintiff and the orchestra members constituted a master-servant relationship in law.

Regarding procedural issues, the court held that interlocutors partially sustaining pleas and allowing proof are interlocutors disposing in part of the merits, permitting reclaiming notes within statutory time limits. It rejected the Defendants’ arguments that interlocutors become final in such circumstances without opportunity for reclaiming.

Holding and Implications

The court sustained the competency of the Plaintiff’s reclaiming note and allowed proof on parts of the case excluding the claim for loss of profits under condition 4, which was dismissed quoad the damages claimed therein. The court held that the Plaintiff has no right of action under Scots law for damages arising from the loss of services of orchestra members caused by the Defendants' negligence.

The direct effect is that the Plaintiff cannot recover damages for loss of a profit-yielding asset constituted by the contractual services of the orchestra members. The Plaintiff remains entitled to recover damages for personal injury, loss of property, and loss of profits directly connected to personal injury or property loss. No new precedent expanding Scots law to recognize employer claims for negligent loss of employee services was established; the decision affirms existing legal principles limiting such claims.