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[2014] ZAGPPHC 131
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Uniqon Wonings (Pty) Limited v City of Tshwane Metropolitan Municipality (22726/201) [2014] ZAGPPHC 131 (13 March 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Case No: 2192/2009
In
the matter between:
ASHLEIGH
PATRICIA PAMELA
BATTLE
...........................................................................
Plaintiff
and
ROAD
ACCIDENT
FUND
......................................................................................................
Defendant
JUDGMENT
DELIVERED ON 20 AUGUST 2014
BOQWANA,
J
Introduction
[1]
The plaintiff is a 31
year old business woman. She is married to Gren Aspeling (‘Aspeling’)
with whom she runs very
successful fashion clothing stores selling
both men’s and women’s apparel. On
17
December 2007, she
was involved in a motor vehicle accident, when her vehicle which was
stationery was hit from behind by another
vehicle. She was wearing a
seatbelt at the time. She was admitted to hospital and discharged on
the same day and went home with
a neck collar. She sustained a soft
tissue injury to the neck (whiplash) from the accident. X – Ray
and CT scan were reported
normal. She wore a neck brace for about six
to eight weeks and did not go to work during that period.
[2]
The merits of the
case have been conceded by the defendant. The defendant has also
admitted: that the plaintiff suffered a soft
tissue injury to the
cervical spine; her past hospital and medical expenses of
R5704.37
;
that she is entitled to an undertaking in respect of her future
hospital and medical expenses arising from the injuries sustained
in
the accident and to general damages, although the quantum thereof is
in dispute.
Issues
to be determined
[3]
The issues for
determination by the Court are whether the plaintiff suffered any
loss of earnings as a result of the accident and
quantum in relation
to general damages. The plaintiff contends that she has suffered a
total loss of income in the amount of
R
4 617 814.00
as
a result of the accident. She however concedes that there was no
direct loss of income arising from the accident in December
2007 and
January 2008 (which would be the period she would have stayed at home
and not gone to work). The amount of
R
4 617 814.00
is
made up as follows:
3.1
Past (until 28 February 2013) : R 1 185 114.00
Comprising
of:
3.1.1
Past (assistant) : R 92 880.00
3.1.2
Past (stores) : R 1092 234.00
3.2
Past (assistant) : R5700.00
3.3
Past (stores) : R115 100.00
3.4
Future (assistant) : R509 000.00
3.5
Future (stores) :R2 802 900.00
[4]
The plaintiff’s
claim for loss of earnings is two-fold being;
a
claim for losses owing to the need for on-going additional
assistance, and a claim for losses owing to the delayed national
expansion
of her business and slower growth in stores.
The
plaintiff testified in her own case and also called Aspeling, her
husband, and Mark Edwards (‘Edwards’), a financial
accountant from Summit Forensic Accountants (‘Summit’),
as her witnesses. Roy Waligora (‘Waligora’), a
chartered
accountant from KPMG, testified on behalf of the defendant. This was
done by agreement between the parties in order to
curtail the
proceedings.
[5]
The parties further
agreed that expert reports would be handed in on the basis that they
are what they purport to be, without the
need for oral evidence from
those experts. Expert reports handed in on behalf of the plaintiff
were by Dr Jaffe, an orthopaedic
surgeon; Susan Human (‘Human’),
an occupational therapist; Graeme Lewis (‘Lewis’), a
clinical psychologist;
Norma Colley, an i
ndustrial
psychologist; Edwards of Summit, a forensic consultant
and
Alex Munro of Munro Consulting Actuaries (‘Munro Consulting’).
On behalf of the defendants, the following expert
reports were
submitted: that of Dr Marks, an orthopaedic surgeon; Professor T
Zabow (‘Prof Zabow’), a psychiatrist;
Lynne Pringle
(‘Pringle’), an occupational therapist; Larry Loebenstein
(‘Loebenstein’), a clinical psychologist;
Professor F
Abrahams (‘Prof Abrahams’), an industrial psychologist;
Waligora of KPMG, a chartered accountant and Piet
Zeeman (‘Zeeman’),
a chartered accountant.
[6]
In addition to the
above reports, joint minutes of Doctors Jaffe and Marks; Lewis and
Prof Zabow; Human and Pringle; Colley and
Abrahams; and Edwards,
Waligora and Zeeman were handed in.
[7]
For purposes of
convenience, I will sometimes refer to the plaintiff and Aspeling as
‘the couple’, when reference is
made to both of them
together.
Plaintiff’s
case
Plaintiff’s
evidence
[8]
The plaintiff has had
interest in fashion and clothing from when she was a little girl. At
school she achieved good academic results
and even won, amongst
others, an award for constructing a sustainable business model for
products that could be sold to her peers.
She passed matric well and
enrolled for a B Com Information Systems degree with the University
of Cape Town (‘UCT’).
Whilst at University she organised
events for a night club, for extra cash, which proved to be
successful. Having realised her
entrepreneurial abilities, she got
involved in several promotional exercises which involved hiring
promoters and DJs for several
events. At that point, she met Aspeling
with whom she worked together in organising events. The couple found
that they worked very
well together.
[9]
The plaintiff had
always wanted to have a fashion empire and shared the dream that she
had with Aspeling. The two realised that
they shared a common
interest in fashion. Aspeling had been to Thailand during a school
trip where he discovered that clothes could
be bought at cheap prices
there and sold to South African buyers at profitable mark-up.
[10]
Together with the
plaintiff, they investigated the idea of importing clothing from
Thailand to South Africa and opening clothing
stores. Their first
clothing store called Twisted Love was opened in 2006 at the Old
Biscuit Mill in Woodstock. The store made
great sales mainly on
Saturdays. The business was successful even though it was quiet
during the week. The couple continued to
explore other spaces.
Premises became available in Kloof Street and a second store, known
as Poppa Trunks, was opened. Due to the
success of the Twisted Love
store the couple had capital and that meant roll-out of stores from
that point on would be fast.
[11]
In 2007 they started
actively looking towards opening a third store. They were considering
Cavendish Square and also had Canal Walk
and various other possible
options in mind. They however realised that overheads and rental per
square metre would be higher in
malls together with other rates such
as marketing, security and percentage of the turnover that needed to
be paid. They needed
to build more capital to get there. They
therefore dismissed the option of opening inside a mall and
investigated street locations
instead. They were also
considering opening stores in malls in Johannesburg, Sandton and
Durban, Gateway. At the time of
the accident they had not secured
space nationally. They were investigating opening their first
national store in Johannesburg
because of the sheer volume of people
with a lot more available disposable income. Their first
national store would have
been opened at the end of 2008 or early
2009. The national expansion did not take place because of the
accident. Their first national
store would be opened on 01 March
2014.
[12]
As a result of the
accident the plaintiff developed fear of being in a motor vehicle as
a driver and a passenger and only trusted
her husband and parents to
drive her. She also developed intense fear of flying in aeroplanes,
which is an irony because when she
was younger she had an interest in
becoming a pilot. She described the trauma involved when she had to
fly overseas which involved
preparing herself several days before the
trip by taking tranquilisers, in order to sedate herself. If she did
not do that she
would suffer from severe panic attacks whilst on
board before the flight took off.
[13]
The fear of
travelling has affected her social life heavily and she also misses
out on a lot of things because she cannot travel
overseas by herself
and has had to miss invitations from friends due to this restraint.
Aspeling had to be by her side whenever
she travelled overseas for
their business. Her professional life was also affected because she
could no longer just jump into her
vehicle and go to the stores or
other places she needed to go to as she was completely dependent on
Aspeling. This has had an impact
on both of their productivity, has
brought a strain on their relationship and has also affected her view
of herself as a strong,
independent woman.
[14]
As
an attempt to eliminate the need to travel they changed their
business model of opening stores in different geographical locations
(‘i.e. a vertical growth pattern’) to opening stores
within the same proximity (‘i.e. a horizontal growth pattern’).
Three stores were opened in Kloof Street
[1]
within 100 metres of each other as a result and another three stores
were subsequently opened in Claremont. With every store that
opened
on the same street, turnover in the existing stores went down.
Essentially all those businesses were profitable but it is
claimed
that they were so much less profitable than they would have been if
they were in different geographical locations. Different
stores were
branded differently to give customers a different ‘feel’
of each store. The stores were essentially competition
to themselves.
A few years down the line, the plaintiff and Aspeling have realised
that the horizontal business concept is flawed.
They have
consolidated all of the stores except for one.
They
have now returned to the business model they initially intended to
follow in 2008, namely, a vertical growth pattern.
In
2009 they won a Small Business of the Year Award.
[15]
The plaintiff
travelled overseas because she had to procure stock to make a living.
She could not send Aspeling to go on his own
because she procured all
of the women products and at least half of the men’s wear,
which made up 80% of the products.
[16]
The business is
grossly overstaffed because of the fact that the plaintiff is so
dependent on others. She requires assistance not
only in being driven
everywhere she needs to go, but also, due to her neck and back pain,
with the lifting, packing or pulling
of stock that is required onto
or from the shelves. She uses Spasmed and Myprodol regularly for the
pain. The pain has been
consistent since the accident. She had
to see a chiropractor a number of times and only does light exercises
at the gym. Insofar
as the psychological
sequalae
are
concerned, she went to see a psychologist who after the third to
fourth week of treatment suggested that she take anti-depressants.
She found the experience of seeing a psychologist and having to take
medication very traumatic. She researched a lot of different
techniques on how to deal with her situation.
She
effectively applies self-help treatment.
She also does yoga.
She did try to undergo a three months course of anti-depressants last
year but did not feel there was enough
benefit in them especially
compared to the side effects that she experienced such as changes in
appetite, drowsiness, and the headaches
she experienced if she did
not take the tablets every day at the same time.
[17]
She advised Edwards,
the financial accountant, that they would have achieved 5 stores
nationally by now. The projections done by
Edwards of three national
stores were conservative. She maintained that she is 100% accurate
they could have reached such a projection
had she not been injured as
she was able to achieve whatever she put her mind to.
Aspeling’s
evidence
[18]
Aspeling corroborated
most of the plaintiff’s testimony. I would therefore not repeat
all his evidence, save to highlight
relevant aspects that are
important for the determination of the issues before me. Aspeling
testified that the plan was to ‘open
one store per year around
the country comprising of Johannesburg and Durban and within five
years, have six to seven stores maybe
a couple in Cape Town and a
couple in Johannesburg and maybe Durban.’ As the person who
knew the product the plaintiff had
to be involved in unpacking of
merchandise and in the creative process which involved unpacking,
tagging, and placing clothes on
hangers (in a certain way). Their
business is overstaffed to cater for functions which the plaintiff
requires assistance with.
Extra staff members were employed as a
result of the accident.
Edwards’
evidence
[19]
The claim was
quantified by Edwards on the plaintiff’s behalf. Edwards
testified that he had a Bachelor of Science with
accounting,
economics and corporate finance degrees and an honours degree in
corporate finance. He worked,
inter
alia
, at
Pick ‘n Pay for about 2 years heading up their corporate
strategy division. Edwards has experience as a forensic accountant
and has been involved in over 100 personal injury matters. He
believed that the experience he received from his time at Pick ‘n
Pay enabled him to assist the plaintiff with the quantification of
the claim. He quantified the claim based on what the couple
told him
and the financial statements of their businesses. He tested this
information using his experience against a number of
factors, being
the couple’s skill and capacity, availability of capital and
space.
[20]
The couple run their
business through two registered close corporations, i.e. Grassy Knoll
Trading 84 CC (‘Grassy Knoll’)
owned 100% by Aspeling,
and Playnice Retail Productions CC (‘Playnice’) owned
100% by the plaintiff. Edwards
treated the two corporations as
one unit, attributing 50% to the plaintiff as her share, for the
purposes of quantifying a claim.
When the business started in 2007,
it was run under one corporation, Playnice, which was owned 50% by
plaintiff and 50% by Aspeling
but they later changed that arrangement
for tax efficiency purposes. The couple considered themselves to be
in a 50/50 partnership.
They always re-balanced their earnings from
the two CCs so that the 50/50 partnership remained. The distribution
of the profits
remained 50/50 to each despite the changed ownership
structure. Each of them is paid a member’s salary, which
they
receive in their personal capacities, and pay income tax on it,
in their personal capacities. The balance of profits that remain
in
the corporations is distributed to them as dividends. The extent of
the member’s salaries declared to each of them and
the extent
of the amount of profit declared to each of them were, according to
Edwards, consistently equal over the period under
evaluation. The
overheads are also split equally between the two CCs. Forensic
accountants on both sides are more or less in agreement
regarding
calculations on what the plaintiff has earned over the period of time
since the accident.
[21]
Perhaps it is opportune to briefly outline
the number of stores opened by the couple and their timeline.
Timeline
and opening of the stores
[22]
The first store
called Twisted Love was opened in the Old Biscuit Mill in Woodstock
in May 2006, as already mentioned, followed
by a second store called
Poppa Trunks which was opened in Kloof Street in June 2007. In 2008
another store was opened at 45 Kloof
Street, known as The Lot, 100
metres away from Poppa Trunks. The Twisted Love store at the Biscuit
Mill was closed simultaneously
with the opening of The Lot at Kloof
Street. The reason was that the concept of Twisted Love was not
working for the couple and
they sought to trade under a different
banner, The Lot. Another store was opened at Vineyard Street in
Claremont under The Lot
brand name. In 2009 the couple finished the
year with three stores, being, Poppa Trunks and The Lot at Kloof
Street and The Lot
at Vineyard Street in Claremont.
[23]
In the 2010 financial
year another Poppa Trunks store was opened in Vineyard Street next to
The Lot. In the same financial year
another store called The Wardrobe
was opened in Kloof Street. This meant that within 200 metres of each
other in Kloof Street three
stores had been opened. In the 2011
financial year another store, The Wardrobe, was opened in Vineyard
Street, increasing the number
of stores there to three. In 2011 the
plaintiff and Aspeling had 6 stores opened, three next to each other
in Kloof Street and
another three next to each other in Vineyard
Street.
[24]
This business
strategy was fairly anomalous because stores trading adjacent to each
other were targeting the same customers. Edwards
was informed by the
couple that these stores were opened in this manner to make it easier
for the plaintiff to travel between the
stores. The couple needed to
take as many opportunities as possible within very short geographical
distances.
[25]
In 2012, The Lot
store in Kloof Street was doubled in size by renting extra space and
removing the inter-leading wall between it
and a store known as The
Lot, 43 Kloof Street
.
According
to Edwards this was effectively one store with bigger premises. In
the same year another consolidation occurred in Vineyard
Road of The
Lot and Poppa Trunks stores, the inter-leading wall was removed
making it one larger store trading under the banner,
The Lot.
[26]
At the end of the
2012 financial year another store, The Lot, was opened in Canal Walk.
The couple had decided that The Lot was
the brand name they would use
for the future. At the end of the 2012 financial year there were six
stores open. A new store called
The Lot in Stellenbosch was opened in
November or December 2012. In 2013, Poppa Trunks in Kloof
Street was closed.
At the end
of 2013, The
Wardrobe
store in Claremont was closed, leaving five stores remaining, all
trading under the banner of The Lot, in different geographical
areas
of the Western Cape. One further store was
opened in V &A
Waterfront in the 2014 financial year. The first national store
was to be opened in Johannesburg in 01
March 2014.
How
the plaintiff’s loss has been quantified
[27]
The need by the
plaintiff for extra assistance is argued on two fronts: the first one
being physical overexertion of the neck and
back pain from lifting
heavy objects; the second being the
inefficiency
that results from her inability to drive which renders her dependant
on Aspeling
. The
argument is that when the plaintiff requires assistance with physical
work in the business, she effectively removes a staff
member from
their otherwise productive work to assist her which causes a loss to
the business. The business also loses productivity,
it is
submitted, by virtue of Aspeling having to leave his productive work
to drive the plaintiff wherever she needed to
be. It is admitted on
behalf of the plaintiff that no one person has been employed to
assist her with such additional burdens but
a point is made that it
would be impractical to do so as that person would have to do the
driving (which would not work because
the plaintiff only trusts her
husband and parents to drive her) and that person would need to be
with her in all the stores and
assist with the picking up of stock.
[28]
This claim is
quantified using the average cost of a store assistant hired for the
business. Edward testified that he tried
to adopt the
conservative approach by effectively taking the lowest cost member of
staff in the organisation. According to
him the net result of
this additional assistance needed, to the business, is reduction in
profits of
R66 000.00
per annum, as at
2010, which is
R5500
per month.
[29]
In
the curtailed national expansion plan, Edwards is convinced that were
it not for the injuries sustained in the accident, the
plaintiff
would have been able to open more stores. Deferring to medical
evidence which states that the plaintiff’s ‘
psychological
condition is responsive to treatment and that with appropriate
intervention it is probable that she will be able to
regain much of
her psychic health’
[2]
,
Edwards assumes a catch up scenario as the plaintiff’s ability
to effectively manage the business to its full capacity is
restored.
In Edwards’ opinion the number of stores in Cape Town would
have remained the same, i.e. five stores (as at 2013
financial year)
irrespective of the accident. Over and above those stores, the
plaintiff told Edwards they would have opened five
more stores
nationally. Edwards reduced that number to three more stores
nationally as at 2013. He quantified the loss of profits
by taking
the average profit per store in their existing stores per month. His
conclusion was that as at 28 February 2013, the
average net profit
per store was
R40 573.00
per
month. The stores are predominantly street stores. The national
stores were going to be opened in malls which would be more
profitable. Therefore taking the average of the smaller street based
stores is, according to Edwards, conservative.
[30]
Edwards testified
that he used his experience as well as analysis of the available
information and considered the possible constraints
that may have
resulted in the couple not being able to open the stores. Constraints
considered were the availability of skills
and capacity of the
plaintiff, the availability of space to open new stores, and
availability of capital to fund the opening of
those new stores.
Edwards denied when challenged by the defendant’s experts,
Zeeman and Waligora, that he took what he was
told by the couple at
face value, without questioning it. The business was in Edwards’
view profitable enough to self-fund
all their expansion needs.
[31]
He assumed that in
the uninjured scenario, the couple would have opened three national
stores by the 2013 financial year, the stores
opening in the 2010,
2011 and 2013 financial years, over and above the stores opened in
Cape Town. The first store was initially
predicted to open in 2009
nationally (in line with the couple’s evidence), but after
Waligora challenged the practicality
of this assumption, Edwards
pushed it to 2010. Further national stores would have been opened in
2015 and 2017 in the uninjured
scenario. Edwards’ view is that
there would have been five stores in Cape Town in 2013 irrespective
of the accident (giving
a total of 8 stores, both Cape Town and
National, as at 2013). Two further stores would have been opened in
Cape Town in the 2015
and 2017 financial years to make it seven
stores in Cape Town or the Western Cape. That is the number they
would settle at in Cape
Town. The total number of stores opened by
2017 both nationally and in Cape Town would have been 12 in the
uninjured scenario.
[32]
In
the injured scenario, the couple would open their first national
store in 2014 (i.e. the 2015 financial year). This has
already
happened on 1 March 2014 in line with his predictions. The next
number of stores nationally will open in the 2017, 2019,
2021 and
2023 financial years. Edwards’ assumption is that after 2023
the couple will stop opening stores. His view
is that had the
plaintiff not been injured she would have opened three more stores
than she has had. This is how the catch up approach
is explained. He
also allowed for a 12 month timeline for plaintiff’s treatment
and recuperation. The past loss of earnings
as at 28 February 2013 is
calculated to be
R1 185 114
after
tax.
[3]
Defendant’s
evidence
Waligora’s
evidence
[33]
Waligora testified
that he is a chartered accountant with a B Comm. degree from UCT and
a post graduate diploma in accounting from
UCT. He is employed by
KPMG and has specialised in forensic accounting for over 16 years.
He has led or conducted fraud investigations.
He prepared the two
KPMG reports and addendum dated 22 February 2013 and 13 February 2014
respectively. He was appointed to conduct
an independent review of
the plaintiff’s claim. He consulted with the couple and
reviewed documentation he had been provided
with which included the
actuarial calculations done by Munro Consulting, costing the claim at
R17 853 500.00
,
but subsequent to KPMG’s involvement the claim was reduced.
First, KPMG questioned that the plaintiff had suffered any direct
loss of R165 000.00 having inspected the relevant VAT records.
This part of the claim was later abandoned by the plaintiff.
The
second aspect of their involvement in the reduction of the claim
relates to the curtailed national expansion where it was apparent
that the claim was calculated on the basis that the plaintiff would
suffer permanent loss of five stores. Edwards agreed with Waligora’s
observations and prepared a supplementary report quantifying the
claim as a delayed roll out of the stores. This led to the
significant
reduction of the claim to about R4 million. Whilst he
believed that this approach was more reasonable than the first one,
he questioned
whether any loss existed at all.
[34]
With regard to the
claim for extra assistance, the plaintiff would be entitled to actual
costs incurred, but because no actual appointment
was made in this
regard, the plaintiff had not been able to show any loss as there was
no actual expenditure for assistance. Furthermore,
the staff
compliment of the business had grown significantly but such
overstaffing could not be attributed to the accident alone,
it
could also be due to the growth of the business.
The numbers showed an
inconsistent picture on overstaffing. The business was also
overstaffed at certain periods relative to others.
[35]
In regard to the
claim of curtailed expansion, the plaintiff had failed to produce any
evidence to support her claim that she planned
to expand nationally
prior to the accident. This included diagrams and anecdotal material
which she claimed to have had.
[36]
Despite her professed
difficulties in travelling, travel records and passports (which were
furnished upon their request) showed
that the plaintiff had travelled
overseas with some of those trips going
via
Johannesburg. Despite
her driving limitations, the business has grown beyond the southern
suburbs (of Cape Town) to Canal Walk and
Stellenbosch. The business
has shown positive growth year on year based on the Western Cape
expansion. According to Waligora, Summit’s
(Edwards) report did
not show what external source they used to compare the financial
performance of this entity with the market
place. In the absence of
that, Waligora looked at retail indicators. He conceded that it was
difficult to find an exact comparison
for the plaintiff’s
business, but it was not without merit to compare it with the retail
sector (listed in the JSE and Statistics
SA). The business exceeded
the benchmarks he compared it with. In his opinion the couple made
tremendous success of their business
in Cape Town. Whilst they may
have been confined by the accident, their business grew in the
Western Cape from 2008 to 2012 as
a result of the acute focus and
retail acumen of both the plaintiff and Aspeling. According to
Waligora, Edwards failed to recognise
this.
[37]
KPMG
and Zeeman (who was requested by the defendant to investigate and
report on the plaintiff’s claim prior to KPGM coming
on board)
were further of the view that Edwards’ assessment of the number
of stores to be opened was speculative and not
based on fact.
According to them the positive business performance in Cape Town may
have set off any claim for loss of income.
They were of the opinion
that there was no consensus medico-legal opinion that the plaintiff
suffered loss of income and that medical
opinions were inconclusive
on the extent to which the plaintiff’s ability to travel was
impeded and according to them Summit
did not wish to express an
opinion in that regard.
[4]
Even
on the modified plan by Edwards, Waligora was not of the view that
there was a claim. He has not been able to establish any
claim,
mainly due to the positive performance of the business after the
accident and the inconclusive nature of the medical opinion
about her
inability to travel (because while the plaintiff is impaired she
factually still does travel). According to Waligora,
it was not clear
that the plaintiff’s limitations with regard to travelling
impacted negatively on the business growth.
[38]
Furthermore,
the
business had achieved a high degree of success despite
those
limitations and there was no evidence to suggest that the plaintiff
could have done better. Growth of the business was 34%
compared to
Young Designers Emporium’s (‘YDE’) compound annual
growth rate of 5 percent. The plaintiff disputed
that YDE was
comparable to her businesses as it was more matured than hers.
[5]
[39]
Waligora conceded in
cross-examination that he had not come across a business like the
plaintiff’s before. This was his first
RAF case and it was his
first time testifying in the High Court. The work done in his report
was carried out by staff members under
his guidance. He however
applied his mind to the information provided and work done by his
juniors. He could not dispute that malls
were potentially a better
prospect than street stores. He further agreed that once expanded in
Cape Town, it made sense for the
couple to expand in other cities. He
further agreed that Gauteng was a bigger market than Cape Town,
although he was not an expert
on this issue. Whilst agreeing that
malls would bring more sales than street stores, he however was not
sure if that meant more
profit in light of the higher rental and
other rates applicable in malls. He confirmed that the approach of
average profitability
of the existing stores, as a way of calculating
the loss, was a reasonable approach but still maintained that no loss
had been
shown. He could not give a view on the prediction made by
Edwards that the plaintiff would be able to catch up by 2023. He
maintained
that she could get there much sooner than 2023. Despite
criticisms sought to be levelled against Waligora, he played a
significant
role in the reduction of the claim.
Medical
reports
[40]
Dealing briefly with
the medical reports, it is common cause amongst all medical experts
that the plaintiff was impaired by the
accident both physically and
psychologically. In regard to the physical aspect of the injuries,
the difference between the experts
lies in the extent to which such
injuries would have reduced her capacity. Doctors Jaffe and Marks
agree that the plaintiff still
has intermittent neck pain and that
she has developed an intense fear of driving and severe anxiety
diagnosed with post-traumatic
stress disorder and that there is no
evidence of instability and no neurological involvement. They however
differ on the causes
of the pain and on the need for extra
assistance. According to Dr Marks bouts of neck and/or low back pain
were not attributable
to a single traumatic event in the absence of
demonstration of structural damage. He is of the view that neck and
back pain are
common in the general population following activities
of daily living, and aggravated by psychological distress. According
to him
treatment should be focused on the plaintiff’s emotional
status as determined by the psychologist and psychiatrist. He
concludes
that because there is no functional impairment observed,
there is no justification to impose restrictions on the plaintiff’s
physical activities in her day to day life, including handling of
merchandise and household chores. His view is that pain is
perpetuated
by psychological stress, not the other way round, and
that the bio psychosocial model of pain is well established in
scientific
literature.
[41]
Dr Jaffe however is
of the opinion that the neck and back pain will continue to require
analgesic mediation on an on-going basis.
He concludes that the
physical side of the plaintiff’s work aggravated the pain and
he noted that she goes for Chiropractic
treatment regularly.
According to him it was unlikely that the neck pain would improve.
His view is that the plaintiff would be
able to continue with her
business as long as she received extra assistance. At the end of the
day, there is disagreement between
the plaintiff’s and
defendant’s experts on the plaintiff’s ability to perform
her physical side of work, without
a need for assistance.
[42]
With regard to the
psychological aspect of the injuries, all the psychologists and the
psychiatrist are in agreement that the plaintiff
suffered from a
Post-Traumatic Stress Disorder (‘PTSD’) as a result of
the accident. This resulted in heightened anxiety
when she travels in
motor vehicles and panic attacks which occur when she travels in
aeroplanes and in lifts. She therefore avoids
being in those
situations.
[43]
The experts found
that with the necessary intervention she will overcome her fear of
travelling. In his first report dated 21 June
2009, Lewis recommended
that the plaintiff should consult with a psychologist for
psychotherapy and have one session a week for
six months initially
and then on a needs basis for two years. Lewis, however, having found
no change in the plaintiff’s condition
in 2014, expanded on
this in his report of 6 February 2014 by stating that the Eye
Movement Desensitisation Reprocessing (EMDR)
method would be the most
optimal form of psychotherapy for the plaintiff to receive as this
modality of treatment had been proven
to be efficacious in the
treatment of PTSD. He further stated that the psychological treatment
had been made more complicated by
the fact that the plaintiff had
struggled for a very long time with her psychological difficulties,
and these were entrenched with
the passage of time. Lewis prepared a
further report dated 17 February 2014, explaining and listing reasons
why the plaintiff had
not gone for treatment, which were treatment
fear, fear of emotion, anticipated utility, self-disclosure, social
stigma and self-esteem
issues. According to him, these have been
shown in the literature to be avoidance factors that inhibit
help-seeking behaviour when
it comes to psychological assistance.
Zabow on the other hand, in his report of 20 November 2011, found
that although there would
have been a long time period since the
accident, the plaintiff would benefit to some extent from treatment
and he recommended a
form of psychotherapy (cognitive behavioural
course).
Evaluation
Loss
of earnings
[44]
I would first deal
with an issue raised by the defendant that the manner in which the
claim is calculated may not be a legally acceptable
way of
determining the plaintiff’s loss of earning incapacity. It was
submitted by Mr Bhoopchand on behalf of the defendant
that the
plaintiff’s loss of earnings is not based on her own losses but
that of the potential loss of the two close corporations,
i.e. Grassy
Knoll, owned 100% by Aspeling, and Playnice, which is wholly owned by
the plaintiff. I have already dealt with the
structure of the
businesses above. Edwards treated the two CCs as one whole,
attributing 50% of the consolidated business to the
plaintiff.
[45]
Mr
Bhoopchand submitted that this situation presented a legal conundrum
in the context of the
Rudman
v Road Accident Fund
[6]
decision.
His view was that, whilst this arrangement of the two CCs is based on
sound accounting principles, it did not necessarily
follow that it
was a legally acceptable way of determining the plaintiff’s
loss of earning capacity. He argued that in
Rudman,
the
Court found that one must be careful not to attribute any losses
suffered by a company or a CC to that of the plaintiff who
has
suffered an injury in an accident. According to him the plaintiff had
not been able to show that this present matter is distinguishable
on
the facts from the
Rudman
decision,
unlike those cases that Mr Coughlan, plaintiff’s counsel,
mentioned in his heads of argument, which were clearly
distinguishable.
[7]
[46]
Mr Bhoopchand
submitted that in those cases the entire earnings of the plaintiffs
involved could be compared to, attributable to
and were equal to the
earnings of the CCs. Furthermore, in those cases, the plaintiff was
either the only member of the CC or he
or she was the majority
member. The difficulty that the Court is presented with in this
matter, he argued, is that the two CCs
in this case were separately
owned on paper but for convenience the earnings were split equally
between the plaintiff and Aspeling.
The problem he raised was that in
terms of her evidence, the plaintiff was doing the bulk of the work,
which is 80% of the purchasing
of merchandise. She did the marketing,
decoration and dressing of the store windows. Her work constituted
significantly more than
50% of the shared profit. In view of the fact
that the business is structured as a CC, her expectations lie in her
50% member’s
interest (in the two CCs combined), regardless of
the amount of work she did or did not do. If there was a loss
therefore in a
business which is structured in the form of a judicial
entity, then that loss would be attributable to the business and not
to
the individuals that are either members or shareholders of that
business. Mr Bhoopchand essentially attacked the structure of the
claim on the two bases: firstly, that the claim is based on the loss
suffered by two close corporations, one of which the plaintiff
does
not own, and secondly, regardless of what she did or did not do, her
expectation from the combined turnover of those two CCs
was 50%.
[47]
I
disagree with Mr Bhoopchand’s view on this issue. As a starting
point, it is important to examine the
Rudman
decision
as well as the decisions that were delivered by different courts,
especially those whose facts were held to be different
to those in
the
Rudman
case.
Rudman
was
a game farmer and a professional hunter who ran a very successful
operation in the Eastern Cape. He was involved in a motor
accident
that left him permanently disabled, not being able to hunt nor
conduct his farming business with the same vigour as the
hands-on
manager as before.
Rudman
’
s
business was run through a company of which the family held 3900
shares and the remaining 100 belonged to
Rudman.
Rudman
remained
the driving force behind the company. The Court held that the loss to
the company could not automatically and necessarily
be equated to
Rudman
’
s
personal loss. Whilst there was evidence to show that the company had
incurred and would in future incur the additional expense
of
employing others to do what
Rudman
used
to do, there was no proof that that produced loss to
Rudman.
The
Court held that there was no evidence, for example, that his shares
in the company were worth less, or he had received less
dividends, or
fees or drawings because of the company’s reduced income, or
that he would do so in the future. The company’s,
the trust’s
and Rudman’s financial statements did not show any loss to
Rudman at all, neither did Rudman’s nor
his accountant’s
evidence.
[8]
The Court found
further that on the evidence before it, Rudman could still perform
his real function of being the driving force
behind the company, and
the
most important capacity in which he acted, and that which mattered
the most, i.e. being a Chief Executive Officer of the Rudman
empire,
was not impaired
.
The Court found further that whether or not he still did things he
formerly did, those things could still be done by his sons
and his
employees under his direction and supervision.
[9]
[48]
My
view is that the facts of this case are indeed distinguishable from
Rudman’s on many fronts and are more in line with judgments
that Mr Coughlan referred to. In
Miller
v Road Accident Fund
[10]
,
the Court in considering circumstances of the appellant, Miller, who
was claiming for past and future loss of earnings held that:‘...
unlike the position in Rudman, Miller’s close corporation was
nothing more than a conduit for his sole source of income which
was
the fees that he generated as an architect
’
[11]
.
In the matter of
Miles
v Road Accident Fund
[12]
,
it was held that:
‘
The
fortunes of the CC, quite clearly, are inextricably bound up with the
well-being as well as the time and effort expended by
the Plaintiff
on the business. Importantly, the performance of the CC depends
vitally on the efficiency with which the Plaintiff
conducts and
manages the business. The fact that persons are employed in the
business, in my view, does not militate against the
approach which I
propose to follow.’
[49]
In
the latter case, the Court concluded that the case was
distinguishable from that of
Rudman
and
the matter of
Raath
v Nel
[13]
because
of the Plaintiff’s ownership of 99 per cent of the member’s
interest in the CC, his control of the affairs of
the CC, and its
dependence on the Plaintiff’s personal exertion and
performance.
[14]
Another
case worth mentioning is that of
Road
Accident Fund v Oberholzer
[15]
where
on appeal the Eastern Cape full court distinguished Oberholzer’s
(the claimant’s) situation from the Rudman position
as follows:
‘
In
the present matter the plaintiff’s real function was never that
of chief executive officer of a large undertaking. In fact,
while he
may have been in charge of his business he could hardly have been
described as the chief executive officer. He now holds
the position
of managing director which, as I have indicated, is really a misnomer
when one has regard to what he does.
What
the plaintiff did that mattered most was to make patterns,
manufacture moulds, maintain the factory and the machinery, and
do
deliveries. He cannot be said to have built up an empire. He was in
the process of building up his business. While the business
will
benefit, probably not to the same extent, from the duties now
performed by the additional people that have been employed,
this will
occur at an expense which would not have been incurred had the
plaintiff not been injured. In all the circumstances there
has, in my
judgment, clearly been a diminution of the plaintiff’s earning
capacity, which has resulted in him suffering a
loss.
In
fact, the position of the plaintiff is more akin to that of the
disabled banana farmer in the case of
Union
and National Insurance Company Limited vs Coetzee
1970
(1) SA 295
(AD)
who,
as Jones, AJA pointed out in
Rudman
’
s
case
supra
at
244 D:“had been on the threshold of his career as a farmer and
about to begin the development of his empire”.(Own
emphasis)
[50]
The
description of this banana farmer seems to fit the plaintiff’s
situation in my view. She had been at the doorstep of her
career and
about to begin the development of her fashion empire when the
accident occurred. She had already opened two stores together
with
her husband, at the time, and was about to open the third one. In my
view, the plaintiff has been able to show that she purchases
80% of
the apparel
and
she is, of the persons connected to the business, the most crucial to
the existence of the business, given her creative talent
and ability
.
Whilst Aspeling shares 50% of the business with her, his role is more
administrative and that of a financial manager. The turnover,
profit
and performance of both CCs largely depended on the plaintiff’s
well-being and capacity. The fortunes of the CCs are
inextricably
linked to her efforts spent therein and there was complete
convergence between her interests and those of the CCs,
as the court
put it in the
Miles
judgment.
[16]
The
present case is also distinguishable from
Rudman
because
unlike the claimant Rudman, who played an overseeing role of the CEO
in his business, the plaintiff describes herself as
a hands-on
person, which is demanded by the nature of the business
.
Furthermore,
unlike in
Rudman,
loss
of profits of the CCs has not automatically been attributed to the
plaintiff. The plaintiff’s loss of earnings is based
on the net
profit of 50% and her member’s salary from the consolidated
business. There is an acknowledgment that she only
owns 50% of the
consolidated business. Even though she does 80% of the work, what is
important is what she would have earned at
the end of the day and
that equates to 50%. In the circumstances, I have no difficulty with
the fact that the claim is premised
on the earnings of the CCs, which
are attributed to the plaintiff in the manner they have. I now
proceed to deal with the claims.
Need
for extra assistance
[51]
As I have mentioned above, there are
conflicting medical views on whether the plaintiff would require
extra assistance in executing
her physical duties. In assessing the
evidence, it seems to me there is some level of agreement that the
physical pain and psychological
difficulties have an effect on each
other.
Dr Marks’
view, however, is that the pain is perpetuated by the psychological
stress, not the other way round, as some may
seem to suggest.
In
her evidence, the plaintiff testified that the injury to her neck was
relatively minor compared to the psychological issue. Whilst
there
was no evidence of neck instability or neurological involvement, I am
not convinced that Dr Marks’ conclusion has been
conclusively
established as a fact, on this aspect.
[52]
In view of the fact that there is evidence
that the plaintiff was diagnosed with an injury to the neck as a
result of the accident,
I am prepared to accept that the recurring
pain is connected to physical injuries sustained to the neck during
the accident. Even
if it could also be attributed to psychological
difficulties, it seems to be common cause that the emotional
difficulties in any
event resulted from the accident. Given the
medical consensus that there was recurring pain (whether physically
or psychologically
related) and the evidence of the couple, which was
consistent, there is no reason not to accept that on the balance of
probabilities,
she had difficulty in conducting duties that required
physical effort.
[53]
The second part of
the plaintiff’s claim based on the need for extra assistance is
that she depends on Aspeling to drive her
and that affects the
productivity of both of them. The plaintiff’s fear of driving
is not in dispute. It is borne out by
medical reports and her
evidence that indeed she has depended on Aspeling to drive her.
[54]
That is however not the end of the enquiry,
the
key
question arising from the plaintiff’s claims based on the needs
for additional assistance is whether she has shown any
actual loss of
earnings owing to such need.
[55]
The defendant is
challenging this claim on the basis that there has not been any
person actually appointed to assist the plaintiff,
which is admitted
by the plaintiff and her witnesses, nor has there been any actual
expenditure incurred. I am persuaded by Waligora’s
opinion that
the plaintiff should only be compensated for the actual loss
incurred.
[56]
The plaintiff has not
been able to show that the business has suffered any loss by her
requiring assistance from staff members in
her business. The
assertion that whenever she needed assistance at the store, the
plaintiff removed a staff member from their otherwise
productive work
seems to be in conflict with the evidence to the effect that the
business was actually overstaffed to cater for
that need for
assistance. I understood the plaintiff to be saying that additional
staff members were appointed in all the stores
due to the accident.
If that is the case, the actual expenditure incurred as a result of
the accident should have been the basis
of the claim. That is however
not how the claim is characterised. Furthermore, I am persuaded by
Waligora’s view that the
fact that the business was overstaffed
at certain periods relative to others could not be attributed to the
accident alone, it
could also be due to the growth of the business.
For example, Waligora notes that the business was overstaffed by 5.57
in 2012.
There was no clear explanation as to why the figures
escalated so much, i.e. from 19 in 2011 to 39 staff members
(including casual
workers) in 2012.Numbers seemed to have been
consistent between 2009 and 2011 per store, but then jumped in 2012.
It is this inconsistency
that creates doubt in my mind about whether
overstaffing could only be attributed to the accident.
[57]
Nevertheless and
without emphasizing the point, the argument that more staff members
were employed than the business required seems
to neutralize the
point that employees were removed from their otherwise productive
work to help the plaintiff as and when she
attended to work at those
stores. Those extra staff members would presumably help her and would
without a doubt have been engaged
in other functions such as
attending to customers and contributing to the growth of the
business
.
Aspeling
did not seem to dispute this proposition when put to him in
cross-examination by Mr Bhoopchand. His answer was that for
the bulk
of the business, they have had extra staff so he had nothing to
compare it with.
[58]
I am aware of the
evidence of the plaintiff and Aspeling that it would have been
impractical to appoint an assistant to go with
the plaintiff
everywhere she went. I am however not convinced that the plaintiff
has been able to show a loss to the business.
The submission is made
on her behalf that the cost of an additional staff member resulted in
an annual expense, which results in
a reduction in net profits of
R66 000.00
per annum
as at 2010 and
R73 870.00
in 2013. Edwards has
tried to quantify the claim by looking at the average salary of an
assistant. In my view this kind of claim
requires actual loss to be
shown, which has not occurred. My view is that the claim based on the
need for extra assistance must
fail.
Curtailed
national expansion
Did
a national expansion plan exist?
[59]
The plaintiff has led
compelling evidence regarding her dream of a fashion empire. The
evidence shows that she had the talent, the
skill and the drive as an
entrepreneur. From a young age she was drawn to fashion and has
had a creative mind, and knowledge
of how to sell her product to
customers. Her abilities were apparent even before she opened her
first clothing store, when she
turned around fortunes of a night club
due to her creative ideas and organising of events, which had made
good money for herself
whilst being a student. Taking into account
her career track record, the fact that already by December 2007 she
had two stores,
her impressive success in opening multiple stores
even after the accident, I have no difficulty in accepting that, on
the balance
of probabilities, she wanted to expand her business
nationally. It also does make sense that Johannesburg would be most
attractive
because of the sheer volume of the market and available
disposable income.
[60]
However, it is
another question altogether whether the national stores would have
been opened at the time the plaintiff alleges
and that would depend
on a number of factors, including those mentioned by Edwards and
Waligora. Although the absence of documentary
evidence does not
necessarily discount the evidence given by the couple that they would
have opened their first store at the end
of 2008 or early 2009 had it
not been for the accident, written growth plans would have helped in
confirming evidence of the actual
opening of the stores at such
times. I do not believe that the claim is as straight forward as put
by Edwards. There are a number
of factors which in my view Edwards
did not take into account in the quantification of the claim.
[61]
In the first
instance, I do not think any doubt exists that the plaintiff was
impaired psychologically; particularly that she feared
travelling in
aeroplanes and vehicles as a result of the accident, if one has
regard to the expert reports. There is however evidence
before this
Court that the plaintiff, whilst she had difficulties, did actually
fly about 5 times a year to Asia and once a year
to Europe. It is
submitted on behalf of the defendant that those flights went
via
Johannesburg.
I am in agreement with Waligora that this factual evidence was not
factored in by the medical experts, particularly
in addressing the
question of whether the fact that the plaintiff did fly, would in any
way have influenced the assessment of her
claim on curtailed
expansion. I do accept the plaintiff’s evidence that she had no
option but to fly to Asia to buy the stock
as it was crucial for her
livelihood and because most of their stock is imported from Asia. I
also accept that she could not send
Aspeling alone there because ‘she
was the creative eye’ of the business and the business was
successful because of
her.
[62]
It is accepted that
it was a struggle for her every time she had to fly as she had to
take tranquilisers or suffer panic attacks.
It also must be counted
in the plaintiff’s favour that whilst Johannesburg and Durban
are much closer to Cape Town than is
Asia, flights to those
destinations would have had to have been more frequent especially at
the beginning stages of the new stores.
The fact though is that the
plaintiff did fly. Without sounding unsympathetic regarding the
plaintiff’s situation, the factual
information, it seems to me,
should have been considered by the medical experts and Edwards should
have considered it in the quantification
of the claim, more so,
because most of the travelling to Asia would have been after the
accident, taking into account the fact
that the stores were doing
well and well stocked with apparel predominantly from Asia.
[63]
The second issue is
that the basis of the claim regarding delayed expansion of national
stores is premised on the claim that as
at 2013, the plaintiff would
have had opened 5 stores in Cape Town and would have had 3 more
national stores by then in the uninjured
state. The quantification of
the claim does not seem to consider the fact that over a period of
seven years, i.e. from 2006 to
2013, in fact, 11 stores were
opened (at different stages of the business), albeit,
some
of which were consolidated or closed thereafter.
[64]
The couple started
with the Twisted Love brand in 2006. They would indeed have been
experimenting with brands until they settled
with The Lot as the
preferred brand. They opened a store each year and all these stores
would have generated profits for the CCs.
The stores, according to my
understanding of the evidence, were either closed because they did
not fit the brand or consolidated
with those built in close proximity
in line with the horizontal strategy. The point is they did exist and
did make profit and contributed
to the business growth even though
they were in competition with each other. The quantification of the
claim, based on the three
national stores, cannot be viewed
separately from that context in my view.
[65]
If
one looks at the plaintiff’s evidence closely, it is clear that
although she did not expand the business vertically, i.e.
nationally,
she did expand horizontally. In cross-examination the plaintiff said
the following: ‘
Like
the plan that we have needs travel, is such a huge part of it that is
when we started thinking about the idea of possibly rather
than, we
could still get to the same amount of stores, I mean, from, from,
from the start of this until now I have opened eleven
stores, eleven
spaces, but they just were compounded on top of each other.’
[17]
[66]
In another passage
still under cross-examination she went on to say: ‘
....so
when I said to you before, before the accident my
dream was
always to open that amount of stores,
it is just they
did not work together,
so
we did open that amount of stores,
it is just they
did not work together, so we have had to close them down because
geographically they were not in the different locations
that we had
initially identified was the way to do it.’
(Own
emphasis)
[67]
From that I do not understand her evidence
to be that she would have
opened
only five stores in Cape Town as articulated by Edwards and over and
above those five stores, a further five (or three as
reduced by
Edwards) in Johannesburg and/or Durban. She is saying, in what I have
quoted above, that she would have opened the same
number of stores
that she actually did, which
is 11,
but in different geographical areas.
[68]
Even
Aspeling’s evidence is not as crisp on the number of stores
they sought to open as Edwards presents the case to be. Aspeling
testified that their plan was to open a store a year and within five
years to have
six
or seven stores
,
maybe a couple of stores in Cape Town and a couple in Johannesburg,
with Johannesburg being the main focus, that they would have
‘at
least
three,
four, five stores up there
because
of the financial benefits’. Elsewhere he says the following:
‘
So
sitting now in 2014 we would have liked to have had maybe
six
or seven stores nationally, but comprising
probably
maybe
four
Johannesburg,
two,
three
Durban
and
a
couple
in
Cape Town.’
[18]
(Own emphasis)
[69]
Although Edwards
would have to have received his instructions from the couple about
the number of stores that would have been opened
both nationally and
in Cape Town,
the couple should have
explained their aims more clearly
when
giving their evidence. That is however not the main point of my
analysis of this evidence. My main issue is that the factual
position
regarding the actual stores opened over the seven year period does
not seem to have been considered by Edwards. I therefore
agree with
Mr Bhoopchand that the consolidation and closure of stores did not
justify the manner in which the claim was formulated
which gave an
incorrect impression that the plaintiff now lags behind the
number
of stores she should
she would have, had she not been
injured
. The
consolidation of stores did not reduce floor space occupied by the
stores. Rather, the number of stores was technically reduced.
Further, had the matter been heard in 2013, the plaintiff would have
had 7 stores, as The Wardrobe in Claremont was closed at the
end of
2013, as it is argued on behalf of the defendant.
[70]
If one considers the
fact that 11 stores were factually opened, although some being
consolidated and others closed, that could arguably
have been in
excess of the number predicted for both the injured and uninjured
state. The fact that expansion in Cape Town showed
positive growth
year on year cannot be ignored. Edwards dismissed this issue as being
irrelevant on the basis that one ought to
be put in a position they
would have been were it not for the accident. He completely ignores
the fact that the couple did not
only open 5 stores in Cape Town and
does not deal with what impact the stores that were opened and
consolidated had on the business.
Those stores did trade and made
profits.
[71]
The
defendant contends that the impact or success of those stores may
have offset the claim for curtailed expansion. Whilst that
may be so,
that has not been established and remains speculative because no
proper assessment was done to that effect
.
Apparently annual business results per store were not made available
when requested by Zeeman.
[19]
[72]
I have already
expressed a view that there is enough evidence to show that the
plaintiff would in all probability have expanded
nationally. My issue
however is that Edwards failed to take relevant factors into account
and simply dismissed them as being irrelevant.
In a situation like
this the Court is not without options, it can still award an amount
that it deems appropriate.
[73]
Another
important issue is that the experts gave no indication as to the
period estimated in which the plaintiff would regain her
full
capacity, given treatment. Lewis simply said ‘
psychological
condition is responsive to treatment and that with appropriate
intervention it is probable that she will be able to
regain much of
her psychic health’
[20]
.
Edwards admittedly ‘guessed’ the catch up period with no
medical backing. Whilst I am critical of Edwards’
approach, I do find that the plaintiff’s earning capacity would
have been reduced by the fear of flying that she had developed.
The
extent to which such earning capacity would have been reduced remains
a mystery, in the light of the fact that the medical
experts did not
address the fact that she factually flew to Asia. Her business
strategy of opening stores next to each other
in the manner she did
is also evidence of her intentions to expand her business. Her
success
after the accident does not mean she was not entitled to a claim of
loss earnings. In the decision of
Venter
v Road Accident Fund
[21]
,
Beasley AJ, disagreeing with the findings of Bizos AJ in
Devsel
v Road Accident Fund
[22]
,
held that
‘
...the
Plaintiff may well not suffer a loss or diminution of her present
income in the future. However, this does not mean that
she would not
(but for her injuries) have enjoyed an even better income.....,
depending on the facts, the court is entitled to
investigate the
relevance of such potential future loss.’
[74]
The
plaintiff's claim in respect of her diminished earning capacity must
now be considered in the light of the medical evidence
and factual
position that I have alluded to. There is convincing evidence to the
effect that the plaintiff was well qualified to
have opened
successful stores nationally. Her track record showed this. Her
business continued to grow and was successful even
during the
recessionary period of 2008/2009. However, not much evidence was
given to the court regarding differences between the
trading
landscapes in Johannesburg, Durban and Cape Town and differences
between trading on streets and in malls, apart from secondary
evidence obtained from a certain Mr K Schreuder, a director at
Foschini who apparently had independent conversations with Prof
Abrahams and Edwards, and who provided them with his views about the
plaintiff’s business and national expansion. These views
changed between the conversations he had with Prof Abrahams and
Edwards. Apparently, after Schreuder visited the plaintiff’s
stores, he was of the opinion that mall based stores would be the
most appropriate form for future expansion. He also agreed with
Edwards that Gauteng would be more profitable, followed by Cape Town
and Durban, but he did raise the issue of the challenges that
arise
with management of multiple stores, especially when they exist
indifferent geographical areas. There was no agreement from
the
parties that this ‘collateral evidence’ should be
accepted for what it purports to be, although Schreuder features
in
both Prof Abrahams and Edwards’ report. I am not convinced that
I should attach too much weight to Schreuder’s views.
I do
however note that Waligora made some concessions during
cross-examination, almost agreeing with most of Schreuder’s
views as reported by Edwards.
[75]
My impression is that
whilst the couple was successful in Cape Town, they could face
different market conditions in Johannesburg
and Durban. The risks of
high rental amounts and rates payable in upmarket Johannesburg malls
could affect the profitability of
the business. The issue of economic
environment and market demand is equally important. It cannot be
assumed that just because
the plaintiff was successful in Cape Town,
she will equally be the same in Johannesburg and in Durban.
While
the existence of Facebook followers and evidence of interest of
members of the public in the products offered by the plaintiff
may be
indicators of demand, such indicators will not necessarily be
translated into sales should those stores be opened in such
areas.
The economic
environment is important. By 2013 only one mall store was opened in
Canal Walk. The Canal Walk store was said to be
more profitable than
others but its financial statements were not presented.
[76]
The management of
those stores is another important issue. The plaintiff testified that
she is hands-on and involved in how the
apparel is displayed on
hangers, in the store and in windows and in the unpacking and packing
of merchandise. She gave an impression
that her involvement is daily.
This means that not all stores will get the same attention,
especially those stores that are not
in her immediate geographical
area. The advantage in having them concentrated in one area, as
was the case in the past, is
that the plaintiff is given an
opportunity to pay attention to and have acute focus on each of them.
This advantage might be lost
with the geographical spread of the
stores, especially nationally.
[77]
In
Southern
Insurance Association Limited v Bailey N.O.
[23]
Nicholas
JA said the following:
‘
Any
enquiry into damages for loss of earning capacity is of its nature
speculative, because it involves a prediction as to the future,
without the benefit of crystal balls, soothsayers, augurs or oracles.
All that the court can do is make an estimate, which is often
a very
rough estimate, of the present value of the loss.
It
has open to it two approaches.
One
is for the Judge to make a round estimate of an amount which seems to
him to be fair and reasonable. That is entirely a matter
of
guesswork, 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 may vary from the strongly probable
to the
speculative.
It
is manifest that either approach involves guesswork to a greater or
lesser extent. But the Court cannot for this reason adopt
a non
possumus attitude and make no award. See Hersman v Shapiro & Co
1926 TPD 367
at 379 per STRATFORD J:
‘
Monetary
damage having been suffered, it is necessary for the Court to assess
the amount and make the best use it can of the evidence
before it.
There are cases where the assessment by the Court is little more than
an estimate; but even so, it is certain that pecuniary
damage has
been suffered, the Court is bound to award damages.’
[78]
The
Court said in
Griffiths
v Mutual and Federal Insurance Company Limited
[24]
:
‘
In
a
case where there is no evidence upon which a mathematical or
actuarially based assessment can be made, the Court will
nevertheless,
once it is clear that pecuniary damage has been
suffered, make an award of an arbitrary, globular amount of what
seems to it to
be fair and reasonable, even though the result may be
no more than an informed guess. (See
Southern
Insurance Association Ltd v Bailey
NO
1984
(1) SA 98
(A)
at 113G – 114E and the cases there cited.)’
[79]
In view of all the
uncertainties as to the future and the imponderable nature of the
factors that could have influenced the business,
it is impossible to
perform any actuarial calculation with sufficient accuracy to justify
an award
on that basis.
In light of that, and
taking into account all the considerations I have mentioned above,
including concerns I have raised regarding
failure to take into
account important considerations in the assessment of the claim, it
seems to me awarding a globular amount
would be most favourable and
reasonable to both the parties. The amount of
R2 000 000.00
would be most
adequate in compensating the plaintiff for her loss of earnings
claim.
General
damages
[80]
The plaintiff seeks
R250 000 as general damages, whilst the defendant is of the view
that an award of R150 000 would be
more than adequate to
compensate for any pain and suffering and for loss of amenities of
life. I have allowed the amendment of
the claim on general damages
from R200 000 to R250 000. The plaintiff had omitted filing the
amended page and did so at the
hearing of argument.
[81]
There is clear
evidence that the injuries affected the plaintiff in a significant
way. I would not want to burden an already lengthy
judgment by
repeating all the evidence. The plaintiff clearly continues to suffer
pain in her neck that has resulted in her having
to obtain assistance
in order to lift heavy weight objects. Pain often wakes her at night
and she experiences severe headaches
which would last for a few days.
She often has to rest at home or attend chiropractic treatment when
pain is aggravated. She continues
to go to gym, but has to do light
exercises. The plaintiff was clearly a fit and healthy
individual prior to the accident.
Her social and business lives were
affected by her psychological state, with her being confined to or
dependent on others
to transport her or not being able to travel
whenever she needed to visit friends overseas or parents, which she
frequently did
before the accident. Her view of herself as a
strong and independent woman was affected.
Mitigation
of damages
[82]
There is an
allegation by the defendant that the plaintiff failed to mitigate her
loss. It is worth mentioning my dissatisfaction
regarding the fact
that the plaintiff was advised as early as 2009 to obtain treatment
by Lewis and yet only went for 3 or 4 sessions
of psychotherapy and
thereafter stopped because she thought she would be coerced to take
anti-depressants. In 2014 her condition
was recorded by Lewis as
largely unchanged but could potentially be entrenched due to the
passage of time.
[83]
Lewis’
conclusion in his report dated 06 February 2014 that the plaintiff’s
condition remained largely unchanged does
not seem to accord with
Aspelings’ evidence that the plaintiff is getting better and
the evidence that at this juncture,
stores have been opened at
different geographical locations of the Western Cape and one recently
in Johannesburg, which might indicate
some improvement in her
condition. There is also evidence to the effect that the plaintiff
does drive to destinations at close
distances, although driving where
there are fast moving cars such as on the N1 highway is still a
struggle. It is not clear if
this improvement is attributed to
‘treatment’ recommended or methods applied by the
plaintiff based on her research.
It was however apparent in Court
that the accident still affected the plaintiff. She was very
emotional and cried a number of times
whenever she had to give
details about the accident and its impact on her. My assessment is
that the plaintiff still needed professional
help to help her solve
her psychological distress.
[84]
There is a
possibility that the plaintiff’s condition could have improved
had she gone for treatment as soon as she was advised
to do so by the
experts, first by Lewis, her own expert. It is rather curious
that the only reason mentioned in 2009 to Lewis
for the plaintiff
having stopped attending psychotherapy treatment was because‘
[After
3 or 4 sessions] she recommended that I go on antidepressants, the
reason being that I had an anxiety disorder and
tranquilisers are
addictive. So she said that the way one treats it is by going onto
antidepressants. And even though she still
said that she would treat
me if I didn’t [take the antidepressants] , I got the
impression that it was so highly recommended
that I got the sense
that she was saying that it was the best option for me. And I don’t
want antidepressants because I’m
not depressed. I really just
wanted someone to help me through the fear of driving and the
associated problems...I decided I didn’t
want to take
antidepressants. So I actually called [Ms Stretton] and told her that
I was okay and that I would call her if I need
to see her again.’
[85]
After that she never
went for psychotherapy, until she commenced a course of
anti-depressants again in 2013. Now, years later, in
2014 more
reasons about why the plaintiff has been avoiding treatment are added
and factors inhibiting her from seeking help are
listed, which might
I add, could have been made more complicated by her struggling with
her psychological difficulties over a prolonged
period of time, if
one has regard to Lewis’ report of 06 February 2014.
[86]
Another reason she
mentioned during the trial was that she was not prepared to spend
further money on a psychologist given what
the accident had caused
her and how expensive sessions were for her as a small business
owner. The plaintiff testified that
for years, Aspeling had
advised her to see a psychologist. Aspeling has an honours degree in
psychology, although he never practised.
Aspeling was also not
convinced of psychological treatment, but did concede that if someone
had an ailment it was reasonable to
seek help to alleviate the
symptoms. The plaintiff said she administered self-help based on the
research she did. She took a three
month course of anti-depressants
at the beginning of 2013. She did not feel that she obtained much
benefit compared to the side
effects which included changes in
appetite and drowsiness as well as headaches. Whilst the plaintiff
has adopted self-help methods
over the years, she failed to follow
the recommendations of the experts or even explore alternative
methods with the experts themselves.
That in my view cannot be found
to be reasonable. The point is, even if Lewis’ findings of
treatment avoidance are accepted,
in my assessment the plaintiff
still needed professional help in order to deal with her problem,
which she reasonably failed to
do. I have considered submissions made
by both counsel in light of the prevailing case law on general
damages and, my view is that
an amount of
R200 000.00
would be fair to both
sides. The plaintiff’s failure to follow treatment
recommendations constitutes a failure to mitigate
her loss, which in
my view should result in a reduction of the amount awarded for
general damages to
R180 000.00
.
[87]
In the circumstances
I make the following order:
1.
The defendant is to pay plaintiff the sum of R
2 185 704.37
in
settlement of her claim in the manner and on the date set out in
paragraph 2 hereunder.
2.
The defendant shall pay the full capital sum
within 14 days of the date of the order, by way of electronic
transfer into the plaintiff’s
attorneys’ trust banking
account.
3.
The defendant shall provide an undertaking in
terms of Section 17(4) (a) of the Road Accident Fund Act 56 of 1996
(“the undertaking”),
to compensate the plaintiff for the
costs relating to the future accommodation of the plaintiff in a
hospital or nursing home or
treatment of or rendering of a service or
supplying of goods to the said plaintiff for her benefit arising from
the collision on
17 December 2007, after the costs have been incurred
and on proof thereof.
4.
The defendant shall pay the plaintiff’s
taxed or agreed costs on the high court scale as between party and
party, including
costs of counsel
,
p
reparation,
qualifying and reservation fees of Mark Edwards, costs of the experts
listed below
as well as all
reasonable costs attached to the procurement of the reports and
supplementary reports, if any, prepared by these
experts:
Dr R Jaffe
(Orthopaedic Surgeon);
Drs Morton &
Partners (Radiologists);
Susan Human
(Occupational Therapist);
Graeme Lewis
(Clinical Psychologist);
Norma Colley
(Industrial Psychologist);
Mark Edwards
(Forensic Accountant);
Munro Consulting
(Actuaries);
5.
The defendant shall
pay the
costs of preparing a
transcript of the Court proceedings.
6.
Payment of the taxed or agreed costs reflected
above shall be effected within 14 (fourteen) calendar days of
agreement or taxation
(the due date) and shall likewise be effected
by electronic transfer into the plaintiff’s attorneys’
trust banking
account.
7.
Should the said capital and costs not be
paid on the due date, then the defendant will be liable for interest
thereon at the prescribed
statutory rate.
____________________________
N
P BOQWANA
Judge
of the High Court
APPEARANCES:
For
the Plaintiff: Adv W Coughlan
Instructed
by: DSC Attorneys, Cape Town
For
the Defendant: Adv Bhoopchand
Instructed
by: Mayats Attorneys, Claremont c/o S S Qali Attorneys, Cape
Town
Dates
of hearing
: 18 February 2014
19
February 2014
20
February 2014
22
April 2014
20
June 2014
Date
of judgment
: 20 August 2014
[1]
(in
Cape Town)
[2]
See
Graeme Lewis’ Psychological Assessment Report dated 21 June
2009 at page 11
[3]
Munro
Consulting calculated past and future loss of earnings as per
paragraph setting out the claim above
[4]
See
joint minute between Summit, KPMG and Zeeman at page 267 of the
paginated Court papers and expert reports
[5]
YDE
is (according to the plaintiff) a fashion retail success story
founded by Paul Simon, which gave retail space to young South
African Designers. Simon had within nine years managed to open ten
stores turning around R120 million a year, but subsequently
sold to
Truworths. She was inspired by what Simon could achieve, but wanted
to open her empire without borrowing money.
[6]
2003
(2) SA 234 (SCA)
[7]
Cases
cited by Mr Coughlan are, inter alia,
Miller
v Road Accident Fund
,
unreported judgment,
(A
134/2013) [2013] ZAWCHC delivered on 12 September 2013;
Van der
Walt v Road Accident Fund
2002 [5J2] QOD 149 (AF);
Miles
v Road Accident Fund
(7410/2009) [2013] ZAKZPHC 41 (14 June
2013)
[8]
See
Rudman
supra
at paragraph [13].
[9]
See
Rudman
supra
at paragraph [14].
[10]
Unreported
judgment (A 134/2013) [2013] ZAWCHC (12 September 2013)
[11]
Miller
v Road Accident Fund
supra
at paragraph 7
[12]
(7410/2009)
[2013] ZAKZPCH 41 (14 June 2013) at paragraph 25
[13]
2012
(5) SA 273 (SCA); [2012] 4 All SA 26 (SCA)
[14]
In
Raath
the
Court at paragraph [17] emphasised the point made in Rudman that
‘
...
it is not axiomatic in these circumstances that the company’s
loss is the individual’s personal loss, even if
he is the sole
shareholder and/or the driving force behind the company. Proof of
the individual’s personal loss is still
required.’
[15]
[2006]
3 All SA 593
(E). See also
Road
Accident Fund v Ronaasen NO
(86-2006)
[2007] ZAECHC 153
(22 June 2007) at paragraph 8
[16]
Miles
v Road Accident Fund supra at paragraphs 22 to 26
[17]
Page
41 of the transcribed record
[18]
Pages
400 and 401 of the transcribed record
[19]
See
P D Zeeman report dated 14 November 2012 at page 9 at paragraph
5.2.2.1
[20]
Other
experts including Norma Colley agreed with that conclusion
[21]
(50016/10)
[2012] ZAGPPHC 297 (19 November 2012) at paragraph 13
[22]
Case
number 2483/09 handed down in the South Gauteng High Court on 24
June 2011 (unreported). In this case Bizos AJ held at paragraph
38
that "... her [the plaintiff] employment contract as it was at
the time of the
delict
was
replaced with a significantly higher profile contract after the
accident. If anything, her earning capacity has increased
recently... ‘He held that no future loss of earnings had been
proved therefore, there no future loss of earning capacity
was
proven, because ‘... a claim for loss of income is effectively
a quantified claim for loss of earning capacity and
a claim for loss
of future earning capacity cannot be made without the proof and
quantification that is found in its resultant
loss of future
income.’ (paragraph [27].
[23]
1984
(1) SA 98
(A)
at 113 G – 114B.
[24]
[1993]
ZASCA 121
;
1994
(1) SA 535
(
AD)
at 546f – h