LPL4802 PORTFOLIO SOLUTION
OCT/NOV SECOND SEMESTER 2022
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LAW OF DAMAGES
(LPL4802)PORTFOLIO
2022 2022
SEMESTER 2 2022
DUE 28 OCTOBER
2022
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QUESTION 1: ESSAY
PATRIMONAL DAMAGES FOR LOSS
Under the common law, the actio pauliana applies to dishonest dispositions by an
insolvent in which there was a transfer wherein the insolvent's assets were diminished
with the intention to defraud creditors and provide an unfair advantage to one creditor
over others. This remedy applies to any transaction aimed at defrauding creditors, in the
sense that its application results in the setting aside any such transaction.
The remedy is available if the transaction actually defrauds the creditors in that the assets
of the person alienating the property are diminished by such alienation. The action can
be instituted before or after the sequestration of the debtor.
The following must be proved:
a. the alienation must have diminished the debtor's assets
b. the recipient must not have received his own property or something owing to him;
c. (the debtor or alienator must have intended to defraud his creditors (if he received
value in respect of the alienation, the recipient must also have been aware of the
debtor's intention);
d. The fraud must have caused the loss suffered by the creditors. The intention to
defraud still plays a significant role here‖.
The fraud being referred in this situation is not 'fraud' in the criminal sense of the term but
refers to an act which will have the effect of prejudicing the creditor‘s ability to recover the
debt owed to him
It is law that the action can be only instituted if the alienation caused or increased the
insolvency of the debtor. The evolution of the actio pauliana has made it a remedy of
general application in cases wherein the claimant suffers loss as a result of fraudulent
transfers.
The actio pauliana forms part of our common law and is available where a debtor
―disposes of assets with the intent to defraud, in these cases a court can set aside the
disposition, provided that the alienee was a party to the fraud and had acquired the
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property, even if innocently, ex titulo lucrativa, that is to say gratuitously, for no
consideration‖. In essence any attempt to diminish the value of a transaction whether
through a simulated transaction or by a malicious donation will evoke the application of
the actio pauliana. This action can only be evoked if the person who receives the property
is party to the fraud or receives it as a donation for free.
The most obvious situation in which the actio pauliana can be invoked is where a person
faced with imminent bankruptcy gives away his property to friends and family in order to
defeat the claims of his creditors. It is not an essential of this common-law remedy that
the debtor's estate shall have been placed under sequestration. Thus where a debtor had
drawn up but not signed a statement of affairs for the surrender of his estate as insolvent
and his principal creditor, knowing this, induced him to withdraw the statement of affairs
and to transfer what was virtually his whole estate to him to satisfy his debt and those of
certain other creditors, such transaction was held to be a fraud on the other creditors and
liable to be set aside at common law. This allows for other creditors leeway to initiate the
action even if the debtor has already transferred his entire estate to a single creditor as
long as they can prove that the effect of the transfer was to effectively defraud them of
their share of the insolvent estate.
The main aim of the actio pauliana is to simply recover goods or property wherein a debtor
has transferred property to a third party with the intent to defraud his creditors.
The actio pauliana is an action for the recovery of a thing alienated by a debtor in fraud of his
creditors and that the action arises where the fraudulent alienation has been made with the
knowledge of the person to whom the alienation has been made, that is to say, where the
latter has shared in the fraud. It will only apply where there is fraudulent disposition; alienation
or transfer of asserts by debtor in an attempt to permanently deprive the creditors of any
recourse at law by effectively reducing the debtor ‘s estate.
The actio pauliana is designed to avoid certain transactions that are to the detriment of
creditors and was developed in tandem with execution (debt-collecting) procedures of
property law,essential elements for successfully invoking the actio pauliana against the
recipient are that there was a fraudulent disposition of his property by a debtor; the
disposition must have caused or increased the alienator‘s insolvency; and the recipient
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must have participated in the fraud. If the property was obtained by a lucrative title (for
example, a donation), the fraudulent intention of the debtor would suffice.
The second requirement that need to be satisfied for the actio pauliana to apply is that
the recipient must have participated in the fraud. Meaning that the recipient of the property
must have known that the transfer was fraudulent and willing took part. This is different
from the statutory remedy of piercing the corporate veil in that they do not impose any
such onus on a person initiating the action to prove that the recipient or beneficiary of a
fraudulent transaction should have known or anticipated the fraud in order to be
successful with the action.
For the actio pauliana to find application it requires that the fraudulent transfer must have
caused the loss suffered by the creditors. The actio pauliana expressly state that only
creditors can initiate the process against fraudulent debtors, this means that shareholders
can not directly initiate any action for the recovery of assets of a fraudulent dispossession.
The actio pauliana is grounded in principle hence it is not limited by the wording as in the
case of statutes hence offers a wide and more comprehensive remedy when dealing with
fraudulent alienations.
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QUESTION 2: FACTS
QUANTUM OF DAMAGES FOR INJURY TO PERSONALITY
2.1. Rights to his honour and dignity
2.2. Actio iniuriarum for satisfaction(solatium)
2.3. In Independent Newspaper Holdings Ltd v Suliman [2004] 3 All SA 137 (SCA) at
160 it was pointed out that some, but not all, invasions of privacy may involve
publication of defamatory material. In instances where the two are inextricably
enmeshed, it will seldom, if ever, be possible to quantify separately the damages
to be awarded for the defamation and for the concomitant invasion of privacy, and,
generally speaking, no such attempt should be made; the damages, if any, should
be merged into a single amount.
2.4. Factors and authority
a. Truth of defamatory statements
b. Retraction, apology and amende honourable
c. Absence of intention (animus iniuriandi)
d. Absence of improper motive or spite (malice)
e. Defendant not originator of defamation
f. Personal circumstances of defendant
g. Provocation, retortio and compensatio
h. Delay on part of plaintiff in bringing action
According to Fraser v Hertzog, [274] the fact that the defendant uttered the defamatory
matter in response to a question of the plaintiff or someone else can be considered in
mitigation.
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2.5. A Court must, as best it can, make a realistic assessment of what it considers just
and fair in all the circumstances.‘ A range of factors can be considered here, such
as
• ‗the nature and extent of the invasion or violation of privacy;
• malice on the part of the respondent;
• rank or social standing of the parties;
• the absence or nature of the apology;
• the nature and extent of the publication;
• and the general conduct of the respondent‘.
In a similar previous case, (2007 (5) SA 250 (CC), the court stated that the ‗greater
the violation of the privacy, the greater the need to protect the applicants and the
greater the award of damages ‘. The inclusion and publication of the applicants ‘HIV
status (highly personal and confidential material) in the book constituted a grave
violation of their privacy (and dignity) and should therefore be compensated. Due to
the gravity of the violations of privacy, the court considered a higher award than that
awarded by the trial court to be reasonable in the circumstances
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QUESTION 3: THEORY
QUANTUM OF DAMAGES AND SATISFACTION FOR NON-PATRIMONAL LOSS
3.1. Although damage in the form of non-patrimonial loss cannot be directly expressed
in terms of money, the relationship between the two is found by using fairness as
a type of formula. In practice this means that a defendant will not be compelled to
pay a large amount of damages just because of the law‘s sympathy with an injured
plaintiff.
In Pitt v Economic Insurance Co Ltd the court stated:
―I have only to add that the Court must take care to see that its award is fair to
both sides—it must give just compensation to the plaintiff, but it must not pour out
largesse from the horn of plenty at the defendant ‘s expense. ‖
Fairness is probably a collective concept in respect of inter alia the following
principles:
• the court should consider all the relevant circumstances which give an
indication of the extent of the non-pecuniary loss and ignore irrelevant
considerations such as undue sympathy for the defendant;
• the basic compensatory function should receive the necessary emphasis;
• the court should, without being unreasonable, exercise its discretion
carefully and conservatively and rather award too little than too much;
• the amount of damages should not unnecessarily burden a defendant in
favour of the plaintiff;
• an award should as far as reasonably possible be consistent with awards
in comparable previous decisions;
• the tendency to grant higher awards may be considered as a factor;
• the high value placed on personality interests in the Constitution must be
taken into consideration in assessing damages;
• the general economic conditions in the country should be taken into
account in a justifiable manner.
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• If these principles are applied, one may safely assume that a fair approach
has been adopted
3.2. Basic principles
The locus classicus on the technique of considering previous cases is Protea
Assurance Co Ltd v Lamb:
It should be emphasised, however, that this process of comparison does not take
the form of a meticulous examination of awards made in other cases in order to fix
the amount of compensation; nor should the process be allowed so to dominate
the enquiry as to become a fetter upon the Court‘s general discretion in such
matters.
Comparable cases, when available, should rather be used to afford some
guidance, in a general way, towards assisting the Court in arriving at an award
which is not substantially out of general accord with previous awards in broadly
similar cases, regard being had to all the factors which are considered to be
relevant in the assessment of general damages. At the same time it may be
permissible ... to test any assessment arrived at upon this basis by reference to
the general pattern of previous awards in cases where the injuries and their
sequelae may have been either more serious or less than those in the case under
consideration.
Considering depreciating value of money
It is obvious that, if a court considers a previous award made in a comparable case,
regard should be had to its actual present monetary value. This matter is well
summarized in an obiter dictum in SA Eagle Ins Co Ltd v Hartley:
As stated by Lord Diplock in Wright v Railways Board, non-ecomomic loss is not
susceptible of measurement in money. Any figure which is awarded cannot be other
than artificial and, if the aim is that justice meted out to all litigants should be
even- handed instead of depending on the idiosyncrasies of the assessor, the
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figure must be ‗‗basically a conventional figure derived from experience and from
awards in comparable cases‘‘ (Ward v James.) The need for even-handedness
requires that, when comparing awards in comparable cases, regard must be had
to the purchasing power of the currency at the time when such cases were decided,
otherwise one would not be comparing comparables ... In assessing general
damages one is dealing, not with a monetary debt, but with the valuation of a non-
monetary loss. Such a valuation must obviously be made in terms of currency
values as they are at the time of valuation, and not in the terms of the values of an
earlier time. In the same way ... a valuer determining the present value of a farm
would not use the currency values of the past.
The question is which method of calculation should be used to express a previous
award in current monetary value?Inflation should usually be computed with
reference to changes in the Consumer Price Index.
Practical method of using previous awards
Newdigate and Honey state that, where there are no recent cases which are
directly comparable with the case under evaluation, one should attempt to
establish a pattern of previous awards in cases where there were comparable
injuries and consequences. It may be very difficult to find comparable cases in
instances of multiple injuries. In such a case one may attempt to consider each
individual injury against the background of similar awards for such injury in the
past. However, this method should be used carefully lest the global award of
damages is unreasonably increased.
It is submitted that the following factors are to be considered:
a. The similarity of the physical injuries.
b. The type and duration of medical treatment.
c. The permanence of some types of injury.
d. The similarities in loss of the amenities of life.
e. The age (and sometimes the gender) of the plaintiff.
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OCT/NOV SECOND SEMESTER 2022
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written by
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LAW OF DAMAGES
(LPL4802)PORTFOLIO
2022 2022
SEMESTER 2 2022
DUE 28 OCTOBER
2022
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QUESTION 1: ESSAY
PATRIMONAL DAMAGES FOR LOSS
Under the common law, the actio pauliana applies to dishonest dispositions by an
insolvent in which there was a transfer wherein the insolvent's assets were diminished
with the intention to defraud creditors and provide an unfair advantage to one creditor
over others. This remedy applies to any transaction aimed at defrauding creditors, in the
sense that its application results in the setting aside any such transaction.
The remedy is available if the transaction actually defrauds the creditors in that the assets
of the person alienating the property are diminished by such alienation. The action can
be instituted before or after the sequestration of the debtor.
The following must be proved:
a. the alienation must have diminished the debtor's assets
b. the recipient must not have received his own property or something owing to him;
c. (the debtor or alienator must have intended to defraud his creditors (if he received
value in respect of the alienation, the recipient must also have been aware of the
debtor's intention);
d. The fraud must have caused the loss suffered by the creditors. The intention to
defraud still plays a significant role here‖.
The fraud being referred in this situation is not 'fraud' in the criminal sense of the term but
refers to an act which will have the effect of prejudicing the creditor‘s ability to recover the
debt owed to him
It is law that the action can be only instituted if the alienation caused or increased the
insolvency of the debtor. The evolution of the actio pauliana has made it a remedy of
general application in cases wherein the claimant suffers loss as a result of fraudulent
transfers.
The actio pauliana forms part of our common law and is available where a debtor
―disposes of assets with the intent to defraud, in these cases a court can set aside the
disposition, provided that the alienee was a party to the fraud and had acquired the
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property, even if innocently, ex titulo lucrativa, that is to say gratuitously, for no
consideration‖. In essence any attempt to diminish the value of a transaction whether
through a simulated transaction or by a malicious donation will evoke the application of
the actio pauliana. This action can only be evoked if the person who receives the property
is party to the fraud or receives it as a donation for free.
The most obvious situation in which the actio pauliana can be invoked is where a person
faced with imminent bankruptcy gives away his property to friends and family in order to
defeat the claims of his creditors. It is not an essential of this common-law remedy that
the debtor's estate shall have been placed under sequestration. Thus where a debtor had
drawn up but not signed a statement of affairs for the surrender of his estate as insolvent
and his principal creditor, knowing this, induced him to withdraw the statement of affairs
and to transfer what was virtually his whole estate to him to satisfy his debt and those of
certain other creditors, such transaction was held to be a fraud on the other creditors and
liable to be set aside at common law. This allows for other creditors leeway to initiate the
action even if the debtor has already transferred his entire estate to a single creditor as
long as they can prove that the effect of the transfer was to effectively defraud them of
their share of the insolvent estate.
The main aim of the actio pauliana is to simply recover goods or property wherein a debtor
has transferred property to a third party with the intent to defraud his creditors.
The actio pauliana is an action for the recovery of a thing alienated by a debtor in fraud of his
creditors and that the action arises where the fraudulent alienation has been made with the
knowledge of the person to whom the alienation has been made, that is to say, where the
latter has shared in the fraud. It will only apply where there is fraudulent disposition; alienation
or transfer of asserts by debtor in an attempt to permanently deprive the creditors of any
recourse at law by effectively reducing the debtor ‘s estate.
The actio pauliana is designed to avoid certain transactions that are to the detriment of
creditors and was developed in tandem with execution (debt-collecting) procedures of
property law,essential elements for successfully invoking the actio pauliana against the
recipient are that there was a fraudulent disposition of his property by a debtor; the
disposition must have caused or increased the alienator‘s insolvency; and the recipient
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must have participated in the fraud. If the property was obtained by a lucrative title (for
example, a donation), the fraudulent intention of the debtor would suffice.
The second requirement that need to be satisfied for the actio pauliana to apply is that
the recipient must have participated in the fraud. Meaning that the recipient of the property
must have known that the transfer was fraudulent and willing took part. This is different
from the statutory remedy of piercing the corporate veil in that they do not impose any
such onus on a person initiating the action to prove that the recipient or beneficiary of a
fraudulent transaction should have known or anticipated the fraud in order to be
successful with the action.
For the actio pauliana to find application it requires that the fraudulent transfer must have
caused the loss suffered by the creditors. The actio pauliana expressly state that only
creditors can initiate the process against fraudulent debtors, this means that shareholders
can not directly initiate any action for the recovery of assets of a fraudulent dispossession.
The actio pauliana is grounded in principle hence it is not limited by the wording as in the
case of statutes hence offers a wide and more comprehensive remedy when dealing with
fraudulent alienations.
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QUESTION 2: FACTS
QUANTUM OF DAMAGES FOR INJURY TO PERSONALITY
2.1. Rights to his honour and dignity
2.2. Actio iniuriarum for satisfaction(solatium)
2.3. In Independent Newspaper Holdings Ltd v Suliman [2004] 3 All SA 137 (SCA) at
160 it was pointed out that some, but not all, invasions of privacy may involve
publication of defamatory material. In instances where the two are inextricably
enmeshed, it will seldom, if ever, be possible to quantify separately the damages
to be awarded for the defamation and for the concomitant invasion of privacy, and,
generally speaking, no such attempt should be made; the damages, if any, should
be merged into a single amount.
2.4. Factors and authority
a. Truth of defamatory statements
b. Retraction, apology and amende honourable
c. Absence of intention (animus iniuriandi)
d. Absence of improper motive or spite (malice)
e. Defendant not originator of defamation
f. Personal circumstances of defendant
g. Provocation, retortio and compensatio
h. Delay on part of plaintiff in bringing action
According to Fraser v Hertzog, [274] the fact that the defendant uttered the defamatory
matter in response to a question of the plaintiff or someone else can be considered in
mitigation.
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2.5. A Court must, as best it can, make a realistic assessment of what it considers just
and fair in all the circumstances.‘ A range of factors can be considered here, such
as
• ‗the nature and extent of the invasion or violation of privacy;
• malice on the part of the respondent;
• rank or social standing of the parties;
• the absence or nature of the apology;
• the nature and extent of the publication;
• and the general conduct of the respondent‘.
In a similar previous case, (2007 (5) SA 250 (CC), the court stated that the ‗greater
the violation of the privacy, the greater the need to protect the applicants and the
greater the award of damages ‘. The inclusion and publication of the applicants ‘HIV
status (highly personal and confidential material) in the book constituted a grave
violation of their privacy (and dignity) and should therefore be compensated. Due to
the gravity of the violations of privacy, the court considered a higher award than that
awarded by the trial court to be reasonable in the circumstances
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QUESTION 3: THEORY
QUANTUM OF DAMAGES AND SATISFACTION FOR NON-PATRIMONAL LOSS
3.1. Although damage in the form of non-patrimonial loss cannot be directly expressed
in terms of money, the relationship between the two is found by using fairness as
a type of formula. In practice this means that a defendant will not be compelled to
pay a large amount of damages just because of the law‘s sympathy with an injured
plaintiff.
In Pitt v Economic Insurance Co Ltd the court stated:
―I have only to add that the Court must take care to see that its award is fair to
both sides—it must give just compensation to the plaintiff, but it must not pour out
largesse from the horn of plenty at the defendant ‘s expense. ‖
Fairness is probably a collective concept in respect of inter alia the following
principles:
• the court should consider all the relevant circumstances which give an
indication of the extent of the non-pecuniary loss and ignore irrelevant
considerations such as undue sympathy for the defendant;
• the basic compensatory function should receive the necessary emphasis;
• the court should, without being unreasonable, exercise its discretion
carefully and conservatively and rather award too little than too much;
• the amount of damages should not unnecessarily burden a defendant in
favour of the plaintiff;
• an award should as far as reasonably possible be consistent with awards
in comparable previous decisions;
• the tendency to grant higher awards may be considered as a factor;
• the high value placed on personality interests in the Constitution must be
taken into consideration in assessing damages;
• the general economic conditions in the country should be taken into
account in a justifiable manner.
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• If these principles are applied, one may safely assume that a fair approach
has been adopted
3.2. Basic principles
The locus classicus on the technique of considering previous cases is Protea
Assurance Co Ltd v Lamb:
It should be emphasised, however, that this process of comparison does not take
the form of a meticulous examination of awards made in other cases in order to fix
the amount of compensation; nor should the process be allowed so to dominate
the enquiry as to become a fetter upon the Court‘s general discretion in such
matters.
Comparable cases, when available, should rather be used to afford some
guidance, in a general way, towards assisting the Court in arriving at an award
which is not substantially out of general accord with previous awards in broadly
similar cases, regard being had to all the factors which are considered to be
relevant in the assessment of general damages. At the same time it may be
permissible ... to test any assessment arrived at upon this basis by reference to
the general pattern of previous awards in cases where the injuries and their
sequelae may have been either more serious or less than those in the case under
consideration.
Considering depreciating value of money
It is obvious that, if a court considers a previous award made in a comparable case,
regard should be had to its actual present monetary value. This matter is well
summarized in an obiter dictum in SA Eagle Ins Co Ltd v Hartley:
As stated by Lord Diplock in Wright v Railways Board, non-ecomomic loss is not
susceptible of measurement in money. Any figure which is awarded cannot be other
than artificial and, if the aim is that justice meted out to all litigants should be
even- handed instead of depending on the idiosyncrasies of the assessor, the
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figure must be ‗‗basically a conventional figure derived from experience and from
awards in comparable cases‘‘ (Ward v James.) The need for even-handedness
requires that, when comparing awards in comparable cases, regard must be had
to the purchasing power of the currency at the time when such cases were decided,
otherwise one would not be comparing comparables ... In assessing general
damages one is dealing, not with a monetary debt, but with the valuation of a non-
monetary loss. Such a valuation must obviously be made in terms of currency
values as they are at the time of valuation, and not in the terms of the values of an
earlier time. In the same way ... a valuer determining the present value of a farm
would not use the currency values of the past.
The question is which method of calculation should be used to express a previous
award in current monetary value?Inflation should usually be computed with
reference to changes in the Consumer Price Index.
Practical method of using previous awards
Newdigate and Honey state that, where there are no recent cases which are
directly comparable with the case under evaluation, one should attempt to
establish a pattern of previous awards in cases where there were comparable
injuries and consequences. It may be very difficult to find comparable cases in
instances of multiple injuries. In such a case one may attempt to consider each
individual injury against the background of similar awards for such injury in the
past. However, this method should be used carefully lest the global award of
damages is unreasonably increased.
It is submitted that the following factors are to be considered:
a. The similarity of the physical injuries.
b. The type and duration of medical treatment.
c. The permanence of some types of injury.
d. The similarities in loss of the amenities of life.
e. The age (and sometimes the gender) of the plaintiff.
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