BRITISH TRANSPORT COMMISSION v. GOURLEY1
| Date | 01 July 1956 |
| Author | W. T. Baxter |
| Published date | 01 July 1956 |
| DOI | http://doi.org/10.1111/j.1468-2230.1956.tb00367.x |
BRITISH
TRANSPORT
COMMISSION
v.
GOURLEY’
THIS
case posed the question of whether tax should be deducted
from compensation for loss of income. The decision-that
tnx
should indeed be deducted-will in many instances change the
amount of damages to a dramatic extent; further, the new principle
may possibly be stretched in the future to cover loss of ofice and
even compulsory acquisition. Accordingly, some comment by an
accountant
on
the arithmetic of this case, and
on
its
implications,
may not seem altogether out of place.
FACTS
The respondent, Mr.
H.
J.
F.
Gourley, was severely and per-
manently injured while travelling by train
on
September
21, 1951,
owing to the negligence of the appellant’s servants. He was
sixty-
five years old at that date, and, as senior partner
in
a firm
of
civil
engineers, was earning a high income.
For
some months after $he
accident he was unable
to
take part in the firm’s business. On his
return to work an abatement was madebecause
of
his disabilities
-in his share of the profits; accordingly, from the date of the
accident to the end of
1968
(just before the action for recovery
of damages) his earnings were greatly reduced. Moreover, the
firm’s profits seemed likely to
fall
in future years because of
hie
diminished working powers; and
so
his prospective earnings (from
the trial until his hypothetical retirement date) might well be lower
than they would have been but
for
the accident. Nevertheless,
his
expected income-despite his handicaps-still appeared large
enough to attract surtax
u
at the highest rate.”
The trial took place
in
March,
1954,
and Pearce
J.
awarded
damages of
E47,720.
Authorities binding
on
him and the Court
of
Appeal required him to ignore tax in assessing the respondent’s loss
of income,
i.e.,
the damages under this head were estimates
of
gross income lost, regardless of the fact that tax would have been
paid
on
this income had
it
actually been received. As the appel-
lants wished to bring this matter before the House of Lords, they
requested Pearce
J.
to make alternative findings of the damages
due
if
tax was deductible. The resulting analysis may
for
convenience here be shown as follows:
1
[1066]
A.C.
186.
865
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