Vermaak v Road Accident Fund (1976/06) [2008] ZAWCHC 12 (5 March 2008)

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[2008] ZAWCHC 12
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Vermaak v Road Accident Fund (1976/06) [2008] ZAWCHC 12 (5 March 2008)

IN
THE HIGH COURT OF SOUTH AFRICA
REPORTABLE
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE NO: 1976/06
In
the matter between:
TESSA
VERMAAK
Plaintiff
and
ROAD
ACCIDENT FUND
Defendant
________________________________________________________________
JUDGMENT
DELIVERED ON 5 MARCH 2008
_______________________________________________________________
CROWE
AJ
:
[1] In
this matter the Plaintiff, in her capacity as the mother and natural
guardian of her minor son Sasha Marius Nel who was born
on 6 January
1999, claims compensation from the Defendant in terms of the
provisions of ss 17(1) of the Road Accident Fund Act No
56 of 1996
(“
the
RAF Act”
).
Plaintiff claims loss of support for the minor arising from the
death of his father, Mr Marius Nel, who was fatally injured in
a
motor vehicle accident on 15 February 1999.
[2] Per Deed of
Settlement dated 13 September 2007 Defendant accepted liability for
the Plaintiff’s damages and the parties settled
the quantum of
Plaintiff’s claims for the minor’s past and future loss of
support in the capital sum of R274 109,00. At the
trial before me,
which commenced on 19 February 2008, it was common cause between the
parties that the said capital sum had been
calculated by the actuary
Dr Robert Koch in a certificate of value dated 30 August 2007 using a
valuation date of 29 August 2007.
It was also common cause that the
said capital sum was made up of past loss of support of R96 153,20
(being R136 204,00 less amounts
of R12 810,00 for state welfare grant
payments received and R27 240,80 representing a 20% general
contingency deduction) and a rounded
down figure of R177 955,80
for future loss of support (being R222 445,00 less an amount of R44
489,00 representing a 20% general
contingency deduction). It was
also common cause that Defendant made an interim payment of R90
000,00 to the Plaintiff on 28 October
2007 and that I should
accordingly order Defendant to pay Plaintiff the remaining capital
balance of (R274 109, 00 less R90 000,00)=
R184 109,00.
[3] In
dispute is Plaintiff’s claim in terms of the provisions of s 2A of
the Prescribed Rate of Interest Act No. 55 of 1975 (
“the
PRI Act”)
for
prescribed interest at the rate of 15,5% per annum, as well as the
costs of suit subsequent to 30 August 2007.
[4] Plaintiff
claims such interest on the agreed past loss of support of R96 153,20
from 16 November 2005, the date on which
the Defendant received a
letter of demand from Plaintiff’s attorneys date 14 November 2005.
For this claim, Plaintiff relies on
the provisions of subsections
(1), (2)(a) and (5) of s 2A of the PRI Act and the definition of
“demand”
in s 4(ii) thereof.
[5] Plaintiff claims such
interest on the aforesaid future loss of support of R177 955,80 from
13 September 2007, the date of the
aforesaid Deed of Settlement in
which the capital sum of the Plaintiff’s claims was agreed. For
this claim Plaintiff relies on
the provisions of subsection (3) of s
2A of the PRI Act.
[6] The Defendant
disputes liability to pay any interest to the Plaintiff in terms of s
2A of the PRI Act. The Defendant contends
that the provisions of ss
17(3)(a) of the RAF Act governs its liability for the payment of
interest on compensation awarded under
that Act and that the
provisions of that subsection override those of s 2A of the PRI Act.
[7] The
following provisions of the PRI Act are relevant:
“
1.
Interest
on a debt to be calculated at a prescribed rate in certain
circumstances
(1) If a debt bears
interest and the rate at which the interest is to be calculated is
not governed by any other law or by an agreement
or a trade custom or
in any other manner, such interest shall be calculated at the rate
prescribed under subsection (2) as at the
time when such interest
begins to run, unless a court of law, on the ground of special
circumstances relating to that debt, orders
otherwise.
(2) The
Minister of Justice may from time to time prescribe a rate of
interest
1
for the purposes of subsection (1) by notice in the Gazette.
…
2.
Interest
on a judgment debt
(1) Every judgment
debt which, but for the provisions of this subsection, would not bear
any interest after the date of the judgment
or order by virtue of
which it is due, shall bear interest from the day on which such
judgment debt is payable, unless the judgment
or order provides
others.
(2) Any interest
payable in terms of subsection (1) may be recovered as if it formed
part of the judgment debt on which it is due.
(3) In
this section ‘judgment debt’ means a sum of money due in terms of
a judgment or an order, including an order as to costs,
of a court of
law, and includes any part of such a sum of money, but does not
include any interest not forming part of the principal
sum of a
judgment debt.
2A
Interest
on unliquidated debts
(1) Subject to the
provisions of this section the amount of every unliquidated debt as
determined by a court of law … or by agreement
between the creditor
and the debtor, shall bear interest as contemplated in section 1.
(2) (a) Subject to any
other agreement between the parties the interest contemplated in
subsection (1) shall run from the date on
which payment of the debt
is claimed by the service on the debtor of a demand or summons,
whichever date is the earlier.
(b) …
(3) The interest on
that part of a debt which consists of the present value of a loss
which will occur in the future shall not commence
to run until the
date upon which the quantum of that part is determined by judgment,
arbitration or agreement and any such part determined
by arbitration
or agreement shall for this purposes of this Act be deemed to be a
judgment debt.
(4) Where a debtor
offers to settle a debt by making a payment into court or a tender
and the creditor accepts the payment or tender,
or a court of law
awards an amount not exceeding such payment or tender, the running of
interest shall be interrupted from the date
of the payment into court
or the tender until the date of the said acceptance or award.
(5) Notwithstanding
the provisions of this Act but subject to any other law or an
agreement between the parties, a court of law …
may make such order
as appears just in respect of the payment of interest on an
unliquidated debt, the rate at which interest shall
accrue and the
date from which interest shall run.
(6) The
provisions of section 2(2) shall apply
mutatis
mutandis
to interest recoverable under this section.
…
4
Definitions
In
this Act, unless the context indicates otherwise –
…
‘
demand
’
means a written demand setting out the creditors’ claim in such a
manner as to enable the debtor reasonably to assess the
quantum
thereof
”.
[8] Mr
Odendaal, for the Plaintiff, sketched the relevant history and
application of s 2A of the PRI Act. He referred me to
Union
Government v Jackson & Others
1956 (2) SA 398
(A)
at
412
E – 413 A
where the common law position regarding interest on unliquidated
damages was clearly stated to be as follows:
“
The
ordinary rule of our law is that liability for interest does not
automatically attach to an unliquidated debt – an obligation
which
has not yet been reduced to a definite sum of money. That rule was
applied in
Victoria
Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines
Ltd
1915 AD 1.
I quote from the judgment of Innes CJ at 31, 32:
‘
The
question with which we are concerned is whether in a claim for
unliquidated damages only ascertainable as to amount after a long
and
intricate investigation, the defendant can properly be held liable
for interest prior to judgment upon the sum finally assessed.
In the
present case the defendant was
in
mora
insofar as the supply of electric power was concerned, and for that
it must pay damages. But was it
in
mora
with regard to those damages, and therefore subject to an order for
interest in addition? Under the common law of England and America
that question would probably be answered in the negative, on the
ground that the party sued did not know what sum he owed, and
therefore
cannot be in default for not paying. … The civil law did
not attribute
mora
to a debtor who did not know and could not ascertain the amount he
had to pay. ‘
Non
potest improbus videri, qui ignorat, quantum solvere debeat
’
… and that rule was adopted by the courts of Vriesland … It has
also been followed in our own practice. No South African
decision
was quoted to us, nor have I been able to find any, in which interest
before judgment has been awarded upon unliquidated
damages. I do not
think, therefore, that they can be given here. I do not say that
under no circumstances whatever could such damages
carry interest.
Cases may possibly arise in which though the claim is unliquidated
the amount payable might have been ascertainable
upon an enquiry
which it was reasonable the debtor should have made. Such cases,
should they occur, may be left open. But the present
matter stands in
a different position. It was not possible for the defendant to know
or ascertain what damage its breach of contract
had caused, and it
cannot therefore on the principles of our law be held liable for
interest prior to judgment upon the amount of
the damage’.
”
[9] The
need for the introduction of a provision such as s 2A was recognised
by Burger J in his judgment in
Bailey
NO v General Accident Insurance Co Ltd
1987 (2) SA 702
(C)
when he stated the following (at
706
A – C
):
“
…
maar ek meen dat die tyd ryp is dat daar … wetlike voorsiening
gemaak moet word vir rente betaalbaar op illikwiede eise vir
die
tydperk na dagvaarding tot by uitspraak. Die feit dat hulle rente op
dié wyse spaar, lei ongetwyfeld daartoe dat skuldenaars
aangemoedig
word om sake te bestry. Dit is klaarblyklik onbillik en moedig
onnodige litigasie aan.
”
In
similar vein, the following was stated in
SA
Eagle Insurance Co Ltd v Hartley
[1990] ZASCA 106
;
1990 (4) SA 833
(A)
at
841
G – 842 B
:
“
The
result which I have thus reached is not satisfactory. If a plaintiff
through no fault of his own has to wait a substantial period
of time
to establish his claim it seems unfair that he should be paid in
depreciated currency. Of course, in respect of many debts
this
problem is resolved (or partially resolved) by an order for the
payment of interest, and the
Prescribed Rate of Interest Act
… is
flexible enough to permit the Minister of Justice to prescribe rates
of interest which reflect the influence of inflation
on the level of
rates generally (see
s1(2)).
Its application is, however, limited to
debts bearing interest
(s1(1))
; and it is trite law that there can be
no
mora
,
and accordingly no
mora
interest, in respect of unliquidated claims for damages. See
Victoria
Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines
Ltd
1915 AD 1
at 31-3, a decision which has been consistently applied and
followed, also in this Court. It follows that there is no mechanism
by which a court can compensate a plaintiff like the present for the
ravages of inflation in respect of monetary losses incurred
prior to
the trial. In other jurisdictions, a statutory power to award
interest is used for this purpose … Whether our courts should
have
a similar power, and what precise form it should take, is not,
however, something we can lay down. It is essentially a matter
of
policy which is for the Legislature to decide. … It is comforting
to know that the Law Commission is at present considering
this
topic
”.
[10]
s
2A
was inserted into the PRI Act by s 1 of Act 7 of 1997 and came
into operation on 5 April 1997. In
Adel
Builders (Pty) Ltd v Thompson
2000 (4) SA 1027
the
SCA commented thereon as follows (at
1031
B – C
and
F
– H
):
“
Before
the introduction of s 2A no common-law principle or statutory
enactment provided for the award of pre-judgment interest on
unliquidated damages; in other words, damages whose quantum had to
be fixed by the court.
…
…
the
court below … observed that … the new section was obviously aimed
at alleviating the plight of a plaintiff who has to wait
a
substantial period of time to establish his claim, through no fault
of his own, and is paid in depreciated currency.
”
[11] In
MV
Sea Joy
1998 (1) SA 487
(C)
,
Thring J applied the provisions of s 2A as follows (at
507
H – 508 H
):
“
Summons
was served in this matter on 8 September 1992 when the Sea Joy was
arrested. However, the summons contains only the bare
bones of the
quantum of the plaintiff’s claim. It would not, in my opinion, be
just or equitable to hold the defendant liable
to pay interest on a
claim whose quantum it could not reasonably be expected to assess.
Section 2A(2)(a) of Act 7 of 1997 fixes the
date from which interest
is to run as ‘the service on the debtor of a demand or summons,
whichever date is the earlier’. It
is clear that by ‘demand’
is meant ‘a written demand setting out the creditor’s claim in
such a manner as to enable the debtor
reasonably to assess the
quantum thereof’ (s 4 sv ‘demand’). By ‘summons’ the
legislature must have had in mind a combined
summons such as is
referred to in Uniform … Rule 17(2)(a), where the claim is not for
‘a debt or liquidated demand’, to which
summons must be annexed
particulars of claim which comply,
inter
alia
,
with Rule 18(10), which, in turn, stipulates that a plaintiff suing
for damage shall set them out ‘in such manner as will enable
the
defendant reasonably to assess the quantum thereof’. The
Plaintiff’s damages in this case were so set out in its particulars
of claim only on 27 August 1993.
In terms of s 2A(5) …
I have a discretion ‘[n]otwithstanding the provisions of this Act’
(and, therefore, notwithstanding the
peremptory terms of s 1(1) …),
to make ‘such order as appears just in respect of the payment of
interest on an unliquidated debt,
the rate at which interest shall
accrue and the date from which interest shall run’. Whether or not
interest should run against
the defendant at all before 24 April 1997
is thus in my discretion to order. I am satisfied that it should.
The plaintiff has been
kept out of its money by the defendant for
nearly four years, notwithstanding the due setting out of its damages
in its particulars
of claim and the defendant’s consequent ability
to ascertain the quantum thereof by means of an enquiry which it
could reasonably
have made … I can see no good reason why the
plaintiff should not be compensated by the defendant in this regard.
In the exercise
of my discretion, I propose to order that interest
shall run, but only from 27 August 1993.
Next,
the applicable rate of interest. As at 27 August 1993 it was
prescribed in terms of the Act at 18,5% per annum. Only about
a
month later, on 29 September 1993 the prescribed rate was reduced to
15,5% per annum, and it has remained at that level since then.
In
Davehill
(Pty) Limited and others v Community Development Board
1988 (1) SA 290
(A) it was held … that the rate prescribed under s
1(2) … at the time when interest begins to run governs the
calculation of
interest is fixed at that time and remains constant.
Applying that principle to the present case, the rate would be 18,5%
per annum.
It was held in that case that, because s1(1) … is in
peremptory terms, its application is obligatory, not discretionary …
However,
in my view that is not the case when it comes to interest
on an unliquidated debt which is awarded under s 2A of the amending
Act
7 of 1997. As I have said, under s 2A(5) … the Court is given
a discretion as to,
inter
alia
‘the rate at which interest shall accrue’.
Now,
the prescribed rate was 18,5% per annum for only about a month after
the date on which interest started to run on this claim.
For nearly
four years thereafter it has been only 15,5% per annum. I think that
justice and fairness to both parties require that
I should, in the
exercise of my discretion, fix the rate at the lower level
”.
[12] Regarding
the exercise of this discretion, the following was stated in the
Adel
Builders
case,
supra
,
at
1022
H – J
:
“
Acting
in terms of ss (5), it was open to the Court, in fixing the date from
which interest was to run, to give effect to its own
view of what was
just in all the circumstances. No question of onus was raised then
or in the notice of appeal. Nor could it have
been. The discretion
afforded by s 2A(5) was of the nature referred to in a long line of
cases in this Court from
Ex
Parte Neethling and others
1951 (4) SA 331
(A)
onwards.
Plainly, if parties wish certain facts and circumstances to be
weighed in the exercise of such a discretion they must establish
them. But there are no
facta
probanda
.
No enquiry arises as to whether a necessary fact has been
successfully proved. Similarly, absence of proof does not result in
failure on any issue. Indeed, there are no evidential issues to
attract any onus
”.
[13] At
paragraph 32 of an unreported judgment in
De
Vries NO v Minister of Safety & Security
in
Case
No 16058/92
,
delivered in this Division on 31 October 2006, Blignault J exercised
his discretion in terms of ss 2A(5) and awarded interest on
a claim
for past loss of earnings arising from the unlawful shooting of a
person by a policeman. He had regard to the principle
of currency
nominalism
2
referred to in the
Hartley
case,
supra
,
at
838
F – 840 I
in which the AD considered the time at which claims for past loss of
earnings should be calculated and held that a claim for loss
of
earnings should not be discounted back to the date of the injury, but
should properly be determined as at the later date of the
trial when
the loss “
manifested
itself
”.
He also had regard to the fact that, in computing the past loss of
earnings, the actuary had been instructed to discount the
assumed
current salary of R7 500,00 per month in accordance with past
rates of inflation in order to reflect the nominal value
of his
earnings in past years, which method of calculation is in accordance
with the principle of nominalism of currency. In this
regard,
Blignault J stated the following (at
para
33
):
“
Given
this method of calculation, it seems to me that it would be just to
plaintiff to award interest on the amounts representing
his loss of
past earnings. The reasons for the delay in the prosecution of this
action are not clear. The fact of the matter, however,
is that
plaintiff did not have the use and enjoyment of these monies. It
seems to me, therefore, that it would be fair to award interest
on
the loss of past earnings in order to compensate plaintiff for the
loss of the enjoyment of these funds in the past. It would
be fair
to calculate this interest at the same rates that were used by the
actuary in discounting plaintiff’s assumed current salary.

Interest would thus be allowed on plaintiff’s loss of past earnings
at the rates of inflation used in calculating that loss.
”
In
a subsequent memorandum to the parties dated 18 May 2007 regarding
applications for leave to appeal, Blignault J elaborated on
his
method of calculating this interest as follows (at
para
11
):
“
For
the purpose of the quantification of past losses Dr Koch
[the
actuary]
… took the assumed salary of plaintiff at the date of valuation
(R7 500,00 per month) as starting point. He then discounted
the
annual salary at the rate of inflation (an average rate of 7,3% per
year was used) to arrive at a notional annual salary for
each of the
years from 1992 to 2006. Dr Koch next deducted income tax for each
of these years in order to arrive at a notional after
tax salary for
each of the years in question and he then calculated the loss of
earnings on this basis. The aggregate amount of
these losses
amounted to the sum of R705 208,00 which, after a deduction of
5% for contingencies, came to the sum of R669 948,00
[being the sum agreed upon by the parties in respect of past loss of
earnings].”
In
paragraphs 12 to 15 of his said memorandum Blignault J explained how
he calculated the amount of R345 973,00 (being R364 182,00
less a 5% adjustment for contingencies) which he awarded to the
Plaintiff in terms of ss 2A(5) as interest on the said amount of
R669 948,00. Firstly, he utilised the amounts of notional
after-tax salary calculated by the actuary for each calendar year
during the period from 1992 to 2006 which together make up the said
sum of R705 208,00. He then added interest at the rate
of 7,3%
per
annum
to these amounts for each calendar year and then capitalised the
interest at the end of each calendar year. He then added up all
the
amounts of capitalised interest for all of the calendar years and
arrived at the said amount of R364 182,00. He then deducted
a
5% contingency.
[14] It
appears from the aforegoing that our courts readily award interest on
unliquidated claims for past damages and past loss of
earnings and
there is no reason, in principle, why this should not also be done in
respect of claims for past loss of support. It
also appears that the
courts have made liberal use of the discretion afforded to them in
terms of ss 2A(5) to tailor these awards
of interest to ensure that
same are “
just
”.
[15] Plaintiff’s
counsel submits that there is no reason why the RAF, the present
Defendant, should not pay interest in terms of
s 2A on unliquidated
damages just like other defendants, such as the owner of the vessel
in which cargo was damaged in the
MV
Sea Joy
case,
supra
,
or the defendant building contractor in the
Adel
Builders
case,
supra
,
or the Minister of Safety & Security in the
De
Vries NO
matter,
supra
.
In this regard, he referred to the equality provision in the Bill of
Rights in ss 9(1) of our Constitution
3
which provides that “
everyone
is equal before the law and has the right to equal protection and
benefit of the law
”
and to ss 8(1) thereof which provides that the Bill of Rights applies
to all law and binds the legislature, the executive, the
judiciary
and all organs of state. He also referred to the provisions of ss
39(2) thereof which provides
inter
alia
that when interpreting any legislation every court
“must
promote the spirit, purport and objects of the Bill of Rights”.
Mr
Eia, for the Defendant, submitted that the Plaintiff’s claim for
interest in terms of s 2A is barred by the provisions of ss
17(3)(a)
of the RAF Act.
[16] The
history of ss 17(3)(a) of the RAF Act is that it is the fourth
re-enactment of a virtually identical interest provision in
four
successive motor vehicle accident statutes in this country, namely ss
21(1)(a) of the Compulsory Motor Vehicle Insurance Act
No 56 of 1972
(it was first inserted therein by way of an amendment during 1978);
ss 8(3) of the MVA Act, No 84 of 1986 (“
the
1986 Act
”);
Article 42(a) of the Schedule to the Multilateral MVA Fund Act, No 93
of 1989 (“
the
1989 Act
”);
and, ss 17(3)(a) of the RAF Act.
In its original form in
the first and second of these statutes this interest provision was
worded as per ss 8(3) of the 1986 Act,
as follows:
“No
interest shall be payable on the amount of any compensation which a
court awards to any third party by virtue of the provisions
of
subsection (1), unless 14 days have elapsed from the date of the
court’s relevant order”.
In its last two
enactments the interest provision has been in its present form, as
per ss 17(3)(a) of the RAF Act, as follows:
“
(3)(a) No
interest calculated on the amount of any compensation which a Court
awards to any third party by virtue of the provisions
of subsection
(1) shall be payable unless 14 days have elapsed from the date of the
Court’s relevant order
”.
It
is permissible for the court to refer to a similar or related
predecessor of a statutory provision in order to interpret it,
provided
that it is so-called “
kindred
”
legislation that is
in
pari materia
4
.
[17] At
page 52 of his work “
MVA
Practice Under Act 84 of 1986
”
(Joan Lötter Publications 1987) the author
DP
Honey
commented
on the second enactment of this interest provision – in ss 8(3) of
the 1986 Act – as follows:
“
This
section is a verbatim repeat of section 21(1)(a) of the 1972 Act.
The effect seems to be that interest on compensation awarded
by the
Court is waived if payment of the compensation is effected within
fourteen days from the date of the award. If this interpretation
is
correct, then it follows that where payment of the compensation is
effected after the lapse of a period of fourteen days from
the date
of the award, interest is recoverable from the date of the award …
The section does not appear to prohibit the payment
of interest from
the date of the claim in those cases where interest is recoverable.
The simple explanation as to why this section
was introduced into the
1972 Act
[by
s 8 of Act 69 of 1978]
appears to have been that a reasonable time should be allowed to the
appointed agent to have the cheque processed by its head office,
mailed to its attorneys and thereafter transferred to the claimant’s
attorneys. It was intended to put a stop to an endless number
of
cases where the claimant’s attorneys, upon receipt of the cheque
for the amount awarded, notify the company that a further amount
is
required because interest has accrued between date of judgment and
date of receipt
”.
This view supports the
case of the present Plaintiff.
[18] On
the other hand, support for the Defendant’s submission is found in
an unreported judgment of Broome DPJ delivered on 29
May 1997 in
Campbell
v Sentrasure Ltd
in
case
number 166/95
in the Durban & Coast Local Division where the court considered
and upheld a submission that s 2A of the PRI Act was overridden
by
the third enactment of this interest provision, namely Article 42(a)
of the 1989 Act. The
ratio
for the Court’s decision was that s 2A “
is
hit
”
by the provisions of the said Article 42 which “
clearly
restricts any interest on an award in that interest can only run
after 14 days after
[sic]
from the date of the court’s order
”.
[19] Mr
Odendaal submitted that the point was not properly argued before
Broome DJP and that ss 17(3)(a) should be interpreted as
simply
granting the RAF an administrative period after the date of judgment
to process payment. He submitted that the two provisions
are
reconcilable. He argued, in the alternative, that if they are not
reconcilable the provisions of s 2A prevail over those of ss
17(3)(a).
[20] The
starting point in deciding this issue is the meaning of the word
“compensation”
in ss 17(3)(a). In this regard, ss 17(1) of the RAF Act obliges the
RAF:
“…
t
o
compensate any person (the third party) for any loss or damage which
the third party has suffered as a result of any bodily injury
to
himself or herself or the death of or any bodily injury to any other
person, caused by or arising from the driving of a motor
vehicle by
any person …
”.
In
the present matter the amount of such compensation was agreed between
the parties in their Deed of Settlement dated 13 September
2007 in
the “
capital
sum
”
of R274 109,00 and it is clear that this capital sum constitutes
“
the
amount of
”
an “
unliquidated
debt as determined … by agreement between the creditor and the
debtor
”
as contemplated in ss 2A(1) of the PRI Act. Accordingly, and in terms
of such subsection, it “
shall
bear interest as contemplated in section 1
”,
namely at the prescribed rate of interest which has prevailed at all
times relevant to this action, namely 15,5% per
annum.
[21] In
order to properly construe the two provisions I must apply the golden
or general rule of construction, namely that words of
a statute must
be given their ordinary, literal and grammatical meaning and if by so
doing it is ascertained that the words are clear
and unambiguous,
then effect should be given to their ordinary meaning unless it is
apparent that such a literal construction falls
within one of those
exceptional cases in which it would be permissible for a court of law
to depart from such a literal construction,
eg where it leads to a
manifest absurdity, inconsistency, hardship or a result contrary to
the legislative intent
5
.
I must also bear in mind the equality provisions contained in ss
9(1) of the Bill of Rights and apply the interpretive provisions
of
ss 39(2) of the Constitution.
[22] ss
17(3)(a) provides that
“no
interest … shall be payable”
on the amount of any compensation awarded to a third party
“unless
14 days have elapsed from the date of the court’s … order”
.
According to the Concise Oxford English Dictionary (Oxford University
Press, 10
th
edition, revised 2002), the word
“payable”
means
“required
to be paid”
or “
able
to be paid”
and the word
“unless”
means
“except
when”
or
“is
not”.
It
follows that the ordinary grammatical meaning of the subsection is
that no interest shall be required/able to be paid on the amount
of
any compensation awarded to a third party
“except
when”
14
days have elapsed, alternatively
“if”
14
days have
“not”
elapsed,
from the date of the court’s order.
In
my view, the use of the word
“unless”
in
the subsection
is
ambiguous. If it is taken to mean
“except
when”
the
subsection means that no interest is
“required”
or
“able”
to be paid on any compensation awarded
“except
when”
14
days have elapsed from the date of the court’s order. This first
interpretation implies that interest only commences to run on
day 15.
However,
if the word
“unless”
is
taken to mean
“if
not”
the
subsection means that no interest is
“required”
or
“able”
to
be paid on any compensation awarded
“if”
14
days have
“not”
elapsed.
This second interpretation implies that interest is
“required”
or
“able”
to
be paid on the compensation awarded after the 14 day period has
elapsed and, accordingly (and as per the aforesaid opinion of the
author Honey and the submission of Mr. Odendaal), means that interest
commences to run on day 1, but that the obligation to pay such
interest is suspended during the 14 day period and only arises or
commences on day 15.
[23] In
my view, the legislature could not have intended the above second
interpretation as this would lead to a manifest absurdity
and/or a
result contrary to what the legislature intended. What purpose would
the legislature achieve by suspending the obligation
to pay interest
for the 14 day period without at the same time suspending the running
of interest during that period? There would
be no inducement to the
RAF to effect payment during the 14 day period as it would neither
save interest, nor would it save the administrative
burden of having
to deal with claimants’ attorneys requiring a second payment in
respect of interest after the expiry of the 14
day period. On this
interpretation the subsection would be meaningless and effectively
superfluous, which would offend against the
common law presumption
that statutes do not contain invalid or purposeless provisions and
are meant to be of effect
6
.
It would mean that the legislature intended that a claimant who is
paid his full compensation on day 13 could wait until the expiry
of
day 14 and then claim the interest which had accrued on the
compensation during the first 13 days.
[24] It
follows, in my view, that the above first interpretation of ss
17(3)(a) was intended, namely that interest does not run during
the
14 day period after the court’s order and only commences to run
from day 15.
This
interpretation is consistent with the following view of the author
H
Daniels
at E – 29 of the loose-leaf work
“
MMF-RAF
The Practitioner’s Guide
”
(Lexis
Nexis Buttherworths):
“
Section 17(3)(a)
simply provides that an award made shall not attract interest (at the
mora rate) for a period of 14 days from the
date upon which such
award is made. It has become the practice to award interest at the
legal rate, to run from a date specified,
being 14 days from the date
upon which the award is made.”
[25] I
now consider whether the provisions of ss 17(3)(a) of the RAF Act
override those of s 2A of the PRI Act, or whether they can
be
reconciled.
I
do not see how the two provisions can be reconciled. The Plaintiff
has asked me to order the Defendant to pay interest at the prescribed
rate in terms of s 2A of the PRI Act on the agreed past loss of
R96 153,20 from 16 November 2005 (being the date contemplated
in
ss 2(a) thereof “
on
which payment of the debt
”
was allegedly “
claimed
by the service of a demand or summons, whichever is the earlier
”)
and on the agreed future loss of R177 955,80 from 13 September
2007 (being the date contemplated in ss (3) thereof “
upon
which the quantum of that part
”
of the debt “
which
consists of the present value of a loss which will occur in the
future
”
was “
determined
by … agreement
”).
Both of these dates predate the date on which the court will award
compensation to the Plaintiff in this matter.
There
is no doubt that these are both claims as contemplated in ss 17(3)(a)
of the RAF Act for “
interest
calculated on the amount of any compensation which a court awards to
any third party by virtue of subsection (1)
”.
The
problem with these claims is that ss 17(3)(a) expressly provides that
no such interest “
shall
be payable unless 14 days have elapsed from the date of the court’s
… order
”.
As set out above, I have interpreted this to mean that no interest
shall be required / able to be paid on the amount of any
compensation
awarded to a third party except when 14 days have elapsed from the
date of the court’s order.
It follows, in my view,
that the provisions of ss 17(3)(a) bar the payment of the interest
claimed by Plaintiff in terms of s 2A and
that the two provisions are
irreconcilable.
[26] Which
statute should prevail?
Plaintiff’s
counsel sought to rely on the principle of statutory interpretation
that a later statute prevails over an earlier one.
This principle
only applies where the two statutes are
in
pari materia
,
which is not the case in the present instance. In this regard see
Grove
Primary School v Minister of Education
1997 (4) SA 982
(C)
at
1006
D – E
.
Plaintiff’s
counsel also relied on the principle of statutory interpretation that
statute law does not alter the existing law more
than is necessary.
This submission can also not be upheld as such presumption only
applies when considering the effect of statute
law on the common law,
so as to harmonise statute and common law, and not as between two
statutes
7
.
There
is, however, a presumption of statutory interpretation which is of
assistance, namely the maxim
generalia
specialibus
non derogant
which translates, roughly, as
“generalised
provisions
will
not derogate from specific provisions”.
In
Transnet
Ltd v Chirwa
2007
(2) SA 198
SCA
at
214
C – 215 A
Conradie JA applied this principle and found that certain matters
assigned specially to the Labour Court could not have been repealed
by the Promotion of Administrative Justice Act No 3 of 2000 (“
PAJA
”),
which was promulgated seven years later,
“without
[PAJA]
expressly
saying so
”.
The learned judge cited with approval a passage from an author who
had described the maxim as having application when the legislature
“has
given attention to
a
separate subject and made provision for it”
,
in which case the presumption “
is
that a subsequent general enactment is not intended to interfere with
the special provision, unless it manifests that intention
very
clearly
”.
The learned judge also cited with approval an English authority to
the effect that one is not to hold “
earlier
and special legislation
”
to be indirectly repealed, altered or derogated from by general words
“without
any indication of a particular intention to do so”
.
It
is clear, on the application of this principle, that there is no
particular or express statement in the later general provisions
of s
2A of the PRI that same are intended to prevail over the earlier
specific provisions of ss 17(3)(a) of the RAF Act and its
3
predecesors (which have been in existence effectively since 1978).
It
follows in my view, on an application of the common law canons of
construction, that the provisions of ss 17(3)(a) prevail over
those
of s 2A.
[27] I
have also give careful consideration to the argument that the
provisions of the PRI Act should prevail by virtue of the equality
provisions in the Bill of Rights and the requirement that, in
interpreting legislation, the court must promote the spirit, purport
and objects of the Bill of Rights. In this regard, I point out that
Plaintiff’s counsel pertinently abandoned an argument that
ss
17(3)(a) should be struck down as unconstitutional as he recognised
that Plaintiff had failed to follow the procedures required
to do so
– she had failed to join the relevant Minister and she had failed
to raise the point in her pleadings. In my view, that
would have been
the appropriate procedure for the Plaintiff to adopt. The matter
could then have been dealt with fairly and squarely
on the basis of
alleged unconstitutionality, relying on the entrenched right of
equality in the Bill of Rights with the appropriate
defendants
brought before the court to deal specifically with the matters raised
in ss 36(1) of the Constitution. In these circumstances,
I do not
consider that the court’s obligation to promote the spirit, purport
and objects of the Bill of Rights obliges me to interpret
the statute
so as to find for the Plaintiff.
[28] In
conclusion, I am of the view that the provisions of ss 17(3)(a) of
the RAF Act prevail over those of s 2A of the PRI Act and
I,
accordingly, find that the Plaintiff is not entitled to interest at
the prescribed rate in terms of s 2A of the PRI Act.
[29] Regarding
costs, the matter could not be heard on the first and second days of
the trial, namely 29 and 30 August 2007, as no
judge was available to
hear the matter. In the Deed of Settlement the Defendant accepted
liability for costs up to and including
the first day of trial, but
disputes liability from the second day onwards. Friday 31 August 2007
was not a court day. On that day
Plaintiff’s attorneys sent
Defendant’s attorneys a letter in which Plaintiff accepted
R274 109,00 as the capital sum of
the Plaintiff’s damages. In
that letter, and for the first time, Plaintiff’s attorneys formally
claimed payment of interest in
terms of
s 2A of the PRI Act. The
Defendant was thereby placed in an invidious position as no such
claim had previously been made on the pleadings
or in the
correspondence. Until then interest had simply been claimed on the
capital sum claimed
“at
a rate of 15.5% per annum to
date
of payment
”.
I am of the view that the Plaintiff ought, properly, to have pleaded
the specific claim for interest under s 2A of the PRI and
that its
failure to formally raise this issue timeously has escalated the
costs in this matter. On the third day of the trial, namely
Monday 3
September 2007, a judge became available to hear the matter but the
parties did not proceed to trial. It is apparent that
the parties had
settled all quantum issues between them by that stage and that the
matter would probably have been settled on 31
August had the
Plaintiff not belatedly raised her claim for interest in terms of s
2A. The parties remained locked in negotiations
from 3 to 13
September 2007, when the Deed of Settlement was eventually signed and
the matter was subsequently postponed for hearing
on 19 February 2008
on the s 2A interest claim. Having regard to these facts, and in the
exercise of my discretion, I intend to order
Defendant to pay
Plaintiff’s costs of suit up to 31 August and Plaintiff to pay
Defendant’s costs of suit thereafter. By agreement,
the present
matter was heard together with a related opposed application under
case number 4481/07 in which Plaintiff’s attorneys
appeared for the
Applicant and the same counsel appeared for both parties. That matter
occupied the whole of the hearing before me
on 19 February 2008 until
15h00, when this matter commenced. As counsels fees for that day have
already been accommodated in that
matter, I do not anticipate that
either counsel will raise another fee in this matter in respect of
that day. In order to cater
for that circumstance, I intend to order
that each party shall bear their own respective costs of counsel in
respect of the short
hearing of this matter on 19 February 2008. I
was also requested by the Defendant to disallow the costs of certain
reports of the
Plaintiff’s actuary, but decline to do so as I
consider this to be a function of the Taxing Master.
[30] In
the result, I make the following order:
Defendant
is ordered to pay Plaintiff an amount of R184 109,00 (being the
agreed capital sum of R274 109,00 less the interim payment
of R90
000,00 made on 28 October 2007) together with interest thereon at
the rate of 15,5% per
annum
from a date 14 days after judgment herein to date of payment;
Regarding costs:
Defendant
is ordered to pay Plaintiff’s costs of suit up to and including 31
August 2007;
Save
that each party shall bear their own respective costs of counsel in
respect of the short hearing of this matter on 19 February
2008,
Plaintiff shall pay Defendant’s costs of suit after 31 August
2007;
Defendant shall pay the
reasonable fees and disbursements of the Plaintiff’s expert
witness, the consulting actuary Dr R Koch.
___________
CROWE,
AJ
1
In
terms of GN R1814 promulgated in GG 15143 of 1 October 1993 the
prescribed rate of interest has been 15,5% per
annum
since that date.
2
Regarding
this
principle,
see also
Eden
v Pienaar
2001
(1) SA 158
(W)
at
165F-167H
.
3
The
Constitution of the Republic of South Africa at No. 108 of 1996.
4
LAWSA
Vol 25, Part 1, p 405 para 359.
5
Adampol
(Pty) Ltd v Administrator, Transvaal
1989 (3) SA 800
(A)
at
804
B – C
.
6
LAWSA
Vol. 25 Part 1 pg 349 para 330.
7
LAWSA
Vol 25 Part 1 p 341 at para 328.