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[2013] ZAGPJHC 149
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Jonosky v Road Accident Fund (2010/01220) [2013] ZAGPJHC 149; 2013 (5) SA 356 (GSJ) (14 June 2013)
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IN THE SOUTH GAUTENG
HIGH COURT OF SOUTH AFRICA
(JOHANNESBURG)
Case No: 2010/01220
In the matter between:
NEVILLE
RONALD JONOSKY
Plaintiff
and
ROAD
ACCIDENT FUND
Defendant
JUDGMENT
C. J. CLAASSEN J
:
[1] The plaintiff is an
adult male born on 13 April 1960. At the age of 49 years and on 6 May
2009 he was involved in a motor vehicle
collision. His claim against
the Road Accident Fund in terms of Act 56 of 1996 (“the Act”)
is all but settled save
in one legal respect. I am called upon in
this judgment to resolve such remaining issue.
[2] The issue concerns
the proper interpretation and application of the amended section
17(4) of the Act. The relevant portions
of this section read as
follows:
“
17(4)
Where a claim for compensation under subsection (1) –
(a) …
(b) …
(c)
includes a claim for loss of income or support, the
annual
loss
irrespective of the actual loss, shall be proportionately calculated
to an amount not exceeding –
(i) RX per year, in the
case of a claim for loss of income; and
(ii) RX per
year, in respect of each deceased breadwinner, in the case of a claim
for loss of support.
(4A)(a) The Fund shall,
by notice in the Gazette, adjust the amounts referred to in
subsection (4)(c) quarterly, in order to
counter the effect of
inflation.
(b) In respect of any
claim for loss of income or support the amounts adjusted in terms of
paragraph (a) shall be the
amounts set out in the last notice
issued prior to the date on which the cause of action arose
.”
(Emphasis added)
[3] I have been told from
the bar that the interpretation of section 17(4)(c) in regard to the
highlighted portions above, has not
yet been the subject of any
previous judicial interpretation
.
[4] In the present case
the dispute is about what the correct amount is for the plaintiff’s
past and future loss of earnings.
The question to be resolved
pertains to the methodology to be adopted when applying the limit, or
as is commonly known, the annual
“cap”, set out in
section 17(4)(c). The actuaries employed by the respective parties
differ in regard to their interpretation
of how this cap is to be
applied in calculating the plaintiff’s future loss of earnings.
This difference of approach results
in the plaintiff’s actuary
calculating the future loss of earnings at an amount of R2 631 300.00
whereas the defendant’s
actuary calculates the amount at
R2 231 570.00 i.e. a difference amounting to R399 730.00.
[5] In a nutshell, the
different approaches in determining the aforesaid section can be
explained as follows:
1. The plaintiff’s
actuary interprets the section as permitting the plaintiff’s
annual capped loss of earnings to be
adjusted for every future year
after the date upon which the cause of action arose, with a factor
representing:
i.
for the past loss of earnings: the actual annual increase
in inflation; and
ii. for
the future years up to the date upon which the plaintiff will retire,
a projected rate of increase in
inflation.
2. The defendant’s
actuary interprets the sub-section as:
i.
permitting one adjustment for inflation in the year that the
loss was sustained; and
ii.
thereafter multiplying such amount for the remaining future
years up to the date of the plaintiff’s
retirement. The
rationale is that inflationary increases for the future are subject
to fluctuations and, as such, inexact and at
best speculative.
[6] Plaintiff’s
counsel submits that the plain/grammatical meaning of the relevant
sub-section makes it clear that a limited
loss must be adjusted to
counter the effect of inflation and in so doing, it will give effect
to the clear intention of the Legislature.
[7] The defendant’s
counsel submits that the clear intention of the Legislature is set
out in the second half of section 17(4A)(b)
to the effect that the
adjustment to the loss of income “shall be the amount set out
in the last notice issued prior to the
date on which the cause of
action arose”, meaning that such adjustment takes place once
only on the date of the accident
when the then applicable capped loss
of income is used and thereafter multiplied for the future years
until date of retirement.
INTERPRETATION
[8] Section 3 of the Act
states categorically:
“
The object of the
Fund shall be the payment of compensation in accordance with the Act
for loss of damage wrongfully caused by the
driving of motor
vehicles.”
[9]
The Act and
its predecessors have been the subject of several cases where certain
sections have been expansively, and others restrictively,
interpreted. Those judgments which held that the victim of a motor
vehicle collision should be afforded the widest possible protection
all allude to the fact that the protection is necessary due to the
claimant’s inability to obtain redress from a common law
wrongdoer because the latter might be indigent. This conclusion also
results from the fact that section 21 of the present Act as
well as
its predecessors suspends the claimant’s common law delictual
claim and substitutes it with a statutory claim against
the Fund.
[1]
Those judgments upholding a restrictive interpretation of the Act
applied it to sections where the Act and its predecessors lay
down
formalistic requirements to be complied with by the claimant to
enforce rights under the Act.
[2]
[10] I respectfully agree
with Sutherland J in
Sil and Others v Road Accident Fund
2013
(3) SA 402
(GSJ) where he interprets section 17(4)(c) in an expansive
manner in order to hold that contingencies are to be applied to the
calculation of actual future loss of earnings before applying the
capped limitation. He came to this conclusion relying on the
well-known principle laid down in
Dadoo v Krugersdorp Municipal
Council
1920 AD 530
at 552 where Innes CJ held that it was a
wholesome rule of our law that statutory provisions which interfere
with elementary rights
should be interpreted to cause the least
invasion of such rights. Sutherland J found that to apply the
contingencies only after
the capped limitation had reduced the
quantum of future loss of earnings, would, in effect, further reduce
the claimant’s
compensation for loss of future earning
capacity. It was therefore found that the normal method of
calculating future loss of earnings
should not be disturbed and that
the capped limitation should only be applied after the future loss of
earnings had been calculated
which calculation had already
incorporated all the contingencies.
[11] In the present case
the interpretation contended for by the plaintiff’s counsel
will result in a larger amount of damages
being awarded to the
plaintiff in respect of future loss of earnings whereas the
interpretation contended for by the defendant’s
counsel will
result in a lesser amount of damages being awarded under such item.
In a situation, such as the present, where the
Legislature
consciously recognised that a claimant will not be compensated in
full for a certain item of loss, I am of the view
that the statutory
provision should be interpreted widely and liberally. The sub-section
should be interpreted to cause the least
invasion to the rights of a
claimant who had suffered loss. Thus where an “actual loss”
suffered is substituted by
a reduced “statutory loss” a
benevolent interpretation, which will result in the least restriction
on an actual loss
suffered, is appropriate.
[12] I cannot agree with
the interpretation advanced about section 17(4A)(b) by defendant’s
counsel. This sub-section contemplates
the adjustment to the amounts
stipulated in section 17(4)(c) in respect of a claim for loss of
income and/or a loss of support
as at the date when the loss
occurred, being the date of the accident. The sub-section does not
purport to deal with adjustments
after the date on which the cause of
action arose. Where a calculation of future loss of income is made at
a point in time, say
three years after the accident occurred, then
the adjustments for the past loss of earnings, as between the date of
the accident
and the date upon which the calculation is made, will be
calculated in accordance with the statutory adjustments as gazetted
for
each of the intervening years. Each year between the date of the
collision and the date upon which a calculation for loss of earnings
has to be made will, in accordance with the gazetted amounts, be
calculated exactly.
[13] However, what is to
be done with regard to the calculation of the “annual loss”
suffered by the claimant after
the date upon which the calculation is
being made? The solution seems to me that reliance should be placed
on the normal actuarial
calculations of future loss of earnings
which, in the past, have always taken into consideration a projected
future inflation rate
for each year up to the date of retirement. In
my view, there is no need to disturb that methodology when
calculating future loss
of earnings. There has always been a
speculative “looking into a crystal ball” to come up with
a projected annual inflation
rate during the future years up to
retirement. I see nothing sinister in relying on the professionalism
of actuaries to calculate
future inflation rates in respect of those
years, as they have always done. In any event, the positive and
negative effects of
the usual contingies applied to these futuristic
calculations ameliorate the inexactitude and speculation caused by
the fluctuation
of inflation
in futuro.
[14] In my view, the
purpose of sub-section (b) of section 17(4) is to fix the starting
point at which the gazetted adjustments
are to be incorporated in the
calculation of loss of earnings. The subsection contemplates that the
adjustment applicable as at
the date of the accident will normally be
less than the adjustment applicable as at the date when the
calculation is made. This
must be so because of the inherent delay
between the accident date and the calculation date arising from the
statutory 2 years’
delay and notice period before summons may
be issued. The effect of the subsection is to prevent the use of a
larger adjustment
amount, applicable as at the date of calculation,
being used for calculating the past loss of income during the
intervening period
between the date of the accident and the date upon
which the calculation is made. If it were otherwise, there would be
an incentive
for claimants to wait as long as possible before coming
to court to calculate loss of earnings in order to benefit from the
adjustment
amount in force at such later date, which, in comparison
to the adjustment amount as at the date of the accident, would
normally
be a larger amount and therefore more beneficial to the
claimant. The purpose of the subsection is therefore intended to
setting
a starting date for utilising adjustment amounts when
calculating loss of earnings after the accident and for no other
prupose.
[15] If it is accepted
that the gazetted amounts will increase every year due to inflation,
then there is no reason to suspect that
the Legislature intended such
inflation rates to suddenly stop increasing at the date upon which
the calculation is being made.
It defies simple logic to disregard
the reality that inflation rates on the whole generally rise as time
goes by up to the time
of the retirement date. To hold otherwise
would read into the sub-section an absurdity.
[16] By way of an
example, one can contemplate a situation where future loss of
earnings is being claimed for a minor, say, at the
age of ten years.
If the minor is expected to have a remaining working life beginning
at the age of twenty lasting up to the age
of sixty five, it would
mean that a calculation has to be made for future loss of earnings
during a forty five year period of time.
It is a generally accepted
fact that devaluation erodes the value of money as time goes by. If
the actuary is prohibited from including
in his calculation for that
forty five year period of time any future inflationary increases, it
would mean that the devaluation
of money over forty five years would
cause whatever amount is awarded to become valueless in real money
terms by the end of the
forty five year period. In my view, it would
be absurd to suggest that the Legislature contemplated such a result.
It flies in
the face of the entire object of the Act to compensate
claimants who suffered loss of future income due to injuries
sustained in
motor vehicle collisions.
CONCLUSION
[17] In light of the
aforesaid arguments I am of the view that the proper interpretation
of section 17(4)(c) is the one contended
for by the plaintiff. In
calculating the future loss of earnings beyond the date upon which
such calculation is made, an actuary
is duty-bound to incorporate a
projected future inflation rate on an annual basis. That being my
conclusion, it follows that the
amount to be awarded to the plaintiff
in respect of his future loss of income is R2 631 300.00.
[18] I make the following
order:
1. The defendant is to
pay the plaintiff the amount of R2 631 300.00 in respect of
the plaintiff’s future loss of
income.
2. The parties are given
leave to approach me in chambers with a draft order incorporating the
aforesaid award and all the other
terms of their agreement for
purposes of making it a final court order.
DATED THE 14
th
DAY OF JUNE 2013 IN JOHANNESBURG
C. J. CLAASSEN
JUDGE OF THE HIGH
COURT
Counsel for the
Plaintiff: Adv M. Coetzer
Counsel for the
Defendant: Adv A. I. Cajee
Attorney for the
Plaintiff: Wim Krynauw Attorneys
Attorney for the
Defendant: Mayat, Nurick and Associates Inc
Argument took place on:
16 May 2013
[1]
See
Rose’s
Car Hire (Pty) Ltd v Grant
1948 (2) SA 466 (A)
[2]
See
Chauke
v Santam
[1996] ZASCA 120
;
1997 (1) SA 178
(A) and
MMF
v Radebe
[1995] ZASCA 80
;
1996 (2) SA 145
(A)