THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No: 311/08

ERASMUS FERREIRA & ACKERMANN
First Appellant
CHRIS FERREIRA
Second Appellant
HENDRIK ACKERMANN
Third Appellant

and

KERRY-LYNN FRANCIS
Respondent

Neutral citation:
Erasmus Ferreira & Ackermann v Francis (311/08) [2009]
ZASCA 54 (27 May 2009)

Coram:
STREICHER, FARLAM, NUGENT, CLOETE & CACHALIA
JJA

Heard:
17 MARCH 2009

Delivered:
27 MAY 2009

Summary:
Section 1(1) of the Assessment of Damages Act 9 of 1969
which, in an action for damages arising from a person’s
death, prohibits insurance money, pensions or benefits from
being taken into account in calculating loss of support, does
not apply to a dependant’s action against attorneys who
negligently caused the loss of support claim to become
prescribed. Where, however, a dependant received a
collateral benefit from an insurance company in respect of
the prescribed claim it was held that it was fair that the
attorneys, who had caused the loss of support claim to
become prescribed, should not be entitled to deduct that
benefit from their overall liability to the dependant.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from:  High Court, Pretoria (Visser AJ sitting as court of first
instance).

The following orders are made:
(i)
The appeal is dismissed with costs.
(ii)
The order of the court below is amended to include the agreed
provision for interest so that it reads:
‘Judgment is entered for the plaintiff against the defendants, jointly and
severally, one paying the others to be absolved, in the amount of R850 000
(eight hundred and fifty thousand rand) with interest at the rate of 15.5% per
annum calculated from the date 14 days after date of judgment with costs
which costs are to include the costs attendant upon the employment of senior
counsel.’

_____________________________________________________________________

JUDGMENT
_____________________________________________________________________

CACHALIA JA (STREICHER, FARLAM, NUGENT, CLOETE JJA concurring)

[1] This an appeal from the Pretoria High Court (Visser AJ) with its leave
against a judgment ordering the appellants to pay the respondent an amount
of R850 000 for damages arising from the professional negligence of the
appellants. The high court decided the case on the basis of a stated case
agreed to by the parties. It will be convenient to refer to the parties as they
were referred to in the court below – the appellants were the defendants and
the respondent was the plaintiff.

[2] The plaintiff was married to one Bruce Francis (‘the deceased’) who
was killed in a motor vehicle collision on 9 October 1998 giving rise to a third
party claim by the plaintiff for damages for loss of support against the Road
Accident Fund (‘the Fund’) under the Road Accident Fund Act 56 of 1956. The
plaintiff instructed the defendants, who are attorneys, to pursue her claim
against the Fund. They accepted the instruction and lodged the claim but
failed to issue summons timeously. The claim thus became prescribed and
the plaintiff sued the defendants for professional negligence. Her claim
against the defendants was for R850 000 – the amount that the parties
agreed she would have been entitled to recover from the Fund for her loss of
support had the defendants not caused her claim to become prescribed.

[3] The deceased was employed at Douglas Colliery Services Limited
(‘Douglas Colliery’). In terms of his employment contract with Douglas Colliery
he was (and on his death his dependants were) entitled to benefits under an
insurance policy known as a Commuting Journey Policy (‘the CJP’) issued by
Rand Mutual Assurance Company Limited (‘Rand Mutual’). It is common
cause that, the plaintiff became entitled to payment of a pension of R695 525
from Rand Mutual in terms of the CJP arising from the death of the deceased,
and that the pension is indeed being paid to her. (The figure comprises both
the amounts which the plaintiff has received in the form of monthly pension
payments, and the capitalised value of future payments.) Had the defendants
pursued the plaintiff’s claim against the Fund, the Fund would not have been
entitled to bring this amount into account as it was ‘for loss of support as a
result of a person’s death (and constituted) insurance money, pension or
benefit’ as envisaged in s 1(1) of the Assessment of Damages Act 9 of 1969
(‘the Assessment Act’), which the Fund, in terms of the section, would have
been precluded from deducting from its overall liability. However, in terms of
the CJP the plaintiff would have been obliged to pay Rand Mutual out of the
amount received from the Fund to the extent of the benefit payable by Rand
Mutual in terms of the CJP.

[4] So, had the defendants pursued the claim against the Fund on the
plaintiff’s behalf they would have recovered R850 000 in respect of the

plaintiff’s loss of support from the Fund. She would have had to pay R695 525
to Rand Mutual, retaining a balance of R154 475 and would have continued to
receive the CJP pension. She would thus, in effect, have received a total of
R850 000 comprised of her monthly CJP pension to the value of R695 525
and the R154 475 that she would have retained out of her claim against the
Fund.

[5] The defendants contended that the plaintiff was not obliged to
indemnify Rand Mutual to any extent out of damages recovered from them.
This meant that she suffered damages in an amount of R154 475 and not
R850 000 as a result of their negligence. Should they be ordered to pay
R850 000 to the plaintiff she would, they submitted, be R695 525 better off
than she would have been had they not allowed her claim to become
prescribed. The plaintiff on the other hand contended that in terms of the CJP
she is obliged to indemnify Rand Mutual out of damages recovered from any
third party to the extent of the benefit payable by Rand Mutual. In the
alternative she contended that her claim against the defendants is a claim for
loss of support as a result of the death of her husband and that in terms of s 1
of the Assessment Act the insurance money payable to her may not be taken
into account in assessing her damages claimed from the defendants.
Consequently the stated case posed the following questions for determination
by the high court:
‘The Court is asked to adjudicate upon the effect of the (p)laintiff’s receipt of benefits
in terms of the CJP upon the (d)efendants’ liability to the (p)laintiff arising out of the
prescription of her claim against the Fund. More in particular, the Court is asked to
determine:
(a)
Whether the defendants were ‘third parties’ as defined in Condition 8 of the
CJP.
(b)
If not, whether the plaintiff’s claim against the defendants fell to be reduced by
the amount which the plaintiff would have had to repay to Rand Mutual, and
which she was no longer obliged to.’
In answering the second question the high court was asked to determine
whether the provisions of s 1 of the Assessment Act applied to the plaintiff’s
claim against the defendants.

[6] It appeared to the parties that if either question was answered
affirmatively the plaintiff would be entitled to the full amount of R850 000
without having to deduct the R695 525. On the other hand, if the second
question was resolved in favour of the defendants, in other words that the
Assessment Act did not apply to the plaintiff’s claim, the parties were under
the impression that the defendants’ liability of R850 00 would be reduced by
R695 525 to R154 475. The high court decided the first question against the
plaintiff but the second in her favour. This meant that the defendants could not
deduct the value of the pension from the computation of the plaintiff’s
damages and were thus liable to her for the full amount of R850 000. The
defendants appealed against this finding.

[7] I turn to consider the first question – whether the defendants are ‘third
parties’ as envisaged in Condition 8 of the CJP. It reads thus:
‘Where the accident in respect of which a benefit is payable was caused under
circumstances creating a legal liability in some person other than the Insured
(hereinafter referred to as the Third Party) to pay damages to the Insured Person or
to his dependants in respect thereof, the Insurer shall be entitled to be indemnified by
the Insured Person or by his dependants, as the case may be, out of any damages
recovered from the third party, to the extent of any benefit payable by the Insurer in
terms of this policy . . .’

[8] The plaintiff contended in the high court, as she did before us, that the
cause of the plaintiff’s claim was the accident. As such, so the contention
went, the court should give effect to the true intention of the parties by
interpreting the condition so as to include the defendants within the ambit of
the meaning of ‘the Third Party’. The high court observed that the clear terms
of the condition applied only to a claim that arose from an accident and
because, the court reasoned, the legal liability of the defendants was caused
not by the accident but by the prescription of the claim, the defendants were
not third parties envisaged in the CJP. In my view the court’s reasoning on
this aspect cannot be faulted.

[9] I turn to the second issue namely whether the Assessment Act applied
to the plaintiff’s claim.  Section 1 of the Assessment Act provides as follows:
‘(1)
When in any action, the cause of which arose after the commencement of this
Act, damages are assessed for loss of support as a result of a person's death, no
insurance money, pension or benefit which has been or will or may be paid as a
result of the death, shall be taken into account.
(2)
For the purposes of subsection (1) –
“benefit” means any payment by a friendly society or trade union for the relief or
maintenance of a member's dependants;
“insurance money” includes a refund of premiums and any payment of interest on
such premiums;
“pension” includes a refund of contributions and any payment of interest on such
contributions, and also any payment of a gratuity or other lump sum by a pension or
provident fund or by an employer in respect of a person's employment.’

[10] The defendants contended in the high court, as they do now, that the
Assessment Act in its terms applies only to actions in which damages are
assessed for loss of support, which the plaintiff’s action against the Fund is.
And, so they contended, because the plaintiff’s action against the defendants
is not one for loss of support, but for loss of her claim against the Fund, the
Assessment Act did not apply to her claim against them.

[11] The high court rejected this contention. In so doing, it reasoned that
even though the plaintiff’s cause of action against the Fund differed from its
action against the defendants, her claim, that is, her right of action against
them was essentially the same – they both related to damages for loss of
support as a result of the death of the deceased.  I do not agree with the High
Court’s reasoning on this aspect.
[12] Claims for loss of support on the one hand and for professional
negligence on the other differ. In the former case what is being compensated
is the loss of support; in the case of the latter it is the lost opportunity for
recovering that loss. The claims are conceptually different. Section 1(1) of the
Assessment Act applies only to actions in which damages are to be assessed
for loss of support as a result of a person’s death. In the present action
damages are not to be assessed for loss of support. The damages that are to

be assessed are the damages suffered by the plaintiff as a result of the
negligence of the defendants in having allowed her claim for loss of support
against the Fund to become prescribed. The fact that the quantum of
damages suffered by the plaintiff may be the same as the amount of her loss
of support and the fact that such damages have to be determined by
reference to her loss of support do not make the present action an action in
which ‘damages are assessed for loss of support’.

[13] In light of the fact that the plaintiff is not in terms of the CJP obliged to
indemnify Rand Mutual out of damages recovered from the defendants and
the fact that the value of the benefit payable by Rand Mutual is not to be
excluded from the computation of the damages suffered by the plaintiff as a
result of the defendants’ negligence, the defendants submitted that the
damages suffered by the plaintiff arising from their negligence amounted only
to R154 475 and not R850 000 as claimed by her.

[14] However, it does not follow that because s 1(1) of the Assessment Act
does not apply the plaintiff’s claim against the defendants falls to be reduced
by the amount which the plaintiff would have had to repay to Rand Mutual.
The question arises whether, at common law, the benefit payable to the
plaintiff in terms of the CJP should not be disregarded when determining the
damages suffered by the plaintiff as a result of the defendants’ negligence.
Because of the conclusion the high court had arrived at it was not necessary
to pursue this inquiry and during their oral submissions before this court
neither party dealt with this question satisfactorily.

[15] So the parties were invited to make further written submissions. In
particular they were requested to deal with whether the benefit payable by
Rand Mutual was collateral to the plaintiff’s right of action according to the
principle res inter alios acta, aliis neque nocet, neque prodest (‘a thing done,
or a transaction entered into, between certain parties cannot advantage or
injure those who are not parties to the act or transaction’) and had to be
disregarded in computing the plaintiff’s damages. The parties were also asked
to deal with the question whether Rand Mutual should have been joined in the

proceedings before the high court. Since then Rand Mutual has indicated that
it waived its right to be joined as a party and that it considers itself bound by
this court’s decision.  So the answer to this question fell away. It remains to
deal with the question whether the pension benefit that Rand Mutual paid to
the plaintiff was a collateral benefit which had to be disregarded in computing
the damages suffered by her as a result of the defendants’ negligence.

[16] As a general rule the patrimonial delictual damages suffered by a
plaintiff is the difference between his patrimony before and after the
commission of the delict. In determining a plaintiff’s patrimony after the
commission of the delict advantageous consequences have to be taken into
account. But it has been recognised that there are exceptions to this general
rule. Various attempts to formulate a legal principle as to which benefits
should be taken into account have been made. In Standard General
Insurance Co Ltd v Dugmore NO 1997 (1) SA 33 at 41E-42E Olivier JA
referred to these attempts and concluded:
‘Boberg (The Law of Delict vol 1 at 479) succinctly states:
“The existence of the collateral source rule can therefore not be doubted; to what
benefit it applies is determined casuistically; where the rule itself is without logical
foundation, it cannot be expected of logic to circumscribe its ambit.”
It now seems to be generally accepted that there is no single test to determine which
benefits are collateral and which are deductible. Both in our country (Santam
Versekeringsmaatskappy Bpk v Byleveldt (supra at 150F) and in England (Parry v
Cleaver [1969] 1 All ER 555 (HL) (1970) AC 1) at 14 and 31 it is acknowledged that
policy considerations of fairness ultimately play a determinative role.’
In a dissenting judgment Marais JA said that there can be little doubt that the
exclusion of benefits flowing from the benevolence of third parties or from
insurance policies which a plaintiff had himself taken out and paid for is a
result intuitively sensed by virtually all to be ‘fair’. As to the reason why
benefits in other classes of cases have not been excluded he suspected ‘that
the intuitively sensed ‘fairness’ of ignoring benefits flowing from the
benevolence of third parties or from insurance policies which a plaintiff himself

had taken out and paid for, is either entirely absent in the other classes of
case, or not so keenly sensed.’1

[17] In light of the aforegoing I agree with Neethling, Potgieter and Visser
Law of Delict 5ed (2006) at p 215-216 that ‘[q]uestions regarding collateral
benefits are normative in nature; they have to be approached and solved in
terms of policy principles and equity’ and that in doing so ‘there should always
be a weighing-up of the interests of the plaintiff, the defendant, the source of
the benefit as well as the community in establishing how benefits resulting
from a damage-causing event should be treated’.

[18] The defendants submitted that it would be unfair to allow the plaintiff to
receive double compensation and thereby to be enriched in the amount of
R695 525, which will occur if the defendants are not able to deduct this
amount from their overall liability of R850 000. On the other hand there would
seem to be no reason why the defendants should be allowed to benefit from
an insurance policy which had to be disregarded in respect of the loss of
support claim which they allowed to become prescribed. Should the amount
that the plaintiff receives from Rand Mutual be disregarded she may well
consider herself morally obliged to indemnify Rand Mutual to the extent of the
benefit payable by it in terms of the CJP as she would have been obliged to
do had her claim against the Fund not become prescribed. I see no reason
why she should be deprived of that moral choice by withholding the means for
her to do so. An order that R850 000 be paid to her will therefore also be in
the best interests of Rand Mutual, which according to Mr Mullins who
appeared on behalf of the defendants, is ‘lurking behind (her) claim’. If it is,
there is nothing opprobrious in its conduct. It is out of pocket in the amount of
R695 525 and is entitled to try to recover this amount.

[19] But even if the plaintiff does not repay Rand Mutual and thereby profits
from the outcome of this litigation, I do not think it unfair that the defendants
compensate her for the full extent of her loss of R850 000, for this is what she

1 At 48E-G.

would have been entitled to receive from the Fund had the defendants not
negligently caused her claim against the Fund to become prescribed. The
defendants therefore cannot complain – they are no worse off than the Fund
would have been had they fulfilled their mandate to diligently pursue her claim
against the Fund.

[20] For these reasons the appeal must fail. The parties agreed in the
stated case that if the plaintiff’s claim succeeded she would be entitled to
interest at the rate of 15.5% per annum calculated from a date 14
days after the date of judgment.2 The high court appears to have inadvertently
omitted to reflect this agreement in its order. The following orders are made:
(i)
The appeal is dismissed with costs.
(ii)
The order of the court below is amended to include the agreed
provision for interest so that it reads:
‘Judgment is entered for the plaintiff against the defendants, jointly and
severally, the one paying the others to be absolved, in the amount of
R850 000 (eight hundred and fifty thousand rand) with interest at the rate of
15.5% per annum calculated from the date 14 days after date of judgment
with costs which costs are to include the costs attendant upon the
employment of senior counsel.’

________________
A CACHALIA
JUDGE OF APPEAL

2 The reason for the 14 day delay is inexplicable. The pleader may have had in mind s 1(A)
inserted into s 21 of the Compulsory Motor Vehicle Insurance Act 56 of 1972 by s 8 of Act 69
of 1978 but that provision has long since ceased to be applicable to motor accident claims
and would in any event not have been applicable to the plaintiff’s claim here. She would have
been entitled to interest at the prescribed rate, from the date on which the judgment debt
became due and payable in terms of s 2(1) of the Prescribed Rate of Interest Act 55 of 1975
but he did not ask for it.

APPEARANCES:
For Appellant:
J F Mullins SC

Instructed by:

Savage Jooste & Adams Inc; Pretoria

Webbers; Bloemfontein

For Respondent:
J G Bergenthuin SC

Instructed by:

Van Zyl Le Roux & Hurter Inc; Pretoria

Molefi Thoabala Attorneys; Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From: The Registrar, Supreme Court of Appeal

Date:

Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.

Erasmus Ferreira & Ackermann & others v Kerry-Lynn Francis

The Supreme Court of Appeal (‘the SCA’) today held that s 1(1) of the Assessment
of Damages Act 9 of 1969 (‘the Assessment Act’) which, in an action for damages
arising from a person’s death, prohibits insurance money, pensions or benefits from
being taken into account in calculating loss of support, does not apply to a
dependant’s action against attorneys who negligently caused the loss of support
claim to become prescribed. It held, however, that where a widow received a
collateral benefit from an insurance company in respect of her claim for loss of
support under the Assessment Act, it was fair that the attorneys, who negligently
caused her claim to become prescribed and had thus themselves become liable to
her, not be entitled to deduct the benefit from their overall liability to the widow.

The facts of the case briefly, were these: The widow, Kerry-Lynn Francis’s husband,
Bruce (‘the deceased’), was killed in a motor vehicle accident on 9 October 1998.
The Road Accident Fund, as the third party, was liable for her claim for loss of
support. She instructed the defendants, who are attorneys, to pursue the claim
against the Fund. They accepted the instruction but failed to issue summons within
the prescribed time limits. This meant that she was not able to enforce her claim
against the Fund. She thus sued the defendants for professional negligence
claiming from them R850 000 – the amount she would have been entitled to claim
from the Fund.

The deceased was employed at Douglas Colliery Services Limited (‘Douglas
Colliery’). In terms of his employment contract with Douglas Colliery he was (and
on his death his dependants were) entitled to cover under an insurance policy

known as a Commuting Journey Policy (‘the CJP’) issued by Rand Mutual
Assurance Company Limited (‘Rand Mutual’). Mrs Francis became entitled to
payment of a pension of R695 525 from Rand Mutual in terms of the CJP arising
from the death of her husband. The pension was paid to her. Had the defendants
pursued Mrs Francis’s claim against the Fund, the Fund would not have been
entitled to bring this amount into account as it was ‘for loss of support as a result
of a person’s death (and constituted) insurance money, pension or benefit’ as
envisaged in Assessment Act, which the Fund would have been precluded from
deducting from its overall liability. However, in terms of the CJP Mrs Francis
would have been obliged to pay Rand Mutual out of the amount received from
the Fund to the extent of the benefit payable by Rand Mutual in terms of the CJP.

So, had the defendants pursued the claim against the Fund on Mrs Francis’s
behalf they would have recovered R850 000 in respect of the plaintiff’s loss of
support from the Fund. She would have had to pay R695 525 to Rand Mutual,
retaining a balance of R154 475 and would have continued to receive the CJP
pension. She would thus, in effect, have received a total of R850 000 comprised
of her monthly CJP pension to the value of R695 525 and the R154 475 that she
would have retained out of her claim against the Fund.

The defendants contended that the Assessment Act did not apply to
Mrs Francis’s claim against them as it had applied to her claim against the Fund.
This was, so they contended, because the Assessment Act applied only to claims
for loss of support, not to claims against attorneys for professional negligence.
Thus, they submitted, the defendants are liable to Mrs Francis only for R154 475,
and not the full amount of R850 000, as Rand Mutual had paid her the pension of
R695 525. On the other hand, they submitted, should Mrs Francis’s contention
that the Assessment Act applied be upheld the consequence would be that she
would be double compensated to the extent of R695 525 because she would
now not be obliged to repay Rand Mutual as the claim against the Fund had
become prescribed.

Although the SCA agreed with the defendants’ contention that the Assessment
Act did not apply to Mrs Francis’s claim against them as it did against the Fund,
the court disagreed that this meant that the defendants could deduct the
R695 525 from their overall liability to her, which the Fund was precluded from
doing. This was because, so it reasoned, the common law recognized the
amount as a collateral benefit, which would be unfair for the defendants to deduct
when the Fund would have been debarred from doing so. Furthermore, said the
SCA, the defendants had no cause to complain – had they not negligently failed
to pursue the claim against the Fund the latter would have had been liable to
Mrs Francis for the full amount of R850 000. The fact that she may profit from the
litigation (if she does not repay Rand Mutual) does not detract from this fact. The
defendants are therefore no worse off than the Fund would have been.

The SCA accordingly dismissed the defendants’ appeal and ordered it to pay the
costs.