British Transport Commission v Gourley

This case established the Gourley Principle - whether an award for loss of earnings should be paid to the recipient before or after taking into account tax

HL 1955, 34 ATC 305; [1956] AC 185; [1955] 3 All ER 796
A civil engineer was awarded damages by the British Transport Commission in respect of a railway accident; the award included an amount for loss of earnings.

The question was whether the amount of damages should be paid to the recipient gross or net of deductions that would have been suffered by the individual had he remained in employment.

It was held that the award should be made net of an amount that would reflect the deductions that would have been made for tax and national insurance in arriving at the settlement figure:

'the broad general principle which should govern the assessment of damages in cases such as this is that the tribunal should award the injured party such a sum of money as will put him in the same position as he would have been in if he had not sustained the injuries … to ignore the tax element at the present day would be to act in a manner which is out of touch with reality'.

This established an important principle, known as the Gourley principle.

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