Road Accident Fund R.A.F.
SOME FURTHER OBSERVATIONS ON THE ROAD ACCIDENT AMENDMENT ACT.
In an article titled: 'Some observations on the Road Accident Fund Amendment Act' published in 2006 (Oct) DR 28, the constitutional viability of the proposed Act was broadly dealt with.
In a letter in 2008 (Jan/Feb) DR 6, the Chief Executive Officer of the Road Accident Fund (RAF) largely dismissed some of the content of this article relating to observations made on operational aspects of the RAF as anecdotal.
He did not respond to the main thrust of the arguments advanced regarding the constitutionality of the Road Accident Amendment Act 19 of 2005 (the Act) contained in the Article. The CEO'S attitude was in essence that, in this regard, he would rather adopt a wait-and-see policy. In this article the content and implications of some of the more important amendments that affect the rights of a road accident victim are analysed and discussed.
RESTRICTION OF GENERAL DAMAGES TO SERIOUS INJURY
Section 6 of the Act has the effect of amending s 17 and thereby restricting the RAF's liability for the payment of non-pecunary damages to those cases where there is serious injury. Whether a person sustained a serious injury will be (in terms of reg. 3(1) the draft regulations published in GG 29478/12-12-2008 determined by a doctor according to the latest edition of the American Medical Associations
Guides of Permanent Impairment.
According to draft reg 3 (2)(c) a serious injury is constituted by 30 percent or more impairment of the whole person. The report of the medical practitioner who made the assessment of serious impairment must accompany the claim for general damages. In the event of a dispute by either the third party or the RAF relating to this report, such dispute is referred to a panel of medical practitioners assembled by the registrar of the Health Professions Council of South Africa. The entire procedure will be for the account of the RAF.
It currently takes in excess of six years for a claim against the RAF to be finalised at a direct cost per claim to the RAF of approximately 46 cents in the Rand (22 cents in 2002).
In practice all claimants are likely to, if at all feasible, attempt to show their injury to be serious enough to qualify for general damages. This convoluted and intricate procedure will substantially add to the costs and time span of claims - both as a result of direct cost implications and the great likelihood that this regulation's legal validity to be disputed.
It, furthermore, restrict's a claimants access to the courts and the applications of the section and its accompanying regulations may also provide a fertile ground for litigation.
Apart from the obvious practical implications, it falls foul of the fundamental legal principles to personal injury claims as regulated by legislation since 1942. The premise of this legislation was, initially to protect pedestrians against motorised vehicular traffic. This was later extended to include passengers.
The protection afforded was in the form of the assurance that a road-accident victim would be able to recover recover damages and would not be placed in a position that he succeeds in establishing a claim only to find that the wrongdoer is financially incapable of settling the claim. Fundamentally the legislator acknowledged and respected the intended road-accident victim's common law right to claim damages.
What it introduced into the equation was the suspension of the liability of the common law wrongdoer and substituted defendant in the form of, initially an Insurance company, and later the Motor Vehicle Accident and Road Accident Fund. The RAF's liability is established by s 21 of the Act. For authority regarding the effect if the Act on the comon law claim of a road-accident victim, see Rose's Car Hire (Pty) Ltd v Grant 1948 (2) SA 466 (A); Da Silva and Another v Coutinho 1971 (3) SA 123 (A).
It is important to note that the predecessors of the Road Accident Fund Act 56 of 1996 (the RAF Act) and the RAF Act itself (apart from, to a limited extent, hit-and-run liability), is not the source or basis of a road-accident victim's right of recourse. The source and basis of such victim's rights are squarely rooted and entrenched in the common law, it is ironic indeed, that where the courts have in the past held that the purpose of third party compensation legislation was to afford the third party the widest possible protection (see the judgement of Ramsbottom JA in Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A) at 285; Smith v Road Accident Fund 2006 (4) SA 590 )SCA) and Road Accident Fund v Makwetlane 2005 (4) SA 51 (SCA) the legislator is, with the introduction of this Act, seeking to abolish, erode and severely limit the rights of the primary road-accident victim and the protection that it is supposed to provide in order to be able to survive financially and to afford the protection of passengers (secondary victims).
It is therefore, in principle, from a policy and jurisprudential perspective, a reproachable, inequitable and very risky exercise to utilise the RAF Act to abolish and restrict a road-accident victim's (common-law) rights without introducing a balancing advantage (see Road Accident Fund v Makwetlane 2005 (4) SA 51 (SCA); Road Accident Fund v Smith 2006 (4) SA 590 (SCA); and Engelbrecht v Road Accident Fund and Another 2007 (6) SA 96 (CC)
In this regard, a possible precedent for the restriction of the rights of a claimant who has suffered bodily injury or loss due to death could arguably be found in the Compensation for Occupational Injuries and Diseases Act 130 of 1993. However, this Act fundamentally distinguishes itself from the RAF Act in that it creates a fully statutory regulated system of compensation. Limitations found in this Act are justifiable because of the reciprocating advantage given in the form of no fault liability (see Jooste v Score Supermarkets Trading (Pty) Ltd (Minister of Labour Intervening) 1999 (2) SA 1 (CC)).
Compensation for non-patrimonial damages by the third party compensation system is a question of public policy that must be dealt with on an all or nothing basis. Taking into account the purpose of an award of non-patrimonial damages, being to a certain extent deemed to be a civil penalty imposed against a wrongdoer for a wrong committed against a victim. The retention of non-patrimonial damages within the system needs to be reconsidered as it is not the wrongdoer who is visited with such penalty, but proportionately all levy-paying motorists. From this perspective, the only but very difficult option is to return full liability for non-patrimonial damages to the common law domain where it is seated.
REPEAL OF LIABILTY FOR PRE-SUMMONS PARTY-AND-PARTY COSTS
Section 17(2) of the RAF Act contains a provision that allows a third party claimant to recover party and party costs on settlement of his claim prior to the issue of summons. The provision is omitted from the revised s 17.
Section 17 (2) was introduced as article 41 in the Multilateral Motor Vehicle Accidents Fund Act 93 of 1989 in response to a practice that developed where summons was issued by claimants' attorneys subsequent to an offer of settlement being made in order to secure the recovery of pre-summons costs by taxation.
This was the consequence of a line of judgements that do not clearly establish whether a claimant is entitled to tax a Bill including such costs in the absence of a summons being issued (see Brits v Engelbrecht 1907 TS 876; Verwoerd v Toubkin 1948 (4) SA 245 (EC); Openshaw v Russel 1967 (4) SA 344 (EC); Hastings v The Taxing Master and Another 1962 (3) SA 789 (N) Meer v Taxing Master and Another 1967 (4) SA 652 (I); and Van Rooyen v Commerical Union Assurance Co of SA Ltd 1983 (2) SA 465 (C)).
In view of the ostensible reason for the introduction of the predecessors of s 17(2), the ommission of this section by the Act is clearly retrogressive and unwise, and will achieve quite the opposite of the well-intended attempt to limit the RAF's liability for legal costs.
RESTRICTION OF THE AMOUNT RECOVERABLE AS LOSS OF INCOME OF SUPPORT AND MEDICAL COSTS
Section 6 amends s 17 to restrict the loss of income and support to a maximum of R160,000 per annum. It also limits the medical costs recoverable from the RAF to a statutory established tariff based on the National Health Act 61 (the NHA).
The limitation on earnings, together with the abolishment of a third party's residual common law claim in terms of s 9 of the Act, is a serious intrusion into and limitation of the rights of a road-accident victim, especially regarding the seemingly arbituary limit is R160,000.
It is nowhere near equitable as the only comparable legislation. Compensation for Occupational Injuries Act 130 of 1993 (COIDA) Section 63 of COIDA contains guidelines for the determination of the income of the employee. Schedule 4 of this Act sets out a formula for calculating loss of income and earning capacity. It provides for different cases and circumstances and affects all employees equally. The Act fixes one maximum amount only, which punishes high-income earners with severe limitation while visiting low income earners with no limitation at all.
As far as medical costs are concerned, the attempt to limit medical costs to that of government run medical institutions also represents an intrusion into the rights of a road-accident victim. It also creates inequality, since s 63 of COIDA reflects the common law standard of reasonableness as the standard for judging tariffs. In practice the Commissioner deems the tariffs recommended by the South African Medical Association (SAMA) to be reasonable.
This is far higher than the tariffs in terms of the NHA and even the recommended tariff of the Board of Health Funders.. The suggested tariff has no built in flexibility to provide for special circumstances and effectively exposes the road-accident victim to the amount that exceeds the NHA tariff, thereby limiting his protection against the immediate primary consequence of a road accident = his medical costs.
What was said about the lack of jurisprudential basis and justification in relation to the partial abolishment of damages for non-patrimonial loss (above) applies equally to the limitation of loss of income, support and medical costs.
ABOLITION OF EXCLUSION OF CLAIMS
Paying Motorcycle Passengers, related passengers and claim for emotional shock.
Section 8 abolishes ss 19(b)(i) and (ii) that excludes the claim of social passengers injured-carried by a motor cycle for reward and a motor vehicle by the sole negligence of the driver of the vehicle in which they were being conveyed. It adds a new exclusion in respect of emotional shock suffered by the victims who were not personally involved in the collision (secondary victims).
The scrapping of s 19(b) (i) was overdue as it conflicted with s 18(b)(i) and was for this reason disregarded in practice. Section 18(b)(i) is repealed by s 7 of the Act.
The reason for the existence of s 19(b)(ii) is to be found in the phenomenon that a driver of a motor vehicle is less inhibited in making admissions relating to liability in circumstances where such driver is not personally liable (see Roberts v British American Assurance Co 1953 (1) SA 127 (C). The circumstances of these claims are, in addition, such that collusion between the driver and his passengers is a distinct possibility.
Moreover, there is the aspect that the negligent driver may owe a duty of maintenance to his injured passengers. Allowing a claim would, in the latter, instance mean that the negligent driver benefits from his own negligence in that the RAF accepts responsibility for, inter alia, medical costs which may be such driver's legal responsibility as a result of his familial relationship with an injured passenger.
This is contrary to the legal rule that a person is not entitled to benefit from his own wrongdoing (see the maxim: Nemo ex sua delicto meliorum suam conditionem facere potest and Parity Insurance Co Lits v Marescia and Others 1965 (3) SA 430 (A); Principal Immigration Officer v Bhula 1931 AD 323; Ex Parte Steenkamp and Steenkamp 1952 (1) SA 744 (T) and Weintraub and Weintraub v Joseph and Others 1964 (1) SA 750 (W)). It follows that the scrapping of s 19(b)(ii) will cost the RAF both in terms of additional claims previously excluded and in further costs to investigate possible collusion.
How a distinction between bodily injury and emotional shock can be justified is difficult to comprehend. In our law the pshyche and physical being are inseparable (see Bester v Commercial Union Versekeringsmaarskappy van SA Bpk 1973(1) SA 769 (A); Masiba and Another v Constantia Insurance Co Ltd and Another 1982 (4) SA 333 (C); Majiet v Santam Limited 1997 (4) All SA 555 (C); Barnard v Santam Bpk 1999(1) SA 202 (SCA); Gibson v Berkowitz and Another 1996 (4) SA 1029 (W) Boswell v Minister of Police and Another 1978 (3) SA 268 (E); Hauman v Malmesbury Divisional Council 1916 CPD 216; Creydt-Ridgeway v Hoppers 1930 TPD 664; Mulder v South British Insurance Co Ltd 1957 (2) SA 444 (W); Lutzkie v South African Railways and Harbours and Another 1974 (4) SA 396 (w); Els E v Bruce; Els J v Bruce 1922 EDL 295. This is an unwanted and unjustified incursion into the common law rightsof the road-accident victim, even if such victim was not actually involved in the collision and physically injured.
ABOLISHING OF RESIDUAL COMMON LAW RIGHTS
Section 9 replaces the existing s 21 with a newly worded s 21. The new section now provides that no claim for compensation arising from a motor-vehicle accident can be brought against the owner or driver or the driver's employer. Section 21 does not apply if the RAF is unable to pay any compensation, or where damages arise from emotional shock suffered by a secondary victim. It omits the wording found in the current s 21 which reads that a third party who is entitled to claim from the Fund under s 17:
'..........may not claim compensation in respect of that loss or damage from the owner or from the person who so drove the vehicle, or if that person drove the
vehicle as an employee in the performance of his or her duties, from his or her employer'
but must claim from the RAF. This means that the new s 21 does not contain the wording which makes the RAF the liable entity as is the case with the existing s 21.
Section 21 is couched in the negative, it firstly states that the driver or owner of the unlawfully and negligently driven motor vehicle is not liable. It then continues to make the wrongdoing driver or owner liable only when the RAF is unable to pay any compensation and when the secondary victim suffers emotional shock. It does not make the exclusion of liability of the owner or driver subject to the third party being entitled to a claim under s 17.
If one considers the effect of the amended s 21 and the rest of the Act in order to establish when and where the RAF is liable, the only section in the amended RAF Act that will refer to the liability of the RAF will be s 17(1) (as amended). Section 17(1) states that the RAF is liable, 'subject to this Act'. Section 19(a) of the Act (this Act) reads:
'The Fund or an agent shall not be obliged to compensate any person in terms of section 17 for any loss or damage - (a) for which neither the driver nor the
owner of the motor vehicle concerned would have been liable but for section 21'.
This has the effect that:
* The wrongdoer is liable only in the case of emotional shock and where the RAF is completely unable to pay any compensation.
* The RAF will never be liable in terms of s 17(1) of the amended RAF Act or otherwise. Section 19(a) excludes such liability because the amended s 21 absolves a wrongdoing driver and his employer from liability to the road-accident victim except where it is a claim for emotional shock by a secondary victim. The amended s 17 (1) in turn excludes a claim for emotional shock by a secondary victim. Because the RAF is not liable - the situation where it is unable to pay any compensation will never arise.
* The common law claim of a road-accident victim (except a secondary victim's claim for emotional shock) against the wrongdoing driver or his employer is effectively abolished and no liability for a claim against the RAF is established . This was the function of the original introductory wording of s 21 which read:
'When a third party is entitled under s 17 to claim from the Fund or an agent any compensation in respect of any loss or damage resulting from any bodily injury or
death of any person caused by or arising from the driving of a motor vehicle by the owner thereof or by the other person with the consent of the owner.'
Clearly, the drafter of this new s 21 had little or no comprehension of and appreciation for the purpose and scheme of the Act. The amendment contrives effectively to denude a road-accident victim of all rights to compensation barring a claim by a secondary victim for emotional shock. This is completely in conflict with the purpose and scheme of the RAF Act.
The amended s 21 has an utterly absurd result. Essentially this means that the amended s 21 must be interpreted to remove the absurdity and to give effect to the true intention of the legislator (see Steyn Uitleg van Wette. 5th ed, Juta: Cape Town (1981) at 32; Venter v R 1907 TS 910). Ultimately and essentially, this requires that the omitted wording of the original s 21, which establishes the liability of the RAF, be restored.
The observations made regarding the restriction of the rights of the road-accident victim contained in para 2.2 also apply to the abolishment of his remaining common law rights.
Not only is the constitutionally unviable, most of its more important provisions are contrary to and in conflict with the purpose, scheme and structure of the compensation system created by the legislator for the benefit of road-acciodent victims and which has equitably served the road-accident victim for more than 50 years. It is ill-considered, ill-advised, creates inequalities and contains inconsistencies, contradictions and conflicts that establish fertile grounds for potential litigation.
If revision of the current system is required and indicated, a far better approach would be to follow the carefully researched recommendations of the RAF Commission and to design a custom-made sustainable statutory compensation system rather than to unjustifably tinker (by means of the Act) with a well-established, tried and tested common law system that may create even more difficulties that those it sets out to remove.
In the meantime, the management of the RAF needs urgently to devise an effective strategy to ensure that the RAF becomes an efficient organisation that takes its stewardship of levies intended for road-accident victims seriously by ensuring that these funds are not wasted on costly and unnecessary litigation and other matters not part of its core function. One means of achieving this objective would be to cut down on the ever snowballing of outstanding claims, lengthening claim completion times and the cost to the RAF of handling such claims.
Author - Professor Hennie Klopper, BA LLD (UFS) is a practising attorney in Pretoria and a professor of law at the University of Pretoria.