We are often confronted with clients who have been seriously injured in a motor vehicle accident and as a result have lost earnings and/or will continue to do so in the future. We work together with experienced actuaries to determine the loss as accurately as possible and ensure that our clients are justifiably compensated.
This sounds rather simple, and often can be if a client is employed by an institution or corporation, receiving monthly payslips as well as paying tax via PAYE. What happens with the self-employed person who more often than not is paid “cash in hand” and fails to declare such earnings to the South African Revenue Services? The position was recently cleared up in Heese NO v Road Accident Fund 2014 (1) SA 357 (WCC):
- The Claimant, represented by his curator, was seriously injured in a motor vehicle accident and accordingly submitted a claim against the Road Accident Fund. The medical expenses as well as general damages were settled and the only issue in dispute was loss of income and/or earning capacity.
- The Claimant’s income had been made illegally under a fraudulent tax evasion scheme. He was under-declaring earnings and further inflating expenses. As a result of his conduct the court held that he was not entitled to his claim for loss of illegal income. This matter was also dismissed by a full bench on appeal.
- The appeal judges took it further by stating that he may well have been imprisoned at some future stage which would, in any event, render his earning capacity worthless or diminished.
- The finding was based largely on public policy in that a court will only award such damages which were earned in compliance with South African tax laws.
The result of this case is that illegal practice relating to income earned can effect and in fact destroy both a claim for loss of income as well as any proposed claims for loss of earning capacity if the possibility of a future event (imprisonment in this case) may have occurred.
