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IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL LOCAL DIVISION, DURBAN

CASE NO 2854/2012

DATE: 22 OCTOBER 2014

In the matter between:

SAMANTHA FRENCKEN...............................................Plaintiff

And

ROAD ACCIDENT FUND..........................................Defendant

JUDGMENT

OLSEN J

[1] On 26 December 2009 the plaintiff, Ms Samantha Frencken, was travelling as a passenger in a motor vehicle which was involved in a collision near Mtubatuba. She was seriously injured, and the defendant, the Road Accident Fund, accepts its liability to compensate her for the damages she has suffered as a result of her injuries.

[2] The plaintiff has claimed compensation in respect of past medical and hospital expenses, future medical expenses, past and future loss of earnings, and general damages.

[3] Most of these claims have been agreed. What has been agreed will be incorporated in a court order in due course, the position being that this judgment will not finalise the litigation as actuarial calculations will have to be made based on the decisions which are the subject of this judgment. A further hearing will be required if any dispute arises over the calculations which the parties cannot resolve. What has been agreed to be incorporated in the final judgment in this case should be recorded at the outset.

(a) Some past medical expenses have already been met by way of interim payments. It is agreed that judgment must be entered for a further amount of R33 790.90 in respect of unpaid past medical expenses.

(b) It is agreed that the defendant will furnish an undertaking to the plaintiff in respect of future medical expenses in a form set out in a draft order handed in by consent (the “draft order”) which remains lodged in the court file.

(c) The plaintiff’s claim for general damages has been agreed in a sum of R850 000.

(d) There is agreement on the costs which have been incurred to date, save with regard to the question as to whether the costs of two counsel should be allowed. The full terms of the agreed costs order are set out in paragraph 3 of the draft order. It is agreed that despite such agreement (which covers costs to date) an order should not be made now lest it transpires that the costs which might be incurred in any further hearing complicate the issue. It is agreed that I should withhold a decision on the question as to whether the costs of two counsel should be allowed until judgment is finally given. (The dispute over the costs of two counsel has already been argued, and there is no need for it to be addressed further unless the trial resumes.)

[4] The outstanding claims, which were the centre of the trial just completed, are those for past and future loss of earnings or loss of earning capacity. Even here the parties have managed to agree on a number of important issues, and confined their disagreements on others to vary narrow bands. In the result they have asked the court to make certain determinations which, together with the inputs into actuarial calculations which have been agreed, will enable the actuaries advising the parties to complete their calculations. It is hoped that any minor variants between the outcomes can be resolved by agreement with the result that final judgment can be granted by consent. During the course of argument a “kink” developed in the plan, which I will deal with at the end of this judgment.

[5] The plaintiff was born on the 13 April 1987. Her primary schooling took place in the United Kingdom until, at the age of ten, she moved with her family to South Africa. She completed grade ten at the Roseway Waldorf School at Assagay before moving to the EduArt College at Hillcrest where she matriculated, most of her subjects belonging in the artistic field. She did very well and earned the right to undergo a computer graphics course with Hirt and Carter for eight months in the year following her matriculation. She then returned to the EduArt College for one year teaching graphic design. The plaintiff then took off what is commonly called a “gap year” in London and, on her return to South Africa, enrolled for training at the Christina Martin Culinary School in Westville. The witnesses regard the school as a renowned educational institution for those who wish to enter the culinary field in order to make their livings. The plaintiff enrolled for an intensive one year course. The course is described as “intensive” because it is designed (presumably for those who can cope) to fit into one year what would ordinarily be taught in three.

[6] The plaintiff graduated from the Cristina Martin Culinary School on 19 December 2009. She was top of her class. The testimonial given to her by the school described her in glowing terms. She qualified as a chef de Partie. She was recommended in the testimonial “with pride”, and the recommendation was made without reservation. She was described as “profoundly dedicated and responsible”. Through to some inadvertence on the defendant’s side, Ms Karen Plaatjes, the industrial psychologist called by the defendant, did not see this testimonial until she was giving evidence. Having read it she accepted the proposition that the testimonial was as positive a one as anyone could hope to receive.

[7] Having graduated on 19 December 2009 the plaintiff set off on a holiday, and the motor collision which gave rise to her claims occurred when she was on her way back on 26 December 2009.

[8] The plaintiff sustained a number of injuries which need not be described as their contributions to her claim for general damages (which is where they feature) has been agreed. The injury to be considered for the purpose of making the decisions now required is a diffuse brain injury involving in particular damage to the left and right frontal lobes. She was in a coma for some time, and emerged from it, and her subsequent period of rehabilitation, as a somewhat different person to the one she was before the injury was sustained. Again, there is no need to furnish an account of the consequences of the brain injury sustained by the plaintiff. It is accepted that she is incapable of anything except sympathetic employment. At one stage after her recuperation she was working with her mother who had set up a small home industry making sandwiches in the mornings, and delivering them to various businesses in the area in which they lived. Whilst it lasted this venture (which Mrs Frencken started for the sake of her daughter) generated an income of R1 750 per month for the plaintiff. Even that proved too much for the plaintiff who could not last much past mid-day, and the venture was given up. The plaintiff paints, but she experiences perceptual difficulties which are an hindrance. With the assistance of her father she has sold one painting for R15 000, but nothing else has been sold. In the circumstances it has been agreed that the plaintiff’s post-accident earning capacity should be regarded as R1 750 per month as at 2012 (the year in which the sandwich business operated). The question for decision by this court is as to what contingency factor should be applied to take account of the fact that such sheltered employment is difficult to obtain and, from the plaintiff’s point of view, difficult to sustain given the facts that she is prone to inappropriate behaviour when dealing with people, that she lacks staying power, and, I venture to suggest, that such work would have to be of a peculiar type in order to engage the artistic side of the plaintiff’s character which appears to have survived the injury, albeit not perfectly.

[9] Most of the evidence led in this case goes to the question of what the plaintiff’s earning profile would have been if her intended career had not been completely derailed by her injuries. But even then the area of dispute (the allowance for contingencies aside) is confined to the plaintiff’s first three years of employment, that is to say 2010, 2011 and 2012. I was informed that the parties have agreed on everything required to calculate her loss of earnings from the beginning of 2013 through to a retirement age of sixty five. This part of her claim will be calculated upon the basis that the plaintiff would in that period have followed a successful career path as a chef in South Africa. The only issue affecting that period left to be decided is the appropriate contingency factor.

[10] The dispute about the period 2010 to 2012 (inclusive) hinges around the question as to whether the plaintiff would have launched her career in South Africa, or whether she would have spent those first three years of her working life as a chef on a luxury yacht (or luxury yachts) where the pay is in US dollars at a considerably higher rate than can be earned in South Africa. Unfortunately some of the predictions offered by the experts who were called to deal with the subject were confused by errors of fact. The Christina Martin School had found a position for the plaintiff at the Royal Livingston Hotel in Zambia, which on the evidence is a well-known prestige hotel which would have paid well and would have served as an excellent starting point. The plaintiff had turned that down. An impression appears to have been created that she turned it down because she had bound herself to work for her parents in a lodge which they were about to open in the Hluhluwe area of KwaZulu-Natal. If that was correct it would certainly suggest a South African career from the outset, and would in my view have raised questions which were not answered in the evidence, as to how much the plaintiff would have earned in those circumstances and what sort of early career path it would have generated for her. The plaintiff’s mother gave evidence and expressed the view that this error had arisen as a result of a misunderstanding, probably of something said by Chef Barry, who had been the head of the Christina Martin School when the applicant was being trained. She said that the plaintiff had turned down the job offer in Zambia because her preference was for a position on a luxury yacht.

[11] After the plaintiff’s initial recovery from her injuries an arrangement was made through Chef Barry for the plaintiff to work on a non-paying basis for two months at the Blue Waters Hotel in Durban. Chef Barry appears to been involved in the hotel, which is a three and a half star establishment. According to the plaintiff’s mother, Mrs Frencken, the experiment did not last beyond two weeks. Her daughter could not cope with the simplest work. She needed constant supervision which is obviously not available in an active commercial kitchen, and she simply could not cope. For some reason an impression appeared to be have been created on the side of those assisting the defendant that the plaintiff’s career would have commenced at the Blue Waters Hotel. The pay there would not have been the same as at the Livingston or any like luxury hotel. The only reason that I was able to discern for this misconception lay in the fact that there was a connection between Chef Barry (who obviously had taken an interest in the plaintiff and her plight) and the hotel. It is not logical. According to Mrs Frencken her daughter never contemplated a job at the Blue Waters Hotel prior to the accident.

[12] I was impressed with the evidence given by Mrs Frencken. In my view she gave rational and balanced accounts of the material she was asked to canvas. Her evidence was clear and easy to understand. I detected no attempt to hide anything or to render any subject obscure. I accept Mrs Frencken’s evidence that, in the last quarter of her year at the Culinary School, the plaintiff reported to her family about discussions between her friends concerning what appears to have been a market well known to them for employment on luxury yachts at pay scales much better than those available in South Africa. I accept also Mrs Frencken’s evidence to the effect that it was the intention of her daughter to pursue that course, and that it was for that reason that she did not want to take up the offer of employment in Zambia. Some of her friends indeed took up positions on luxury yachts. On Mrs Frencken’s evidence the plaintiff’s choice of that career path was more than idle speculation or wishful thinking. She discussed the subject with her parents. Mrs Frencken confessed that her memory for any other career options on the table at that stage was hazy. What she does remember is the discussion about work on luxury yachts.

[13] Against this defendant’s counsel points out quite correctly that no steps at all had been taken in pursuit of a career on luxury yachts, nor indeed in pursuit of a career on cruise liners which would also have generated an income in dollars, but at rates lower than those which could be achieved on yachts. One of the requirements for employment on a luxury yacht is that one should have a licence which is obtainable in South Africa. However Ms Hill, an industrial psychologist called by the plaintiff, happens to be involved in yachting and was able to say that the course is one of only three weeks duration and easy to pass. It provides an aspirant crew member with the basic skills which a hand on board should have even if employed as a chef rather than as a sailor. In my view the fact that preparations had not been made, and positions sought, prior to the accident does not indicate that it was improbable that the plaintiff intended to pursue her opportunities on a luxury yacht. On the evidence before me the course at the Culinary School was an intensive one which would have taken up a lot of the plaintiff’s time and mental space. The fact that she did so well suggests that she put a lot of effort into the course. The only decision she appears to have executed in advance of the holiday which followed her graduation was her refusal of the offer of employment at the Royal Livingston. In my view, whichever employment course she intended to follow, it would be pursued actively when she returned from holiday.

[14] Mrs Frencken explained that the lodge which she and her husband intended to be involved in was a venture which would only come to fruition some years after the plaintiff had qualified. (As it turns out the main lodge opens in December this year.) It was hoped that the plaintiff would run at least the culinary side of things in the lodge venture. At that time she had a well-established relationship with a man who had an adventurous spirit, and who worked as a photographer with a well know traveller in Africa, a Mr Holgate. The plaintiff’s boyfriend was a qualified game ranger and, if the relationship between the two flourished, he could also take part in the venture which would hopefully be profitable for everyone. There was accordingly not at that time a settled intention that the plaintiff would pursue a career as an employed chef indefinitely. Better things appeared to have been hoped for. In those circumstances one would think that spending the time in the interim (before the lodge venture got off the ground) earning a higher income in dollars than could be earned employed in the culinary market in South Africa would be a preferred route. It seems also to be more in keeping with the plaintiff’s profile. She had an artistic bent. She could also work hard. As her mother put it, all her talents came together in her ultimately chosen field for which she qualified at the Christina Martin School. Her eight month period at Hirt and Carter made her realise that she was not made for a desk and a computer, which is where all fundamental graphic design work takes place. When she took her gap period in London she was sent overseas with very little money, and had to live in digs doing such work as came her way. She returned to South Africa firm in the conviction that she had to do something and that she did not wish to spend her life working for what her mother called a “minimum wage”. This profile appears to me to render it probable that the plaintiff would have chosen the course of working on luxury yachts. That course would have been more adventurous, and had the added advantage of much better immediate returns by way of earnings. It appears to have been believed by all concerned, rightly or wrongly, that those earnings would be free of any taxation.

[15] The first determination which I am obliged to make is as to which career path the plaintiff would probably have followed for the years 2010 to 2012 inclusive. My view is that it is probable that she would have sought employment and obtained it on luxury yachts. It does not appear to be disputed that such positions are in fact available for people qualified as the plaintiff was. Her performance at the Christina Martin School, coupled with the testimonial the school gave her, suggest that if others had been successful in obtaining such employment, then surely the plaintiff would have been.

[16] Counsel were agreed that if my finding should be that the plaintiff would have taken the international route, one should allow for a three month period of unemployment at the outset, during which time the plaintiff would have looked for a position and negotiated for it, qualified herself for the issue of a licence, obtained visas, and so on. These things take time. On this determination, therefore, the calculations must be based upon the proposition that her employment would have started on 1 April 2010.

[17] The next question involves the rates of pay to be used in the calculation. Ms Hill dealt with this subject. She found it relatively easy to research and pin down the expected salary scales for the various levels of chefs on cruise liners, but not on luxury yachts. Her evidence as to the fact that earnings on luxury yachts are higher than on cruise liners was not challenged.

[18] In the joint minute presented by the two industrial psychologists (Ms Hill and Ms Plaatje) Ms Hill recorded her contentions on the basis that the claim must be assessed with regard to cruise liner salaries because she was unable to provide a reasonable opinion as to the higher salaries earned on luxury yachts. That was the best she could do and, like her, the court must do the best it can with what is available. The plaintiff was qualified as a chef de Partie. But Ms Hill suggested that her employment in the international sea-going arena would probably commence as a demi chef de Partie, which is a slightly lesser position, and which would endure for a year. The salary scale there lies between $2 700 and $3 700 per month. She postulates promotion after a year to the position for which Samantha was qualified, that is chef de Partie, where the salary range is $3 200 to $4 600. For year three (which for the purpose of calculation in this case will only be of nine months duration) Ms Hill states in the joint minute that the plaintiff would have “had the capacity to compete for work” as a sous chef or executive sous chef, the former having a salary range of $3 400 to $5 800 and the latter a range from $3 800 to $6 500. In considering these figures one must in my opinion take a conservative view because they do not appear to be as well established as the figures applicable to a career path in South Africa, and because there is a dearth of evidence concerning how a career develops on luxury yachts. But on the other hand one must bring to account the evidence that the pay scales are higher on luxury yachts. (I should mention that Mrs Frencken’s evidence was to the effect that her daughter had expressed no interest in working on cruise liners as opposed to luxury yachts.) It must also be brought to account that the figures mentioned above are all as at June 2011, with the result that they need to be adjusted to the periods within which they are going to be applied.

[19] In so far as the plaintiff’s anticipated earnings derived from the cruise liner table are concerned, counsel for the plaintiff argued that the figures which appear in the report dated 8 October 2014 of Mr Whittaker, the actuary employed by the plaintiff, should be used as there is no evidence to contradict them. As Mr Whittaker’s report indicates, the figures emanated from the joint minute of the industrial psychologists where they are recorded under disputed items. It is correct that the defendant has offered no evidence to contradict the ranges mentioned in the joint minute and which feature also in Ms Hill’s original report. But on the other hand there is no evidence tendered by the plaintiff concerning earnings on luxury yachts besides the simple proposition that they are higher than can be achieved on cruise liners. In my view the evidence tendered with regard to the relationship between earnings on a luxury yacht and earnings on a cruise liner goes no further than the proposition that any one particular employee would as a matter of probability at any one time earn more on a luxury yacht than the same particular person at the same time would earn performing the same work on a cruise liner. That does not mean that one can safely assume that any particular person, like the plaintiff, would earn a salary on a luxury yacht beyond the researched range of pay for the same work on a cruise liner. In my view a court faced with this paucity of evidence cannot assume that the duty to avoid a decision which results in over-compensation can be discharged merely by reminding oneself that the earnings on luxury yachts are higher. The uncertainties about the figures the court must now work with suggest that a conservative approach must be adopted in order to avoid over-compensation, but without being unfair to the plaintiff. Using the available data relating to cruise liners achieves this up to a point, but not wholly so; the ranges of salaries researched by Ms Hill are very wide.

[20] In my view, balancing these considerations, the probable earnings (expressed in June 2011 terms) would be as follows.

(a) For the first year commencing 1 April 2010, $3 200 per month as a demi chef de Partie. This is the lowest salary level on the cruise liner table for a chef de Partie, which qualification the plaintiff held. It lies in the middle of the range given in the table for a demi chef de Partie.

(b) For the second year commencing 1 April 2011, $4 000 per month as a chef de Partie. This represents a substantial increase in salary after a years experience on board. It is above the mid-point of the range given in evidence for a chef de Partie, but it should not be overlooked that the plaintiff would have been qualified for that position from the outset.

(c) For the nine months between 1 April and 31 December 2012, $4 400 per month. In my view this represents a reasonable increase on the salary for the preceding year. Here I think one has to be more conservative. Ms Hill has postulated the salary range for a sous chef (and indeed also for an executive sous chef). According to her own research this is a standing achieved on a cruise liner after five to seven years experience in a lower position. There is no evidence to support the proposition that wages on board a luxury yacht, higher as they may be from the outset, would rise at a much faster rate than might happen on a cruise liner. Luxury yachts may very well be generous employers, but it is not clear at all that such generosity would extend to promotion to higher positions at a pace which bears no relationship to rates of promotion elsewhere. Of course circumstances, and the qualities of an employee, may dictate otherwise in a particular case; but to speculate along those lines may too easily result in over-compensation.

[21] I turn now to the question of contingency factors to take account of the vicissitudes of life insofar as they have a bearing on the assumptions which are made for the purpose of calculating the claims for loss of earnings or earning capacity. There are three categories to be considered. The claim for past loss of earnings (i.e. the loss incurred to date of trial) has two components, the one relating to earnings on board a luxury yacht (or luxury yachts) between 1 April 2010 and 31 December 2012, and the other being a claim for loss with respect to employment in South Africa from 1 January 2013 to date. The third category is of course the claim for the future. It is also necessary to apply a contingency factor to the calculated post-injury earnings based on an income of R1 750 per month in 2012 Rands, which we know is not being earned at present.

[22] Starting with past loss of earnings in South Africa for the period 1 January 2013 to date, I think it is fair to say that at the end of argument, whilst contrary submissions had been made, a contingency factor of 5% was regarded as acceptable. That appears to me to be the correct factor.

[23] Counsel were agreed that the contingency factor applicable to employment on luxury yachts had to be higher given any number of factors. Amongst these I would include the relative insecurity of such employment, and the fact that one would anticipate a real likelihood of intermittent periods of unemployment, given that luxury yachts are not quite the same thing as cruise liners and merchant vessels which must be underway at all times in order to justify the capital invested in them. Counsel for the defendant suggested that the factor to be applied for the loss calculated with respect to the period 1 April 2010 to 31 December 2012 should be between 10 and 12.5%. Counsel for the plaintiff said that he could live with a 10% contingency factor. I have already exercised caution in making a determination as to the amounts the plaintiff would earn in such employment. A better balance may be struck if I adopt a more liberal approach concerning the contingency factor, and on that basis I conclude that 10% would be appropriate.

[24] In so far as future earnings are concerned plaintiff’s counsel contended for 20%. The period of employment under consideration is long because the plaintiff was so young when she lost her working capacity. Defendant’s counsel asked for a higher contingency factor, but confessed that he could think of no case in which, for an ordinary well-established career course, a contingency factor of higher than 20% had been applied. The experts on both sides agreed that a full working life to a retirement age of sixty-five probably awaited the plaintiff, and they have agreed on the earnings which would have been enjoyed by the plaintiff throughout this career. In my view the plaintiff’s counsel correctly concedes that the long duration of future employment calls for a contingency allowance of 20%, but I can discern no circumstances emanating from the evidence before me which suggest that it should be any higher than that. Twenty percent appears to me to be correct.

[25] Turning then to the contingency factor to be applied to an assessment of what the plaintiff may earn in her injured condition, counsel for the plaintiff argued that given that the plaintiff would never be suitable for anything except sympathetic or sheltered employment, and given how difficult it is to obtain sustainable employment of that kind, a contingency factor of 60% should be applied. Counsel for the defendant did not dispute that those circumstances justified a high contingency factor, and suggested 50%. I am concerned that on the evidence before me the attempts to date to put the plaintiff in some form of employment have proved singularly unsuccessful. The plaintiff presently enjoys the support and attention of her parents in this regard, and they may yet find something for her which again generates an income approximating R1 750 per month (in 2012 terms). Of course their life expectancies dictate that they will not always be there, capable of either seeking out or creating sympathetic employment for the plaintiff. In my view a 60% contingency factor would be fair.

[26] Finally, I must deal with the question of how the so-called “cap” imposed by s 17(4) (c) of the Road Accident Fund Act 56 of 1996 should be applied. A joint minute prepared by the actuaries suggests that the method of calculation derived from the judgment in Sweatman v Road Accident Fund 2013 JDR 2821 (WCC) should be applied. Counsel advised me that the parties themselves were in agreement on that score, and asked me to adopt the recommendation of the actuaries unless I should consider the judgment in Sweatman clearly wrong. I do not consider the judgment to be clearly wrong, and accordingly the determinations which I make in this judgment should be read upon the basis that they are to generate an outcome following what the parties called the “Sweatman method”.

[27] However during the course of argument it became apparent that there is not necessarily agreement between the parties and the actuaries on how to deal with pension benefits and contributions when applying the Sweatman method. The judgment in Sweatman does not cover that issue. After some debate it was agreed that the order to be made at this stage is one making the determinations dealt with above, and then adjourning this matter sine die; withholding, for the time being, any order as to costs. If the parties are able to resolve any issue which arises concerning pension contributions and benefits within the framework of the Sweatman method, the outcome will be conveyed to me and I will be asked to make an order in chambers determining the question of the costs of two counsel (which has already been argued), and otherwise inserting the agreed figure for the sum of all damages into the draft order referred to at the outset of this judgment. If a difference arises on the pension issue which cannot be resolved, then the trial will be resumed and evidence will be lead solely on the question as to how to deal with the plaintiff’s anticipated pension contributions or benefits within the framework of the Sweatman method.

I accordingly make the following order.

1. The following determinations are made for the purposes of calculating the plaintiff’s claims for past and future loss of earnings.

(a) It shall be assumed that the plaintiff would have been employed for the period 1 April 2010 to 31 December 2012 as a chef on a luxury yacht earning her salary in United States dollars.

(b) It shall be assumed that the salary which the plaintiff would have earned, expressed in June 2011 dollar terms, would have been

i) $3 200 per month between 1 April 2010 and 31 March 2011;

ii) $4 000 per month between 1 April 2011 and 31 March 2012; and

iii) $4 400 per month between 1 April 2012 and 31 December 2012.

The actuaries shall adjust those salary figures from June 2011 dollars to the dollar equivalents during the periods to which the dollar amounts expressed in (i), (ii) and (iii) above relate.

(c) Insofar as the plaintiff’s claims for past loss of earnings to the date of trial are concerned, a contingency factor of 10% shall be applied to her calculated dollar loss and a factor of 5% shall be applied to her loss of earnings in South Africa.

(d) A contingency factor of 20% shall be applied in the calculation of the total earnings the plaintiff would, but for her injury, have earned from the date of trial.

(e) A contingency factor of 60% shall be applied to the amount calculated to represent the plaintiff’s actual and projected potential for post-injury earnings based on an earning capacity of R1 750 per month in 2012 South African Rands.

(f) The product of the calculation in (e) is to be deducted from the product of the calculation in (d).

2. The costs of this action to date are reserved for decision when the final judgment is delivered after the actuarial work has been done based on the determinations in paragraph 1 of this order.

3. This matter stands adjourned sine die.

DATE OF HEARING: 16 October 2014

DATE OF JUDGMENT: 22 October 2014

FOR THE APPELLANTS: A J Troskie SC and M Sibisi, instructed by FRIEDMAN & ASSOCIATES

FOR THE RESPONDENT: M Maharaj, instructed by LINDA MAZIBUKO & ASSOSCIATES

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