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[2013] ZAWCHC 131
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Miller v Road Accident Fund (A 134/2013) [2013] ZAWCHC 131 (12 September 2013)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE
TOWN)
In the application between:
Case no: A 134/2013
QUINTON EDWARD GRANT MILLER
..................................................................
Appellant
v
ROAD ACCIDENT FUND
..................................................................................
Respondent
Court
:
Mr Justice
Bozalek, Mr Justice Binns-Ward
et
Mrs Justice Cloete
Heard
:
26 July
2013 and 1 August 2013
Delivered
:
12
September 2013
JUDGMENT
CLOETE J
:
Introduction
:
This is an appeal against orders made
by the court
a quo
in respect of the appellant’s past
and future loss of earnings which, it is alleged, were caused as a
result of injuries
that he sustained in a motor vehicle collision
that occurred on 21 June 2004. The appeal is brought with the
leave of the
Judge President, who heard the application for leave to
appeal after the trial judge (Ngewu AJ) had completed her temporary
tenure
on the Bench. It is no longer in dispute that the negligence
of the insured driver concerned was the sole cause of the collision.
The amount claimed at trial by the
appellant (‘
Miller’
) for past loss of earnings
was R2 099 410.85 and the amount awarded was R90 670.86.
The amount claimed for future
loss of earnings was R4 239 700
and no amount was awarded in respect thereof. The award by the trial
court of the sum
of R90 670 as a component of the claim for
past loss of earnings is not in issue on appeal, and in fact was an
amount conceded
by the respondent at the trial. The appeal in
respect of past loss of earnings thus concerns only the question
whether Miller
should have obtained an award in an amount exceeding
that made by the court a quo.
There was initially a purported
cross-appeal by the respondent (‘
the RAF’
) but by
the time of the hearing that was effectively abandoned. The
cross-appeal was in any event not competently lodged, given
that
leave to cross-appeal had not been obtained.
The claim for loss of earnings (both
past and future) was introduced in the action only some two years
after the statutory claim
for compensation had been submitted in
2006. The major part of the claim was predicated on the alleged
consequences of the extent
of the depression suffered by Miller
post-collision which, it was contended, affected his ability to
properly carry out his work
as an architect on a major building
project (The Decks) in which he was involved at the time of the
collision and during the
ensuing three years. Miller’s case
was that hisdeficient performance on The Decks caused him
reputational damage, which
in turn impacted negatively on his
ability to obtain more remunerative work thereafter.
A fundamental difficulty confronting
this court on appeal is that many of the material factual findings
which we would expect
in order to determine the issues before us are
not apparent from the judgment of the trial court. Although the
evidence and the
respective parties’ contentions were
summarised at some length, the trial court did not analyse them in
any meaningful
way, refrained from making credibility findings in
respect of the lay witnesses, and similarly refrained from
determining the
areas of conflict in the expert opinion evidence as
well as to what extent such evidence was admissible. We thus,
somewhat unsatisfactorily
for an appeal court, have to work with
something of a blank canvas and must consequently determine the
appeal on a purely objective
impression of the totality of the
admissible evidence viewed against the inherent probabilities.
The award by the trial court of
R90 670.86 for past loss of earnings was premised on a
concession by the RAF that such amount
might properly be awarded. It
related to overtime payments made by the close corporation, through
which Miller (as sole member)
conducted his architectural practice,
to certain employees and a colleague for extra work done on The
Decks, as well as an unrelated
project in Durban, because of
Miller’s physical indisposition after the collision.
This notwithstanding, the trial
court, however, refused to make any award in respect of future loss
of earningssolely on the basis
of the approach set out in
Rudman
v Road Accident Fund
2003 (2) SA 234
(SCA) especially at paras
[11] and [13]. In
Rudman
the court held that proof of a loss
sustained by a corporate entity through which the plaintiff
conducted his business and in
which he had a proprietary interest
did not constitute proof of the diminution, if any, in the
plaintiff’s patrimony. However
the Supreme Court of Appeal
made it clear that its conclusion was based on the particular facts
of that case which are entirely
distinguishable from those in the
present matter. In the current matter, unlike the position in
Rudman
, Miller’s close corporation was nothing other
than a conduit for his sole source of income which was the feesthat
he generated
as an architect. At the commencement of argument before
us senior counsel for the RAF (who did not appear in the court a
quo)
abandoned reliance on
Rudman
and thus this aspect of the
matter requires no further comment.
Although treated in the court
a
quo
as a claim for ‘
future loss of earnings’
it was accepted during argument on appeal that this head of damages
is more properly described as a ‘
loss of earning capacity’
:
see for example
Santam Versekeringsmaatskappy Bpk v Byleveldt
1973 (2) SA 146
(AD) at 150B-C;
Southern Insurance Association
Ltd v Bailey NO
1984 (1) SA 98
(A) at 111C-D.
Earning capacity, as the trial court
correctly recognised,
may
constitute part of a person’s
patrimonial estate and, if it does, its loss may be compensable to
the extent that the loss
is quantifiable as a diminution in the
value of the estate: see
Dippenaar v Shield Insurance Co Ltd
1979
(2) SA 904
(A) at 917B-D.
Miller’s complaint is not that
he is unable (apart from the six month period immediately following
the collision, which
has been addressed by the aforementioned award
of R90 670 made by the trial court) to practice as an architect
as a result
of the injuries that he sustained in the collision and
his consequent severe depression; it is that because of the alleged
consequent
damage to his reputation he is not able to earn what he
could have earned had there been no collision. This claim is divided
into two parts, namely past loss of earnings which is a form of
special damages, and future loss of earning capacity which, as
mentioned, is a category of general damages. In order to assess
Miller’s claim I shall first address factual causation
and
thereafter legal causation which will in turn include a
consideration of the two heads of damages.
Factual
Causation
:
The test for factual causation was
explained in
International Shipping Co (Pty) Ltd v Bentley
1990 (1) SA 680
(AD) at 700E-G as follows:
‘
The
first is a factual one and relates to the question as to whether the
defendant’s wrongful act was a cause of the plaintiff’s
loss. This has been referred to as “factual causation”.
The enquiry as to factual causation is generally conducted
by
applying the so-called “but-for” test, which is designed
to determine whether a postulated cause can be identified
as a
causa
sine qua non
of
the loss in question.In order to apply this test one must make a
hypothetical enquiry as to what probably would have happened
but for
the wrongful conduct of the defendant. This enquiry may involve the
mental elimination of the wrongful conduct and the
substitution of a
hypothetical course of lawful conduct and the posing of the question
as to whether upon such an hypothesis plaintiff’s
loss would
have ensued or not. If it would in any event have ensued, then the
wrongful conduct was not a cause of the plaintiff’s
loss.’
It is not in dispute that prior to
the collision Miller was a gifted, accomplished architect with a
growing practice of his own
and particular expertise in the
restoration of historic buildings. The Decks project was Miller’s
brainchild and he had
conceptualised it over a number of years
before approaching a property development company with his idea.
The project involved combining four
historical buildings in the Cape Town CBD into one complex, while at
the same time preserving
the facades of two of the buildings which,
being over 100 years old, fell under the auspices of the Heritage
Council, with the
attendant red tape that heritage authorisation
entails. It was also a large, difficult project that would involve
retaining street
level retail space, above which would be added nine
parking levels and six levels of upmarket residential units. The RAF
did
not dispute the evidence that The Decks was a pioneer project in
the ongoing rejuvenation which was expected to last some years
in
the Cape Town CBD; nor did it dispute that prior to the accident
Miller had performed satisfactorily on all other projects
for which
he had been appointed as architect. Miller had previously been a
partner in a large firm of architects with a national
practice but,
after the dissolution of that partnership due to financial problems,
he had started his own small practice approximately
five years
before the collision. At the time of the collision the new practice
was staffed by Miller, a young architect employed
as his assistant,
two draughtsmen and Miller’s wife, who attended to the
administration. Although the gross income generated
by the new
practice grew steeply during the aforementioned five year period,
The Decks was the first project of a significant
scale in which
Miller was engaged after he started his own practice.
Miller was severely injured in the
collision and was bedridden for a period of three months thereafter
at a crucial stage of the
project, when he wouldotherwise not only
have been actively involved in securing Heritage Council approval
but also intricately
involved in the pre-construction stage. The
weight of the evidence was further that Miller’s rolewas
pivotal for the successful
advancement of the project to completion
and that in particular this lay in the fact that much of the concept
was ‘
in his head’
.
There can be little doubt that Miller
had a pre-existing psychological vulnerability which, according to
him, was severely exacerbated
to the point of debilitating
depression when he found himself unable to competently fulfil his
role in The Decks project as a
result of the physical injuries that
he had sustained in the collision. The opinion of both of the
psychologists who testified
for the parties was that the collision
itself would certainly have caused acute psychological distress to a
person with Miller’s
‘
goal-directed propensities’
.
In essence, Miller’s mood and self-esteem were directly
dependent upon his professional performance. If his performance
was
compromised, so too were his mood and self-esteem. Moreover, because
of his particular psychological vulnerability the consequences
to
him psychologically were more severe than they would have been to
the average individual.
It was Miller’s testimony that
The Decks project was important to him because it was to be executed
in the most historically
sensitive area in the Cape Town CBD and was
a pilot project which would also have brought him not only
professional esteem, but
would also have put him on the map for
future developments of this nature. There are only a handful of
architects who have this
speciality. This evidence was not
challenged.
Miller testified that after the
accident he found it a ‘
nightmare’
going back to
work because ‘
suddenly from this dream and this excitement
there was massive pressure to get the Council drawings finished, to
get Heritage
approval, to get a contractor on site. And from this
dream it suddenly became a huge pressure situation’.
He
would attend meetings and return to his office with lists. He said
‘
I found myself looking at these lists and not knowing what
to do with them. I felt paralysed. I felt an inertia. I found it
hard
to delegate. I didn’t know where to start…they
were long lists and I found myself panicking because I didn’t
know how to get from point A to point B. Previously I was an
organised person and I didn’t panic and I could structure
things. And I was quietly confident. But I found myself having been
out of the picture for three months. I was shocked to come
back into
it because there was so much activity and so much work to be done
that I didn’t know how to instruct Barak
[his employee who
stepped in to assist]…
.I lost the confidence to say we
need to do this… I remember I would lie down on the floor
under the desk and I would go
to sleep and my wife would wake me up
after half an hour. And I would get back up and she would bring me
some coffee and I would
start looking at these lists again and then
the phone would ring and it would be Mike Bradshaw
[the project
manager]
. Can I go to site. Can I attend a meeting. And I didn’t
have the stamina that I had before... I also was still in pain and
…
I would get headaches … my stomach would go into a knot …
I just wouldn’t know how to cope with
it so I started to lose
my self-confidence and I didn’t want anyone to see that
because they previously had been looking
up to me to lead the design
team. Suddenly I was on the back foot. I was playing catch-up in a
situation that I couldn’t
catch up so every week I was getting
more and more panicky … I wasn’t closing the gap. The
gap was getting bigger
and bigger.’
The psychological consequences to
Miller were corroborated by the testimony of his wife and Mr Rob
Kane (‘
Kane’
),who was a director of the property
development company involved in The Decks project. Although Kane was
obviously not able to
directly attribute the change in Miller to the
sequelae
of the collision, he was consistent in his testimony
that after Miller returned to work following the collision ‘…
he
was different. It took me some months to realise and I realised two
things. One is the detailed design work that we thought
was
happening was not happening. And two, Quinton Miller was very
different. He had lost a lot of – it seemed as if he
had lost
a lot of confidence and I think the term I used once, which I stand
by, is that that accident had knocked the stuffing
out of him. There
was a very material change in the man’.
Kane explained why the developer had
not replaced Miller when the problems started surfacing. He
testified that not only was it
hoped that Miller would recover,but
that it was a complicated development and much of the information
was in Miller’s head.
To have another architect replace him
would have given rise to serious financial implications (an enormous
fee to the new architect);
there was the risk that the new architect
would not understand some of the designs; and another architect
would have been reluctant
to take over because if any problems had
arisen he would have been the one ultimately responsible for the
final product. It was
Kane’s testimony that due to Miller’s
condition post-collision the information flow (which increased as
the project
progressed) suffered materially although the contractor
was also causing delays and the structural engineer minor delays.
The
late information flow gave the contractor the excuse to blame
Miller for its own lack of performance. Construction was scheduled
to start in June 2004 and to be completed in July 2006, but the main
construction only started in February 2005 and the project
was only
ultimately completed in July 2007. It was Kane’s evidence that
Miller’s lack of performance post-collision‘
was not
the only problem, but he was a major problem’.
It was Miller’s testimony that
his lack of performance on The Decks resulted in Kane refusing to
appoint him as an architect
in future projects; that word got around
in the industry that he had become a high risk architect and this
similarly resulted
in him not being able to secure remunerative work
of the same standard; and that Mr Chico Mereilles (‘
Mereilles’
),
who had wished to appoint him as an architectural subcontractor on a
large commercial project, had decided against doing so
after
contacting Kane for a reference. This evidence was corroborated in
all material respects by both Kane and Mereilles. At
the risk of
repetition it was this reputational damage which, it was alleged,
resulted in the loss sustained by Miller.
It was the RAF’s stance that
Miller was already significantly depressed before the collision;
that after the collision he
was confronted by various serious but
unrelated personal stressors which had, at the very least,
contributed to his later depression;
and that the true reason for
his fallout with Kane was an ongoing fee dispute which ultimately
resulted in him threatening to
walk off site and paying attention to
another project when he should have been concentrating on The Decks.
It was also contended–
variously –that Miller had indeed
performed on the project; but to the extent that he might not have
performed this had
only played a minor role in the delays and had
not significantly increased costs in the completion of the project.
However, even if Miller was depressed
before the collision there was no evidence to indicate that his
condition had impacted on
his prior professional performance in any
way. In fact shortly before the collision he had completed a show
flat for The Decks
in record time and Kane in his testimony
described Miller’s performance as exemplary. The weight of the
evidence was rather
that the cracks started to show as soon as
Miller was physically able to return to work on the project after
the collision and
endured for a considerable period of time
thereafter. It was also common cause that he was still being treated
for depression
when the trial took place in 2010. In addition,
Miller had dealt with a number of harsh personal setbacks in the
past, but none
of these had affected his work as an architect.
Certainly, those that he faced post-collision (and after his return
to work)
would no doubt have had some effect on his psychological
condition, but the point is that the origin of his heightened state
of psychological vulnerability coincided with his return to work
after the collision.
There was indeed a dispute over fees,
but the RAF’s attempt to portray this as a burning issue from
the inception of the
project cannot be accepted. It was the
testimony of all of the witnesses who have direct knowledge of the
construction industry,
namely Miller, Kane and Mereilles, that tough
fee negotiations are par for the course in this type of project. It
was also the
evidence of both Miller and Kane that after the initial
fee tussle in 2004 (which pre-dated the collision and the outcome of
which Miller, although not happy, accepted) the issue only really
reared its head again in the latter half of 2006. This was at
a time
when all involved in the project were on edge as a result of the
delays and significantly increased costs. It seems clear
that no-one
involved had anticipated what was to come as the development
progressed, and that when the shoe really started to
pinch it became
a matter of protecting oneself against claims while at the same time
attempting to extract as much financial
benefit as possible.
Although there were tensions between
Miller and Kane these were not only financial. There was also the
evidence of Mereilles that
Kane had never told him that he felt
blackmailed by Miller when he threatened to walk off The Decks
project over the fee dispute
in 2006; nor that Kane had felt angry
that Miller by that stage was focusing on a project other than The
Decks. His testimony
was that Kane’s complaint related only to
Miller’s lack of performance on the project in the period
following the
collision.
Although at liberty to do so the RAF
did not adduce any evidence directly contradicting the testimony of
Miller and his witnesses
on these aspects. Instead it relied largely
on the testimony of Mr Trevor Foster, an expert accountant who
appears to have
assumed the role of what can best be described as a
private investigator and who attempted to interpret the construction
records
relating to The Decks in conjunction with interviews with
Miller, Kane and various others in support of the RAF’s
version.
Much of Foster’s testimony on these aspects fell
outside of his area of expertise, although some of his evidence
concerning
the computation of Miller’s claim for loss of
earning capacity was valuable and led to it being substantially
reduced.
In addition, the later, qualified opinion of the RAF’s
expert psychologist, Mr Loebenstein, that Miller’s
post-collision
psychological condition might well have been
attributable to various factors raised by Foster, cannot be
accepted, given that
it was based on conclusions reached by Foster
that fell outside of his field of expertise. The same applies to the
evidence of
the RAF’s expert industrial psychologist, Mr
Hannes Swart, who
inter alia
expressed opinions on the degree
of complexity of the project, something which he similarly was not
qualified to testify about.
Having regard to the aforegoing I am
persuaded that, viewed against the totality of the admissible
evidence as well as the inherent
probabilities, Miller has succeeded
in proving that the collision and its
sequelae
were the
direct cause of the psychological condition in which he found
himself thereafter. That however is not the end of the
matter, since
it is nonetheless necessary to consider whether the loss allegedly
suffered by Miller is sufficiently closely linked
to the
sequelae
of the collision.
Legal causation
:
In
International Shipping Co (Pty)
Ltd v Bentley
(
supra
) the court explained the test for
legal causation at 700H-701C as follows:
‘
On
the other hand, demonstration that the wrongful act was a
causa
sine qua non
of
the loss does not necessarily result in legal liability. The second
enquiry then arises, viz whether the wrongful act is linked
sufficiently closely or directly to the loss for legal liability to
ensue or whether, as it is said, the loss is too remote. This
is
basically a juridical problem in the solution of which considerations
of policy may play a part. This is sometimes called “legal
causation”. (See generally
Minister
ofPolice v Skosana
1977
(1) SA 31
(A) at 34E - 35A, 43E - 44B;
Standard
Bank of South Africa Ltd vCoetsee
1981 (1) SA 1131
(A)
at
1138H - 1139C;
S
v Daniëls en 'n Ander
1983
(3) SA 275
(A) at 331B - 332A;
Siman
& Co (Pty) Ltd v BarclaysNational Bank Ltd
1984
(2) SA 888
(A) at 914F - 915H; S v Mokgethi en Andere, a recent
and hitherto unreported judgment of this Court, at pp 18 - 24.)
Fleming
The
Law of Torts
7th
ed at 173 sums up this second enquiry as follows:
'The
second problem involves the question whether, or to what extent, the
defendant should have to answer for the consequences which
his
conduct has actually helped to produce. As a matter of
practical politics, some limitation must be placed upon legal
responsibility, because the consequences of an act theoretically
stretch into infinity. There must be a reasonable connection between
the harm threatened and the harm done. This inquiry, unlike the
first, presents a much larger area of choice in which legal policy
and accepted value judgments must be the final arbiter of what
balance to strike between the claim to full reparation for the loss
suffered by an innocent victim of another's culpable conduct and the
excessive burden that would be imposed on human activity if
a
wrongdoer were held to answer for all the consequences of his
default.'
During argument before us Miller’s
claim for past loss of earnings was revised and reduced to two
possible scenarios, and
amounts were put forward on the basis of
each scenario. It was suggested that the mid-point between these two
scenarios represented
the appropriate amount to be awarded.
The first scenario, on which an
amount was postulated of R2 578 494, was described by
Miller’s senior counsel
himself as ‘
overly
optimistic’
and ‘
the top point’
and it
was not suggested that this scenario should be adopted. To my mind,
it would, in the circumstances, be artificial to use
the first
scenario to arrive at any ‘
mid-point’
. The second
scenario – clearly more realistic – was calculated on
the basis of three categories of past loss of earnings
and an amount
was postulated of R703 249.
The first category related to an
amount of R270 466 (i.e. R416 102 less 35% tax) which
Miller claimed he would have
received from the development company
represented by Kane (and which I will refer to as ‘
Vunani’
)
at the end of The Decks project had he fully performed. It was
conceded by Miller’s senior counsel that this amount
represented an alleged contractual entitlement based on the
increased cost of the project.
This claim faces aninsurmountable
difficulty. On Miller’s own version he failed to pursue the
enforcement of his contractual
rights against Vunani.Miller’s
counsel sought to argue that a delictual claim co-existed with the
contractual claim and
that it was a matter of choice which to
pursue. While it is correct that the same set of facts can give rise
to a damages claim
that can be formulated either incontractor in
delict (see e.g.
Holzhausen v Absa Bank Ltd
2008 (5) SA 630
(SCA), at paras [5] – [7]), thataxiom does not support
the notion that a person canelect
to forego enforcing a contractual
claim and choose to recover its value by surrogate means as
delictual damages. Indeed, under
questioning by the bench, Miller’s
counsel were driven to concede that the contractual claim formed
part of Miller’s
patrimony and that to succeed in recovering
its value in a delictual action he would have to prove not only the
value of the
claim, but also that Miller’s abilityto exact it
against Vunani had been lost as a consequence of the negligent and
wrongful
actions of the RAF. Miller not only did not pertinently
plead the claim (a broadbrush reference in the amended particulars
of
claim to the content of the reports of his expert accountant Mr
Eric De Kroon, and actuary Mr AlexMunro, did not suffice in this
regard), he came nowhere discharging the onus to establish it.
It was also in any event apparent
from Kane’s evidence that, apart from his dissatisfaction with
Miller’s performance,
he did not agree that Miller would
otherwise have been entitled to payment of this amount. Both Kane
and Miller testified that
there was a dispute towards the end of the
project about whether or not he was entitled to a fixed fee or
whether his fee was
to have varied according to the contract sum as
finally determined. The high water mark of Kane’s evidence was
that, had
Miller performed well, he ‘
believed’
that he would nonetheless have paid Miller something approximating
the additional amount as it would have been fair and reasonable
to
do so. That evidence was entirely conjectural. In the context of a
project that was,by the advanced stage of execution that
had been
reached when the question of additional payment would have presented
itself, plainly going to result in a financial
loss to Vunani, it is
inherently improbable that the company would have been inclined to
make
ex gratia
additional payments to professionals engaged on
it. The evidence is that additional payments were indeed made to
Bradshaw, the
project manager, and to Miller. However these
additional payments were made because Vunani wished to keep them
engaged on the
project after the period within which it had been
expected the work would be completed had elapsed and not as a matter
of generosity,
or a token of appreciation. In Miller’s case it
is evident that Vunani’s directors were of the view that it
would
be considerably more expensive to the company were Miller to
walk away from the project thereby forcing them to employ a
replacement
than it would be to accede to Miller’s demand for
continued payments of R75 000 per month for the period December
2006 to March 2007.
I would therefore make no award in
respect of what I have labelled the first category of Miller’s
claim for past loss of
earnings.
The second category of the claim for
past loss of earnings related to the amount that Miller claims he
would have been paid by
Mereilles had the latter not been dissuaded
from appointing him on a project after a poor reference from Kane.
Mereilles is an architect who had
been acquainted with Miller professionally for a number of years.
Mereilles testified that during
2007 he was contacted by Miller who
was seeking work. Mereilles was looking to appoint a senior
architect in a subcontractor
capacity to assist him with a large
commercial project called The Pepper Club, also in the Cape Town
CBD. Mereilles had occasion
to discuss this with Kane who made clear
his dissatisfaction with Miller’s performance on The Decks. As
a direct result
of this conversation Mereilles decided against
appointing Miller. Had Miller been appointed he would have been paid
between R25 000
and R30 000 per month for a period that
was envisaged at that stage to endure for 12 months. However it
transpired
instead that the project lasted three years (i.e. 2008 to
2010). Mereilles testified that there was a ‘
very high
chance’
that if he had been satisfied with Miller’s
performance he would have retained him for the full three year
period.
Miller’s claim for loss of
income from Mereilles was predicated on him having been employed at
an average monthly fee of
R27 500 per month for the full three
year period, which equates to R257 400 after deduction of 60%
for ‘
sales and overheads’
and 35% tax. These were
the percentage deductions on which Miller himself made his
calculations.
In my view Miller succeeded in
establishing that but for the reputational damage he had suffered as
a consequence of his deficient
performance on The Decks he would
probably have been employed by Mereilles. I also consider that it
has been established that
his average gross monthly remuneration in
such employment would have been R27 500. It would be
appropriate to subject any
award calculated on the aforegoing basis
to a significant deduction for contingencies; cf.e.g.
A A Mutual
Insurance Association Ltd v Maqula
1978 (1) SA 805
(A) at
813C-D. This is so particularly having regard to the computation of
the claim with relation to the three year period involved
in the
completion of the Pepper Club.
It was not canvassed in evidence why
the Pepper Club project ran over by two years, nor was there any
evidence about what steps
could or should have been taken to shorten
the length of the project. It is thus conceivable that had Miller
been appointed,
and performed, he may have been able to direct the
project to earlier completion with his particular skill and
experience. In
addition, one cannot entirely discount the
possibility that another, unforeseen event, occurring at any stage
of the Pepper Club
project, might have had a significantly negative
impact on Miller’s pre-existing psychological vulnerability,
which could
independently have affected his work performance.
Taking these factors into account it
would be appropriate, in my view, to apply a contingency deduction
of 40% to the net amount
Miller could have earned had he been
subcontracted for three years to Mereilles:
Total gross fee income at R27 500
per month
x 36 months (mid-2007/2008 –
2010) 990 000
Less
: 40% of R27 500 per
month x 24 months
264 000
726 000
Less
: 60% cost of sales and
overheads
435 600
290 400
Less
: 35% tax
101 640
188 760
The third category of the claim for
past loss of earnings is based on Kane’s evidence in chief
that had Miller performed
on The Decks he would have included him as
part of the professional team on three other projects in which
Vunani was engaged
during 2009 and 2010. These were Jewellery
Avenue, 14 Long Street and Wale Street Chambers. The architects
appointed were paid
R228 000 for Jewellery Avenue, R215 800
for 14 Long Street and, by the time of the trial in 2010, R230 750
for
Wale Street Chambers, totalling in all the sum of R674 550.
However during cross-examination Kane
accepted that it was normal business practice to ‘
diversify’
a professional team among projects, and that there was thus no
guarantee that Miller would have been the only architect appointed,
even though Kane was clear that Miller would have been capable of
the work (they were run of the mill projects) were it not for
his
post-collision condition. In addition it must be borne in mind that,
had Miller also been appointed by Mereilles, he would
have been
engaged in more than one project at a time over a period of at least
18 months (i.e. January 2009 until mid-2010).
Having regard to the aforegoing,
includingMiller’s pre-existing psychological vulnerability and
the fact that the effect
of his employment on the Vunani projects
has already been accounted as an adverse contingency in respect of
the Pepper Club based
computation, it would be appropriate to apply
a 35% contingency deduction to this category, with the
following result:
Total gross fee income for Vunani
projects (2009 – 2010) 674 550
Less
: 35% contingency deduction
236 093
438 457
Less
: 60% cost of sales and
overheads
263 074
175 383
Less
: 35% tax
61 384
113 999
The total net earnings from Mereilles
and Vunani is thus recalculated in the amount of
R303 000
(i.e.
R189 000 + R114 000). I do not believe that it is
appropriate to deduct the actual income earned by Miller over
the
same period. It can be accepted in his favour that he would have
been able to accommodate all of the work, given that his
actual work
over the period was relatively little.
Lest it might be thought that I have
only taken into account negative contingencies and made no allowance
for the possibility
that successful performance on The Decks project
might have kick-started Miller into a higher income earning bracket
on more
lucrative projects over the same period, I should perhaps
expressly record that this has not been the case. I have accepted
that
pre-collision Miller was regarded as a gifted architect with a
particular talent in an area in which he would only have had to
compete with a handful of others; that he had the necessary
professional contacts at both the Heritage Council and the local
authority; and that The Decks was a unique project at the time. To
be balanced against these factors, however, are the industry
statistics provided by an economist, Professor Bayat, which both
parties accepted and which reflected no fluctuation in earnings
in
the industry in 2008 but a reduction of 15% in 2009 and a further
reduction of 50% in 2010. Based on these statistics it is
reasonable
to assume that Miller would in any event have had to compete in a
falling market at least during 2009 and 2010.
It is recognised by our courts that
it is not necessary for damages to be assessed with mathematical
precision, and that a court’s
task in estimating damages is
always a difficult one: see
Pitt v Economic Insurance Co Ltd
1957 (3) SA 284
(DCLD) at 287D-F where it was said that:
‘
Basically,
one has evidence as to the plaintiff’s affairs, but when, in
addition, the future has to be scanned, the Court
is virtually called
upon to ponder the imponderable. However, no better system for
assessing damages has yet been evolved, and
the Court has to do the
best it can with the material available, even if, in the result, its
award might be described as an informed
guess. I have only to add
that the Court must take care to see that its award is fair to both
sides – it must give just compensation
to the plaintiff, but
must not pour out largesse from the horn of plenty at the defendant’s
expense.’
The aforementioned amount of R303 000
determined in respect of the claim for past loss of earnings falls
to be added to the
amount of R90 670 awarded by the trial
court, which is unaffected by the issues dealt with on appeal. The
total award for
past loss of earnings will therefore now be in the
amount of R393 670. (It should perhaps be noted that insofar as
mora
interest on the past loss of earnings award is concerned,
interest shall be payable on the aforementioned component of R90 670
with effect from 14 days after the date of the judgment of the court
a quo, and in respect of the balance of R303 000 with
effect
from 14 days after the date of this judgment.)
I shall now deal with Miller’s
claim for loss of earning capacity. During argument before us
Miller’s senior counsel,advisedly
in my view, abandoned any
reliance on a mathematical or actuarial approach and submitted that
it would be appropriate to make
a globular award which is fair and
reasonable in the circumstances. On the other hand senior counsel
for the RAF urged us to
make no award at all. However there can be
little doubt that Miller’s reputational damage in the years
that followed after
The Decks is sufficiently directly linked to the
effect of the injuries as not to be too remote. This
notwithstanding, and for
the reasons that follow, I am not persuaded
that Miller is entitled to compensation in an amount of anything
near to the sum
of R4.2 million claimed by him in the court
a
quo.
Miller had left another firm to
commence practice for his own account during 1999. The evidence was
that in the following five
year period leading up to the collision
his practice had grown in leaps and bounds and his income was on a
sharp upward trajectory.
However this is only to be expected when an
experienced professional starts a new practice and it does not
necessarily follow
that the trajectory, which started from a very
low base and by the time of the collision had still reached only a
relatively
modest level, would have continued. In a small practice
the capacity to increase earnings would become limited by resources
within
a reasonably short period. Only so much can be done within a
certain time by one person. There was no evidence to indicate that
Miller intended to expand his practice into a large concern. Indeed,
his evidence of his experience of over-extension at his
previous
firm would have provided a disincentive to following that course.
As regards future Vunani projects,
Kane’s evidence did not establish any reliable basis for
postulating an estimate of what
Miller might have earned going
forward. Although Kane clearly tried to put a positive spin on his
predictions, in reality they
boiled down to the following. There was
a project in Salt River where a feasibility study and preliminary
drawings had been completed.
Up to that point the architects had
worked on risk. The total value of the project was estimated to be
R230 million and
Kane’s testimony was that ‘
I
would say our chance of success is certainly more than 50%, probably
65, 70%, but it’s difficult to say. We do a lot of
abortive
work. This year I’ve probably looked at 20 projects, but not
all of them will come off… there’s another
[project]
in Maitland… low income residential… the building
value is about R7 million but it needs extensive renovation work
done to it’.
Kane estimated that, but for his performance
on The Decks, Miller would have received 50% of the work for any
Vunani project
in Cape Town going forward.
During cross-examination Kane
referred to the Salt River project as ‘
the R230 million
development that I am negotiating on now’.
His evidence
was further that ‘
now I am getting back into the market
because I believe by the time I have finished building those units
[i.e. in Salt River]
in 18 months, 2 years’ time, the
market will be back. And I hope I am right’.
He also
testified that ‘
I anticipate doing approximately
R110 million worth of development work in Cape Town per annum.
That may vary. It may be
larger, it may be smaller, it depends on
the projects that I find and the value of those projects. At the
moment I am looking
at one large project, for R230 million’
.
Kane’s predictions were thus at
best speculative and there was no other direct evidence to indicate
that Miller would in
the future have definitely obtained other
lucrative work.
In addition Miller’s claim for
future loss of earnings in the court
a quo
was based on the
assumption that he would retire either at the age of 65 in 2016 or
at 70 in 2021. At the time of trial in 2010
Miller was 59 years old,
and on his own version he thus anticipated working for a maximum of
a further 11 years.
The evidence was also that during the
period between The Decks and the trial Miller had in fact - albeit
largely unsuccessfully
– marketed himself, but had nonetheless
completed a project in Hout Bay, been involved in a hotel
development project in
Swellendam (which ground to a halt for
reasons unrelated to Miller), and had been the architect on a few
residential projects
(which also came to an end when the client
passed away). These setbacks cannot be laid at the RAF’s door.
There was also
no suggestion that Miller had not performed well on
these projects. It is thus probable that the reputational damage
which he
suffered as a consequence of The Decks is something that
Miller will be able to overcome and it accordingly has to be given
diminishing
effect over time.
Further the economic decline in the
industry would undoubtedly have played a role in Miller’s
future earning capacity and
in particular his involvement on large
commercial projects. Also, as previously mentioned, it is not a
given that Miller would
not have had a career setback as a result of
an unrelated event or events which would have impacted negatively on
his pre-existing
psychological vulnerability.
On the other hand there was the
evidence that other successful architects had been able to rely on
the momentum from prior large
projects to see them through the
economic downturn for the reason that these projects take so long to
design and build. Miller
had lost out on these opportunities
(particularly the surge of big commercial projects leading up to the
2010 FIFA World Cup)
and thus on the momentum which other architects
had relied upon going forward thereafter. It was also common cause
that Miller
was a gifted architect with a particular talent and it
was never suggested that he would in any event have been compelled
to
scramble along with mediocre professionals to secure work.
As to the late introduction of the
claim for loss of earnings in 2009, it was Miller’s evidence
that he had only come to
realise the full extent of the reputational
damage during 2008. I have no difficulty in accepting this despite
the RAF’s
contention that the entire claim was nothing other
than opportunistic.
In
Burger v Union National South
British Insurance Co
1975 (4) SA 72
(WLD) at 74H-75A it was
stated that:
‘
I
do not think, however, where the available evidence established a
likelihood of some fact, situation or event as a consequence
of the
collision which is incapable of quantification within narrow limits,
that I am obliged, because the
onus
is
on the plaintiff, to act on the possibility least favourable to her.
Causation is one thing and quantification is another, although
I
readily concede that it is not always possible to distinguish clearly
between them in cases like the present one. It has never,
within the
range of my knowledge and experience, been the approach of our
Courts, when charged with the assessment of damages,
to resolve by an
application of the burden of proof such uncertainties as I have
referred to. I am not dealing with a case in which
the plaintiff
could have called evidence to remove the uncertainty, but neglected
to do so. I am referring to cases like
Turkstra
Ltd.v. Richards
,
1926 T.P.D. 276
, in which the plaintiff has laid before the Court
such evidence as was available, but that evidence has necessarily
failed to remove
uncertainties with regard to matters bearing upon
the
quantum
of
damage. The Court, in such a case, does the best it can with the
material available. If it can do no better, it makes the “informed
guess” referred to by
HOLMES
,
J.A., in
Anthony
and Another v. Cape Town Municipality
,
1967 (4) S.A. 445
(A.D.).’
Applying this approach and having
regard to all of the factors set out above I am of the view that an
amount of R250 000
would represent adequate compensation for
Miller’s future loss of earning capacity and that he is
entitled to be awarded
this amount which is fair and reasonable to
both parties.
Conclusion
:
In the result the following order is
made:
The appeal is upheld with costs,
including the costs of two counsel.
The award of the court
a quo
to the appellant for past loss of earnings is set aside and replaced
with an order awarding R393 670(three hundred and ninety-three
thousand six hundred and seventy rand) for past loss of earnings.
The respondent shall pay to the
appellant the sum of R250 000 (two hundred and fifty thousand
rand) in respect of his claim
for loss of earning capacity.
Interest at 15,5% per annum a
tempore morae shall be payable on the aforementioned amounts,
subject to the provisions of
s 17(3)
of the
Road Accident Fund Act
56 of 1996
and the observation in parenthesis at the end of
paragraph [46] of this judgment.
______________________
J. I. CLOETE
Judge of the High Court
We concur:
______________________
L. J. BOZALEK
Judge of the High Court
__________________
A. G. BINNS-WARD
Judge of the High Court