Brief Summary

Delict — Loss of earnings — Claim for damages arising from motor vehicle accident — Plaintiff, a qualified diesel mechanic, sustained injuries affecting his earning capacity — Dispute over inclusion of free use of business premises in loss calculation — Court found plaintiff's claim of free use unsubstantiated and excluded it from loss assessment — Compensation awarded for past and future loss of earnings calculated at R3 187 560.00.

Comprehensive Summary

Summary of Judgment

1. Introduction

This was a delictual damages action arising from a motor vehicle accident, in which the plaintiff claimed compensation from the Road Accident Fund for losses suffered as a result of bodily injuries sustained in the collision. The proceedings came before the High Court of South Africa, Free State Division, Bloemfontein.

The parties were Roucher Burger (plaintiff/applicant in the heading) and the Road Accident Fund (defendant/respondent). By the time the matter proceeded to adjudication, several issues had already been resolved between the parties.

The procedural posture was that liability had been settled on the basis that the insured driver was solely negligent, and the claims relating to future medical expenses and general damages had also been settled. The only remaining dispute for determination by the court was the quantification of the plaintiff’s past and future loss of earnings.

The general subject-matter of the dispute concerned the proper calculation of patrimonial loss flowing from impaired earning capacity, and, more specifically, whether an alleged “free benefit” (the asserted free use of business premises) formed part of the plaintiff’s pre-accident income for purposes of quantifying loss of earnings.

2. Material Facts

The motor vehicle accident occurred on 29 January 2016. It was accepted (following settlement) that the insured driver’s negligence was the sole cause of the accident, and the court proceeded on the basis that the plaintiff had suffered injuries with sequelae affecting his work capacity.

The plaintiff was a qualified diesel mechanic. Before the collision, he had been employed in the transport and mechanical sector, including employment at Volvo SA and BZM Transport, and thereafter as a workshop manager at Hestony Transport. The salary advices placed before the court reflected earnings of R34 450 per month, together with a thirteenth cheque, producing an annual income recorded as R447 525.00.

The plaintiff left Hestony Transport to start his own business. Shortly after becoming self-employed, the accident occurred. The plaintiff’s version was that, after starting his business, he entered into a working arrangement with Knottco. He testified that Knottco paid him R22 745.00 per month to supervise and service clients in respect of repair work referred to him, and that he was also permitted to pursue his trade in addition to that arrangement.

A central factual dispute concerned the plaintiff’s assertion that he enjoyed the free use of Knottco’s business premises (workshop space), and that the value of this free use should be included in the calculation of his pre-accident earnings. In support of the alleged value of the premises, the plaintiff called Mr Carl Buchow, who expressed the opinion that the rental value of the space (described as 525 square metres, including charges such as water and electricity) totalled R26 250.00 per month. The defendant disputed that this alleged benefit should be taken into account.

As to injury and functional outcome, Dr J F Ziervogel, an orthopaedic surgeon, reported that the plaintiff sustained a humeral shaft fracture treated surgically by open reduction and internal fixation with plate and screws. At consultation, the plaintiff’s shoulder displayed serious limitation of active movement and pain. The plaintiff had also sustained a compression fracture, with the opinion recorded that this might cause future mechanical lower backache. Dr Ziervogel expressed the view that the plaintiff could not do the job for which he was trained and would be better suited to supervisory duties.

The industrial psychology evidence, particularly that of Ms Susan Van Jaarsveld, together with a joint minute compiled with the respondent’s industrial psychologist, recorded agreement that, absent the collision, the plaintiff would probably have continued as a self-employed diesel mechanic or in similar work until retirement age, but that he could not currently compete fairly for work in his field in the open labour market where heavy physical exertion and increased mobility are required. It was also accepted that he would be disadvantaged in efficiency, effectiveness, and productivity relative to uninjured counterparts.

It was treated as common cause that the plaintiff could not return to work as a diesel mechanic in his own business and that during recuperation he performed no remunerative work and generated no income. The judgment also recorded that, although he later returned to work, he did so with considerable pain and discomfort, and that he could perform only supervisory duties, with occasional exertion required beyond that. Because of work challenges he was forced to close his business and became employed as a depot manager, reportedly earning about R30 000.00 per month. The court further recorded (in its narrative of post-accident employment) that after closing his sole proprietorship he secured employment with Strada earning R18 000 per month, and that during 2017 he became employed in Middleburg as a depot manager.

3. Legal Issues

The central legal questions concerned the quantification of damages for past and future loss of earnings arising from diminished earning capacity, given that liability had been settled and the existence of some earning impairment was largely accepted.

A key issue was one of application of law to fact, with a significant factual component: whether the plaintiff had proved, on the probabilities, that he enjoyed the beneficial free use of Knottco’s premises and whether that benefit properly formed part of his pre-accident earning package for purposes of calculating loss of earnings.

A further issue concerned the selection and acceptance of actuarial scenarios and contingencies in order to determine the appropriate amount of compensation, including which expert calculations were to be preferred on the evidence placed before the court.

4. Court’s Reasoning

The court approached the claim on the basis of established delictual principles governing patrimonial loss. It endorsed the proposition that a defendant must make good the difference between the value of the plaintiff’s estate after the commission of the delict and what it would have been worth but for the delict, and that a person’s capacity to earn money forms part of their estate. The court relied on authority recognising that impairment of earning capacity constitutes compensable loss where it diminishes the plaintiff’s patrimony.

On the contested question of the alleged “free benefit” (the free use of Knottco premises), the court rejected the plaintiff’s contention that this evidence was undisputed and should be accepted. The court attached weight to the fact that, during cross-examination, it became apparent that the plaintiff had not informed his expert witnesses, including his industrial psychologist, of this alleged beneficial free use. The court regarded the absence of explanation for that omission as material to the reliability of the plaintiff’s version. The court further considered the plaintiff’s explanation regarding the whereabouts and contactability of the owner of Knottco to be unsatisfactory, noting that his account shifted from apparent lack of knowledge to an assertion that the owner had emigrated and could be contacted. In the court’s evaluation, these features undermined the reliability of the asserted arrangement.

On that basis, the court found that the submission that the plaintiff had beneficial free use of part of Knottco’s premises free of charge had to be rejected, and it followed that the purported benefit could not be included when calculating loss of earnings.

Turning to quantification, the court accepted that the plaintiff’s earning capacity had been compromised and that this constituted a loss for which he was entitled to compensation. The court aligned itself with the industrial psychological assessment that the plaintiff should be compensated for the differential between what he would have earned as a diesel mechanic (uninjured scenario) and what he could now earn given his limitations and the move into more supervisory roles.

On the actuarial evidence, the court recorded that the parties’ actuaries used the same general methodology (the actuarial present value method) and the same mortality tables, and that a joint minute had been accepted in evidence. The court expressed a preference for the respondent actuary Mr Grant Pretorius’s first scenario for calculating loss of earnings, noting that it was based on the report of the industrial psychologist called by and commissioned for the plaintiff. The court further noted the agreement reflected in the joint minute that, should the court accept the earning scenarios and contingencies set out by Pretorius, the actuaries were in agreement with the results in Pretorius’s report.

Applying those accepted assumptions and the contingencies and capping reflected by Pretorius, the court determined that the plaintiff’s proven losses comprised a past loss and a future loss, which together yielded the total compensable amount. The court’s quantification thus flowed from (a) rejecting the free-premises benefit as unproven, (b) accepting diminished earning capacity, and (c) adopting the actuarial scenario and contingencies it considered supported by the evidence and the experts’ joint position.

5. Outcome and Relief

The court awarded the plaintiff R3 187 560.00 as compensation for loss of earnings, comprising R742 776.00 in past loss of earnings and R2 444 784.00 in future loss of earnings.

The defendant was ordered to pay the award into the plaintiff’s attorneys’ trust account as specified in the order. The court further ordered that, if the defendant did not pay the capital amount within 180 days from the date of the order, the defendant would be liable for interest at 7% per annum, compounded and calculated fourteen days from the date of the order (as framed in the judgment).

The defendant was ordered to pay the plaintiff’s taxed or agreed party-and-party costs on a High Court scale, subject to the taxing master’s discretion, including the reasonable qualifying fees of the identified expert witnesses (Dr Ziervogel, Ms Van Jaarsveld, and Mr Wim Loots), together with costs attendant upon obtaining payment under the order. Provision was also made for taxation steps if costs were not agreed.

Cases Cited

Dippenaar v Shield Insurance Co Ltd 1979 (2) SA 904 (A) at 917B–D.

Union Government (Minister of Railways and Harbours) v Warneke 1911 AD 657.

Union and National Insurance Co Ltd v Coetzee 1970 (1) SA 295 (A).

Legislation Cited

No legislation was expressly cited in the text of the judgment provided.

Rules of Court Cited

No rules of court were expressly cited in the text of the judgment provided.

Held

The court held that the plaintiff had proved a compensable impairment of earning capacity and was entitled to damages representing the difference between his uninjured earning trajectory and his post-accident earning capacity as supported by the accepted expert evidence.

The court further held that the plaintiff had not established, on the probabilities, that he enjoyed the alleged free use of Knottco’s premises as a benefit properly to be included in the pre-accident earnings calculation, and the claimed value of that alleged benefit was therefore excluded from the computation of loss.

On the accepted actuarial scenario (Pretorius’s first scenario) and contingencies, the court held that the plaintiff’s total loss of earnings amounted to R3 187 560.00, and it granted judgment for that sum with ancillary payment, interest (on the terms stated), and costs orders.

LEGAL PRINCIPLES

The judgment applied the principle that, under the lex Aquilia, delictual patrimonial damages are assessed by comparing the value of the plaintiff’s estate after the delict with what it would have been worth absent the delict, and awarding the difference.

It applied the established rule that earning capacity forms part of a person’s patrimony, and that the loss or impairment of earning capacity constitutes compensable loss to the extent that it diminishes the estate, even where quantification requires estimation and expert modelling.

The judgment also reflects that alleged components of pre-accident remuneration or benefits (such as the asserted free use of premises) must be proved on the probabilities; where the court finds the underlying factual basis unreliable or inadequately supported, such a benefit will not be incorporated into the damages computation.

Finally, it reflects the approach that, where actuaries employ common methodology and produce a joint minute indicating agreement conditional on the court’s acceptance of specified assumptions, the court may adopt the quantification flowing from the scenario it finds consistent with the accepted expert and factual foundation.

Burger v Road Accident Fund (2799/2018) [2022] ZAFSHC 313 (2 November 2022)