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[2016] ZAGPPHC 256
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Potgieter v Road Accident Fund (6668/2013) [2016] ZAGPPHC 256 (9 February 2016)
I
N THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 6668/2013
DATE:
9/2/2016
In
the matter between:
JOSEPH
POTGIETER
Plaintiff
and
ROAD
ACCIDENT
FUND
Defendant
JUDGMENT
MOTHLE
J
1.
Joseph Potgieter, a major male truck driver,
("the
Plaintiff')
haS instituted action against the Road
Accident Fund
("{the Defendant
'
)
for
damages arising out of injuries sustained in a motor collision which
took place on 14 February 2012 on the N2 near Victoria
West.
2.
The parties have settled the merits with the Defendant accepting
liability. Certain aspects of the claim such as general damages
have
also been settled by the parties. The only issue on which the parties
proceeded before this Court was the question of contingency
deduction
which should apply in determining the future loss of income.
3.
The Plaintiff contends that 8% contingencies should be deducted on
the amount claimed for loss of income, while the Defendant
contends
that 60% should be deducted as contingency.
4.
In support of its contention, the Plaintiff called one of the experts
Dr Read, an Orthopaedic Surgeon who filed two post-accident
reports,
after examining the Plaintiff. The Defendant on the other hand had
neither witnesses to call nor any expert report filed.
Its
submissions were based solely on the reports of the Plaintiff's
experts.
5.
It is apposite to state the facts briefly as follows:
5.1
Dr Read in his medico-legal report notes that prior to the accident,
the Plaintiff had numerous
procedures and injuries which included an
appendectomy when he was 8 years old; he has had four prior back
surgeries to his lumbar
spine as a result of injury while in the army
in 1988; he had a fractured C spine which was treated with
traction in 1993;
in 1997 the patient had renal and liver injuries,
caused in a motor vehicle accident; in 2001 he had an injury to his
right shoulder;
in 2011 he had a Myocardial infraction and he is on
treatment for cholesterol and hypertension.
5.2
In 2012, the Plaintiff had undergone a popliteal by-pass on the left
lower limb. The surgical
wound from that by-pass was in the process
of being healed when he was involved in this accident in February
2012. As a result
of the accident in question, the open surgical
wound that was sealed during the by-pass re-opened. During the
accident itself he
suffered bone structure on the tibia below the
knee.
6.
Dr Read testified further that shortly before this accident and
following the vascular by-pass, the Plaintiff was cleared by
Dr
Pillay as being fit to resume work as evidence- showed· that
he
was
on the road to recovery. The accident occurred·a few days
after he was so cleared. In fact, it was
stated
that he met the accident in February 2012 on the first day of his
reporting to work while travelling from Johannesburg to
Cape.
7.
After the accident the Plaintiff had four surgical operations two of
which resulted in the amputation, first of the lower limb
of the left
leg below the knee and thereafter the amputation of the rest of
remaining left leg. The other two operations were made
in an attempt
to rescue the leg.
8.
It seems to me that from the report of the Plaintiffs experts, one of
which was confirmed by Dr Read giving evidence in Court,
agree that
the loss of the left leg which has rendered the Plaintiff
unemployable as concluded by the Industrial Psychologist,
Dr Fourie,
was jointly caused by the Plaintiffs pre-accident medical condition
as well as the injury sustained during the
accident itself.
Their view is that the pre-existing conditions have substantially
contributed to the loss of limb to the extent
of 60% (by Professor
Pantanowitz) and to the extent of 50% (by Dr Read).
9.
The Plaintiff placed before the Court an actuarial assessment of
compensation and calculations prepared by Ivan Kramer CC, Fellow
of
the Actuarial Society of South Africa. In that calculation, he
applied a deduction of 8% for contingencies.
10.
Much as the evidence before Court, which has not been contested or
disputed by the Defendant, is that the Plaintiff at the time
of the
accident was on the road to recovery from his pre-accident medical
condition, it is not suggested anywhere in the evidence
that the
injury on the lower left leg by itself was the sole cause of the
amputation which has rendered him unemployable. Under
these
circumstances, I am of the view that a contingency deduction of 8% is
too low. On the other hand, a contingency deduction
of 60% as
contended for by the Defendant loses sight of the fact that but for
the accident; the Plaintiff s prospects of recovery
would have been
good. 60% contingencies deduction would not under the circumstances
be fair to the Plaintiff. It needs to be mentioned
that the Defendant
did not file any expert report or presented any evidence that would
have been of assistance to the Court.
11.
I am of the view therefore based on the expert reports before me a
contingency deduction of 15% would be fair and reasonable
for both
parties.
12.
I have requested the parties to submit a draft order and include
therein all other items that have been settled as well as a
re-
calculation by Ivan Kramer based on my finding concerning contingency
percentage.
13.
I have received the draft order and the re-calculation by Ivan Kramer
CC, which have been agreed to by the parties. I have endorsed
them as
an order of this Court. Both documents are attached to this judgment
as annexures A and B respectively.
SP
MOTHLE
JUDGE
OF THE HIGH COURT
GAUTENG
DIVISION
PRETORIA.
Date
of Hearing: 28 January 2016.
Date
of Judgment: 9 February 2016.
This
loss of income calculated consists of two components:
Accrued Loss
The loss of
earnings for the period between the accident date and the
valuation date.
Prospective Loss
The loss of
earnings for the future period after the valuation date.
The
actuarial assumptions used in calculating the loss are as follows
(where applicable):
FACTOR
ASSUMPTION
Future Rate of Salary
Inflation
In addition to any
promotional increases, future income after
the valuation date is assumed
to increase in line with future salary inflation taken to be at
the rate of 6% pa. Salary inflation
between the report date and
the valuation date has
also been taken as 6% pa.
Investment
return
on lump
sum
,
The capital value of the
prospective loss needs to be reduced
to take account of future
investment income that could be earned on the capital sum until
the occurrence of the future losses.
I have assumed an after tax
investment return of 8.65% pa. This has been chosen in conjunction
with the 6% pa salary inflation
rate mentioned above, to give an
investment return,
net of inflation, of 2.5% pa
(l.0865 divided by 1.06 equals
1.025).
Past Mortality
No allowances are necessary
(the claimant has survived until the valuation date).
Future Mortality
I have assumed that Mr
Potgieter was in good health prior to the accident in terms of
factors that may have impacted on mortality,
and that the accident
has not affected his life expectancy. I have used Life Table 4
Males (Quantum Yearbook) to assess his
future life exoectancv.
Past Income tax
Actual tax rates have been
used in the calculations.
Future Income Tax
It is assumed that
tax rates applicable for 2015/2016 will continue at
the same level in future adjusting
for inflation.
Interest on Accrued Losses
No allowance has been made in
the calculations.
7.
GENERAL CONTINGENCIES
A
deduction for general contingencies needs to be made to allow for
savings in travelling to and from work and the possibility of
loss of
income due to illness or unemployment. This contingency factor is a
subjective issue, which would be a decision of the
court. I have been
instructed to use the deductions below.
Value
of income but for the accident
Value
of income having regard to the accident
Accrued
5.0%
0.0%
Prospective 15.0%
n/a
8.
R160,000 LIMIT
For
accidents after 1 August 2008, the
Road Accident Fund Act 1996
makes
allowance for a maximum loss of R160,000 pa. The calculations have
been done in accordance with RAF v Sweatman (162/2014)
[2015] ZASCA
22
(20 March 2015).
Allowance
is made to adjust the annual limit every 3 months after August 2008
until the accident date to counter the effects of
inflation.
The
limit has been applied to the present value of the loss after
allowance for deduction of taxation, mortality, net discount rate,
contingency deductions.
The
limit is not applied individually to the value of income "but
for the accident" or "having rgard to the
accident"
but is only applied to the net loss.
Note
that the limit is based on the
general contingencies
shown above.
If the contingencies change, the limit may be affected.
The
results first show the net loss without the application of the limit
and then the net loss once the limit is applied.
9.
RESULTS
Results
are shown on the next page. The loss of income shown is the
difference between the value ofincome "but for the accident"
and "having regards to the accident".
The
full loss of income is shown in the results. Any apportionment should
be applied the loss shown.
Note
that the values will change with the passage of time and may need to
be recalculated if there a significant delay between the
valuation
date and the settlement date.
Yours
faithfully
I
B Kramer
Fellow
of the Actuarial Society of South Africa
JOSEPH
POTGIETER
Values
below are in Rands but for the accident having
regard to
the accident
NO
LIMIT
APPLIED
net loss
LIMIT
APPLIED
net loss
Gross accrued value
of income
444 679
39 494
Less contingency
22 234
0
Net accrued value
of income
422 445
39 494
382 951
379 780
Gross prospective
value of income
2 541 158
0
Less contingency
381 174
0
Net prospective
value of income
2 159 984
0
2 159 984
2 159 984
Total value of
income
2 582 429
39 494
2 542 935
2 539 764
Contingency
%
accrued
5.0%
0.0%
prospective
15.0%
0.0%