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[2018] ZASCA 90
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Boutell v Road Accident Fund (324/2017) [2018] ZASCA 90; 2018 (5) SA 99 (SCA) (31 May 2018)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 324/2017
In the matter between:
LEON
ST LEGER BOUTTELL
APPELLANT
and
ROAD
ACCIDENT FUND
RESPONDENT
Neutral
citation:
Bouttell
v RAF
(324/2017)
[2018] ZASCA 90
(31 May 2018)
Coram:
Navsa,
Majiedt and Mbha JJA and Plasket and Hughes AJJA
Heard:
14
May 2018
Delivered:
31
May 2018
Summary:
Delict
- Road Accident Fund - damages – claim for loss of earnings –
prior to accident appellant contributed towards
a retirement annuity
fund – whether voluntary contributions towards such retirement
annuity fund can be claimed as loss of
earnings.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Holland-Mϋter AJ sitting
as
court of first instance):
The
appeal is dismissed with costs including the costs of two counsel.
JUDGMENT
Hughes
AJA (
Navsa,
Majiedt and Mbha JJA and Plasket AJA
concurring):
[1]
Mr Leon St
Leger Bouttell, the appellant, an electrical engineer by profession,
was very successful in the electrical instrument
and automation
domain. Since March 2006 he started up and ran, as owner and general
manager, two businesses, namely Exel Electrics
& Instrumentation
and Le Roux, Bouttell & Associates. He was thus in a position to
dictate the manner and form of the monthly
salary he drew. It appears
from the expert reports filed that he earned dividends and salary in
a total amount of approximately
R4 million per year. From his gross
income, he elected to make contributions equivalent to 15% of his
gross earnings to a retirement
annuity fund.
[2]
On 25 July
2012 and along the Kathu/Deben road, in the district of Kathu, Mr
Bouttell was involved in a motor vehicle collision.
As a result of
the collision he sustained bodily injuries for which he instituted a
claim against the Road Accident Fund (the RAF),
a statutory body
established under the Road Accident Fund Act 56 of 1996 (the RAF Act)
to administer the compensation system envisaged
by national
legislation. The RAF conceded liability on the merits in favour of Mr
Bouttell and the trial on quantum was scheduled
to proceed in the
Gauteng Division of the High Court, Pretoria. On the scheduled date
the parties engaged in settlement negotiations
and settled all heads
of damages, save for that of future loss of earnings. In respect of
future loss of earnings the parties presented
argument to the court a
quo based on the pleadings before the court, together with
calculations of their respective actuaries,
which they accepted to be
correct. The High Court found that there is a distinction between
contributions to an employer pension
fund and voluntary contributions
to a retirement annuity fund for purposes of calculating loss of
earnings. In this regard it upheld
the RAF’s contentions that
the contributions to a retirement annuity fund are not to be taken
into account in a claim for
loss of earnings. The issue in this
appeal is whether the aforesaid conclusion is correct.
[3]
Section
17(4) of the RAF Act imposes a cap on the limitation of claims for
loss of income or loss of support. It reads as follows
in respect of
a claim for loss of income:
‘
17
Liability of the Fund and agents
(1)
The Fund or an agent shall-
.
. .
be
obliged to 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 at any place within the Republic, if the injury
or death is due to the negligence or other wrongful
act of the
driver…
. . .
(4)
Where a claim for compensation under subsection (1) –
…
(c)
includes a claim for loss of income or
support, the annual loss, irrespective of the actual
loss, shall be proportionately
calculated to an amount not exceeding-
(i)
[Rx] per year in the case of a
claim for loss of income; and
(ii)
[Rx] per year, in respect of
each deceased breadwinner, in the case of a claim for loss of
support.’
[4]
The amounts
referred to in section 17(4)(
c
)(i)
and (ii) of the RAF Act are adjusted quarterly and determined by
notice in the Government Gazette in terms of sections 17(4A)(
a
)
and 17(4)(
b
).
Hence, the amount to be utilised in calculating the loss of earnings
in 2012, being the year in which the collision occurred,
is that
which was last published in the notice prior to the date on which the
cause of action arose. This would be R196 636
per year as per
the notice.
[5]
In the
court a quo Holland-Mϋter AJ accepted the correctness of the
actuarial calculations of Gregory Whittaker of Algorithm
Consultants,
who conducted a calculation on behalf of the appellant, and that of
Gerald Jacobson, for the RAF. Mr Whitaker calculated
the appellant’s
future income, including his contributions to the retirement annuity,
to be R6 578 936. Mr Jacobson
calculated the appellant’s
future income, excluding the contributions to the retirement annuity,
to be R3 539 448.
The court a quo made an award for future
loss of earnings in the amount of R3 539 448.
[6]
Mr Marais,
counsel for the appellant, contended that claimants such as the
appellant, who voluntarily contributed to a retirement
annuity fund
were discriminated against in that they were placed at a disadvantage
and prejudice by not being able to include their
contributions to an
annuity fund in a claim for loss of earnings. Such discrimination, he
contended led to the RAF not adhering
to its constitutional duty as
envisaged by the Act, in compensating a claimant in full. This is so,
because the retirement annuity
fund contributions were not taken into
account when calculating the compensation claimable for loss of
earnings as were the pension
fund contributions. In the
circumstances, so the arguments goes, the appellant was being
discriminated against and his rights in
terms of sections 1(
a
),
7(1) and 9 of the Constitution of the Republic of South Africa 108 of
1996 were being violated.
[7]
Mr Marais
was at pains to point out that a retirement annuity fund and a
pension fund were one and the same. I do not agree. I refer
to the
Income Tax Act 58 of 1962 (the Income Tax Act), where a retirement
annuity fund is defined as
‘
any
fund (other than a pension fund, provident fund or benefit fund)
approved by the Commissioner’
.
This definition was fortified by the pronouncement made in
Commissioner
for Inland Revenue v Milstein
1942 TPD 279
at 287 where Millin J stated:
‘…
Annuities differ from other
investments
in that the capital sum invested is not returnable when the annuity
ceases to be payable. Baron Watson’s description of an
annuity
in
Foley v
Fletcher
(5H.
and N. 769, 117 R.R at p.978) is thus summarised in 17 Hailsham,
sec.378, p.181: “An annuity is an income purchased with
a sum
of money or an asset which then ceases to exist, the principal having
been converted into an annuity.” The test,
in determining
whether a series of annual payments amount to an annuity, is whether
the principal continues to exist as a debt
or is liquidated when the
transaction takes place. If it is liquidated the payment constitutes
an annuity.’ [My emphasis]
The
dictum was adopted by this court in
Kommissaris
van Binnelandse Inkomste en ’n Ander v Hogan
1993 (4) SA 150
(A). When one subscribes to a retirement annuity fund
projections are often based on calculated future date of return,
typically
what one would expect from an investment.
[8]
It is
evident, as indicated above, that a retirement annuity fund is not a
pension fund, but rather a form of investment. Contributions
to an
employer pension fund make up part of one’s employment
benefits, whilst contributions to a retirement annuity do not.
[9]
This court,
in
Dippenaar
v Shield Insurance Co Ltd
1979
(2) SA 904
(A), considered whether the pension deduction from the
claimant’s earnings and the contribution made by his employer
toward
a pension, arising from his contract of employment, could be
excluded from his earnings, income or salary. Rumpff CJ at 917 to 920
examined the leading authority from the House of Lords of
Parry
v Cleaver
(1969) 1 All ER 555.
Relying on the dicta in
Parry
he upheld the lower court stating the following at 920D-E:
‘
When
capacity to earn is sought to be proved by the plaintiff by means of
a contract of employment, the monetary value of the contract
can only
be assessed when one looks at the contract as a whole. In this regard
it is clear that, if in terms of such contract there
is a compulsory
deduction from salary plus a contribution by the employer in order to
pay the employee money as sick leave or as
a pension, it is the
intention of the parties that that money shall be paid when it is
due, in terms of the contract. In fact the
“income” of
the employee is in terms of the contract not confined to his salary…
but includes also sick pay
or pension when such pay or pension is
due. If monetary value is sought to be put on the earning capacity
based on this contract,
every benefit received under the contract,
such as a pension, must therefore be considered, as was done by the
trial Court in the
present case.’
[10]
Quoting
directly from the court a quo’s judgment, Rumpff CJ, at 921A-B,
associated himself with the view that one could not
compare a pension
to a benefit that is
‘
deemed
to have been purchased’
.
Thus, if a claimant purchases a benefit, such as a retirement annuity
in the present case, and he does so voluntarily and unconnected
to an
employment contract, his contributions or payments in relation to
such makes it an investment or purchase of a benefit that
cannot be
recovered from the RAF. The reasoning, in my view, is that a
negligent third party cannot be liable to compensate a claimant
who
voluntarily opted to attain a benefit, irrespective of whether that
third party was negligent. This is so because the voluntary
purchase
of the benefit does not cancel out the benefit when the delict is
committed.
[11]
In my view,
the court a quo was correct when it concluded that ‘provisions
for the future’, such as an investment cannot
be taken into
account when calculating future loss of earnings for the purpose of
provisions of the RAF Act.
[12]
I now turn
to deal with the issue of discrimination raised by the appellant. The
distinction between claimants whose employers contribute
to their
pension funds as part of their contracts of employment and those who
do so voluntarily was categorised by Mr Marais as
discrimination.
That is not correct while the concepts of equity and discrimination
are linked, discrimination concerns treating
one person (or groups of
persons) differently to another on the basis of inherent
characteristics or attributes such as race, gender
or the other
grounds listed in s 9(3) of the Constitution. What is alleged here is
a differentiation in treatment that is unrelated
to any inherent
characteristic or attribute having the potential to impair the
dignity of a person. See
Harksen
v Lane NO & others
[1997] ZACC 12
;
1998 (1) SA 300
(CC) paras 47 and 50;
City
of Johannesburg Metropolitan Municipality v Blue Moonlight Properties
39 (Pty) Ltd & another
2011 (4) SA 337
(CC) para 58. The right to equality may be
implicated, but not the right to be free from unfair discrimination.
[13]
Iain Currie
and Johan de Waal in
The
Bill of Rights Handbook
(5 ed) para 9.1 (at 230) state that ‘[a]t its most basic and
abstract, the formal idea of equality is that people who are
similarly situated in relevant ways should be treated similarly’.
In this case, it cannot be said that a person like the
appellant
whose employer does not contribute to a pension fund for the employer
as part of his or her remuneration is in a similar
position to an
employee whose employer does contribute to a pension fund for the
employee as part of his or her remuneration. All
employees are,
however, treated equally in the sense that in order to determine
their future loss of earnings, a court considers
the employment
contract as a whole. Consequently, the discrimination argument must
also fail.
[14]
The general
rule of costs following the result ought to apply in these
circumstances.
[15]
I make the
following order:
The
appeal is dismissed with costs including the costs of two counsel.
___________________
W Hughes
Acting
Judge of Appeal
APPEARANCES
For
the Appellant:
H B Marais SC
Instructed
by:
Frank Botha & Vickers Attorneys
Claude
Reid Attorneys, Bloemfontein
For
the Respondent:
C van Jaarsveld with L Eloff
Instructed
by:
Diale Mogashoa Inc., Pretoria
McIntyre
van der Post, Bloemfontein