In order to determine a plaintiff’s claim for future loss of income or earning capacity, it becomes necessary to compare what the claimant would have earned ‘but for” the incident with what he would likely have earned after the incident. The future loss represents the difference between the pre-morbid and post-morbid figures after the application of the appropriate contingencies.
A court has a wide discretion which needs to be exercised judicially when it determines fair and reasonable compensation for loss of income or earning capacity. In the majority of claims the percentage to be deducted is negotiated by the parties, but contingencies remain the prerogative of the Court.
The ‘once and for all’ principle determines that a plaintiff only has one chance to claim all past and potential damages flowing from a single cause of action. When courts make awards for potential or future losses, it is general practice to make use of contingency deductions to provide for any future events or circumstances which is possible but cannot be predicted with certainty such as longevity, loss of employment, early death, promotion prospects, etc.
In Duma v Road Accident Fund  JOL 41486 (KZP) the plaintiff was involved in a motor vehicle accident at the age of 47. The court accepted that the plaintiff suffered a mild head injury with neuro-cognitive fallout and that he was incapable of assuming any form of employment due to his physical and mental difficulties.
The court referred to Goodall v President Insurance 1978 1 SA 389 (W) in which the approach of the so-called sliding scale of ½ % per year to retirement age in the ‘but for’ scenario was adopted – i.e. 25% for a child, 20% for a youth and 10% in middle age. In the ‘but for’ scenarios the Road Accident Fund usually agrees to deductions of 5% for past loss and 15% for future loss – the so-called “normal contingencies”.
In the Duma case the plaintiff was already 47 years of age and the court found that ‘but for’ the accident, the plaintiff would have been able to work until the retirement age of 65 and therefore a 7% pre-morbid and 7% post-morbid contingency deduction would be appropriate, fair and reasonable.
Compiled by: Lize-Mari Viljoen (B. Com Law, LL.B.); source: https://www.lexisnexis.co.za/
Duma v Road Accident Fund
 JOL 41486 (KZP)
Case Number: 672 / 2014P
Judgment Date: 01 / 03 / 2019
Country: South Africa
Jurisdiction: High Court
Division: KwaZul-Natal, Pietermaritzburg
Bench: Mbatha J
Personal Injury/ Delict – Motor vehicle accident – Past and future loss of earnings – Contingency
Whilst a pedestrian, the plaintiff sustained injuries when a motor vehicle collided with him.
The defendant fund having conceded liability of the merits in the plaintiff’s favour, the only issues remaining for determination related to the plaintiff’s past and future loss of earnings.
Held that in determining fair and reasonable compensation for loss of income or earning capacity, the court has a wide discretion which needs to be exercised judicially.
Compensation should be to the extent that the plaintiff’s patrimony has been diminished as a result of the other party’s negligence, and such damages are to include loss of future earning capacity. The court exercises a wide discretion when it assesses the quantum of damages due to loss of earning capacity, and has a large discretion to award what it considers right. Though courts rely on actuarial computations, it still exercises a wide discretion as to what is just.
Noting that the plaintiff had no adverse health conditions, and to compensate for the total loss of earning capacity as there was no evidence that he would not have worked until the age of 65 years, the court applied a 7 per cent pre-morbid and post-morbid contingency.