Road Accident Fund (Transitional Provisions) Bill [B22-2012]: briefing

Meeting report

The Chairperson commented on the increasing number of accidents occurring on the roads and stated the need to revisit the road safety strategy of the Department of Transport. She mentioned three recent major accidents. The Committee had made visits to the families of the victims and had inquired how the Road Accident Fund was responding to the situation.

Adv Adam Masombuka, Acting DOT Chief Director of Legal Services, stated that prior to 1 August 2008, the Road Accident Fund (RAF) Act provided that most categories of road accident victims could claim full compensation from the RAF, however, certain categories of claimants had had their claims limited by section 18 of the old Act. For example passengers conveyed in a taxi were limited to claiming a maximum of R25 000 from the Fund, where their driver’s negligence was solely responsible for the accident in question. In enacting the Road Accident Fund Amendment Act, 2005, Parliament had recognised that these limits which applied only to certain categories of passengers were inequitable, unfair and discriminatory. Parliament had therefore abolished those provisions and replaced them with provisions that had a more generous limit on claims, and which limits applied to all claimants. The constitutionality of this new approach had been upheld by the Constitutional Court.

Mr Masombuka stated that the Amendment Act however, applied only to causes of action which arose after its commencement on 1 August 2008. As a result, claimants whose claims were limited (or capped) by section 18 of the old Act and whose causes of action arose prior to 1 August 2008 derived no benefit from the regime created by the Amendment Act. These claimants were still subjected to the unfair, inequitable and discriminatory limitations to their claims under section 18 of the old Act. On 17 February 2011, the Constitutional Court in Mvumvu v Minister of Transport and another, CCT 67/10 [2011] ZA CC 1 concluded that the limitations in section 18 of the old Act were unconstitutional and invalid to the extent that they constituted unfair discrimination. This finding was not opposed by the Minister of Transport or the Road Accident Fund.

The Constitutional Court had agreed that it would not be appropriate to declare the sections invalid with immediate or retrospective effect. Instead the Constitutional Court held that “Parliament was best suited to determine the extent of compensation to which the applicants were entitled”. The Constitutional Court had therefore suspended the declaration of invalidity for 18 months. The Constitutional Court also added that while its judgment only concerned three of the caps created by section 18 of the old Act, there were three other caps created by the same section which had not been before the Constitutional Court. It held that “it was desirable that Parliament address the plight of those affected by these subsections as well”. It was therefore clear from the judgment of the Constitutional Court that Parliament had to devise a new regime applicable to a discrete category of road accident victims – that is those who were involved in accidents prior to 1 August 2008 and whose claims are capped by section 18 of the old Act.

Mr Masombuka stated that the legislation would propose some middle ground which increased the compensation available to the victims but which did not amount to full compensation. The legislation would not have the effect of forcing all road accident victims affected to be subjected to the Road Accident Fund Act, 1996 (Act No.56 of 1996), as it stood after 1 August 2008 as this would retrospectively remove the rights that they had under the old Act. The Road Accident Fund (Transitional Provisions) Bill, 2012 sought to provide for transitional measures in respect of certain categories of third parties whose claims were limited under the old Act, and give effect to the Constitutional Court judgment of Mvumvu v Minister of Transport.

Mr Masombuka went through the provisions of the Bill.

Clause 1 defined the following words as:
“Fund” - Refers to Road Accident Fund as defined in the principal act.
“New Act” - Means the Road Accident Fund Act, 1996 as it stood from 1 August 2008 onwards;
“Old Act” - Means the Road Accident Fund Act, 1996 as it stood prior to 1 August 2008.
“Prescribed” - Refers to regulations prescribed by the Minister in the Gazette.
“Third Party” - Refers to a person who has a right to claim compensation from the Fund in terms of section 17 of the old Act whose claim is subject to limitations imposed by section 18(1) or (2) of that Act, and whose claim has upon this Act taking effect, not prescribed or been finally determined by settlement or judgment.

Clause 2 dealt with transitional arrangements for certain third parties:
Clause 2(1) provided that if a third party intended to have its claim considered in terms of the old Act, they must expressly and unconditionally indicate this on the prescribed form within one year of the Act taking effect. Clause 2(1) further provided that if the third party did not elect and indicate their election on the prescribed form, then the claim of the third party would be dealt with in terms of the new Act and would be subjected to the transitional arrangements set out in clauses 2(1)(a) to 2(1)(g).

Clause 2(1)(a) provided that subject to the remaining provisions of the Act, the cause of action of the third party was deemed to have arisen on the 1 August 2008 for purposes of Section 12 of the RAF Amendment Act, 2005 (Act No. 19 of 2005) and section 17(4A)(b) of the new Act.

Clause 2(1)(b) provided that the right of the third party to claim non-pecuniary (general damages) loss was limited to a maximum amount of R25 000 unless:
(i) The third party submitted a serious injury assessment report as prescribed by regulation 3 of the RAF Regulations 2008, indicating a serious injury, within two years of the Act taking effect and
(ii) It was determined in accordance with Regulation 3 of the RAF Regulations, 2008, that the third party suffered a serious injury.

Clause 2(1)(c) prohibited double dipping or double compensation by allowing the deduction of certain amounts from the claim of the third party if:
(i) The third party recovered monies from the owner, driver or employer of the driver of the motor vehicle;
(ii) Payments were made to suppliers for goods and services provided to the third party;
(iii) Interim payments were made to the third party in terms of (17)(6) of the old Act;
(iv) Payments were received in terms of the Compensation for Occupational Injuries & Diseases Act, 1993, the Defence Act, 2002 or any other Act governing the South African National Defence Force.

Clause 2(1)(d) imposed a duty on the third party to declare in writing any monies received under 2(c).

Clause 2(1)(e) stated that a third party is not required to lodge a new claim form. It also states that if action has been instituted in a Magistrates Court, the third party may withdraw the action and institute action in a High Court, and that no plea may be raised in respect of prescription during that period.

Clause 2(1)(f ) provides that the transitional regime does not affect the claims of suppliers of medical goods and services contemplated in terms of section 17(5) of the old Act in respect of costs incurred by the third party prior to the Act taking effect.

Clause 2(1)(g) absolves the owner, driver and employer of the driver, from any liability to the third party.

Clause 2(2) exempts the third party from prescription in certain circumstances such as being a minor, any person detained as patient in terms of mental health legislation or a person under curatorship and prescription would start running once the impediments ceased to exist.

Clause 3 was a standard clause providing for the short title and commencement and provides that this Act will come into operation on a date fixed by the President by proclamation in the Gazette.

Mr Masombuka said there had been consultation on the Bill in August 2011. Comments had been received and where necessary, these had been incorporated into the Draft Bill.

Mr Masombuka explained the financial implications of the Bill. If the Bill was passed in its present form it would cost the RAF an estimated R1 300 billion. However, if the Bill was not passed, it would cost the RAF an estimated R2 264 billion. This meant an additional expenditure of R964 million. In respect of the communication implications, once the Bill had been approved by Parliament and assented to by the President, it would be published in the Government Gazette for general information. The implications of the Act would be communicated to the affected third parties and ultimately the Act would be proclaimed for commencement.

Concerning parliamentary procedure, the State Law Advisers and the Department of Transport were of the opinion that the Bill ought to be dealt with in accordance with the procedure established by section 75 of the Constitution since it contained no provision to which the procedure set out in section 74 or 76 of the Constitution applied. The State Law Advisers and the Department of Transport were of the opinion that it was not necessary to refer the Bill to the National House of Traditional Leaders in terms of section 18(1)(a) of the Traditional Leadership and Governance Framework Act, 2003 (Act No. 41 of 2003), since it did not contain provisions pertaining to customary law or customs of traditional communities.

Mr Masombuka requested that the Committee consider and approve the Bill.

Discussion
Mr L Suka (ANC) stated that the Committee would like to have a better understanding of the Bill. He asked what the Bill intended to achieve.

Mr Terrence Gow, RAF Project Manager, replied that the Bill was not an amendment to the RAF Act but that it was a standalone bill and the reason was that the Bill dealt with the old passenger claims which arose before 1 August 2008. These were the claims of those passengers who were involved in vehicle accidents in which the driver of the vehicle was to blame and which claim was limited to R25 000 only. However those passengers who were involved in vehicles in which their driver was not to blame had claims which were unlimited. It was this disparity between the two categories of passenger claims which existed prior to 1 August 2008 that the Bill sought to address in obedience to the Constitutional Court judgement which held that the disparity between the two categories of claims was unfair and inequitable.

Mr Gow stated that the DOT had been given a grace period of eighteen months by the Constitutional Court to resolve the problem of the disparity between the two categories of claimants and that if the DOT failed to come up with a solution of resolving the disparity within that time duration then all the claimants would have unlimited claims. The DOT had however applied for an extension to the grace period.

Mr Suka referred to the issue of consultation on the Bill with different bodies. He asked if consultation had been made with other stakeholders such as those in the taxi and the bus industries.

Mr Gow replied that the DOT had been pressed to make consultations with as many people in the shortest time possible.

Mr I Ollis (DA) referred to Clause 2(1)(d) of the Bill which imposed a duty on the third party to declare in writing any monies received from any other source. He asked if those who failed to declare such monies received from other sources would be subjected to criminal prosecution under the Bill.

Mr Gow replied that the Bill did not criminalise the failure to disclose but it was required that the oath should be given on a prescribed form which set a certain standard.

Mr Ollis referred to the financial implication of the Bill. He asked for clarity on what it meant that it would cost the RAF R1 300 billion if the Bill was passed and R2 264 billion if the Bill was not passed.

Mr Gow explained that if the DOT failed to get the Bill approved within the deadline proposed then the claims of that category of persons who were limited to R25 000 would become unlimited and that is why the figure would escalate from R1 300 billion to R2 264 billion.

Mr Ollis observed that the proposed Bill was a solution to a problem raised in the Constitutional Court. However, he wondered what efforts were being made by the DOT to address other problems such as the sum of R42 billion which were the outstanding claims yet to be paid by the RAF and people having to wait for long periods of time before they could receive payments.

The Chairperson referred to the issue of consultation with various stakeholders and commented that it was vital for consultations to be held with various national structures such as the South African Commuters Organisation. This would ensure that the public was carried along in relation to the Bill.

Mr Gow responded that the Bill had been published in a public gazette for consultation and that presentations had been made at various institutions. A lot of comments had been received from the public because of the publishing of the Bill in the gazette and these comments had been well considered and taken into account and which had guided the drafting of the Bill.

Mr Ollis stated that he had a follow up question. He observed that the claims to be addressed by the Bill would cost R1 300 billion while the DOT had a debt of R42 billion. He asked how the RAF intended to fund the cost of the Bill in view of the debt which already existed.

Mr Gow replied that the money was to be sourced from National Treasury.

Mr Suka asked if the Bill was to be used only in the English language. Were there plans to translate the Bill into the major languages spoken in South Africa? He asked how urgently the Bill needed to be passed. Was there a need to fast track the Bill or was it to take the normal course?

Mr Masombuka responded that the Bill would be translated into at least two official languages which would be English and Afrikaans, however there was nothing stopping the translation of the Bill into other languages. On whether the Bill needed to be fast tracked, he stated that it would be appreciated if the Bill could be considered as soon as possible.

The Chairperson thanked the DOT delegates and adjourned the meeting.