Tag Archive | Loss of earnings

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.

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.”


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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.”

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 : damagesclaims@iac.co.za, 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

Static or fluctuating cap, which gives greater cover to claimant?

Dear Reader,
Welcome to the nineteenth edition of Independent Actuaries & Consultant’s (IAC’s) monthly newsletter.

If you send us instuctions you are entitiled to the same.
Via this newsletter we will keep you updated of all the latest case law relating to motor vehicle accidents, the quantification of damages relating to personal injury claims and dates and venues of training seminars.
Now, as you might or might not know there are three main opinions on how the cap on loss of earnings and support, as introduced by the amendment act, should be interpreted and applied.  On a strict interpretation of the amendment act it would seem that a static cap should be used. The loss limit shall be the cap amount set out in the last notice issued prior to the date on which the cause of
action arose, this limit will then be applicable to each future year of loss and no adjustment will be made to the claimants future earnings for the time value of money before the cap is applied.  When allowance is made for the time value of money it simply means that the current value of a future amount is taken into account instead of simply taking the face value of a future amount into account.
Example, if you receive R 10 000.00 5 years from now, it will not be worth the same as R 10 000.00 today. That is because things become more expensive as a result of inflation which erodes the value of money.  A second opinion is similar to the first except that the claimants earnings is adjusted for time-value of money before applying the cap.  Finally the RAF has stated that a fluctuating cap should be applied. However, they do not motivate how they managed to come to this interpretation or why it should be favoured. It basically means that the cap changes every quarter in line with Gazetted amounts and in future the cap is assumed to increase with inflation. What is of importance to you is that the static cap with the adjustment for earnings, the second scenario, is the interpretation that gives the claimant the widest possible cover in that it relates in the biggest quantum in every situation.
The Fund aims to provide the maximum cover to third parties subject to the limitations set out in the RAF act and subsequent amendment act.   Therefore it is my opinion that the interpretation that gives the claimant the widest possible cover within the limitations which the amendment act introduces should be the one favoured by the courts.
Sending us an Instruction
Our dedicated full time professional team receive instructions by any of the following means:

• Email : damagesclaims@iac.co.za, or
• Post : PO Box 1172, Cape Town, 8000
• Fax : 086 616 8308
Now for some words of wisdom –
“A man of wrath stirs up strife, and a man given to anger commits and causes much
transgression” – Proverbs 29:22 (AMP)

When does a physical disability reduce earning capacity?


Broken Arm
On 11 August 2005 the appellant, an inspector in the South African Police Services, sustained bodily injuries in the course of a collision between two motor vehicles.  The driver of the other vehicle was entirely to blame. The appellant claimed damages for past and future medical expenses, compensation for loss of earning capacity in the future, and general damages.

The matter was set down for trial on 4 November 2008. After hearing evidence the learned judge made an award of R120 000-00 for general damages but held that the appellant had not discharged the onus of proving that her disability gave rise to reduced earning capacity, and he dismissed her claim for compensation under that head.

The appellant now appeals to this Court. It is apparent from the judgment a quo that the appellant’s injuries gave rise to permanent disability which justified a substantial award for general damages.  Her case was that the same disability gives rise to a claim for future loss of income. She was a member of the South African Police Services when she sustained her injuries. She held the rank of inspector. On the facts, she suffered soft tissue injuries to the lumbar spine, which have resulted in permanent disability and impairment to perform many physical activities that are part of her work.

The correctness of the actuarial calculations was admitted. The appellant sought to discharge the onus of proving the factual allegations giving rise to the claim for a reduction of earning capacity primarily on the expert opinion of the industrial psychologist, Dr Holmes, read in the light of an agreement between the medical experts to which I shall later refer.

It was Dr Holmes’s opinion that but for the injuries and the ensuing disability the appellant would have been promoted to the rank of captain and superintendent, that she will not be able to accommodate to the restrictions of the sedentary employment to which she must be confined in the future, and that this will inevitably result in emotional trauma, frustration and stagnation in the workplace, and an inability  to proceed beyond the rank of inspector.  The combined effect of this will probably ultimately compel her to take early retirement.

The agreement between the medical experts, Dr Keeley, the neuro-surgeon, who was to be called by the appellant, and Dr De Jonge, the orthopaedic surgeon who was to be called by the Fund stated:

“. . . that the appellant would work until normal retirement age with the provision that she is promoted
to only office work, accommodated in an ergonomically friendly environment and never is required to
attend physical courses or training sessions; . .”

This eliminated the issue of retirement prior to the normal retirement of 60 years as the basis of  thereduction of earning capacity, by reason, at any rate, of the physical disability.

Mr Pretorius argued for the appellant that the court should have accepted Dr Holmes’s opinion that the appellant will in fact retire early despite the medical agreement. The Court held that there is no doubt that her disability impairs the continued performance of these physically demanding duties.

Mr Pretorius argued that the appellant’s condition constitutes an impairment of her capacity to earn an income – she can no longer do what she does best (the physical attributes of her employment) – and that this in turn must result in the production of a lesser income in the future.

The learned judge found that on the evidence the appellant had failed to prove that her injury had a cognizable effect on her earning capacity, and, in that event, her damage was indeed nil.

The fallacy in Mr Pretorius’s criticism is that it assumes that the appellant suffers loss once he proves that his physical disabilities bring about a reduction in his earning capacity; thereafter all that remains is to quantify the loss. This assumption cannot be made.  A physical disability which impacts upon capacity to earn does not necessarily reduce the estate or patrimony of the person injured. It may in some cases follow quite readily that it does, but not on the facts of this case. There must be proof that the reduction in earning capacity indeed gives rise to pecuniary loss.

In essence, the learned trial judge found that although the appellant had proved that she had suffered injuries which physically impaired her ability to perform certain kinds of police work and which prevented further advancement in the police force in those lines of work, she had not proved that she was unable to continue in her employment in the police force in other lines of work, or that she had been deprived of promotional prospects which she would in fact otherwise have had. He held in effect that on the acceptable evidence the appellant would probably not have been promoted above the rank of inspector even if she had not been injured; that she will probably continue in her employment in the police force until normal retirement age without any reduction in salary; and that she has therefore not shown that she has suffered loss.

In the light of the agreement between the doctors, the trial judge’s conclusion that the appellant did not discharge the onus of proving that she suffered a loss or reduction of her earning capacity must remain undisturbed.
In the result the appeal is dismissed with costs.

Sending us an Instruction
Our dedicated full time professional team receive instructions by any of the following means:

• Email : damagesclaims@iac.co.za, or
• Post : PO Box 1172, Cape Town, 8000Independent Actuarial Consultants (Pty) Ltd. Page 3
• Fax : 086 616 8308

And for some inspiration –
“The true measure of a man is how he treats someone who can do him absolutely no good.”
– Ann Landers