Big Quantum Does Not = Senior Counsel – IAC Newsletter 39/2014, (March 2014)

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Dear Reader,

Welcome to the 39th edition of Independent Actuaries & Consultant’s (IAC’s) MVA newsletter.

Big Quantum does not = Senior Counsel – Smit v RAF, Eastern Cape High Court (PE), case no: 448/2013

Both the merits of the plaintiff’s claim and the quantum of his damages had been agreed between the parties. The court ordered that the defendant pay the plaintiff the sum of R3,050,612-16 (Three Million Fifty Thousand Six Hundred and Twelve Rand and Sixteen Cents) in full and final settlement of his damages.

The parties were unable to reach agreement in respect of the costs order to be made. The defendant tendered the plaintiff’s costs including the qualifying expenses of expert witnesses on a party and party scale. The plaintiff seeked an order that the defendant pay the costs of two counsel. This was the only issue in dispute.

Summons was originally issued in February 2013 claiming the amount of R6 082 652.00 and the Particulars of Claim were prepared and signed by junior counsel. A subsequent amendment inflated the figures, notably those in respect of loss of earning capacity and general damages, so as to claim the amount of R8 144 578.52.

On 1 October 2013 the plaintiff’s attorney of record instructed a second counsel to lead the junior counsel who had drafted the pleadings and to conduct the trial.

The bulk of the claim related to loss of earning capacity and general damages.

The court noted that generally, the computation and proof of a claim for loss of earning capacity does usually involve complex issues of fact and law. Where the claim is large, then it is usually a reasonable and prudent precaution for a plaintiff to engage the services of two counsel.

The accident in the present case, however, occurred on 8 October 2008 after the amendment act came into force that has the effect of “capping” loss of income claims.

The plaintiff’s claim in respect of his actual loss of earning capacity amounted to R7 025 477,00 as calculated by an actuary. His loss of earning capacity computed and capped in accordance with section 17(4)(c) of the Act as calculated by the same actuary, amounted to R2 583 000,00.

The court held that where it is a foregone conclusion that the plaintiff’s actual loss of earning capacity will far exceed the limit set by section17 of the Act, the calculation and proof of the plaintiff’s entitlement will not involve any significant factual or legal difficulty.

The court further held that the assessment of general damages is dependent primarily on the lay evidence of the plaintiff himself and, though not entirely simple, was not so complex as to justify the employment of two counsel.

In the courts view one counsel of sufficient seniority and experience could have properly handled the matter without any significant difficulty.

Now for some inspiration  –

“That old law about ‘an eye for an  eye’ leaves everybody blind. The time is always right to do the right thing.”

Martin Luther King Jr.

Tax evasion extinguishes loss of earning capacity claim – IAC Newsletter 38/2013, (November 2013)

Dear Reader,

Welcome to the 38th edition of Independent Actuaries & Consultant’s (IAC’s) monthly newsletter.

Tax evasion extinguishes loss of earning capacity claim – Heese N.O. v RAF, Western Cape High Court, case no: A586/2012

Hans Ulrich Peters (‘Peters’), a German businessman, was seriously injured in a motor car accident in Cape Town on 10 June 2000. The appellant, an advocate, was appointed as his curator ad litem (‘the plaintiff’) for purposes of pursuing a claim against the respondent (‘the RAF’). The curator issued summons against the RAF in October 2004. The merits were referred to arbitration. In June 2007 the arbitrator determined that the RAF was fully liable for any damages suffered by Peters.

The determination of damages went to trial in the high court and the only aspect that remained in issue was Peters’ alleged diminution of earning capacity. The parties agreed at the beginning of the trial that the determination of damages in respect of Peters’ earning capacity would be divided into two phases.

In the first phase the trial judge would be asked to determine the gross pre-tax income that Peters would have earned but for the accident. The second phase would address questions of tax.
The curator contended, on behalf of Peters, that his historic profits as a businessman over the period 1991 to 2001, as reflected in his financial statements and tax returns, was not a safe guide to his likely post-accident profits because he had dishonestly evaded tax in Germany by understating his income and overstating his expenditure.

Blignault J dismissed the plaintiff’s claim, finding that Peters had no post-accident earning capacity to which a value could be ascribed. The trial judge based his conclusion on two lines of reasoning.

The first line was the following. The judge accepted that Peters’ business (the selling of magazine subscriptions) was not unlawful. The capacity to earn money from such a business could legitimately be the subject of compensation. However, Peters could not lawfully have continued to conduct the business without disclosing to the German tax authorities that he had evaded tax. If Peters could only earn future income by dishonestly refraining from making such a disclosure, it would be contrary to policy to award him compensation for the loss of the future earnings. And if he did make the necessary disclosure, this would have caused the sterilisation of his earning capacity by virtue of harsh criminal sanctions.

The trial judge’s second line of reasoning was that the German tax authorities were in any event closing in on Peters and that he would probably have been arrested if he had not made voluntary disclosure.

The claimant appealed against the judgement.

The appeal court did not accept that the court a quo’s reasoning was wrong. If it appears from evidence that a claimant’s supposed earning capacity would as likely as not have been sterilised and rendered worthless by some or other event over the future period covered by the claim, the court could properly conclude that a claim of diminution in earning capacity has not been established.

In short the appeal court found that the tax evasion in itself did not cause the claimant to fail in its claim, however in casu the tax evasion led to imminent criminal prosecution which precluded the claimant to return to his homeland to continue his business. Thus, it was as a results of the tax evasion that the claimants earning capacity was extinguished and not as a result of the sequlae of the motor vehicle accident.

As observed in Rudman v Road Accident Fund 2003 (2) SA 234 (SCA) paras 11 and 16) para 11, the fact that a physical disability which impacts upon earning capacity also reduces the patrimony of the injured person may follow readily in some cases but it did not follow in all cases, including this one.

Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

• Email :, or
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Now for some inspiration –
“If you don’t value your time, neither will others. Stop giving away your time and talents. Value what you know & start charging for it.”
Kim Garst

40% contingency applied on past loss – IAC Newsletter 37/2013, (September 2013)

Dear Reader,

Welcome to the 37th edition of Independent Actuaries & Consultant’s (IAC’s) monthly newsletter.

40% contingency applied on past loss of earnings – Miller v RAF, Western Cape High Court, case no: A 134/2013

This was an appeal against orders in respect of the appellant’s past loss of earnings and future loss of earning capacity.

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 loss of earning capacity was R4.2 million and the amount awarded was nil.

The major part of the claim was based on the consequences of depression suffered by Miller post-collision which 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.

Miller’s case was that his deficient performance on The Decks caused him reputational damage, which in turn impacted negatively on his ability to obtain work on better projects thereafter.

It was 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. Miller was severely injured in the collision and was bedridden for a period of three months thereafter at a crucial stage of the project.

Miller’s role was pivotal for the successful advancement of the project as much of the concept was ‘in his head’.

It was Miller’s testimony that The Decks project would have brought him not only professional esteem, but would also have put him on the map for future developments of this nature.

The developer of The Decks testified that Millers lack of performance on The Decks resulted in them refusing to appoint him as an architect on 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.

Taking these factors into account the court applied a contingency deduction of 40% to the net amount Miller could have earned on work that he would have been appointed on, but for the accident, from the time of the collision to the time of the hearing (past loss of earnings).

The court further held that it was not appropriate to deduct the actual income earned by Miller over the same period as 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.

In considering Miller’s R 4.2 million claim for loss of earning capacity the court found it probable that the reputational damage which Miller suffered as a consequence of The Decks is something that he would be able to overcome and accordingly has to be given a diminishing effect over time and the economic decline in the industry would undoubtedly have played a role in Miller’s future earning capacity.

The court awarded an amount of R 250 000.00 in regards to Miller’s claim for loss of earning capacity.

Sending us an Instruction

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Static or fluctuating cap? – IAC Newsletter 36/2013, (August 2013)

Dear Reader,

Welcome to the 36th edition of Independent Actuaries & Consultant’s (IAC’s) monthly newsletter.

Static or fluctuating cap – Jonosky v RAF, South Gauteng High Court, case no: 1220/2010

The question that needed to be answered was whether a static cap, fixed at the time the calculation is made, should be used to calculate a plaintiff’s future loss of income or whether the cap amount, as at the date of calculation, should be adjusted for inflation for every future year in which the loss is calculated.

It is obvious that a cap that is adjusted for inflation for every future year of calculating the loss will result in the plaintiff receiving a larger payout.

The judge held: “In calculating the future loss of earnings beyond the date upon which such calculation is made, an actuary is duty bound to incorporate a projected future inflation rate on an annual basis.”


Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

Now for some fun  –

A man sat down at a bar, looked into his shirt pocket and ordered a double scotch.

A few minutes later, the man again peeked into his pocket and ordered another double. This routine was followed for some time, until after looking into his pocket, the man told the bartender he’d had enough.

The bartender said, “I’ve got to ask you. What’s with the pocket business?”

“Oh,” said the man, “I have my lawyer’s picture in here, and when he starts to look honest, I know I’ve had enough.”

What Is Happening With The RAF’s New Actuarial Panel?

6 Actuaries

For those who don’t know (I would imagine you would be claimants attorneys and disgruntled defendants attorneys) the RAF has announced that it is to implement a new panel of 6 actuaries, who will be appointed on a rotational basis at branch level, to calculate loss of income and support claims for the RAF and its panel attorneys.

It would seem that should a defendant’s attorney want to appoint an actuary on a matter he or she would have to send a request to the relevant branch and they will then issue him/her with a name from the new panel based on a rotational allocation system whereafter the attorney would then send the actuary the instruction.

The new panel and the rotational system was initially set to be implemented on 1 April 2013 which might have caused some confusion out there as to whether you, as a defendant attorney, have to appoint actuaries from the new panel.

The answer is NO, the implementation date of 1 April 2013 has been postponed sine die, hence you can still appoint IAC or any other actuary you used to appoint.

I will keep you updated of any progress or developments herein.

Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

• Email :, or
• Post : PO Box 1172, Cape Town, 8000
• Fax : 086 616 8308

Now for some fun –

A prominent young attorney was on his way to court to begin arguments on a complex lawsuit when he suddenly found himself at the Gates of Heaven. St. Peter started to escort him inside, when he began to protest that his untimely death had to be some sort of mistake. “I’m much too young to die! I’m only 35!” St. Peter agreed that 35 did seem to be a bit young to be entering the pearly gates, and agreed to check on his case. When St. Peter returned, he told the attorney, “I’m afraid that the mistake must be yours, my son. We verified your age on the basis of the number of hours you’ve billed to your clients, and you’re at least 108.”

Can An OT Or IP Assess A Plaintiff For Purposes Of The RAF 4?

Court of appeal

The RAF v Duma, Kubeka, Meyer & Mokoena [2012] ZASCA 169 (27 November 2012).

The Fund contended on appeal that the High Court should have held in each case that the issue whether the plaintiff had suffered ‘serious injury’ had not been determined by the method prescribed by the regulations and that the High Court should therefore not have awarded general damages.

In all four cases the RAF 4 form was signed by a psychiatrist, Dr Braude. In all four cases the Fund filed special pleas stating that the plaintiff had not complied with regulation 3 and that his or her claim for general damages was either not competent or premature. In all four cases the Fund subsequently rejected the RAF 4 by means of a letter from its attorneys. These letters were written at least one year after the RAF 4 form had been delivered to the Fund and very shortly before the commencement of trial.

In each case the RAF 4 was completed by Ms Marks an occupational therapist and signed by Dr Braude without him examining the patient, instead relying on the hospital records and other expert reports which in some cases were 7 months old.

The Fund contended in the High Court that the plaintiffs’ RAF 4 forms did not comply with regulation 3 because Dr Braude had failed to do a physical examination and Ms Marks was not a medical practitioner, the RAF 4 forms had been rejected by the Fund, and therefore the plaintiffs’ remedy was to declare a dispute with the HPCSA in terms of regulation 3(4); and that in the circumstances, the court could not entertain the claims for general damages.

The High Court did not agree and held the RAF 4 forms were in fact compliant with regulation 3 and it was apparent from the medical evidence that the plaintiffs did indeed suffer serious injuries.

Moreover, the Fund’s rejection was invalid because the Fund had failed to reject the RAF 4 forms within a reasonable time and its right to do so had therefore expired and secondly, since the Fund had given insufficient or invalid reasons for its rejection, it did not constitute a proper rejection.

The Appeal Court did not agree with the High Court’s construction that if the Fund should fail to properly or timeously reject the plaintiff’s RAF 4, such rejection can be ignored, if the medical evidence before the court then shows that the plaintiff was indeed seriously injured the court can decide the issue of general damages.

The Appeal Court held this approach to be fundamentally flawed as the legislature chose to confer the right to decide whether or not an injury is serious enough to justify an award of general damages on the Fund and not on the court.

The Appeal Court further held that any determination of the period within which the Fund should reasonably take that decision must depend on the facts of each case.

As regards the 2nd reason given namely that the the RAF 4 forms were rejected without proper reasons the Appeal Court held that the Fund’s decision to reject the RAF 4 forms constituted administrative action and until that decision was set aside by a court on review or overturned in an internal appeal, it remained valid and binding.

Additionally the court was asked to deal with the question of whether the RAF 4 forms in these cases met the requirements of regulation 3(1).

Must a medical practitioner physically examine the claimant for purposes of the assessment?

The honourable Judge found that regulation 3(1)(a) requires a medical practitioner to physically examine a claimant.

Can the assessment be done by an occupational therapist?

The short answer is no. The honourable Judge found that Ms Marks, who is an occupational therapist, did not qualify as a “medical practitioner”, within the meaning of regulation 3(1)(a), but rather as a “health practitioner”.

Can an assessment in terms of regulation narrative test be conducted without first performing the assessment in terms of regulation AMA guides?

The honourable Judge found that if one had a look at the contents of the RAF 4 form itself, which is incorporated in the regulations, it is of significance that paragraph 4, which deals with the AMA guides, contains the substance of the report. If paragraph 4 were to be left uncompleted, the report would be of little substance. The inference to be drawn from the contents of the report is that it was never intended that an assessment could bypass the AMA/WPI test.

Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

• Email :, or
• Post : PO Box 1172, Cape Town, 8000
• Fax : 086 616 8308

Now for some fun –

Who is the roundest knight at king Arthurs table?
Sir Cumfrence

Unmarried Partners And Dependents Now Have A Claim For Loss Of Support

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Paixão v Road Accident Fund (640/2011) [2012] ZASCA 130

The main issue in this appeal was whether or not the common law should be developed to extend the dependents’ action to permanent heterosexual relationships.

The appellants sued the Road Accident Fund for loss of maintenance and support arising from the death of José Adelino Do Olival Gomes in a motor vehicle collision on 2 January 2008. The deceased had been living with the first appellant (Mrs Paixão) and her children at the time and supported them financially. He had planned to marry her, but had not yet done so.

The South Gauteng High Court found that the deceased had supported the appellants out of ‘gratitude’ in return for their assistance during his illness rather than from any legal duty, and also that it ‘would be an affront to the fabric of our society . . and seriously erode the institution of marriage’ if the dependents’ action were to be extended to the appellants. It therefore dismissed their claims but granted them leave to appeal to the SCA.

In its judgement the SCA stated that a plaintiff’s assertion that he or she was in life partnership, cannot be taken as sufficient proof of the fact. Proving the existence of a life partnership entails more than showing that the parties cohabited and jointly contributed to the upkeep of the common home. It entails demonstrating that the partnership had similar characteristics to a marriage.

The implied inference to be drawn from the proven facts must be that the parties, in the absence of an express agreement, agreed tacitly that their cohabitation included assuming reciprocal commitments – ie a duty to support – to each other.

The facts showed that the community accepted the deceased, Mrs Paixão and her children as a family and did not regard their cohabitation as opprobrious. Cohabitation outside of a formal marriage is now widely practiced and accepted by many communities universally and therefore not against the boni mores.

Evidence that the parties intended to marry may be relevant to determining whether a duty of support exists, as in this case. But it does not mean that there must be an agreement to marry before the duty is established.

The court held that the dependents’ action is to be extended to unmarried persons in heterosexual relationships who have established a contractual reciprocal duty of support.

Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

• Email :, or
• Post : PO Box 1172, Cape Town, 8000
• Fax : 086 616 8308

Now for your joke:
Q: What’s the difference between an accountant and a lawyer?
A: Accountants know they’re boring.

When To Submit The RAF 4?

Van Zyl v Road Accident Fund (34299/2009) [2012] ZAGPJHC 118 (11 June 2012)

The plaintiff was injured in a MVA on 2 August 2008. The period of three years specified for lodgement of a claim expired on 1 August 2011. The plaintiff’s claim was lodged on 8 January 2009. However the RAF 4 form was only served on 6 February 2012.

The defendant filed a special plea which states: ‘[t]he RAF 4 form may be submitted after the submission of the claim but before the expiry of the periods for lodgement of the claim as prescribed in the RAF Act’ and that the plaintiff’s claim for general damages ‘prescribed on 1 August due to the fact that the RAF 4 was not submitted within 3 years from date of accident’.

The question before the court was whether or not the claim lodged on 8 January 2009 constitutes a claim in respect of general damages or does such claim only arise once the ‘serious injury assessment report’ has been lodged.
The defendant argues that, without submission of ‘a serious injury assessment report’, no claim in respect of non-patrimonial loss can or does exist.

The court held that the claim envisaged by the Act is neither correspondent with nor one and the same as the serious injury assessment report. They are two documents prepared for different purposes. The claim notifies the RAF of the identity of the claimant, the motor vehicle accident, the identification of the insured motor vehicle, the injuries and the loss caused thereby and the computation of the compensation claimed. The report provides support in substantiation of the claim, it is evidence of the claim, it is not the claim itself.

The court further held that the Act stipulates only one procedure for presentation of the claim. Where the form RAF 1 is completed in full and then submitted, the ‘claim’ as intended by the Act has been lodged. Should there be any challenge to the validity of the claim, then the RAF has a period of sixty days within which to notify the claimant of any challenge to thereto. If the claim was challenged by reason of absence of the supposed prerequisite of form RAF4, then one would expect the RAF to have notified the claimant.

The court further held that the prescription periods provided for in the Act, namely the initial three years and the extension of two years, are both periods during which the form RAF 4 may be submitted to the RAF.
The court further held that the obligation of the RAF to compensate the claimant may only arise once the form RAF 4 (the serious injury assessment report) has been submitted. Notwithstanding, that no liability of the RAF may arise prior to submission of RAF 4 form, the claim may be valid in all respects.

Accordingly the claim for compensation in respect of non-patrimonial loss has not prescribed.

Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

• Email :, or
• Post : PO Box 1172, Cape Town, 8000
• Fax : 086 616 8308

Now for a joke –

You Might Be A Lawyer If….

You are charging someone for reading these jokes.

The shortest sentence you have ever written was more than eighty words long.

You have a daughter named Sue and a son named Bill.

Your other car is a BMW.

When you look in a mirror, you see a lawyer.

When your wife says “I love you,” you cross-examine her.

Loss of Earning Capacity vs An Actual Patrimonial Loss

Dear Reader,

Welcome to the thirtieth edition of Independent Actuaries & Consultant’s (IAC’s) monthly newsletter.

IAC Training 2012 – Time Management Workshop for all supporting staff

Based on the lack of response regarding the training seminar on how to work with the IAC blog we have decided not to proceed with same.

However, in line with our ethos of adding value to our clients business, we are looking at presenting a time management workshop aimed at equipping your supporting staff (personal assistants, office managers, legal secretaries, typists and article clerks) to better manage their time and your resources thereby increasing productivity.

The workshop will take place during the July 2012 recess, depending on your response.

Please indicate via return mail whether you are interested and how many people from your firm might attend.


LOSS OF EARNING CAPACITY vs AN ACTUAL PATRIMONIAL LOSS – Mvundle v Road Accident Fund (63500/2009) [2012] ZAGPPHC 57 (17 April 2012)

The plaintiff, the driver of a Mercedes-Benz bus, was involved in a motor vehicle collision. As a result of the collision the plaintiff sustained the following injuries: soft tissue injury of the scalp, neck, shoulder and ankle; loss of 50% of his sight to the left eye and emotional trauma.

The Plaintiff was employed as a professional driver for most of his working life. His claim for loss of earning capacity was based on him no longer being physically able to drive because of the shoulder injury, loss of sight in his left eye and head injuries sustained in the accident.

In considering the claim the court held that it’s trite law that any claim in respect of future loss of earnings / earning capacity requires:

“36.1 A loss of earning capacity as a result of a damage causing event; and
36.2 An actual patrimonial loss of income as a result of the above mentioned loss of earning capacity. In which case, either the one or the other may be claimed for the same amount.”

The court further held as trite that damages for loss of income can be granted where a person has in fact suffered or will suffer a true patrimonial loss in that his or her employment situation has manifestly changed. The plaintiff’s performance can also influence his patrimony if there was a possibility that he could lose his current job and be limited in the number and quality of his choices should he decide to find other employment.

In casu the honourable Judge found that had the plaintiff remained in his erstwhile employment he would not have succeeded in his claim for loss of earnings / earning capacity. But because he left the job, irrespective of what the cause was, he must be compensated if he could establish that but for the accident he was no longer fit to drive and that his choices, either in number or quality, of finding alternative employment were now limited and his chances of retraining for a new career were negatively affected.

Sending us an Instruction

Our dedicated full time professional team receive instructions by any of the following means:

• Email :, or
• Post : PO Box 1172, Cape Town, 8000
• Fax : 086 616 8308

Now for a joke –

Q: What’s the difference between a lawyer and a herd of buffalo?
A: The lawyer charges more

RAF 4 – The 60 Day Period Rejected

writing on form

Van Loggerenberg v RAF

In this case the plaintiff submitted a serious injury assessment form i.t.o. reg 3(3)(a) describing her injuries as a serious long term impairment or loss of a body function. The Dr’s handwritten notes stated that she had lost ¾ of her left index finger.

The defendant rejected her RAF 4 form 5 days before trial informing her that her injury does not constitute a 30% WPI as required i.t.o. the AMA guides and further that her RAF 4 form establishes no basis that the four elements of the narrative test has been satisfied.

The letter continued stating that if the plaintiff wishes to dispute the rejection she can do so by following the procedure set out in Reg 3(4) and 3(13).

Subsequently a special plea was raised that the plaintiff cannot claim general damages unless she complies with the act. The plaintiff did not respond, instead the plaintiff relied on the Louw matter, stating that the Fund had to reject the RAF 4 within 60 days of receiving it, failing which the claim for general damages is a valid claim.

The judge disagreed stating that neither the act not the regulations stated a time period within which the fund had to reject the plaintiff’s RAF 4 form.

The judge further stated that he is of the opinion that there should be a distinction between a claim for pecuniary and non-pecuniary loss in regards to the provisions of Sec 17(1)(b) of the act.

The judge went on to distinguish this case from the Louw matter on the grounds that in the latter case evidence was presented to the court in respect of the seriousness of the plaintiff’s injuries.

In closing the judge stated that the RAF 4 form should deal with the effects of the injury in detail where the narrative test is employed.

The special plea was upheld.