Crockwell v Haley

• Jurisdiction: Bermuda
• Judgment Date: 29 June 1993
• Date: 29 June 1993
• Docket Number: Civil Appeal No. 23 of 1992
• Court: Court of Appeal (Bermuda)

In the Court of Appeal for Bermuda

In the Court of Appeal for Bermuda

In the Court of Appeal for Bermuda

da Costa JA., P.Ag.

Henry JA.

Georges JA.

da Costa JA (Ag. P)

Henry JA

Georges JA

Civil Appeal No. 23 of 1992

Civil Appeal No 23 of 1992

Civil Appeal No. 23 of 1992

Lance Murray Crockwell

Appellant

and

Theresa E. Haley & Thomas F. Haley

Respondents

Lance Murray Crockwell

Appellant

and

Theresa E. Haley & Thomas F. Haley

Respondent

Lance Murray Crockwell

Appellant

and

Theresa E. Haley

Thomas F. Haley

Respondents

Piers Ashworth Q.C. and John Cooper for the Appellant

Kieron Unwin for the Respondent

British Transport Commission v GourleyELR [1956] AC 185

Russell v Van GalenUNK (1985) 36 WIR 144

de Lasala v de LasalaELR [1980] AC 546

Franklin v RELR [1987] AC 576

Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank LtdELR [1986] AC 80

Skelton v CollinsUNK (1965-66) 115 CLR 94

Andrews v Grand & Toy Alberta Ltd.UNK 83 DLR (3d) 452

R (in the Right of Ontario) v JenningsUNK 57 DLR (2d) 644

Farley v John Thompson LtdUNK [1973] 2 Lloyds Rep. 41

Moelicker v Reyrolle & CoWLR [1977] WLR 132

Cookson v KnowlesELR [1979] AC 556

Hodgson v TrappELR [1989] AC 807

Atlas Tiles v BriersUNK (1976-77) 144 CLR 202

Johnson v BrowneUNK (1972) 19 WIR 382

Smiths v Wellington Wool Mfg. Co. Ltd. [1956] NZLR 491

Pitt v Economic Insurance Co. Ltd [1957] 3 SALR 284

Norfolk and Western Railway Co v Liepelt (1980) 100 SCR 755

Personal injury — Damages — Pedestrian on crosswalk struck by motor cycle — Whether loss of earnings should be based pre-tax or post-tax — Whether Gourley principle to be applied in Bermuda

JUDGMENT

da Costa JA., P.Ag.

In August 1955 the respondent Mrs. Haley while on vacation in Bermuda was struck on a pedestrian crossing near the Inverurie Hotel by a motor cycle driven by the appellant. She suffered serious injuries which have effected the whole course of her life. At the time of the accident she was a school teacher in Philadelphia. She was then 49 years of age. She has been forced by her injuries to abandon her career as a teacher.

She claimed damages for pain, suffering and loss of amenities, loss of earnings past and future and medical expenses past and prospective. Ward J. assessed the past loss of earnings in the sum of $225,078.78 and the future loss in the sum of $263,900. These were gross figures. The appellant does not contest these figures, but contends that tax should be deducted from these gross figures with the result that the award should be based on the net figures. In short the appellant submits that the principle established by the decision of the House of Lords in British Transport Commission v. GourleyELR(1956) AC 185 should be applied in Bermuda.

The learned judge examined the question of whether he ought to take into account the tax position in assessing the part of the damages attributable to loss of earnings actual or prospective and concluded:

‘In Russell v Van GalenCivil Appeal No. 21 of 1984 the Court of Appeal for Bermuda considered the question of the possible tax liability in assessing damages for loss of earnings and concluded that the reduction of damages under that head so as to take account of a possible tax liability should not have been made because the matter involved a consideration of foreign law which must be pleaded and proved by expert evidence. The Court also held that loss of earning capacity was a capital asset and not subject to income tax. The Court adopted the reasoning advanced in the dissenting speech of Lord Keith in British Transport Commission v GourleyUNK(1955) 3 All E.R. 796.

Mr. Cooper sought to distinguish Russell's case from the one at bar and suggested that anything which might have been said by the learned Justices of Appeal which was not strictly necessary for the decision in Russell was obiter and should not be followed. I disagree. Bermuda has long prided itself on having no income tax and Bermudian Courts should not concern themselves with the application of income tax rules and regulations in other jurisdictions particularly when such application would yield no direct benefit to the foreign state.’

The first question that arises for consideration is whether the observations made in Gourley's case were part of the ratio decidendi or were obiter.

In Russell v Van GalenUNK(1985) 36 WIR 144 at 176 I said:

‘The interesting question of the application of Gourley's rule in the present context almost emerged in this case, but in reality does not and for a very good reason. The principle that in a court in Bermuda, as in England, foreign law is a matter of fact is well established and it has two important practical consequences. In the first place, the foreign law must be pleaded: the general rule is that if a party wishes to rely on a foreign law he must plead it in the same way as any other fact (King of Spain v. MachadoENR(1827) 4 Russ 225). Secondly, the foreign law must be proved as the court will not take judicial notice of foreign law; and, further, it must be proved in each case.’

After some further observations I added:

‘Accordingly, in my judgment, it is the defendant who relies on foreign law and he was therefore obliged to plead and prove it. This he has failed to do. The consequence is that it is not open to him to contend that United Kingdom tax should be deducted from the plaintiff's loss of earnings under the rule in Gourley's case.

While I fully realise that any comment of mine on the rule in Gourley's case must hereafter be held to be strictly obiter I nevertheless would add a few observations.’

The learned President, Sir Alastair Blair-Kerr too after an examination of the views expressed in Gourley's case concluded at p.166: ‘But any views expressed by me concerning the decision in Gourley's case should be treated as obiter.’ He then gave his reasons why the views he expressed should be so regarded.

My brother Henry JA did not expressly state that his views on the Gourley case were obiter, but a perusal of his judgment shows that they obviously were (see pp. 180–181).

The vital question therefore which arises for consideration on this appeal is whether the views expressed in Russell v. Van GalenUNK(1985) 36 WIR 144 by this Court on the Gourley case are correct. Mr. Ashworth for the appellant submits that in the circumstances of this case the Court is bound by, or alternatively ought to follow Gourley; in the further alternative, irrespective of Gourley, the general principles governing the assessment of damages in cases of negligence require that tax be deducted.

I turn therefore to consider the issue as to whether this Court is bound by the decision of the House of Lords in Gourley's case. I have had the privilege of reading in draft the judgment of my brother Georges. I am in entire agreement with the views expressed therein. I particularly endorse his views at pp. 4–7 of his judgment on the authority of the decisions of the House of Lords, expressed as they are with consummate clarity. With some diffidence I venture to add a few observations on this aspect of the case.

The orthodox theory of the position of colonial courts is stated by Sir Kenneth Roberts-Wray as follows:

‘In the first place, there appears in the past to have been a tendency, possibly unintended, to view the judicature overseas as if their authority was in some way inferior. In some quarters, it may have been fostered by their own judges, though the unquestioning readiness with which they often relied upon English decisions need be attributed to no more than the respect with which the English Judiciary have always been held and the dearth of other precedents. However that may be, this tendency probably flowed from the subordinate states of the Executive and the Legislature. If so, the analogy, though understandable was unsound; for Colonial Courts are not, and never have been, subordinate to English Courts, or anymore subordinate to the United Kingdom Parliament or Government than the English Courts themselves’ (Sir Kenneth Roberts-Wray, Commonwealth & Colonial Law pp. 569–570).

Those words were written in 1966. Since then there have been many judicial pronouncements on the subject. In de Lasala v. de LasalaELR(1980) AC 546; 557-558 Lord Diplock said:

‘It has become generally accepted at the present day that the common law is not unchanging but develops to meet the changing circumstances and patterns of society in which it is applied. In Australian Consolidated Press Ltd. v. UrenELR[1969] 1 AC 590 it was accepted by this Board that the common law as to the right to punitive damages for tort had of recent years developed in different ways in England and in New South Wales and that neither Australian courts themselves nor this Board sitting on an appeal from an Australian court were bound by the decision of the House of Lords in Rookes v. BarnardELR[1964] A.C. 1129 which limited the categories of cases in which punitive damages could be awarded in England. So too in Hong Kong, where the reception of the common law and the rules of equity is expressed to be ‘so far as they are applicable to the circumstances of Hong Kong or its inhabitants’ and ‘subject to such modifications as such circumstances may require’ a decision of the House of Lords on a matter which in Hong Kong is governed by the common law by virtue of the Application of English Law Ordinance is not ipso facto binding upon a Hong Kong court although its persuasive authority must be very great, since the Judicial Committee of the Privy Council, whose decisions on appeals from Hong Kong are binding on all Hong Kong courts, shares with the Appellate Committee of the House of Lords a common membership. This Board is unlikely to diverge from a decision which its members have reached in their alternative capacity, unless the decision is in a field of law in which the circumstances of the colony or its...