Road Accident Fund (Transitional Provisions) Bill: briefing by Department of Transport

Meeting report

Department of Transport
The Department of Transport briefed the Committee on the Road Accident Fund (Transitional Provisions) Bill. The delegation comprised of Dr Maria Du Toit (DoT Deputy Director General), Adv Adam Masombuka (DoT Acting Chief Director: Legal Services), Mr Johannes Makgatho (DoT Director: Legal Services), Mr Terence Gow (DoT Road Accident Fund Project Manager) as well as Ms Lyndsey Steele (RAF Legal and Compliance Executive) and Ms Nomvo Ngcenge (State Law Advisor: Office of the Chief State Law Advisor).

Adv Masombuka provided some background to the Bill. Prior to 1 August 2008, the RAF Act provided that most categories of road accident victims could claim full compensation from the RAF, however certain categories of claimants 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 the driver’s negligence was solely responsible for the accident in question. In enacting the RAF Amendment Act of 2005 Parliament recognised that these limits which applied only to certain categories of passengers were inequitable, unfair and discriminatory. Parliament therefore abolished those provisions and replaced them with provisions that have a more generous limit on claims and which applied to all claimants. The constitutionality of this new approach was upheld by the Constitutional Court. The Amendment Act however applied only to causes of action arising after its commencement on the 1 August 2008. The result was that 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 wee still subject to the unfair, inequitable and discriminatory limitations to their claims under section 18 of the old Act.

On the 17 February 2011, the Constitutional Court in Mvumvu vs Minister of Transport and another, CCT 67/10[2011] ZA CC 1 concluded that the limitations in section18 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 agreed that it would not be appropriate to declare the sections invalid with immediate effect and suspended the declaration of invalidity for 18 months. The Court held that “Parliament was best suited to determine the extent of compensation to which the applicants were entitled”.

Thus Parliament must 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 were capped by section 18 of the old Act.

 The legislation also should not have the effect of forcing all road victims affected to be subject 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 right that they had under the old Act.

The Road Accident Fund (Transitional Provisions) Bill 2012 seeks 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 judgement of Mvumvu vs Minister of Transport. The briefing then explained specifics each of the clauses in the Bill.

The Committee was told that if the Bill is passed in its present form it will cost the RAF an estimated R1 300 million. If the Bill is not passed, it will cost the RAF an estimated R2 264 million. That means an additional expenditure of R964 million. 
 
Discussion
Mr Z Mlenzana (COPE, Eastern Cape) appreciated the briefing but stated that often when the Committee was briefed on bills, Members never got the opportunity to see the regulations which went with such bills. He referred to intermediaries which acted on behalf of claimants and asked where they were covered in the Bill. The Committee wished to do away with the use of intermediaries. There was no need for South Africans to make claims from the RAF via intermediaries or lawyers. Perhaps it was not covered by the Bill but the question that needed to be answered was where was this issue being addressed.

Adv Masombuka conceded that usually there was a delay in regulations when a bill was passed. However this was not the case with the RAF. Regulations were key to the RAF Act. The RAF could not do anything without regulations. The Bill currently before the Committee was a transitional period bill and not an amendment bill.

Mr Gow referred to the use of intermediaries and stated that the RAF was engaged on the issue so that in the future claimants could deal directly with the RAF. A communication strategy was being finalised and a strategy was being formulated. Cabinet had recommended an advocacy programme whch was being carried out.

Dr Du Toit, DoT Deputy Director General, noted that doing away with intermediaries was the overall aim of the whole system.

Ms M Themba (ANC, Mpumalanga) said that the briefing document spoke about the Bill having being published for public comment in the Government Gazette and that inputs from stakeholders had been incorporated within the Bill. She asked how ordinary persons at grassroots level had access to information about the Bill. What about persons living in rural areas who did not even know about the concept of a government gazette. She asked how people were being made aware. The briefing document also mentioned that there was no need for the Bill to be forwarded to the House of Traditional Leaders. She disagreed, and said information on the Bill should be forwarded to them as well. The Bill before the Committee was the finished product which had incorporated the amendments made by the Portfolio Committee on Transport. Where was the unamended original bill?

The Chairperson responded that the Bill before the Committee was the one which had incorporated the amendments made by the Portfolio Committee on Transport. The final Bill would incorporate contributions from both houses of Parliament.

Adv Masombuka noted the comments made about public access to information on the Bill even though it had been gazetted. The original Bill was a public document as it had been gazetted and it would not be a problem to provide it to the Committee. The Bill before the Committee was the one that had been processed by the Portfolio Committee on Transport.

Ms Steele commented that communication was one of the strategic objectives of the RAF. The RAF was trying to improve its footprint across SA. The RAF had embarked on roadshows. The RAF accepted new claims or settled old ones. Claims could be lodged directly with the RAF. She added that there would be communication campaigns. The RAF also had a call centre in place. With its new strategy, the RAF would be known to the ordinary person.

Mr O De Beer (COPE, Western Cape) referred to Slide 21 of the presentation which stated that if action had been instituted in a Magistrates Court, the third party may withdraw the action and institute action in a High Court, if necessary and that no plea may be raised in respect of prescription during that period.

He asked who was to pay the costs involved in moving the matter from a magistrate’s court to a high court. Members of the Committee represented provinces and hence it was important for Members to be able to have insight into the comments made on the Bill. A one pager would suffice. What was currently incorporated into the Bill was purely up to the discretion of the Department of Transport.

Mr Gow explained that the issue of costs were dealt with at the finalisation of the claim. In the event that the claimant was successful, the RAF would foot the bill.

Mr M Jacobs (ANC, Free State) was not satisfied with the response given on who would bear the costs when a matter was moved from a magistrate’s court to a high court. Moving a matter from a magistrate’s court to a high court was expensive. Was it to be believed that the RAF was to bear the costs?

Dr Du Toit explained that when a case did not fall within the domain of a magistrate’s court, it automatically went to a high court. It was not a costly process it was normal court processes. Once final judgement was given and the claimant had been successful, the RAF paid the costs. She noted that in RAF claims, the RAF carried the legal costs. The agreements which attorneys had with claimants stipulated that attorneys would only be entitled to claim their fees after and when the claim was successful.

Mr D Feldman (COPE, Gauteng) asked how the figures contained in the briefing document were calculated in the event that the Bill was not passed.

Dr Du Toit responded that the financial implications of not passing the Bill meant that there were categories of claimants who could aver that the applicable legislation was unconstitutional and hence they would have an unlimited claim. The Bill was being brought in to prevent such unlimited claims. The amount was capped in terms of the existing system.

Mr Mlenzana asked how claimants were going to be represented in a high court without lawyers.

Mr Themba requested the Department of Transport provide the Committee with the original Bill. It was important as the Committee needed to check on the correctness of the amendments. There could be mistakes.

The Chairperson referred to Slide 8 of the presentation and asked for greater elaboration on the different categories of claimants. He asked what the relationship between the Bill and the Road Accident Benefit Scheme was. Why was the Bill a transitional provision? In what direction was the Department of Transport moving towards with this exercise.

Dr Du Toit replied that the Bill did not deal with the Road Accident Benefit Scheme at all. The Department of Transport was drafting a Road Accident Benefit Scheme Bill. It would be published for public comment by the end of the calendar year. It would replace the Road Accident Fund as it was currently functioning.
It was indeed true that the Bill was a transitional provision. The 2005 Amendment Bill that came into operation in 2008 corrected provisions of the previous Act which limited claims to R25 000 to address issues of unconstitutionality. Persons involved in accidents prior to 2008 got frustrated by the unconstitutionality of the provisions. The 2008 amendments covered new claims but it could not be applied retrospectively to older claims. The best way to deal with the older claims was by way of legislation. In the 2008 amendments the claims for damages were capped. Unlimited claims for damages could not be entertained. The courts had decided that a bill was required to rectify the situation regarding older claims. Under the old RAF regime a claim from the RAF was limited to R 25 000, the balance of the claim could be claimed from the guilty party. The Bill gave the old-claim claimant the choice of the old system which was a limited claim of R25 000 from the RAF and the balance from the guilty party or alternatively to follow the new dispensation which was a claim by any party who was not guilty to claim serious injury damages. One of the issues that arose was how one proved serious injuries when so much time had elapsed. A clause was introduced in the Bill that if a claimant was unable to prove serious injuries, a claimant was still able to claim general damages. She emphasised that the Bill would lapse once all the old claims had been dealt with. It had to be remembered that the 2005 Amendment Bill that came into operation in 2008, would deal with new claims.

Ms Themba referred to the Bill before the Committee (the B-bill: B22B-2012] and said that the amended parts in the Bill were not underlined, in bold or clearly defined.

Adv Masobuka said that the process stipulated that the NCOP Committee should considered Bill as passed by the Portfolio Committee. The Portfolio Committee on Transport amendment was reflected in the A-bill: [B22A-2012]. The only clause that was amended was Clause 2(1)(f). The clause was merely rephrased but the intention remained the same. The Committee would be provided with the amendment.

Mr De Beer made it clear that the Committee did not simply rubberstamp legislation. The Bill before the Committee was a final product. He pointed out that attorneys’ fees were much more in a high court than in a magistrate’s court. He referred to the earlier mentioned RAF Call Centre and said that people waited for more than an hour for assistance. How was the use of an intermediary going to be set aside? It was necessary to stop the practice as intermediaries took a major portion of the claimant’s payout.

Mr Gow said that the old system had a limited claim of R25 000. In order to claim more the matter was moved from the Magistrates’ Court to the High Court. There were court rules which stipulated how much could be claimed at a particular type of court.

Mr Jacobs pointed out that what Ms Themba was requesting from the Department of Transport was the original Bill that had been provided to the National Assembly and not the Bill which already contained the National Assembly amendments. He still was not comfortable over the issue of transferring cases from the Magistrates’ Court to the High Court.

The Chairperson said that there had been an outcry about persons from overseas claiming more from the RAF than what locals were. It had come to light that there was foul play involved. The individuals involved apparently had dual citizenship. Were persons abroad being paid more than what local persons were? Was there discrimination? He also asked for timeframes regarding the Bill.

Mr Gow responded that the issue of foreigners was not covered by the Bill. The Road Accident Benefit Scheme Bill would cover it and ensure that certain categories of passengers’ claims were limited. The Road Accident Fund (Transitional Provisions) Bill addressed issues that emanated from the Mvumvu vs Minister of Transport case. This Bill was a standalone bill and was not an RAF Amendment Bill.

Ms Themba insisted that the Committee needed to see where amendments were made on the original bill. Members could not agree on amendments which they had not even seen. It made no sense.

Mr Mlenzana agreed that the Committee should have been given the original Bill. Members had not been afforded the opportunity to see the amendments. The Department of Transport had taken it for granted that the Committee would rubberstamp the Bill. He felt that the Department was not ready for the Committee.

Mr Jacobs said that Mr Mlenzana had captured the sentiments of the Committee. He agreed that the amendments were not even highlighted in the Bill before the Committee. There was only an addendum which stated that amendments had been made. Where matters were transferred from the Magistrates’ Court to the High Court, how was the RAF prepared to pay the legal costs where the action was being brought against them. He remained unconvinced.

Dr Du Toit apologised if it seemed that the Department of Transport gave the impression that it was expecting the Committee to rubberstamp the Bill. It was not the case. The Committee should approve of the Bill and there should be understanding of the Bill in Members’ constituencies. The Department of Transport would provide the Committee with whatever documentation it needed. She emphasised that the RAF was trying to rectify problems that had emerged in the past. The Transitional Bill was necessitated due to the judgment given in the Mvumvu case. The Bill would apply only to those old cases already in the system. The rules applicable to courts stipulate that if a claim was above a certain amount it could not be heard in a particular court but would fall within the ambit of a higher court. It was an administrative issue. The referral from the Magistrates’ Court to the High Court was done to make it administratively easier. The agreements between attorneys and claimants stipulate that the attorney only got paid at the end of a case. The agreement could be that the attorney received from 25%-40% of the settlement value. This issue was being dealt with by the Road Accident Benefit Scheme Bill. At present those agreements were binding upon parties and could not be intervened upon.
She asked for guidance on what route the process on the Bill was to take. Did the Department of Transport have to return with the required documents? The Department of Transport was aware of the timelines attached to the Bill but the Bill did not have to be finalised at present as yet.

The Chairperson responded that the Committee had no major problems with the Bill. It was only that members needed to see the original Bill as well as the amendments which the Portfolio Committee on Transport had made. He proposed that the Department of Transport be given the opportunity to provide the Committee with the documentation that it needed and that the Bill could be dealt with on the 30 October 2012 by the Committee. He added that more information should be provided on the contingency fees that attorneys charged claimants. These fees were exorbitant.

The meeting was adjourned.