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[2012] ZAGPPHC 152
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Mfomadi and Another v Road Accident Fund (34221/06) [2012] ZAGPPHC 152 (3 August 2012)
FLYNOTES:
ACTUARIAL – Loss of support – Accelerated inheritance
– Widow taking over late husband’s
taxi business –
Income a benefit which accrues as a consequence of the death the
deceased – Deductible as an
accelerated benefit –
Widow not possessing skill and experience and business collapsing
– Inheritance of taxi
business resulted in a financial loss
and therefore no benefit accrued when in totality of situation.
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
(NORTH
GAUTENG, PRETORIA)
CASE
NO: 34221/06
NOT
REPORTABLE
DATE:03/08/2012
In the matter
between:
MA MFOMADI
First Plaintiff
SCINTIA SEDIELA
MFOMADI
Second Plaintiff
And
THE ROAD
ACCIDENT FUND
Defendant
JUDGMENT
MAKGOKA,
J
[1]
This is a claim for loss of support in terms of the Road Accident
Fund in Act 56 of 1996 (the Act) following the death of the
first
plaintiffs husband on 20 October 2001 as a result of injuries he
sustained during or motor vehicle collision. Initially the
plaintiff
sued both in her personality capacity, as well as her capacity as
mother and 'natural guardian' of the second plaintiff.
The second
plaintiff had
reached majority when the action was instituted
in 2006, but was still a minor when the claim was lodged with the
defendant in June
2003.
[2]
At the commencement of the trial counsel for the plaintiff applied in
terms of rule 15 (2) of the Uniform Rules of Court for
an order in
terms of which the erstwhile minor child was to be joined in these
proceedings as the second plaintiff. There was no
objection to the
proposed joinder. Accordingly I made an order joining Scintia Sediela
Mfomadi as the second plaintiff. Counsel
further moved for amendment
to the plaintiffs particulars of claim. Similarly, there was no
objection and I granted the proposed
amendment in the following
respects (which obviously affects the prayers): (i) by deletion of
the amount of 2.5 x R 144 on page
9 and replacing it with R4141 385;
(ii) by substituting paragraph 10 with the following:
'For greater particularity, reference
is made to the actuarial report of Human and Morries dated 24
February 2012 in the amount
of R 273 838.'
[3]
The following issues are common cause or not in dispute. The
plaintiff was born on 9 December 1950. On 9 November 1983 she married
her late husband (the deceased) in community of property. The
deceased was born on 11 January 1947. He was, during his lifetime,
a
taxi owner and driver. Four children were born from the marriage, two
of whom were self- supporting at the time of his death.
The second
plaintiff was born on 7 November 1986. Her immediate elder sister was
born in 1982. No claim has been instituted on
her behalf. On 20
October 2001 the deceased was killed in a motor vehicle collision.
The defendant has conceded liability for the
collision. Counsel
informed me that the parties had further agreed that the plaintiffs'
damages, if any, should be 'apportioned'
in the ratio 60/40.1 shall
deal with this aspect later. The trial proceeded therefore only on
the issue of the amount of damages.
[4]
The issues in dispute and for determination are the following: (i)
the income of the deceased; (ii) whether the first plaintiff
has
suffered any loss for loss of support and if so, the quantum of such
claim; (iii) the quantum of the second plaintiffs damages
and (iv)
the age of dependency of the second plaintiff.
[5]
Three witnesses testified, namely the two plaintiffs and Mr Matome
Marcus Rakimane, who testified on behalf of their behalf.
The
defendant closed its case without calling any witnesses on its
behalf. What follows is a brief exposition of each witness'
evidence.
The
first plaintiff
[6]
She testified that during the deceased's lifetime he managed the taxi
business. She was employed at an electric plugs-manufacturing
firm
since 1975, but was retrenched on 15 February 2012. After the
deceased's death she inherited the deceased's only vehicle,
which he
had used as a taxi. The deceased had bought the vehicle second-hand.
She continued to operate the taxi. The driver she
employed used to
bring daily takings of R150 and R200. She encountered numerous
problems with the driver, whom she suspected of
embezzling the daily
takings and short-changing her. As a result, the taxi business
deteriorated and was no longer profitable.
She received approximately
R5000 per month from the taxi business, which she used for her
daughter's education. According to her,
the deceased, during his
life-time derived more money from the taxi business than she did when
she managed the business, after
his death.
[7]
By the time she was retrenched, she had already surrendered the
vehicle in terms of the government's taxi recapitalization programme,
in respect of which she received R50 00 for the scrap. She used that
money as a deposit on a new vehicle. She was unable to maintain
regular repayments on the new vehicle, which she also used as a taxi.
It broke down frequently and caused more money to repair.
The
situation was exacerbated by the continuing embezzlement of daily
takings by the drivers she had employed. She currently receives
old-age pension of R1 140 a month, since January 2011.
The
second plaintiff
[9]
She was 15 years old at the time of the deceased's death and still a
pupil. She failed matric in 2007 and did a 're-examination'
in June
2008. Thereafter she remained at home and obtained a post matric
certificate in 2009. She only became gainfully employed
in 2010.
Mr
Rakimane
[10]
He is taxi owner and a member of a taxi association to which the
deceased also belonged. He is currently the deputy chairperson
of the
association. At the time of the deceased death he was a Yank master'.
He had to, among others, ensure that commuters were
transported
safely and monitoring of fare fees charged by the drivers. By virtue
of his position, the records of the trips made
by the taxis whose
members belonged to his association, he was able to ascertain the
member of loads made by each taxi He testified
that during the
relevant period a single trip from Brits to Maboloka was R6. The
deceased's vehicle carried 15 passengers. One
taxi would make 5
return loads per day during the week, and over the weekends it could
be up to 7 loads per day. Using a particular
formula, he estimated
the deceased's gross income per month to be R5 665, and R3 150 net.
(Assuming the deceased has loaded 7 days
a week). During
cross-examination he was unable to explain how he arrived at the
gross profit of R5 665. He further conceded that
the amount of R3 150
did not take into consideration the normal wear and tear,
maintenance, service, rank fees, driver wages, tyre
change.
[11]
I must immediately remark that the evidence of the deceased's
earnings is not the best there could be. The evidence of Mr Rakimane
is based largely on suppositions. However, the fact remains that the
deceased owned and drove a taxi. He earned some income from
that
business. Mr. Rakimane's evidence, imperfect as it might be, provides
some basis from which an award may be made. The fact
that the
evidence is open to criticism is no reason for a court to adopt 'a
non possumus attitude' and make no award. See Hersman
v Shapiro &
Co
1
where Stratford J said:
'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,
if it is certain that
pecuniary damages have been suffered, the Court
is bound to award damages.' (See also Southern Association v Bailey
2
and Anthony and Another v Cape Town Municipality
3
)
[12]
In his work, The Quantum Year Book (2012) Robert Koch at p108
provides a useful list of suggested earnings assumptions for
non-corporate workers, where a taxi-owner -driver's earnings are
assumed at R44 000 - R260 000 per year. I am therefore satisfied
that
there is a sufficient basis on which an award can be made for
damages.
[13]
I now consider the plaintiffs' individual claims. With regard to the
first plaintiffs claim, it is in contention whether she
is entitled
to any award. Counsel for the defendant, Mr. Nel, argued that since
the first plaintiff derived income from the deceased's
taxi business
after his death, she suffered no loss at all. Accordingly, so was the
submission, absolution from the instance should
be granted. On the
other hand, Mr De Beer, for the plaintiff, urged me to find that the
first plaintiff indeed suffered a loss.
[14]
Before I consider the parties' contentions, I deem it prudent to set
out the general principles governing the payment for loss
of support.
Those were conveniently summarized by Lewis AJA (as she then was) in
Lambrakis v Santam
4
The measures of damages for loss of
support is, usually, the difference between the position of the
defendant as a result of the
loss of support and the position he or
she could reasonably have expected to be had the deceased not died:
Joubert (ed) The Law
of South Africa (1st re-issue) Vol 7 para 89,
citing Jameson's Minors v Central South African Railways
1908 TS 575
at 603; Hulley v Cox
1923 AD 234
; and Legal Insurance Co Ltd v Botes
1963 (1) SA 608
(A). The particular equities of the case must alos be
taken into account and an adjustment made if appropriate: Botes above
at
614 F-H, where Holmes JA said that the trial Judge 'has a
discretion to award what under the circumstances he thinks right'.
Thus
any addition to a dependant's income, arising from the death of
the deceased, must be deducted from the total amount of the loss.
In
assessing the value of the benefit-and indeed the loss-the court may
be guided but is certainly not tied down by inexorable
actuarial
calculations' (Holmes JA in Botes {supra at 614F-G)...
Where property is inherited by a
dependant, in determining the extent of his or her loss the court
should take into account not
the value of the property but that of
the accelerated accrual (cf Groenewald v Snyders
1966 (3) SA 248C-F).
This entails assessing the probabilities of the dependant having
inherited the property should the deceased not have been killed
through the wrongdoing of the defendant, but dying from a different
cause at a later stage.'
[15]
The basis of liability to compensate for loss of support is therefore
to compensate a widow or a child for the value of the
support lost as
a result of the death of the spouse or parent. The fact that income
accrues from other sources which compensate
for the loss is not a
ground for reducing the amount payable by the wrongdoers unless such
income is a direct consequence of the
death of the deceased. (See
Santam Insurance v Meredith
5
at
267H-J). At least since the decision in Jameson's Minors, it has been
settled law that income generated by an asset in a deceased
estate
constitutes an accelerated benefit to dependent heirs. In Indrani and
Another v African Guarantee & Indemnity Co Ltd
6
the following was stated at 607 F-H:
The general principle applied by the
South African Court is that a dependant plaintiff when entitled to
damages for loss of support,
should be awarded damages only for the
"material loss caused... by his death" (See Hulley v Cox
1923 AD 234
at 243). It seems implicit in what was said by Innes CJ
in Hulley v Cox, that the material loss can only be ascertained "
by balancing, on the one hand , the loss to him of the future
pecuniary benefit, and, on the other, any pecuniary advantage which
from whatever source comes to him by reason of the death" (my
emphasis).
[16]
In the present case, the first plaintiff was married in community of
property to the deceased. In addition to her compensation
for loss of
support she also acquired an additional source of income from the
proceeds of her half-share of the estate which she
could use for her
own benefit. It admits of no debate that the income derived from the
taxi business constitutes a benefit which
accrues as a consequence of
the death the deceased. It is therefore deductible as an accelerated
benefit. In Santam Insurance Ltd
v Meredith
7
Goldin JA articulated the position thus:
'Community of property is a universal
economic partnership of the spouses. All their assets and liabilities
are merged in a joint
estate, in which both spouses, irrespective of
the value of their financial contributions, hold equal shares.'(See
Hahlo The South
African Law of Husband and Wife, 5th ed at 157-8.)ln
addition to her compensation for loss of support she also acquires an
additional
source of income from the proceeds of her half of the
estate which she can use for her own benefit. In my view such income
can
constitute a benefit which accrues as a consequence of the death
of the deceased. The division of the joint estate is not itself
a
benefit but the proceeds from her exercise of ownership of her half
can depending on all the facts, constitute, as does accelerated
succession, a deductible benefit. (See De Wet NO v Furgens
1970 (3)
SA 38
(A) at 46-51.) In deciding whether or to what extent income
does in fact constitute a deductible benefit it is necessary to
consider
and give effect to the situation as a whole.(See Marine and
Trade Insurance Co Ltd v Mariamah and Another
1978 (3) SA 480
(A) at
488-9.)
[17]
For the calculation of the deduction for acceleration, one must have
regard to the three separate components mentioned in Groenewald
at
248E-F, namely:
(a) The inheritance (the value of
assets which have accrued as a result of the death,
(b) The use value (the value of use of
the assets by the family had there been no death)
(c) The chance of later inheritance
(the present value of the chance of inheriting at a later date had
the death not occurred prematurely).
[18]
In the present case, (c) finds no application. With regard to (a) the
only two assets accruing are the immovable property and
the taxi
(jointly valued at R100 00). Regarding (b), it is highly likely
(subject of course to the general contingencies of life)
that the
deceased would have continued the taxi business, but for his death.
[19]
The question is therefore, whether, on a conspectus of all the
factors, the first plaintiff derived benefit from the division
of the
joint estate, and if so, to what extent. As stated elsewhere in this
judgment, the proper approach is that indicated in
Botes above,
namely, that the remedy for loss of support aims at putting the
defendants in as good a position, as regards maintenance,
as they
would have been in if the deceased had not been killed; and that, to
this end, material losses as well as benefits and
prospects must be
considered (See also Groenewald v Snyders, above at 256 C-D).
[20]
In this regard it should be taken into account that although the
first plaintiff continued to manage the business, it is clear
that
she did not possess the necessary skill and experience that the
deceased had. She lacked the insight and "street-wise"
skills, for example, to manage possible embezzlement of daily takings
by drivers. My impression of her overall evidence is that
the hazards
of managing or business as competitive and complex such as a taxi,
were just too much for her. She was clearly out
of her depth. Indeed,
what the deceased had managed for many years, collapsed shortly after
his death.
[21]
In argument, the parties' counsel relied on the actuarial
calculations contained in the reports prepared for the parties,
respectively. In the actuarial report dated 24 February 2012 prepared
for the plaintiffs by Human & Morris Consulting Actuaries,
the
approach adopted in the calculation is the following. The net income
of the deceased was determined at R144 000 before tax,
with the
assumption that there would have been an increase of 6% per year from
date of the accident to assumed retirement age of
65, from which
period the deceased would have been entitled to a State Old Age
pension.
[22]
The income of the first plaintiff at the time of the accident was
also taken into account, namely R42 328 per year, backdated
at 6% per
year to date of the accident. It is assumed that the first plaintiff,
after being retrenched in February 2007, had not
received any income
until she commenced receipt of State Old Age pension in January 2011.
With regard to apportionment of family
income, it is assumed that the
pre-accident net family income would have been apportioned two parts
to each parent, and one part
to the second plaintiff. The first
plaintiff is deemed to apply her own full net income to offset her
loss of support. It was assumed
that the second plaintiff would have
needed support up to 31 October 2010 (apparently as she became
employed only in November 2010).
The net estate of the deceased is
assumed at R100 000, being a house and assumed value for the taxi
business, thus R50 000 was
calculated for accelerated benefits
purposes. On the basis of these and other assumptions, the
plaintiffs' losses were calculated
at R414 385 and R273 878,
respectively
[23]
Counsel for the defendant, in submitting that the first plaintiff had
suffered no loss, since she inherited the deceased's
taxi and
continued to derive income from it, was apparently influenced by, and
relied on, an actuarial calculation prepared for
the defendant by Mr.
George Schwalb of GRS Actuarial Consulting dated 19 July 2011. Based
also on certain assumptions, it is concluded
in the calculation that
the first plaintiff had suffered no loss at all. The basis of this
conclusion is as follows:
According to a letter dated 27 August
2010 by Road Accident & Insurance Assessors:
•
Maboloka Jericho Taxi
association supplied them with an 'estimated (sic) of what a taxi
owner in this instance would have earned'.
The widow is earning a
similar thumb suck income as taxi owner.
•
Clipsal Manufacturing employed
Ms Ntsane
8
until the branch
where she worked closed down.
According to a rough estimate by
Maboloka Jericho taxi operators in August 2010, "Mrs Mfomadi"
earns about R3 150 per
week profit from the taxi business (note that
their estimate excluded depreciation and maintenance).
From the above information it seems
clear that the value of Ms Ntsane's inheritance of the taxi business
exceeded any financial
support that she would have received from Mr
Mfomadi from the same taxi business and, therefore, she has not
suffered any net loss
of earnings. We thus only estimated the
children's loss of earnings."
[24]
With regard to the second plaintiff, it was assumed that the income
from the taxi business would be apportioned among others,
to the
second plaintiffs sister, who was 19 at the time of the accident. On
the assumption that both children would have needed
support until the
ages of 21 respectively, the second plaintiffs loss is calculated at
R124 097.
[25]
The actuarial calculation prepared for the defendant, and its premise
with regard to the first plaintiff, is in my view, not
very helpful,
and to the extent I point out here, flawed. It is flawed in one
simple respect. It is assumed that since the first
plaintiff
inherited the deceased's taxi, she was able to generate the same
income as the deceased did. This is simplistic, and
obviously ignores
the undisputed evidence, which I accept, that the first plaintiff was
not possessed of the necessary skills that
the deceased had to
sustain the business. This is largely why the business collapsed. Of
course, her driver would have loaded the
same number of passengers as
did the deceased, and even perhaps collected the same daily takings,
but that is only part of the
overall management, in respect of which
she was found lagging. As a result, the first plaintiffs income from
her inheritance of
the deceased's taxi business, and the value
thereof, resulted in a financial loss and therefore no benefit
accrued when the totality
of the situation is considered. (Compare
the facts to those in Santam Insurance v Meredith, above). I am
therefore satisfied that
the first plaintiff did suffer a loss as a
result of the deceased's death.
[26]
With regard to the second plaintiff, the calculation is obviously
distorted by the inclusion of the second plaintiffs sister,
who is
not part of this action, and apparently did not assert a need for
support. It appears from the first plaintiffs evidence
that she was
had been in receipt of a social grant since 2006.1 therefore prefer
the plaintiffs' actuarial calculation over that
of the defendant. It
is not to suggest that the plaintiffs' calculation does not have its
flaws. For example, I have already commented
on the inadequacy of
evidence with regard to the deceased's income, on which evidence, the
actuarial report is premised. However,
that can be balanced with a
suitable contingency deduction, which is an aspect I now to.
[27]
Both plaintiffs' awards should be adjusted to make provision for the
general contingencies. Had he not been killed, the deceased's
future
life and, in particular, his taxi business and earning capacity would
have been subject to a variety of normal vicissitudes
and hazards of
life, the more so that he was self-employed in a volatile taxi
industry. He would have been, for example, affected
by the
recapitalization programme. It is likely therefore that he would have
struggled financially, maybe even to the extent of
collapse.
Obviously, not all these ponderables would have been adverse. He may
have continued to work beyond the retirement age
of 65.
[28]
On the other hand, he and his businesses may have fallen on hard
times. Ill-health or injury may have dogged him; he may have
been
killed in a taxi-related violence (which is not far-fetched, given
the notoriety of the industry in this regard). All these
would cause
loss of income or forced retirement. Therefore, a deduction should be
made from the plaintiffs' claim to allow for
general contingencies,
some of which I have alluded to above. All these factors, in my view,
point to a higher contingency deduction,
especially in respect of the
first plaintiff. Having regard to all the factors, I conclude that a
deduction of 40% from the first
plaintiffs claim in respect of her
loss would, in the circumstances, be fair and adequate to allow for
general contingencies. It
takes into account all of the above
contingencies, and the fact that she received some income from an
inherited asset, though on
a very limited basis. It also balances out
the inadequacy of the evidence with regard to the deceased's income.
[29]
I turn now to the second plaintiffs claim. In this regard
compensation is for the loss of support from a parent who did infact
support, or was under an obligation to do so. (See Groenewald v
Snyders, above at 247A-C. The principles governing the award of
damages to the second plaintiff are not contested. It is common cause
that the second plaintiff is entitled to damages only insofar
as she
has suffered actual pecuniary loss as a result of the wrongdoing of
the insured driver (see Evins v Shield Insurance Co.
Ltd9). On a
conspectus of all the facts, I am satisfied that the second plaintiff
suffered actual pecuniary loss as result of the
death of her father,
and for that she is entitled to adequate and fair compensation.
[30]
In the actuarial calculation, it was assumed that she would have been
in need of maintenance up to the time she became employed.
This is
the correct assumption. A parent's duty to support a child does not
cease when the child reaches a particular age but it
usually does so
when the child becomes self-supporting. Majority is not the
determining factor (see Smith v Smith]0). The deceased
in the present
case, would have been obliged to continue supporting the second
plaintiff up to self-sufficiency. Similarly, the
second plaintiffs
claim should be adjusted to factor in the general contingencies. I
also take into account all the factors considered
in arriving at the
contingency deduction from the first plaintiffs claim. Of course, the
factor relating to the inheritance is
not applicable to her. In her
case, I deem a deduction of 20% to be appropriate.
[31]
The plaintiffs' combined damages are in the amount of R467 733.34,
calculated as follows:
(a) First plaintiff
R414 385-40% = R165 754 Net R248 631
(b) Second plaintiff
R273 878 - 20% - R54 775.66 Net R219
102.34
[32]
Finally, I deal with an aspect I alluded to in the introduction. It
is to be recalled that I mentioned that counsel conveyed
to me that
the parties had agreed that the plaintiffs' damages be apportioned on
a 60/40 ratio. It occurred to me when preparing
this judgment that I
did not query this aspect with counsel when it was raised. This being
a dependants' claim, apportionment does
not come into reckoning. The
negligence of the deceased in an action by dependants is irrelevant
(see for example Potgieter v Rondalia
Assurance Corp. of SA Ltdu).
All the dependants have to establish is the proverbial 1 % in order
to succeed with their full damages.
The agreement of the parties with
regard to the apportionment is therefore at odds with the general
legal policy and is not binding
on this court. I was of the mind to
request counsel to address me on this aspect before delivery of this
judgment. On second thought
I decided against that, as the legal
principle is trite, and counsel would be constrained to agree with
the established principle.
The plaintiffs are, as a result, entitled
to their full damages, without any apportionment.
[33]
In the result I make the following order:
1. The defendant is ordered to pay the
plaintiff an amount of R467 733.34 on or before 3 September 2012;
2. The said amount shall be paid
directly into the Trust Account of the plaintiffs attorneys, the
particulars of which shall be
furnished to the defendant's attorneys
forthwith;
3. The defendant is ordered to pay the
plaintiffs taxed or agreed party and party costs, which costs shall
include the reasonable
taxable costs of obtaining the actuarial
reports from Human & Morris (actuaries);
4. The capital amount will not bear
interest unless the defendant fails to effect payment on the due
date, in which event the capital
amount will bear interest at the
rate of 15.5% per annum from and including the fifteenth calendar day
after the date of this order,
to date of payment.
TM
MAKGOKA
JUDGE
OF THE HIGH COURT
DATE
OF HEARING :1 MARCH 2012
JUDGMENT
DELIVERED : 3 AUGUST 2012
FOR THE PLAINTIFF
:
ADV RJ DE BEER
INSTRUCTED BY :
LOURENS ATTORNEYS,
BRITS
FOR THE DEFENDANT
:
ADV JP NEL
INSTRUCTED BY :
MOTLHE JOOMA
SABDIA INC., PRETORIA
1
1926
TPD 367
at 379
2
1984(1)
SA 98 (A) at 114A
3
1967
(4) SA 445
(A) at 451B-C.
4
2002
(3) SA 710
paras 12 and 13.
5
1990(4)
SA 265 (Tk A)
6
1968
(4) SA 606
(D)
7
Above
at 269B-D
8
Reference
to the first plaintiff by her maiden surname. It is not clear why,
as she had attached her marriage certificate to her
claim.