slashed by 20 percent by the Court of Appeal.

And the case is said to be a landmark as it is the first time that the Bermudian courts have gone against the House of Lords in the United Kingdom.

The damages to road accident victim Mrs. Theresa Eileen Haley were cut from $651,990.14 to $515,878.44 to take into account United States tax laws.

But the Appeal Court judges were split over the decision with the Hon. Mr.

Justice Henry deciding to stick to the original award.

However he was outvoted by Acting President the Hon. Mr. Justice da Costa and the Hon. Mr. Justice Georges.

The case involves an accident which happened in August 1985 when kindergarten teacher Mrs. Haley was knocked down by motorcyclist Mr. Lance Murray Crockwell on a pedestrian crossing near the Inverurie Hotel, on Harbour Road, Paget.

Mrs. Haley was visiting the Island with her husband Mr. Thomas Haley. At the time of the accident the former nun was 49-years-old.

She suffered multiple injuries including concussion from a head wound, fractured neck, ribs, left ankle and index finger, with bruising and cuts all over her body.

She was treated at the King Edward VII Memorial Hospital for five days before being moved to Abington Memorial Hospital in Pennsylvania.

Doctors had hoped that Mrs. Haley would recover but she was forced to endure years of pain -- by 1987 she was unable to stand or walk for any period. She was forced to give up kindergarten teaching and she also suffered psychologically, with Mr. Haley claiming her personality had changed.

Because of financial problems the couple were forced to leave their home to go to live in Arizona in a cheaper home.

In October Puisne Judge Mr. Justice Ward ordered that damages cover medical expenses, part loss of earnings, future loss of earnings until the age of 65, general damages and interest, adding up to $651,990.14. He also awarded damages to Mr. Haley of $500.

Mr. Crockwell took the case to appeal against the inclusion of US federal tax on the loss of earnings.

Mr. Justice da Costa said: "The appellant does not contest these figures but contends that tax should be deducted from the gross figures with the result that the award should be based on the net figures.

"Before the trial the parties had actually agreed that the plaintiff's past and futures earnings (had she not been injured) would have been subject to federal and state income taxes at the rate of 25 percent and that her damages will not be taxable. The agreement was confirmed on appeal.'' The different tax laws were pointed out between the United States, the United Kingdom and Bermuda where there is no income tax.

Mr. Justice Georges said: "The Courts of Bermuda should not enmesh themselves in the income tax laws of foreign countries when Bermuda itself has no tax.

"The principle should have been applied by the trial judge in this case leading to a reduction in the actual loss of earnings by 25 percent and in the future loss of earnings by a like percentage - the agreed tax deduction.'' Counsel for Mr. and Mrs. Haley Mr. Kieron Unwin said his clients would not be taking the case any further, but he said that the decision had been a landmark in Bermudian legal history. He said it was the first time that the courts have gone against the House of Lords. In his judgment Mr. Justice Georges said: "Not many disputes fall within this range. Generally then it can be said that the Courts of Bermuda will accept as binding decisions of the House of Lords in common law matters.

"Where, however, a problem does fall within this range and the courts are satisfied that the social conditions of Bermuda make inappropriate the particular path of development chosen by the House of Lords against the background of British conditions, then the Courts of Bermuda must be at liberty to map their own particular path making clear their reasons for so doing.''