Erasmus Ferreira & Ackermann and Others v Francis (311/08) [2009] ZASCA 54; 2010 (2) SA 228 (SCA) ; [2009] 3 All SA 500 (SCA) (27 May 2009)

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Erasmus Ferreira & Ackermann and Others v Francis (311/08) [2009] ZASCA 54; 2010 (2) SA 228 (SCA) ; [2009] 3 All SA 500 (SCA) (27 May 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 311/08
ERASMUS FERREIRA & ACKERMANN First
Appellant
CHRIS FERREIRA Second Appellant
HENDRIK ACKERMANN Third Appellant
and
KERRY-LYNN FRANCIS Respondent
Neutral citation:
Erasmus
Ferreira & Ackermann v Francis
(311/08)
[2009] ZASCA 54
(27 May 2009)
Coram:
STREICHER, FARLAM,
NUGENT, CLOETE & CACHALIA JJA
Heard:
17 MARCH 2009
Delivered:
27
MAY 2009
Summary:
Section 1(1)
of the
Assessment of Damages Act 9 of 1969
which, in an action for damages
arising from a person’s death, prohibits insurance money, pensions
or benefits from being taken
into account in calculating loss of
support, does not apply to a dependant’s action against attorneys
who negligently caused
the loss of support claim to become
prescribed. Where, however, a dependant received a collateral benefit
from an insurance company
in respect of the prescribed claim it was
held that it was fair that the attorneys, who had caused the loss of
support claim to
become prescribed, should not be entitled to deduct
that benefit from their overall liability to the dependant.
______________________________________________________________
__
ORDER
________________________________________________________________
On appeal from:
High Court,
Pretoria (Visser AJ sitting as court of first instance).
The following orders are made:
(i) The appeal is dismissed with costs.
(ii) The order of the court below is amended to include
the agreed provision for interest so that it reads:
‘
Judgment is entered for the
plaintiff against the defendants, jointly and severally, one paying
the others to be absolved, in the
amount of R850 000 (eight
hundred and fifty thousand rand) with interest at the rate of 15.5%
per annum calculated from the
date 14 days after date of judgment
with costs which costs are to include the costs attendant upon the
employment of senior counsel.’
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
CACHALIA JA (STREICHER, FARLAM, NUGENT, CLOETE JJA
concurring)
[1] This an appeal from the Pretoria High Court (Visser
AJ) with its leave against a judgment ordering the appellants to pay
the
respondent an amount of R850 000 for damages arising from
the professional negligence of the appellants. The high court decided

the case on the basis of a stated case agreed to by the parties. It
will be convenient to refer to the parties as they were referred
to
in the court below – the appellants were the defendants and the
respondent was the plaintiff.
[2] The plaintiff was married to one Bruce Francis (‘the
deceased’) who was killed in a motor vehicle collision on 9 October

1998 giving rise to a third party claim by the plaintiff for damages
for loss of support against the Road Accident Fund (‘the
Fund’)
under the Road Accident Fund Act 56 of 1956. The plaintiff instructed
the defendants, who are attorneys, to pursue her
claim against the
Fund. They accepted the instruction and lodged the claim but failed
to issue summons timeously. The claim thus
became prescribed and the
plaintiff sued the defendants for professional negligence. Her claim
against the defendants was for R850 000
– the amount that the
parties agreed she would have been entitled to recover from the Fund
for her loss of support had the defendants
not caused her claim to
become prescribed.
[3] The deceased was employed at Douglas Colliery
Services Limited (‘Douglas Colliery’). In terms of his employment
contract
with Douglas Colliery he was (and on his death his
dependants were) entitled to benefits under an insurance policy known
as a Commuting
Journey Policy (‘the CJP’) issued by Rand Mutual
Assurance Company Limited (‘Rand Mutual’). It is common cause
that, the
plaintiff became entitled to payment of a pension of
R695 525 from Rand Mutual in terms of the CJP arising from the
death
of the deceased, and that the pension is indeed being paid to
her. (The figure comprises both the amounts which the plaintiff has

received in the form of monthly pension payments, and the capitalised
value of future payments.) Had the defendants pursued the
plaintiff’s
claim against the Fund, the Fund would not have been entitled to
bring this amount into account as it was ‘for
loss of support as a
result of a person’s death (and constituted) insurance money,
pension or benefit’ as envisaged in
s 1(1)
of the
Assessment
of Damages Act 9
of 1969 (‘the Assessment Act’), which the Fund,
in terms of the section, would have been precluded from deducting
from its
overall liability. However, in terms of the CJP the
plaintiff would have been obliged to pay Rand Mutual out of the
amount received
from the Fund to the extent of the benefit payable by
Rand Mutual in terms of the CJP.
[4] So, had the defendants pursued the claim against the
Fund on the plaintiff’s behalf they would have recovered R850 000

in respect of the plaintiff’s loss of support from the Fund. She
would have had to pay R695 525 to Rand Mutual, retaining
a
balance of R154 475 and would have continued to receive the CJP
pension. She would thus, in effect, have received a total
of R850 000
comprised of her monthly CJP pension to the value of R695 525
and the R154 475 that she would have retained
out of her claim
against the Fund.
[5] The defendants contended that the plaintiff would
not be obliged to indemnify Rand Mutual to any extent out of damages
recovered
from them with the result that she suffered damages in an
amount of R154 475 and not R850 000 as a result of their
negligence.
Should they be ordered to pay R850 000 to the
plaintiff, she would be R695 525 better off than she would have
been had
they not allowed her claim to become prescribed. The
plaintiff on the other hand contended that, in terms of the CJP she
is obliged
to indemnify Rand Mutual out of damages recovered from any
third party to the extent of the benefit payable by Rand Mutual in
terms
of the policy. In the alternative she contended that her claim
against the defendants is a claim for loss of support as a result
of
the death of her husband and that in terms of
s 1
of the
Assessment of Damages Act 9 of 1969
the insurance money payable to
her may not be taken into account in assessing her damages claimed
from the defendants. Consequently
the stated case posed the following
questions for determination by the high court:
‘
The Court is asked to
adjudicate upon the effect of the Plaintiff’s receipt of benefits
in terms of the CJP upon the Defendants’
liability to the Plaintiff
arising out of the prescription of her claim against the Fund. More
in particular, the Court is asked
to determine:
(a) Whether the defendants were
‘third parties’ as defined in Condition 8 of the CJP.
(b) If not, whether the
plaintiff’s claim against the defendants fell to be reduced by the
amount which the plaintiff would have
had to repay to Rand Mutual,
and which she was no longer obliged to.’
In answering the second question the high court was
asked to determine whether the provisions of s 1 of the
Assessment Act
applied to the plaintiff’s claim against the
defendants.
[6] It appeared to the parties that if either question
was answered affirmatively the plaintiff would be entitled to the
full amount
of R850 000 without having to deduct the R695 525.
On the other hand, if the second question was resolved in favour of

the defendants, in other words that the Assessment Act did not apply
to the plaintiff’s claim, the parties were under the impression

that the defendants’ liability of R850 00 would be reduced by
R695 525 to R154 475. The high court decided the
first
question against the plaintiff but the second in her favour. This
meant that the defendants could not deduct the value of
the pension
from the computation of the plaintiff’s damages and were thus
liable to the plaintiff for the full amount of R850 000.
The
defendants appealed against this finding.
[7] I turn to consider the first question – whether
the defendants are ‘third parties’ as envisaged in Condition 8 of
the
CJP. It reads thus:
‘
Where the accident in respect
of which a benefit is payable was caused under circumstances creating
a legal liability in some person
other than the Insured (hereinafter
referred to as the Third Party) to pay damages to the Insured Person
or to his dependants in
respect thereof, the Insurer shall be
entitled to be indemnified by the Insured Person or by his
dependants, as the case may be,
out of any damages recovered from the
third party, to the extent of any benefit payable by the Insurer in
terms of this policy
. . .’
[8] The plaintiff contended in the high court, as she
did before us, that the cause of the plaintiff’s claim was the
accident.
As such, so the contention went, the court should give
effect to the true intention of the parties by interpreting the
condition
so as to include the defendants within the ambit of the
meaning of ‘the Third Party’. The high court observed that the
clear
terms of the condition applied only to a claim that arose from
an accident and because, the court reasoned, the legal liability
of
the defendants was caused not by the accident but by the prescription
of the claim, the defendants were not third parties envisaged
in the
CJP. In my view the court’s reasoning on this aspect cannot be
faulted.
[9] I turn to the second issue namely whether the
Assessment Act applied to the plaintiff’s claim. Section 1 of the
Assessment
Act provides as follows:
‘
(1) When
in any action, the cause of which arose after the commencement of
this Act, damages are assessed for loss of support as
a result of a
person's death, no insurance money, pension or benefit which has been
or will or may be paid as a result of the deat
h,
shall be taken into account.
(2) For the
purposes of subsection (1) –
“
benefit”
means any payment by a friendly society or trade union for the relief
or maintenance of a member's dependants;
“
insurance
money” includes a refund of premiums and any payment of interest on
such premiums;
“
pension”
includes a refund of contributions and any payment of interest on
such contributions, and also any payment of a gratuity
or other lump
sum by a pension or provident fund or by an employer in respect of a
person's employment.’
[10] The defendants contended in the high court, as they
do now, that the Assessment Act, in its terms, applies only to
actions
in which damages are assessed for loss of support, which the
plaintiff’s action against the Fund is. And, so they contended,
because the plaintiff’s action against the defendants is not one
for loss of support, but for loss of her claim against the Fund,
the
Assessment Act did not apply to her claim against them.
[11] The high court rejected this contention. In so
doing, it reasoned that even though the plaintiff’s cause of action
against
the Fund differed from its action against the defendants, her
claim, that is, her right of action against them was essentially the

same – they both related to damages for loss of support as a result
of the death of the deceased.
[12] Claims for loss of support on the one hand and for
professional negligence on the other differ. In the former case what
is
being compensated is the loss of support; in the case of the
latter it is the lost opportunity for recovering that loss. The
claims
are conceptually different. Section 1(1) of the Assessment Act
applies only to actions in which damages are to be assessed for loss

of support as a result of a person’s death. In the present action
damages are not to be assessed for loss of support. The damages
that
are to be assessed are the damages suffered by the plaintiff as a
result of the negligence of the defendants in having allowed
her
claim for loss of support against the Fund to become prescribed. The
fact that the damages suffered by the plaintiff may be
the same as
the amount of her loss of support and the fact that such damages have
to be determined by reference to her loss of
support do not make the
present action an action in which ‘damages are assessed for loss of
support’.
[13] In light of the fact that the plaintiff is not in
terms of the CJP obliged to indemnify Rand Mutual out of damages
recovered
from the defendants and the fact that the value of the
benefit payable by Rand Mutual is not to be excluded from the
computation
of the damages suffered by the plaintiff as a result of
the defendants’ negligence, the defendants submitted that the
damages
suffered by the plaintiff as a result of their negligence
amounted to R154 475 and not R850 000 as claimed by her.
[14] However, it does not follow that because s 1(1)
of the Assessment Act does not apply the plaintiff’s claim against
the
defendants falls to be reduced by the amount which the plaintiff
would have had to repay to Rand Mutual. The question arises whether,

at common law, the benefit payable to the plaintiff in terms of the
CJP should not be disregarded when determining the damages
suffered
by the plaintiff as a result of the defendants’ negligence. Because
of the conclusion the high court had arrived at
it was not necessary
to pursue this inquiry and during their oral submissions before this
court neither party dealt with this question
satisfactorily.
[15] So the parties were invited to make further written
submissions. In particular they were requested to deal with whether
the
benefit payable by Rand Mutual was collateral to the plaintiff’s
right of action according to the principle
res
inter alios acta
,
aliis
neque nocet
,
neque
prodest
(‘a thing done, or a transaction
entered into, between certain parties cannot advantage or injure
those who are not parties to
the act or transaction’) and had to be
disregarded in computing the plaintiff’s damages. The parties were
also asked to deal
with the question whether Rand Mutual should have
been joined in the proceedings before the high court. Since then Rand
Mutual
has indicated that it waived its right to be joined as a party
and that it considers itself bound by this court’s decision and
so
the answer to this question fell away. It remains to deal with the
question whether the pension benefit that Rand Mutual paid
to the
plaintiff was a collateral benefit which had to be disregarded in
computing the damages suffered by her as a result of the
defendants’
negligence.
[16] As a general rule the patrimonial delictual damages
suffered by a plaintiff is the difference between his patrimony
before
and after the commission of the delict. In determining a
plaintiff’s patrimony after the commission of the delict
advantageous
consequences have to be taken into account. But it has
been recognised that there are exceptions to this general rule.
Various
attempts to formulate a legal principle as to which benefits
should be taken into account have been made. In
Standard
General Insurance Co Ltd v Dugmore NO
1997
(1) SA 33
at 41E-42E Olivier JA referred to these attempts and
concluded:
‘
Boberg (
The
Law of Delict
vol 1
at 479) succinctly states:
“
The existence of the
collateral source rule can therefore not be doubted; to what benefit
it applies is determined casuistically;
where the rule itself is
without logical foundation, it cannot be expected of logic to
circumscribe its ambit.”
It now seems to be generally
accepted that there is no single test to determine which benefits are
collateral and which are deductible.
Both in our country (
Santam
Versekeringsmaatskappy Bpk v Byleveldt
(
supra
at 150F) and in England (
Parry
v Cleaver
[1969] 1
All ER 555
(HL)
(1970) AC 1)
at 14 and 31 it is acknowledged that
policy considerations of fairness ultimately play a determinative
role.’
In a dissenting judgment Marais JA said that there can
be little doubt that the exclusion of benefits flowing from the
benevolence
of third parties or from insurance policies which a
plaintiff had himself taken out and paid for is a result intuitively
sensed
by virtually all to be ‘fair’. As to the reason why
benefits in other classes of cases have not been excluded he
suspected
‘that the intuitively sensed ‘fairness’ of ignoring
benefits flowing from the benevolence of third parties or from
insurance
policies which a plaintiff himself had taken out and paid
for, is either entirely absent in the other classes of case, or not
so
keenly sensed.’
1
[17] In light of the aforegoing I agree with Neethling,
Potgieter and Visser
Law of Delict
5ed (2006) at p 215-216 that ‘[q]uestions regarding collateral
benefits are normative in nature; they have to be approached and

solved in terms of policy principles and equity’ and that in doing
so ‘there should always be a weighing-up of the interests
of the
plaintiff, the defendant, the source of the benefit as well as the
community in establishing how benefits resulting from
a
damage-causing event should be treated’.
[18] The defendants submitted that it would be unfair to
allow the plaintiff to receive double compensation and thereby to be
enriched
in the amount of R695 525, which will occur if the
defendants are not able to deduct this amount from their overall
liability
of R850 000. On the other hand there would seem to be
no reason why the defendants should be allowed to benefit from an
insurance
policy which had to be disregarded in respect of the loss
of support claim which they allowed to become prescribed. Should the
amount received by the plaintiff from Rand Mutual be disregarded she
may well consider herself morally obliged to indemnify Rand
Mutual to
the extent of the benefit payable by Rand Mutual in terms of the CJP
as she would have been obliged to do had her claim
against the Fund
not become prescribed. I see no reason why she should be deprived of
that moral choice by withholding the means
for her to do so. An order
that R850 000 be paid to her will therefore also be in the best
interests of Rand Mutual which
according to Mr Mullins who appeared
on behalf of the defendants, is ‘lurking behind (her) claim’. If
it is, there is nothing
opprobrious in its conduct. It is out of
pocket in the amount of R695 525 and is entitled to try to
recover this amount.
[19] But even if the plaintiff does not repay Rand
Mutual and thereby profits from the outcome of this litigation, I do
not think
it unfair that the defendants compensate her for the full
extent of her loss of R850 000, for this is what she would have
been entitled to receive from the Fund had the defendants not
negligently caused her claim against the Fund to become prescribed.

The defendants therefore cannot complain – they are no worse off
than the Fund would have been had they fulfilled their mandate
to
diligently pursue her claim against the Fund.
[20] For these reasons the appeal must fail. The parties
agreed in the stated case that if the plaintiff succeeded in the high
court
she would be entitled to interest at the rate of 15.5% per
annum calculated from a date 14
days after the date of judgment.
2
The high court appears to have inadvertently omitted to reflect this
agreement in its order. The following orders are made:
(i) The appeal is dismissed with costs.
(ii) The order of the court below is
amended to
include the
agreed provision for interest so that it reads:
‘
Judgment is entered for the plaintiff against the
defendants, jointly and severally, the one paying the others to be
absolved, in
the amount of R850 000 (eight hundred and fifty
thousand rand) with interest at the rate of 15.5% per annum
calculated from
the date 14 days after date of judgment with costs
which costs are to include the costs attendant upon the employment of
senior
counsel.’
________________
A CACHALIA
JUDGE OF APPEAL
APPEARANCES:
For Appellant: J F Mullins SC
Instructed by:
Savage Jooste & Adams Inc;
Pretoria
Webbers; Bloemfontein
For Respondent: J G Bergenthuin SC
Instructed by:
Van Zyl Le Roux & Hurter Inc;
Pretoria
Molefi Thoabala Attorneys;
Bloemfontein
1
At 48E-G.
2
The reason
for the 14 day delay is inexplicable. The pleader may have had in
mind s 1(A) inserted into s 21 of the Compulsory
Motor
Vehicle Insurance Act 56 of 1972 by s 8 of Act 69 of 1978 but
that provision has long since ceased to be applicable
to motor
accident claims and would in any event not have been applicable to
the plaintiff’s claim here. She would have been
entitled to
interest at the prescribed rate, from the date on which the judgment
debt became due and payable in terms of
s 2(1)
of the
Prescribed Rate of Interest Act 55 of 1975
but he did not ask for
it.