Brief Summary

Road Accident Fund — Loss of earning capacity — Assessment of damages — Respondent, a neurosurgeon, injured in a road accident, unable to continue practice — Appellant liable for 75% of damages — High Court awarded R4 810 709 for loss of earning capacity — Appellant appealed against assessment and costs order, claiming trial court errors in admitting evidence and concluding respondent would have entered private practice — Court upheld trial court's findings, determining that the assessment of loss of earning capacity was reasonable and supported by evidence, including expert testimony on respondent's professional competence and earning potential.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings concerned an appeal and a cross-appeal to the Supreme Court of Appeal against a High Court award of damages arising from a motor vehicle accident, with the principal dispute relating to the quantification of loss of earning capacity and a further dispute relating to the appropriate scale of costs.

The appellant was the Road Accident Fund and the respondent was Roman Klisiewicz, a neurosurgeon who had practised until injuries sustained in a 1995 road accident rendered him incapable of working as a medical doctor. The parties had agreed that the Fund was liable to compensate the respondent for 75% of his proven damages.

In the High Court at Johannesburg (Goldblatt J), the respondent’s damages were assessed and awarded with costs. With leave, the Fund appealed (and the respondent cross-appealed) against the award insofar as it included R4 810 709,00 for loss of earning capacity. The respondent additionally sought leave in the Supreme Court of Appeal to cross-appeal against the High Court’s refusal to grant a special costs order, contending that the Fund’s conduct warranted costs on a punitive scale.

The general subject-matter was the monetary assessment of damages for a professional person who, because of accident-related injuries, lost the ability to continue in his specialised profession, and whether litigation conduct justified a punitive costs consequence.

2. Material Facts

It was common cause that the respondent, born in 1951 in Poland, was a qualified neurosurgeon with a PhD in neurosurgery, and that he emigrated to South Africa in 1991 with his family. He secured employment in the neurosurgery section at Johannesburg General Hospital, first temporarily and then on a full-time basis from 1 August 1991. The respondent later moved to Paardekraal Provincial Hospital in Krugersdorp, commencing there on 2 January 1995. Approximately seven months thereafter he was injured in the 1995 accident.

It was undisputed that, as a result of the accident and ensuing complications, the respondent became incapable of earning a living as a medical doctor of any kind. The quantification dispute therefore turned on what his likely career and earnings would have been but for the accident, and whether he retained any realistic residual earning capacity in his disabled state.

A central factual component concerned the respondent’s professional trajectory in South Africa. To enter private practice as a neurosurgeon in Johannesburg he needed specialist registration from the South African Medical and Dental Council (later the Health Professions Council). The Council required him to pass the relevant College examination (and also an examination in legal ethics and language). By the time of the accident he had not yet written these examinations. The High Court nevertheless found it reasonable, on the evidence, to conclude that he would have written and passed them, entered private practice, and ultimately earned at a level comparable to a practitioner in the middle echelons of private neurosurgical practice in Johannesburg.

The evidence relevant to those prospects included detailed letters written by Professor V J R Farrell (head of the Department of Neurological Surgery at Johannesburg Hospital and a College examiner) in support of the respondent’s application for specialist registration. Those letters strongly endorsed the respondent’s skill and attributes as a neurosurgeon in an academic setting. Evidence also addressed the deterioration of the working relationship between the respondent and Professor Farrell and the circumstances leading to the respondent’s transfer from Johannesburg Hospital to Paardekraal.

On residual earning capacity, the Fund sought to advance that the respondent was not totally disabled for work. The evidence the appeal court treated as material included that the respondent suffered hypoxic brain damage with a material memory deficiency and other problems affecting employability, and that no witness could provide a convincing basis for concluding that he was employable on the open labour market. Evidence about sleep apnoea was led to suggest a remediable condition affecting work capacity, but the appeal court regarded the thrust of the evidence as showing no such disabling ailment connected to the accident.

3. Legal Issues

The central legal questions were whether the High Court erred in its assessment of the respondent’s loss of earning capacity, including whether it was justified in finding that he would have entered private practice and how it quantified the likely earnings and contingencies, and whether it should have found a quantifiable residual earning capacity.

These questions involved, in significant part, the application of legal principles to fact and the exercise of a value judgment/discretion typical of damage quantification in personal injury matters, where the assessment turns on forecasts and contingencies rather than certainties.

In addition, the appeal raised evidentiary and procedural issues concerning whether the High Court correctly disallowed certain expert-type evidence from Professor Farrell due to non-compliance with procedural requirements, and whether the High Court erred in admitting certain evidence concerning private neurosurgeons’ earnings (though the appeal court ultimately considered the admission issue non-determinative because the judgment did not indicate reliance on that evidence).

A further issue was whether the Fund’s manner of conducting the litigation justified a punitive costs order (in particular, an attorney-and-client scale) for part of the trial, and whether the High Court’s refusal of such an order should be interfered with on appeal.

4. Court’s Reasoning

On the attempted evidence from Professor Farrell about the respondent’s professional competence and prospects, the Supreme Court of Appeal emphasised the procedural framework governing expert evidence. The respondent had complied with the rules applicable to expert witnesses months before trial. The Fund, by contrast, did not consult timeously with Professor Farrell, gave no notice that he would testify as an expert, and only at a late stage attempted to elicit opinion evidence concerning the respondent’s abilities and chances of passing the required examinations. The appeal court agreed with the High Court that the evidence was plainly expert in nature, and that the Fund’s contention that it was not expert evidence was correctly rejected.

The appeal court held that the High Court was justified, as an exercise of discretion, both in disallowing the questioning and in refusing a postponement sought to remedy the lack of notice. The Fund’s dilatoriness and failure to attend to procedural obligations were treated as decisive in upholding those rulings.

On the challenged evidence regarding earnings in private practice (obtained by an industrial psychologist, Ms Noble, from discussions with practising neurosurgeons), the appeal court reasoned that the record did not show that the disallowed later evidence was of the same nature as the admitted evidence, and, critically, the High Court’s judgment did not reveal that it actually relied on the disputed income figures in reaching its conclusion on quantum. For that reason, this complaint did not assist the Fund in overturning the award.

On whether the respondent would have entered private practice, the appeal court considered the evidence as a whole, including the respondent’s personal characteristics (ability, ambition, drive, courage), his decision to emigrate at the age of 40, his qualifications and experience, and Professor Farrell’s strong endorsements. Although Professor Farrell’s letters referred to academic neurosurgery and did not mention private practice, the appeal court noted that the respondent testified that private practice was his intention and that this was not put to him in cross-examination as being inconsistent with what he had told others. The respondent’s wife gave consistent evidence on his intention.

The appeal court also addressed the Fund’s submission that the respondent had to prove it was probable that he would have passed the examinations, entered private practice, and succeeded. It rejected this approach as inconsistent with authority in circumstances where it was already clear that the accident disabled him from working as a doctor; the task was not causation but quantification. In quantification, the court held, it is permissible and customary to take account of future possibilities even if they are not proved as probabilities, applying the approach in the authorities cited.

In assessing whether the High Court took too optimistic (as the Fund argued) or too conservative (as the respondent argued) a view of practice prospects, the appeal court evaluated how the High Court used comparator evidence (in particular, Dr Edeling’s income) and the timeline to parity. It held that the High Court did not improperly equate the respondent with Dr Edeling at the same level and time, because the High Court’s approach placed the respondent on a lower scale by projecting parity only by 2006 with Dr Edeling’s 2000 earnings. The appeal court considered that the High Court adopted a cautious approach and further relied on an assessment (which had not been challenged) that the respondent would likely inspire confidence in patients and the medical fraternity.

At the same time, the appeal court recognised and weighed countervailing considerations identified in the evidence: the respondent’s deficiencies in clinical examination and follow-up stemming from differences between Polish and British/South African training approaches, the need for improvement in patient communication particularly early in private practice, and the possibility that age might have affected patient choice in a competitive market. It also noted uncertainty about whether the respondent’s paediatric neurosurgery interest would have attracted work, treating it as a possibility without evidence pointing definitively one way or the other.

On residual earning capacity, the appeal court accepted that the medical evidence did not translate into realistic employability. Professor Vorster’s evidence that the respondent had residual abilities was regarded as insufficient without a realistic employment prospect, and she ultimately deferred to industrial psychology. Ms Noble’s evidence in court was that employment would be “onmoontlik” or “baie moeilik” to obtain and that retention prospects were “baie skraal”, particularly given memory and concentration problems and other constraints. The appeal court therefore upheld the High Court’s decision not to attribute any quantifiable residual earning capacity.

Regarding contingencies and the quantification methodology, the appeal court endorsed the High Court’s approach of identifying predicted income levels from 1995 to retirement and then applying a substantial contingency discount to reflect uncertainties (including delay in reaching private practice, the chance of never entering it, the risk of lack of success, and possible health curtailment), balanced against upward contingencies (including the chance of reaching upper echelons and earning beyond age 65). The net result was a 20% contingency deduction, which the appeal court considered within the wide discretion afforded to trial courts in such assessments.

The appeal court, however, identified an arithmetic error in the High Court’s calculation: applying a 20% deduction to the unadjusted loss of R5 930 014 should have yielded R4 744 011 rather than R4 810 709, a difference of R66 698. It corrected the award accordingly, describing the reduction as less than 2% and not warranting a special costs consequence.

On costs, the appeal court revisited the High Court’s refusal to grant a special costs order. It accepted the High Court’s strong criticism of the Fund’s conduct but held that it was insufficient to excuse that conduct merely as “excess caution and uncertainty” if it stemmed from unreasonable lack of preparation. Drawing on the notion of “vexatious” conduct in the cited authority (including conduct that puts the opponent to unnecessary trouble and expense), the appeal court concluded that the Fund was profoundly ill-prepared, pursued unnecessary issues, failed to take timeous and reasonable steps (including proper expert engagement and admissions), and thereby materially lengthened the trial. On a broad conspectus it found that the trial was extended from about seven to fourteen days due to the Fund’s fault.

The appeal court held that a special costs order was therefore appropriate and necessary, also emphasising the Fund’s public duty to administer funds with integrity and efficiency through thorough investigation and responsible litigation conduct. Nevertheless, it declined to order costs on the scale as between attorney and own client, noting the Supreme Court of Appeal’s expressed disinclination to make such awards absent fuller argument and forensic debate establishing a proper basis.

5. Outcome and Relief

The Supreme Court of Appeal dismissed the Fund’s appeal on the merits of the loss of earning capacity assessment, and also dismissed the respondent’s cross-appeal on quantum. The court corrected the High Court’s arithmetic error by reducing the total sum reflected in paragraph 1 of the High Court order by R66 698,00, substituting the amount R3 641 571,00.

The appeal was dismissed with costs (subject to the amended amount). Leave was granted to the respondent to cross-appeal against the High Court’s costs order, but the respondent was ordered to pay the costs of the application for such leave. The respondent’s cross-appeal on costs succeeded with costs, and the High Court’s costs order was supplemented to provide that, in respect of seven days of the trial, costs were to be paid on the scale as between attorney and client.

Cases Cited

Burger v Union National South British Insurance Co 1975 (4) SA 72 (W)

Blyth v Van den Heever 1980 (1) SA 191 (A)

Engineering Management Services (Pty) Ltd v South Cape Corporation (Pty) Ltd 1979 (3) SA 1341 (W)

AA Alloy Foundry (Pty) Ltd v Titaco Projects (Pty) Ltd 2000 (1) SA 639 (SCA)

Thoroughbred Breeders Association v Price Waterhouse 2001 (4) SA 551 (SCA)

Legislation Cited

No legislation was expressly cited in the judgment.

Rules of Court Cited

No specific rule number was expressly cited; the judgment referred generally to the procedural requirements governing the calling of expert evidence (notice and summary).

Held

The Supreme Court of Appeal held that the High Court did not err in its substantive assessment of the respondent’s loss of earning capacity, including its conclusion that the respondent would have written and passed the required examinations, obtained specialist registration, entered private practice, and earned at a level broadly consistent with a middle-tier neurosurgeon in Johannesburg private practice, subject to appropriate contingencies.

It held that the High Court properly exercised its discretion in excluding opinion evidence sought from Professor Farrell as expert evidence where the Fund had failed to comply with procedural requirements, and in refusing a postponement sought to cure that failure at a late stage.

It held that there was no basis to interfere with the High Court’s treatment of residual earning capacity, as the evidence did not support realistic employability on the open labour market given the respondent’s cognitive impairments and other constraints.

It held that an arithmetic error in the High Court’s application of the contingency deduction required correction, resulting in a modest reduction of the final amount.

It held that the Fund’s unreasonable lack of preparation and conduct of the defence materially and unnecessarily lengthened the trial, justifying a special costs order for part of the trial on an attorney-and-client scale, but not on the more punitive attorney-and-own-client scale.

LEGAL PRINCIPLES

The judgment applied the principle that, once it is established that an accident has rendered a plaintiff unable to work in their profession, the assessment of what would have been earned is primarily a matter of quantification, not causation, and that in quantifying future loss a court may consider future possibilities and is not confined to outcomes proved as probabilities.

It affirmed that trial courts enjoy a wide discretion and latitude in assessing damages for loss of earning capacity due to the inherent imponderables in forecasting future career trajectories and earnings, and that an appellate court will not readily interfere absent demonstrable misdirection, aside from correcting a clear arithmetic error.

It applied the procedural principle that expert opinion evidence must be introduced in accordance with applicable procedural requirements, including timely notice and summaries, and that a trial court may, as a matter of discretion, exclude such evidence and refuse postponements where a party’s non-compliance results from dilatoriness and unreasonable lack of preparation.

It applied the costs principle that litigation conduct may justify a punitive costs order where a party’s unreasonable conduct causes unnecessary trouble, expense, or prolongation of proceedings, and that a public body administering public funds bears a responsibility to litigate efficiently and responsibly; however, it recognised the Supreme Court of Appeal’s caution in granting the most punitive scale of costs (attorney and own client) absent fuller development of the jurisprudential basis for such orders.

Road Accident Fund v Klisiewicz (192/2001) [2002] ZASCA 57 (29 May 2002)