LEE TIN YEUNG v. CHIU CHOW ASSOCIATION SECONDARY SCHOOL AND OTHERS

HCPI201/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO. 201 OF 1999

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RULING REGARDING TAX LIABILITY

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1. I am not satisfied that the original position of either party on the manner in which the tax liability of the plaintiff should be taken into account was correct.

2. What the court is concerned to do is to award the injured person such sum of money as would put him in the position he would have been in if he had not sustained his injury.

3. The injured party is not entitled to be compensated in a case such as this for his full loss of earnings over the relevant period, but only for those earnings after tax. The defendant is also entitled to the benefit of what the plaintiff earned or was capable of earning during that period, but is not entitled to the benefit of the tax that the plaintiff paid or would have paid on that income.

4. It follows from this that the court must look at what the income of the plaintiff would have been after payment of tax if the accident had not occurred.

5. It must also separately look at the actual or notional income of the plaintiff after payment of tax since the injury.

6. This involves two entirely separate tax assessments, applying the allowances to which the plaintiff would have been entitled separately to each amount.

7. At my request, the parties have recalculated the pre-trial and future loss of earnings of the plaintiff on the basis of this principle.

8. In this case, this has involved giving the defendant credit for the tax the plaintiff would have paid on his pre-injury income but giving the plaintiff the credit for the tax he would have had to pay on his notional income of $11,000 per month.

9. This has resulted in the pre-trial loss of earnings being in the sum of $1,019,705.44, and the future loss of earnings being in the sum of $394,578.30.