Msiska v Mandala and Another (Civil Cause 74 of 2017) [2022] MWHCCiv 60 (31 October 2022)

IN THE HIGH COURT OF MALAWI MZUZU DISTRICT REGISTRY CIVIL CAUSE NO. 74 OF 2017 BETWEEN EMMANUEL PHUKUSA MSISKA (Suing on his own behalf and on behalf of other dependants OFGLORY DIANA SOR Oildereased \inwcncrcimmnwo amnenemeneniiminn came ymin earmire mn CLAIMANT AND WILFRED MANDALA: wancnce- nrunrsnnennniiniieh nn STEEN 18 DEFENDANT CHARTER INSURANCE CO. LTD. ..........::ccceeeeee ee ete etn ttettteeneneenenes 2NP DEFENDANT CORAM: Honourable Justice T. R. Ligowe C. Ghambi, Counsel for the Claimant B. B. C. Kondowe, Counsel for the Defendant F. Luwe, Official Interpreter R. Luhanga, Court Reporter ORDER Ligowe J 1 The defendants admitted liability to the claimant’s claim for negligence and I entered judgment on 16" January 2019 in favour of the claimant for damages for loss of dependency to be assessed and costs of the action. Here is the order on assessment of the damages. 2 On 9" September 2016 the deceased, Gloria Diana Soko, was a passenger in a Toyota Hiace minibus registration number KA 6849 traveling from Mzuzu going towards L Ekwendeni. The 1° defendant was at the material time driving an Ashok Leyland tipper registration number BQ 9942 in the opposite direction. The tipper was insured by the 7 defendant. It so happened that at a place called Chisato, the 1* defendant lost control of the tipper, as a result of which he collided with several motor vehicles including the minibus in which Gloria Diana Soko was a passenger. She died on the spot. The claimant was a husband of the deceased and he brought this action in negligence claiming damages for loss of dependency for himself and children, namely; Crown Msiska, Emma Msiska, Russel Msiska, Sydney Msiska and Closeby Msiska. He had included a claim for damages for loss of expectation of life and special damages for funeral expenses amounting to K250 000, cost of a police report at K3 000 and cost of a death report at K3 000. Actions for loss of dependency Section 3 of the Statute Law (Miscellaneous Provisions) Act allows an action to be brought in respect of the death of a person caused by a wrongful act, neglect or default, when the act, neglect or default is such as would (if death had not ensued) have entitled the person injured to maintain an action and recover damages in respect thereof. Under section 4, the action has to be brought by and in the name of the executor or administrator of a deceased person, against the person who caused the death of the deceased by the wrongful act, negligence or default, for the benefit of the wife, husband, parent and child of the deceased person. Child is defined in section 2 as a son, a daughter, a grandson, a granddaughter, a stepson and a stepdaughter. Parent is also defined as a father, a mother, a grandfather, a grandmother, a stepfather and a stepmother. The court will award damages proportionate to the injury suffered, as a result of the death, by the people in respect of whom the action has been brought. And will divide the damages among the people in such shares as by its judgment shall find and direct. Such damage is otherwise referred to as loss of dependency. If there is no executor or if no action is brought by an executor or an administrator within six months of the death, section 7 states that the action may be brought by and in the names of all or any of the persons for whose benefit the action would have been brought. That is what happened in the present case. Section 6 allows the court to award in addition to any damages awarded under section 4 (1), damages in respect of funeral expenses of the deceased person, if such expenses have been incurred by the parties for whom and for whose benefit the action is brought. Survival of actions The survival of action under Part I of the Statute Law (Miscellaneous Provisions) Act under which sections 2, 3, 4, 6 and 7 discussed above fall, should be differentiated from Part II which comprises section 10. Part I provides for survival of actions arising from fatal accidents caused by wrongful act, neglect or default. Such actions are for loss of dependency of the wife, husband, parent and child of the deceased person, and funeral expenses, if they incurred such expenses. Part II provides for survival of actions generally. Section 10 (1) provides that all causes of actions subsisting against or vested in a deceased person after the commencement of the Act, survive against, or, as the case may be, for the benefit of his estate. This is all causes of actions either against or vested in the deceased before death, and they survive against or for the benefit of the estate of the deceased. In the case of actions vesting as a result of fatal accidents, it means, every other damage than loss of dependency and funeral expenses as provided in Part I, survives for the benefit of the deceased estate. Such an action has to be brought by the executor or administrator of the estate. The present action was brought by the husband of the deceased for his own benefit and for the benefit of other dependants. He did not bring it as executor or administrator of his deceased wife’s estate. He therefore is only entitled to what is provided for under Part I of the Statute Law (Miscellaneous Provisions) Act, to wit, loss of dependency and funeral expenses incurred by them. Hence the exclusion of damages for loss of expectation of life from the judgment entered in favour of the claimant. 10 1] Assessment of damages for loss of dependency The basis for this head of damages is strictly compensation for pecuniary loss. Viscount Haldane L. C. stated in Taff Vale Ry. v. Jenkins [1913] A. C. 1 that: - “The basis is not what has been called solatium, that is to say damages given for injured feelings or on the ground of sentiment but damages based on compensation for a pecuniary loss.” Commenting on the same, Lord Wright in Davies v. Powell Duffryn Collieries [1942] A. C. 601 had to say: - “There is no question here of what may be called sentimental damages, bereavement or pain and suffering. It is a hard matter of pounds, shillings and pence.” Let me also state that the courts have evolved a particular method for assessing the value of dependency. This amount is calculated by taking the present annual figure of dependency, whether stemming from money or goods provided or services rendered, and multiplying it by a figure which, while based upon the number of years that the dependency might reasonably be expected to last, is discounted so as to allow for the fact that a lump sum is being given now instead of periodical payments over the years. See Mc Gregor on Damages, 15" Edition. Para 1557. Lord Pearson set it out tersely in Taylor —vs- O’Connor [1971] AC 115 at 140, thus: - “There are three stages in the normal calculation, namely; (i) to estimate the loss of earnings, i.e. the sums which the deceased probably would have earned but for the fatal accident; (ii)To estimate the lost benefit, i.e. the pecuniary benefit which the dependants probably would have derived from the lost earning, and to express the lost benefit as an annual sum of the period of the lost earnings; and (iti) to choose the appropriate multiplier which, when applied to the lost benefit expressed as an annual sum, gives the amount of the damages which is a lump sum.” 12 13 14 15 16 The underlying factor for all this is that the value of the compensation has to be in reference to the dependents’ reasonable expectation of pecuniary benefit and/or emotional security and support from the deceased. Lord Diplock put it differently in Cookson v. Knowles [1978] 2 All ER 604 at 609: - “Looked at from a juristic standpoint, it may be accurate to say, as did the majority of the High Court of Australia in Ruby v Marsh, that the entirety of the damage is sustained by the widow at the moment that her husband dies; but what she loses then is only the expectancy of the benefits which he would have provided for her in future years if he had lived. Looked at realistically her loss of the benefit for each year is not suffered until the year in which it would have been received; and at the date of death the present value of that future loss is such a sum as would grow to the money value of the benefit if it were invested at compound interest at current rates until the year in which it would have been received.” It was stated in Banda v Chunda 12 MLR 283 at page 290 that the object of the assessment of damages for loss of support is to create a capital fund whose purpose is to provide an annuity which is equivalent to the annual financial support lost by the dependants so that the capital fund should produce similar income as the deceased were still living. Just as the deceased would not go on producing income in perpetuity, so too the capital fund should not produce income in perpetuity; it must be capable of being exhausted over the anticipated period of dependency. The Judge in Banda v Chunda (supra) further held that the prevailing practice is to assess the damages in two stages. The first stage is concerned with the pre-trial loss. This is the loss of support which the dependants have suffered between the date of the deceased’s death and the date of trial.” And the post-trial loss, calculated using the loss of dependency from the date of trial onwards. The justification for this is as given by Lord Diplock in Cookson vy. Knowles [1978] 2 All ER 604 at 609 that: - ‘ie 18 19 20 “For the period between the death and trial, however, there will be some hard facts available which reduce, though they cannot eliminate, reliance on conjecture. ... I agree therefore with that part of the decision of the Court of Appeal that holds that, as a general rule in fatal accident cases the damages should be assessed in two parts, the first and less speculative component being an estimate of the loss sustained up to the date of trial, and the second component an estimate of the loss to be sustained thereafter.” I am aware that in Sakonda v. S. R. Nicholas, Civil Appeal No. 67 of 2013 (Principal Registry) (unreported) Justice Mwaungulu held that the splitting of awards in England and Wales is based on an Act of Parliament, not of general application before 1902, that does not apply to Malawi, under which courts can award interest on damages. The Judge referred to Jefford v Gee [1970] 2 Q. B. 130 on this point. The Judge further held that since the courts in Malawi have no power to order interest on damages, it is not necessary to split the awards. It appears to me the splitting is, apart from the need to award interest on the pre-trial damages, for the reason that the losses between the death and the trial will have already been sustained, and do not have to be capitalized at a discount rate as it happens with the post-trial loss. I therefore think it is necessary to split the awards to avoid undercompensating the claimant as it will be demonstrated at the end of this order. Let us now go through the stages mentioned by Lord Pearson in Taylor -vs- O’Connor (supra) as are done in this country. To estimate the loss of earnings, the courts in this country have taken into account the earnings of the deceased at the time of death and evidence of any prospect of this being increased at the time of trial and after trial. For the lost benefit, the courts have usually assumed that most men spend about one-third of their income on themselves and leaving two-thirds for the support of their families. As for the multiplier, the courts have considered: (a) the age and expectation of the working life of the deceased; (b) the life expectancy of the widow of the deceased; (c) the future 21 Ze 23 24 prospects of the deceased; (d) engagement of the deceased in some especially hazardous employment; (e) any prospect of the remarriage of the widow (if among the beneficiaries is a widow) and (f) any prospect of any other dependants of the deceased becoming independent. See Bayliss v. Jenkins 1923-60 ALR Mal 809, Banda v Chunda 12 MLR 283, Mbila and another v. Attorney General and another {1993] 16 (1) MLR 313, and Thindwa v. Attorney General and another [1995] 1 MLR 336. In view of the considerations for calculating the multiplier, it should be acknowledged as did Justice Tambala in Banda v Chunda 12 MLR 283 at 287 that the computation of damages of this nature “involves a consideration of so many uncertain and imponderable elements that an accurate arithmetical approach is quite impossible. The court simply has to do the best it can in the circumstances.” Lord Diplock also expressed similar sentiments in Cookson v Knowles [1997] A. C. 556 at 571 when he said: - “Quite apart from the prospects of future inflation, the assessment of damages in fatal accidents can at best be only rough and ready because of the conjectural nature of so many of the other assumptions upon which it has to be based.” I therefore agree with the authors of McGregor on Damages 14™ ed., (1980) para. 130 at 888 that: - “The dependants’ annual loss — the multiplicand — is not to be multiplied by the number of years during which they have been deprived of the deceased’s support; this would clearly produce overcompensation as it would put the deceased’s future contributions into the dependants’ hands long before they would otherwise have received them, and would enable them to enjoy the interest accruing in the intervening period. It is the present value of the future contribution that is to be awarded, ...” For this reason, in Bayliss v. Jenkins 1923-60 ALR Mal 809 after finding the pre-trial loss for each dependant, the court calculated the post-trial loss for each dependent by 25 26 27 capitalizing at 5% the amount each of them would have lost for the period they would have remained depending on the deceased. In Mbila and another v. Attorney General and another [1993] 16 (1) MLR 313, Justice Mwaungulu, then as Registrar held that interest rates of between 3 and 5% should be used. The rate that was used in Thindwa vy. Attorney General and another [1995] 1 MLR 336 does not come out clearly in the judgment. In one of the most recent cases on the subject, Sakonda v. S. R. Nicholas (supra), Justice Mwaungulu used the rate of 3%. He earlier on in the judgment referred to Wells v. Wells [1998] 3 All E. R. 481 where the House of Lords recommended 3% based on the rate for index linked government stocks. The House of Lords found that index linked government stocks are the most prudent investment for awards of loss of dependency in the UK as they are a risk-free investment and fully protected against inflation. Lord Lloyd of Berwick quote Sir Michael Ogden in the Actuarial Tables with explanatory notes for use in Personal Injury and Fatal Accident cases, second edition (1994) (Explanatory Notes, s A: General, para 8) that: - “ .. the return on such index-linked government stocks is the most accurate reflection of the real rate of interest available to plaintiffs seeking the prudent investment of awards ...” The Judge in Sakonda v. S. R. Nicholas did not state how the rate of index linked government stocks of the UK, a more advanced economy, would apply in Malawi. He actually, in the same judgment, criticised comparing awards in states at different levels of economic development when assessing damages without giving proper justification. Among instruments for long term investment in Malawi, Treasury Notes are considered risk free. On the website of the Reserve Bank of Malawi’ are published “Daily and Weekly Reports” among them a report for “Financial Market Developments.” In that report is a “Yield Curve for Government Securities.” These are Treasury Bills for short term investment ranging from 91 days to 364 days and Treasury Notes for long term investment ranging from two years to ten years. The current yield/ interest rate for a 2-year Treasury 1 Reserve Bank of Malawi (rbm.mw) Note is 21.5%, 3-year Treasury Note 23%, 5-year Treasury Note 25%, 7-year Treasury Note 26.5% and a 10-year Treasury Note 27.5. I have the firm view that Treasury Notes are the most prudent investment for awards of loss of dependency in Malawi. Contrary to my senior brother in Sakonda v. S. R. Nicholas, | submit for use of interest rates of Treasury Notes in calculating post-trial damages for loss of dependency in this country. 28 The rate of interest, otherwise referred to as the discount rate, is used to calculate the present net value of the future loss of dependency. Three methods may be used. 29 The first is to use a schedule as was done in Sakonda v. S. R. Nicholas (supra). In that case | the Judge proposed that after calculating the multiplicand, the schedule should be starter with a multiplier of 20. It was emphasized that the multiplier can never be above 20, otherwise it will result in overcompensation. It is not clear however, in the judgment, how the Judge arrived at 20 as the starting point. After constructing the schedule, the Judge gave directions on how to find the award as follows: - “First decide the determining event. Secondly, consider the victim’s age. Thirdly, determine how many years remain up to the determining event. Fourthly, locate on the EXCEL sheet where the annuity is less than the annual periodical payment. Fifthly, counting upwards, count remaining years. Sixthly, this is the accurate award. Seventhly, to determine the multiplier, divide the award determined by the annual periodical sum. Eighthly, consider if factors necessitate increase or decrease of the award by increasing the multiplier or multiplicand. Notice that the multiplier is always less than 20.” 30 The second method is to calculate using a calculator or discount tables the net present value of the annuity using the formula P = [t= | where P is the net present value, A is the (14+1)” annuity payment, i is the rate of interest and » is the number of years.” ? Andre Francis, Business Mathematics and statistics, 6" Edition, South Western Cengage Learning, Chapter 23, page 321, 31 32 33 34 The third method is to use actuarial tables. Incidentally as of now, we have no such tables for Malawi. United Kingdom uses actuarial tables. In the Fourth Edition of the Tables, it is stated at page 6 that the tables set out multipliers. The multipliers enable the user to assess the present capital value of future annual loss (net of tax) or annual expense calculated on the basis of various assumptions including the mortality rates experienced in England and Wales in a historical three-year period and the current and reasonable projected future improvements in the mortality rates. Until we have our own tables in this country, Justice Mwaungulu in Sakonda v. SR. Nicholas (supra) advocates the method of a schedule as he did in that case. There is apart from that method, also in Excel, a function that returns the present value of an investment: the total amount that a series of future payments is worth now, (PV) that can be used to make the same calculations. It is in my view, simpler to use than developing a whole schedule. The authors of the article “How to calculate the present value of an annuity in Excel” explain better how to use the function. Considering that not many of us on the bench are so familiar with Excel, I find it important to reproduce relevant parts of the article. “Functions in Excel consist of specific values, known as arguments, arranged in a certain order, called the structure. In the PV function, there are five arguments, two of which are optional: Rate: The rate refers to the interest rate per period. ... This value is a required argument for the formula. Nper: Nper refers to the total number of payment periods in an annuity. ... This value, too, is required. 3 Actuarial Tables with explanatory notes in Personal Injury and Fatal Accident Cases, prepared by an inter- disciplinary Working party of Actuaries, Lawyers, Accountants and other interested parties, Fourth Edition, London: her Majesty’s Stationery Office. * How To Calculate the Present Value of an Annuity in Excel | Indeed.com 10 Pmt: Pmt is the payment amount per period, expressed as a negative integer in the structure, Over the course of the annuity, this value can't change. ... Pmt is the third required value of the PV function but can be substituted by fv. Fy: Fv is "future value," which refers to the cash balance you wish to have after making the final payment. ... If you've supplied a pmt value, the fv is optional. Omitting the fv defaults it to 0. Type: Type refers to the annuity payment type. If you're dealing with an ordinary annuity, in which the payment is due at the end of the period, you'd input 0 or omit a value altogether. If it’s an annuity due, in which the payment is given at the beginning of the period, you'd input 1. How to calculate the present value of an annuity in Excel You can follow these steps to calculate the present value of an annuity in Excel: 1, Open a new Excel document Begin the process of calculating the present value of an annuity by opening a new Excel worksheet. Find and double-click the Excel icon on your desktop or applications folder, or click it once on your taskbar or your operating system's search feature. If the program prompts you to select a type of document, choose "Blank workbook." 2. Gather and input your data As mentioned, the data required to calculate the present value of an annuity in Excel are the interest rate per period, the total number of payment periods in the annuity and the payment amount per period—trate, nper and pmt. If you'd like to add the future value and the annuity type, have those at hand as well. Then create a table that displays the data in a logical way. For example, in your blank workbook, you can input the payment amount in Al, the interest rate in A2 and the number of payment periods in A3. 3. Calculate an ordinary annuity 11 a0 36 To calculate an ordinary annuity, highlight a cell outside of the table of data you've created. In the example above, the bottommost entry is payment periods in A3, so you'd highlight A4. Then, minus the quotation marks, type "=pv" followed immediately by an open parenthesis. Holding down "Ctrl" on your keyboard, select the cells for your data in the following order: e Rate e Nper e Pmt Finally, input a close parenthesis and hit "Enter" on your keyboard. The resulting figure in the cells is the present value of the ordinary annuity. Alternatively, you can manually input the individual figures in the above-mentioned order. 4, Calculate an annuity due To calculate an annuity due, it's necessary to specify the fv and type values in addition to the three required arguments. To add them to the formula, proceed with the instructions as outlined in the third step but stop short of inputting a closed parenthesis. Instead, after the pmt value, input a comma, the number 0 for the fv, another comma and then the number | to indicate an annuity due. Then input the close parenthesis and hit "Enter" on your keyboard. Again, you can elect to input the figures manually instead.” The present case The Claimant’s evidence in the present case was that his wife died at the age of 56. She was at the time of her death selling clothes at Mataifa Market in Mzuzu from which she earned K150 000 per month. He however brought no proof for his wife’s earnings at the time. In such situations the courts in this country have used the minimum wage to calculate the multiplicand. See Sakonda y. S. R. Nicholas (supra). The Claimant also testified that despite his wife being 56 years old, she was in good health that she used to travel to South Africa to import clothes for sale in her business, and that she was bound to exceed the life expectancy of Malawi pegged at 56. In Sakonda v. S. R. 12 ay 38 Nicholas (supra) the Court held that since life expectancy in Malawi has recently been at 55, “Courts, if the determining event is death, should use 55 years when awarding compensation for lost earnings.” This should also apply to compensation for loss of dependency. As already seen above, the life expectancy of the dependants and any prospect of them becoming independent should also be considered. In his evidence the Claimant stated that his wife used to pay school fees for their grandchildren and essentially providing for members of the family. This indicates that there are other beneficiaries apart from the husband. However, his age and the ages of the other beneficiaries were not disclosed. I will take it as if there was only the Claimant who lost dependency of his wife’s support. And, ordinarily husbands are older than their wives. Meaning that in this case, the Claimant must have been 56 years or more at the time his wife died. Given the wife’s state of health at the time of death and that she had passed the life expectancy, it is just to assume that she would have retired from her business at age 65. I will put the determining event at 65. The Claimant therefore has to be compensated for loss in nine years from 9" September 2016 when his wife died. Today being October 2022, the loss for the past six years is pre-trial loss. According to the Employment (Minimum Wages) Order, the minimum wage as of 2017 was K962.00 per day. This was revised by the Employment Act (Minimum Wages) (Amendment) Order, 2019 to KI 346.16 and revised again by the Employment Act (Minimum Wages) (Amendment) Order, 2020 to K1 923.08. When such was the case in Bayliss v. Jenkins 1923-60 ALR Mal 809, the Court took the average. The average in this case is K1 409.75. I think we can also take that she supported her family with two thirds of this, so the claimant’s daily loss was K939.83. To express this as an annual sum we multiply with 260 working days, that is 52 five-day weeks to get to K244 355.80. See Sakonda v. S. R. Nicholas (supra). K244 355.80 is then multiplied with 6 to get to the Claimant’s pre-trial loss of K1 466 134.80. The post-trial loss is the one to be calculated using the PV function on Excel. The annual amount of dependency has to be based on current wages at the time of trial. That is two thirds of K1 923.08 and thus K1 282.05. Expressed as annual figure it gets to K333 333. 13 39 40 4] 42 Three years now remain to calculate the future loss of dependency. As earlier seen, the rate of interest for a 3-year Treasury Note is 23%. At this rate the post-trial loss in this case is K670 457.42. Adding the pre-trial and the post-trial losses, the Claimant in this case is hereby awarded K2 136 592.22. Earlier, I said that splitting the awards into pre-trail and post-trial losses is necessary to avoid under compensation. The present case can demonstrate this. If not split, the award would have been the net present value of the annuity for nine years, six of which are past. Using the PV function on Excel, the amount is K1 224 366.14. This is way below the award given to the Claimant upon splitting the losses. The Claimant is awarded K2 136 592.22 plus costs of the action. Delivered in open court this 31“ day of October 2022. 14