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Voluntary Contributions Not to Be Claimed as Loss of Earnings Against the Road Accident Fund, The Supreme Court of Appeals Decides.

 

A question of whether voluntary contributions towards a retirement annuity fund can be claimed as loss of earnings in terms of Section 17(4) of the Road Accident Fund Act 56 of 1996 (“the Act”), formed a subject matter of an appeal against a judgement of the Gauteng Division of the High Court, in the case of Bouttell v Road Accident Fund (324/2017) [2018] ZASCA 90 (31 May 2018).

 

In this case the Appellant, Mr Leon Bouttell, had elected to make contributions equivalent to 15% of his gross earnings to a retirement annuity fund. He claimed these contributions against the Road Accident Fund (“RAF”) as part of his loss of earnings as a result of the injuries sustained in the motor vehicle accident. RAF contended that the contributions to a retirement annuity fund are not to be taken into account in a claim for loss of earnings. The High Court held that there is a distinction between contributions to an employer pension fund and voluntary contributions to a retirement annuity fund for purposes of calculating loss of earnings. It therefore concluded that the contributions to the retirement annuity fund are not to be considered in a claim for loss of earnings. The Supreme Court of Appeal (“the SCA”) had to decide whether this conclusion by the High Court was correct.

 

The SCA considered Section 17(4) of the Road Accident Fund Act 56 of 1996 which requires the Fund to compensate any person for any loss or damage which the third party has suffered arising from the motor vehicle accident including a claim for loss of income or loss of support. The Appellant contended that a retirement annuity fund and a pension fund were one and the same therefore the former should also be included in the calculations for loss of earnings as the latter is. Rumpff CJ in Dippenaar v Shield Insurance Co Ltd 1979 (2) SA 904 (A) when deciding whether the pension deduction from the claimant’s earnings and the contributions made by the employer toward a pension could be excluded from his earnings, held that the ‘income’ of the employee is not confined to his salary but includes also pension when such pension is due. Further he held that, if monetary value is sought to be put on the earning capacity based on the contract of employment, every benefit received under the contract including the pension must therefore be considered. The judge stated that one could not compare a pension to a benefit that is deemed to have been purchased. If the claimant purchases a benefit and he or she does so voluntarily and unconnected to an employment contract, contributions or payment in relation to such makes it an investment or purchase of a benefit that cannot be recovered from the RAF.

 

Houghes AJA, in this case, was of the view that a negligent third party cannot be liable to compensate a claimant who voluntarily opted to attain a benefit, irrespective of whether that third party was negligent. He confirmed the High Court’s decision that ‘provisions for the future’, such as an investment cannot be taken into account when calculating future loss of earnings for the purposes of provisions of the RAF Act.

 

The Appellant further argued that claimants who voluntarily contributed to a retirement annuity fund were discriminated against and their right in terms of section 1(a), 7(1) and 9 of the Constitution of the Republic of South Africa were violated. He contended that the claimants are placed at a disadvantage and prejudice as the retirement annuity fund contributions were not taken into account while the pension fund contributions are. In dealing with this issue, the court stated that what is alleged by the Appellant is a differentiation in treatment that is unrelated to any inherent characteristics or attribute having the potential to impair the dignity of a person.

 

In light of this, it is imperative to provide a definition of discrimination and inequality: In terms of Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000, discrimination means any act or omission, including a policy, law, rule, practice, condition or situation which directly or indirectly withholds benefits, opportunities or advantages from any person on one or more of the prohibited grounds. Equality includes the full and equal enjoyment of rights and freedoms as contemplated in the constitution. In Harksen v Lane NO & Others 1998 (1) SA 300 (CC), the constitutional court set out the test to be followed in determining whether section 9 of the Bill of Rights is violated. According to this test, the first question is whether the act differentiates between people or categories of people? If so, does the differentiation bear a rational connection to a legitimate governmental purpose? If it does, then there is no violation of s 9(1).

 

In the present case, the court correctly ruled that the right to equality may be implicated, but not the right to be free from unfair discrimination. It concluded that it cannot be said that a person like the Appellant whose employer does not contribute to a pension fund for the employee as part of his or her remuneration is in a similar position to an employee whose employer does contribute to a pension fund for the employee as part of his or her remuneration. All employees are treated equally in the sense that in order to determine their future loss of earnings, a court considers the employment contract as a whole.

 

This judgement provides an opportune moment for Road Accident Fund. It is evident that the legislature did not intend to include any voluntary contributions as part of loss of income as envisaged in Section 17(4) of the Act.
 

Contributor:   Duduzile Ngubane (Candidate Attorney) (PMB Office)

Overseen by:  Nithen Maharaj (Director)

E-mail:  duduzilen@tmj.co.za

Telephone:  033 341 9100