SA Eagle Insurance Co Ltd v Hartley

• Jurisdiction: South Africa
• Court: Appellate Division
• Judge: Joubert ACJ, E M Grosskopf JA, Milne JA, Kumleben JA and Nicholas AJA
• Judgment Date: 26 September 1990
• Citation: 1990 (4) SA 833 (A)
• Hearing Date: 28 August 1990

E M Grosskopf JA:

The respondent was injured in a motor car collision on 5 February 1983. He instituted a third-party action in the Cape G Provincial Division against the appellant, who was the statutory insurer of the vehicle with which the respondent had collided. The matter was heard by Fagan J, who gave judgment in favour of the respondent on 21 December 1988. The respondent's total damages were calculated by the Court at R464 245. However, it was common cause at the trial that fault H in respect of the collision should be apportioned on a 50/50 basis. Consequently judgment was granted in the respondent's favour for payment of R232 123 as damages, with ancillary orders for the payment of interest and costs.

Included in this award was an amount for past loss of earnings, ie earnings lost by the respondent, as a result of his injuries, between I the date of the collision and the trial. This amount was calculated as follows. But for the accident, the respondent would have been able to earn R155 698 between the date of the accident and the date of the calculation of his damages (1 October 1988). The Court reduced this figure by a 5% contingency allowance, which then gave a figure of R147 913. The Court found that the respondent's actual income during this J period was R77 554.

E M Grosskopf JA

A By subtracting the actual income from the potential income the Court derived at a figure of R70 359, which reflected the respondent's loss of earnings in rand terms. The Court then added this figure to the amount awarded for future loss of earnings, and (by consent) made an allowance to compensate for the period between the date of calculation, ie 1 B October 1988, and the date of judgment, 21 December 1988. This gave a figure of R382 228 for a total of past and future losses of earnings as at 21 December 1988. To this was added what the Court called an 'Everson adjustment' of R31 457. This was an adjustment to compensate the respondent for the loss of purchasing power of money since the dates upon which his past losses of earnings had been incurred, and it is the propriety of this adjustment which is in issue in the present appeal. C The addition of the 'Everson adjustment' resulted in a total loss of earnings (past and present) of R413 685, which was added to the amounts found due in respect of past medical expenses and general damages to reach the total figure of R464 245 which I mentioned earlier. As I stated above, half this amount was awarded to the respondent as damages, D and it is accordingly half the amount of the Everson adjustment which will fall to be deducted if the appeal were to succeed (ie R15 728). The Court a quo granted leave to appeal against that portion of its judgment in which it held that the 'Everson adjustment' should be added to the respondent's past loss of earnings.

E The expressions 'Everson adjustment' and 'Everson principle' derive from the title of the pioneering case on this topic, viz Everson v Allianz Insurance Ltd 1989 (2) SA 173 (C). In that case also the plaintiff was entitled to an award in respect of past loss of earnings. What was not in dispute were the sources and quantum of the sums which the plaintiff would have earned had he not been injured, and those which he had in fact earned over the period; and therefore what in rand terms F he had lost. The plaintiff's actuary, Mr Koch, had expressed the opinion in evidence that to place the plaintiff in the position in which he would have been had he not been injured, it was necessary to add to the sum of the loss as expressed in rand terms an allowance to compensate for the reduction of the buying power of the rand during the period G between the date of the accident and the date of the trial. The fact and extent of the reduction were common cause. The Court (Howie J) dealt with the matter as follows (at 174I - 175F):

'What is in dispute in the present connection is whether I should add on the aforesaid allowance for lost buying power. Counsel intimated that H they were not aware of any reported case in which such addition had been effected with regard to loss of earnings up to the time of trial. Nor am I. In my view the question of an allowance for lost buying power is not a question involving legal policy but one of fact and the application of established principles. It is trite that plaintiff is entitled by the Court's award to be placed in the position, as far as is reasonably I possible, as that in which he would have been had he not been injured.

The evidence of Mr Koch established without any question that if one were simply to award plaintiff the number of rands he has lost he would not be placed in the required position and that it is necessary, in order to achieve that position, to adjust the numerical value of the rand sum involved by addition of the lost buying power allowance referred to. That adjustment does not amount to an indirect and legally J incompetent award of interest on damages as defendant's

E M Grosskopf JA

A counsel sought at one stage to suggest. Factually the evidence proves that plaintiff has indeed suffered loss in respect of the diminished buying power of the rands he would have earned uninjured. The allowance made by Mr Koch for increased earnings during the period, even assuming that such increases were prompted or necessitated by...