Reportable

Case No 370/2001

In the Supreme Court of Appeal of South Africa

In the matter between

ARTHUR OLIVER RUDMAN

Appellant
and
ROAD ACCIDENT FUND

Respondent

Coram:

Howie, Cameron, Nugent JJA, Jones et Lewis AJJA
Heard:

9 September 2002
Delivered:

26 September 2002
Summary:
Delict – damages – loss of earnings and loss of earning
capacity – proof of – injured party totally precluded from
being a professional hunter and partially disabled from
farming – employed by “family” company – whether loss
to him.

JUDGMENT

JONES AJA:

[1] The appellant, whom I shall call Rudman, is a farmer of the farm
Blaauwkrantz in the Kirkwood district of the Eastern Cape Province.  He is a
mohair farmer.  He is also a game farmer, a hunting outfitter and a registered
professional hunter who brings large numbers of foreign hunters to the
Eastern Cape.  He runs a highly successful operation, one of the most
successful of its kind in the Eastern Cape and indeed in the whole country.

His activities were abruptly interrupted on 5 May 1998 when he was involved
in a motor collision.  He sustained serious bodily injuries, notably bad fracture-
dislocations of both lower legs and ankles, fractures of the right arm, the right
hand and the ribs, and soft tissue injuries to the head, neck, back, hip and
buttocks.  After a spell in hospital he returned to the farm.  But never again to
hunt; nor to resume with the same vigour the role of hands-on manager of a
large angora goat farm.  He was permanently disabled.  He was then 53 years
old.

[2] Rudman was an active man until the collision.  He was a fine
sportsman – in his day, a provincial cricketer.  He had always maintained a
high level of personal fitness.  This was part of his way of life and a necessary

ingredient of his activities as a professional hunter and a farmer.  His passion
was his work.  He was brought up on a farm as a child.  After he left school
his father put him through a farming apprenticeship before he began farming
on his own account.  In 1970 he purchased a farm in partnership with his
brother and then, in 1972, he purchased a farm on his own account with
money borrowed from his mother-in-law.  This was the beginning of what
would develop into one of the most extensive farming enterprises in the
Eastern Cape.  By 1977 he had acquired other farms.  That year his
accountant advised, for reasons of estate planning and income tax strategy,
that he should restructure his affairs.

Acting on this advice Rudman formed the Arthur Rudman Family Trust with
himself, his wife, his accountant and his attorney as trustees and his two sons
as beneficiaries.  He is neither a capital beneficiary nor an income beneficiary.
At about that time he also acquired control of a company which later became
registered as Blaauwkrantz Farming Enterprises (Pty) Ltd.  The trust holds
3900 shares in the company and Rudman the remaining 100 shares.  He, his

wife and his children are the directors.  The trust has become the property-
owning entity in the Rudman enterprise.  The company is the income-
producing entity.  Rudman is the driving force.  Although the farming and the
hunting business is done through the company the fact of the matter is that
Rudman continued to operate in the same way as he has always done – as if
he were a farmer farming for his personal account in his personal capacity.
He used the company’s banking account, but treated it as a personal account.
His wife wrote up the farming books.  His auditors saw to the financial
statements.  He did not bother himself with these things, which he regarded
as technical matters.  He got on with running his farms.

[3] Today the company owns four farms.  It leases sixteen other farms,
fourteen from the trust and two which are owned by Rudman personally.
These farms are extensive.  They form a single farming unit measuring more
than 20 000 hectares.  Their resale value is said to be about twenty million
rand.  They are stocked with 11 000 angora goats and 3 000 sheep and boer
goats.  They are also stocked with 24 species of antelope, about 5 000 head

in all, and there are other varieties of game as well.  They are situated in
rugged terrain – much of it steep mountainous slopes with deep gorges and
valleys and thick bush, inaccessible by vehicle.

[4] The motor collision of 5 May 1998 led in due course to a claim by
Rudman for compensation in terms of the provisions of the Road Accident
Fund Act, Act No 56 of 1996 as amended.  The amount of the damages he
claimed was R2 340 015,95 which is made up as follows:

past provincial hospital expenses
208,00
past private hospital expenses
6 926,20
past medical expenses
15799,75
estimated future medical expenses
81 200,00
past loss of earnings
745 882,00
loss of earning capacity
1 380 000,00
general damages
100 000.00

R 2 340 015,95

[5] Summons was issued on 20 October 2000, and the matter proceeded
to trial before Liebenberg J in the South Eastern Cape Local Division on 28
May 2001.  At the trial the Fund conceded liability on the merits.  It also
conceded liability to pay for past medical and hospital expenses and

submitted to an order that it furnish an undertaking to pay all future medical
and hospital expenses as and when they are incurred.  The parties went to
trial on the claims for past loss of earnings, loss of earning capacity and
general damages.

The trial Court delivered judgment on 18 July 2001.  It awarded general
damages in the sum of R100 000,00, which included a comparatively large
allowance for loss of the enjoyment of hunting.  But it dismissed the claims for
past loss of earnings and loss of earning capacity.  Rudman appeals to this
Court against the dismissal of those claims, with leave from the Court a quo.

[6] The evidence establishes beyond question that Rudman’s injuries have
given rise to severe permanent disability.  The claims for past loss of earnings
and loss of earning capacity arise from the physical handicaps from which he
suffers.  He has severe restriction of movement caused by the injuries to his
ankles, and muscular weakness of the right hand and arm.  The prognosis is
poor.  The parties accept that he will never again function as a professional

hunter, and that he is physically unable to do the maintenance work which he
formerly did on the farms.

The pleadings allege that the past loss of income suffered by the hunting side
of the operation amounts to R553 882-00 for the years 1998, 1999 and 2000.
This is the sum of
(a) the difference between the anticipated turnover for those years and
what was actually produced after numerous hunters either cancelled
their commitments or did not confirm their provisional bookings
because of Rudman’s unavailability (R523 882-00); and
(b)  additional travelling and marketing expenses which were incurred to
regain clients who had cancelled or threatened to cancel their bookings
(R30 000-00).
The past loss suffered by the farming side of the enterprise is the cost of
employing a maintenance manager to do work which Rudman would have
done himself.  The manager was employed at a monthly salary of R8 000-00

for the period June 1998 to June 2000.  The amount is R192 000-00.  This
gives a total claim of R745 882-00 for past loss of earnings.

[7] With regard to loss of earning capacity, the pleadings allege that
Rudman is permanently and completely disabled from earning a living as a
professional hunter, and permanently and partially disabled in his efficiency as
a farmer in that he can no longer do the maintenance work which he formerly
did.  But for his disabilities he would have continued to do these things until
the age of 65 years (that is, for a further 10 years).  He would have hunted for
150 days a year at a rate of R600-00 per day.  An amount of R900 000-00 is
claimed under this head.  For the other half of the year he would have
continued to perform, inter alia, maintenance duties on the farm which will
now be performed by a maintenance manager at a salary of R8 000-00 per
month.  R480 000-00 is claimed under this heading, being half an annual
salary of R96 000-00 for the next 10 years.  The total claimed for loss of
earning capacity is R1 380 000-00.

[8] The trial judge dismissed the claims for past loss of earnings and loss
of earning capacity for the following reasons:

‘On the evidence before me I must conclude that the losses
suffered as a result of the temporary decline in the income
generated by the professional hunting and professional outfitter
operations due to the incapacity of the plaintiff are losses suffered
by the company and do not represent a diminution in the patrimony
of the plaintiff.  I may pause to remark that the fact that the plaintiff
personally is registered as the professional outfitter does not
change the situation.  According to the evidence before me it must
be held that he was employed by the company in order to conduct
that section of the business.  The same holds true of the costs of
employing a professional hunter to stand in for the plaintiff as well
as the employment of the repair and maintenance manager … .
These persons are also employed by the company to take over
functions performed by the plaintiff and they are paid by the
company.  Any loss which may have occurred as a result thereof is
a loss to the company and not to the plaintiff’s private estate.  It
follows that in real terms the plaintiff’s private estate was not
diminished due to his incapacity.
…
In my judgment the plaintiff has failed to prove that his patrimony
was diminished due to any loss of earning capacity past or future
resulting from his injuries and consequently he has failed to prove

any entitlement to be compensated in respect of these heads of
damages.’

In other words, the learned judge concludes that although Rudman has
proved physical disabilities which, potentially at any rate, could give rise to a
reduction in his earning capacity, he has not proved that this has resulted in
patrimonial loss.  He has not proved that the reduction in earning capacity
translates into loss in the sense that his patrimony after the delict was less
than it would have been if the delict had not been committed.

[9] Mr Eksteen’s argument on behalf of Rudman is that on a proper
reading of the authorities to which he refers the learned trial judge’s reasoning
fails to distinguish between a claim for loss of earnings (past or future) and a
claim for loss of earning capacity.1  He says that Rudman’s capacity to earn a
living as a professional hunter and his capacity to perform the maintenance
necessary for a large farming concern are assets in his estate which have a

Santam Versekeringsmaatskappy Bpk v Byleveldt 1973 (2) SA 146 (A); Dippenaar v
Shield Insurance Co Ltd 1979 (2) SA 904 (A); Commercial Union Assurance Co v Stanley
1973 (1) SA 699 (A) 705 A-C.

measurable monetary value, and that the value of his estate has necessarily
been diminished when that capacity is eliminated or impaired.  He argues
further that Rudman does not have to rely on his contract of employment with
Blaauwkrantz Farming Enterprises (Pty) Ltd to place a monetary value on his
loss,2 especially where, as here, his earnings from the company bear no
relationship to the value of his services.  Indeed, at an early stage in the
pleadings Rudman expressly disavowed any reliance on his drawings from
the company, asserting that they have no bearing on his earning capacity.  In
so far as past loss is concerned, he is entitled to use the loss to the company
as a measure of his personal loss, and his future loss may in these
circumstances be quantified by the costs of employing substitute labour to do
the work which Rudman would have done if he had not been injured.3

[10] Mr Eksteen’s submission is correct that on the facts of this case the
nature of the loss (if Rudman has indeed suffered loss under these heads) is

Dippenaar’s case supra (footnote 1) 917F; President Insurance Co Ltd v Mathews
1992 (1) SA 1 (A) 5 D.
Muller v Mutual & Federal Insurance Co Ltd and another 1994 (2) SA 425 (C) 451 J –
452 B; Mathews’s case supra (footnote 2) at 7 C; Blyth v Van den Heever 1980 (1) SA 191
(A); and Estate De Villiers v Bell (1975 RAD) reported in Corbett and Buchanan, The
Quantum of Damages in Bodily and Fatal Injury Cases vol 2 at 454, especially at 457 and
458.

his diminished earning capacity.  In Santam Versekeringsmaatskappy Bpk v
Byleveldt4 Rumpff JA states the principle in the following terms:5

‘In 'n saak soos die onderhawige word daar namens die
benadeelde skadevergoeding geëis en skade beteken die verskil
tussen die  vermoënsposisie van die benadeelde vóór die
onregmatige daad en daarna. Kyk, bv., Union Government v
Warneke, 1911 AD 657 op b1. 665, en die bekende omskrywing
deur Mommsen, Beiträge zum Obligationenrecht, band 2, b1. 3.
Skade is die ongunstige verskil wat deur die onregmatige daad
ontstaan het. Die vermoënsvermindering moet wees ten opsigte
van iets wat op geld waardeerbaar is en sou insluit die
vermindering veroorsaak deur 'n besering as gevolg waarvan die
benadeelde nie meer enige inkomste kan verdien nie of alleen
maar 'n laer inkomste verdien. Die verlies van geskiktheid om
inkomste te verdien, hoewel gewoonlik gemeet aan die standaard
van verwagte inkomste, is 'n verlies van geskiktheid en nie 'n
verlies van inkomste nie.’

The same learned judge of appeal again dealt with the principle in Dippenaar
v Shield Insurance Co Ltd.6  He says:7

Supra (footnote 1 paragraph 9).
at 150 B – D.
Supra (footnote 1 paragraph 9).
at 917 B – D.

‘In our law, under the lex Aquilia, the defendant must make good
the difference between the value of the plaintiff's estate after the
commission of the delict and the value it would have had if the
delict had not been committed. The capacity to earn money is
considered to be part of a person's estate and the loss or
impairment of that capacity constitutes a loss, if such loss
diminishes the estate. This was the approach in Union Government
(Minister of Railways and Harbours) v Warneke 1911 AD 657 at
665 where the following appears:

"In later Roman law property came to mean the universitas of
the plaintiff's rights and duties, and the object of the action
was to recover the difference between the universitas as it
was after the act of damage, and as it would have been if the
act had not been committed (Greuber at 269). Any element of
attachment or affection for the thing damaged was rigorously
excluded. And this principle was fully recognised by the law of
Holland."

See also Union and National Insurance Co Ltd v Coetzee 1970 (1)
SA 295 (A) where damages were claimed and allowed by reason of
impairment of earning capacity.’
[11] In my opinion the learned judge in the Court a quo has not misdirected
himself in his understanding of these authorities or in his application of the law

to the facts.  His judgment correctly emphasizes that where a person’s
earning capacity has been compromised, “that incapacity constitutes a loss, if
such loss diminishes the estate” (Rumpff CJ in the above quotation from
Dippenaar’s case) and “he is entitled to be compensated to the extent that his
patrimony has been diminished” (Smalberger JA in President Insurance Co
Ltd v Mathews).8  (The underlining is from the trial judge’s judgment.)  In his
view, Rudman’s disability giving rise to a diminished earning incapacity was
proved, but the evidence did not go further and prove that his incapacity
constituted a loss which diminished his estate.

I believe that this conclusion is correct.  The fallacy in Mr Eksteen’s criticism is
that it assumes that Rudman suffers loss once he proves that his physical
disabilities bring about a reduction in his earning capacity; thereafter all that
remains is to quantify the loss.  This assumption cannot be made.  A physical
disability which impacts upon capacity to earn does not necessarily reduce
the estate or patrimony of the person injured.  It may in some cases follow

supra (footnote 2 paragraph 9) at 5 C – D.

quite readily that it does, but not on the facts of this case.  There must be
proof that the reduction in earning capacity indeed gives rise to pecuniary
loss.  Thus, in Union and National Insurance Co Ltd v Coetzee,9 which is
referred to in the passage quoted above from Dippenaar’s case10 and which
deals with a lump sum award for loss of earning capacity, Jansen JA makes
the point11 that “ 'n [b]epaalde liggaamlike gebrek bring egter nie noodwendig
'n vermindering van verdienvermoë mee nie of altyd 'n vermindering van
gelyke omvang nie - dit hang o.a. af van die soort werk waarteen die gebrek
beoordeel word”. (My underlining.)12  This is what is emphasised by the
learned trial judge in the passages quoted from his judgment which he has
underlined.13

[12] The case made by Rudman and his accountant Van der Ryst in their
evidence is that the company is for all practical purposes Rudman’s alter ego.

1970 (1) SA 29(5 (A).
See footnote 7, paragraph 10.
At 300 A
See also Krugell v Shield Versekeringsmaatskappy Bpk 1982 (4) SA 95 (T) per Van
Dijkhorst J at 99 E:  “Die blote feit dat 'n besondere betrekking verloor is of 'n besondere
rigting vir 'n eiser geslote is, beteken nog nie noodwendig dat sy vermoë om te verdien
daardeur geheel of gedeeltelik vernietig is nie. Dit hang van die omstandighede af.”
They are reproduced earlier in this paragraph.

According to Rudman, the auditors prepare the company’s annual financial
statements from the company’s cash-book and cheque-books.  They advise
on the amount of directors’ fees, rentals, interest and the like that should be
reflected in the financial statements in any given year.  They consolidate the
loan accounts.  They work out the taxes.  Rudman has little or no
understanding of most of this.  He is a down-to-earth farmer.  The fact of the
matter is that over the years he has virtually single-handedly produced the
company’s income.  He deposits the income in the company’s banking
account.  He pays all the expenses and other farming costs from the
company’s banking account.  He also makes whatever drawings he needs
from the company’s banking account for his living and other requirements and
those of his dependants.  There is no difference between the way he operates
and the way a farmer operates who farms solely for his own account, except
that the banking account and the farming operation is not in his own name.

The argument on Rudman’s behalf in the Court below, particularly with regard
to the claim for past loss of earnings, was that he is the person who felt the

pinch because there was less money coming in to the company.  He is the
person who in fact suffered the loss incurred by the company.  He is the
person who should be compensated.  The counter-argument, which was
accepted by the learned trial judge, is that this ignores entirely that the
company is a separate legal entity with its own personality and its own estate,
which is distinct and separate from Rudman’s estate.

Mr Eksteen has not pressed this argument before us.  He has submitted
instead that in the circumstances of this case it is appropriate to use the loss
to the company as a method of placing a monetary value on Rudman’s
personal loss.

[13] For present purposes I am prepared to accept the proposition (without
pronouncing finally upon it) that in appropriate circumstances a farmer in
Rudman’s position, who operates through a “family” company, may be able to
prove and quantify his personal loss in a delictual claim with reference to the
loss of income suffered by the company, provided that he does not fall into the

trap of regarding the loss to the company as automatically and necessarily
equivalent to his personal loss.  In the present case, there is evidence to show
that the company has lost income because, by reason of Rudman’s injuries, it
did not achieve the increases in hunting income that were confidently and
reasonably expected.  There is also evidence to show that the company has
incurred and will in future incur the additional expense of employing others to
do what Rudman used to do.  However, there is no proof that this produces
loss to Rudman.  There is no evidence, for example, that the value of his
shares in the company is less, or even that he received less from the
company by way of dividends or fees or drawings because of the company’s
reduced income, or that he will do so in the future.  Rudman’s financial
statements, the company’s financial statements, and the trust’s financial
statements for the years 1997, 1998, 1999 and 2000 do not show any loss to
Rudman at all, and neither does Rudman’s evidence nor the evidence of his
accountant.

[14] There is another fallacy in Mr Eksteen’s argument.  It does not consider
Rudman’s earning capacity as a whole.  His earning capacity is a complex of
abilities which together make up an asset in his estate14 and which becomes
part of the universitas of his rights and duties which has allegedly been
compromised and for which compensation is sought.15  Mr Eksteen’s
argument isolates individual elements of Rudman’s ability to earn a living
which have been compromised and places a monetary value on them, without
considering whether they bring about a diminution in his earning capacity as a
whole.  Rudman is not employed as a maintenance man or as a professional
hunter on a game farm, and his earning capacity is not to be confined or
compartmentalized as if he were.  Although he might have performed these
and other functions which he can no longer perform, his real function was and
is that of chief executive officer of a large farming undertaking.  He still
performs that function.  He remains the driving force behind the entire

See Dippenaar’s case supra (footnote 7 paragraph 10):  “The capacity to earn
money is considered to be part of a person's estate and the loss or impairment of
that capacity constitutes a loss, if such loss diminishes the estate.”
See Dippenaar’s case supra (footnote 7 paragraph 9) quoting from Union
Government v Warneke: “… property came to mean the universitas of the plaintiff's
rights and duties, and the object of the [Aquilian] action was to recover the difference
between the universitas as it was after the act of damage, and as it would have been
if the act had not been committed.”

enterprise.  On the evidence before us the disabilities from which he suffers,
serious and real though they are, do not impair his capacity to do what
matters most – to see to it that the Rudman empire which he has developed
continues to flourish in all its spheres for the benefit of himself, the trust, the
company, and, through the trust and the company, the rest of his family.
Whether or not he no longer does things which he formerly did, those things
will still be done by his sons and his employees under his direction and
supervision.  He is in a different position from the disabled banana farmer in
Coetzee’s case,16 in respect of whom Jansen JA makes the following
observation:

‘Dat die eiser se beweeglikheid ingekort is en verder ingekort sal
word, is duidelik. 'n Bepaalde liggaamlike gebrek bring egter nie
noodwendig 'n vermindering van verdienvermoë mee nie of altyd 'n
vermindering van gelyke omvang nie - dit hang o.a. af van die soort
werk waarteen die gebrek beoordeel word. Die verlies van die
eerste lit van die linkerhand se pinkie kan vir 'n kassier, wat
verdienvermoë betref, onbeduidend wees maar vir 'n pianis
noodlottig; so ook 'n stywe enkel vir die kassier teenoor die geval
van 'n balletdanser. Dat die eiser se soort ongeskiktheid, sy verlies

Supra at 301 C – D (footnote 7 paragraph 10).

aan beweeglikheid, egter 'n boer, en bepaaldelik 'n piesangboer, se
werkvermoë nadelig sou aantas, en aldus sy verdienvermoë, is
deur die Hof a quo aanvaar en is in die lig van die getuienis kwalik
te ontken.’
Rudman’s disabilities may well have constituted a loss for which he would be
entitled to compensation if his injuries had been incurred when, like the
plaintiff in Coetzee, he had been on the threshold of his career as a farmer
and about to begin the development of his empire.  But he is not in that
position, and his disabilities do not give rise to loss any more than a stiff ankle
or the loss of part of a little finger diminishes the estate of a bank teller.

[15] Mr Eksteen’s alternative argument is that Rudman should in any event
be awarded a globular amount to compensate him for his general handicap on
the open labour market.  This is to cater for the possibility of his no longer
being able to offer his services as a professional hunter should it ever become
necessary for him to seek a livelihood in that capacity.  Compensation is

sometimes awarded for this sort of contingency.17  An example is Union and
National Insurance Co Ltd v Coetzee.18

[16] The question is whether or not Rudman has proved that he is entitled
to an award of this nature.  Like the plaintiff in Coetzee’s case,19 his mobility is
restricted and he suffers from other physical handicaps as well, but this does
not necessarily translate into a reduction of earning capacity causing loss.
Has he proved such a reduction?  What is the probability of Rudman ever
leaving his farm in order to seek a livelihood elsewhere?  The answer involves
a consideration of a variety of possibilities.  In considering them it must be
remembered that in the final analysis an award cannot be based upon
speculation.  It must have an evidential foundation.20  There is in this case no
evidence at all that Rudman may for some reason be forced to have recourse
to the open labour market to earn a living.  The evidence indicates the
contrary.  The Rudman enterprise continues to flourish under his stewardship.

Burger v Union National South British Insurance Co 1975 (4) SA 72 (W).
supra (footnote 7 paragraph 9 and footnote 16 paragraph 14).
supra (footnote 7 paragraph 9 and footnote 14 paragraph 15).
See Monumental Art Co Ltd v Kenston Pharmacy (Pty) Ltd 1976 (2) SA 111 (C) 118
E and, for example, the approach of Jansen JA in Coetzee’s case supra (footnote 4
paragraph 10) at 301 D – E.

The chances are that this will continue.  The evidence of experts is that the
future prospects for the professional hunting industry in the Eastern Cape are
good, better than anywhere else in the country.  There is every reason to
suppose that the Rudman game farms will continue to generate profits.  There
is no reason to suppose that the future prospects for the Rudman mohair
enterprise, which is described as one of the largest, if not the largest in the
world, are anything but sound.  The financial statements of the trust and the
company show continued growth and a healthy relationship between assets
and debts, one which makes it unlikely that this farming empire will
disintegrate for financial reasons.  Rudman’s personal liabilities are small in
relation to his assets.  The Rudman family – father, mother, two sons and a
daughter - is closely knit and supportive.  All contribute to the family farming
operation.  All appear to accept the family policy of working for the good of the
family as a whole, rather than concentrating on an increase in personal
wealth.  There is no hint of the possibility of Rudman branching off on his own
for personal family reasons.  On the facts, the risk of Rudman ever being

forced to seek a living on the open labour market, or the possibility of his ever
choosing to do so, is so remote that in my view it must be disregarded.

[17] My conclusion is that Rudman has failed to discharge the onus of
proving that he has suffered a diminution in the value of his patrimony.  It is
therefore unnecessary to consider the evidence and arguments dealing with
the quantification of loss.

[18] In the result the appeal is dismissed with costs.

RJW JONES
Acting Judge of Appeal

HOWIE JA
CAMERON JA
NUGENT JA
LEWIS AJA

concur