Law of Damages (LPL4802)
The law of damages is that part of the law which indicates how the existence and extent of damage, as well as
the proper amount of damages or satisfaction, are to be determined in the case of delict, breach of contract or
some other juristic fact providing for the payment of damages (for instance, legislation or insurance).
This subject consists of four main parts
the general principles regarding damage and compensation
the measure of damages in the law of contract
the measure of damages in the law of delict
certain procedural and other general matters
When contracts are concluded and delicts are committed, the need to compensate damage is often paramount. It
follows that an infinite variety of persons may benefit from a working knowledge of the legal principles expounded
in this subject. Persons in the legal profession, insurance industry, commerce, banking, advertising, medicine and
accounting, are just a small number of those persons who come to mind.
Damages
How damages are calculated
If you suffer injury, loss or damage as a result of someone else's action or failure to act,
you may claim damages or compensation from that person (the defendant) if you can
prove that he or she committed:
A breach of contract; or
A civil wrong (delict) such as personal injury or defamation. In delict, the law
imposes duties on everyone, whereas in contract the parties themselves make
their own rules, which are binding on them alone. Generally, damages are aimed
at putting you in the same position you would have been in had the breach of
contract or civil wrong not occurred. Although most claims for damages are
settled without the case going to court, a settlement is usually negotiated on the
basis of what a court would be likely to award if it did have to make a ruling. The
measure of damages depends on the type of claim:
BREACH OF CONTRACT Damages for breach of contract, such as buying and selling,
are awarded on the principle that, through payment, the injured party must be placed in
the same financial position he or she would have been in had the contract been properly
performed.
INJURY Generally, damages for injury arising out of delict (civil wrong) denote the
difference between the present financial state of the plaintiff and the state he or she
would have been in had the delict not taken place. The damages cover actual loss,
probable future loss, and compensation for pain and disability. (Seebreach of contract.)
DEFAMATION Where the plaintiff's personality has been impaired (as in defamation),
compensation damages may be awarded for the resultant insult, indignity and suffering.
(See defamation.)
General principles
Damages are awarded in one lump (monetary) sum; the court cannot order periodic
payments to be made. Furthermore, only one award can arise out of a single cause of
action. In a damages action, whether for breach of contract or delict, you must claim
,damages for all damage resulting from the action, the onus being on you to establish on
a balance of probabilities both the extent of damage and the amount of damages. This
may require you to seek compensation not only for loss already sustained, but also for
prospective loss, even if the full extent of your damage has not yet emerged when your
case comes to court. Give what evidence is available - and if you can assess your
damages financially, substantiate them. If, after giving evidence, you cannot
substantiate your claim, the court will assess the damages to the best of its ability. Once
damages have been assessed, you cannot claim further compensation for subsequent
loss arising from the same cause of action.
Mitigation (reduction) of damages
You cannot claim damages for loss you could have avoided had you taken the steps a
'reasonable man' would have taken to mitigate (reduce) damages. For example (in
contract): if a hotel booking is cancelled, a hotelier can claim for full loss only if it can
be shown that reasonable efforts were made to fill the vacant accommodation (unless
the contract provides otherwise). If the hotel was full anyway, the hotelier would have
no claim, because there would be no loss. Another example (in delict): if you cannot
continue working in a particular job because of a disabling injury received through
another person's negligence, you would be expected to look for other employment if you
are still capable of working. You cannot sit back, do nothing and then claim the full loss
of income. At the same time, you do not have a 'duty' towards the defendant in this
regard: the general legal principle is that you cannot be the author of your own loss.
The defendant must prove that you could - and should - have reduced your loss. If
necessary, you can claim any expenses that you incur in taking reasonable steps to
minimise your damage.
Damages for breach of contract
In delict, the law imposes certain duties on everyone, whereas in contract the parties
themselves make their own rules, which are binding on them alone. A party who fails to
fulfil an undertaking may be ordered to pay damages to the other party for breach of
contract. An injured party is entitled to be put in the position he or she would have been
in had the contract been properly carried out - whether or not the breach is serious
enough to justify cancelling the contract. The damages that can be recovered in an
action are the actual monetary loss (damnum emergens) incurred and monetary profit
(lucrum cessans) not made. (See breach of contract).
Damages for fraud Two types of fraud can give rise to an action for damages:
Fraud that does not lead to a contract, in which case you are entitled to damages
for financial loss;
Fraud that induces a contract. In the above instance, you may rescind the
contract, especially if the fraud was 'causal', that is, you would not have
contracted at all had you known the truth. In such a case you would be entitled
to damages that would put you in the same position that you would have been in
had you not contracted at all - the same rule as would apply to damages for
delict. The amount of damages you would receive if you kept your part of the
contract has not yet been cleared up by the courts. The following appears to be
the present state of the law: If the fraud was 'incidental' - in other words, if it
was of such a nature that you would still have contracted, but on better terms,
had you known the truth - you would be awarded the loss caused by the fraud.
You might be awarded damages even if the value of the award exceeds what you
gave, provided that you would still have been better off had the fraud not taken
place. If the case is one of 'causal' fraud, you would obtain your financial loss as
damages. Normally this would be the difference in value between what you gave
and what you received, but there could also be consequential damages. For
instance, if a farmer's cows were infected by new cows bought from a dealer who
, fraudulently stated they were disease-free, the farmer could claim compensation.
Damage to property
If your property has been wrongfully damaged or destroyed, damages might be
assessed on the basis of the loss in value of the property when it was damaged. In such
a case, the cost of repairs may be a suitable reciprocal measure if it is necessary and
fair, if it does not exceed the cost of replacement and if it will restore the property to its
previous state. Although a claim may also be made for loss of use and profits, the loss
must not be too remote - it must be within the foresight of a 'reasonable man'. Also, the
person sustaining a loss must take reasonable steps to reduce any damage which may
occur.
Damages for personal injury
In deciding on damages for personal injury, the courts will try to restore you (the
claimant) to the financial position you would have been in had the accident not
occurred. In this respect, four main factors are usually considered:
The actual expenditure and financial loss incurred in the time between the
accident and the trial; EFuture expenses;
Disfigurement, pain and suffering, and the loss of health and enjoyment of life
you have suffered and will suffer in future;
Loss of earning capacity. Earnings lost through an accident are calculated from
the date of the accident to the court hearing - and this could often be two years
or more. Moreover, you will also be awarded damages for loss of possible future
earnings if you have been permanently or partly prevented from earning a living.
SALARY OF WAGES If you have fixed earnings paid on the usual weekly or monthly
basis, your total earnings lost are easily calculated - you will often receive a pension,
sick-leave benefits or even wages while you are incapacitated. If these benefits form
part of your terms of employment, the courts will take them into account when
calculating the amount to be paid by the defendant. Compensation will be increased if
the weekly wage or overtime rate for your job has risen since you sustained your injury.
Alternatively, the amount of compensation will be reduced if your job would have ended
through 'natural causes' such as redundancy - although the court will have to consider
that you might have found another job. Compensation is also reduced if you were close
to retirement age - a claim for lost earnings is limited to the period you are likely to
have continued to work. Savings arising from not working - for example, a cut in
travelling expenses - may reduce the damages. But a loss of privileges - cheap meals, for
instance - increases them. Generally, you are entitled to full pay for the time you are off
work - and if you return to your post before the trial, but lose earnings because your
disability prevents you from doing your previous job, you may also be compensated for
this.
SELF-EMPLOYED If you are self-employed - for example, if you are a partner in a firm,
or a working director of a company - you must show that the firm's probable profits
have been reduced because of your inability to work and that, as a result, you yourself
have lost money.
DEDUCTIONS If you have received compensation after an accident at work or as a
result of an occupational disease under the Compensation for Occupational Injuries and
Diseases Act, 1993 (the successor to the Workmen's Compensation Act), this amount
may be deducted from an award of damages. Any benefit that you may receive from an
insurance policy for which you pay all or part of the premium cannot be deducted from
your claim unless the defendant has contributed to payment of the premium.
, ADDITIONAL EXPENSES You can claim the costs of visits to hospital by your spouse or
children if you can show that their presence helped you to recover. The costs of visits of
a parent to a child in hospital may also be recovered if the child usually lives at home.
The cost of private treatment, prescriptions, nursing homes, convalescent homes or
holidays can be claimed if they are undertaken on medical advice.
FUTURE FINANCIAL LOSS In serious cases, claims will not usually be settled for at
least two years after an accident - to allow the condition of the plaintiff to stabilise and
to enable an estimate of future losses and expenses to be made from the size of the
amount already lost. A claimant who as a result of the injury has had to take a job at a
lower wage or salary can claim compensation for the estimated future loss in earnings.
Probable future medical expenses directly caused by the accident can also be added. If
injuries permanently impair your ability to earn a living, you can claim for your reduced
earning capacity; however, if your expectation of life has been shortened, your claim for
earnings lost in this way may well be unsuccessful - on the grounds that you would not
be there to collect them. However, this difficult point of law has not been finalised. In
calculating such an award, the courts will try to arrive at a sum currently payable
which, when invested, will give the claimant a periodic payment. This would make up
the difference between your reduced wage and your earnings had you not been
disabled. The present value of what you would have earned were it not for the disability
is calculated, and from this is deducted the present value of your estimated actual
future income. This figure is then adjusted in the light of other relevant factors. With
regard to compensation for pain and disability, a court may consider:
Pain and suffering;
Disfigurement;
Loss of enjoyment of life and of general health; and
Future medical and hospital expenses.
Quick Tip - A Dependant's Action
A dependant - for example, a widow or dependant child - can claim against anyone who,
through delict, caused the death of the breadwinner.
The measure of this loss is, essentially, the difference between the position of the
dependant now and what it would have been had the breadwinner not died. This
calculation, however, may prove to be extremely complex. In general, direct benefits
going to the dependant, such as an inheritance, are deducted, but the Assessment of
Damages Act, 1969, states that no account may be taken of insurance money, pension or
benefits that will be paid because of the death. The determination of damages will also
have to consider a widow's or widower's prospect of remarriage.
Damages as a result of strikes or lock-outs
The Labour Relations Act, 1995, protects certain strikes and lock-outs as reasonable
exercises of bargaining power. Employees who participate in a protected strike and
employers who embark on a protected lock-out do not commit a delict or breach of
contract. civil proceedings may not be instituted against any person for partici-pating in
such an action, even if the act is an offence under the Basic Conditions of Employment
Act or the Wage Act. Claims for damages may be lodged in the Labour Court only if the
strike or lock-out is not protected. (See strikes.)
How much can you expect
In a case decided some years ago, a labourer who was paralysed from the waist down
was awarded R69000 in damages.
