The Gazette 1958-61

In damagesfor loss of earnings tax position should be taken into account. The plaintiff was injured by reason of the negli– gence of the defendants. The trial judge awarded him .£37,720 damages in respect of loss of earnings actual and prospective, paying no regard to the income tax and surtax he would have had to pay on the amount of such earnings had he not been injured. The judge alternatively assessed these damages at £6,695 taking such hypothetical tax into account. It was agreed that the plaintiff would incur no tax liability on the £37,720 or £6,695 : Held by the House of Lords (Earl Jowitt, Lord Goddard, Lord Reid, Lord Radcliffe, Lord Tucker and Lord Somervell, Lord Keith of Avonholm dissenting), reversing the Court of Appeal (Somervell, Birkett and Romer, L.JJ.) and the High Court (Pearce, J.), that the judge ought to have taken the tax position into account and that the award in respect of loss of earnings should be reduced to £6,695. Per Lord Goddard (Lord Radcliffe and Lord Somervell of Harrow agreeing) : Such damages are awarded as compensation, not restitution, and must be decided by the application of reasonable common- sense, taking all matters which might have affected the plaintiff's tax liability into account. The same principles would be applicable in wrongful dismissal actions. Per Earl Jowitt : There may well be a difference between actions for personal injuries and actions for wrongful dismissal in regard to the obligation of the plaintiff to pay tax on the amount of damages re– ceived and cases on the one topic may therefore be a dangerous guide to follow on the other. Per Lord Tucker : Expenditure which, although not actually a charge on earnings, is imposed by law as a necessary consequence of their receipt is relevant to the ascertainment of the loss suffered by the party injured. Note.— As a result of this decision, the Lord Chancellor asked the Law Reform Committee to report on its effect. This Committee of 15, repre– senting Judges, barristers and academic lawyers, has just issued its report, and as it cannot agree, it does not in effect recommend any consequential change. Nine members of this Committee (including Lord Justice Jenkins, Lord Justice Parker, Lord Justice Pearce, Mr. Justice Diplock, Professor Goodhart and Mr. Megarry) took the view that the decision in this case gives full effect to the well- settled principle that damages for tort or for-breach of contract are intended to compensate the injured party for the loss that he has suffered, and ordinarily do no more than this.

SAN FRANCISCO : Washington, Oregon, California, Nevada, Arizona, Utah, Idaho, Montana, Wyoming, Colorado, New Mexico, and Alaska- WASHINGTON : Washington D.C. DECISIONS OF PROFESSIONAL INTEREST Solicitor s lien on papers upon change of solicitor upheld on appeal. THE facts of this case were reported in the Gazette of July, 1958, page 30. On 29th July, 1958, the Court of Appeal (Hodson, Morris and Sellers, L.JJ.) reversed Wrangham, J., and held that the solicitor concerned was entitled to a lien on the papers until his costs had been paid. Hodson, L. H., delivering the judgment of the Court said that there was no doubt that a solicitor who was discharged by his client during an action otherwise than for misconduct could retain any papers in the cause in his possession until his costs had been paid (In re Rapid Road Transit Co., 119091, i Ch. 96). The Judge (in the Court below), however, while recognizing the rule as being unqualified where no other parties were interested held that divorce proceedings were in the same catagory as actions in which third parties were interested having regard to the public interest involved and therefore disregard– ed the lien. It was true, as he said, that divorce affected status and the public interest was involved, but the fact remained that divorce proceedings inter paries were still litigation and their Lordships could not see any compelling reason why the rights of solicitors should in such cases differ from their rights in other cases. The litigant need not change his solicitor without good cause. It would be odd if he were in effect able to get solicitors' work done for nothing by the simple expedient of changing his solicitor as often as he chose, leaving a trail of unpaid costs in his wake and demanding the papers without payment when he had no just cause to complain of the conduct of the solicitors instructed and discarded. If he was hampered in the presentation of his case to his own disadvantage by having changed his solicitors without good cause the public interest did not require that a litigant who sought to put away his wife should be in a better position to obtain documents over which the solicitor had a lien than a litigant in any other civil proceedings. This lien should be preserved in the public interest in order that litigation might be properly conducted with due regard to the interest not only of litigants but also of the officers of the Court who serve those interests. (Hughes v. Hughes, The Times, 30th July, 1958.)