Lambrakis v Santam Ltd (412/00) [2002] ZASCA 16 (26 March 2002)

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[2002] ZASCA 16
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Lambrakis v Santam Ltd (412/00) [2002] ZASCA 16; 2002 (3) SA 710 (SCA) (26 March 2002)

THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
CASE
NUMBER 412/00
In
the matter between:
KALISTHENE
LAMBRAKIS Appellant
and
SANTAM
LIMITED Respondent
______________________________________________________________________
Before: NIENABER, OLIVIER, MPATI JJA, HEHER &
LEWIS AJJA
Heard: 28 FEBRUARY 2002
Delivered:
26 MARCH 2002
Summary: Measure of damages for loss of support;
interest on investment in deceased estate constitutes an accelerated
benefit to
heirs.
JUDGMENT
LEWIS
AJA
[1]
Frixos Lambrakis (the
deceased) was killed on 27 February 1987 in a motor collision. The
respondent was an agent of the then Multilateral
Motor Vehicle
Accidents Fund, and the insurer of the driver responsible for the
deceased’s death. The appellant (referred to for
convenience as
the plaintiff), who is the divorced wife of the deceased, sued the
respondent (the defendant) in her capacity as the
guardian of her two
minor children for damages for loss of support. The defendant
admitted that the death of the deceased was caused
solely by the
negligence of the insured driver. The only issue for the
determination of the trial Court, therefore, was the quantum
of
damages to be awarded to the plaintiff on behalf of her children.
[2]
Shakenovsky
AJ made no such determination, however, granting absolution from the
instance on the basis that the plaintiff had not
discharged the onus
of proving that the children had in fact sustained any loss at all.
The judgment of the court
a quo
is reported in
2000 (3) SA
1098
(W).
[3]
The
circumstances of the deceased, the plaintiff and the children were
unusual. The deceased was young (38) when he was killed.
He had
been divorced from the plaintiff three years previously. At the time
of his death their children, N. and G., were ten and
seven
respectively. The deceased had a third child, A., a year old at the
time of his death, who was born out of wedlock from his
relationship
with his partner, then a Mrs Pretorius, who was at the time of the
trial, Mrs Styos.
[4]
The
deceased had built up a flourishing business (Jaguar Catering
Equipment Manufacturers CC) making catering equipment. It was
run as
a close corporation, of which he was the sole member. It was
undisputed, however, that Mrs Pretorius had in fact been his
partner
in the business as well: she had formerly been the deceased’s
secretary, but had advanced to become the administrative
manager of
the business while the deceased was the marketing or sales manager.
[5]
Despite
his financial acumen, the deceased died intestate. His two heirs
were thus N. and G.. A., being born out of wedlock, inherited
nothing. The
Intestate Succession Act 81 of 1987
, which would have
conferred on her a right of inheritance on her natural father’s
death intestate, was passed shortly after his
death.
[6]
When
the plaintiff and the deceased had divorced they had concluded an
agreement of settlement, made an order of court, in terms
of which
the deceased would provide a house for the children and the
plaintiff; and would pay the plaintiff monthly maintenance for
herself of R400 and for the children of R250 each. It was common
cause that the deceased had always paid the agreed maintenance
and,
in addition, being a generous and loving father, had paid whatever
the children or the plaintiff had needed or asked for. He
had also
bought a house in which the plaintiff and the children lived, and in
respect of which the plaintiff incurred no costs.
The house was
registered in the names of the children and the plaintiff had a life
usufruct in respect of it.
[7]
The
deceased estate was administered by a Mr Buckerfield of Syfrets Trust
Ltd over a period of nearly 11 years: the final liquidation
and
distribution account was dated 17 December 1997. During the whole of
this period Buckerfield paid the plaintiff and her two
children the
maintenance stipulated in the divorce settlement, and also paid
various medical and other expenses. Although the plaintiff
testified
that she and her children had been financially worse off than they
had been when the deceased was alive, it became plain
during the
course of the trial that in fact the plaintiff had been paid not only
the maintenance to which she was entitled in terms
of the divorce
settlement, but also that the maintenance had been increased over the
years. Buckerfield, as executor of the estate,
had in effect paid to
the plaintiff whatever she and the children had asked for. Moreover,
there was an excess of income in the
estate that had not been used by
them when the estate was wound up. No evidence of any amount of
money that the children had needed,
and not been able to obtain from
the estate, was led by the plaintiff.
[8]
The
assets in the estate, when eventually it was wound up and after all
liabilities had been paid, comprised a block of flats, Elba
Court,
worth some R150 000; gold coins worth R1 898, and a cash sum,
R185 904.17. The unused income generated by the capital
(invested wisely by the executor over the period of winding up)
amounted to R456 255.45. The cash was paid into the Guardians Fund
for the children. It should be noted that N. had attained majority
at the time of the trial and that, by the time this court heard
the
appeal, G. too had become a major.
[9]
The
court
a quo
accepted the submission that both children should
be regarded as self-supporting on reaching the age of 24.
Shakenovsky AJ concluded,
however, that because the children’s
needs for maintenance had been fully met from the income derived from
the investment of estate
assets, and from the rental obtained from
the letting of Elba Court, they had suffered no pecuniary loss as a
result of the death
of their father and were not entitled to damages
– hence the order of absolution from the instance. This is the
issue before this
Court, leave to appeal having been granted by the
Court
a quo
.
[10]
The
principles governing the award of damages to dependants for loss of
support were not in contention in this appeal. It was conceded
by
the plaintiff that the children were entitled to damages only in so
far as they had suffered actual pecuniary loss as a result
of the
wrongdoing of the insured driver (see
Evins v Shield Insurance Co
Ltd
1980 (2) SA 814
(A) at 838A, where Corbett JA described this
proposition as trite). And the defendant did not take issue with the
claim that the
children had been the dependants of the deceased and
were entitled to maintenance until they were self-supporting.
[11]
The
contested issues were thus the quantification of the loss, and the
determination of whether the income from the deceased’s
estate
amounted to an accelerated benefit such that it should be regarded as
negativing or reducing that loss.
[12]
The
measure of damages for loss of support is, usually, the difference
between the position of the dependant as a result of the loss
of
support and the position he or she could reasonably have expected to
be in had the deceased not died: Joubert (ed)
The Law of South
Africa
(1st re-issue) vol 7 para 89, citing
Jameson’s Minors
v Central South African Railways
1908 TS 575
at 603;
Hulley v
Cox
1923 AD 234
; and
Legal Insurance Co Ltd v Botes
1963
(1) SA 608
(A). The particular equities of the case must also be
taken into account and an adjustment made if appropriate:
Botes
above at 614F—H where Holmes JA said that the trial judge ‘has a
discretion to award what under the circumstances he thinks right’.

Thus any addition to a dependant’s income, arising from the death
of the deceased, must be deducted from the total amount of the
loss.
In assessing the value of the benefit – and indeed the loss – the
court ‘may be guided but is certainly not tied down
by inexorable
actuarial calculations’ (Holmes JA in
Botes
above at
614F—G). It is to be noted that in terms of
s 1(1)
of the
Assessment of Damages Act 9 of 1969
, insurance money (which includes
a refund of premiums and payment of interest on premiums) and
pensions do not fall to be deducted.
[13]
Where
property is inherited by a dependant, in determining the extent of
his or her loss the court should take into account not the
value of
the property but that of the accelerated accrual (cf
Groenewald v
Snyders
1966 (3) SA 237
(A) at 248C—F). This entails assessing
the probabilities of the dependant having inherited the property
should the deceased not
have been killed through the wrongdoing of
the defendant, but dying from a different cause at a later date.
[14]
The
assessment of loss, on the one hand, and of benefits on the other,
must necessarily depend on the making of a number of assumptions,
none of which can be proved at the time of making the assessment.
Thus, for example, where a widow is claiming damages, the possibility
of her remarrying and finding a new source of support is taken into
account; the life expectancy of the deceased had he not been
killed
must be estimated; his future earnings must be quantified, taking
into account both taxation and inflation; and his probable
age of
retirement must be estimated. These are all contingencies that will
determine what the actual loss of the dependant is when
the
breadwinner is killed. The exercise is, in effect, no more than the
making of an educated guess. Thus Holmes JA in
Anthony &
another v Cape Town Municipality
1967 (4) SA 445
(A) said, in
assessing such damages (at 451B—C):
‘
When
it comes to scanning the uncertain future, the Court is virtually
pondering the imponderable, but must do the best it can on
the
material available, even if the result may not inappropriately be
described as an informed guess, for no better system has yet
been
devised for assessing damages for future loss.’
And in
Southern Insurance
Association v Bailey NO
1984 (1) SA 98
(A) at 113G—114A,
dealing with loss of earning capacity rather than loss of support,
but where a similar assessment must be made,
Nicholas JA said:
‘
Any enquiry into damages for loss of earning capacity
is of its nature speculative, because it involves a prediction as to
the future,
without the benefit of crystal balls, soothsayers, augurs
or oracles. All that the Court can do is to make an estimate, which
is
often a very rough estimate, of the present value of the loss.
It has open to it two possible approaches.
One is for the judge to make a round estimate of an
amount which seems to him to be fair and reasonable. That is entirely
a matter
of guesswork, a blind plunge into the unknown.
The other is to try to make an assessment, by way of
mathematical calculations, on the basis of assumptions resting on the
evidence.
The validity of this approach depends of course upon the
soundness of the assumptions, and these may vary from the strongly
probable
to the speculative.
It is manifest that either approach involves guesswork
to a greater or lesser extent. But the Court cannot for this reason
adopt a
non possumus
attitude and make no award.’
Nicholas JA went on to say (at 114D) that where
the court does have material on which an actuarial calculation can be
made, the first
approach offers no advantage over that involving
actuarial calculations.
[15]
In
the court
a quo
the plaintiff had relied on the evidence of
the actuary, Mr G W Jacobson. His approach was the following: the
income of the deceased
must be determined by having regard to his
earnings prior to death. That amount would form the basis for
assessing his income from
the date of death until the time when both
children were self-supporting, but would be adjusted by taking into
account various factors
that might affect the amount earned. Thus
the total sum at the end of the period was discounted by between 20
and 25 per cent.
The reduced sum is then divided into shares. The
standard practice, Jacobson testified, is to allocate two shares to
each adult
(deceased and spouse) and one share to each child. In this
case he allocated four shares to the deceased (being unmarried but
living
with a partner) and one each to the three children (including
A.). In his final report, prepared in 1999, Jacobson estimated that
on this basis the total sum that would have been available to the
children N. and G. amounted to close to R2 million. He then deducted
from this sum the amounts of maintenance received from the executor
over the period between the deceased’s death and the date of
winding up the estate, based upon the divorce settlement (plus the
increases agreed to by the executor), as well as the amounts received
by the children by way of inheritance (the value of Elba Court, the
cash residue left in the estate and the value of the gold coins),
which he referred to as the ‘accelerated benefits’, and concluded
that the balance represented the loss of the dependants. On
this
basis, he calculated that N. had been deprived of some R849 738
and G. of R1 095 380.
[16]
Shakenovsky
AJ rejected the conclusions reached by Jacobson on the basis that his
assumptions were in several instances unfounded
(at 1117ff). I shall
not deal with these since in my view they make no difference to the
actual result.
[17]
Mr
Jordaan, for the defendant, argued that the children had in fact
suffered no loss. They had been paid by the executor whatever
they
had required. The amounts of maintenance that the deceased had been
obliged to pay under the agreement of settlement had been
paid to the
plaintiff. In addition, all medical expenses, and various other
claims made by the plaintiff, had been paid by the estate.
And when
the estate was finally wound up there was, as indicated earlier, an
excess of income that was paid into the Guardian’s
Fund. Mr Wessels
for the plaintiff countered this submission by arguing that the
income used for the children’s support was in
fact their money:
they had paid for their own support (and indeed their mother’s)
from their own resources and had still therefore
suffered a loss of
support from their father.
[18]
Another
aspect of the plaintiff’s case was that the income generated
through the investment of cash in the estate did not constitute
an
accelerated benefit that fell to be deducted from the loss of
support. The defendant’s argument, on the other hand, was that
the
financial position of the dependants at the time of the trial had to
be compared with the position they would have been in had
their
father not died. This requires one to take into account any income
that they receive from an inheritance from the erstwhile
breadwinner.
In
Jameson’s Minors
above at 603—4 Innes CJ stated that in
determining the amount to be awarded to the children of Dr Jameson,
the amounts that they
received after his death from income on his
investments, and interest on life policies and on cash had to be
taken into account.
[19]
Mr
Jordaan rightly submitted that where a deceased estate generates
sufficient income to support the dependants in full, no financial
loss would be suffered as a result of the death of the deceased.
This submission is bolstered by the general principle that a child
who is able fully to support himself or herself is not legally
entitled to support from anyone else:
Boberg’s Law of Persons
and the Family
2
nd
edition by Belinda van Heerden,
Alfred Cockrell and Raylene Keightley 245—6. Further, a child’s
right to support continues against
the estate of a deceased parent:
Hoffman v Herdan NO
1982 (2) SA 274
(T) and
Boberg’s Law
of Persons and the Family
270ff.
[20]
The
approach of the plaintiff is in my view also in conflict with the
principle that the dependants of the deceased should be compensated
only for financial loss, and that they should not profit from the
wrongdoing of the defendant. See in this regard
Groenewald v
Snyders
1966 (3) SA 237
(A) at 247A—D. Moreover, there was no
authority cited in support of the proposition that income generated
by assets in a deceased
estate does not constitute an accelerated
benefit to dependent heirs. And such argument is in conflict with
settled law applied
at least since the decision in
Jameson’s
Minors
. The trial Court cited in this regard
Indrani &
another v African Guarantee & Indemnity Co Ltd
1968 (4) SA
606
(D) where Fannin J said (at 607F-H):
‘
The general principle applied by the South African
Courts is that a dependant plaintiff, when entitled to damages for
loss of support,
should be awarded damages only for the “material
loss caused . . . by his death” (see
Hulley v Cox
1923 AD
234
at p 243). It seems implicit in what was said by Innes CJ in
Hulley v Cox
, that the material loss
can only be
ascertained ‘by balancing, on the one hand, the loss to him of the
future pecuniary benefit, and, on the other, any
pecuniary advantage
which from whatever source comes to him
by reason of the death
’
(my emphasis).
Fannin
J also referred (at 607G—H) with approval to the work of Professor
P Q R Boberg in his series of articles dealing with actions
for loss
of support in
(1964) 81
SALJ
198
, where he had shown that our
courts have ‘consistently applied this principle of the “balance
of losses and gains” ‘. The
argument of the plaintiff that the
children had paid for their own support, and thus suffered a loss,
must accordingly fail.
[21]
It
cannot be disputed that the income on the funds in the estate came to
the children ‘by reason of his death’. The death of
their father
was the cause of the receipt of the income by the children and his
estate its source. But for his death, the children
would not have
received the income when they did. Further, Jacobson adopted a
somewhat inconsistent approach to the benefits that
should be
deducted from the support to which the children were entitled. While
not deducting interest on estate assets, he did deduct
the rental
paid from the letting of Elba Court. Mr Wessels argued that this
indicated a very conservative approach on the part of
Jacobson. But
it seems to me to show that he recognized that the rental would not
have been payable to the children had their father
not died, and thus
that it constituted an accelerated benefit. There cannot, in my
view, be any difference in principle between
rental from property and
interest on funds invested. The interest generated by the investment
of the estate assets, payable to the
children only because of their
father’s death, did therefore constitute an accelerated benefit.
[22]
The
actuarial basis for the computation of the children’s loss was
argued to be inappropriate in this case. While the formula
entailing
a division of future income into shares, and an allocation of two
shares to each adult and one to each child, may work
well in certain
instances, it cannot be used as a general guide in the calculation of
loss of support. The formula might be appropriate,
argued Mr
Jordaan, where the deceased was employed and had a fixed income, and
where his estate was inherited by all of his dependants.
But in this
case, in my view, the application of the formula resulted in the
untenable conclusion that a large sum of money (calculated
on
assumptions based on the deceased’s income and projected future
income) would have been payable to the dependants when they
had in
fact not been deprived of support.
[23]
For
these reasons I consider that the Court
a quo
correctly found
that the plaintiff had not discharged the onus of proving that her
children had suffered any financial loss as a
result of the
wrongdoing of the insured driver. As indicated earlier, the children
of the plaintiff have both reached majority. They
have undertaken to
abide by any costs order made against the plaintiff.
[24]
The following order is made: the appeal is dismissed with costs.
____________________________
C
H LEWIS
ACTING
JUDGE OF APPEAL
NIENABER
JA )
OLIVIER
JA ) CONCUR
MPATI
JA )
HEHER
AJA )