Judgment date: 22 September 2011
Matar v Jones [2011] NSWCA 304
Supreme Court of New South Wales - Court of Appeal1
In Brief
- A plaintiff's failure to make full disclosure of income does not preclude recovery of damages based on what the plaintiff truly earned, as opposed to what was disclosed in income tax returns.
- In accepting that a plaintiff's actual earnings are distinct from what was disclosed, it is the duty of a Court to refer the judgment to the Commissioner of Taxation for consideration.
Background
The plaintiff, a self-employed taxi driver, was injured as a result of a collision between the taxi he was driving and the vehicle the defendant was driving.
Prior to the subject accident, the plaintiff earned income by driving a taxi that he owned and leasing a second taxi plate. Initially, when the plaintiff gave evidence he confirmed that all of his income was disclosed in his tax returns. Later, he alleged that his tax returns did not include the lease payments and that he was only made aware of this when he spoke to his accountant. The plaintiff's accountant gave evidence that when preparing the plaintiff's tax returns he was unaware that the plaintiff owned a second taxi plate.
Despite the evidence of the plaintiff and his accountant, Delaney DCJ assessed the plaintiff's pre-accident earnings based upon the figures in his income tax returns for the 3 years preceding the subject accident. Delaney DCJ commented as follows:
"in this case, where the credibility of the plaintiff in relation to his taxation records is in issue the court should not accept late attempts to change the financial records when the plaintiff said in chief they included all his income."
The primary issue for determination by the Court of Appeal was whether the trial judge had erred in his findings as to the level of the plaintiff's pre-injury earnings.
Judgment
The Court of Appeal noted that it can only intervene in relation to credit-based findings where the findings are contrary to "incontrovertible facts" or "uncontested testimony", or are "glaringly improbable" or "contrary to compelling inferences."2
Having analysed evidence in respect of the usual annual gross turnover of a taxi operator in addition to that of the plaintiff himself, the Court of Appeal formed the view that it was overwhelmingly probable that the plaintiff did not disclose the lease payments for income tax purposes.
The Court of Appeal reiterated the principles enunciated in Giorginis v Kastrati3 and decided that the plaintiff was entitled to have his damages assessed according to the full extent of the income he actually earned. To that extent, the appeal was successful. However, it is the duty of the Court to refer the judgment to the Commissioner of Taxation.
Implications
The case affirms that despite non-disclosure to the tax authorities of all income, a plaintiff is entitled to recover damages in respect of what was truly earned. However, this is subject to a reduction for income tax which ought to be paid on those earnings and subject to the question whether the plaintiff would have continued to earn such income despite the requirement to pay income tax on those earnings.
1 Beazley JA; Giles JA and Macfarlan JA
2 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [28] and [29]
3 Giorginis v Kastrati [1988] 48 SASR 371; [1989] Aust Torts Reports 68,460
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