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ACTUARIAL CASE LAW REVIEW

Issue 122 – Monday 24 June 2024

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ACTUARIAL – Loss of support – Proof of deceased’s income – Mother claiming loss of support for herself and deceased’s two siblings – Affidavit from employer regarding deceased’s employment – Employer not called to testify – No Uniform Rule 38(2) application to admit affidavit into evidence – No contract of employment or bank statements provided to support mother’s testimony – Without evidence led to prove authenticity of documentary evidence, such only qualifying as hearsay evidence – Plaintiff not presenting sufficient evidence to confirm deceased’s income – Absolution from the instance is granted.

Facts: Mr Mokoena (the deceased) was a passenger in a motor vehicle driven by the insured driver. He was killed when the insured driver lost control of the vehicle in which they were travelling, resulting in the deceased sustaining fatal bodily injuries, in consequence of which he died at Matikwane hospital. Mr Mokoena was 20 years old at the time of the accident. The plaintiff is the mother of the deceased. She testified that the deceased, her first born child, was employed at Big Joe, a company that manufactures tissue paper. The deceased was earning R600 per week. He would save the weekly earnings and at the end of the month would withdraw the sum of R1,500 and give it to her. With this money, the plaintiff would buy electricity, food, give pocket-money to the minor children, and buy them clothing when needed, at least twice a year. During cross-examination the plaintiff stated that she would at times buy high-blood-pressure medication for herself.


Claim: The plaintiff lodged a claim for compensation against the Road Accident Fund, both in her personal capacity as the deceased’s mother as well as in her representative capacity, as mother and natural guardian of her two minor children. The two minor children were the deceased’s younger siblings. Negligence on the part of the driver was conceded on the basis that the Fund is liable for 100% of the plaintiff’s proven or agreed damages. Evidence of four witnesses was adduced in support of the plaintiff’s claim from which an assessment of the deceased’s earnings and duty to support would be made. The plaintiff testified and called three witnesses and their evidence was substantially the same. Based on what the plaintiff told them, they testified that the deceased was supporting the plaintiff and the minor children.


Discussion: The actuary relied on information provided to him in an affidavit by the deceased’s employer and examined all the permutations based on this information. In this affidavit, the deponent merely states that the deceased was temporarily employed by him prior the accident earning R600 per week, he goes on to state that he did not issue any salary advice. The period for which the deceased had been employed is not stated. All that the court has is what the plaintiff says the deceased earned. Nothing was presented in the form of a contract of employment or bank statements. These are some of the documents that would have given a clear indication regarding the deceased’s income, thus giving credence to the plaintiff’s testimony. That is so, even though the plaintiff in her testimony stated that the deceased had a bank account. The plaintiff, therefore, remains the only source of information.


Findings: The court should not assess damages based on incomplete information or on an inadequate factual basis. This more so, where the evidence is available to the plaintiff, which she has not produced. Section 3(4) of the Law of Evidence Amendment Act 45 of 1988 defines hearsay evidence as evidence, whether oral or in writing, the probative value of which depends upon the credibility of any person other than the person giving such evidence. Hearsay evidence is only admissible in very limited circumstances. The author of the affidavit, the deceased’s former employer, was not called to testify. Likewise, an application in terms of Uniform Rule 38(2) was not brought to have the affidavit admitted into evidence where the plaintiff sought to rely on the contents of the affidavit. If evidence is not led to prove the authenticity and originality of documentary evidence, such evidence will only qualify as hearsay evidence. The plaintiff has not presented enough evidence to confirm the deceased’s income and has failed to establish the facts in support of her case to the satisfaction of the court.


Order: Absolution from the instance is granted. The plaintiff is ordered to pay the Fund’s costs.

MOLELEKI AJ

ACTUARIAL – Loss of income – Burn injuries – Suffering burns at hospital from hot water – Emotional trauma, depression and permanent disfigurement – Employment as trolley pusher and then gardener – Was HIV positive and suffered from health issues prior to injuries and highest education of Grade 8 – With therapy and medication, his self-esteem and depression could improve – Retirement age of 60 when he will qualify for state pension – Contingency of 35% pre-morbid and 40% post-morbid – Future loss of income of R223,279.

Facts: Mr Lebogo, the plaintiff, was 27 years old when he was taken by ambulance and admitted as a patient at Seshego Hospital. The plaintiff was vomiting, had severe abdominal pain, and he was confused and weak. He was admitted and was given an injection to sedate him, which caused him to sleep. The plaintiff woke up having sustained second-degree burn wounds over his body, with no idea of how this happened to him. The plaintiff testified that he was burned on his back going down to his buttocks, his right hand and arm, his left hand and arm, and also his right leg. He had a cut/abrasion on his chin and above his left eye which left a scar. He testified that he still suffers from the burn wounds, especially when it is hot, he has to wear light clothes. He can't wear a belt because it will cause the skin on his back to tear. The burn wounds also affected his vision. He received a disability grant due to the burn injuries caused by the hospital.


Claim: After considering the evidence, the court finds that in all probability the hospital had issues with water, alternatively the water system was defective. The hospital staff used an urn to heat up or even boil the water, and failed to test the heat of the hot water before the plaintiff was bathed and he consequently got burned. It is self-evident that the burns were caused by the negligence of the staff of the defendant in failing to properly care for the plaintiff. The merits are awarded 100% in favour of the plaintiff.


Discussion: The plaintiff suffered emotional trauma and still suffers from depression, over and above the burn wounds, as well as permanent disfigurement and scarring as a result of the incident. His highest educational qualification is Grade Eight and he is employed in the informal employment sector, pushing trolleys at supermarkets. He has no post-school qualifications. Further, the plaintiff is HIV+, smokes cannabis and drinks alcohol. He however had no functional impairment as a result of these conditions or substances prior the burn injuries. Plaintiff indicated that his annual income was R9,360 and he received disability grant of R16,770. He was therefore was in an advantaged position in that his disability grant received was in actual fact more than his total income per annum. It can therefore not be said that he suffered a loss of past income. 


Findings: The plaintiff appears to be adversely impacted by the residual psychological pathology, as well as the serious and permanent disfigurement arising from the scarring. Plaintiff testified that he cannot work as he used to because he gets tired. This may also be as a result of his HIV positive status. With therapy and medication, the plaintiff's self-esteem and depression can become better or even return to normal. Plaintiff will suffer some loss of future income, however, his income should only be calculated to the age of 60 (being the age he will qualify for a state pension) and not 64, considering the fact that plaintiff was diagnosed to be HIV+, suffered from health issues at the time of his admission, his highest grade is only Grade 8, and he was a trolley pusher up to or about 2020/2021 whereafter he did piece jobs as a gardener. In addition, a contingency of 35% pre-morbid should be applied and not only 15% and 40% post-morbid instead of only 35% post-morbid. Accordingly, a future loss of income in the amount of R223,279 is reasonable.


Order: The MEC is ordered to pay R1,289,648 calculated as follows: future medical and related expenses of R416,369; past and future loss of earnings of R223,279; and general damages and enjoyment of amenities of life of R650,000.

NAUDE-ODENDAAL J

ACTUARIAL – Loss of income – Extent of injuries – Court a quo suspicious of seriousness of appellant's injuries – Committed irregularity by awarding arbitrary amount for loss of earnings – Uncontested and undisputed evidence of medico-legal experts revealed that sales manager sustained severely debilitating orthopaedic injuries – In conjunction with severe brain injury, these rendered him entirely unfit for employment – Only employed due to employer's sympathetic and accommodating demeanour – Court on appeal replacing award with one based on the actuarial calculations.

Facts: Mr Bakkes was a sales manager, born in 1973. He was cycling one day in 2017 when he was involved in a collision with a Toyota Quantum motor vehicle along the N6 route connecting Queenstown and Jamestown. Mr Bakkes was 44 years of age at the time of the collision and married with two teenage daughters. He was promoted at work shortly before the collision to the position of sales manager at a motor vehicle retail group and was a successful semi-professional cyclist with a sponsorship, enabling him to ride thousands of kilometres per month and frequently compete in cycle races. He suffered a severe traumatic brain injury, which comprised of a diffused concussive brain injury together with focal damage to both frontal lobes, a severe compression fracture to the thoracic vertebra, a transverse fracture to his sacrum, a compression fracture of the lumbar vertebra, as well as other fractures and nerve paralysis resulting in double vision.


Appeal: The appellant is Advocate Tromp NO, acting as the curatrix ad litem on behalf of Mr Bakkes. The appellant agreed to accept the Fund's offer to compensate him for 90% of his damages. The court a quo awarded a net amount of R3,100,000, after the 10% merits apportionment, for loss of future earnings and a net amount of R1,350,000 for general damages, after the 10% merits apportionment. That court took into consideration the submissions by the Fund that although the plaintiff suffered serious injuries there is improvement in as far as his mobility is concerned and he was healing well. The court a quo noted that Mr Bakkes had no operations and he was in hospital for a week and for a person who was seriously injured as alleged by the plaintiff with his multiple injuries he ought to have been in hospital for more than a month. The appeal turns on whether the award granted by the court a quo was justifiable.


Discussion: The uncontested and undisputed evidence of the medico-legal experts reveals that Mr Bakkes sustained severely debilitating orthopaedic injuries, which, in conjunction with a severe brain injury, renders him entirely unfit for employment. The updated medico-legal reports confirm that, even though the appellant remained employed from the date of the collision to the hearing, his employment situation deteriorated to the point where he was at risk of being terminated as soon as his claim against the Fund was finalised. In other words, Mr Bakkes is unfit for employment and has only been able to sustain employment due to his employer's sympathetic and accommodating demeanour. The court a quo failed to assess all the evidence placed before it properly. In so doing, it misdirected itself on the facts, thereby committing an irregularity. Had it not done so, it would not have been suspicious of the seriousness of the appellant's injuries. The fact that Mr Bakkes was admitted to the hospital for a week as opposed to a month and had not undergone any surgical procedures cannot be a measure of the severity of his injuries. The evidence is that his injuries rendered him unfit for employment.


Findings: The court a quo committed an irregularity by awarding an arbitrary amount concerning the loss of earnings. Had it not done so, it would have addressed its concerns by applying contingencies to the calculations done by the actuary. Based on various assumptions, the actuary calculated that the appellant's value of income uninjured would have been R2,116,380, for income injured would be R1,432,226, and the future loss of earnings would be R8,232,878. He suggested deducting 5 % for past loss, 15 % for future income (uninjured) and no contingency for future income (injured) as the appellant would be rendered unemployable. After applying these contingencies, the past loss of earnings amounted to R578,334 and the future loss of earnings amounted to R6,997,946, making the total loss of earnings R7,576,280. As the CAP introduced by the Road Accident Fund Amendment Act is applicable, loss of earnings is limited as follows: past loss of earnings of R578,334; future loss of earnings of R4,283,830; and a total loss of earnings of R4,862,164.


Order: The appeal is upheld with costs. Paragraph 1.3 of the order of the court a quo is replaced such that loss of earnings is awarded at R4,862,164 and general damages at R1,800,000 for a total of R6,662,164.

MAHOSI J (BASSON J and DAVIS J concurring)

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BOOKS / RESEARCH / ARTICLES

Authors:  J de-Villiers-Strijdom and N Krige


Orientation: As a standard practice, retirement capital is converted into either an immediate life annuity (annuitisation), affording significant protection against longevity risk or a living annuity (self-annuitisation), exposing capital to volatile investment returns.

Research purpose: This article presents a number of exploratory factors (based on annuity puzzle literature) that associate with retirees’ satisfaction levels, with respect to the eventual outcome of their living annuity choice.

Motivation for the study: Reticence among retirees to protect themselves against longevity risk is an annuity puzzle that has been the subject of vigorous academic debate.

Research approach and method: A quantitative research approach was followed by performing an ordinary least squares (OLS) linear multiple regression analysis in order to ascertain which factors associate with the satisfaction levels of living annuitants.

Main findings: The most interesting conclusion is that, although one would expect active involvement in managing retirement capital among living annuitants to contribute to satisfaction levels, the desire to control and manage living annuity capital in the pursuance of capital growth, actually significantly contributes to retiree discontentment or dissatisfaction.

Practical implications: Financial education and counselling with respect to optimal annuity decision-making could restore the promise of retirement income security.

Contribution: Identifying the annuity puzzle factors (previously mainly reserved for immediate life annuities) that are associated with living annuitant satisfaction levels, serve as the basis for the contribution of this study.

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