Loss of earnings claims often form the larger portion of a claim against, for example, the Road Accident Fund, the MEC: Health, the Minister of Police or private medical practitioners. How are these claims quantified?
Firstly, it should be noted that South African delictual law, unlike for example German law, is compensatory and not punitive. The objective is to compensate the aggrieved person for his loss and not to punish the wrongdoer for his action. Put differently, the law of delict aims to place the aggrieved person in the position he would have enjoyed but for the damage-causing conduct (delict) (for example the motor vehicle accident, unlawful arrest, medical malpractice or slip-and-fall injuries). To this end, an enquiry will be made as to what the aggrieved person has in fact lost from his patrimony. This loss is quantified by comparing two values (i) the value of a person’s patrimony had the delict not occurred; and (ii) the value of a person’s patrimony now that the delict has occurred. I will not deal here with non-patrimonial loss.
In Southern Insurance Ass Ltd v Bailey 1984 (1) SA 98 (A) at 113-114 two methods of quantification were identified. The first method is where a judge awards “….a round estimate of an amount which seems to him to be fair and reasonable. This is entirely a matter of guesswork, a blind plunge into the unknown.” The second method involves quantification by way of mathematical calculations, “on the basis of assumptions resting on the evidence”. The probable value of this method of quantification is dependent on the “soundness of the assumptions”. These two methods were subsequently confirmed in Road Accident Fund v Guedes 2006 (5) SA 583 (SCA) at 586.
Although courts may use the first method, for the purposes of this article I shall discuss only the second one, as it is the more favoured approach in legal practice. In Southern Insurance Ass Ltd v Bailey it was stated (at 113) that courts ought to favour the second approach over the first, as the second is a result of an actuarial calculation, an informed guess and a logical attempt to quantify loss “whereas the trial Judge's "gut feeling" as to what is fair and reasonable is nothing more than a blind guess.”
Where a person is unable to return to his pre-accident occupation, as an employee or in a self-employed capacity, he or she is said to have suffered damages for loss of earnings. His patrimony is effectively reduced by his inability to earn an income following the delict.
As illustration, Moses Victimus is 27 years old and employed as a dancer. On 06 November 2021 he accidently slips on an unattended petrol spill at Risk Fuel Ltd. He falls, injuring his right leg and shoulder. He is unable to return to his pre-accident employment because his physical abilities no longer match his occupational requirements. Various factors have to be considered to quantify Moses’ loss of income. For example, it must be considered that, but for the accident, Moses could have progressed to become a dance instructor and reached his career ceiling at the age of 45 years old, with inflationary increases thereafter until “normal” retirement age at 65. Employee benefits such as allowances, overtime and performance bonuses ought to be assessed and included in the quantification of loss. These considerations and assumptions are often derived from research statistics.
In some instances, a person’s loss of earnings is not as obvious and so is more difficult to quantify. Due to various considerations such as limited education, skills or training, as well as a difficult economic climate, claimants often remain employed albeit suffering pain and other accident-related symptoms. The claims of such persons for loss of earnings are referred to as ‘a reduction of earning capacity’. The distinction is often referred to as “actual loss” versus “capacity loss”. A person is said to have suffered a capacity loss when he, post-accident, must exert more effort in order to perform pre-accident tasks. As a result, they have been made more vulnerable as they can no longer compete with their peers in the open labour market and may be relying on a sympathetic employer for employment. By virtue of prescription and the once-and-for-all rule, an award for capacity loss must cater for every possible eventuality which can be reasonably foreseen in the claimant’s future. For example, had Moses been a bank teller, he could have continued his employment as a bank teller, albeit suffering from pain and reduced employment opportunities due to his impairment. Moses may be retrenched and his accident related symptoms may make it more difficult for him to obtain alternative employment.
Capacity loss was discussed in Krugell v Shield Versekeringsmaatskappy Bpk 1982 (4) SA (T) 95 where it was found, on the evidence, that the claimant would be able to obtain employment, but to a lesser extent and for interrupted periods. Despite the likelihood of subsequent employment possibilities, the court had regard to the extended additional burdens that arose from the injuries sustained by the claimant in the accident, the decreased chances of obtaining employment, the likelihood of success in job applications and retention in such employment (at 105). The court was guided by the opinions of the medico-legal experts and their prognosis. See also Deysel v Road Accident Fund (2483/09) (SG) where Bizos JA stated at para 36 that “The only way I could see her performance influencing her patrimony is if there was a possibility that the Plaintiff could lose her current job and/or be limited in the number and quality of her choices should she decide to find another employment.” In Mvundle v Road Accident Fund (63500/09) 2012 (NG) Kubushi AJ, as she then was, stated (para 42, referring to Deysel above) 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 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/or be limited in the number and quality of his/her choices should he decide to find other employment.” See also Makuapane v Road Accident Fund (12871/12) 2015 (GSJ) where Moshidi J stated, at para 22, that the evidence of the experts proved that the Plaintiff was in sympathetic employment – “the evidence was overwhelming.” The judgment further noted that it was established in our jurisprudence that “even if found to be gainfully employed post-accident, victims of accidents who no longer functioned in capacities that they were employed for, were entitled to damages since they had suffered a complete loss of earnings capacities.”
Contingency deductions are applied to claims for actual loss and/or capacity loss. In Southern Insurance Ass Ltd v Bailey supra, the court stated that: “where the method of actuarial computation is adopted in assessing damages for loss of earning capacity, it does not mean that the trial Judge is "tied down by inexorable actuarial calculations". He has "a large discretion to award what he considers right". One of the elements in exercising that discretion is the making of a discount for "contingencies" or the "vicissitudes of life". These include such matters as the possibility that the plaintiff may in the result have less than a "normal" expectation of life; and that he may experience periods of unemployment by reason of incapacity due to illness or accident, or to labour unrest or general economic conditions. The amount of any discount may vary, depending upon the circumstances of the case. The rate of discount cannot, of course, be assessed on any logical basis: the assessment must be largely arbitrary and must depend upon the trial Judge's impression of the case. In making such a discount for "contingencies" or the "vicissitudes of life", it is, however, erroneous to regard the fortunes of life as being always adverse: they may be favourable.”
From the above-mentioned it should be clear that the quantification of a claim for loss of earnings is a specialized legal process that involves investigation, collating the necessary and admissible evidence, and presenting the same to experts who will, in turn, formulate opinions to guide legal practitioners and courts alike. Claimants are urged to retain every bit of evidence in the form of accident/incident related pictures, the contact details of witnesses, proof of accident-related expenses incurred and proof of earnings, amongst others. It is equally important to approach an attorney’s firm that you can trust. While a claimant may represent themselves in these claims, the benefit of an experienced and skillful attorney, to ensure that you obtain the best possible outcome, cannot be overstated.
