Mr J Cronin

The Chairperson of the

Portfolio Committee on Transport

Parliament

Cape Town

8001

Dear Mr Cronin

1.1 During the deliberations of the Parliamentary Portfolio Committee on Transport regarding the Road Accident Fund Amendment Bill, 2003 ("the Bill"), the constitutionality of some of the provisions of the Bill was questioned. The main attack on the constitutionality is contained in a representation from a coalition consisting of a private organisation and members from business and the legal and medical professions ("the Coalition"). We have been asked to advise the Committee.

1.2 We have also been asked to comment on the proposed section 17B which will require the Road Accident Fund ("the Fund") to deduct benefits received from extraneous sources from compensation payable in terms of the Road Accident Fund Act, 1996 (Act No. 56 of 1996) ("the Act").

2.1 The main tenor of the current section 17(4)(a) of the Act, is that it confers a discretion on the Fund, after furnishing an undertaking to that effect, to compensate a third party in respect of costs of future accommodation in a hospital or nursing home or treatment of or rendering of a service or supplying of goods to a claimant, after the costs have been incurred and on proof thereof. The proposed section seeks to remove the discretion and to make it obligatory for the Fund to compensate the claimant after the costs have been incurred.

2.2 The Coalition’s view is–

2.3 It is important to note that the Coalition’s concern is, in the first instance, raised against the current section 17(4)(a), and in particular against the application and administration of section 17(4)(a). The Coalition does not indicate in which respect the section itself is in conflict with the Constitution.

2.4 Section 17(1) prescribes the general liability of the Fund in respect of claims made against it. That section is amplified by section 17(4) in terms of which the Fund has a discretion to pay certain future expenditure by way of an undertaking as and when such costs are incurred and on proof thereof. Thus, section 17(4) merely prescribes how the Fund may deal with certain claims. As such, that section does not, in our view, contain anything that can be regarded as being unconstitutional.

2.5 Section 27 of the Constitution asserts a persons right to have access to health care services. It also requires the State to take reasonable legislative and other measures within its available resources to achieve the progressive realisation of such right. Since section 17(4)(a) of the Act is aimed at compensating a person for the cost of accommodation in a hospital or nursing home or treatment, that section does not limit or negate a persons right to have access to health care services.

2.6 Furthermore, that section is of general application. It does not seek to treat people differently. It therefore cannot be said to discriminate against certain persons.

2.7 The proposed amendment of section 17(4)(a) seeks to remove the discretion mentioned above and to oblige the Fund to pay the expenditure as and when such costs are incurred and on proof thereof. Nowhere does the section seek to diminish a third party’s claim against the Fund.

2.8 In our view, if the application of section 17(4) currently results in unfair treatment of claimants, the fault should be sought elsewhere, and not in the legislation. It may be, for example, that certain suppliers of treatment refuse to supply on the mere undertaking of the Fund, making it difficult for the indigent claimant to obtain treatment. In such a case, in our view, the problem lies with the supplier and, possibly, with the Fund if it has established a reputation for being a tardy payer. Whatever the situation, it is our view that the legislation is not the cause of the problem. The same would, in our view, apply in respect of the proposed, amended section 17(4)(a).

3.2 Again, we are of the view that the proposed section as such is not in conflict with the Constitution. In terms of section 34 of the Constitution everyone has the right to have any dispute that can be resolved by the application of law be decided before a court. The proposed section contained in the Bill does not deny a claimant that right. Furthermore, even if the right to be legally represented is read into section 34 of the Constitution (as opposed to section 35 of the Constitution in terms of which detained, accused and sentenced persons have the right to choose or to have legal practitioners assigned to them), proposed section 17(4)(b) still does not prevent a claimant against the Fund from obtaining the services of a legal practitioner.

3.3 Even if it should be proved that an indigent person requires the services of a legal practitioner in its dealings with the Fund and that the application of section 17(4) in effect prevents such person from acquiring legal representation, and that it is a Constitutional right to be legally represented in the circumstances, we are not convinced that the proposed section denies such person the right to be legally represented. We have confirmed with the Office of the Legal Aid Board that, although there are limitations on legal aid by the State in cases of claims sounding in money, the possibility exists that where a person cannot afford the services of an attorney in his or her dealings with the Fund, the Legal Aid Board may assist such person.

3.4 By way of interpolation it may also be added that, in terms of section 17(2) of the Act, a third party is, upon acceptance of the amount offered by the Fund as compensation, entitled to the agreed party and party costs or taxed party and party costs in respect of the claim concerned. None of the proposed provisions of the Bill affect section 17(2) and such costs will still be payable apart from the amount offered as compensation. Thus, it is difficult to see how the proposed amendments can be interpreted as denying a third party the right to legal representation.

3.5 In view of our comments above, the Coalition’s concern regarding section 9(1) and (3) of the Constitution (the right to equal treatment and not to be discriminated against, respectively), falls away.

4.1 The proposed section 17(4)(c) is a new provision which seeks to oblige the Fund to pay in instalments, and in accordance with the regulations, that portion of the amount payable by the Fund in respect of non-patrimonial losses that exceeds the prescribed amount. In other words, once the amount payable by the Fund is determined, that part of the amount which exceeds the prescribed amount, will be paid in instalments.

4.2 The Coalition raises the same concerns in respect of this provision as in respect of proposed section 17(4)(a) and (b).

4.3 What proposed section 17(4)(c) seeks to achieve, is merely to determine a different method of how non-patrimonial losses will be paid. Also, in this case, we are of the view that the section as such does not contain anything which can be regarded as unconstitutional. Our remarks made above in respect of proposed section 17(4)(a) and (b) equally applies in this instance.

5.1 Clause 6(2) of the Bill seeks to provide that sections 17(4)(a), (b) and (c) shall apply to all claims under section 17 of the Act that have not been finalised prior to the commencement of the Amendment Act.

5.2 In the Coalition’s view the envisaged retrospectivity "…constitutes an infringement of the Rule of Law-Principal which is generally accepted in our law, namely that people should be able to regularise their affairs, secure in the knowledge that they are at liberty to perform any action that has not been proscribed by law of general application" (quoted verbatim).

5.3 It is true that in the interpretation of laws, there is a strong presumption against the retrospective operation of laws: Statutes are to be interpreted prospectively unless the intention that the statute must operate retrospectively clearly appears from the express language of the statute, or from the clear purpose of the statute or by necessary or unavoidable implication.

5.4 The underlying rationale for the rule of construction against the retrospective operation of statutes is that it seeks to prevent injustice being done to an individual by preventing the operation of the statute which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect of transactions or considerations already past.

5.5 It is trite that Parliament may make laws which have an effect in the past. If any such law encroaches upon any right contained in the Constitution, and cannot be saved by section 36 of the Constitution, that law is unconstitutional. We have already indicated that we are not convinced that the proposed amendments diminish a third party’s claim against the Fund. We are also not convinced that any substantive right of such person is impaired by the proposals. In our view the Bill merely seeks to seeks deal with future claims, as well as claims not yet finalised, in a different manner.

5.6 The Road Accident Fund Commission also dealt with the question at what stage its recommendations had to be implemented. The Commission referred to foreign jurisprudence in terms of which it is suggested that the use of retroactive legislation probably does not violate the rule of law in circumstances where penalties are not involved. The Commission referred to Counsel’s view submitted to it and mentioned the following:

5.7 In its submission to the Portfolio Committee, the Coalition did not point out how the retrospectivity in question in any way compromise the ability of claimants to regularise their affairs. It is difficult to see what other action a claimant would have taken had he or she known, when submitting his or her claim, that payment for future expenses would only be forthcoming after the expenses were incurred or that some payments will be made in instalments.

5.8 The evidence before the Portfolio Committee by the Fund and the Department is that the amendments would go some way in alleviating the Fund’s financial burden. Also, that the amendments seek to ensure that expenses are paid as and when they occur and to provide some measure of long-term assistance in respect of non-patrimonial loss.

5.9 Legally, we cannot find fault in having proposed section 17(4) applied to claims not yet finalised when the Amendment Act is put into effect. Whether that proposal should be adopted, is for the Portfolio Committee to decide.

6.1 As to paragraph 1.2 above, proposed section 17B seeks to limit the Fund’s liability by providing that if a person is already covered against loss or damage from extraneous sources, such sources must be taken into account when compensation in terms of the Act is determined.

6.2 It was submitted to the Portfolio Committee that benefits payable from sources other than the Fund are legally irrelevant to the quantum of damages recoverable under the Act (res inter alios acta), and should therefore not be deducted from the compensation payable in terms of the Act.

6.3 Since the monies of the Fund is procured by way of a fuel levy in respect of all fuel sold within the Republic, such monies must be regarded as public monies and has to be administered as such. By introducing the Bill, and thus the proposed section 17B, Cabinet took a policy decision that, in future, benefits from other sources will be taken into account in respect of compensation payable in terms of the Act.

6.4 Although this changes the current law, we cannot question Parliament’s power to legislate in this regard. How this provision will affect the insurance industry, and to what extent individuals will still be willing to insure themselves, taking into account the new provision, is also not a matter for us to question. The Portfolio Committee might, however, wish to take cognisance of the fact that our courts have on various occasions had to decide how collateral benefits should be dealt with in cases of third party claims. In this respect considerations such as public policy, reasonableness and justice played an important role. Section 17B would effectively end the courts’ role in this regard.

Herman Smuts

State Law Advisers