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[1995] ZASCA 35
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Radell v Multilateral Motor Vehicle Accident Fund (563/93) [1995] ZASCA 35; 1995 (4) SA 24 (AD); [1995] 2 All SA 392 (A) (29 March 1995)
CASE NO. 563/93
jvdm/
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
LESLEY RADELL APPELLANT
and
THE MULTILATERAL MOTOR RESPONDENT
VEHICLE ACCIDENT FUND
CORAM
: JOUBERT, NESTADT, STEYN,
F H GROSSKOPF et NIENABER, JJA
HEARD
: 16 MARCH 1995
DELIVERED
: 29 MARCH 1995
JUDGMENT
STEYN, JA/
2
STEYN JA:
Appellant, ("plaintiff") a citizen of the United States of
America, appeals against an order of costs made in the Transvaal Provincial
Division on 15 June 1993 in an action in terms of the Compulsory Motor Vehicle
Insurance Act, 56 of 1972, against respondent ("defendant")
for damages in
respect of personal injuries sustained by her in a motor vehicle collision in
this country.
By agreement between the parties the record in this appeal was
limited to the judgment on costs delivered by Myburgh J in the Court
a quo on
the said date. That is consequently all that is now before us.
The relevant facts are set out in the judgment as follows:
"During August 1983 the plaintiff, Mrs Radell, issued summons against President
Insurance Co Limited ('President') for the payment
of the sum R72 997,20 as
damages resulting from injuries sustained by her in a collision on 20 May 1981
with a vehicle insured by
President in terms of Act No 56 of 1972. During June
1984 plaintiff amended her claim to increase it
to
3
R611 329,11. On 30 July 1990 the defendant tendered to pay the plaintiff R300
000 and costs in terms of Uniform Rule 34(1). In terms
of rule 34(6) the
plaintiff had fifteen days within which to accept the tender. The fifteen day
period expired on 17 August 1990.
On 6 March 1992 plaintiff again amended her
claim. She increased her claim and for the first time claimed payment of some of
the
damages in US dollars. Her claim, in total was for R146 751,92 and $1 066
063,71. In April/May 1992, evidence was taken on commission
in the United States
of America over a period of about four weeks. The trial commenced before this
Court on 26 October 1992 and ran
for two weeks. It was then postponed to 15
March 1993. On 13 March 1993 the plaintiff substituted the Multilateral Motor
Vehicle
Accident Fund ('the Fund') as defendant in place of President, which had
been placed in liquidation. On 15 March 1993 the trial resumed.
It ran for about
two and a half weeks. On 8 April 1993 this Court gave judgment for the plaintiff
in the following amounts:
Past hospital and medical expenses R 20 875,96
Future hospital and medical expenses $12 945,00
Future loss of earnings $74 446,00
General damages R30 000,00"
The tender was then disclosed to the
Court a quo. The question of costs was thereafter dealt with. The Court a quo
decided
4 that
"one has to determine the value to the plaintiff of the tender in 1990 and
compare it with the value of the award in 1993"
Having done so,
and having found by that method of calculation that
"the value in real terms of the tender to plaintiff in 1990 exceeded the value
to her of the amount of the judgment given in 1993",
the Court a
quo came to the conclusion that the tender exceeded the award. The
above-mentioned order of costs was then made. In terms
thereof respondent was
ordered to pay plaintiff her party and party costs until 16 August 1990 (on
which date the spatium deliberandi
afforded plaintiff by Rule 34(6) expired)
and, save for certain exceptions not now relevant, plaintiff was ordered to pay
defendant's
party and party costs since that date.
The key to the trial Court's order is, to my mind, the fact that plaintiff's
claim was partly in US dollars and that the award in
her
5
favour was also partly in that currency. The general principle is that if the
amount awarded exceeds that of the tender, an order
of costs will, in the
absence of special circumstances, be made in favour of the plaintiff and vice
versa. Harms: Civil Procedure
in the Supreme Court, Section P 8 p 439; Swisstool
Manufacturing Co (Pty) Ltd v Omega Africa Plastics (Pty) Ltd
1977 (3) SA 458
(W)
at 460C.
The learned Judge dealt in these terms with the effect of the rate of
exchange on the award in US dollars:
"The exchange rates on the three relevant dates and the equivalent in Rands of
the amount awarded by the court are the following:
30 July 1990
2,6072 R278 721,77 17 August 1990 2,5657 R275 095,00 8 April 1993 3,2025 R330
745,63
It follows that if the rate of exchange on 8 April 1993, the date of
judgment, is applicable, the judgment exceeded the tender by
R30 745,63; if the
rates of exchange in July and August 1990, when the tender was made and the
plaintiff enjoyed a spatium deliberandi,
are applicable, the tender exceeded
judgment."
6
The reasoning by way of which the learned Judge came
to the aforementioned conclusion appears from the following
further
passages in his judgment:
"Mr Peter Solomon, who appeared for the plaintiff to argue this
point,
submitted that the applicable rate of exchange was the
one prevailing on the
date of judgment. It was on that date that
the Court determined the quantum
of the plaintiff's damages and
it was on that date that the amount awarded
became payable
I am not, however, persuaded. In my view one has to determine the value to the
plaintiff of the tender in 1990 and compare it with
the value of the award in
1993. The purpose of the tender is to bring an end to the litigation and to
protect the defendant against
further costs. In this case it is not surprising
that President made a tender in terms of rule 34(1): the merits had been
settled,
the only issue being the quantum of the plaintiff's damages; the claim
was substantial; the plaintiff, an American citizen living
in the USA, was
entitled to claim for loss of earning capacity and future medical expenses in US
dollars and it was inevitable that
evidence on commission in the USA would have
to be taken, adding substantially to the costs of litigation. It was a prudent
step
to take. The mechanism of an unconditional offer to settle contained in
rule 34(1) and a judgment have these features in common:
the aim of each is to
compensate the plaintiff for her loss, and, on acceptance of
the
7
offer or on judgment, the lis between the parties is ended. In arriving at
the amount of the tender, the defendant would have undergone
a similar exercise
to the one undertaken by the Court and made an assessment of the plaintiffs loss
under each head of damages, erring
on the side of generosity in order to ensure
that the tender exceeded any amount awarded by a Court in due course. The
question which
President would have asked itself is: what amount should a Court
award the plaintiff to compensate her for her loss? When the plaintiff
received
the tender, she should have asked the same question. Had she come to the
conclusion that the defendant's assessment was
accurate or too low, but
nevertheless attractive, and accepted the tender, she would have received R300
000 in 1990. She would have
been compensated in full for her loss, and had
change. On acceptance of the tender, not only would the plaintiff have been
compensated
in full, she would have received R21 278,23 more than the amount of
her loss (as assessed by the Court), being the difference between
the tender of
R300 000 and the value in rands at that time of the Court's award of R278 721,77
with the consequence that litigation
would have been ended (and the parties
saved many hundreds of thousands of rands in costs).
Accordingly, the value in real terms of the tender to the plaintiff in 1990
exceeded the value to her of the amount of the judgment
given in 1993."
After 6 March 1992 when the dollar claims
were
8
introduced by way of amendment to plaintiffs particulars of claim, both
parties were undoubtedly at risk by virtue of the continual
fluctuations in the
exchange rates between the two relevant currencies. The tender was made in rand
and remained unchanged as to
currency and amount despite the subsequent
introduction of the claims in US dollars. Those claims likewise remained
unchanged. 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 explained by E M Grosskopf JA in SA Eagle
Insurance Co Ltd v Hartley
[1990] ZASCA 106
;
1990 (4) SA 833
(A) at 839 D-J in the following terms, in contrast to the
so-called "Everson principle" enunciated by Howie J in Everson v Allianz
Insurance Ltd
1989 (2) SA 173
C:
"Now, ex hypothesi, the Rl 000 represents the actual financial loss incurred
some time before the trial. Let us assume it was incurred
on a single occasion.
If judgment had been given a day later an amount of Rl 000 and no more would
have been
9
awarded. That represents 'the number of rands he has lost' in the words of
Howie J (Everson's case at 175A). The application of the
Everson principle would
entail that the plaintiff would be awarded a different number of rands at the
trial if it took place some
time after the loss was incurred and there had been
a change in the purchasing power of the currency in the interim. (In recent
decades
we have suffered a decline in purchasing power, but the same rule must
in principle apply to an enhancement.) The application of
the Everson principle
would thus 'be tantamount to altering the quantum of the debt according to when
the (plaintiff) seeks to exact
it' (Cosmopolitan National Bank of Chicago v
Steiberg
1973 (4) SA 579
(R) at 581F; Voest Alpine Intertrading Gesellschaft MBH
v Burwill and Co SA (Pty) Ltd
1985 (2) SA 149
(W) at 151D).
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 Geld 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. See Farlam and Hathaway Contract:Cases,Material
and
Commentary 3rd ed at 719 note 2; H J Delport 'Inflation and South African Law'
(1982) 4 Modern Business Law 115 and A Spandau
'Inflation
10
and the Law'
1975 SALJ 31.
Nominalism is the norm in the common law of Western States with similar systems
to our own. Thus in Deutsche Bank Filiale Nürnberg
v Humphrey
[1926] USSC 201
;
(1926) 272 US
517
at 519 the United States Supreme Court
said:
'An obligation in terms of the currency of a country takes the risk of currency
fluctuations and whether creditor or debtor profits
by the change the law takes
no account of
it Obviously, in fact a dollar or a mark may have
different values at different times, but to the law that established it it is
always the same. If the debt had been due here and
the value of dollars had
dropped before suit was brought the plaintiff could recover no more dollars on
that account.'"
At 840 G-H the learned Judge applied
that principle as follows to the claim there under consideration:
"The principle of currency nominalism is in my view to be applied as follows in
the present case. The respondent suffered a loss
of income, expressed in rands,
prior to the trial. That loss had to be made good by the appellant by paying to
the respondent the
number of rands which he has lost, irrespective of whether
the purchasing power of the rand has varied in
the
11
interim."
This principle and its mode of application are clearly
applicable to the present matter.
It is now settled law that the Court a quo
had the power to award plaintiff damages in US dollars in respect of her claims
for loss
of earning capacity and future medical expenses. Under the
circumstances it was appropriate that this was done. Standard Chartered
Bank of
Canada v Nedperm Bank Ltd
[1994] ZASCA 146
;
1994 (4) SA 747
(A) at 774F-775A.
As to how and
when such an award may be satisfied Corbett CJ said the following in the Nedperm
Bank case, supra, at 777 CD.
"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 the payment of its
equivalent in rand
when paid
. (Compare
the
12
Elgin Brown case at 674J, and see also the English cases of Miliangos v George
Frank(Textiles)Ltd
[1985] 1 All ER 1076
(CA) at 1086b; The Despina R
[1977] 3
All ER 874
(CA)at 902/1) Any other conversion date could render meaningless the
award in the foreign currency."
[my emphasis]
The learned Chief Justice here clearly applied the principle of currency
nominalism.
The date of payment could certainly never be earlier than that of
the award and will certainly here be substantially subsequent thereto.
At date
of payment the conversion rate could, and under the circumstances pertaining in
this matter, would most probably be different
to that at date of judgment due to
the constantly fluctuating rate of exchange between rand and dollar. This may be
to the advantage
of either party. In the present matter it is, however, quite
improbable that at date of payment the conversion rate would be such
that the
rand equivalent of the dollar award would be less than the amount of the
tender.
13
To decide whether the tender exceeded the award or not, the dollar portion of
the latter had of necessity to be converted into rand
because that was the
currency in which the tender was made. For purposes of payment such conversion,
in accordance with the judgment
of the Chief Justice, has to be made at the date
of payment. In order to determine the issue of costs, the date of payment, which
depends partly on the defendant's decision, would not, however, be practical.
The only practical date closest to the date of payment,
is the date of judgment.
A defendant who decides to tender must, in assessing the amount of his tender,
take into account the possible
delay between the date of tender and the date of
judgment; and, if he makes his tender in a different currency from that in which
the claim is couched, the possible fluctuations in the exchange rate. Those are
the risks inherent in this form of procedure.
The learned Judge a quo was, therefore, undoubtedly wrong in taking the date
of the tender as the conversion date and in
14
concluding on the strength thereof that the tender amount exceeded that of
the award. In the light of this Court's decision in Nedperm
Bank, supra, the
award clearly beat the tender.
The order of costs made by the learned Judge,
cannot, therefore, remain in force and must be set aside. The appeal is
consequently
successful to that extent, and must be allowed with costs. That is
not, however, the end of the matter. The question of the costs
of the trial
remains to be considered. In that respect Rule of Court 34(12) provides as
follows:
"(12) If the court has given judgment on the question of costs in ignorance of
the offer or tender and it is brought to the notice
of the registrar, in
writing, within five days after the date of judgment, the question of costs
shall be considered afresh in the
light of the offer or tender; Provided that
nothing in this sub-rule contained shall affect the court's discretion as to an
award
of costs."
A knowledge of all the relevant facts is
necessary for the proper exercise of such a discretion. The learned Judge a
quo
15
expressed his concern at the disturbingly high costs of the trial. By virtue
of the limited nature of the record before us, this Court
is not in possession
of all the relevant facts. It is not, therefore, in a position to make any order
as to the costs of the trial.
Plaintiffs counsel requested that the matter be
remitted to the trial court to consider those costs and to make such order
thereon
as, in the exercise of its discretion, is deemed proper. His request
must, to my mind, be acceded to.
The following orders are
made:
(1)
The appeal is allowed with
costs;
(2) The order of costs made by the Court a quo on 15 June 1993 is set aside;
(3) The matter is remitted to the trial Court to make such order as to the costs
of the trial as it, in the exercise of its
discretion,
16
deems proper.
M T STEYN JA
JOUBERT JA ) NESTADT JA ) F H GROSSKOPF JA ) concur NIENABER JA )