Mohan and Others v Road Accident Fund (7724/01) [2007] ZAKZHC 36; 2008 (5) SA 305 (D); (11 December 2007)

IN THE HIGH COURT OF SOUTH AFRICA Reportable

DURBAN

AND COAST LOCAL DIVISION

Case No 7724\01

In the matter between :

CHUMPATHI MOHAN First Plaintiff

ISHAN MOHAN Second Plaintiff

CHANTAL MOHAN Third Plaintiff

and

ROAD ACCIDENT FUND Defendant

J U D G M E N T

NICHOLSON J

It is common cause that Dhandshwar Mohan (hereinafter referred to as “the deceased”) was fatally injured in a motor vehicle accident on 27th December 1996 at Umbumbulu within the jurisdiction of this Court.

All three plaintiffs are claiming damages, being loss of support, from the defendant.

It is common cause that the defendant, the Road Accident Fund, has conceded liability and agreed to pay proven, alternatively agreed damages.

It is also common cause that the first plaintiff is the widow of the deceased, the parties having been married in community of property, and the second and third plaintiffs are the deceased’s son and daughter respectively.

At the time of his death the deceased, who was born on 11th February 1953, was a self-employed panel beater.

The trial matter was set down for five days. The matter stood down from the first day and counsel negotiated a method of shortening the proceedings. No evidence has been led in this case but the parties have agreed certain facts and on the basis of this agreement, a joint minute was placed before the Court by the parties’ respective actuaries.

The calculations were based on the following agreed figures :

That the deceased’s income was R18 000,00 per month and would have increased with inflation until his retirement age at 65;

That the second and third plaintiffs (the deceased’s children) would have remained dependant upon the deceased until the end of the respective calendar years during which they would have reached the age of 20; and

The contingency deductions would be 5% in respect of past loss and 15% in respect of future loss.

It is common cause that at the time of his death the deceased owned two properties which were unencumbered, House 19, 56th Avenue, Umhlatazana (Lot 249) and Lot 700 at 63 Chatsworth Main Road (hereinafter referred to as “the residential property” and “the rental property”). The first plaintiff continues to reside in the residential property with the two children.

As a consequence of the death of the deceased, the plaintiff began to receive the taxable rental income of R3 000,00 per month which increased with inflation.

As a consequence of the deceased’s death the first plaintiff became the sole owner of both properties and the recipient of all rentals received.

Mr Khan has appeared for the plaintiffs and Mr McIntosh for the defendant.

The actuaries have agreed and included in their calculations the relevant values of the properties, the pertinent dates being the municipal values at the time of death, the market value at the time of death and the market value at the time of settlement. These calculations are included in the joint minute.

The agreed minute postulates five bases and the Court was invited to select the most legally appropriate in the circumstances.

The first scenario contemplates the municipal valuations of the properties in 1996 and does not take into account the residential property and a car and firearm. Mr Khan conceded that the municipal valuation was not the real valuation of the property and for this reason that scenario fell to be rejected.

The second scenario is similar to the first save it contemplates a proper agreed valuation of the rental property, in other words at the time of the deceased’s death.

The third is similar to the second but includes both properties.

The fourth excludes the residential property but assumes the current value of the rental property.

The fifth includes both properties at current value.

The parties have agreed that the damages suffered by the plaintiffs stand to be reduced due to the accelerated inheritance. The parties have agreed all the relevant figures and contingency deductions.

However, there are two issues that remain in dispute. The parties cannot agree whether the residential property should be included in the actuaries’ calculations regarding accelerated inheritance and the parties cannot agree as to what date the values should be allocated to the respective properties.

In determining what damages should be ordered when a breadwinner is killed the basic measure employed is the difference between the position of the dependant as a result of the loss of support, and the position the dependant could reasonably expect to have been in had the deceased not died. Legal Insurance Co Ltd v Botes 1963 1 SA 608 (A).

This generally means that benefits received by dependants on the death of their breadwinner – such as bequests under a will or by intestacy – have to be deducted. Legal Insurance Co Ltd v Botes supra 614; Groenewald v Snyders 1966 3 SA 237 (A).

The important question in this case is whether less apparent benefits, such as the acquisition of ownership of a house or car or furniture previously used jointly with the deceased but owned by the plaintiff, are to be taken into account. See Snyders v Groenewald 1966 3 SA 785 (C) 790; Maasberg v Hunt, Leuchars & Hepburn Ltd 1944 WLD 2 4; SANTAM Insurance Ltd v Meredith 1990 4 SA 265 (TkA) 269.

In SANTAM v Meredith Goldin JA held at p269 -70

‘What is usually described as 'invariable consequences' of marriage includes the duty of a husband to support his wife with all her requirements which he can afford to provide. The duty of support is not dependent upon whether the marriage is in or out of community of property. Community of property concerns the ownership of the property of the spouses as follows:

'Community of property is a universal economic partnership of the spouses. All their assets and liabilities are merged in a joint estate, in which both spouses, irrespective of the value of their financial contributions, hold equal shares.'

(See Hahlo The South African Law of Husband and Wife 5th ed at 157 - 8.)

In addition to her compensation for loss of support she also acquires an additional source of income from the proceeds of her half of the estate which she can use for her own benefit. In my view such income can constitute a benefit which accrues as a consequence of the death of the deceased. The division of the joint estate is not itself a benefit but the proceeds from her exercise of ownership of her half can, depending on all the facts, constitute, as does accelerated succession, a deductible benefit. (See De Wet NO v Jurgens 1970 (3) SA 38 (A) at 46 - 51.) In deciding whether or to what extent income does in fact constitute a deductible benefit it is necessary to consider and give effect to the situation as a whole. (See Marine and Trade Insurance Co Ltd v Mariamah and Another 1978 (3) SA 480 (A) at 488 - 9.)

To sum up, the one half of the estate received by respondent is not by itself a benefit because it was always her property during the subsistence of the marriage. But the acquisition of the rights of ownership of her half upon the dissolution of community can result in a financial benefit which accrues as a consequence upon the death of the deceased. Whether it does so in any particular case is a question of fact, dependent upon the economic consequences as a whole concerning the value of and income from her half of the estate.’

In this matter the parties handed in a minute as I have mentioned above setting out all the relevant facts. I asked the counsel whether the plaintiff (the widow) and her two children were occupying the matrimonial home. I was informed that the widow that is the first plaintiff and her son would live in the matrimonial home for the foreseeable future. I understand that the daughter has moved out. There was, therefore, no indication that the house as such or any part thereof would be let out or sold to provide some benefit that had not accrued prior to the death of the deceased.

In Maasberg at page 13 Ramsbottom J (as he then was) held as follows:

“As her husband’s heiress, the plaintiff has inherited his half of the joint estate. The only asset in the joint estate is a plot of ground, a dwelling house, and furniture… half of which the plaintiff inherits from her husband. It was contended that a deduction must be made for the value of the accelerated acquisition of the dominium in this half of the property… [A]lthough she is getting the dominium in this half, she has always had the use of it, and is not pecuniarily better off. I agree with this argument. During his lifetime, Maasberg supported his wife in their joint home, he did not only provide her with half of his income, he provided her also with a house to live in and with furniture for her comfort. If it is claimed that a deduction should be made for the accelerated receipt of the inheritance, an addition must be made for the value of the accommodation supplied by Maasberg to the plaintiff. I think that the one may fairly be set off against the other. The answer to the argument that she can now sell the property and use the money is, I think, that if she did so she would have to provide herself with accommodation elsewhere at her own expense – presumably out of the proceeds of the sale. She has lost the value of the accommodation which her husband provided and whether that is compensated by the share of the house which she has inherited or by what she could get for that share if she were to sell it, the result is the same. No deduction can be made on this head.’

The first plaintiff would have had to rent suitable accommodation or buy a similar house if she sold the matrimonial home. To all intents and purposes she is in no better a situation that she was prior to the death of her husband. No evidence was directed to showing that there was any different benefit. I cannot therefore make any deduction in this regard.

The second question deals with the time at which the value of the rental property is determined. In the SANTAM case Goldin JA went on to hold:

‘The undisputed facts establish that the deceased was a successful businessman whose skill and acumen created and increased the assets and value of their joint property. When they were married in 1964 they did not possess any property. Within a few years the deceased first acquired a garage with borrowed money and then acquired a substantial number of profit providing assets by using the profits derived from existing businesses.

He owned a variety of different business enterprises which yielded substantial profits. This included MS Motors, Alfa Laval Agency business and an hotel as well as a farm and several houses. He also owned a half share in a block of flats. He resided on the farm on which he effected many improvements such as replacing an existing cottage with 'a beautiful and spacious home'. He provided the family with all their needs and they enjoyed luxury and unstinted care. After his death respondent tried to run the garage but was unable to cope because she lacked his skill and ability. Similarly she had to dispose of the agency business and the hotel and other assets.

During his lifetime the value of the community and consequently her undivided share thereof was consistently increasing and yielding increased profits. The capital value of their assets increased by using and saving profits not required by them for living expenses and at the same time their capital value increased as a result of economic factors. There is no reason to doubt that he would have continued to maintain this situation for many years as there was no significant difference in their ages and he was capable of maintaining and using his skill and flair for successful business development.

In the result, upon his death the growth of her half share ceased. The proceeds of her half share was substantially less than the value of the profits and growth of her half share before the dissolution of the community upon his death. In fact the capital value or yield of her half share not only ceased to increase but with the constant decrease in the value of moneys it became and will continue to be worth far less. Accordingly, her income from her ownership of the half share after his death and the value thereof resulted in financial loss and therefore no benefit accrued when the situation is considered as a whole. There is no substance in the contention, having regard to the evidence, that she acquired a 'double benefit'. Professor P Q R Boberg in his learned article summarised the basis for making deductions as follows:

'The underlying rationale and basis of deduction, when it takes place, is the "golden rule" enunciated above, namely that damages may only be awarded for the actual pecuniary loss caused by the death, and that "the actual pecuniary loss of each individual entitled to sue can only be ascertained by balancing, on the one hand, the loss to him of the future pecuniary benefit, and, on the other, any pecuniary advantage which from whatever source comes to him by reason of death".'

(See Boberg 'Deductions from Gross Damages in Actions for Wrongful Death' (1964) 81 SALJ 194 at 197, Marine and Trade Insurance Co Ltd v Mariamah and Another (supra at 488) and compare Nochomowitz v Santam Insurance Co Ltd 1972 (1) SA 718 (T) at 727.)’

This passage was relied on by Mr McIntosh to show that the value of the property is determined at the date of the settlement. I find nothing in the dicta of the learned judge indicating any such conclusion. All the passage seems to show is that hindsight gave a very good indication of what her business acumen was like. The enquiry is still what the benefit to the plaintiff was at the date of death of the deceased.

To suggest any other date would not evaluate her position at the date of his death. It would also lead to all sorts of anomalies. Firstly the date of assessment might fluctuate depending on when the parties finally decided to settle the matter. Secondly all other calculations relating to the deceased’s earning capacity are made as at the date of his death. Any subsequent events, in my judgment, can only be used to obtain a bird’s eye view of what the financial circumstances were at that date.

There is support for this In Snyders case in the CPD at 791 C-F where Van Winsen J held that

‘It was contended on defendant's behalf that the benefit which plaintiff derived from the house over and above the benefit she had enjoyed from the occupation of the house before her husband's death was represented by the value of the dominium of the house, and that the accelerated value of this should be a deduction from the amount due to plaintiff. Mr. Steyn argued that no deduction should be made in this regard, since the changed relationship between plaintiff and this particular asset after her husband's death was a matter of form rather than of substance. It seems to me that the dominium acquired by plaintiff under the will is a benefit over and above that enjoyed by her before her husband's death, and that some deduction must be made for this. The deduction would at most be the accelerated value of a sum representing the difference between the value of the house at the date of the deceased's death and the amount of the bond. The evidence shows that the house was sold some eight months after the deceased's death for the sum of R6,700. There is no evidence that this was its value in June, 1962. It is accordingly not possible to calculate the difference between the value of the house as at June, 1962, and the amount of the bond. The most practical way of dealing with the problem is for the parties to agree to be bound by the certificate of a sworn appraiser - jointly appointed by them - as to its value in June, 1962. The amount of the deduction would then be the accelerated value of the sum representing the difference between the appraiser's figure and the amount of the bond.’ (Emphasis added.)

It is clear that Van Winsen J was clear that the applicable date was the deceased’s death and that the task of the sworn appraiser in the extract quoted above was to ascertain the value of the house at the time of the deceased’s death. It is, of course, trite law that in an action for the recovery of damages for a delict these are assessed at the date of such delict. See Philip Robinson Motors (Pty) Ltd v N M Dada (Pty) Ltd 1975(2) SA 420 (AD) at 429 H.

In the light of the above conclusions I must therefore determine that the second scenario posited above by the actuaries is the most appropriate.

In the premises I grant judgment as follows:

For First Plaintiff damages in the sum of R 1 285 439,

For Second Plaintiff damages in the sum of R 148 723,

For Third Plaintiff damages in the sum of R 192 965.

Defendant is ordered to pay all three Plaintiffs’ costs.

Date of hearing : 1st November 2007

Date of judgment :11th December 2007

Counsel for the Plaintiff : M Khan (instructed by Sayed and Company)

Counsel for the Defendant : K C McIntosh (instructed by Askew Grindlay and Partners)