The reduced utility of a life plan as basis for the assessment of damages for personal injury and death

[摘要] ENGLISH ABSTRACT: This thesis is concerned with damages for continuing loss, such as most commonly arise withpersonal injury, or the death of a breadwinner. The approach has been multidisciplinaryrather than multinational. The thesis comprises 4 sections: General theory; technical issues;technique and law governing personal injury claims; technique and law governing claimsfor loss of support. The thesis does not seek to be a compilation of all relevant legalsources.The initial inquiry focuses upon utility theory and the related concept of value. In its mostgeneral form utility is merely descriptive of a vital life force. Its application to theassessment of damages requires objectivization. Money and risk are both subject toutilitarian considerations. Techniques can be developed for the measurement of personalutilities. The statistical concept of an expectation describes the utility of uncertain, usuallyfuture events. In suitable circumstances market value provides an objective guide to utility.Abstraction promotes forensic efficiency. Concretization, attention to personal details,ensures for each claimant and defendant a proper hearing. Justice involves a blend of theseconflicting goals.Perfect restitution is only possible in extremely rare instances. In general the damagesawarded by a court are compensation, a fair equivalent for what has been lost. Whendifferencing utility regard must be had for the effect of the award for damages on the overallutility after the wrongful act. The assessment of lump-sum damages is assisted by theconcept of a patrimonium which includes as assets the present values of future uncertainincomes and outlays. The assessment of damages requires a comparison between thehypothetical state had there been no wrongful act and the actual state having regard to thatact.Fundamental to the assessment of damages for uncertain loss is the technique, known as'valuation of a chance', whereby the present value of an uncertain hypothetical event iscalculated by taking the value of that event as a certainty and then reducing it by apercentage to allow for the contingency of non-occurrence. The technique is applicableequally to past and future losses. The technique is distinguished from proof in a civil courton the balance of probabilities. The determination of the percentage chance may have regardto historical statistics but will more often be based on subjective value judgments. Theanalysis of chances according to subjective considerations has been a major field of study foranalysts of utility.The average expectation of life is a point estimate obtained by summing the survival chancesfor all possible years of life to age 99 and beyond. The chance of inheritance is similarlycalculated but with the chance of death in each year substituted for one of the survival ratios.The standard actuarial calculation for ascertaining present value proceeds by taking the valueof the chance in each year of the relevant income or expenditure and then summing the resulting series of separate values. It is generally unsound to suggest that by consuminginterest and capital a claimant may reproduce the income that has been lost.Despite the inadequacies of a compensation model based upon consuming interest and capitalit is a useful concept provided its limitations are borne in mind. Conditions of high inflationdictate that there is a 'ballooning' of the original capital for many years before inroads into· accumulated funds begin to be made. To test the consumable income from investing anaward a court should ignore high nominal rates of return and look to rates closer to the realrate of return. The prudent investor will save for a retirement that extends well beyond theexpiry of the expectation of life. The impact of tax on interest receipts is aggravated by highrates of inflation and renders such investments unattractive compared to growth investmentssuch as mutual funds and immovable property.Life annuities provide a medium for contractually transferring the risk of early and late deathto a life insurer. The use of actuaries by the courts has its origin in the need for evidenceas to the price at which to purchase a life annuity. This evidence has with time becomecorrupted into a fiction about consuming interest and capital over the expectation of life. Inrecent years there has been a resurgence of interest in life annuities in the form of 'settlementannuities' . There are a variety of different annuity contracts of which the 'annuity certain'and the 'life annuity' deserve special note. It was the practice in the classical Roman-Dutchlaw to ignore the price at which 'life annuities' were commercially available. That practice,with few exceptions, continues today.The 'discount rate of interest' is better described as the 'discount rate of return'. A nominalrate (I) comprises a real rate of return (R) and an offset to inflation (F). For compensationcalculations R is the most important measure. · Historical analysis suggests that R has a valueof about 2,5 % per year compound. The net capitalization rate will be different from R ifthe cash flow to be valued does not escalate in line with inflation. The allowance for the riskaspect of general contingencies is best achieved by an increase to the discount rate of return.The deduction for general contingencies reflects the court's subjective impression as to theadequacy, or otherwise, the comparative utility, of the primary actuarial calculations.Although collateral benefits are sometimes viewed as part of the general contingencies therisks attaching to what has been, or will be lost, are the major component of the deduction.Allowance for such risks can equally be achieved through an increase to the discount rate ofreturn.Interest is the measure of loss for deprivation from the use of money. The loss of use ofgoods can generally be quantified by interest on the value of the goods subject to anadjustment for the rate at which the goods increase or decrease in value with the passage oftime. A court is competent to award damages expressed in terms of a foreign currency. Therate of mora interest must then be adjusted to that appropriate to the relevant foreigneconomy.Before dealing with the explicit actions for loss of earning capacity and support one needsto examine the.impact of collateral benefit rules upon the distribution of the costs of damagewithin the community at large. A comprehensive approach to damages requires the deduction of insurance and employment benefits. A court making an award of damagesshould specify that a claimant should reimburse certain welldoers including an employer.Benefits provided by the State are not gratuitous and are generally deducted.The expression 'loss of earning capacity' embraces both earnings and living expenses. 'Lossof earnings' and 'loss of earning capacity' should not be distinguished. Just as increasedliving expenses, damnum emergens, increase the compensation payable so too saved livingexpenses reduce damage suffered and thus the defendant's liability. General damages hasa patrimonial aspect and awards must have some regard to the cost of goods and services inthe community at large. Likely earnings and likely expenses are the criteria by which tomeasure earning capacity and spending needs. The earning capacity of business capitalshould be distinguished from the earning capacity of the victim. Compensation for 'loss ofearning capacity' includes loss of support for the victim's family. Illegal earnings are bestdealt with by basing compensation on what would have been earned had the victim actedlegally.The loss of a right to support determines who may bring an action for loss of support. Thefinancial loss suffered is, however, not the right to support but the value of the financialbenefits expected from the breadwinner in consequence of this right. This financial valuewill be assessed according the value of the chance of receiving the support. The workingwife who earns sufficient to support herself has no right, at that point in time, to claimsupport from her husband. The loss by the dependants will be assessed without regard forcompensating advantages other than inheritance and remarriage. The focus is on the supportwhich would have been provided had there been no death. The widow who takes upemployment after the death will be compensated as though she were unemployed.Conversely a widow who ceases employment in consequence of the death has no claim underthe dependants' action for this loss of earnings. Loss of inheritance prospects will becompensated to the extent that these would have provided ongoing support. Althoughdependants have in theory a claim for loss of support during the 'lost years' such claims willusually fail due to difficulties with evidence.

[发布机构] Stellenbosch University