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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

(1)     REPORTABLE: YES/NO

(2)     OF INTEREST TO OTHER JUDGES: YES/NO

(3)     REVISED.

CASE NUMBER: 46601/2015

16/10/2019

 

In the matter between:-

 

ML RAMASILO obo KC                                                                                                    Plaintiff

 

and

 
ROAD ACCIDENT FUND                                                                                                  Defendant

JUDGMENT

SNYMAN (AJ)

Background

[1]        The plaintiff instituted action on behalf of her minor son K[….] C[….] R[….] ("the minor I plaintiff '), who was involved in a motor vehicle collision in which he was a pedestrian on 17 July 2013. At the time of the collision the minor was 11 years old. The insured vehicle and driver has been identified.

[2]       The parties have reached a settlement on 8 August 2016, in terms of which 90% of plaintiffs' proven or agreed damages would be paid by the defendant.

[3]        The defendant has also provided the plaintiff with an undertaking in terms of Section 17(4)(a) of the Road Accident Fund Act 56 of 1996 in terms of which the plaintiff will be compensated 90% of future medical expenses

[4]        On 28 August 2019, the parties reached a settlement in terms of which the plaintiff would be paid the sum of R630,000.00 (Six Hundred and Thirty Thousand Rand) for general damages

[5]        The remaining issue to determine is the future loss of earnings of the plaintiff, and the contingencies applied to such loss.

 

The injuries

[6]       It was agreed by the Orthopaedic Surgeons (Dr Oelofse and Dr Tladi) that the plaintiffs injuries did not meet the requirements for a serious injury under the narrative test, but due to the permanent serious disfigurement of the tongue and face the plaintiff qualifies for a positive narrative. The report of Dr JA Smuts however, reflected a whole person impairment of 34%. Be that as it may, I am satisfied that the extent and nature of the plaintiffs injuries would meet the requirements of the narrative test.

[7]       The injuries of the plaintiff are summarised in accordance with the joint minutes received from the experts of both parties.

a.          Both neurologists (Dr Madau and Dr Smuts) agreed that the plaintiff sustained a mild to moderate head injury with facial abrasions. The head injury is associated with mild to moderate brain injury. They also agreed that the plaintiff suffered post­ traumatic headaches and mild cognitive difficulties, and that cognitive and personality changes are likely;

b.          Plaintiff sustained serious injuries to his mouth, tongue and teeth, which severely impaired his speech functionality after the collision. This was corrected and the plaintiff now displays normal speech production skills with good intelligibility, but his vocabulary in his home language is not age appropriate;

c.           The injuries sustained in the collision is unlikely to have a detrimental effect on the plaintiffs life expectancy; and

d.          Abrasions to his left arm and both knees.

 

[8]        With reference to the plaintiffs pre-morbid functioning, the experts agree that the plaintiff had age-related speech- and language development and satisfactory fine- and gross motor development.

[9]        In relation to the plaintiffs post-morbid functioning, the parties expert witnesses agreed:

a.         The head injury is of mild to moderate nature, confirmed evidence of neuropsychological problems and symptoms of PTSD (Post Traumatic Stress Disorder), resulting in the plaintiff being a vulnerable individual.

b.         That the type of injury exacerbated the pre-morbid vulnerabilities and made it harder for the plaintiff to optimize his cognitive potential. The occupational therapists (Ms Rossouw and Ms Adroos) agreed that post-morbid the plaintiff has the capacity to endure up to medium physical work.

c.         The plaintiff's employability in the open market is compromised and it is likely that the plaintiff will enter the open labour market doing manual or physical type work.

d.         The speech and language therapists agree that the plaintiff displayed normal speech production skills, adequate range and strength of motion of the articulators, and adequate language comprehension. They also agree that the plaintiff has difficulty with auditory memory.

 

Loss of future income

[10]     The legal representatives of both the plaintiff and defendant agreed in principle that there is a loss of future income.

[11]      The legal representatives agreed to argue the percentage of contingencies to be applied, from one base scenario. They argued on the calculations of the plaintiffs actuary namely Johan Sauer Actuaries & Consultants ("the actuary"). The actuary compiled an actuarial certificate on the basis of three (3) different scenarios. The legal representatives, by agreement, argued on the third scenario and set of calculations.

[12]     The loss of income was calculated on the basis of the following assumptions as summarised from the actuarial report:

a.          In the pre-morbid scenario no income is projected until 1 January 2022.

b.          From 1 January 2022 it is assumed that the plaintiff will be able to earn an income, equal to the national minimum wage of R3,500 per month in current monetary terms. Thus an annual income of R42,000.

c.          After the age of 45 it is assumed that the plaintiff will earn an income equivalent to the upper quartile income of semi-skilled workers, which is R178,000 in current monetary terms. This is calculated with inflationary increase until retirement age of 64.

d.         Future escalation rate is calculated at 5.85% per annum

 

[13]     On behalf of the plaintiff, Mr Marx argues that a contingency of 54% should be applied to reach a fair and just amount. Mr Vermaak argues on behalf of the defendant that a contingency of 30% should be applied to reach a fair and just amount.

 

Calculations of contingencies

[14]     In BOTHA v ROAD ACCIDENT FUND 2015 (2) SA 108 (GP) it was held by Victor J that:

 

"[33]       The once-and-for-al/ rule is of importance here. It cannot assist a plaintiff who may in the future, depending on the nature of the injury, be subjected to a loss of earning capacity which he/she cannot quantify with exactitude at the time of trial. Therefore, based on this principle, the court must at this stage determine the question of future loss of income."

 

[15]      The calculation of a loss of earning capacity (or prospective income) is set out in LAWS (Law of South Africa) as follows:

 

"Loss of earning capacity (prospective income) Part of a plaintiffs prospective patrimonial loss may be his or her reduced earning capacity. The manner in which it is assessed is not without uncertainty and controversy. Arbitrary considerations have been held to play an inevitable part in a proper allowance for contingencies. An attempt at mathematical precision - particularly with an annuity basis - has sometimes been decried. So, on the other hand, has any award by mere intuitive assessment. The middle way is a recognition that exact mathematical computation is impossible, but that a calculation on an annuity basis is an appropriate guide though not a peremptory one. An award of this type is designed to provide such a sum presently payable as will give to the plaintiff a periodic payment calculated in such a way that at the end of the appropriate period there will be no capital sum left. This period must be computed on the basis of life expectancy, natural or reduced. Thus the present value of the plaintiff's future income but for the disability is first calculated and from that is deducted the present value of his or her future income with the disability. This is then adjusted according to appropriate contingencies. In the assessment of damages for loss of earning capacity courts enjoy a wide discretion and are not obliged to employ some standard method of calculation."

 

[16]      In determining what percentage of contingency deferential would be fair and reasonable, I take guidance from Nicholas JA (as he then was), set out in Southern Insurance Association Ltd v Bailey NO 1984 (1) SA 98 (A) at 113G - 114A, where he stated as follows:

 

"It has open to it two possible approaches. One is for a 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 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 greater or lesser extent. But the court cannot for this reason adopt a non possumus attitude and make no award."

 

[17]       In Sil and Others v Road Accident Fund 2013 (3) SA 402 (GSJ) it was held by Sutherland J as follows:

 

"[13]       An 'annual loss' cannot be the equivalent of the 'annual income' because the projected annual income is merely a part of the exercise in calculating the actual loss. In projecting a future actual loss, the exercise contemplates the chances of not achieving the projected rate of earnings by factoring in predictable risks. Those risks are expressed as the given contingencies. There is no other place in the calculation process where, sensibly, the contingencies could be usefully intruded into a calculation of loss, that is to say the net loss or, more appropriately, the 'actual loss'. The important point to guard against is employing phraseology that is likely to obscure the

 critical point that the word 'loss' ought to be reserved for what is indeed suffered, and used to allude to what is to be paid by way of compensation."

 

[18]      The following is the agreed scenario used as a base-line for the arguments relating to the application of the contingency:

 

	Had accident not happened	Now that accident did happen	Difference = Loss
Future earnings	R 4 466 131,00	R 2 672 510,00
less contingency deduction (10%/44%)	R 446 613,10	R 1 175 904,40
total loss of future earnings	R 4 019 517,90	R 1 496 605,60	R 2 522 912,30

 

[19]      Mr Marx argued on behalf of the plaintiff that a contingency of 54% would be fair and reasonable. The award in favour of the plaintiff would then be an amount of R2,790,163.30, calculated as follows:

 

Normal 10%             Plaintiff 54%

	Had accident not happened	Now that accident did happen	Difference= Loss
Future earnings	R 4 466 131,00	R 2 672 510,00
Less contingency deduction	R 446 613,10	R 1 443 155,40
Total loss of future earnings	R 4 019 517,90	R 1 229 354,60	R 2 790 163,30

[20]      Mr Vermaak argued on behalf of the defendant that a contingency of 30% would be fair and reasonable. The award in favour of the plaintiff would then be an amount of R 2,148,760.90calculated as follows:

 

Normal 10%         Defendant 30%

	Had accident not happened	Now that accident did happen	Difference= Loss Difference = Loss
Future earnings	R 4 466 131,00	R 2 672 510,00
Less contingency deduction	R446613,10	R 801 753,00
Total loss of future earnings	R 4 019 517,90	R 1 870 757,00	R 2 148 760,90

 

[21]      The following facts are taken into account in the exercise of my discression to determine the percentage of contingency to be applied to be fair and reasonable to both parties.

[22]      The plaintiff will have difficulty in entering the employment market. The effect that the brain injury had on the plaintiff, is resultant thereto that the plaintiff will in all probabilities have difficulties in remembering issues and would have to be guided to perform his duties.

[23]     The head injury also presented with confirmed evidence of neuropsychological problems and symptoms of PTSD.

[24]     The plaintiff experienced speech problems, which was resolved at the time that the speech therapists compiled their joint minutes.

[25]     The plaintiff did have difficulty on an academic level prior to the collision.

[26]     After the collision, the plaintiff spent two (2) weeks in the hospital and another month at home recovering from his injuries.

[27]     The plaintiff's current age is 17 and the calculations by the actuary made provision for no income (as in the pre-morbid scenario) until 1 January 2022.

[28]     With the plaintiff's prospects in obtaining employment, the plaintiff may be placed in the upper quartile income of semi-skilled workers.

[29]     Having considered the various medico-legal reports, the different legal approaches and the submissions by counsel for both the plaintiff and defendant, I am persuaded that a contingency of 45% would be reasonable and fair in these circumstances.

 

45%

	Had accident not happened	Now that accident did happen	Difference = Loss
Future earnings	R 4 466 131,00	R 2 672 510,00
Less contingency deduction	R 446 613,10	R 1 202 629,50
Total loss of future earnings	R 4 019 517,90	R 1 469 880,50	R 2 549 637,00

[30]     The monetary amount of the plaintiff's future loss of earnings and / or earning capacity is calculated at the amount of R 2,549,637.00. (Two Million Five Hundred and Forty Nine Thousand Six Hundred and Thirty Seven Rand) set out in paragraph 29 above.

[31]     The parties agreed that the sum of R630,000.00 (Six Hundred and Thirty Thousand Rand) would be paid by the defendant to the plaintiff in respect of general damages.

[32]       The total amount of damages suffered by the plaintiff is therefore R2,549,637.00 (loss of earnings) plus R630,000.00 (general damages) being R3,179,637.00 (Three Million One Hundred Seventy Nine Thousand Six Hundred and Thirty Seven Thousand Rand).

[33]      The parties agreed that the defendant would be liable for 90% of the plaintiff's damages. In application of the 90/10 division of the quantum, the amount of R317,963.70should be deducted from the amount of R3,179,637.00.

[34]      The defendant should therefore pay to the plaintiff an amount of R2,861,673.30 (Two Million Eight Hundred And Sixty One Thousand Rand Six Hundred and Seventy Three Thousand Rand and Thirty Cents) in full and final settlement of the damages suffered by the plaintiff.

[35]     After hearing the matter, the parties provided me with a draft order that stipulates all the other relevant orders and agreements between the parties.

[36]      The draft order included a Deed of Trust in which a trustee is appointed to administrate the funds to be paid to the plaintiff.

[37]     I was not made aware of any Contingency Fee agreement.

[38]     I consequently make the following order:

1.        The defendant is ordered to pay to the plaintiff an amount R2,861,673.30 (Two Million Eight Hundred And Sixty One Thousand Rand Six Hundred and Seventy Three Thousand Rand and Thirty Cents)in respect of damages suffered by the plaintiff.

2.        The draft order attached hereto and marked "X" is made an order of Court.

 

 

 

FMM SNYMAN, AJ

ACTING JUDGE OF THE HIGH COURT

 

 

DATE OF HEARING:         28 AUGUST 2019

DATE OF JUDGMENT:      16 OKTOBER 2019

 

 

 

Appearance for the plaintiff:   Mr D Marx (082 828 0629)

Instructed by VZLR Inc Attorneys

Tel 012 435 9444

 

Appearance for the defendant:             Adv H Vermaak 082 373 0047

Instructed by Diale Mogashoa Inc Attorneys

Tel: 012 346 5436

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