THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

REPORTABLE
Case No:  453/2011

In the matter between:

LIZE-MARI MACDONALD

FIRST APPELLANT
PETRUS MACDONALD

SECOND APPELLANT
SUMé MACDONALD

THIRD APPELLANT

v

THE ROAD ACCIDENT FUND

RESPONDENT

Neutral citation:
MacDonald v Road Accident Fund (453/2011) [2012] ZASCA 69
(24 May 2012).

Coram:

Navsa, Brand et Mhlantla JJA
Heard:

11 May 2012
Delivered:

24 May 2012

Summary:
Dependants’ claim for loss of support – application of
Assessment of Damages Act 9 of 1969 – calculations based on
assumptions and contingencies not appropriate where actual
figures available.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from:   Western Cape High Court, Cape Town (Bozalek J sitting as court
of first instance):
The appeal is dismissed with costs, including the costs of two counsel.
________________________________________________________________

JUDGMENT
________________________________________________________________

BRAND JA (NAVSA AND MHLANTLA JJA CONCURRING):

[1] On 3 March 1994 a motor vehicle collision occurred on the N2 highway near
Moorreesburg in the Western Cape. The collision tragically claimed the lives of two
young parents, Mr Petrus Geyser MacDonald and his wife, Mrs Myra MacDonald. I
propose to refer to them as the deceased father and the deceased mother,
respectively. They were survived by three children: Sumé, born on 24 July 1984;
Petrus, born on 15 February1988 and Lize-Mari, born on 30 March 1992 who are the
appellants in this matter.

[2] The respondent is the Road Accident Fund, a statutory insurer, established in
terms of the Road Accident Fund Act 56 of 1996 (the Act). The proceedings which
eventually led to this appeal commenced when a curator ad litem for the three
appellants, who were still minors at the time, instituted an action in the Western
Cape High Court against the respondent for the loss of support that they had
suffered due to the death of their parents. Because of the lapse of time since the
collision, all three children have since attained majority. In consequence they are

now cited as appellants in their own names. I propose to refer to them by their first
names, or collectively, as the appellants.

[3] The respondent conceded that the collision was caused by the negligence of
the insured driver, who collided with the vehicle of the deceased parents and that, in
consequence, it was liable for the appellants for whatever loss of support they could
establish at the trial. The issues presented to the court a quo for determination, thus
turned on the quantum of the appellants’ respective claims. At the end of the
proceedings Bozalek J absolved the respondent from the instance, essentially on
the basis that the appellants had failed to establish that their reasonable
maintenance needs could not be met by the proceeds of the deceased father’s
estate. The appeal against that judgment is with the leave of the court a quo.

[4] The issues arising on appeal will best be understood in the light of the
background facts that follow, which proved to be largely undisputed. Hence issues of
credibility do not arise. The deceased parents were married out of community of
property. During the lifetime of the deceased father he owned a farm and derived
income from his farming activities as well as from a small transport business.
Though the amount of the deceased father’s projected future income was
challenged by the respondent, the court a quo determined this amount at the
inflation adjusted value of his income for the 1994 financial year which was
R218 000. According to the evidence, the deceased mother also generated a small
income by way of selling items of pottery as well as milk and meat produced on the
farm. The court a quo found, however, that the appellants had failed to establish that
the deceased mother had made an independent monetary contribution to their
maintenance. Even at this early stage it can be stated, in my view, that these factual
findings of the court a quo regarding the financial position of the deceased parents
were not and could not be criticised by counsel for the respective parties.

[5] Six months before their untimely death, the deceased parents executed a
joint will. The will provided, inter alia, for the event of their simultaneous demise. In

which case they bequeathed both their estates to a testamentary trust to be created
for the benefit of their children. As to the powers of the trustees, the will authorised
them to utilise so much of the income and the capital assets of the trust as they
regarded necessary, in the exercise of their absolute discretion, for the maintenance,
upbringing, education and other interests of the children. According to the will, the
testamentary trust thus created would be dissolved when the youngest child, Liza-
Mari, turned 21 which, as we know, will occur on 30 March 2013.

[6] In accordance with the nominations in the joint will, the sister of the deceased
father, Mrs Susan van Rensburg, was appointed as the executrix in both estates
while the brother of the deceased father, Mr Hermanus MacDonald, and his wife,
Marlene (the MacDonalds) were appointed as guardians of the minor children.
Shortly after the death of the deceased parents, the appellants moved in with the
MacDonalds who looked after them admirably and took responsibility for their
upbringing until they each reached the age of independence. Mrs van Rensburg took
control of the financial affairs of the estates. Unfortunately, she also died in a motor
vehicle accident in March 1997. After her death an attorney, Mr Phillipus de Villiers,
was appointed as the executor in the estates of the deceased.

[7] At the time of her death Mrs van Rensburg had not yet registered the trust
envisaged by the deceased parents. That was done by De Villiers only in 1997. De
Villiers and the MacDonalds were then formally appointed as joint trustees of the
trust. In practice, however, De Villiers took sole control of the trust’s financial affairs.
Mrs van Rensburg had also not finalised the liquidation and distribution accounts in
the estates. De Villiers thus prepared the accounts which were eventually approved
by the Master. According to his evidence, the early history of the financial affairs of
the trust was unfortunately left largely obscure. What we do know from the evidence
of De Villiers and Herman MacDonald, however, is that Mrs van Rensburg paid an
amount of R700 per month per child to the MacDonalds. After the appointment of De
Villiers he continued with the same practice.But, as the children grew older, their
needs increased and a pattern was then established whereby the MacDonalds were

regularly reimbursed by De Villiers for the expenses they incurred on behalf of the
children. Over the years, so it seems, a system thus developed which satisfied the
requirements of the MacDonalds and at the same time served the best interest of
the children.

[8] According to De Villiers’ evidence at the trial, the payments thus made from
the death of the deceased parents up to the end of February 2010, amounted to
R1 979 390, 46. A schedule prepared by De Villiers also shows that during the first
years the amounts paid were relatively small. In fact, during the first four years they
were limited to R25 200 (calculated on the basis of R700 x 3 x 12) per year. In later
years, from about 2001, the amounts paid increased substantially. The explanation
for this phenomenon by Herman MacDonald in his evidence was that the larger
amounts included college fees and the purchase price of motor cars for the two older
children as well as an amount of R70 000 for the wedding of Sumé in November
2009.

[9] The nett assets in the estates of the deceased parents, which eventually
devolved to the trust, appear from the final liquidation and distribution accounts
prepared by De Villiers. The assets in the estate of the deceased mother essentially
derived from the proceeds of two insurance policies which came to about R326 000.
Her only other asset was a credit balance of some R9 000 on a credit card account.
Her liabilities, on the other hand, were hardly worthy of mention.

[10] The final liquidation and distribution account in the estate of the deceased
father showed the following:
(a)
The total nett assets in his estate after provision had been made for liabilities
and estate duty came to about R2,2 million which included the proceeds of
insurance policies in an amount of some R1 683 281.
(b)
The non-insurance portion of his estate included his farm, which was reflected
at its Land Bank valuation of R378 000; his shares in Orange Rivier Wine Cellars

Co-op Ltd, valued at R8 250; and his farm implements and equipment valued at
R94 500.

[11] It is plain, however, that at least some of the assets in the deceased father’s
estate were substantially undervalued. This is borne out by an agreement of sale
entered into during May 1997. In terms of that agreement the farm was sold for R1,2
million; the shares in the Orange River Wine Cellars for R70 000; and the farm
implements and equipment for R200 000. Three assets valued in the liquidation and
distribution account at less than R500 000 were thus sold for almost R1,5 million. In
terms of the deed of sale the purchase price was payable by way of three
instalments of R500 000 each. The first instalment became due upon transfer while
the second and third instalments were payable one year and two years later
respectively. In terms of the sale interest was payable on the last two instalments at
the rate of 18 per cent per annum from date of transfer to date of payment.
Eventually the farm was only transferred in 1999 so that the instalments of R500 000
each only became due in 1999, 2000 and 2001.

[12] With the benefit of hindsight, it is apparent that the affairs of the trust were
extremely well managed by De Villiers and that, acting on the advice of experts, wise
investment decisions were made. In the result the assets of the trust grew steadily
and towards the end of February 2010 the total portfolio of these investments stood
at about R7,4 million. That was over and above the R1,97 million which had been
expended over the years for the benefit of the appellants.

[13] Essentially relying on the facts and figures thus far recounted, an actuary, Mr
P W Ennis, was instructed on behalf of the appellants, to calculate the quantum of
the loss of the support they each suffered. These calculations by Ennis, in turn,
formed the basis of their claims in the court a quo. But before I revert to those
calculations, I find it convenient to turn to the legal principles involved.

[14] The historical background and the general principles underlying the action of
dependants for loss of support by their breadwinners, have by now become well
known (see eg Jameson’s Minors v Central South African Railways 1908 TS 575,
602 et seq; Hulley v Cox 1923 AD 234; Evins v Shield Insurance Co Ltd 1980 (2) SA
814 (A); Boberg’s Law of Persons and the Family 2 ed (by Belinda van Heerden,
Alfred Cockrell and Raylene Keightley) at 298 et seq; Joubert (ed) The Law of South
Africa 2 ed Vol 7 para 88). As I see it, a restatement of these principles can hardly
serve any purpose. Hence I focus the spotlight only on those principles that have a
direct bearing on this case.

[15] First amongst these relevant principles is that loss of support is confined to
actual pecuniary loss. In the first place that means that the dependants cannot claim
compensation in the form of a solatium for the grief, the stress and the hurt brought
about by the death of a loved one, because these are not capable of being
calculated in money. It also means that the dependants are not allowed to profit from
the wrongdoing of the defendant. Accordingly, the actual pecuniary loss to which the
dependants are entitled, can only be ascertained by a balance of losses and gains,
that is by having regard not only to the losses suffered, but also to the pecuniary
advantage which may come to the dependants by reason of the breadwinner’s death
(see eg Hulley v Cox, supra, 243; Indrani v African Guarantee and Indemnity Co Ltd
1968 (4) SA 606 (D) at 607F-H). This requires one to take into account any income
available to the dependants by way of an inheritance from the erstwhile breadwinner
(see eg Jameson’s Minors, supra, 603-604). And it matters not, as I see it, whether
the income thus available would come to the dependants directly from the deceased
breadwinner’s estate or indirectly through the mechanism of a trust. If the nett assets
in the estate of a deceased parent, together with the income derived from those
assets are therefore sufficient to support the dependants in full, no claim for loss of
support as a result of the breadwinner’s death can be sustained (see eg Lambrakis v
Santam Ltd 2002 (3) SA 710 (SCA) paras 19 and 20).

[16] The second legal principle relevant to this case derives from statute, more
particularly from the Assessment of Damages Act 9 of 1969. The Act is a model of
brevity. Its operative provisions are all contained in s 1, which provides:
‘When in an 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.’

[17] This brings me to the calculation of the quantum of the appellants’ claims by
their actuary, Ennis. These calculations were reflected in a number of reports. The
hypotheses and factual bases relied upon in these different reports slightly differed
in each case. I shall soon return to these differences. But what these reports have in
common is that they all start with a calculation of the amount of maintenance the
appellants would have received from their deceased parents had they not died. With
regard to the deceased mother Ennis’ calculation departed from the assumption that,
at the time of the accident, she had earned R12 756 per annum. However, as I have
indicated in the course of the factual narrative, the court a quo held this assumption
to be unsubstantiated by the evidence. Since I am of the view that this finding is
unassailable, we do not have to concern ourselves any further with the appellants’
claims based on the death of the deceased mother. This results from the trite
principle that no loss of support is claimable unless it is established that the
deceased actually contributed to the support of the plaintiff-dependant.

[18] As to the appellants’ loss suffered through the death of their father, the first
premise of Ennis’ calculation was the assumption that he had earned R218 761 per
annum when he died and that his earnings would have remained level with
adjustments for inflation in later years. He then assumed that Sumé would have
remained dependant until 23 – which was an historical fact – while Petrus and Lize-
Mari would have become self-supporting at age 21. Finally Ennis assumed that the
deceased father’s projected income would have been consumed on the basis of two
shares to each parent and one share to each dependant child. After making
allowances for certain contingencies, he arrived at the conclusion that because of

the death of the deceased father the appellants had been deprived of maintenance
in the following amounts:
(a)
Sumé R410 581;
(b)
Petrus R523 436;
(c)
Lize-Mari R779 385.

[19] The court a quo considered these calculations and found some of the
assumptions wanting. So, for example, it found the division of two shares for each
parent and one share per dependant child, inappropriate in the circumstances. But I
have a more fundamental problem with the actuarial approach based on
assumptions, hypotheses and contingencies when we know the actual amount that
was required for the maintenance of the appellants after the death of their parents.
At the time of the trial two of the appellants were already self-supporting while the
youngest had almost reached the age of 21. It had also been established that until
that stage about R1,97 million was expended for the benefit of the children.

[20] In addition, it would appear that throughout their upbringing all of the
appellants’ maintenance needs were met. No evidence was led that the appellants
had lacked for anything within reason. On the contrary, it would appear that De
Villiers adopted a generous approach to any claim made on their behalf. Indeed,
judging by the trust’s contribution of R70 000 towards Sumé’s wedding expenses at
a time when she was already self-employed, maintenance needs were liberally
construed. There is therefore no reason to think that, but for the death of their father,
the appellants would have received more than R1,97 million in maintenance. In the
circumstances an elaborate actuarial calculation of the maintenance the appellants
would notionally have received seems to amount to an exercise in futility. What is
more, it is in conflict with the general principle that ‘where facts are available they
are to be preferred to prophecies’. (See Simpson v Jones [1968] 2 All ER 929 (Ch)
at 935, referred to with approval in Inter Maritime Management SA v Companhia
Portuguesa de Transportes Maritimos EP 1990 (4) SA 850 (A) at 869G-H. See also
Road Accident Fund v Monani 2009 (4) SA 327 (SCA) para 9.)

[21] This brings me to the differences between Ennis’ divergent reports, which
differences all relate to the monetary benefits the appellants in his view, received
from the estate of their deceased father and, more particularly, to the valuation of the
assets in his estate. In his first report Ennis relied on the values reflected in the
liquidation and distribution account in the deceased father’s estate. On that basis the
total capital, nett of estate duty, transferred to the trust amounted to R2 213 511,
which included the proceeds of life insurance policies to the value of R1 683 281. On
that basis he determined the portion of trust capital not attributable to insurance
policies at some 24 per cent. In Ennis’ opinion the Assessment of Damages Act thus
requires a deduction of 24 per cent of the maintenance actually received by the
appellants, that is R1,97 million, from the amount of maintenance they would have
received from their deceased father.

[22] As pointed out in my earlier narrative of the facts, it became apparent,
however, that some of the estate assets were substantially undervalued when these
assets were sold in May 1997. The disparity was particularly striking with reference
to the farm valued for estate purposes at R378 000, to be sold three years later for
R1,2 million. Other assets that were sold in May 1997 at markedly higher prices
included farm equipment and implements, as well as the shares held by the
deceased father in Orange River Wine Cellars Co-op. In his subsequent reports
Ennis therefore tried to accommodate these higher values. One of the ways in which
he did so was to assume that the Land Bank valuation underlying to the R378 000
was one third less than the true market value of the property. He therefore adjusted
the value of the farm upwards by 50 per cent. On this basis the nett asset value of
the estate became R2 402 511 of which the non-insurance component changes to
about 30 per cent.

[23] Another way in which Ennis tried to provide for the increased value of estate
assets was to include the farm at the value of R1,2 million in May 1997, adjusted for
inflation back to 3 March 1994, which was the date of the accident. On this basis the
value of the farm became R980 985, as a result whereof the nett asset value of the

estate grew to R2 816 497, of which the non-insurance component became about 40
per cent. In his final report Ennis again took the value of the farm at R980 985. In
addition he adjusted the value of the farming equipment and implements as well as
the shares in the Orange River Wine Cellars to reflect the prices at which these
assets were eventually sold in May 1997. On this basis he determined the total nett
capital received by the trust at R2 983 797 which left the non-insurance component
at 43,6 per cent.

[24] The different calculations based on different valuations obviously led to
different results in Ennis’ determination of the benefits that came to the appellants
through the death of their father. For purposes of further discussion, I will, however,
refer to the last report only. From the 43,6 per cent threshold established in that
report, Ennis proceeded to calculate that the loss suffered by the appellants as a
result of their father’s death, should be reduced by 43,6 per cent of the R1,97 million
they actually received from his estate via the trust. On that basis Ennis determined
that the appellants’ loss suffered as a result of the death of their father should be
reduced by the following amounts:
(a)
Sumé R213 447;
(b)
Petrus R281 732;
(c)
Lize-Mari R444 555

[25] According to Ennis’ calculations the appellants were thus entitled to payment
of the following amounts from the respondent:
‘(a)
Sumé      R 432 191
Less           213 447

R197 134
(b)
Petrus      R 523 436
Less           281 732

R241 704
(c)
Lize-Mari   R779 385
Less
444 555

R 334 830’

[26] The appellants’ argument in support of Ennis’ underlying thesis of a
percentage split between insurance and non-insurance money received by the trust,
proceeded along the following lines. The total monetary benefit received by the
appellants from their deceased father’s estate came to R1,97 million. Part of that
benefit, however, derived from the proceeds of life insurance policies. In terms of the
Assessment of Damages Act, that part ‘shall [not] be taken into account’ in
calculating the appellants’ loss of support. We know that both the insurance money
and non-insurance money found its way into one communal account of the trust. But
it is not possible to determine whether the maintenance payments by the trust came
from the proceeds of the insurance policies or from a non-insurance source. For that
reason a practical approach to the facts dictates that the same percentage split to
maintenance payments should be applied as the percentage split between insurance
and non-insurance money that came to the trust from the deceased father’s estate.

[27] The fundamental problem with Ennis’ thesis, as I see it, is that the
Assessment of Damages Act does not support the notion of a percentage split on
which it relies. As I see it, s 1 of the Act requires that damages for loss of support
resulting from a breadwinner’s death must be calculated without reference to the
proceeds of insurance policies. In the assessment of benefits resulting from the
breadwinner’s death, the proceeds of insurance policies must thus be ignored. The
position of both the plaintiff-dependant and the defendant-wrongdoer is the same as
if the deceased breadwinner’s estate had received no money from insurance policies
at all.

[28] According to the appellants’ argument in support of the percentage split
thesis, the Act requires a determination of where the maintenance actually received
by the dependants came from. If we know that all the maintenance received by the
dependants came from the proceeds of insurance, the Act therefore requires that all
maintenance received be ignored. Any other approach, so the appellants’ argument
went, will result in the wrongdoer reaping the benefit of insurance policies which is
exactly what the Act is intended to prevent.

[29] I agree that the intention of the Act is that a wrongdoer should not benefit
from the proceeds of insurance. But I cannot see how the wrongdoer can benefit
from the proceeds of an insurance policy if the policy is completely ignored. The
inescapable consequence of the appellants’ argument would be that the executor in
a deceased breadwinner’s estate, who has both non-insurance and insurance
money available, could decide whether the application of the Act should have any
effect or none at all. If the executor decides to pay all maintenance from money
derived from a non-insurance source, everything is deductable from the
maintenance loss. But if the executor should decide to pay all maintenance from
insurance money these payments are ignored.

[30] Moreover, the appellants’ argument avoids the question as to what the
approach should be in the event that no maintenance had yet been paid when the
assessment is made. Should one’s approach then also be that the assessment
depends on the executor’s likely decision whether to pay the future maintenance
from insurance policies or from non-insurance sources where both are available? I
think the answer to the question posed is obvious. One should ignore the insurance
policy and enquire whether there is sufficient non-insurance money in the estate to
meet the future maintenance needs of the dependants. As I see it one’s approach
can be no different if the maintenance had already been paid. The Act requires one
to ignore the proceeds of insurance policies. Whether the maintenance actually paid
came from an insurance or a non-insurance source is of no consequence.

[31] In accordance with what I see as the correct application of the Act, the first
step is thus to ignore the proceeds of insurance policies. The second step that
follows is an enquiry which is no different from the one embarked upon in a case
such as Lambrakis, supra, where there is no insurance money available. That
inquiry is in essence whether the (non-insurance) assets in the deceased estate
together with the income derived from those assets would be sufficient to meet the
maintenance needs of the dependants (see Lambrakis, supra, paras 19 and 20). In
a case such as the present where the maintenance needs of the dependants had

already been met, the inquiry is even less complicated. It is simply whether the
amount of maintenance we know the dependants had actually received could be
produced by the (non-insurance) assets in the estate together with the income
generated by those assets. That is the actuarial exercise Ennis should have been
asked to perform, but which he was obviously not requested to do.

[32] As appears from what I have said with reference to Ennis’ divergent reports,
he was asked to determine the notional market value of the non-insurance assets in
the deceased father’s estate as at the date when he died. That, as I see it, was an
irrelevant exercise which led to equally irrelevant answers. What we need to know
was whether the maintenance actually paid could be covered by the non-insurance
part of the trust assets. Far more relevant for that purpose, for example, is the
purchase price actually received for those assets instead of their notional market
value at some stage in the past. It is therefore again a case of relying on notional
calculations based on hypotheses and assumptions rather than available facts.
Because Ennis was not asked to determine whether the non-insurance part of the
estate was sufficient to pay the amount of R1,97 million disbursed in respect of
maintenance, we do not know that exact answer to this question, which lies at the
heart of the case.

[33] But even a rough, non-detailed appraisal of the available figures seems to
indicate that the non-insurance part of the trust was sufficient to cover the
appellants’ maintenance needs of R1,97 million. If I understood the appellants’
counsel correctly, that much was conceded by him and in my view rightly so. We
know, for example, that from 1999 until 2001 the trust received an amount of R1,5
million together with interest in an amount of R270 000 from the sale of the farm and
other movables. That in itself would prima facie be sufficient to cover the
maintenance payments subsequently made. We also know that from the schedules
produced on behalf of the appellants, the maintenance they received between 1994
and 1998 was no more than R25 200 per annum and in 1999 it was R35 200.
Despite the absence of any direct evidence with regard to the income of the trust

during those early years, there is no reason to believe that it did not exceed these
moderate amounts. We also know, for example, that the trust is the owner of a flat
valued at R650 000 which is occupied by the appellants’ grandmother and from
which no income had been received by the trust. Finally, we know that after all
maintenance needs of the appellants had been met there is still an amount of about
R7,4 million left in the trust. I am not losing sight, of course, of the fact that a large
part of both the R1,97 million paid out as maintenance and the remaining R7,4
million originated from insurance policies. Nonetheless, the sheer magnitude of the
remaining amount seems to support the conclusion that the non-insurance part of
the deceased father’s estate was more then sufficient to provide the maintenance
that the appellants actually received. However, in the absence of any exact actuarial
calculations, it is perhaps advisable to adopt the more cautious approach followed
by the court a quo. That is, to absolve the respondent from the instance rather than
to dismiss the appellants’ claims.

[34] In the result the appeal is dismissed with costs, including the costs of two
counsel.

_________________
F D J BRAND
JUDGE OF APPEAL

APPEARANCES:

For AppellantS:
D J Coetsee

Instructed by:
Honey Attorneys

TYGER VALLEY

Correspondents:
Honey & Partners
BLOEMFONTEIN

For Respondent:
D Jacobs SC

S Mahomed

Instructed by:
Z Abdurahman Attorneys

CAPE TOWN

Correspondents:
Webbers

BLOEMFONTEIN