Road Accident Fund (Transitional Provisions) Bill [B22-2012]: Law Society SA concerns & Department of Transport response

Meeting report

Road Accident Fund (Transitional Provisions) Bill: Law Society South Africa (LSSA) submission
Advocate Marious Van Heerden, Representative, Law Society of South Africa,  stated that the current version of the Road Accident Fund (Transitional Provisions) Bill (the Bill) was far simpler than the previous version, and certain of the issues raised in the previous comment by the Law Society South Africa (LSSA) had now been addressed. However, the fundamental issues remained unresolved - namely that the Bill perpetuated discrimination against a certain class of passengers by retaining the cap of R25 000 for non-pecuniary loss (general damages), unless the claimant could meet the very stringent threshold imposed by Regulation 3 of the Road Accident Fund (RAF) Regulations, 2008.

He pointed out that the Constitutional Court had already found out that capping the claims of a certain class of passengers was inconsistent with Section9(3) of the Constitution. In addition, to the extent that these provisions overwhelmingly affected black people, they were considered to create indirect discrimination that is presumptively unfair, and thus to offend against sections 9(1) or 9(3) of the Constitution (the equality clause). The Constitutional Court judge held that “this is so because the discrimination is based on one of the grounds listed in Section 9 (3). In the absence of a rebuttal of this presumption from the respondents, I have to accept that the type of discrimination we are concerned with here is indeed unfair”.

Although this class of claimants now also had a claim for special damages, over and above the capped claim, the reality was that many would not be able to prove claims for loss of income and most would have received treatment at Provincial hospitals. The lifting of the overall cap was therefore more apparent than real.  Those claimants who had incurred medical and hospital costs and could prove loss of income were further discriminated against in comparison to other passengers and claimants, in that their claims were subject to caps for loss of income and reduced tariffs for emergency treatments as at 1 August 2008. This differentiation would give rise to the an enquiry as to whether the differentiation amounted to discrimination and, if so, whether it amounted to  ‘unfair discrimination’. If it did, a further enquiry was necessary  as to whether it could be justified under the limitation clause contained in Section 36 of the Constitution.

The Constitutional Court had already found out that discriminating against this class of passengers was unfair and not justified. However, the real issue was what remedy might be appropriate. There remained two questions – firstly, whether the proposed wording of the Bill fixed the problem and provided relief for the inequality which the old scheme continued to cause, and secondly, whether continued inequality between this class and other classes of passengers, who were claiming under the old RAF Act, was justified, in light of the serious budgetary implications of removing the limitations unconditionally.

Mr Heerden stated that the LSSA believed that the imposition of a threshold on general damages was hardly a viable solution. The Road Accident Fund itself anticipated that it would exclude approximately 92% of claimants from receiving compensation for general damages. The legislation was ostensibly aimed at providing relief for the inequality which the old scheme continued to cause. In addition, he stressed that the majority of the affected third parties would have no other viable claim for compensation against the Road Accident Fund if they were denied general damages.

He reiterated that the current version of the Bill went some way towards providing relief by allowing capped compensation of R25 000 for all affected passengers, including those who would not have qualified for any compensation for general damages at all under the old Act (including the “social passengers” and passengers in unregistered taxis). However, they were still being discriminated against when compared to other classes of passengers whose claims for general damages were not capped.

The LSSA remained of the view that, if it was necessary to impose some kind of limit on the compensation, in the interest of good governance, the proposed cap on loss of income and support would be sufficient and appropriate.

Mr Heerden then went on to comment more specifically on specific clauses in the Bill.

The LSSA submitted, In respect of Clause 2(1)(a) and (b), that another differentiation was being applied through retrospective application of the RAF Amendment Act to a certain class of passenger. Many of the claimants had already had the decisions on their matters held in limbo since the decision of the Western Cape High Court in June 2010. It appeared that they now would face a further delay by having to obtain a serious injury assessment report from a medical practitioner, and might also face a special plea from the RAF that the jurisdiction of the court in which their cases currently were proceeding had been ousted in regard to general damages. This would have particular relevance where claimants had sued both in terms of the RAF Act and in terms of the common law, as well as cases in which there were disputes as to which driver was to blame.

The current Bill still allowed the RAF, in practice, to avoid liability on a claim from a passenger, by contending that the accident arose as a result of the sole negligence of the driver of the vehicle in which the claimant was conveyed. This would encourage litigation being pursued on the merits, rather than leading to solution of claims.

LSSA submitted that clause 2(1)(f) of the Bill was not clear. It appeared that the intention might be that claims of suppliers arising before 1 August 2008 would not be subjected to any tariffs which might be prescribed, thus limiting the liability of the RAF for emergency treatment. However, it could also be interpreted to mean that those claims were still subject to the R25 000 cap.

Clause 2(1)(g), in its present form, would only absolve owners, drivers, and employers from common law liability if the third party did not expressly and unconditionally indicate to the RAF, on the prescribed form and within one year, that the claim should be governed by the old Act. However, if the injured party was under a legal impediment, the running of this one-year period was delayed until the impediment ceased. This could result in protracted uncertainty for potential common law defendants. Presumably, the intention was that the guardian or curator ad litem of the injured party should have time to make that election, and that a common law defendant would have to accept the decision if it was to have the claim decided in terms of the old Act, and therefore to retain the common law claim. However, LSSA felt that it should be clarified.

Department of Transport responses
Mr Steven Budlender, Legal Counsel for Department of Transport, said that he would firstly respond on the general comment, and then to the submissions on specific clauses.

In regard to the assertion that the Bill resulted in discrimination against certain classes of passengers, because claims for general damages were capped unless the claimant had a serious injury, he replied that it was important to understand the scheme of the Bill. He explained that, where claimants (including those not seriously injured) elected to be subject to the Bill, then they would all be allowed to claim up to R25 000 in general damages, in addition to their claims for loss of earnings and medical expenses. If claimants had been seriously injured, they would have an uncapped claim for general damages, in addition to their claims for loss of earnings and medical expenses. This meant that the new Bill offered substantially more generous compensation than was done previously.

He added that, under the old RAF Act, passengers who were subject to the caps could never receive more than a total of R25 000. However, under this Bill, in addition to claims for loss of income and medical expenses, claimants could claim for R25 000 in general damages alone, and for seriously injured passengers, the claim for general damages was unlimited. This was also in contrast to the RAF Amendment Act of 2005 (the 2005 Act) which provided that there was no claim for general damages if the claimant was not seriously injured. He stressed again that the Bill provided that a claimant who was not seriously injured could claim up to R25 000 for general damages. For this reason, the Bill did redress the inequalities in the old Act in respect of passengers’ claims, and did so in a manner that was financially sustainable for the Road Accident Fund.  

Mr Budlender further emphasised that in the Mvumvu judgment, the Constitutional Court did not require that passengers be given unlimited compensation, nor that they be subjected to the identical regime that governed non-passengers under the old Act. On the contrary, the Court accepted the argument of the Minister of Transport and the RAF and had concluded that Parliament was best suited to determine the extent of compensation to which applicants should be entitled. The Bill was therefore very much in accordance with the Mvumvu judgement.

He said that the LSSA was essentially trying to reopen the question of whether general damages should be unlimited, irrespective of the seriousness of the plaintiff’s injury. That issue had been resolved by Parliament in the 2005 Act. After hearing lengthy submissions, Parliament had concluded that general damages should only be available to those who were seriously injured. This remained the position under the new Bill.

He pointed out that the constitutionality of this point had already been challenged by LSSA in the case of Law Society of South Africa and Others v Minister of Transport and Another 2010 (11) BCLR 1140 (GNP). The North Gauteng High Court had emphatically rejected the challenge. Paragraph 36 of the judgment stated that “Neither was there  any coherent argument presented in Court in this particular context (by the LSSA) and it is difficult therefore to discern on which possible basis the Proviso should be declared unconstitutional. Persons with non-serious injuries cannot claim general damages for pain and suffering and loss of amenities of life for instance, but they can still claim medical expenses and loss of earnings”.

Mr Budlender noted that whilst the LSSA had taken some other aspects to the Constitutional Court on appeal, it had not raised this point. He therefore submitted that there was no merit in the LSSA’s general comment.

Mr Budlender then responded to the comments on specific clauses. In respect of clause 2(1)(a) and (b), the LSSA had contended that there would be further delays. He responded that there was no reason to suppose that the delay would be significant. The RAF had already indicated to the Constitutional Court that it intended prioritising these matters. In fact, in their application to extend the period of suspension granted by the Constitutional Court, the Minister and the Fund had asked for specific wording in the Order. The suggested wording was:  “In the event that Parliament enacts the Road Accident Fund (Transitional Measures) Bill, the Road Accident Fund and, where possible, courts, are directed to prioritise and expedite the finalisation of claims by persons subject to the Bill.” He said that it was highly likely that an order in these terms would shortly be granted by the Constitutional Court.

Mr Budlender said that the suggestion by LSSA that the RFA could avoid liability on a claim from a passenger by contending that the accident arose as a result of the sole negligence of the driver of the vehicle in which the claimant was being conveyed was incorrect. He reiterated that the Bill would significantly increase the Fund’s liability to all previously-capped passengers with pending claims, even if they were not seriously injured.

Mr Budlender noted that clause 2(1)(f) currently provided that: “The transitional regime does not affect the claims of the suppliers of goods and services in terms of section 17(5) of the old Act, in respect of costs incurred by the transitional third party prior to this section taking effect”. LSSA was concerned that the clause was unclear. He replied that the intention was to ensure that where there were supplies of goods and services to the passengers concerned, prior to the Bill coming into force, these should not be subjected to the tariff limitations of under section 17(4B) of the 2005 Act, and should not be subjected, therefore, to the R25 000 cap.

Mr Budlender, however, stated that in response to the suggestion that the clause was unclear, a new draft had been prepared. The Department of Transport (DOT) had therefore suggested that the current clause 2(1)(f) be replaced with the following wording:

“Notwithstanding the transitional regime, section 17(4B) of the new Act and the tariffs thereunder shall have no effect on the claims of the suppliers of goods and services in terms of section 17(5) of the old Act, in respect of costs incurred by the transitional third party, prior to this section taking effect”.

In respect of the LSSA’s submissions for clause 2(1)(g) Mr Budlender clarified that this clause, when read together with clause 2(1), said that unless a claimant elected to have the old Act apply, the owner, driver, or driver’s employer for the motor vehicle involved, with effect from the date on which this clause would take effect, were absolved from any further liability to the transitional third party. This election must generally be made within one year of the Bill taking effect. However, Clause 2(2) made it clear that where the passenger claimant was under any legal impediment (such as being a minor) that period of one year would commence running only when the impediment ceased to exist.  Where, for instance, a curator ad litem was appointed, the election could obviously be made sooner. The one year period was intended as the outer date by which the election should be made.

Mr Budlender stated that the LSSA did not complain – nor could it in fact do so – that these provisions prejudiced passenger claimants. It had been concerned about delay to common law defendants. However, he stated that if there was any prejudice caused by the delay, it would be minimal and in  fact inconsequential in the greater scheme of things. It was far more important to ensure that no minor or other person under a legal impediment was prejudiced, and the clause sought to ensure that this did not happen.

Discussion
Mr I Ollis (DA) expressed his satisfaction with the submissions of the LSSA and the reply given by Mr Budlender.

Mr Ollis asked what the cost of a medical examination would be for a claimant, and said he was worried whether a claimant could be prejudiced by these costs being too high, which would then drastically reduce the amount a claimant could receive.

The Chairperson asked if the RAF covered the medical assessment done by claimants, in view of the fact that some of these assessments were very expensive.

Mr Budlender responded that the RAF would pay for the assessments, after they had been adjudged successful. In other words, if a claimant’s injury was assessed as being serious, and if the claim was successful, then the RAF would recompense the claimant for the cost of the assessment.

Mr Budlender added that if a claimant could prove that s/he could not afford the assessment, and there was a reasonable possibility that the assessment would result in the finding of a serious injury, then the RAF would also cover such assessment.

Mr L Suka (ANC) referred to the past discrimination, in which tourists had been paid higher claims than South Africa citizens. He stated that RAF had not outlined anything to address this disparity.

Mr Budlender responded that the Bill would in future avoid the situation where tourists could claim vast sums, as had happened in the past, because it capped the amount that could be claimed. Tourists would only be able to claim a limited amount.

Mr Suka urged that the Bill be translated into one of the local languages, so that the intention and outcome of the Bill could be properly understood by all. He further suggested that there might be a need to consult with trade unions, to ensure that all stakeholders were involved in the process.

Mr G Krumbock  (DA) asked exactly what disagreements there were between the LSSA and the DOT.

Mr Budlender responded that the principal disagreement between the LSSA and the DOT related to general damages. All parties agreed that there should be unlimited medical expenses, and there was also a consensus that there should be cap on loss of earnings, as had applied under the 2005 Act. However, they were not agreed that there should be a cap on general damages. He explained that general damages were limited to only those claimants who had suffered serious injuries, although everyone could claim for their actual loss of earnings and medical expenses. The principle behind this was that allowing general damages gave rise to vast amounts of money being paid to people who were not really in need of the money, and this was not appropriate.

Mr Ollis opined that he was convinced by the argument of the DOT on the issue of general damages.

The meeting was adjourned.