Should disability grants be deducted from loss of earnings claims against the RAF?

July 1st, 2019
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South African courts have dealt with the question of whether disability grants should be deducted from loss of earnings claims against the Road Accident Fund (RAF) on three occasions. On two occasions, the court reached the same conclusion, while on the third, the court reached a different conclusion. In the first matter, Mullins v RAF (ECP) (unreported case no 3650/2014, 4-8-2016) (Beshe J) Beshe J answered the question in the affirmative. In the case of Moropane v RAF (GP) (unreported case no 39680/2012, 27-8-2018) the question was answered in the negative. In the third case, Kapa v RAF (LP) (unreported case no 1414/2013, 7-12-2018) (Muller J) Muller J answered the question in the affirmative. This article focuses on the reasons for judgment in the Kapa case.

Facts

In the Kapa case, the plaintiff, instituted action against the RAF for damages as a result of injuries sustained from a motor vehicle collision, which occurred on 23 October 2011. On 13 February 2017 the RAF admitted that it was liable to compensate the plaintiff for her proven damages in totality thereof. It became common cause that she received a disability grant from the state and had suffered a total loss of earnings because of the injuries. The legal question then arose as to whether the disability grant should be deducted from the loss of earnings or whether it is res inter alias acta and not deductible. The parties agreed that the plaintiff’s nett loss of earnings was R 918 748 if the disability grant deduction is disregarded and R 525 975 when the disability grant deduction is taken into consideration.

It was contended on behalf of the plaintiff that a disability grant should be ignored and not be deducted when determining her claim for loss of earnings and the counsel relied on the Moropane case in this respect. The RAF contended that the amount received by her as disability grant should be deducted when determining her claim for loss of earnings. The RAF relied on the Mullins case for its proposition.

The law

It is trite that a damage-causing event does not always result in only negative losses but may, in some instances, have positive benefits for the plaintiff. The inclusion or otherwise of the positive benefits of the damage-causing event has not always lent itself to a simple answer. This unresolved position owes much of its underdevelopment to two conflicting general principles in the law of damages. On the one hand, the law does not allow for double compensation as a result of a single cause of action. On the other hand, it is stated that the wrongdoer or their insurer should not escape liability on account of some fortuitous event such as the generosity of a third party (Zysset and Others v Santam Ltd 1996 (1) SA 273 (C) 279B – C; JM Potgieter, L Steynberg and TB Floyd Visser and Potgieter: Law of Damages 3ed (Cape Town: Juta) at 23).

André Mukheibir notes that there is no generally acceptable test to determine whether or not a benefit ought to be deducted (‘Comparing the casuistry of compensating advantages and collateral sources’ 2002 Obiter 330). This problem was further described as a question of demarcation in Standard General Insurance Co Ltd v Dugmore NO 1997 (1) SA 33 (A) 41D – E, in other words, the question of whether or not to deduct, depends on the claim and the court’s interpretation of the collateral source rule. Ultimately, the demarcation of benefits is determined by policy considerations of fairness (see Dugmore 42B). However, this is no easy task, and this was patently acknowledged in a separate opinion of Marais JA in Dugmore at 47D – E when he captured the difficulty of this balance by stating that: ‘The dilemmas arise when one attempts to respect well-established principles (each of which has its own particular justification and reason for existence), but finds that in respecting one, one is spurning another, and that one’s best efforts to reconcile them come to nought’.

Notwithstanding the appreciation of this difficulty and the absence of satisfactory answers to the question of deductibility of benefits, it has long been established that there are exceptions to the rule against double compensation. Examples are benefits received by the plaintiff under ordinary contracts of insurance for which the plaintiff has paid premiums; and money and other benefits received by the plaintiff as solatium or from the generosity of third parties motivated by sympathy are collateral benefits in any action for damages. It is apparent from the listed and generally accepted exclusions that the established exceptions of res inter alias acta do not address the absence of general principles to the question of deductibility or otherwise, but rather considers a predetermined conclusion to exclude them from quantification (PL Monyamane The nature, assessment and quantification of medical expenses as a head of delictual damage(s) (LLM dissertation, Unisa, 2014) at 60).

However, despite the inherent dangers of casuistry and the conflict of general principles of the law of damages as highlighted, Potgieter, Steynberg and Floyd (op cit) submit that the application of the collateral source rule is flexible and must be considered in view of the interests of the plaintiff, the defendant, the source of the benefit, the community and other interested third parties. This echoes the view held in Zysset at 279A that the inquiry to determine the deductibility of benefits must necessarily include considerations of public policy, reasonableness and justice (see PL Monyamane ‘Social security “benefits” and the collateral source rule – an analysis of the three Coughlan decisions’ (2016) 49 De Jure 326).

It is important to mention that while the Constitutional Court (CC) also had the occasion to deal with a similar question of law – although in relation to foster care grants in a claim for damages as a result of loss of support arising from a motor vehicle collision in Coughlan NO v Road Accident Fund (Centre for Child Law as Amicus Curiae) 2015 (6) BCLR 676 (CC) and consequently answering the question in the negative. The CC did not, however, consider what the effect is on a claim for loss of earnings if the plaintiff is the recipient of a disability grant from the state. It held, with reference to the nature and purpose of foster care grants, that those grants, which arose from the constitutional obligation of the state to provide for children in need of care, are different from compensation. It was held that foster care grants are not paid to the children and are furthermore not predicated on the death of a parent.

Although the judgment in Coughlan is authority to hold that child support grants should be similarly regarded as foster care grants, the same cannot be said about disability grants. Different considerations apply to disability grants.

However, in order to determine whether payment of a disability grant amounts to double compensation, a similar approach adopted by the CC in Coughlan was followed in casu, namely:

  • What is the constitutional obligation of the state in terms of s 27 of the Constitution?
  • The nature and purpose of disability grants vis-à-vis that of compensation for loss of earnings.
  • Whether there is any causal link between a disability grant and compensation for loss of earnings.

It is acknowledged in s 27(1)(c) of the Constitution that the state has an obligation to make social security available to everyone and if they are unable to support themselves and their dependents appropriate social assistance must be provided. The Constitution is not prescriptive as to how the state should make grants available within the available recourses, that has been left for Parliament to decide. The Social Assistance Act 13 of 2004, contains provisions that deal with the provision and administration of social assistance by the state and the qualification requirements for such assistance. The eligibility of a person to apply for a disability grant is set out in s 9 of the Social Assistance Act, which reads as follows:

‘A person is, subject to section 5, eligible for a disability grant, if he or she –

(a) …

(b) is, owing to a physical or mental disability, unfit to obtain by virtue of any service, employment or profession the means needed to enable him or her to provide for his or her maintenance.’

The Road Accident Fund Act 56 of 1996 is silent on whether any form of social assistance, in particular, a disability grant, should be included or excluded from compensation awarded to a claimant. It does not follow, merely, from such silence that social grants, which are available in terms of the Social Assistance Act should simply to be ignored, even if it leads to double compensation.

The nature and purpose of a disability grant is clearly intended to give financial assistance to anyone who as a result of physical or mental disability irrespective of the reason is unfit to obtain the means to provide for their maintenance. This cannot be understood to mean that a person is only eligible if they are totally disabled. All that is required is that the disability should be of such a degree that it renders a person unable to maintain themselves by means of employment. Put differently, a person who is meaningfully employed but their remuneration as a result of their disability is so meagre that they are unable to maintain themselves should qualify.

In casu the disability grant was paid to the plaintiff in Kapa as a direct result of her disability, which was caused by the injuries she sustained, in the motor vehicle collision. She is regarded as unemployable and damages are claimed for loss of earnings due to injuries sustained, the result of which is a total loss of income. The physical injuries, which she sustained, rendered her totally unfit for employment and unable to maintain herself. It comes as no surprise that she qualified for a disability grant.

Conclusion

The grant is not paid to the plaintiff as a result of the generosity, benevolence or charity of the state, but as financial assistance by the state due to the injuries sustained, which caused a loss of income, but also in terms of the constitutional obligation to render social security to everyone in need of such assistance. That is of course, what her claim for compensation is all about. Thus, there is a very close link between the reason for the disability grant and the claim for loss of income. There is no doubt that the payment of the disability grant leads to double compensation.

In addition, it must be taken into consideration that the public carries a heavy financial burden towards the state. The ongoing financial woes of the RAF are notorious and well known. The funds utilised by the RAF and the funds allocated for social grants originates from the public by means of fuel levies on the one side, and taxes, on the other. Public policy, fairness and justice demand that overcompensating motor vehicle accident victims from public funds should be avoided. Fairness and justice demand that the disability grant be deducted from the RAF award to be made.

In Esau v Road Accident Fund (ECP) (unreported case no 3410/15, 1-6-2017) (Plasket J) the court was confronted with a request by the parties to allow for the deduction of the disability grant on the plaintiff’s future loss of earnings, however, the court was not in a position to do so because of lack of evidence before the Court. According to the court, the plaintiff would continue to be eligible for a disability grant after being compensated by the RAF.

As such, the law as followed by the court in Kapa is that the disability grant should be taken into account when determining the plaintiff’s claim for past and future loss of earnings. However, when it comes to future loss of earnings the law – as followed by the court in Esau – is that the RAF should adduce evidence to the effect that the plaintiff will continue to qualify for the disability grant after compensation has been paid by the RAF. The facts of each case will, therefore, always play an important role when the determination is made.

Tshepo Mashile LLB (University of Limpopo) is a legal practitioner at Mkhonto and Ngwenya Inc in Pretoria.

This article was first published in De Rebus in 2019 (July) DR 8.