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[2017] ZASCA 91
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Fourie v Ronald Bobroff and Partners Inc (653/2016) [2017] ZASCA 91 (7 June 2017)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
No: 653/2016
In the
matter between:
URSHA
YVONNE
FOURIE
APPELLANT
and
RONALD
BOBROFF & PARTNERS
INC
RESPONDENT
Neutral
citation:
Fourie
v Ronald Bobroff & Partners Inc
(653/2016)
[2017]
ZASCA 91
(7 June 2017)
Coram:
Cachalia, Saldulker
and Van der Merwe JJA and Coppin and Schippers AJJA
Heard:
17 May 2017
Delivered:
7 June 2017
Summary:
Attorney: duty of
an attorney to client: breach of mandate in respect of claim for
damages for loss of earning capacity: damages
not proved: absolution
from the instance should have been ordered: appeal dismissed.
ORDER
On
appeal from:
Gauteng
Local Division of the High Court, Johannesburg
(Weiner J
sitting as court of first instance):
1 The
order of the court a quo is varied by substituting the dismissal of
the appellant’s claim with an order of absolution
from the
instance.
2 Save
for paragraph 1 above, the appeal is dismissed with costs, including
the costs of two counsel.
JUDGMENT
Van
der Merwe JA (Cachalia and Saldulker JJA and Coppin and Schippers
AJJA concurring):
[1] The
appellant, Ms Ursha Yvonne Fourie, instructed the respondent, Ronald
Bobroff & Partners Incorporated, to claim damages
from the Road
Accident Fund (the RAF). Action was instituted against the RAF, but
the matter was settled. The issues in this appeal
are whether the
respondent breached its mandate by failing to pursue a claim for loss
of earning capacity in respect of the appellant
and by undersettling
the claims for general damages of the appellant and her minor son.
They arose in the circumstances set out
below.
[2] On 27
June 2005, the appellant, her husband (Mr Fourie), their son Lincoln
(born on 12 November 1997) and their daughter Cayleigh
(born on 26
August 2004) were involved in a motor vehicle collision that had
tragic consequences. As a result of injuries sustained
during the
collision, Mr Fourie died on the same day and Cayleigh passed away
about a month later on 27 July 2005. The appellant
sustained physical
injuries consisting of fractured ribs, a soft tissue neck injury, a
soft tissue injury to her right shoulder,
a clavicular fracture,
haematomas to her right upper and lower leg and an abdominal injury.
She was admitted to hospital on the
date of the collision, where she
remained until 8 July 2005. Lincoln suffered soft tissue injuries to
his neck, back and kidneys.
He was examined in hospital immediately
after the collision and sent home. Both the appellant and Lincoln of
course suffered emotional
distress and pain as a result of the loss
of Mr Fourie and Cayleigh.
[3]
During August 2005 the appellant instructed the respondent to claim
damages on her and Lincoln’s behalf from the RAF.
The
respondent specialises in personal injury claims. Since approximately
the middle of 2007, Ms Philippa Jane Farraj, an attorney
of some ten
years’ experience employed by the respondent, handled the
matter. Summons against the RAF was issued during August
2007. The
particulars of claim included claims by the appellant for loss of
support, loss of income and general damages for pain
and suffering,
disability and loss of amenities of life, as well as claims on behalf
of Lincoln for loss of support and general
damages. The case was
eventually set down for hearing on 1 August 2011.
[4]
Approximately ten days before the trial date, Ms Farraj briefed
counsel to appear for the appellant. By that time she had obtained
medico-legal reports from Dr A Matisson (radiologist), Dr G Read
(orthopaedic surgeon), Dr L Fine (psychiatrist), Ms M Ledwaba
(occupational therapist) and Ms S Shaik (industrial psychologist).
She had also obtained a report from an actuary, Mr Ivan Kramer.
The
RAF, in turn, obtained medico-legal reports from Prof Schepers
(orthopaedic surgeon), Prof M Vorster (psychiatrist) and Mr
S van
Huyssteen (industrial psychologist).
[5] Mr
Kramer only made calculations in respect of the claims for the loss
of support. His report to the respondent was dated 8
July 2011. The
calculations were made on the assumption that the appellant was
unemployed and, had the accident not occurred, would
never have been
employed. He therefore calculated the loss of support from the date
of the accident. Ms Farraj did not procure
an actuarial calculation
for the claim for loss of earning capacity.
[6]
During the last couple of days before the trial date, Ms Farraj
decided not to pursue the appellant’s claim for loss of
earning
capacity. She explained in evidence how she had reached this
conclusion. At the time of his death, Mr Fourie earned
a salary
of R11 066 per month. Applying contingency deductions to Mr
Kramer’s calculation of the appellant’s claim
for past
and future loss of support, Ms Farraj arrived at the figure of
R824 997. As I have said, the basis of that calculation
was that
the appellant would never have been employed. Ms Farraj then made
what she termed a ‘crude’ calculation of
the claim for
loss of earning capacity.
[7] The
crude calculation amounted to this. By 1 August 2011, the appellant’s
monthly salary amounted to R36 521. Ms
Farraj accepted that the
appellant would have continued working until she reached the age of
62½ years, that is, for another
18½ years. She
multiplied the amount of R36 000 (the appellant’s salary
rounded off) by 12 months to reflect
her annual income and multiplied
that by 18½ years. That calculation gave a figure of
approximately R7,9 million, taken
as R8 million. She then made a
deduction of 50%, to provide for capitalisation. She assessed the
appellant’s loss of earning
capacity at 10% and thus calculated
that the appellant could recover approximately R400 000 for loss
of earning capacity.
She concluded that it was more favourable for
the appellant to pursue the claim for loss of support.
[8] By
then the attorney for the RAF had made an offer of settlement in the
amount of R1 million. For reasons that are difficult
to fathom in
light of the medico-legal reports available to it, the RAF made the
offer on the basis that the appellant was unemployed
and would remain
unemployed for the rest of her life. On 29 July 2011, Ms Farraj and
counsel consulted with the appellant for about
an hour. The appellant
rejected the offer of R1 million but gave a mandate to the respondent
to settle the action for an amount
of between R1,6 and R1,8 million.
[9] On
the same day, the attorney for the RAF offered to settle the matter
by payment of the following:
Loss of
support in respect of the appellant
R
838 804,60
Loss of
support in respect of Lincoln
R 323 509,00
Past
medical and hospital expenses (appellant)
R 61 947,46
Past
medical and hospital expenses (Cayleigh)
R 283 549,55
General
damages (appellant)
R 200 000,00
General
damages (Lincoln)
R
70 000,00
Total
R1 777 810,50
The offer
was accepted on 29 July 2011 and the settlement was made an order of
court on 1 August 2011.
[10] The
appellant soon became dissatisfied with the settlement. On 27
September 2012 she caused summons to be issued against the
respondent. As I have said, the appellant alleged that the respondent
had breached the mandate given to it by failing to pursue
her claim
for loss of earning capacity and by accepting inappropriately low
amounts for general damages in respect of herself and
Lincoln.
[11] In
amended particulars of claim the appellant alleged that she should
have been awarded the amount of R650 000 for general
damages and
that Lincoln’s general damages should have been assessed at
R350 000. She further alleged that her claim
for loss of earning
capacity had been worth more than R5 million. The appellant
maintained that she was nevertheless entitled to
retain the amount of
R838 804,60 that she had received for loss of support in terms
of the settlement. She thus claimed payment
of the amount of
R5 777 108 from the respondent.
[12] The
matter went to trial before Weiner J in the Gauteng Local Division,
Johannesburg. She dismissed the appellant’s action
with costs,
including the costs of two counsel, but granted leave to appeal to
this court.
[13]
The contract entered into between the appellant and the respondent
was one of mandate. It is settled law that it was an implied
term of
the contract that the respondent was obliged to exercise the skill,
knowledge and diligence expected of an average attorney
that
specialises in personal injury claims.
[1]
A plaintiff suing for damages resulting from breach of a mandate is
entitled to positive interesse, that is, payment of damages
that
places the plaintiff in the position that he or she would have been
had the mandate been properly executed. Thus, the question
is whether
the appellant proved the alleged breach of the mandate as well as the
amount she would have recovered from the RAF had
the mandate been
properly performed.
[14] The
claim that the respondent breached the mandate in respect of the
amounts accepted for general damages, may be dealt with
briefly. The
assessment of general damages is no exact science and is notoriously
difficult. The amounts were accepted on the advice
of experienced
counsel. The analysis of comparable cases by the court a quo, which I
find unnecessary to repeat, indicated that
the amounts fell within
reasonable bounds.
[15] I
therefore turn to the appellant’s case in respect of loss of
earning capacity. This requires an analysis of the evidence
available
to Ms Farraj on 1 August 2011, in respect of the employment record
and the intentions of the appellant before the accident
and her
employability thereafter. After the appellant had obtained a diploma
in accounting, she worked as an accountant for a number
of employers.
She left her employment when she became involved in the Church of
Jesus Christ of Latter-Day Saints (the Church).
Before
Cayleigh’s birth the Church regularly appointed her on contract
to do accounting work in respect of specific projects.
But for the
accident, she would have continued doing contract work for the Church
until Cayleigh was four or five years old. She
would have taken up
fulltime employment by 2009 or 2010. She would have worked for the
rest of her working life. As it happened,
she was employed by the
Church on contract since December 2005 and on fulltime basis from 1
October 2006. On 1 August 2011 she
was still so employed, but
intended to leave the employment of her own volition to operate a
franchise for teaching mathematics
to children.
[16]
During the trial the respondent introduced actuarial calculations
made by Mr G A Whittaker. The appellant disputed the assumptions
in
respect of her employability on which the calculations were made, but
otherwise accepted the correctness of the calculations.
Mr Whittaker
calculated that upon adjustment of Mr Fourie’s earnings in line
with inflation, it would, on 1 March 2011, have
amounted to R15 721
per month. By then, as I have said, the appellant earned R36 521
per month. It follows that save
for a claim for loss of support in
respect of the period up to 2009/2010 when she would not have been
employed on fulltime basis,
the appellant suffered no loss of
support. Mr Whittaker calculated this claim for loss of support over
a longer period, namely
from the date of the accident to 1 August
2011 and on the basis that she had no income during that period.
He concluded that
it amounted to R20 476, before deduction of
contingencies. In respect of the period after the appellant would
have taken up
employment again, she could therefore only have a claim
for loss of earning capacity.
[17] I
therefore proceed to analyse the expert reports in respect of loss of
earning capacity available on 1 August 2011. Dr Read
said that it was
reasonable to expect that even after the orthopaedic treatment he had
recommended, the appellant would have had
a 10 to 15% continued loss
of productivity, without taking into account the psychological
sequelae of the accident. He added:
‘
As
to how this will affect her future income and employment potential, I
defer to the opinion of the relevant experts in this field,
also
taking into consideration the psychological trauma she has
experienced.’
His
counterpart, Prof Schepers, did not dispute this. He said that it was
possible that the appellant’s productivity could
have been
diminished by her ongoing neck symptoms, but that that should be
verified by her employer. Prof Vorster diagnosed the
appellant with
major depressive disorder. This was confirmed by her colleague, Dr
Fine, who stated:
‘
Due
to the severe trauma of having lost both her husband and her
daughter, psychiatric prognosis for full remission of symptoms
is not
favourable, and she would be anticipated to feel some depression,
worse at times, as an expression of grief for the rest
of her life.
Deference is given to other opinions concerning loss of earnings and
occupational capability.’
[18] Ms
Shaik expressed the opinion that but for the accident the appellant
was likely to reach the D1/D2 level of earnings on the
Patterson
scale by the time she reached retirement age. As a result of the
consequences of the accident, the most likely scenario
was that she
would stagnate at the Patterson C5 level, even if she received the
recommended treatment and responded positively
to it. Ms Shaik
summarised her conclusions as follows:
‘
Based
on the experts opinion in the body of this report her orthopaedic
injuries combined with her psychiatric conditions renders
her as
uncompetitive in the open labour market more especially if she loses
her current job. The writer is of the opinion that
post accident she
documents a history of losses of earnings and difficulties coping
with her job requirements as a result of physical
and emotional
problems. A full recovery from her orthopaedic injuries is not
anticipated as she is likely to experience losses
in productivity and
combined with psychiatric problems (deference is given to a
psychiatrist) should she lose her current job she
will struggle to
secure employment and she is likely to be employed on shorter term
basis. However, the effects of the accident
are likely to imply that
she is unlikely to reach her pre-accident earnings.’
This was
not disputed by the industrial psychologist appointed by the RAF, Mr
Van Huyssteen.
[19]
Thus, the medico-legal reports showed that the appellant had suffered
a permanent impairment of earning capacity as a result
of the
orthopaedic and psychiatric injuries she had sustained. Both Ms Shaik
and Mr Van Huyssteen were of the opinion that the
extent of the
impairment should be reflected in differential contingency deductions
in respect of the pre- and post-accident scenarios
of calculation of
earning capacity.
[20] An
attorney exercising the knowledge, skill and diligence required of
the average specialist in personal injury claims, would
soon have
established that the appellant earned considerably more than her
husband and that save for a brief period, she would
have remained
employed for the balance of her working life. That attorney would
have realised that except for a relatively small
claim for loss of
support, the appellant could only have a claim for loss of earning
capacity. Simple logic dictates that claims
for loss of support and
loss of earning capacity cannot for the same period be determined on
mutually exclusive factual assumptions.
All of this was fairly
conceded by counsel for the respondent.
[21] A
prudent attorney in the position of Ms Farraj would upon examination
of the available medico-legal reports have ascertained
that the
appellant did indeed suffer a permanent loss of earning capacity. In
my view this conclusion rendered it imperative to
determine the
extent of the impairment. That should have been done by agreement
between the experts of both parties or by obtaining
and presenting
evidence to this effect. The actuarial calculation of the monetary
value of the impairment of earning capacity should
have presented no
difficulty.
[22] Ms
Farraj made no attempt to have the extent of the impairment of the
appellant’s earning capacity expertly determined.
She did not
even consult with any of the experts. Instead she purported to
determine the extent of the impairment by pure guesswork
and
compounded that by unscientific calculations. I am of the view that
this conduct materially departed from the required standard
and
constituted a breach of mandate by the respondent.
[23] The
next question is whether the appellant proved that she had suffered
damages as a result of the breach of the mandate. In
this case this
requires proof that upon proper performance of the mandate, the
appellant would have recovered more from the RAF
in respect of loss
of earning incapacity than she did recover for future loss of
support. As I have shown, this, in turn, required
expert evidence of
the differential contingency deductions in respect of the position
before and after the accident.
[24]
Regrettably, as I shall show, the appellant bedevilled the assessment
of whether she had suffered damages. She did so by failing
to pursue
a case or to present expert evidence on the extent of the partial
impairment of her earning capacity and by insisting
that she was
permanently unemployable in the open market as at 1 August 2011.
[25] This
proposition is devoid of any evidential basis. On 1 August 2011 the
appellant had been in fulltime employment since 1
October 2006. She
intended to leave that employment to pursue the operation of a
mathematics franchise, a prospect that she was
excited about. Not
only did she not inform any of the experts that she was unable to
cope at work, but all of the experts found
that she was indeed
employable in the open market, albeit subject to some impairment.
[26] In
her evidence the appellant confirmed the correctness of a summary of
the appraisals of her performance at work, which was
presented in
evidence, together with the appraisals themselves, by a human
resource manager of the Church. These appraisals indicated
that the
appellant’s overall performance during 2007 had been rated just
below the required standard. During 2008 she ‘greatly
exceeded’
that standard and during 2009 she managed to exceed it. Her
performance during 2010 was rated as exceptional and
during 2011 she
met the required standard. In the light of the objective evidence,
the expert reports and the admitted appraisals,
the lay evidence of
Mr Rothman and Ms Harris, respectively the financial manager and a
senior bookkeeper employed by the Church,
that the appellant was
unemployable in the open market, could carry no weight.
[27] The
point is well illustrated by the history of the litigation against
the respondent. In the original particulars of claim
it was stated
that the appellant had the capacity to earn not less than R31 000
per month as a bookkeeper/personal assistant,
but that she had lost
the capacity to earn between the ages of 50 and 60, that is, that she
would have retired ten years earlier.
In an actuarial report dated 12
September 2013, which the appellant furnished to the respondent, the
appellant’s claim was
based on the assumption that she would
have retired five years earlier, at age 57½ instead of
age 62½. Only
during opening address in the court a quo, did
counsel for the appellant indicate that the appellant’s case
was that as at
1 August 2011 she had a complete loss of earning
capacity. An amendment to that effect was effected on the following
day.
[28] Mr
Whittaker calculated the monetary value of the income that the
appellant would have received but for the accident as well
as her
expected income as a result of her injuries. He made use of the
different Patterson levels of earning recommended by Ms
Shaik in
respect of the two scenarios. He allowed a contingency deduction of
20% in respect of the first scenario. He found that
upon making a 30%
contingency deduction in respect of the second scenario, that is a
10% differential contingency deduction, the
value of the appellant’s
loss of earning capacity, together with the aforesaid approximately
R20 000 for past loss of
support, would be more or less the same
as the figure included in the settlement for loss of support. It
follows that the use of
an appropriate higher differential
contingency deduction would have indicated that the appellant did
suffer damages as a result
of the breach of the mandate.
[29]
It appears probable that a 10% differential contingency deduction is
too low to accurately reflect the monetary value of the
appellant’s
loss of earning capacity. And even though it is tempting to attempt
to determine an appropriate percentage, I
have, after mature
consideration, come to the conclusion that an attempt by this court
to do so, would amount to the same guesswork
that the respondent was
guilty of.
[2]
The same applies
to the speculative submission of counsel for the appellant that a 70%
differential contingency deduction should
be applied. It follows that
the appellant did not succeed in proving that she had suffered
damages as a result of the breach of
the mandate. In the result, the
order of the court a quo must be varied to one of absolution from the
instance, but should otherwise
remain intact. This does not entitle
the appellant to costs of the appeal.
[30] The
following order is issued:
1 The
order of the court a quo is varied by substituting the dismissal of
the appellant’s claim with an order of absolution
from the
instance.
2 Save
for paragraph 1 above, the appeal is dismissed with costs, including
the costs of two counsel.
__________________
C
H G van der Merwe
Judge
of Appeal
Appearances:
For the
Appellant:
B Ancer
SC (with him A Berkowitz)
Instructed by:
Norman Berger & Partners Inc,
Highlands North
McIntyre & Van der Post,
Bloemfontein
For the
Respondent:
D Mills SC (with him F Grobler)
Instructed by:
Gildenhuys Malatji Attorneys,
Groenkloof
Honey Attorneys, Bloemfontein
[1]
See
Mouton v Die
Mynwerkersunie
1977 (1) SA
110
(A) at 142H.
[2]
See
Mkwanazi v Van der
Merwe & another
1970
(1) SA 609
(A) at 631E-632H.