SA Eagle Insurance Co Ltd v Hartley

• Jurisdiction: South Africa
• Citation: 1990 (4) SA 833 (A)

SA Eagle Insurance Co Ltd v Hartley
1990 (4) SA 833 (A)

1990 (4) SA p833

Citation	1990 (4) SA 833 (A)
Court	Appellate Division
Judge	Joubert ACJ, E M Grosskopf JA, Milne JA, Kumleben JA and Nicholas AJA
Heard	August 28, 1990
Judgment	September 26, 1990

Flynote : Sleutelwoorde

Negligence — Action for damages — For bodily B injuries — Loss of earnings — Adjustment for loss of purchasing power of money since date upon which loss of earnings incurred — Such adjustment altering quantum of debt according to when plaintiff seeking to exact it — Such result in conflict with principle of nominalism of currency underlying our law C of obligations — Monetary debt to be paid according to its nominal value — Defendant to make good plaintiff's loss of income by paying to him number of rands which he has lost irrespective of whether purchasing power of rand has varied in interim — In assessing non-monetary loss, eg general damages, valuation to be made in terms of currency values as D they are at time of valuation — Quaere: Whether our Courts should have statutory power to award interest to compensate plaintiffs for ravages of inflation in respect of monetary losses incurred prior to trial. E

Headnote : Kopnota

In an action for damages resulting from a motor vehicle collision, the respondent (plaintiff) had been granted an award for damages which included an amount for past loss of earnings. The trial Court had arrived at a total figure for past and future losses of earnings as at the date of judgment and then, relying on the judgment in the case of Everson v Allianz Insurance Ltd 1989 (2) SA 173 (C), adjusted that figure by adding an amount 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. On appeal, the Court held that the F application of the so-called 'Everson principle' was tantamount to altering the quantum of the debt according to when the plaintiff sought to exact it, and that this result was in conflict with the principle of nominalism of currency which was firmly entrenched in all aspects of South African law, including the law of obligations. The essence of nominalism of currency, in the field of obligations, was that a debt sounding in money had to be paid in terms of its nominal value G irrespective of any fluctuations in the purchasing power of currency, and it placed the risk of a depreciation of the currency on the creditor and saddled the debtor with the risk of an appreciation.

The Court applied the principle of currency nominalism in the instant case as follows: the respondent had suffered a loss of income, expressed in rands, prior to the trial. That loss had to be made good by the appellant (the authorised insurer of the motor vehicle) by paying to the respondent the number of rands which he had lost, irrespective of H whether the purchasing power of the rand had varied in the interim. This did not mean that the effects of inflation were never relevant in the computation of damages. Where, for example, damages for future loss of earnings or loss of support had to be computed, regard should be had to what the plaintiff or the breadwinner would have earned in the future and the Court ultimately had to calculate what such loss was likely to be in rand terms, so that the loss of purchasing power of the currency I was relevant to the enquiry, but only indirectly. As far as general damages were concerned, the Court remarked that one was there dealing with the valuation of a non-monetary debt and that such a valuation must obviously be made in terms of currency values as they are at the time of valuation and not in terms of the values of an earlier time, and that this did not offend against the principle of currency nominalism.

The Court concluded that the above result was not satisfactory: it was unfair that in many cases there was no mechanism by which a Court could J compensate a plaintiff for

1990 (4) SA p834

A the ravages of inflation in respect of monetary losses incurred prior to the trial. The Court remarked that in other jurisdictions a statutory power to award interest was used for this purpose and that the question of whether our Courts should have a similar power was essentially a matter of policy which was for the Legislature to decide.

Everson v Allianz Insurance Ltd 1989 (2) SA 173 (C) overruled.

The decision of the Cape Provincial Division in Hartley v SA Eagle B Insurance Co Ltd altered as regards the quantum of damages awarded.

Case Information

Appeal from a decision in the Cape Provincial Division (Fagan J). The facts appear from the judgment of E M Grosskopf JA.

D R Mitchell for the appellant referred to the following authorities: C As to previous decisions dealing with the question of an adjustment for loss of purchasing power, see Everson v Allianz Insurance Ltd 1989 (2) SA 173 (C); Jonker v President Insurance Co Ltd (unreported, WLD case No 14715/87, delivered on 2 March 1989); Moekoena v President Insurance Co Ltd (unreported, WLD Case No 16170/87, delivered 5 June 1989) [*] . As to the basis of the judgments holding that an adjustment for loss of D purchasing power should be made, see General Accident Insurance Co SA Ltd v Summers; Southern Versekeringsassosiasie Bpk v Carstens NO; General Accident Insurance Co SA Ltd v Nhlumayo 1987 (3) SA 577 (A). As to the concept of interest on damages, see Victoria Falls & Transvaal E Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 31 - 3; Westrand Estates Ltd v New Zealand Insurance Co Ltd 1926 AD 173 at 195 - 6; Union Government v Jackson and Others 1956 (2) SA 398 (A) at 412 - 13; Russell NO and Loveday NO v Collins Submarine Pipelines Africa (Pty) Ltd 1975 (1) SA 110 (A) at 155 - 6; Bellairs v Hodnett and Another 1978 (1) SA 1109 (A) at 1145 - 9; Siman & Co v Barclays National Bank Ltd 1984 (2) SA 888 (A) at 926C - G; General Accident Versekeringsmaatskappy F Bpk v Bailey NO 1988 (4) SA 353 (A) at 360E. As regards the recognition of inflation as a factor in the award of damages in the South African law, these references are limited to a recognition that past awards of general damages must be considered in the light of any reduction in the purchasing power of money since the date of such previous award, see Phillip Robinson Motors (Pty) Ltd v N M Dada (Pty) Ltd 1975 (2) SA 420 (A) G at 428 - 9; Norton v Ginsberg 1953 (4) SA 537 (A) at 541 and 551; May v Parity Insurance Co Ltd 1967 (1) SA 644 (D) at 647; Lutzkie v SAR & H 1974 (4) SA 396 (D) at 398; Stephenson v General Accident Fire and Life Assurance Corporation Ltd 1974 (4) SA 503 (RA) at 506; Burger v Union National South British Insurance Co Ltd 1975 (4) SA 72 (W). As to the H contention that these judgments do not constitute a departure from the general rule regarding the date of assessment of damages and are not made on the basis of actuarial evidence or by slavishly applying increases in the consumer price index, see AA Onderlinge Assuransie Assosiasie Bpk v Sodoms 1980 (3) SA 134 (A) at 141. As regards the I principle of currency nominalism as hitherto applied in the majority of Western legal systems, see Spandau 'Inflation and the Law' 1975 (92) SALJ at 31 - 58. As to whether the matter should enjoy the attention of the Legislature, see Bailey NO v General Accident Insurance Co Ltd 1987 (2) SA 702 (C) at 706A - B. As to the object of an award

1990 (4) SA p835

A of damages, see Corbett, Buchanan and Gauntlett The Quantum of Damages in Bodily and Fatal Injury Cases 3rd ed at 5; Koch Damages for Lost Income at 29; Union Government v Warneke 1911 AD 657 at 665; Bay Passenger Transport Ltd v Franzen 1975 (1) SA 269 (A) at 274H. As to the remoteness of damages, see Erasmus and Gauntlett in Joubert (ed) The Law of South Africa vol 7 paras 22 - 5. As to the position in English law, B see Halsbury's Laws of England 4th ed (1975) para 1204; Jefford v Gee [1970] 2 QB 120 ([1970] 1 All ER 1202 (CA)); Birkett v Hayes and Another [1982] 1 WLR 816 CA ([1982] 1 All ER 710); Wright v British Railways Board [1983] 2 All ER 698 (HL); McGregor on Damages (1980) at 328 et seq; Teseder-Griffin and Another v Co-operative Insurance Society Ltd [1956] 2 QB 127 ([1965] 2 All ER 33). As to the Canadian law, see C McCraig v Reys (1978) 90 DLR (3d) 13 (British Columbia Court of Appeal); Leitch Transport Ltd v Neonex International Ltd (1976) 106 DLR (3d) 315 (27 OR (2d) 363) (Ontario Court of Appeal); Waddams The Law of Damages (1983) paras 792 - 8. As to the Australian law, see Fleming The Law of Torts 7th ed (1987) at 209 and cases cited in footnote 51; Luntz D Assessment of Damages for Personal Injury and Death 2nd ed (1983) paras 7.1.01 - 7.1.10.

P A L Gamble for the respondent referred to the following authorities: The Court, following the decisions in Everson v Allianz Insurance Ltd 1989 (2) SA 173 (C) and Jonker v President Insurance Co Ltd (unreported, WLD case No 14715/87, delivered on 2 March 1989) should dismiss the appeal. As to the liability of a debtor to pay interest not arising E until the debt is liquidated, see Victoria Falls & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 31 - 3. As to declining currency values, see Spandau 'Inflation and the Law' (1975) 92 SALJ at 31 - 58; Norton v Ginsberg 1953 (4) SA 573 (A); Sigournay v Gillbanks 1960 (2) SA 552 (A) at 556C; Legal Insurance Co Ltd v Botes F 1963 (1) SA 608 (A) at 619G - H; AA Onderlinge Assuransie Assosiasie Bpk v Sodoms 1980 (3) SA 134 (A) at 141G. As to the Court continually adjusting awards for general damages upwards to compensate for the effects of inflation, see the Legal Insurance case supra at 619H; Stephenson NO v General Accident Fire & Life...