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[2022] ZAFSHC 194
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Mahlo v Road Accident Fund (3993/2017) [2022] ZAFSHC 194 (25 August 2022)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 3993/2017
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
MAKGAUHELO
BETTY MAHLO
Plaintiff
and
ROAD
ACCIDENT FUND
Defendant
BEFORE
:
CHESIWE
J
HEARD
ON
:
22
APRIL 2022
DELIVERED
ON
: 25
AUGUST 2022
[1]
The Plaintiff, a major female and business woman instituted a claim
for
damages against the Road Accident Fund (RAF) for injuries
sustained upon a motor vehicle collision that occurred 26 May 2014.
The
Plaintiff was a passenger in the vehicle registered [....].
[2]
The
Defendant accepted liability for 100% (one hundred percent) for the
Plaintiff’s proven damages. A court order was issued
on 21
January 2022 that the Defendant is to pay the Plaintiff an amount of
R430 185, 00 (four hundred and thirty thousand
one hundred and
eighty five rands) as well as an undertaking in terms of section 17
(4) (a) of the
Road
Accident Fund Act.
[1]
[3]
The Plaintiff’s claim for general damages was referred to the
Health
Professional Council of South Africa (HPCSA), but was denied.
[4]
On the day of the hearing, on 22 April 2022, the only issue for
argument
was future loss of earning capacity.
[5]
The Court has to determine the retirement age of the Plaintiff as
well
as the contingency rate.
[6]
The Plaintiff called one witness with respect to the issue of
retirement.
The Defendant did not call any witnesses.
[7]
The Plaintiff testified that, she was a self-employed vendor since
2010
and generating an income of R6 500 (six thousand five
hundred rands) per month. She further testified that she was planning
to retire at the age of 80 (eighty) years, was it not for the
accident and depending on her health.
[8]
Under cross-examination the Plaintiff conceded that the law in South
Africa
states the retirement age is 65 (sixty-five) years of age and
the government pension grant for females is capped at 60 (sixty)
years and male persons at 65 (sixty-five) years of age. She mentioned
that her health will not affect her business, as her thinking
and
running of the business will not be affected by getting older. She
conceded that she is unable to walk at a fast pace as she
is no
longer young. She mentioned that she applied for the old age pension
grant, as her age allowed her to apply for it.
[9]
The Plaintiff called Mr Mofosinyana Joseph Ntsala as her witness. He
testified
that he is 65 (sixty-five) years and he does not belong to
a pension fund and receives a government pension grant. He has
been a vendor, selling on the streets since the year 2010. He
knows the Plaintiff as they have both been vendors since then.
Mr Ntsala confirmed that being a vendor is a risky business, as there
are criminals and “nyaope boys” (drug addicts)
that can
rob them and it’s even riskier for the Plaintiff as she is a
female. Mr Ntsala concluded that depending on
his health, he is
prepared to work until the age of 80 (eighty) years. That concluded
the Plaintiffs case. The Defendant did not
call any witnesses and
also closed its case.
[10]
The legal representatives of both parties were requested to submit
written heads of argument
on 26 April 2022 and 29 April 2022
respectively.
[11]
Counsel on behalf of the Plaintiff, submitted in the written heads of
argument that the
Plaintiff is strong and healthy enough to retire at
the age of 80 (eighty) years, was it not for the accident. He
stated
that the Plaintiff in her evidence showed that in the ‘hawker’
(street vendor) industry, it was a norm to retire at
80 (eighty)
years, provided she was of sound health and was able to fulfil her
duties completely. Counsel submitted that
the Court is to apply
scenario 4 as calculated in the actuarial report.
[12]
Counsel on behalf of the Defendant submitted in the written heads of
argument that the
Plaintiff has failed to prove that she would have
retired at 80 (eighty) years, having regard to her health, personal
circumstances,
safety/risk factors as well as being an easy target
for the criminality on the streets, as ‘hawkers’/street
vendors
sit on the side of the streets when selling their products.
Counsel submitted that the court is to consider scenario 1 of
the
actuarial report.
[13]
Counsel for the Plaintiff submitted that scenario 4 should be
applicable in this instance.
Counsel on behalf of the Defendant
disputed that and submitted that scenario 1 would be more practical
since the retirement age
in South Africa is 65 (sixty-five) years.
[14]
It is common cause that in South Africa, government old age grant is
available for females
at age 60 (sixty) and for males at age 65
(sixty-five). The Court furthermore takes judicial notice of
professionals, government
officials, which are considered to retire
at age 65 (sixty-five). Government employees in terms of the
Government Employees Pension
Fund (GEPF), the retirement policy in
terms of men and women, varies from 55 (fifty-five), 60 (sixty) &
65 (sixty-five).
[15]
However, the Plaintiff in this instance is a vendor, is self-employed
and was financially
dependent on the income generated from the sale
of goods amounting to R6 500 (six thousand five hundred rand)
per month. There
is currently no case law in respect of the
retirement age for a self-employed person as a street vendor. The
majority of
case law deals with the retirement age of employees in a
formal employment setting.
[16]
In
Rubin
Sportswear v SA Clothing and Textile Workers Union and Others
[2]
,
the Court said:
“
What is the normal
retirement age depends upon the meaning accorded the word ‘normal’
in s 187(2)(b). It, accordingly
must be given its ordinary meaning.”
[17]
In
Bos
v Eon Consulting (Pty) Ltd Consulting
[3]
,
the Court accepted the submissions to establish a normal retirement
age. The issue of “normal age” was also dealt with
in
Hibbert
v ARB Electrical Wholesalers (Pty) Ltd.
[4]
[18]
Dr. DH Moloto, an orthopaedic surgeon, concluded in his report that
the accident has not
adversely affected the Plaintiff’s life
expectancy, nor her ability to work and there is no need for any
future orthopaedic
treatment.
[19]
Dr. S Moagi occupational therapist stated in her report as follows:
“
Her
competitiveness and productivity will be affected as long as the
mechanical pain persists when doing physical work. It was evident
that the accident has rendered her less competitive in the open
labour market. It is noted that post-accident, Ms Mahlo seemingly
suffers loss of productivity.
Following the motor
vehicle accident Ms Mahlo stated that she was unable to return to her
pre-accident occupation as a vendor due
to sequelae of injuries
sustained from the accident in question.”
[20]
Ms Kheswa, the industrial psychologist noted in her report as
follow:
“
The accident in
question only intervened when she was on the verge of disengagement
phase, hence not much could have been expected
in terms of career
growth and development. Thus, she could have continued with his (sic)
pre-accident job till such a time as he
(sic) would have retired. She
would have continued earning at her pre-accident earnings level until
she retired.”
[21]
The
Plaintiff filed an actuarial report by Munro Actuaries and there was
no actuarial report filed by the Defendant. The Plaintiff’s
actuarial report showed four scenarios. Munro Actuaries having
calculated four scenarios of the varied retirement ages and concluded
that the Plaintiff would have earned R5 500 (five thousand five
hundred rand) per month (2014 terms before tax) since the
date of the
accident and allowed for earnings inflation until retirement ages 65
(sixty-five), 70 (seventy), 75 (seventy-five)
and 80
(eighty).
[5]
[22]
The scenarios are stated as follows in the Munro Actuaries Report:
Scenario 1
Scenario 2 Scenario 3
Scenario 4
Age 65
Age 70
Age 75
Age 80
Past
loss: R597 300
R597 300
R597 300
R597 300
Future
loss: R80 400
R509 00
R841 400 R1 080 100
Total:
R677 700 R1 106 300
R1 438 700 R1 677 400
[23]
Indeed, it is difficult to quantify the loss of earnings of an
unskilled, self-employed
person such as in this case. The Plaintiff’s
circumstances are different compared to an employee in the private
sector or
within government, where calculations are accurate
predictions. It is clear that the Plaintiff has suffered loss of
earnings and
evidently with no case law which can be used or compared
with as she is a vendor. The Court can only rely on the mathematical
calculations
of the actuarial report.
[24]
The Plaintiff in her evidence testified that, was is not for the
accident, she would have
retired at the age of 80 (eighty) years.
However, I am inclined to agree with Counsel for the Defendant that
during cross-examination,
the Plaintiff was evasive on answering
certain questions, insisting that she was able to retire at the age
of 80 (eighty) years,
of which I doubt, as already during trial she
did move with some difficulty.
[25]
However, it is not unreasonable to accept that she is able to work
beyond the age of 65
years (sixty-five). Though there in no case law
on the retirement age of a self-employed and unskilled labourer,
there are many
instances where employees in the formal employment
market are allowed to work until the age of 70 (seventy) years and
beyond such
as is the case for professionals, Attorneys and
Ministers, though the Plaintiff’s circumstances are not
comparable to some
of these professionals.
[26]
It is clear from the Plaintiff’s testimony that depending on
her health, she will
work beyond the age 65 (sixty-five). I have my
doubts that she will be able to work until the age of 80 (eighty)
years as on observation
during her testimony, she walked with
difficulty as she approached the witness stand. The Plaintiff suffers
from high blood pressure
pre-accident and is already on the
government old age grant, which she has been receiving from the age
of 60 (sixty).
[27]
The
actuarial report on page 57 of the expert bundle, tabulated four
scenarios in which the different retirement ages are set out.
The
Court depends on these calculations as these involve a prediction
into the future. In
Southern
Insurance Association Ltd v Bailey N.O
[6]
, Nicholas JA said the
following:
“
One is for the
Judge to make a round estimate of an amount which seems fair and
reasonable. That is entirely a matter of guess work,
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 vary from the strongly
probable to the speculative. It is manifest that either approach
involves guesswork to a greater or
lesser extent.”
[28]
Nicholas JA continued on page 114 C – D as follows:
“
In a case where
the Court has before it material on which an actuarial calculations
can usefully be made,...while the result of
an actuarial computation
may be no more than an ‘informal guess’ it has the
advantage of an attempt to ascertain the
value of what was lost on a
logical basis.”
[29]
The Plaintiff in this instance is already 65 (sixty-five) years of
age and receiving an
old age grant from the government. The Plaintiff
at this age cannot compete in the labour market as a result of her
age. The Court
has to therefore accept that as a vendor, she would
have worked beyond the age of 65 (sixty-five), had it not been for
the accident,
but it cannot accept that she would be able to work
till the age of 80 (eighty) years.
[30]
Having considered the Plaintiff’s physical factors, personal
circumstances and her
general health, it is not completely impossible
that she would be able to work until the age of 70 (seventy) years.
In my view,
the second scenario of the actuarial calculations would
therefore be more applicable.
[31]
Counsel on behalf of the Plaintiff submitted that the Court is to
apply 7.5 percent contingency,
but not exceed 15 percent taking into
consideration that the accident has affected the Plaintiff’s
competitiveness and productivity
as well as the continued pain being
experienced when doing physical work. Counsel for the Defendant
submitted that a 25 percent
contingency be applied for future loss of
income.
[32]
It is now settled that contingencies, whether
positive or negative are an important control mechanism to adjust the
loss suffered
to the circumstances of the individual case in order to
achieve equity and fairness to the parties. There is no hard fast
rule
regarding contingency allowances.
[33]
It is trite
that contingency deductions are within the discretion of the Court
and depend upon the Court’s impression of the
case. Contingency
is normally calculated at 5 percent for past loss of income and at 15
percent for future loss of income. (See
Southern
Insurance Ltd v Bailey N.O
)
[7]
[34]
Thus an
actuarial report merely serves as an aid to the Court (See
Shield
Insurance CO Ltd v Hall
)
[8]
. There are no hard and fast
rules for mathematical logic in the determination of contingency
discount. Indeed, case law has shown
that an older claimant, in this
instance, the Plaintiff, the contingency discount rate will be lower
than of a younger claimant.
[35]
The factors that the Court has to take into consideration when
determining contingency
are the possibility that the Plaintiff may
eventually have a less than normal life expectancy and may experience
periods of unemployment
by reason of incapacity due to illness or
accident or due to labour unrest or general economic conditions. (See
Southern Insurance s
upra
)
[36]
The
Plaintiff is already 65 (sixty-five) years and is therefore not a
competitor in the labour market. However, reality is that
people work
into their later years, depending on their health. In
Mogale
v Road Accident Fund
[9]
, the Court confirmed as
follows:
“
that people today
are healthier and continue to work after the age of 65.”
[37]
I am thus
inclined to accept that the Plaintiff’s retirement age would be
the age of 70 (seventy) years. Taking into consideration
the Munro
actuarial report, scenario 2 would be applicable and it is more
practical. Bearing in mind what was said in the
matter of
Pitt
v Economic Insurance Co. Ltd,
[10]
Holmes
J (as he then was) cautioned
“…
not
to pour largesse from the horn of plenty at the defendant’s
expense.”
[38]
In the circumstance and in my view, a fair, just and reasonable
contingency of 25 percent,
be deducted from scenario 2 calculations
of R1 106 300,00. Calculated as follows: R1 106 300 –
R276 572 =
R829 725
[39]
Accordingly, the following order is made:
1.
The Defendant is ordered to make payment for loss of earnings in the
amount of
R829 725;
2.
Interests on the above sum at the maximum prescribed rate, presently
being 15,5
% per annum, 14 days from the date of this judgment to
date of final payment;
3.
Costs of suit, including costs of 19, 20 and 22 April 2022.
Chesiwe,
J
On
behalf of the Plaintiff:
Adv. MB Mojaki
Instructed
by:
Makubalo
Attorneys
BLOEMFONTEIN
On
behalf of the Defendant:
J
Gouws
Instructed
by:
State
Attorney
BLOEMFONTEIN
[1]
Act 56 of 1996.
[2]
(2004)
25 ILJ 1671 LAC at para 13
[3]
(JS948/14)
[2016] ZALCJHB 305
[4]
(2013) 34 ILJ 1190 (LC)
[5]
Munro Actuarial Report, pages 58, 59, 60 and 61 of the Index:
Defendant’s Expert Reports
[6]
1984 (1) SA 98 (A)
[7]
1984 (1) SA 98
(A) at 118 G – H
[8]
1976 (4) SA 431
(A) at 444F
[9]
(29208/13) [2014] ZAGPJHC 263 (14 October 2014)
[10]
1957
(3) SA 284
(N) at 287 E-F.