BRITISH TRANSPORT COMMISSION V. GOURLEY, RECONSIDERED

Abstract

British Transport Commission v. Gourley was a striking case. A very successful civil engineer was negligently injured while travelling by train. If the award for loss of earnings were granted without taking into account the plaintiff’s income tax liability, it would amount to £37,720, while if the award were made on the basis of earnings after deduction of the income tax, it would amount to a paltry £6,695. The House of Lords, by a six-to-one majority, reversed the Court of Appeal and held that, in assessing damages for loss of earnings, allowance must be made for the income tax liability which the plaintiff would otherwise have incurred. The Gourley case deposits the complexities of tax law upon the doorstep of the ordinary practitioner. Gordon Bale considers the difficulties involved in applying the Gourley principle and its effect upon the dilemma that income taxation poses in the assessment of damages.