McGenis v Road Accident Fund (4486/2005) [2009] ZAKZDHC 34 (14 September 2009)

IN THE KWAZULU-NATAL HIGH COURT, DURBAN

REPUBLIC OF SOUTH AFRICA

CASE NO: 4486/2005

In the matter between :

NEIL DOUGLAS McGENIS Plaintiff

and

ROAD ACCIDENT FUND Defendant

_______________

J U D G M E N T

DELIVERED ON : 14 SEPTEMBER 2009

PATEL J

[1] On 18 April 2000 at approximately 12h30 near Lions River Wetland Project, a Bell logger reversed, overbalanced and fell on its side thereby trapping Neil Douglas McGenis (“the plaintiff”). The logger was being operated by an employee of Bell Equipment Company (Pty) Ltd (“the Company”).

[2] As a result of the said accident the plaintiff suffered severe bodily injuries and damages in the amount of R174 373, 77 computed as follows:

Claim 1: past hospital and medical expenses in the sum of R29 373, 77

Claim 2: loss of income in the sum of R10 000

Claim 3: future medical expenses in the sum of R15 000, 00

Claim 4: general damages for pain and suffering, loss of amenities of life and disability and disfigurement in the sum of R120 000, 00

[3] On 28 March 2003 the plaintiff lodged a claim for compensation with the Road Accident Fund (“the defendant”) in terms of the Road Accident Fund Act 56 of 1996 (“the Act”). On 16 April 2003 the plaintiff then instituted action against the Company

out of the Natal Provincial Division under Case No. 1894/2003 for damages. Plaintiff alleged that the Company was vicariously liable to compensate him because the driver of the logger was acting within the course and scope of his employment. The Company alleged, by way of a special plea, that the plaintiff relied on the same facts and the same cause of action as a basis for claiming damages against the defendant as relied upon in his application against the Company. Further the plaintiff was precluded, by virtue of section 21 of the Act, from proceeding against the Company unless the defendant was unable to pay the amount of the compensation claimed. Further that the proceedings against the defendant were still pending and the plaintiff had not averred that the defendant was unable to pay the compensation claimed. The Company sought an order dismissing the plaintiff’s claim alternatively that the action be stayed pending the finalisation of the plaintiff’s claim against the defendant.1 The plaintiff then replicated and stated that the defendant disputed liability.2

[4] On 11 March 2005 the plaintiff instituted the present action against the defendant. The defendant, in its special plea, stated that the logger was not a motor vehicle in terms of section 1 of the Act and that it was accordingly not liable to compensate the plaintiff. There followed correspondence between all the parties. The defendant alleged that the Company withdrew its special plea on the basis that the plaintiff would only proceed with the action against the Company. Defendant further alleged that the plaintiff confirmed that he would “not be proceeding with the action against the Road Accident Fund”.3 And on 31 January 2006 the plaintiff further confirmed, by way of letter to the defendant’s attorney, that he “would not pursue the action” against the defendant and proposed that the action be settled on the basis that each party pay its own costs.4 The defendant then insisted that its costs be tendered.5

[5] On 10 October 2006 judgment was granted against the plaintiff and the Company was absolved from the instance with costs. The basis of the judgment was that the driver of the logger was not found to be acting in the course and scope of his employment. Subsequently the plaintiff indicated his intent to pursue this action against the defendant.

[6] The defendant then filed a further special plea in which it alleged that when action was instituted against the Company, the plaintiff during September 2005 agreed to abandon his claim against the defendant and to only proceed against the Company. Defendant’s argument is that the abandonment of the claim constituted a waiver which the defendant accepted and that the plaintiff is accordingly precluded from pursuing this action.

[7] Plaintiff raised two arguments. Firstly he alleged that his attorney lacked the authority to conclude the agreement to abandon his action against the defendant. And secondly that the defendant failed to establish that such abandonment was accepted by it.

Issue to be decided

[8] By agreement between the parties the in limine point, namely whether the plaintiff waived or abandoned his claim against the defendant was argued. I might point out that no viva voce evidence was led on behalf of the plaintiff especially on the question whether his attorney lacked the authority to conclude an

agreement abandoning his action against the defendant. Defendant led the evidence of Mr Adam.

Relevant legislative provisions

[9] In terms of section 17 (1) (a) of the Act the defendant is liable to handle any claim arising out of the driving of a motor vehicle where the identity of the owner or the driver has been established. Section 17(1) (a) of the Act provides as follows:

“(1) The Fund or an agent shall-

subject to this Act, in the case of a claim for compensation under this section arising from the driving of a motor vehicle where the identity of the owner or the driver thereof has been established;

…

be obliged to compensate any person (the third party) for any loss or damage which the third party has suffered as a result of any bodily injury to himself or herself or the death of or any bodily injury to any other person, caused by or arising from the driving of a motor vehicle by any person at any place within the Republic, if the injury or death is due to the negligence or other wrongful act of the driver or of the owner of the motor vehicle or of his or her employee in the performance of the employee's duties as employee: Provided that the obligation of the Fund to compensate a third party for non-pecuniary loss shall be limited to compensation for a serious injury as contemplated in subsection (1A) and shall be paid by way of a lump sum.”

[10] Section 21 of the Act aims to avoid a situation where the injured person is able to claim twice for the same act of negligence. The section provides as follows:

“(1) No claim for compensation in respect of loss or damage resulting from bodily injury to or the death of any person caused by or arising from the driving of a motor vehicle shall lie-

(a) against the owner or driver of a motor vehicle; or

(b) against the employer of the driver.

(2) Subsection (1) does not apply-

(a) if the Fund or an agent is unable to pay any compensation; or

(b) to an action for compensation in respect of loss or damage resulting from emotional shock sustained by a person, other than a third party, when that person witnessed or observed or was informed of the bodily injury or the death of another person as a result of the driving of a motor vehicle.”

[11] At the outset, I shall deal in brief with the evidence led on behalf of the defendant. The defendant called Mr Adam, an attorney and director in the firm which acted for the company in the action brought by the plaintiff against the company. He personally handled the matter on behalf of the company. The sum total of his evidence was that the company was only willing to withdraw its special plea adverted to above if the plaintiff withdrew its action against the defendant. It was on this clear understanding that the trial against the company proceeded. The company was absolved from the instance and hence the plaintiff’s present action

against the defendant.

Application of the law

[12] It is a trite legal principle that waiver of a right is never presumed, that clear proof thereof is required. It must be shown that the person in question had full knowledge of his rights and that his conduct was irreconcilable with continued existence of such rights or with the intention of enforcing them (see Borstlap v Spangenberg en Andere 1974 (3) SA 695 (A) at 704 per Corbett AJA). Waiver is first and foremost a matter of intention and the Supreme Court of Appeal in Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) observed at para 16 that the test to determine intention is as follows:

“The test to determine intention to waive has been said to be objective. (cf Palmer v Poulter 1983 (4) SA 11 (T) at 20C - 21A; Multilateral Motor Vehicle Accidents Fund v Meyerowitz 1995 (1) SA 23 (C) at 26H - 27G; Bekazaku Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd 1996 (2) SA 537 (C) at 543A - 544D). That means, first, that intention to waive, like intention generally, is adjudged by its outward manifestations (cf Traub v Barclays National Bank Ltd; Kalk v Barclays National Bank Ltd 1983 (3) SA 619 (A) at 634H - 635D; Botha (now Griessel) and Another v Finanscredit (Pty) Ltd 1989 (3) SA 773 (A) at 792B - E); secondly, that mental reservations, not communicated, are of no legal consequence (Mutual Life Insurance Co of New York v Ingle 1910 TS 540 at 550); and, thirdly, that the outward manifestations of intention are adjudged from the perspective of the other party concerned, that is to say, from the perspective of the latter's notional alter ego, the reasonable person standing in his shoes.”

[13] The onus of proving a waiver is on the party who raises it (see FirstRand Bank Ltd v Soni 2008 (4) SA 71 (N) at 77). Probably the best known dictum in this regard is that of Innes CJ in Laws v Rutherfurd 1924 AD 261 at 263 where the learned Judge observed as follows:

“The onus is strictly on the appellant. He must show that the respondent, with full knowledge of her right, decided to abandon it, whether expressly or by conduct plainly inconsistent with an intention to enforce it. Waiver is a question of fact, depending on the circumstances.”

[14] Having regards to the facts of this case it is important to take heed to what was said by De Villiers JP in Hlatshwayo v Mare and Deas 1912 AD 242 at 259:

“Whether then we base the doctrine of acquiescence on the consent which is implied or the choice which is exercised, or call it waiver makes no difference. At bottom the doctrine is based upon the application of the principle that no person can be allowed to take up two positions inconsistent with one another, or as is commonly expressed to blow hot and cold, to approbate and reprobate. This being so there is no doubt of the actual minimum which is required by our law in order to constitute acquiescence. And that is: before a person can be said to have acquiesced in a judgment, and thereby to have lost the right of re-opening a case or of appeal, a right which he clearly has or at all events had, the Court must be satisfied upon the evidence that he has done an act which is necessarily inconsistent with his continued intention to have the case re-opened or to appeal.” (my emphasis)

[15] With regards to the issue of denial of authority raised by plaintiff this court finds it rather bizarre that at the pleadings stage the plaintiff failed to raise this argument. A denial of authority must be specifically pleaded and ‘where the lack of authority is not pleaded it cannot be canvassed in evidence without an amendment to the plea’.6 The purpose of pleading is to clarify the issues between the parties and a pleader cannot be allowed to direct the attention of the other party to one issue and then, at the trial, attempt to canvass another (see Nyandeni v Natal Motor Industries Ltd 1974 (2) SA 274 (D) at 279A-B). The plaintiff in casu even failed to replicate to the defendant’s special plea. Therefore it was improper for the plaintiff not to have raised this during the pleadings.

[16] Even assuming that this court accepts that the plaintiff could raise the authority argument, the next question is whether the plaintiff’s attorneys had the necessary authority to waive plaintiff’s claim against the defendant. A court in deciding the issue of agency must have regard to the totality of the evidence. It is difficult to imagine attorneys who were involved in one

completed case and still not knowing what his or client rights and thoughts on the matter were. It must therefore be held that the plaintiff’s attorneys were aware of the facts underlying the waiver and were at all times aware of the plaintiff’s rights. Further it seems highly unlikely that the plaintiff was unaware of the implications of both his actions instituted against the defendant and the Company as well as the defences raised by them. I can only surmise that he had reservations about prospects of success against the defendant and therefore elected to proceed against the Company. Now that he has been unsuccessful against the Company he is trying to get out of the waiver agreement. One would have expected the plaintiff to testify but no evidence was tendered by him denying his attorney’s authority.

[17] Does a waiver have to be accepted? The case at hand does not involve a contractual waiver; it involves a waiver of the plaintiff’s right to claim against the defendant. One author, after reviewing the various senses in which the term waiver had been used, said the following:

“It is submitted that waiver is a unilateral act which consists of the renunciation or abandonment of a right or legal advantage. If, therefore, one accepts for present purposes that a right is a “legally cognized power to realise an interest”, then within the limits of the law I can at any time renounce that power or on the other hand the law's cognizance of that power might be removed

because of my conduct and I might not be permitted to enforce or realise the interest. On this basis it appears a little strange to use the words of the law of contract, viz “offer and acceptance”, in connection with waiver on the ground that ‘release, waiver or abandonment is tantamount to making a donation to the debtor’. On the basis accepted above waiver cannot be used in a sense synonymous with donation. If release be regarded as the gratuitous release of a debtor from the only or remaining prestation in a contract then that may possibly be compared with donation.”7

And as stated in Segal and Another v Segil 1992 (3) SA 136 (C) at 146F-H:

“If, for instance, a contract has terminated, whether by agreement or cancellation, and one of the parties (the creditor) has acquired the right to sue the other (the debtor) for damages arising out of a breach of the contract, it surely cannot be suggested that, if the creditor waives that right and notifies the debtor accordingly, the latter can decline to accept the waiver and insist either on being sued or on the continued existence of the debt. Were that so, could the debtor obtain a mandamus ordering the creditor to sue, or a declarator to the effect that the debt remains alive and enforceable? The answer is obviously in the negative. The debtor can have no greater right to accept or reject the waiver where the creditor has already obtained judgment but waives the right to enforce it.”

It therefore appears that there need not be an acceptance of a waiver for it to be valid.8 Counsel for the plaintiff argued before me that a waiver is incomplete until it is accepted by the debtor. He relied on Union Free State Mining & Finance Corp Ltd v Union Free State Gold & Diamond Corp Ltd 1960 (4) SA 547 (W). His submission was founded upon the following extract from the judgment of Munnik AJ at 549 B-E.

“Mr Festenstein’s first ground of opposition is based on the proposition that there cannot be a unilateral release, waiver or abandonment of a contract by a creditor; in order for the release, waiver or abandonment to be effective there must be an acceptance thereof by the debtor. This acceptance may either be express or implied from the debtor’s conduct. Mr Festenstein relied on Wessels, para, 2344 (a) and Pothier on Obligations, Vol. 1, para. 578 at p401, for this proposition. Apart from the fact that these authorities are undoubtedly weighty,

logically this appears to me to be the correct view. I do not think that a creditor can by the mere exercise of his will terminate the obligation without the concurrence of the debtor because as both Wessels and Pothier point out a release, waiver or abandonment is tantamount to making a donation to the debtor of the obligation from which he is to be released and until that donation has been accepted it has not been perfected. There may conceivably be circumstances in which a debtor does not wish to be released from his obligation. It may for a variety of reasons not suit him to be released. To allow the release, waiver or abandonment and the consequent making of a donation dependent solely on the will or action of the creditor would be tantamount to creating a contract at the will of one party which is a concept foreign to our jurisprudence.”

[18] However, the facts in the Union Free State case were that the plaintiff sought to recover from the defendant ten percent (10%) of all benefits derived and to be derived from certain option and prospecting contracts. The plaintiff’s claim was founded upon a verbal contract. Further, the defendant sought to amend its plea by alleging a waiver, abandonment or release in that the plaintiff subsequently sold the shares held by him to a third party and in doing so warranted that he had no claim against the defendant.

[19] It was against the latter background that the defendant raised the defence of waiver.

[20] The plaintiff objected to the proposed amendment contending, inter alia, that it did not contain an allegation that the waiver was accepted by the defendant and accordingly did not disclose a defence. Munnik AJ, at 549 E-G, dealt with this objection as follows :

“Applying this proposition to para. 2 bis A. Mr Festenstein argues that para. 2 bis A. does not contain an allegation that the plaintiff’s waiver, abandonment or release was accepted by the defendant and therefore does not disclose a defence. I cannot agree with this contention. In my view when the defendant alleges that the plaintiff waived or abandoned all its claims or released the defendant from its obligations there is inherent in the use of these expressions, an implication that such waiver, release or abandonment was perfected by acceptance either express or tacit on behalf of the defendant. Had there been no such acceptance the plaintiff could not be said to have waived, abandoned or released.”

[21] However, in this case, the defendant has asserted in express terms that it has accepted the waiver relied upon. In any event implicit in the reliance by the defendant on waiver is its acceptance thereof, as was concluded by Munnik AJ in the Union Free State case. No other conclusion can be drawn from the correspondence exchanged between the parties.

[22] The plaintiff, by his conduct and correspondence to the defendant’s attorney clearly indicated his intention to waive his claim against the defendant. The Company withdrew its special plea on the basis that the plaintiff was not proceeding against the

defendant.

[23] A party is not allowed to blow hot and cold and this is exactly what the plaintiff is trying to do. On the facts and evidence placed before me, I am satisfied that the defendant has shown, on a balance of probabilities, that the plaintiff intended to abandon his rights against it.

Order

24. The following order is made:

24.1 Defendant’s special plea is upheld and the plaintiff’s claim is dismissed

24.2 Plaintiff is ordered to pay the defendant’s costs including the costs of Senior Counsel.

PATEL J

DATE OF HEARING : MONDAY, 03 AUGUST 2009

DATE OF JUDGMENT : FRIDAY, 11 SEPTEMBER 2009

COUNSEL FOR PLAINTIFF : ADV. A KISSOON-SINGH SC

INSTRUCTED BY : LARSON FALCONER INC.

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1 The Company’s special plea and plea over, Defendant’s Bundle B, page 14.

2 Defendant’s Bundle B, page 25.

3 See Defendant’s Bundle A, page 30.

4 Defendant’s Bundle A, page 32.

5 Defendant’s Bundle A, page 34.

6 De Villiers and Macintosh, The Law of Agency in South Africa, (1981) 3rd Ed at 86.

7 S Evans, “Waiver in discharge of contract”, (1961) 78 SALJ 188 at 190.

8 See also Absa Bank Ltd v The Master and Others NNO 1998 (4) SA 15 (N) at 28A-F and Mutual Life Insurance Co of New York v Ingle 1910 TPD 540 at 550.