Summary of Judgment

1. Introduction

The matter was a trial action for damages arising from a motor vehicle collision, but by the time it came before the Gauteng Division of the High Court (Local Seat, Johannesburg), the litigation had been narrowed to a single separated issue. The only question for determination was the appropriate contingency deduction to be applied to the plaintiff’s pre-morbid (pre-accident) scenario in the calculation of future loss of earnings.

The parties were Ndlovu, Again Masitha (plaintiff) and the Road Accident Fund (defendant). The judgment was delivered by Wright J on 8 October 2019 under case number 3865/2018.

Procedurally, the parties placed a stated case before the court in terms of Rule 33(1), (2), (3) and (6). Liability had already been settled on an apportionment basis, with the defendant liable for 80% of the plaintiff’s proven damages. The defendant had rejected the plaintiff’s RAF4, and the parties intended to refer the issue of general damages to the HPCSA, leaving the present court hearing concerned only with patrimonial loss (future earnings). The matter had been certified trial-ready on the issue of future loss of earnings, and within that, the parties identified contingency deductions as the remaining dispute.

The general subject-matter of the dispute was the quantification of damages for future loss of earning capacity, specifically the fair contingency deduction to reflect uncertainty in the plaintiff’s hypothetical career and earnings trajectory but for the collision.

2. Material Facts

The plaintiff sustained personal injuries in a motor vehicle collision on 12 February 2013, in which he suffered a fracture of the right femur. He was born in June 1969 and was 50 years old at the time of trial. The parties agreed that, for purposes of the future loss calculation, the relevant future period ran from 7 October 2019 (treated as the trial date for the calculation) for 15 years, being the agreed remainder of the plaintiff’s expected working life until age 65.

It was common cause that the plaintiff had Grade 12 and that, at the time of the collision, he occupied a senior role as General Manager within Prestige Cleaning Services, a wholly owned subsidiary of the Bidvest Group. His career history (also treated as common cause) was that he commenced employment in 1989 as a Cleaner and progressed through multiple roles (including Handyman Driver, Supervisor, Area Manager, Operations Manager) to become General Manager in May 2011. The parties agreed that the plaintiff had advanced from an entry-level position to senior management with significant responsibilities.

For purposes of computation, the parties agreed on the income figure used for future earnings. They agreed that the plaintiff’s income from 7 October 2019 for the next 15 years was R6 400 062, and they further agreed (as framed in the stated case) that this figure was also the pre-morbid earnings. They also agreed that the post-accident contingency deduction should be 25%, having regard to factors including a shortened leg, reduced range of motion, chronic pain, reduced working capacity, functional difficulties (including stairs and long distances), compromised postures, and the possibility of knee replacement.

A material background fact (raised for contingency purposes) was that the plaintiff had been involved in a prior accident in 2009, in which he also injured his right femur and received an intramedullary nail. A claim had been lodged with the Road Accident Fund in relation to the 2009 accident, but no compensation had been paid, for reasons unknown to the parties. Additionally, it was accepted that the plaintiff had type 2 diabetes which was not caused by the 2013 collision.

The key disputed issue on the facts and their implications was the extent to which the pre-existing right femur injury and diabetic status should increase the pre-morbid contingency deduction. The plaintiff proposed a sliding scale amounting to 7.5% (½% per year over 15 years), whereas the defendant proposed 20%.

3. Legal Issues

The central legal question was the appropriate pre-morbid contingency deduction to apply when quantifying damages for future loss of earnings / earning capacity, given agreed earnings assumptions and an agreed post-morbid contingency deduction.

The dispute primarily concerned the application of legal principles to agreed facts and the exercise of a value judgment in selecting a contingency percentage that was fair in the circumstances. It did not turn on resolving contested evidence on liability or medical causation, as liability had already been apportioned and the parties presented the issue by way of a stated case.

A subsidiary issue arose from the parties’ agreement that the same earnings figure applied to both pre- and post-accident scenarios. The court addressed how, notwithstanding identical earnings assumptions, the claim could still yield a compensable loss due to differing contingency deductions, reflecting a loss of earning capacity and increased economic vulnerability.

4. Court’s Reasoning

The court approached the matter on the basis that it was required to determine a fair contingency deduction on the pre-accident scenario over a 15-year remaining working life. In doing so, the court considered counsel’s reliance on Road Accident Fund v Guedes 2006(5) SA 583 (SCA) as a comparative reference point for contingency assessment, particularly in relation to a “sliding scale” approach.

The court distinguished the plaintiff’s circumstances from those in Guedes. In Guedes, the plaintiff was in a stable working environment with an expected remaining working life of 38 years, whereas in the present matter the remaining working life was agreed to be 15 years. The court reasoned that the plaintiff in the present case had identifiable pre-accident vulnerabilities that could potentially impair capacity to work even absent the 2013 collision, namely the earlier 2009 femur fracture and type 2 diabetes. Although the court assessed the possibility of impairment from those factors as “small”, it held that it nevertheless had to be taken into account in the pre-morbid contingencies.

At the same time, the court considered the shorter remaining working life (15 years) relative to Guedes as tending to keep the plaintiff’s pre-accident vulnerability “less rather than more”, indicating that the duration of exposure to contingencies was a relevant consideration in moderating the percentage.

Balancing these considerations, the court did not accept either proposed endpoint. It did not adopt the plaintiff’s suggested 7.5% (½% per year) as adequate to reflect the pre-existing conditions, nor did it accept the defendant’s proposed 20% as justified on the facts as presented. Instead, the court selected a 10% pre-morbid contingency deduction as meeting “the justice of the case” on the agreed factual basis.

The court then addressed the computational consequence of the parties’ earnings agreement. While the court observed that identical pre- and post-accident earnings figures might suggest no loss, it accepted (based on the stated case read with counsels’ confirmation in oral argument) that the damages claim was founded on loss of earning capacity and the plaintiff’s increased economic vulnerability post-accident, which the parties had already reflected by agreeing to a 25% post-morbid contingency deduction. On that understanding, the court applied the pre- and post-morbid contingency deductions to the agreed earnings base, calculated the differential, and thereafter applied the agreed 80/20 apportionment of liability.

On the figures accepted by the court, R6 400 062 less 10% produced a pre-morbid discounted amount of R5 760 055. Comparing this to the post-morbid discounted amount (R6 400 062 less 25%) yielded a differential loss of R960 009,30 for future loss of income. The court then reduced that amount by the agreed 20% apportionment against the plaintiff, resulting in a net amount payable of R768 007,44.

5. Outcome and Relief

The court separated the issue of future loss of earnings from the remaining issues and postponed the other issues sine die.

The defendant was ordered to pay the plaintiff R768 007,44 in respect of future loss of earnings.

The defendant was further ordered to pay the plaintiff’s costs, limited to those reasonably incurred to allege and prove future loss of earnings.

Cases Cited

Road Accident Fund v Guedes 2006(5) SA 583 (SCA)

Legislation Cited

No legislation was expressly cited in the judgment.

Rules of Court Cited

Uniform Rules of Court, Rule 33(1), Rule 33(2), Rule 33(3) and Rule 33(6)

Held

The court held that, on the agreed facts and stated case, a 10% pre-morbid contingency deduction was appropriate, taking into account the plaintiff’s pre-existing right femur injury and diabetic status while also recognising the shorter agreed remaining working life of 15 years.

Applying the agreed earnings base, the agreed 25% post-morbid contingency, and the agreed 80/20 apportionment, the court held that the plaintiff proved R768 007,44 as the amount payable for future loss of earnings, and granted a costs order confined to costs reasonably incurred in proving that head of damage.

LEGAL PRINCIPLES

The judgment applied the principle that quantification of damages for future loss of earnings / earning capacity requires the use of contingency deductions to account for the uncertainties and vicissitudes of life affecting future employment and earning trajectories.

The selection of an appropriate contingency percentage is an evaluative determination based on the facts, including the claimant’s pre-accident health and vulnerabilities, the expected remaining working life, and the extent to which post-accident circumstances increase economic vulnerability, even where nominal earnings assumptions may be the same.

The judgment further applied the principle that damages may be calculated by comparing pre-morbid and post-morbid scenarios adjusted by contingencies, and then applying any agreed apportionment of liability, with the resulting differential representing compensable loss attributable to the accident on the accepted basis.