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[2019] ZAECPEHC 58
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Road Accident Fund v van Schoor (1801/2016) [2019] ZAECPEHC 58 (17 September 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
Case No:
1801/2016
Date
heard: 7 August 2019
Date
delivered: 17 September 2019
In
the matter
between:
ROAD
ACCIDENT FUND
Applicant/Defendant
And
LUKA
DAWN VAN SCHOOR
Respondent/Plaintiff
_
JUDGMENT
Goosen
J:
[1]
On 12 April 2019 judgment was delivered in favour of the plaintiff
and
an award of costs was made. On 17 April 2019 the defendant
delivered a notice in terms of Rule 34(11) and (12) seeking a
reconsideration
of the costs order in the light of its offer made to
the plaintiff on 7 March 2018. In its offer of settlement, made in
terms of
Rule 34(1), the defendant offered:
“
1.
Payment of the capital sum of R6 959 023.00 and which will
be made within 120 (hundred and twenty)
days from date of settlement.
2.
The Defendant further tenders to pay the Plaintiff’s taxed or
agreed party and party costs, up
until and including the date of the
tender, on the High Court scale together with interest thereon at the
legal rate of 10.25%
per annum from a date 14 days after date of
settlement/taxation to date of payment subject to the following
conditions:
a.
The Plaintiff shall, in the event that costs are not agreed, serve
the notice of taxation
on the Defendant’s attorney of record
and;
b.
The Plaintiff shall allow the Defendant 14 (fourteen) court days to
make payment of the taxed
or agreed costs.
4.
The above tender is open for acceptance in accordance with the time
limit allowed for in terms of the
Rules of Court.”
[2]
The award made per the judgment was in the amount of R6 633 642.00.
The Rule 34(1) offer accordingly exceeds the award made by this
court. In accordance with its notice in terms of Rule 34(12) the
defendant seeks an order that the plaintiff pay the costs of the
action incurred after 28 March 2018 (being the date by which the
offer could be accepted). It tenders payment prior to this date.
[3]
The plaintiff opposed the reconsideration of the costs order upon
both
technical grounds and upon the basis that the circumstances of
the matter militate against the exercise of the court’s
discretion
to alter the award of costs.
[4]
The “technical” grounds are two-fold. It was submitted
that
the offer sets out a condition regarding payment of the amount
i.e. within 120 days, which is unreasonable and that the plaintiff
was entitled to reject the offer on that ground alone. Secondly, it
was contended that the offer is silent in respect of any interest
payable and, on this basis also, the plaintiff was entitled to reject
the tender.
[5] The
relevant portions of Rule 34 provide as follows:
“
(1) In any action
in which a sum of money is claimed, either alone or with any other
relief, the defendant may at any time unconditionally
or without
prejudice make a written offer to settle the plaintiff's claim. Such
offer shall be signed either by the defendant himself
or by his
attorney if the latter has been authorised thereto in writing.
(5) Notice of any offer
or tender in terms of this rule shall be given to all parties to the
action and shall state-
(a) whether the
same is unconditional or without prejudice as an offer of settlement;
(b) whether it is
accompanied by an offer to pay all or only part of the
costs of the party to
whom the offer or tender is made, and further
that it shall be subject
to such conditions as may be stated therein;
(c) whether the
offer or tender is made by way of settlement of both claim and costs
or of the claim only;
(d) whether the
defendant disclaims liability for the payment of costs or for part
thereof, in which case the reasons for such disclaimer
shall be
given, and the action may then be set down on the question of costs
alone.
(7) In the event of a
failure to pay or to perform within 10 days after delivery of the
notice of acceptance of the offer or tender,
the party entitled to
payment or performance may, on five days' written notice to the party
who has failed to pay or perform apply
through the registrar to a
judge for judgment in accordance with the offer or tender as well as
for the costs of the application.
(11) The fact that an
offer or tender referred to in this rule has been made may be brought
to the notice of the court after judgment
has been given as being
relevant to the question of costs.
(12) If the court
has given judgment on the question of costs in ignorance of the offer
or tender and it is brought to the notice
of the registrar, in
writing, within five days after the date of judgment, the question of
costs shall be considered afresh in
the light of the offer or tender:
Provided that nothing in this subrule contained shall affect the
court's discretion as to an
award of costs.”
[6]
For a
valid offer to be made in terms of Rule 34 the requirements set out
in sub-rule (5) must be met. See
Erasmus
v Santam Insurance Ltd and Another
[1]
.
In this instance the notice given by the plaintiff plainly states
that it offers payment of a specified capital sum and that its
offer
includes payment of costs. Rule 34(5) does not preclude the
imposition of conditions. The stipulation of the period within
which
the capital sum would be paid accordingly falls within the ambit of
the rule.
[7]
Whether or not the plaintiff is entitled to reject the offer on the
basis
that a stipulated condition is unreasonable is a matter which
the plaintiff will be required to establish. In this instance all
that is asserted is that the period stipulated within which payment
would be made is “unreasonable”. The only discernable
basis for this assertion appears to be that no interest was offered.
Yet, it is clear that the defendant tendered payment of a
“capital”
sum. The offer, therefore, envisaged the payment of interest on
the capital sum in accordance with
the plaintiff’s claim for
such interest on the judgment debt.
[8]
In the present matter the plaintiff did not accept the offer within
the
period of 15 days provided by Rule 34(6). I am satisfied that the
offer was indeed one as envisaged by Rule 34(1) read with sub-rule
(5) and that it exceeds the amount awarded to the plaintiff.
Accordingly, the question arises whether in the exercise of my
discretion
as to costs the order previously made ought to be altered.
[9]
The object
of sub-rule (12) is to enable the court to consider the award of
costs having regard to the fact that payment of a sum
exceeding that
which was awarded was rejected by the plaintiff. In
Bloom
v General Accident and Life Assurance Corporation Ltd and Another
[2]
it was held that the intention of Rule 39 (9)(b) (which is the
equivalent of the current Rule 34(12)),
“
is
to enable the Court to take into account the fact that what, in the
event, proved to be a generous offer of settlement had been
refused
by the plaintiff or by one of the defendants, when it exercised its
discretion as to what order as to costs would be fair
in all the
circumstances of the case. As the Court was unaware of the
circumstances of the offer when judgment was delivered it
was unable
at that stage to take it into account, and the Rule accordingly gives
the Court an opportunity to consider the matter
afresh after it has
learned about the secret tender.”
[10]
This
purpose of the Rule was reiterated by Revelas J in
Mntwaphi
v Road Accident Fund
[3]
where the learned judge held:
“
The object of
sub-rule (12) is to enable the court to take into account, when
exercising its discretion as to a fair costs order
in all the
circumstances of the case, the fact that a generous offer, as in the
present case, had been rejected
by the
plaintiff. The rule provides a court with an
opportunity to reconsider the
matter
afresh, after learning about the tender. Once it has
been established that the tender
or
offer beat the amount awarded,
the discretion becomes
limited, apart
from determining the spatium deliberandi, which in this case has to
be the period between the two offers. The usual
practice is, if the
offer or tender exceeds the amount of the judgment, to order the
defendant to pay the plaintiff's costs incurred
up to the date of the
offer and the plaintiff to pay the costs thereafter.”
[11]
Revelas J
noted the usual order which follows in circumstances such as the
present and that the court’s discretion is fairly
limited. See
also
Winlite
Aluminium Windows & Doors (Pty) Ltd v Pyramid Freight (Pty) Ltd
t/a Uti
[4]
.
[12]
In
Naylor
and Another v Jansen
[5]
the nature of the discretion is described as follows:
“
[12] Where a
plaintiff in an action sounding in money has not succeeded in
obtaining an award that exceeds an offer made without
prejudice,
there are two important considerations to be borne in mind by the
Judge exercising the discretion. The first is the
purpose behind the
Rule. The second is that the Rule in no way fetters the judicial
exercise of the discretion.
[13]
The purpose behind the Rule is clear. It is designed to enable a
defendant to avoid further litigation, and failing that to
avoid
liability for the costs of such litigation. The Rule is there not
only to benefit a particular defendant, but for the public
good,
generally, as Denning LJ made clear in Findlay v Railway Executive:
'The hardship on the
plaintiff in the instant case has to be weighed against the
disadvantages which would ensue if plaintiffs generally
who have been
offered reasonable compensation were allowed to go to trial and run
up costs with impunity. The public good is better
secured by allowing
plaintiffs to go on to trial at their own risk generally as to
costs.'
It
is therefore important that Courts should take account of the purpose
behind the Rule, and not give orders which undermine it.
Clayden FJ
put the position thus in Doyle v Salgo (2):
'In cases in
which the continuance of the action cannot be justified on some
ground apart from the recovery of money, as for example
to establish
a disputed right, the Courts, in exercising the discretion to award
costs, must obviously be concerned to ensure that
the Rules do not
fail in this purpose.'
[14]
Ordinarily the purpose behind Rule 34 would cause the Judge to order
the defendant to pay the plaintiff's costs incurred up
to the date of
the offer, and the plaintiff to pay the defendant's costs thereafter.
That does not mean, however, that there is
a 'rule' to this effect,
from which departure is only justified in the case of 'special
circumstances', as suggested in Van Rensburg
v AA Mutual Insurance Co
Ltd and Mdlalose v Road Accident Fund. All it means is that the
exercise of the Court's discretion as
to costs in this way would
usually be proper and unimpeachable, and failure to do so would, if
unjustifiable, amount to a misdirection.
But it needs to be
emphasised, as the proviso to Rule 34(12) makes clear, that the Rule
does not dictate this result, even provisionally.
Where the law has
given a Judge an unfettered discretion, it is not for this
Court to lay down rules which, while purporting
to guide the Judge,
will have the effect only of fettering the discretion. If, therefore,
there are factors which the trial Court,
in the exercise of its
discretion, can and legitimately does decide to take into account so
as to reach a different result, a Court
on appeal is not entitled to
interfere - even although it may or even probably would have given a
different order. The reason
is that the discretion exercised by
the Court's giving the order is not a 'broad' discretion (or a
'discretion in the wide sense'
or a 'discretion loosely so called')
which obliges the Court of first instance to have regard to a number
of features in coming
to its conclusion, and where a Court of appeal
is at liberty to decide the matter according to its the view of the
merits and to
substitute its decision for the decision of the Court
below, simply because it considers its conclusion more appropriate.
The discretion
is a discretion in the strict or narrow sense (also
called a 'strong' or a 'true' discretion). ”
[13]
Mr Schubart SC, for the plaintiff, argued that in reconsidering the
costs award this court
ought to consider the reasonableness of the
plaintiff’s conduct in pursuing the claim after the offer and
the effect that
a cost award against the plaintiff would have. It was
submitted that considerations of fairness and equity require that
this Court
not make the usual order in matters such as this.
[14]
In
developing the argument Mr Schubart placed reliance upon a judgment
of Brooks AJ (as he then was), in
Shanin
Syed v Metaf Limited t/a Metro Cash and Carry
[6]
.
In that matter the learned judge was called upon to reconsider a cost
award made in favour of the plaintiff. At paragraph [6]
of the
judgment the learned judge said the following:
“
[6] In
my view in the exercise of a judicial discretion in a consideration
of a costs award at this stage, consideration
must be given
inter
alia
to the following factors:
·
the reasonableness of the plaintiff’s conduct after the
introduction
of the secret tender in accordance with the provisions
of Rule 34 of the Uniform Rules of Court;
·
the nature and effect of the costs award made in the judgment;
·
the desirability in the interests of justice of making an eventual
award
of costs that is just and equitable in all the circumstances of
the matter, including due consideration of the secret tender made
and
the effect
inter partes
which would be created by an adherence
to the usual practice identified in paragraph [4] hereof.”
[15]
I do not understand the judgment to suggest that these are the only
factors which fall
to be considered. Rather, they represent
appropriate considerations which are relevant to the exercise of the
court’s discretion.
Each matter must, in my view, necessarily
be considered upon its own circumstances and the discretion is to be
exercised having
due regard to relevant factors and the underlying
purpose of Rule 34.
[16]
That this
is so is apparent from a consideration of both the reconsideration
judgment of Brooks J, referred to above, and the main
judgment
[7]
in that matter. The following summary of factors which were
considered at the time of making the original costs award are set out
in the former judgment
[8]
:
“
[11] At the time
of the trial on
quantum
, the bulk of the value of the
plaintiff’s claim was represented by his claim for loss of
income in the sum of R8 823 600,00.
Approximately one half
of the time spent in court was dedicated to the resolution of the
plaintiff’s claim for loss of income.
That claim was dismissed.
The claim for legal expenses was abandoned due to a lack of evidence.
The plaintiff succeeded in his
claim for hospital expenses and was
substantially successful in his claim for future medical expenses and
general damages.
[12] In making the
award for costs which is not under reconsideration cognisance was
taken of the substantial court time which
had been dedicated to the
unsuccessful pursuit of the claim for loss of income. Cognisance was
also taken of the extent to which
certain of the plaintiff’s
expert witnesses had made no useful contribution to the proceedings.
The award of costs which
resulted was intended to prevent the
defendant from being mulcted in costs generated by the pursuit by the
plaintiff of claims
in which he was unsuccessful. It was deemed
necessary to adopt this approach in the interests of justice in order
to ensure an
equitable result
inter partes
.”
[17]
It is appropriate to note that a feature of the main judgment in
relation to the decisions
regarding the different heads of damages is
trenchant criticism of the evidence of certain expert witnesses
called by the plaintiff.
A further reading of the judgment regarding
the reconsideration of the costs award indicates that the learned
judge was satisfied
that the original award had achieved an equitable
result
inter partes
; that the pursuit of plaintiff’s
partially successful claim was not unreasonable in the light of the
unspecified globular
tender made; and that an order awarding all
costs to the defendant would unjustly render the order for liability
nugatory.
[18]
Mr Schubart’s argument was that the plaintiff had reasonably
pursued her claim for
a more substantial award after the date of the
offer. It was submitted that at that stage much was still uncertain
regarding the
quantification of the claim. The pre-morbid career path
was in issue; key aspects of the appropriate actuarial assumptions
viz.
the nett discount/capitalisation rate to be applied; the form of
investment strategy to be followed and the costs thereof; and the
future rate of taxation. Given these uncertainties the actuaries had
prepared calculations which at that stage exceeded the amount
of the
offer. It was accordingly submitted that the plaintiff’s
attorney and counsel could not have advised acceptance of
the offer
until all of those issues were determined.
[19]
It was furthermore argued that to order the plaintiff to pay the
defendant’s costs
after the date of the offer would
substantially reduce the effective award of damages and, therefore,
bring about an inequitable
result.
[20]
Mr Frost, for the defendant, pointed to the underlying purpose of
Rule 34 which is to enable
a defendant to determine its potential
liability and to protect itself against further litigation costs. He
submitted that at the
stage that the offer was made in this instance,
both parties were in the position of uncertainty regarding the
eventual basis upon
which the court would decide the quantum of the
claim. The defendant had, however, made an assessment of its
potential liability;
it had investigated the matter as it is obliged
to do and had made the offer upon such carefully considered basis.
[21]
What followed, it was submitted, was the plaintiff’s insistence
upon obtaining
a definitive judgment regarding the nett
discount rate aspect. Mr Frost pointed out that it was known
that this matter would
serve as a guide for several other cases which
were being held in abeyance. This, he submitted, was not of the
making of the defendant.
[22]
The
centrality of the dispute regarding the nett discount/ capitalisation
rate is noted in the main judgment
[9]
.
Mr Frost argued that, despite acceptance of the case-specific nature
of a determination of the nett discount rate, the plaintiff
had
pursued a determination of the issue which might possibly find more
general application. The defendant’s resistance to
this was
necessary and, ultimately, successful. In these circumstances should
the court not amend its order in accordance with
ordinary practice it
would negate or undermine the very purpose of the Rule. Such a
result would also be inequitable vis-à-vis
the defendant.
[23]
Whilst the
plaintiff was not successful insofar as her contentions regarding the
nett discount rate which ought generally to apply,
the original award
of costs did not particularize that aspect and disallow such
costs
[10]
. That however
is no reason to now alter the original order. What is required is an
assessment of what is fair and equitable
having regard to the fact
that a generous offer was not accepted.
[24]
Mr Schubart placed heavy reliance on the fact that the plaintiff
acted reasonably given
what was known at the time of the offer. It
seems to me, however, that contentions regarding the reasonableness
of the plaintiff’s
conduct should not be elevated to a defining
consideration. After all it will usually be the case that a plaintiff
who rejects
an offer believes that an award in excess of that offered
will be made. In this the plaintiff will invariably be advised by her
representatives upon an appraisal of the matter. The fact that a
plaintiff relies upon such advice does not preclude reconsideration
of an award of costs.
[25]
The circumstances of this matter are different to those at issue in
the
Syed v Metaf Limited t/a Metro Cash and Carry
matter. There several heads of damage were in issue and the offer was
in respect of an unspecified globular amount which was considerably
lower than the total claimed. Also, the original costs order already
provided for a partial indemnity for the defendant regarding
costs.
In this matter the tendered payment was founded upon an actuarial
assessment and concerned the only claim in issue, viz.
loss of
earning capacity. Whether the plaintiff reasonably believed that a
higher award would be made because of the then as yet
undetermined
exigencies does not alter the fact that the plaintiff was placed at
risk. This is the purpose of the Rule. It serves
to impose risk of
continuation and thereby bring about a resolution of the dispute or,
failing acceptance, a degree of indemnification
of the defendant.
[26]
The
following passage in
Erasmus
v Santam Insurance Ltd and Another
[11]
highlights the underlying considerations of fairness which are
relevant in circumstances such as the present:
“
Both the
substantive law and the Courts in their day-to-day approach to
litigation have taken protective care of attempts of parties
to find
each other through negotiation. The line runs through the exclusion
of evidence about settlement discussions to rules which
govern the
making and acceptance of tenders. The willingness of a party (who I
will henceforth call the defendant) to make
a payment to the
other party is the key to the process. It deserves to be so handled
that the defendant knows that his liability
will not exceed what he
has declared himself willing to pay. The process needs to be so
handled that a defendant is able to make
an adequate offer on the
claim without a need in respect of costs to comply with unjustified
demands from the plaintiff. The
settlement process needs such
handling by Courts that a defendant, in order to induce acceptance
despite a known dispute about
the justification of overseas witnesses
who work lavishly to 'qualify' themselves, can offer more on the
'claim' to make overall
settlement attractive despite the dispute. It
is patently unfair and even ineffective to encourage settlement if
the defendant
has added a monetary element to overcome the said
dispute and induce settlement, only to find that the Court takes an
own view
and in fact adds the qualifying fees to the offer.
Nothing arises as a
matter of fairness, desirability or a need for effectiveness to call
for qualification of the basic proposition
that a party should
not be exposed to the need to pay more than he has offered. If he has
offered less on the 'claim' than
the plaintiff could have proved, or
has qualified his offer in some other way, that still is all that he
has offered. That holds
good also if his offer is qualified insofar
as it relates to costs. It is of no consequence that a qualification
of any part of
the offer would, if there had been no acceptance, have
caused it to be inadequate to influence the Court's normal approach
to awards
of costs. It is of no consequence that in that event the
plaintiff would have or could have been awarded more or was entitled
to
claim more. It is of no consequence whether the offer or any
qualification thereof was decided upon for good or for bad reason or
was influenced by some erroneous impression, belief, or calculation.”
[27]
What the
passage highlights is the underlying policy considerations which
favour the settlement of disputes by agreement between
the litigants.
Effect is to be given to the bargain where there has been an
acceptance of the offer made by a defendant. Equally,
effect must be
given to the purpose to be achieved by the Rule. As noted in the
Naylor
matter
[12]
the Rule is for the
public benefit since it seeks to ensure that a plaintiff who goes to
trial, when she has been offered reasonable
compensation, must do so
without impunity in respect of costs.
[28]
It is of course necessary to balance the particular interests of a
plaintiff who may be
deprived of costs against the public benefit
sought to be achieved. Hence the discretion vested in the court.
[29]
I accept that the effect of an order mulcting the plaintiff in costs
after date of the
spatium deliberandi
would serve to reduce
the value of the compensation awarded to her. That consequence will
invariably follow in circumstances where
an order of monetary
compensation has been made. That in itself does not mean that such
order ought not be made. The reduction
in value of the award is
undoubtedly a hardship in this case but it is not such as would
render the plaintiff impecunious.
[30]
I am also alive to the nature of the compensation awarded and that it
flows from the liability
of an organ of state which has been
established to compensate victims of road accidents. In this the
defendant fulfils a vital
social assistance need which is mandated by
the values and rights enshrined in our Constitution as supreme law.
It must, however,
equally be emphasized that the defendant is duty
bound to fulfil its statutory obligations whilst exercising proper
stewardship
of the public funds allocated to it for the task. It is
accordingly entitled to the ordinary protections afforded to a
defendant
who elects to make an offer in terms of Rule 34.
[31]
When I take into account all of these factors I am of the view that
it will be fair and
equitable to order the plaintiff to pay the
defendant’s costs after the date of the offer. As already
stated the defendant
conceded its liability prior to that date.
[32]
In the result the following order is made:
1.
Paragraph 3 of the Order dated 12 April 2019 is set aside and
replaced with the following:
“
3. Defendant is to
pay Plaintiff’s costs, as taxed or agreed, together with Vat
thereon, on the party and party scale up to
and including 28 March
2019. Such costs to include the qualifying expenses, if any of the
following:
1. Dr
Olivier;
2. Prof
Dunn;
3. Dr
Cronwright;
4.
Ansie van Zyl;
5. Dr V
Gardiner;
6. Mr
Eaton;
7. Dr
Badenhorst;
8. Dr J
Gardiner;
9. Dr
Holmes;
10. Mr Roux;
11. Dr Frost;
12. Mr Loots;
13. Dr Naude.
4. Plaintiff is to
pay Defendant’s costs, as taxed or agreed, together with VAT
thereon, on the party and party scale
from 29 March 2018 to 12 April
2019. Such costs are to include the qualifying expenses, if any, of
the following:
1.
Mr B Swart;
2.
Mr M Jacobson.”
2.
Plaintiff is to pay the costs of the application pursuant to Rule
34(12),
as taxed or
agreed, together with VAT thereon, on a party and party
scale.
______________________
G.
G GOOSEN
JUDGE
OF THE HIGH COURT
Obo
the Applicant /Defendant: Adv A. Frost
Instructed
by Joubert
Galpin & Searle, 173 Cape Road, Mill Park, Port Elizabeth
Ref:
N. Boshoff
Tel:
(041) 396 9231
Obo
the Respondent/Plaintiff:
Adv L.A Schubart SC
Instructed
by Goldberg
& De Villiers Inc, 13 Bird Street, Central, Port Elizabeth
Ref:
H. Bekker
Tel:
(041) 501 9819
[1]
1992 (1) SA 893
(W) at 895C
[2]
1967 (2) SA 116
(D) at 118H-119A
[3]
Unreported, Case No 701/2017 ECHPE, 16 February 2018 at par 8
[4]
2011 (1) SA 571
(SCA) at 573H
[5]
2001 (1) SA 16
(SCA)at par 12 - 14
[6]
Unreported, Case No 4094/2009 [2016] ZAECGHC 38 (31 May 2016)
[7]
Unreported, Case No. 4094/2009 [2016] ZAECGHC 38 (31 May 2016)
[8]
Supra at par [11] and [12]
[9]
Main judgment at §5 and §47.
[10]
See Winlite (
supra
)
at 574F-G; See also Gentiruco AG v Firestone SA Pty Ltd 1972 (1) SA
589 (A)
[11]
Supra
at 897D-J
[12]
Supra at 23A-B