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IN THE HIGH COURT OF SOUTH AFRICA

(Northern Cape Division)

Case no: 1552/1999

Date heard: 2003-11-17

Date delivered: 2003-11-21

In the appeal of:

ROAD ACCIDENT FUND APPELLANT

versus

WILLEM MAASDORP RESPONDENT

Coram: Hartzenberg J et Majiedt J et Williams J

JUDGEMENT ON APPEAL

HARTZENBERG J:

The respondent, the plaintiff in the court a quo, was involved in a collision on 22 November 1994. He instituted action against the appellant, the defendant in the court a quo, and claimed damages in an amount of R775 080 computed as follows:

General damages for, pain, suffering, discomfort and loss

of amenities of life R200 000,00

Past loss of earnings R217 404,00

Future loss of (earning capacity) R281 833,00

Future medical expenses R75 843,00

The parties settled the merits of the case on the basis that the respondent was 25% responsible for the collision. The appellant undertook to pay to the respondent 75% of his proven or agreed damages. In the court a quo the following award was made:

“1 In respect of general damages for pain, suffering, discomfort and loss of amenities of life: 75% of R 110 000 = R82 500,00

2. In respect to past loss of earnings: 75% of 122 400 = R91 800,00

3. In respect of future loss of earning capacity: 75% of R120 000 = R90 000,00

4. The claim for future medical expenses are to be covered by the undertaking given by the defendant in terms of article 43(a) of the Schedule to the Multilateral Motor Vehicle Accidents Fund Act, No 93 of 1989. It is further ordered, as undertaken by the defendant, that plaintiff will not be required to pay first for his medical expenses and produce receipts but instead the employees of the Fund will furnish the doctors/hospitals/physiotherapists etc. a pre-authorisation to render the requisite medical services to the plaintiff.

5. Cost of suit……..”

The appellant noted an appeal against the order. Two of the points of appeal were (a) that the court was not entitled to direct that the appellant be bound by an undertaking to cover all the future medical expenses of the respondent and not only 75% thereof and (b) that the court made a calculation error by finding that the past loss of income, of R1 200,00 per month, for seven years and four months (88 months) amounted to R122 400 and not to the correct figure of R105 600 and that the award of R91 800,00 was therefore also erroneous and should have been R79 200. The further grounds of appeal were directed at the award for general damages and the method employed by the court to compute the loss of past earnings and future earning capacity.

The court a quo applied the provisions of rule 42 of the Uniform Rules of Court and varied its order. It reduced the amount of R91 800 to R79 200. It also supplemented the order to make it clear that the undertaking in terms of article 43(a) of the Schedule to the Multilateral Motor Vehicle Accident Fund Act, No 93 of 1989 was made in terms of an agreement between the parties and was only in respect of 75% of the respondent’s future medical costs. It refused the application for leave to appeal.

This matter comes before us in terms of an order of the Supreme Court of Appeal. The only two issues are whether the award of R82 500, being 75% of R110 000 for general damages and the awards of R79 200 for past loss of earnings and of R90 000 for future loss of earning capacity are correct.

As to loss of income, both past and future, the appellant’s contention is that a court can either make an award based on an actuarial calculation or a lump sum award. It categorises the method adopted by the court a quo as a “hybrid of what the Supreme Court of Appeal has laid down as two distinct options” and “a new approach .. in our law”.

The court a quo dealt with the question of loss of earnings as follows. It accepted the evidence of the respondent to the effect that he had a business as a mechanic and that simultaneously he had a business of buying and selling vegetables. The court accepted his evidence that with the income generated through these two businesses he supported his family and acquired a flock of goats of approximately 75. He was able to keep his children at school. After the accident his children had to leave school and his flock of goats dwindled to about 50. The court a quo, quite correctly, found that he suffered a loss of earnings and of earning capacity.

The court furthermore accepted his evidence that he ran both businesses on a cash basis and did not keep invoices or gave receipts or even had a bank account. His business as a mechanic entailed that the customer had to buy all the necessary spare parts and had to pay the respondent purely for his labour. His hawking of vegetables consisted of the buying of stock as far as the Cape Town market. An obvious item of his expenses is the fuel to drive the vehicle from the place of purchase to the various spots where he sold the vegetables. Although he had absolutely no documentary proof of his earnings, the respondent testified that he earned R1 200 per month out of each of the two businesses i.e. R2 400 per month. The court a quo did not accept that that was indeed his average income. It determined his income as R600 per month out of each of the two businesses i.e. R1 200 per month.

Stating that the respondent is illiterate, that it is understandable that he did not keep records or submit tax returns and that his say so did not assist to determine his allegation that his gross income was between R3 600 – R4 400 per month and his nett income R2 400, the court a quo said:

“Notwithstanding the passionate urgings of Ms. Marshall I am persuaded by Mr, Pohl’s argument that this is a proper case of awarding a globular amount.”

The learned judge proceeded to point out that the repair work and the hawking business seem to have been fairly rewarding; that he maintained his vehicle and supported his family and acquired 75 goats. He pointed out that the respondent’s children were constrained to leave school and that he was forced to sell some of the goats as a result of the injuries. He pointed out that the respondent is unable to replace the vehicle on his present income. The learned judge proceeded to say:

“It has been accepted that the plaintiff was an honest witness. Whilst he is unsophisticated and did not keep any records it cannot be said that he had no idea at all what his estimated income was . The R1 200 per business can be used as a rough guide of plaintiff’s income. However, a nett income of R2 400 per month seem to be much too high. One has to accept that there would be lean months and relatively profitable ones. Plaintiff’s market was in the rural and farming area of Leerkrans in the Upington district. The average income of his clientele base, as can be expected, was low. I doubt that his business would become more rewarding as the years went by. He was not getting any younger. His physical involvement as a mechanic would have tapered off as he advanced towards the age of 65 years, taken as his retirement age as already stated. His income would probably not have improved much, if at all. I am prepared to assess his loss of income capacity at R1 200 (One Thousand Two Hundred Rand) per month for both undertakings, in other words R600 per month per business.”

The respondent was born on 17 August 1945. He was 49 years old at the time of the collision. At that time he was already self-employed in the aforesaid capacities for approximately eight years. He was earning a living for himself and his family. He, with justification, anticipated that he would carry on like that until he would become too old to do that type of work. It is not unreasonable to accept that he could work and earn a living until age 65. It means that his loss of earnings and of earning capacity relates to a total period of 15 years and 10 months.

It is of course so that when it comes to quantification of his loss of earnings, there are many more imponderables than in the case of e.g. a salaried worker. In the case of the latter, fairly accurate predictions can be made about possible promotions and the concomitant raises in salary. In such a case an actuary can easily make acceptable assumptions about aspects like inflation, capitalization, taxation, contingencies etc. On the other hand the respondent’s case also differ vastly from e.g. the case of a two year old child who lost its earning capacity. In the latter instance, and although it is clear that there is a loss of earning capacity, it is evident that there are really no indications which can be used as bases for a mathematical calculation.

The question of quantification of loss of earnings and loss of earning capacity is a vexed one and is often considered by our courts. Usually the material available to the court is scant and very often the contentions are speculative. Nevertheless if the court is satisfied that there was a loss of earnings and/or earning capacity the court has to formulate an award of damages. What damages the court will award will depend entirely on the material available to the court.

In the case of the impairment of the earning capacity of small children any formulation of an award is by the nature of things highly speculative. See for argument’s sake the discussion by Nicholas AJA in Southern Insurance Association Ltd. v Bailey N. O., 1984 (1) S A 98 (A) from p.111H – p.112H of some of the more prominent cases. The conclusion to which he comes is that although a court is entitled to award a globular amount there is no general principle that in the case of a small child it is obliged to do so. It is then stated that the trial judge’s award cannot be faulted merely because he did not make a lump sum award.

After discussing the desirability of itemizing the different awards and the reason therefore the learned judge proceeds to say:

“An enquiry into damages for loss of earning capacity is of its nature speculative, because it involves a prediction as to the future, without the benefit of crystal balls, soothsayers, augurs or oracles. All that the court can do is to make an estimate, which is often a very rough estimate, of the present value of the loss.”

“It has open to it two possible approaches.”

“One is for the Judge to make a round estimate of an amount which seems to him to be fair and reasonable. That is entirely a matter of guesswork, a blind plunge into the unknown.”

“The other is to try to make an assessment, by way of mathematical calculations, on the basis of assumptions resting on the evidence. The validity of this approach depends of course upon the soundness of the assumptions, and these may vary from the strongly probable to the speculative.”

“It is manifest that either approach involves guesswork to a greater or lesser extent. But the Court cannot for this reason adopt a non possumus attitude and make no award.”

The court a quo quoted this portion of the judgment with approval. Mr. Gauntlett on behalf of the appellant, and with specific reference to the Bailey matter, submits that the court was presented with two options, either to make a lump sum award or to rely upon a calculation “which strives as far as possible to incorporate actuarial features”. The argument is then that the learned judge failed to adopt either of the two distinct options delineated by the Supreme Court of Appeal and devised a novel and unsatisfactory hybrid.

In the Bailey matter the court made an award for loss of earning capacity in respect of a two year old child. The whole calculation and subsequent award was speculative in the extreme. What is clear though is that the court of appeal was satisfied that the finding that the loss of earning capacity was completely destroyed was correct. The next question was how does one quantify that loss. The court of appeal approved the approach of the trial judge to enquire about the modest earnings of an apple grader and to use that as a yardstick to calculate the minor’s loss. The court a quo, in that matter, had a reasonable idea about the family of the minor, the mother’s dedication to her children and their social status. It is clear that what was approved in that matter was a conservative prediction of the minor’s expected income earning development, but for the accident.

If one bears in mind that a court has to make an award and that the award is to compensate the victim for its loss, it is in my view wrong in principle to approach the matter upon the basis that, as there are uncertainties, the court is disqualified from taking the evidence available into account and is obliged to award a mere consolation prize, without regard to the evidence. A court must evaluate the material at its disposal and must compensate a victim fairly for its loss. I do not understand the position to be that there are two categories of cases i.e. one in which a fair amount is awarded and another one in which the court decides that the evidence is too scant and that a lump sum, which may not bear a relationship to the evidence, and has to be mean, is to be awarded.

The appellant did not really criticize the assumptions made by the court a quo. It could not do so. The assumptions were conservative in the extreme. Although he may not be literate a person who can conduct two businesses and can support his family in the way the respondent did, must have a good idea of the value of money. The respondent’s estimate of his income cannot be discarded off-hand. It is a historic fact that between 1994 and 2002 there was a considerable erosion of the value of money due to inflation. The learned judge’s assumption of only half of the respondent’s estimated income was very unfavourable towards the respondent, not to mention the fact that he did not allow any increase due to inflation. If an actuarial calculation had been made based on a loss of income of say R1 800 per month allowing for inflation of say 7.32% per year the calculation would have been above criticism by the appellant. To indicate how unfavourable the learned judge’s assumptions were against the appellant one has only to look at the actuarial report appearing at page 62 of the record. If an income of R1 800 per month is accepted and contingencies of 10% for past loss of income are allowed against the respondent the actuarial calculation for past loss of income comes to R146 748. It is more than R40 000 higher than the award of the court a quo. If in the case of the loss of earning capacity a liberal reduction for contingencies of 20% against the respondent is assumed the actuarial calculation comes to R169100 i.e. R49 100 more than the amount awarded.

The respondent could not afford the attendance of the actuary at court. The learned judge decided not to make an actuarial calculation, as there were no actual records of the respondent’s income, but to make use of a common sense conservative approach. He quite correctly found that the respondent clearly had a loss of income and of an income earning capacity. In order to put a value thereon he made the above stated assumptions. He spelled out his calculations and did not round the amounts off. I do not see what criticism could have been leveled at awards of say R110 000 for past loss of earnings and R125 000 for loss of earning capacity if the learned judge had explained the method but did not make the actual calculation. The submission by Mr. Potgieter on behalf of the respondent that the court a quo adopted a careful and balanced approach seem to be well founded. It follows that the attack against the method employed, to make the awards for loss of earnings and earning capacity, cannot succeed.

As to the award for general damages, the Supreme Court of Appeal considered that aspect in the recent matter of Road Accident Fund v Marunga, 2003 (5) S A 164 (SCA). Navsa JA indicated “that a trial court …has a wide discretion to award what it considers to be fair and adequate compensation to the injured party” He restated that a court of appeal will only interfere when there is a striking disparity between the award and what it considers ought to have been awarded. (See paragraph 23 at p. 169). He also stated the difficulty but also the usefulness of a comparison of the case in question with previously decided cases. (See paragraph 26 on p. 169)

After stating why a court is to motivate its judgment, i.e. to inform and try to persuade the litigants of the correctness thereof, to inform a possible court of appeal of the basis of the judgment and to inform the general public in a democratic dispensation of the basis of the judgment, so that an assessment can be made as to the correctness or otherwise of the judgment, the learned judge of appeal proceeded to state:

“This is, of course, not a case in which no attempt has been made to provide reasons for judgment. It is a case in which the attempt has been inadequate. Even though courts have a wide discretion to determine general damages and even though it cannot be described as an exercise in exactitude, or be arrived at according to known formulae, a trial court should at the very least state the factors and circumstances it considers important in the assessment of damages. It should provide a reasoned basis for arriving at its conclusions. Regrettably, although the Court below stated the main injury sustained by the respondent and set out the envisaged corrective and further surgery it did not set out adequate motivation for the amount determined as damages.”

(See paragraph 33 on p. 172).

In the present matter the court a quo dealt with the injuries and the medical reports at length. He pointed out that all the experts have in essence declared the respondent permanently disabled. He referred to a future spinal fusion operation and to the effect of the injury on the respondent’s trade. He stated that the respondent can only endure short drives in a vehicle and continued:

“For the past seven years the plaintiff has not had a painfree day. He resorted to taking several painkillers per day to alleviate the pain. Flexing his back results in experiencing severe pain. On the domestic front, he can hardly render any conjugal rights, to his utter dismay and frustration.”

He referred to a list of authorities to which counsel drew his attention and stated that he considered all of them. The list is quite long and is described by the learned judge as “comparable ( and sometimes not so comparable)”. It is only necessary to mention four of them: Wilken v Sentraboer (Edms.) Bpk.: The Quantum of Damages Vol. 3 at 654, National Employers’ General Insurance Co. Ltd v Sullivan: The Quantum of Damages Vol 3 at 679, Boshoff v S A Mutual Fire and General Insurance Co. Ltd: The Quantum of Damages. Vol 3 123 and Poo v President Insurance Co. Ltd: The Quantum of Damages. Vol IV A3-96. The 2002 adjusted amounts of the awards were respectively R43 000, R76 000, R62 000 and R120 000. The learned judge stated that the contention on behalf of the respondent was that the amount ought to be R150 000 and on behalf of the appellant that it ought to be R60 000 and fixed it at R110 000.

It is evident that the learned judge explained in detail what factors he took into account in assessing the amount of general damages. It seems as if the appellant understands the Marunga judgment to mean that a trial court is obliged to take previous awards and to dissect them and thereafter to compare them to the matter in question and to indicate how in its view the matters compare and why a different award is made in the particular matter. That is certainly not what was laid down in that matter. Apart from the obvious difficulty to compare matters which are not completely similar it is a recognized principle in fixing awards of general damages that different courts may very well make different awards on the same facts. The approach was that the court must state what factors it took into account and that if the award is not completely out of line with previous awards a court of appeal ought not to interfere. It cannot be said that the award in this matter is totally out of line with previous awards. In the result there is no basis upon which this court can interfere with the award for general damages.

The appeal is dismissed with costs.

_________________

WJ HARTZENBERG

JUDGE

I concur.

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SA MAJIEDT

JUDGE

I concur.

____________

CC WILLIAMS

JUDGE

FOR THE APPELLANT : Adv JJ Gauntlett SC

FOR THE RESPONDENT : Adv D Potgieter SC

DATE OF HEARING : 2003-11-17

OF JUDGEMENT : 2003-11-21

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