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[2006] ZAWCHC 27
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D'Ambrosi v Bane and Others (10179/02 , 10179/2002) [2006] ZAWCHC 27; 2006 (5) SA 121 (C); [2007] 1 All SA 570 (C) (15 June 2006)
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Case No: 10179/2002
In the
matter between:
MARCO
DâAMBROSI
Plaintiff
and
DR ROY
BANE
First Defendant
DR K
MICHALOWSKI
Second Defendant
DR
HAYHURST
Third Defendant
DR
BOWDEN
Fourth Defendant
DRS
MORTON AND PARTNERS
Fifth Defendant
JUDGMENT: 15 JUNE 2006
VAN ZYL
J:
INTRODUCTION
[1] The plaintiff claims damages in the amount of R16 081 425,95
arising from the medical negligence of the defendants. His action
is
based on their failure, during December 2000, to display the
necessary degree of skill, expertise and judgment in assessing,
diagnosing,
advising and treating his medical condition known as
oesophagitis caused by oesaphageal reflux.
[2] The merits of the action have been settled, the defendants having
conceded liability for the plaintiff's claim. The
quantum
of
the claim has also, for the most part, been settled. Only two legal
issues remain. The first is whether the cost of living differential
between Johannesburg, where the plaintiff now resides, and London,
where he intended to reside from the beginning of 2001, should
be
taken into account in assessing his claim for past and future loss of
earnings or earning capacity. The second is whether medical
aid
scheme benefits should play a role in determining his claim for past
and future hospital and medical expenses.
[3] Mr D F Irish SC, assisted by Mr A D Brown, appeared for the
plaintiff and Mr R S van Riet SC for the defendants. The court
expresses
its appreciation to them for their presentations on behalf
of the respective parties.
STATED CASE
[4] The parties have requested this court to determine the said legal
issues on the basis of a stated case, in which such issues
are dealt
with under the headings "Living Expenses" and "Medical
Costs" respectively. They have agreed that these
issues should
be determined separately in terms of the provisions of Rule 33(4),
and that all other issues should stand over for
later determination.
.
[5] In regard to the issue of living expenses the parties accept the
facts set out in paragraphs 7.1 and 7.2 of the actuarial report
of Mr
M Lowther. Paragraph 7.1 deals with past earnings, future earnings
and future pension on the assumption that the incident causing
the
plaintiff's injuries and resultant damages had not occurred. In
paragraph 7.2 the same matters are dealt with having regard to
the
factual occurrence of the said incident.
[6] The parties accept also that, at all relevant times, the cost of
living expenses in the United Kingdom have been, and would remain,
higher than in South Africa. For purposes of comparison various
agencies annually compile comparative figures regarding the relative
cost of living in major cities around the world. This information is
used,
inter alia
, to assist multinational companies in
determining cost of living allowances for expatriate or seconded
workers.
[7] Against this background the plaintiff contends that the correct
approach to the quantification of his claim for loss of earnings
is:
to calculate the remuneration, in pounds sterling net of tax and
compulsory state pension contributions, that he would have earned,
in his uninjured state, in the United Kingdom from January 2001
until retirement, and thereafter the state pension benefits he
would
have received until his death;
to calculate the remuneration, in rands net of tax, that he will
have earned, in his injured state, in South Africa from January
2001
until retirement;
to discount actuarially the total sums obtained in each of these
calculations with a view to obtaining the present-day lump sum
value
of each and to apply thereto the usual contingency deductions as
this court may deem appropriate;
to render the defendants liable for the difference between such
sums, the pounds sterling component to be converted into rands
at
the exchange rate prevailing on the date of payment.
[8] The defendants contend that, in calculating the damages as
suggested by the plaintiff in paragraph [7](a) and (b) above, account
should be taken of the differential between the cost of living index
in London and Johannesburg at the relevant time. This should
be done
either by adjusting the calculation in paragraph [7](a) or (b), or by
applying the contingency deductions referred to in
paragraph [7](c).
[9] With regard to these opposing contentions, this court is required
to determine whether, as a matter of law, the adjustment contended
for by the defendants should be taken into account. It is further
required to determine whether such adjustment should be regarded
as a
component of the quantification of the plaintiff's damages, or as a
mitigating element in assessing such damages.
[10] The issue of medical costs relates to the plaintiff's claim for
past and future hospital and medical expenses. In this regard
the
court is requested to determine the legal issue on the basis of the
following factual assumptions:
The plaintiff was, at all relevant times, both prior and subsequent
to the injury, a member of the Discovery Life Medical Aid Scheme,
and will probably remain a member for the rest of his life.
As a result of the injuries sustained by the plaintiff, he has been
obliged to pay the said medical aid scheme additional premiums
in
return for the payment of all his costs of medication. This
obligation arises from the fact that he now falls within the
category
of chronic medication, which was not the case before he
sustained such injuries.
[11] The plaintiff contends that he is entitled to claim all his
hospital and medical expenses, regardless of whether he has been,
or
may be, reimbursed by his medical aid scheme, his membership of which
constitutes a type of indemnity insurance. Accordingly the
benefits
he derives from the scheme, and the obligations he has towards the
scheme, are matters between him and the scheme alone.
[12] The defendants raise two contentions in this regard:
The effect of
section 29
of the
Medical Schemes Act
131 of
1998
is that a medical aid scheme may not, subsequent to the
commencement of the Act on 1 February 1999, refuse an application
for membership
on account of any pre-existing medical condition of
the applicant.
The defendants are obliged to compensate the plaintiff only in
respect of the increased premiums and/or other costs he would have
to pay as a result of his injuries, on the assumption that he became
a member of the said medical aid scheme only after sustaining
such
injuries.
[13] This court is now requested to determine whether, as a matter of
law, the plaintiff may claim his full past and future hospital
and
medical expenses, or whether his claim should be restricted on the
basis contended in paragraph [12](b) above.
COST OF LIVING DIFFERENTIAL
[14] This issue must be approached on the assumption that the
plaintiff would have emigrated to the United Kingdom at the beginning
of 2001 and would have been employed in London or its vicinity until
his retirement at age 65. His "uninjured" earnings
there
would then be calculated in pounds sterling after deduction of income
tax and contributions to the state pension. It must further
be
accepted that, as a result of his injury, he was unable to emigrate
as planned or to take up employment in the United Kingdom.
His
"injured" earnings must hence be calculated in South
African Rands, less tax deductions, on the basis that he continues
to
reside and work in Johannesburg.
[15] On whether or not the cost of living differential should be
applied in finalising the claim for loss of earnings, Mr Irish
submitted
that this court should adopt the approach followed by our
courts in regard to "currency nominalism", a principle
which
had been firmly entrenched in our law. This term was explained
by E M Grosskopf JA in
S A Eagle Insurance Co Ltd v Hartley
[1990] ZASCA 106
;
1990
(4) SA 833
(A). Before doing so he considered the so-called "
Everson
adjustment" or "
Everson
principle" emanating
from the case of
Everson v Allianz Insurance Ltd
1989 (2) SA
173
(C), which had been followed by the court
a quo
. In terms
of this principle an adjustment should be made to compensate the
plaintiff for the loss of purchasing power of money since
the date on
which his past loss of earnings had been incurred. After holding (at
839F) that the application of this principle would
amount to altering
the
quantum
of the claim, the learned Judge of Appeal stated
(at 839G):
This result seems to me to be in conflict with the principle of
nominalism of currency which underlies all aspects of South African
law, including the law of obligations. Its essence, in the field of
obligations, is that a debt sounding in money has to be paid
in terms
of its nominal value, irrespective of any fluctuations in the
purchasing power of currency. This places the risk of a depreciation
of the currency on the creditor and saddles the debtor with the risk
of an appreciation.
[16] It would appear that this approach is followed in a number of
Western countries, which have comparable systems of law. In this
regard E M Grosskopf JA made reference to the situation in the United
States, England, Germany and the Netherlands before concluding
(at
840F-G):
[I]t would represent a revolutionary transformation of our legal
system if courts were to be called upon to determine the true
economic
value (in terms of purchasing power) of all obligations
sounding in money. I need not, however, labour this point: currency
nominalism,
for whatever reason, is firmly entrenched in our law.
[17] The principle of currency nominalism applies equally when the
claim sounds in foreign currency. See
Radell v Multilateral Motor
Vehicle Accidents Fund
1995 (4) SA 24
(A) at 28H-29G, where M T
Steyn JA cited the
Hartley
judgment (
supra
) with
approval and held (at 28H):
A claim in US dollars is, if awarded, made in that currency
irrespective of its purchasing power at the date of judgment. It is a
case of take the dollar as you get it. This is due to the principle
of nominalism of currency â¦
[18] It is clear that this court has the power, when dealing with a
claim for delictual damages, to give judgment in a foreign currency.
See
Standard Charter Bank of Canada v Nedperm Bank Ltd
[1994] ZASCA 146
;
1994
(4) SA 747
(A) at 775A. In this regard Corbett CJ referred with
approval to the
dictum
of Lord Wilberforce in the English case
of
Owners of the Mv Eleftherotria v Owners of the Mv Despina R:
The Despina R; Services Europe Atlantique Sud (SEAS) v Stockholms
Rederiaktiebolag
SVEA: The Folias
[1979] 1 All ER 421
(HL) at
427
c-d
:
My Lords, in my opinion, this question can be solved by applying the
normal principles which govern the assessment of damages in
cases of
tort (I shall deal with contract cases in the second appeal). These
are the principles of
restitutio in integrum
and that of the
reasonable foreseeability of the damage sustained. It appears to me
that a plaintiff, who normally conducts his business
through a
particular currency, and who, when other currencies are immediately
involved, uses his own currency to obtain those currencies,
can
reasonably say that the loss he sustains is to be measured not by the
immediate currencies in which the loss first emerges but
by the
amount of his own currency, which in the normal course of operation,
he uses to obtain those currencies. This is the currency
in which his
loss is felt, and is the currency which it is reasonably foreseeable
he will have to spend.
[19] The meaning of
restitutio in integrum
in this context was
expressed thus by Earl Jowitt in
British Transport Commission v
Gourley
[1955] UKHL 4
;
[1955] 3 All ER 796
(HL) at 799D-E:
The broad general principle which should govern the assessment of
damages in cases such as this is that the tribunal should award
the
injured party such a sum of money as will put him in the same
position as he would have been in if he had not sustained the
injuries
⦠This principle is sometimes referred to as the principle
of
restitutio in integrum â¦
In the
Nedperm Bank
case (
supra
at 776D-F) Corbett CJ
pointed out that this same general principle obtains in our law of
delict, although it is not usual to refer
in this regard to
restitutio in integrum
.
[20] After considering all these, and other, authorities, Corbett CJ
concluded (at 777C-D) that the time when the foreign debt should
be
converted is the date on which payment is made. The learned Chief
Justice put it thus:
I accordingly conclude that the damages to be awarded in this case
should be expressed in US dollars. It is implicit in any order
to
this effect that the judgment debt may be satisfied in South Africa
by payment in the foreign currency or by payment of its equivalent
in
rand when paid ⦠Any other conversion date would render meaningless
the award in the foreign currency.
[21] In his argument Mr Irish pointed out further that, in assessing
damages for loss of earning capacity, English courts have been
chary
in allowing deductions from the plaintiff's receipts to give
cognisance to the effect of the operation of items of expenditure
or
other imposts on the plaintiff's patrimony. In the case of
British
Transport Commission v Gourley
(par [19] above) the House of
Lords failed to achieve unanimity. The majority was of the view (
per
Earl Jowitt at 802H-I) that allowance should be made for the
plaintiff's tax liability when making such assessment. In a
dissenting
opinion (at 818H-I) Lord Keith of Avonholm, however,
rejected the proposition that the incidence of taxation on the
plaintiff's earnings
fell to be deducted.
[22] Attempts to extend this principle to other forms of expenditure
were, Mr Irish submitted, met with resistance from the English
courts. Thus in
Parry v Cleaver
[1969] 1 All ER 555
(HL) the
majority of the law lords held that, in assessing damages for loss of
earning capacity, the ill health award to which the
plaintiff was
entitled was not deductible. It would, however, have to be taken into
account in regard to the loss of his retirement
pension.
[23] Similarly in
Daish (an infant by his next friend Albert
Edward Daish) v Wauton
[1972] 1 All ER 25
(CA), the Court of
Appeal held that the national health service benefits that the
plaintiff would receive were not deductible in
assessing his damages.
Furthermore, although it would be proper to take into account
expenditure which would have been incurred in
earning future wages,
it did not follow that a saving in general living expenses would be
deductible. By the same token maintenance
of an injured plaintiff by
a benevolent relative could not be set off against any award of
damages made to him. In this regard, the
Court held (at 34
a-c
)
that no distinction should be drawn between public benevolence, such
as public health benefits, and private benevolence. Such benefits
could, in fact, be regarded as akin to the fruits of an insurance
claim, which would not be deductible.
[24] Attempts to adjust the
quantum
of a plaintiff's claim on
the basis of anticipated inflation or a reduction in the value, and
consequent purchasing power, of money,
have, Mr Irish argued,
likewise failed. Thus in
Mitchell (by his next friend Hazel Doreen
Mitchell) v Mulholland and Another (no 2)
[1971] 2 All ER 1205
(CA), Edmund Davies LJ cited with approval (at 1214
d-h
) the
Australian High Court judgment in
O'Brien v McKean
[1968] HCA 58
;
(1968) 42
ALJR 223
at 225 and 227. In that case Sir Garfield Barwick CJ ruled
that evidence directed at establishing the decline in purchasing
power
of the currency in the future is not admissible for purposes of
determining compensation for lost or diminished earning capacity.
He
explained this in the following terms:
To attempt to establish the probable increases over a substantial
period of time of the cost of the particular goods and services
and
to compare that increase with the probable beneficial use of the
money awarded as damages is in any case, in my opinion, far
too
sophisticated an exercise to be performed in the trial of an action
for personal injuries. Such a trial does not call for a scientific
calculation but for broad estimates resulting from informed judgment.
In my opinion, therefore, the factor of probably increasing
cost of
such goods and services should
in general
be ignored when the
assessment is made of the fair and reasonable sum to compensate for
the need to purchase such goods and services
in the future ⦠Where
sound and precise evidence can be given as to the probable rate of
increase in cost of some specific item
becoming greater than the
probable rate of benefit by the use of the capital sums awarded, the
matter may possibly be different;
though as at present advised I
should consider such a possibility remote.
[25] The attempt by the defendants in the present matter to reduce
the plaintiff's patrimony by applying a cost of living differential
was, Mr Irish submitted, in conflict with the English approach and,
indeed, with the approach of South African courts. The general
principle pertaining in this regard was articulated by Rumpff CJ in
Dippenaar v Shield Insurance Co Ltd
1979 (2) SA 904
(A), at
917B and E:
In our law, under the
lex Aquilia
, the defendant must make
good the difference between the value of the plaintiff's estate after
the commission of the delict and the
value it would have had if the
delict had not been committed. The capacity to earn money is
considered to be part of a person's estate
and the loss or impairment
of that capacity constitutes a loss, if such loss diminishes the
estate â¦
It is correctly argued that, in a case of personal injury as a result
of a delict, the Court must calculate, on the one hand, the
present
monetary value of all the plaintiff would have brought into his
estate had he not been injured, and, on the other hand, the
total
present monetary value of all the plaintiff would be able to bring
into his estate whilst incapacitated by his injury.
[26] Mr Irish hence submitted that there was no legal justification
for any adjustment to the plaintiff's claim for loss of earnings
on
the basis of anticipated fluctuations of the relative purchasing
power of the rand and pound sterling. There was likewise no such
justification on the basis of "any notional but unknowable"
fluctuations in the relative cost of living in London and
Johannesburg
during the plaintiff's lifetime.
[27] In his argument on behalf of the defendants Mr Van Riet placed
strong reliance on
Zysset and Others v Santam Ltd
1996 (1) SA
273
(C) at 277H-278B, where Scott J stated:
The modern South African delictual action for damages arising from
bodily injury negligently caused is compensatory and not penal.
As
far as the plaintiff's patrimonial loss is concerned, the liability
of the defendant is no more than to make good the difference
between
the value of the plaintiff's estate after the commission of the
delict and the value it would have had if the delict had
not been
committed ⦠Similarly, and notwithstanding the problem of placing a
monetary value on a non-patrimonial loss, the object
of awarding
general damages for pain and suffering and loss of amenities of life
is to compensate the plaintiff for his loss. It
is not uncommon,
however, for a plaintiff by reason of his injuries to receive from a
third party some monetary or compensatory benefit
to which he would
not otherwise have been entitled. Logically and because of the
compensatory nature of the action, any advantage
or benefit by which
the plaintiff's loss is reduced should result in a corresponding
reduction in the damages awarded to him. Failure
to deduct such a
benefit would result in the plaintiff recovering double compensation
which, of course, is inconsistent with the
fundamental nature of the
action.
[28] Scott J pointed out, however (at 278B-E), that certain
collateral benefits, such as insurance payments and benefits received
from benevolent third parties "motivated by sympathy", had
to be left out of account. Other benefits, which could not always
be
accurately defined or circumscribed, would likewise qualify as
collateral (
res inter alios actae
), and hence non-deductible,
if there were grounds clearly justifying their treatment as such.
Thus in
Mutual & Federal Insurance Co Ltd v Swanepoel
1988
(2) SA 1
(A) at 11H a military pension was described as being "in
the nature of a
solatium
for the totality of the consequences
of disablement" rather than as compensation for loss of earnings
or earning capacity. The
learned judge considered the practical
difficulties arising in such cases and said (at 278H-279C):
It is doubtful whether the distinction between a benefit which is
deductible and one which is not can be justified on the basis of
a
single jurisprudential principle. In the past the distinction has
been determined by adopting essentially a casuistic approach
and it
is this that has resulted in a number of apparently conflicting
decisions ⦠But whatever the true rationale may be, if indeed
there
is one, it would seem clear that the inquiry must inevitably involve
to some extent, at least, considerations of public policy,
reasonableness and justice ⦠This in turn must necessarily involve,
I think, a weighing up of mainly two conflicting considerations
in
the light of what is considered to be fair and just in all the
circumstances of the case. The one is that the plaintiff should
not
receive double compensation. The other is that the wrongdoer or his
insurer ought not to be relieved of liability on account
of some
fortuitous event such as the generosity of a third party.
[29] Mr Van Riet also placed reliance on
Standard General
Insurance Co Ltd v Dugmore NO
1997 (1) SA 33
(A), in which
Olivier JA discussed the issue of collateral benefits at 41C-42E. In
that case a monthly disability pension due to
the plaintiff in terms
of his employer's pension fund, membership of which was compulsory
and a condition of his employment, was
held to be compensation for
loss of earnings or earning capacity. It was hence deductible. On the
other hand benefits accruing to
the plaintiff in terms of a group
accident insurance policy with Lloyd's, to which the plaintiff made
no contribution, were not deductible.
The reason was (45A-C) that
such benefits were in the nature of "additional insurance
benefits procured by the benevolence of
the employer". As such
they were
res inter alios acta
and not subject to deduction.
See in general on this concept in the context of the computation of
damages Visser and Potgieter's
Law of Damages
(2
nd
edition, 2003, by P J Visser and J M Potgieter) 204-243.
[30] On the facts of the present case Mr Van Riet pointed out that
the plaintiff's income in London would have been more than three
times the amount he would have earned in Johannesburg. A large part
of this excess, he submitted, would have been paid on account
of the
considerably higher cost of living in the United Kingdom. Inasmuch as
the plaintiff would, as a result of his injury, have
a material
saving in living expenses, it would be unjust and unfair to render
the defendants liable for an "artificially inflated"
claim
expressed in pounds sterling. Such saving, Mr Van Riet submitted,
constituted a deductible benefit justifying an adjustment
to the
quantum of the plaintiff's claim. Failure to do so would, he
suggested, lead to an unprecedented spate of claims alleging
that the
plaintiffs, but for their injuries, would have gone to work in some
of the most expensive cities in the world.
[31] For the rest Mr Van Riet described the plaintiff's reliance on
the principle of currency nominalism as misconceived in that
the
defendants do not dispute that the award should be expressed in rands
and that the exchange rate at the date of the trial should
apply.
This had no bearing on the cost of living issue.
[32] Mr Van Riet was unable to refer me to any case dealing directly
or otherwise with a saving on cost of living expenses as a result
of
the plaintiff's injury. In
LAWSA
7 (1
st
reissue,
1995) par 43 at 40, however, it is suggested that the benefit arising
from "a possible saving on living expenses"
as a result of
the plaintiff's injuries must be taken into account in reducing his
damages. Reference is made in this regard to
Roberts NO v Northern
Insurance Co Ltd
1964 (4) SA 531
(D),
Reid v South African
Railways and Harbours
1965 (2) SA 181
(D) and
Dyssel NO v
Shield Insurance Co Ltd
1982 (3) SA 1084
(C). In the
Roberts
and
Dyssel
cases it would appear that a saving on cost of
living was taken into account in assessing general damages. In
Reid
's
case, on the other hand, Fannin J said the following (at 190F-H):
The plaintiff's physical condition and in particular the total loss
of his sexual and procreative function renders it unlikely that
he
will ever marry. While this factor is to be taken into account in
estimating the damages suffered by him as a result of loss of
amenities of life, it should, I think, also be taken into account in
estimating the compensation to be awarded to him for his loss
of
earning capacity. This is so because if he does not marry he will not
have to maintain a wife or children, and if he does marry
he will not
have any natural children to maintain. He may, of course, marry and
it is not beyond the bounds of possibility that he
and his wife may
adopt children. It would, however, I think be fair to make allowance
for this and for any other contingencies which
I may now have
overlooked or which cannot now be foreseen.
[33] This
dictum
was roundly criticised by Rabie ACJ in
General Accident Insurance Co SA Ltd v Summers; Southern
Versekeringsassosiasie Bpk v Carstens NO; General Accident Insurance
Co SA
Ltd v Nhlumayo
1987 (3) SA 577
(A) at 617G-H:
Ek vind dit moeilik om hierdie siening van die aangeleentheid te
aanvaar. As 'n besering iemand se verdienvermoë vernietig en hy
as
gevolg daarvan R50 000 verloor wat hy sou verdien het indien hy nie
beseer is nie, dan -so kom dit my voor - beloop sy skade R50
000, of
hy daarna trou of nie. Dit mag wel wees dat indien so iemand nie trou
nie hy minder uitgawes sal hê as wat hy sou gehad
het indien hy
getrou het, maar hoe dit kan beteken dat die verlies van sy
verdienvermoë minder as R50 000 is en dat dié bedrag
derhalwe
verminder moet word, is vir my nie duidelik nie.
See also Visser and Potgieter (par [29] above) 220 note 118, who
agree with this criticism, adding that "the expenses saved
in
such a case are too uncertain and hypothetical to constitute an
actual benefit".
[34] In the present case I am of the view that the plaintiff's
potential saving in cost of living expenses may well be relevant for
purposes of assessing general damages or determining contingency
deductions. It cannot, however, be regarded as a benefit to be taken
into account in computing damages for loss of earnings or earning
capacity. I say this for the following reasons.
[35] However useful and interesting it may be to compare the cost of
living in different countries or cities, such comparison must
of
necessity be based on any number of variables. Chief among these must
be the requirements and needs of the particular individual
residing
and working in such country or city. He or she may choose to live on
a voluptuous or luxurious scale, spending his or her
full allowance
on living expenses. On the other hand he or she may prefer to live
frugally with a view to saving as much as possible.
Any attempt to
quantify such living expenses would inevitably be of a speculative or
hypothetical nature, based, as it is, on uncertain
and frequently
indeterminate factors.
[36] Although variations in cost of living expenses cannot be equated
with the fluctuating value of money or the ceaselessly changing
level
of inflation, it is usually influenced, or at least affected, by
both. Fluctuations in inflation levels and in the value of
currency
will necessarily lead to fluctuations in cost of living expenses. It
may hence be advisable, as suggested by Mr Irish (par
[15] above), to
adopt a similar approach to cost of living expenses as our courts
have done in respect of the purchasing power of
money, namely by
applying the equivalent of the principle of "currency
nominalism". Just as "currency nominalism"
makes it
unnecessary to attempt the difficult, if not well nigh impossible,
task of determining the relative purchasing power of
money, just so a
"nominal" approach to differences in cost of living appears
to be justified. The plaintiff must take the
monetary value of his
damages award as he gets it, and he must equally accept the extent of
his cost of living expenses as finds
it. It is then immaterial
whether he benefits from, or is prejudiced by, variations in the
purchasing power of his money or the level
of his cost of living
expenses.
[37] In any event it is not for this court to weigh up relative
levels of cost of living in determining its award for loss of
earnings
or, indeed, for damages under any other head. The plaintiff
is entitled to be placed in the same position as that in which he
would
have been had he not been injured. This is what English law
calls "full restitution" or
restitutio in integrum
(par
[19] above). It accords entirely with the fundamental principle
underlying the determination of delictual damages in South African
law (par [25] above).
[38] It follows that any benefit the plaintiff may receive from the
reduced cost of living in Johannesburg, as opposed to London,
cannot,
and should not, be taken into account in assessing his loss of
earnings or earning capacity. This would be the case even
if it were
possible to quantify such reduction in cost of living, which I
seriously doubt. In this regard I respectfully associate
myself with
the approach in the
Daish
and
O'Brien
cases (par [23]
and [24] above). Any attempt to establish a potential saving in cost
of living expenses would, in the words of Sir
Garfield Barwick CJ in
the
O'Brien
case, constitute "far too sophisticated an
exercise to be performed in the trial of an action for personal
injuries". It
would indeed call for a "scientific
calculation" based on "sound and precise evidence".
[39] To this may be added that any speculative saving in cost of
living expenditure cannot be regarded as a monetary or compensatory
benefit entitling a defendant to a reduction in the damages to be
awarded (see the
dictum
from the
Zysset
case cited in
par [27] above). There are, in my view, no grounds clearly justifying
the treatment of reduced cost of living expenses
as a benefit to be
taken into account in assessing damages for lost earnings. Nor do I
believe that justice, fairness, reasonableness
or policy
considerations require that it be so treated (see the
dictum
cited
in par [28] above). At best for the defendant it is a collateral
benefit, which is irrelevant for purposes of determining the
quantum
of loss of earnings or earning capacity. I do not agree with Mr van
Riet (par [30] above) that this approach would give rise to a
spate
of "artificially inflated" claims.
MEDICAL AID SCHEME BENEFITS
[40] The plaintiff's claim for past and future hospital and medical
expenses is made without adjustments in respect of benefits he
may
receive from his medical aid scheme or obligations he may have
towards it in the form of premium payments or reimbursement of
damages awarded to him. Such benefits and obligations arise from his
membership of the scheme which, he contends, constitutes a type
of
"indemnity insurance", and are matters between him and the
scheme alone (
res inter alios acta
) (see par [11] above). The
defendants in turn (par [12] (b) above) accept liability only to the
extent that the plaintiff would have
to pay increased premiums or
other costs as a result of his injuries. They reject the suggestion
that that the plaintiff's membership
of a medical aid scheme renders
it a form of "indemnity insurance".
[41] In his argument for the plaintiff Mr Irish relied on the
principle that insurance benefits are generally excluded as
deductible
assets, as stated in the
Dippenaar
case
(par
[25] above at 920B-C) and reiterated in the
Dugmore
case (par
[29] above at 42D-E). The
ratio
is that such benefits are of a
collateral nature arising, as they do, from some or other extraneous
source (
res inter alios acta
). In
Thomson v Thomson
2002
(5) SA 541
(W) at 547H-I Gautschi AJ opined:
A medical aid scheme is, if not in law then in substance, a form of
insurance. One pays a premium against which there may be no claim,
or
claims less than the value of the premiums, or claims which far
exceed the value of the premiums. Were this a claim for damages,
whether in delict or in contract, there is little doubt that the
defendant would not have been entitled to rely on the payments
received
from the medical aid scheme.
On the concept of "indemnity insurance" see Visser and
Potgieter (par [29] above at 211-212).
[42] This would appear to reflect the position in English case law.
An insurance benefit is excluded unless it constitutes an
ex
gratia
payment by way of benevolence. See
Shearman v Folland
[1950] 1 All ER 976
(CA) at 958A-C;
Hussain v New Taplow Paper
Mills Ltd
[1988] 1 All ER 541
(HL) at 544
h
-545
a
;
McCamley v Cammell Laird Shipbuilders Ltd
[1990] 1 All ER 854
(CA) at 859
h
-861
e
.
[43] Mr Van Riet, in turn, argued that indemnity insurance occurs in
cases where a person has insured himself with an insurer against
the
risk of damage or injury by agreeing to pay premiums. Benefits
arising from this agreement are not deductible. Social insurance
benefits and medical treatment received free of charge in a State
hospital are, however, on a different footing and fall to be
deducted.
[44] Mr Van Riet submitted further that
section 29(1)(
n
) of
the
Medical Schemes Act
131 of 1998 ("the Act")
provides that a medical aid scheme may stipulate the terms and
conditions required for membership
of such scheme. It may not,
however, set requirements relating to the past or present health of
the applicant. This means, Mr Van
Riet argued, that an injured
person, or a person plagued by ill health, may obtain cover against
all medical costs at the same premium
as he would have paid had he
not been injured or in poor health. It would accordingly have been
open to the plaintiff to acquire
membership of a medical aid scheme
after his injury, in which event he could have obtained cover at a
lower, subsidised, premium.
This would constitute a form of social
insurance benefit, which would, in terms of the aforementioned
principles, be deductible.
The defendants would hence be liable to
compensate the plaintiff only for the increased costs or premiums he
would be required to
pay as a result of his injuries. [45] This is a
fallacious argument in that it ignores the established fact that, at
the time he
suffered such injuries, the plaintiff was, and still is,
a member of a medical aid scheme, which has in fact raised his
premiums
in return for all-embracing cover. He has not received, nor
is it envisaged that he will in future receive, any benevolent or
ex
gratia
payments from such scheme. There is hence no question that
any payments made to him by the scheme are in the nature of
deductible
social insurance benefits. I am in respectful agreement
with Gautschi AJ in the
Thomson
case (par [41] above) that a
medical aid scheme, such as that of which the plaintiff is a member,
is in substance a form of insurance.
In my view it is no different
from any other form of indemnity insurance which offers cover against
injury or damage in return for
premium payments.
CONCLUSION
[46] It follows that I must find against the defendants on both
issues referred to this court for adjudication in terms of Rule
33(4).
In the event I make the following order:
The cost of living differential between Johannesburg and London
should not be taken into account in assessing the plaintiff's claim
for past and future loss of earnings or earning capacity.
The medical aid scheme benefits which the plaintiff has received, or
will in future receive, are not deductible in determining
his claim
for past and future hospital and medical expenses.
The defendants are ordered to pay the costs of the proceedings
requiring these issues to be determined separately in terms of Rule
33(4) of the Rules of this Court. Such costs are to include the
costs of two counsel.
All other issues stand over for later determination.
D H VAN ZYL
Judge of the High Court