Road Accident Fund Amendment Bill: deliberations

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
12 November, 2003
ROAD ACCIDENT FUND AMENDMENT BILL: DELIBERATIONS

Chairperson: Mr J Cronin (ANC)

Documents handed out:
Road Accident Fund Amendment Bill [B64-2003]
Department's Submission of Proposed Amendments to the RAF Amendment Bill

SUMMARY
The Committee heard the Department's Submission of Proposed Amendments to the RAF Amendment Bill that combined many previous inputs and suggestions.

MINUTES
Mr S Mphahlele (Manager, Legal Services Department) presented the Department's Submission of Proposed Amendments to the RAF Amendment Bill and explained the position taken in each of the amended clauses. See Appendix for full document.

Clause 1(b)
Instalments and future loss of income or support
This clause dealing with the instalments under future loss of income or support was classified as a driving force of the Amendment Bill that was to improve the cash flow of the Road Accident Fund. The amount payable by the Fund or the agent was to be annually adjusted accordingly to the change in inflation.

Clause 1(c)
Instalments and claims for non-patrimonial loss
The claims for non-patrimonial loss would be dealt with in a mixed system using both lump sum payments and instalments. The figures used in this proposed amendment (i.e. amount paid out being greater of R15 000 or 40 per cent of the amount payable by the Fund, and period of seven years) were based on the statistics provided by the RAF.

Clause 2
Medical tariffs
In the view of the Department, the undertakings with medical tariffs should be maintained under the fault system, and the road accident victims should not need to pay up front. The medical tariff contemplated in sub-clause 2(1) would be prescribed by the Minister, after the proposed tariff has been published in the Gazette for comments. It still needed to be established who the Minister needed to consult on the issue.

Collateral benefits in case of bodily injury or death
The Department proposed replacing section 17B with a new clause. Although it was questioned whether restatement of common law was indispensable, the Department's view on the issue was that it would regulate people's conduct more effectively, as ordinary people did not necessarily have the knowledge of the common law. More importantly, however, the amendment sought to disclose all collateral benefits in order to allow the Fund to deduct the appropriate amount from the compensation payable.

Clause 3
Treatment of non-residents
In principle, the Department did not wish to treat foreigners differently from the ordinary residents of South Africa, however the amounts payable would vary in both cases. the liability of the Fund to compensate the third party concerned for any loss or damage would be limited to the amount determined by the Minister, who in turn must take into account the amount that such person would have received had s/he been ordinarily resident in the Republic.

Clause 5
Mediation & Arbitration
The amendment clause was rejected by the Department and replaced with a new one. The period of 120 days from the date on which the claim was sent was restored in order to allow the Fund sufficient time to scrutinise the claim properly. In addition, the arbitration process became an alternative dispute resolution mechanism. The prior to taking alternative route of arbitration, a claimant would need to go through a mediation process conducted in house of the RAF.

Clause 6
Retrospectivity
The amendment clause was rejected by the Department and replaced with a new one. The Department's view was that the provisions of this Act ought to apply to claims for compensation submitted on or after the date of commencement of this Act. This in turn would ensure that the claims submitted before that time would be dealt with according to the old system.

Clause 8
The Short Title was replaced with a new formulation.
8. (1) This Act is called the Road Accident Fund Amendment Act, 2003.
(2) Sections 17 (4) (a) and 17A shall come into operation on a date determined by the President by proclamation in the Gazette.

Discussion
The Chairperson pointed out that the submission was by the Department and did not necessarily present the view of Committee members. Due to a number of new ideas introduced by the Department, it was not possible to begin a stage of formal considerations of the Amendment Bill, as previously hoped. Instead the Committee members would spend time familiarising themselves with the proposal.

Mr Farrow (DA) and Mr Schneemann (ANC) supported the Chairperson and asked if introducing new submission from the Department would induce another series of public hearings.

Mr Sibande (ANC) argued that it was not fair for the Department to introduce new concepts at this stage and said that the Committee already heard enough inputs from a large number of presenters to be able to enter the next stage of the legislation process.

The Chairperson asked the members to comment on each individual amendment clause.

Clause 1
Mr Mphahlele explained that the new clause introduced a mixed system of instalments and lump sum payments for large claims. Smaller claims, however, amounting to less than R25,000 would be dealt with under the old system and the money would be paid out to victims in cash without using undertakings.

The Chairperson suggested that the Committee discuss whether the undertakings should be obligatory or not. He referred to findings of the Satchwell Commission that reported that the financial state of the RAF was very poor and also that only about 14% of undertakings were actually taken in practice. There were also long delays in payments. Consequently, he challenged the practicality and capacity of undertakings.

Mr Swart (ACDP) inquired on the Department's choice to use the following specific figures in their proposal: R15 000, 40%, 7 years, and asked that the explanation be submitted in writing.

Clause 2
Mr Swart (ACDP) said that there was no need to restate the common law in case of collateral benefits. The Committee should rather concentrate its attention of a more important issue of benefit disclosure. Non-disclosure would make claims partially non-valid. He asked what kind of sanctions would be put on a person as a penalty for non-disclosure and whether the claim would be disqualified. The implications of such action should be clearly stated in the Act.

Mr Ainslie (ANC) said that section 17B(1) has been improved but at the same time agreed with Mr Swart that it was not necessary to restate the common law.

The Chairperson said that one explanation for restating the common law in clause 2 would be the desire of making the legislature more "user friendly". He also asked Mr Swart to come forth with some proposals in relation to his concern on disclosure.

Mr Farrow said that there was a need to specify the types of benefits that would be deducted as a measure of avoiding double indemnity.

Clause 4
Mr Swart inquired on a number of claims submitted for emotional shock. In order to avoid an abuse of law, certain parameters and limitations must be prescribed to such claims. The other option would be to remove claims for emotional shock completely from the Bill. He questioned the desirability of the clause as cases of emotional shock were difficult to dispute and in the end, the legislation could potentially open a flood of claims of that particular nature.

Clause 5
The Chairperson pointed out that the period of 120 days has been retained and summarised the intention of the clause. A claimant was to go through a mediation process first, and in case he was not satisfied with the results, he could then choose a venue of litigation of alternatively of an arbitration process.

Mr Swart and Mr Ainslie asked whether the mediation process was a mandatory step in problem resolution.

Mr Mphahlele said that mediation process was to be conducted in house of the RAF, but if the members wished to change that amendment, then the Committee should debate on it.

The Chairperson asked who was responsible for covering the costs of arbitration.

Mr Mphahlele said that normally the costs would fall on the Fund, but he would still check that to make sure and provide the Committee with a definite answer next time.

Clause 6
Mr Swart pointed out that in his experience it was the usual practice that the provisions of the Act reflected on the date of the collision and not the date of submission of a claim.

Clause 8
The Chairperson suggested that the Committee did not make any decisions on the clause at this time, but he also added that the provision did make sense.

The Chairperson asked that the RAF prepared a response to the issues raised during the meeting and that it be presented to the Committee the following week. The report should concentrate on the effectiveness of undertakings.

The meeting was adjourned.

Appendix

PROPOSED AMENDMENTS
ROAD ACCIDENT FUND AMENDMENT BILL
B 64-20031

CLAUSE 1
1. Replace sections 17(4)(b) and (C):
(b) includes a claim for future loss of income or support, the Fund or an agent shall [be entitled] , after furnishing the third party in question with an undertaking to that effect or a competent court has directed the Fund or the agent to furnish such undertaking, [to] pay the amount payable by it or the agent in respect of the said loss, by equal annually adjusted inflation related instalments in arrear [as agreed upon.]; and
(c) includes a claim for non-patrimonial loss, the Fund or an agent must after furnishing the third party concerned with an undertaking to that effect or a competent court has directed the Fund or the agent to furnish such undertaking, pay in equal annually adjusted inflation related instalments over a period not exceeding seven years such portion of the amount payable by the Fund or the agent in respect of such loss, as exceeds the greater of R15 000 or 40 per cent of the amount payable by the Fund.

2. Insert new subsection 17(4A):

4A. Notwithstanding subsection (4)(a), if the claim contemplated in that subsection does not exceed the amount of R25 000 the claim shall be paid by way of a lump sum.

3. Insert new subsection 17(4B):

4B. The amount payable in instalments referred to in subsection 4(b) and (c) shall be exempted from taxation.

CLAUSE2
1. Insert a new subsection 17A (2):
(2) The medical tariff contemplated in subsection (1) shall be prescribed by the Minister, after the proposed tariff has been published in the Gazette for comments.

2. Replace subsection 17B:

Collateral benefits in case of bodily injury or death
"17B.(1) Subject to section 1 of the Assessment of Damages Act, 1969 (Act No. 9 of 1996), where a third party is entitled to compensation in terms of section 17 for loss or damage suffered as a result of bodily injury or death, the Fund or the agent shall deduct from the compensation payable in terms of this Act all collateral benefits indemnjfyin2 the third party a2ainst bodily injury or death. except benefits which the third party proves to be legally reimbursable to the payer after compensation has been paid in terms of this Act.
(2) In order to make the deduction contemplated in subsection (1), the third party shall disclose to the Fund or a2ent all benefits from whatever source payable to the third party as a result of the bodily injury or death.".

CLAUSE 3
Replace section 1 8 (5) (a) and (b):
(5) (a) If a third party or the injured or deceased person concerned is not ordinarily resident in the Republic, the liability of the Fund or an agent to compensate the third party concerned for any loss or damage contemplated in section I 7 is limited to the amount determined by the Minister, on the recommendation of the Board, by notice in the Gazette.
(b) In determining the amount mentioned in subsection (a) the Minister must take into account the amount that such person would have received had such person been ordinarily resident in the Republic.

CLAUSE 5
Clause rejected

NEW CLAUSE
New clause to follow clause 4:

Amendment of section 24 of Act 56 of 1996
5. Section 24 of the principal Act is hereby amended by the addition of the following subsections:
"(7)(a) As an alternative to enforcing a claim by legal proceedings as contemplated in subsection (6), a third party may refer any dispute regarding the claim to arbitration.
(b) For the purpose of arbitration, the arbitrator shall be appointed by a2reement between the Fund and the third party.
(8)(a) Before any legal proceedings contemplated in subsection (6) or any arbitration proceedings contemplated in subsection (7) are commenced, the Fund and the third party shall endeavour to settle any dispute by way of mediation.".

CLAUSE 6
Clause rejected.

NEW CLAUSE
New clause to follow clause 5:

Application of Act
6. (1) The provisions of this Act apply to claims for compensation under section 17 of the principal Act submitted on or after the date of commencement of this Act.

CLAUSE 8
Replace Clause 8:

Short title and commencement
8. (1) This Act is called the Road Accident Fund Amendment Act, 2003.
(2) Sections 17 (4) (a) and 17A shall come into operation on a date determined by the President by proclamation in the Gazette.