ASSESSMENT OF THE ROAD

ACCIDENT FUND SECOND AMENDMENT BILL, 2004 AND PROPOSALS TO BE MADE BY THE COALITION:

 

I) INTRODUCTION:

    1. The Common Law of South Africa provides, in the law of delict, a remedy whereby the injured road accident victim or the family of a deceased road accident victim, can pursue a civil action for damages against the negligent driver who has caused injury and loss to the victim or his family.

Section 3 of the Road Accident Fund Act of 1996 provides for the

establishment of the Road Accident Fund, which has as its objective "the payment of compensation in accordance with this

Act for loss or damage wrongfully caused by the drivers of motor

vehicles".

2. During the past 10 years concern has been expressed in respect of the funding of Road Accident Fund compensation, the cost of Road Accident Fund compensation, abuse of social security benefits, assessment of injuries and disablement, health care for road accident victims, and delivery of Road Accident Fund compensation. This resulted in the appointment of the Road Accident Fund Commission on 1 June 1999 to "enquire into and to make recommendations regarding a reasonable, equitable, affordable and sustainable system, for payment by the Road Accident Fund of compensation or benefits, or a combination of compensation and benefits, in the event of the injury or death of persons in road accidents in the Republic."

 

PAGE -2-

3. The Road Accident Fund Commission published it’s report during March 2003, advocating far reaching changes to the system. In the light of the far reaching implications in terms of cost, structure and law, the implementation of the Commissions proposals will take considerable time, and various role players have expressed a need to on an interim basis improve the system of payment of compensation to victims of road accidents. Against this background, the Ministry of Transport published on 16 September 2003 the "Road Accident Fund Second Amendment Bill, 2003".

4. The Portfolio Committee on Transport held numerous public hearings during September, October and November 2003 and heard evidence from a large cross-section of the public and stakeholders, including The Quadriplegic Association of South Africa, the National Council on Physical Disability, Hospital Association of South Africa, Headway Kwa-Zulu Natal, South African Chamber of Business, the South African Association of Personal Injury Lawyers, Road Accident Victims Association, Kwa-Zulu Natal Association of Personal Injury Lawyers, Coalition on the Road Accident Fund, Fedusa, Disabled Peoples of South Africa and Cosatu amongst others. Virtually every submission objected to the implementation of the proposed Amendment Bill (2003) as a result of which the Portfolio Committee on Transport recommended a re-assessment of the said Amendment Bill 2003, which was consequently withdrawn by the Department of Transport.

The objections to the said Amendment Bill were broadly based on the following:

 

 

 

PAGE -3-

 

4.1 Oversight in management of the RAF was criticised by reference to the standard of political independence, financial dependence, accountability and a sense of service. The unlawful donations over a period of time by the RAF to the Arrive Alive initiative of the Department of Transport were indicative of a lack of political independence as well as a failure of the previous Board to ensure that fuel levy funds were properly utilised, with identifiable results. The current representation of "sectoral interests" within the board has exposed the Board to allegations of "conflict of interests" and led to queries about the financial independence of the organisation, with particular reference to arrangements made with Alexander Forbes Compensation Technologies. The absence of a database, and analysis and research capacity, the failure of the RAF to respond to requests from auditors for information and the format of the RAF Annual Reports all contributed to an inability to provide proper accounting and conduct proper planning, and evaluation of legislation.

PAGE -4-

The Board of the RAF, appointed in mid-2000, and the new management of the RAF, appointed in 2001, as well the latest Board appointed during 2003, had indicated a commitment to create and develop a professional and efficient organisation. Parliament had been presented with numerous plans for achieving this goal. To this end, there had been extraordinary reliance upon the services and skills of outside consultants, resulting in enormous expenditure of fuel levy funds. However, even at the present time there are still many examples of deterioration in the competence of the organisation. Staff capacity continues to be problematic. Expenditure of fuel levy income was and is sometimes challenged as having been wasteful or irresponsible. Even at the present time, it is questioned whether the current organisation can ever meet the standard expected of the organisation in terms of the present Road Accident Fund Act 56 of 1996 as well as the proposed Road Accident Fund Amendment Bill, 2004.

 

 

PAGE -5-

4.2 Virtually every submission to the Portfolio Committee on Transport highlighted the devastating effect that the denial of lumps sums will have on the lives of road accident victims, particularly those who sustained serious and disabling injuries.

The Road Accident Fund Commission stated:

"The RAF has not conducted any research to the way victims of road accidents used lump sum awards of compensation for general damages and loss of earnings. It also does not know whether, if compensation were paid by way of installments, it would be of any benefit to the seriously injured road accident victim.

The motivation for the proposal to pay General Damages and Loss of earning in installments is purely a financial one. The RAF intends to alleviate the pressures on it’s flow position. It does not appear to have had regard for the impact on the life of the seriously injured and disabled and their families".

  1. In ascribing meaning and purpose to the proposed Road Accident Fund Amendment Bill 2004, the Coalition on the Road Accident Fund adopted the criteria proposed to the Road Accident Fund Commission, namely:

    2. a) Reasonableness;

    b) Equity;

    c) Affordability;

    d) Sustainability;

    e) The constitution of the Republic of South Africa;

    f) Solvency of the RAF.

    PAGE -6-

    Having weighed the proposed amendments (2004) against the abovementioned criteria, the Coalition on the Road Accident Fund is of the opinion that:

    1. No vision emerges from these proposals and there is no indication

that they are based upon any long term strategic plan for the future of Road Accident Fund benefits in South Africa. This is particularly topical in the light of the establishment of an Inter Departmental Committee for road accident victims which will be investigating alternatives to the current system of Road Accident Fund compensation and who will be considering the advantages and disadvantages of the current system and an understanding of the implications of any future system; as well as the establishment of a panel of experts to assist the said Inter Departmental Committee for road accident victims. The question begs: why amend the Road Accident Fund Act now, if such a Committee is busy with an in-depth assessment of the vision for the future?

5.2 The only thread that emerges from these adhoc amendments (2004) to the current legislation is that of avoiding or delaying or reducing expenditure of Road Accident Fund compensation by the current administrative authority, the RAF. The entire package of amendments (2004) appears to be a response to a financial crisis on the part of the RAF.

 

5.3 Where these proposals have significant implications for the administrative infrastructure of the RAF, they appear to be devoid of any appreciation of the current administrative and professional incapacity within the RAF.

 

 

PAGE -7-

 

    1. The draft amendments (2004) envisage provision of compensation by way of periodic payments, yet recent forensic auditors reports comment most critically on the absence and failure of systems within the RAF and especially those pertaining to administration of monies.

      2.  

    2. The proposed amendments (2004) envisaged greater involvement in management of health care and periodic payments in connection therewith, yet the RAF employs a minimal number of persons with health care, social work, medical costing or disability assessment skills and expertise, whilst building this capacity will result in huge financial expenditure.

      3.  

    3. The RAF lacks statistics and research to justify these proposals on the basis of mitigating current perceived problems and achieving anticipated benefits. It has yet to develop the capacity, expertise and experience to embark on such ambitious re-structuring. In any event, it remains an open question as to whether the RAF should interpret such statistics and set policy.

      4.  

    4. Adoption of this draft legislation (2004) would render the current scheme of road accident compensation neither fish nor fowl.’ it would draw back from its status as a scheme providing unlimited compensation for damage arising out of injuries or death sustained in road accidents and would lurch towards a limited benefit social assistance scheme. In so doing, the scheme would not only lose whatever clarity of identity currently exists but would also fail to address the challenges arising from the new context and status.

      5. PAGE -8-

       

    5. The proposed Road Accident Fund Amendment Bill, 2004 totally negates the original intention of the legislature in 1942 when the need was perceived to protect motor vehicle accident victims against the possibility of non-recovery of damage due to the fact that the wrongdoer (driver and / or owner and / or employer who caused the accident) was a "man of straw" and unable to pay the road accident victims loss or damage.

In conclusion the Coalition on the Road Accident Fund is of the opinion that on the assumption that is necessary to place the Road Accident Fund on a sounder financial footing, there are far better and fairer ways of achieving this than the method proposed in the Road Accident Fund Amendment, 2004, which is an almost wholesale abandonment of the existing system in favour of an untested system of dubious value, and which hinges on doubtful constitutionality. There is no need to jettison fair compensation in favour of a system which abandons equity in favour of rigidity (see Section 17(1), Section 17(2)), which to a large extent penalises the innocent (see Section 17(1), Section 17(2), Section17(4)), and rewards the guilty (see Section 21), and which will not reduce litigation or the costs thereof.

PAGE -9-

  1. ROAD ACCIDENT FUND AMENDMENT BILL, 2004:

The Coalition on the Road Accident Fund wishes to make the following comments in respect of the formulation and implications of The Road Accident Fund Amendment Bill, 2004, and submit proposals in order to address the aims identified above.

(II)I AD AMENDMENT TO SECTIONS, 4, 6, 10, 11 AND 12 OF THE ROAD ACCIDENT FUND ACT 56 OF 1996

The Coalition on the Road Accident Fund does not have any objections to

the proposed amendments to Section 4, Section 6, Section 10, Section 11

and Section 12 of The Road Accident Fund Act, 56 of 1996.

 

 

(II)II AD AMENDMENT TO SECTION 17 (1) OF THE ROAD ACCIDENT FUND ACT 56 of 1996

PROPOSED AMENDMENT:

"17. (1) he Fund or an agent shall-

(a) subject to this Act, in the case of a claim for compensation under this section arising from the driving of a motor vehicle where the identity of the owner or the driver thereof has been established;

  1. subject to any regulation made under section 26, in the case of a claim for compensation under this section arising from the driving of a motor vehicle where the identity of neither the owner nor the driver thereof has been established, be obliged to compensate any person (the third party) for any loss or damage which the third party had suffered as a result of any bodily injury to himself or herself or the

PAGE -10-

death of or any bodily injury to any other person, caused by or arising from the driving of a motor vehicle by any person at any place within the Republic, if the injury or death is due to the negligence or other wrongful acto for the driver or of the owner of the motor vehicle or of his or her employee in the performance of the employee’s duties as employee: Provided that the obligation of the Fund to compensate a third party for general damages, for pain and suffering, loss of amenities of life and disability, shall be limited to the amount of R100 000 in respect of each claimant and shall be paid by way of a lump sum: Provided further that the fund’s obligation to pay such compensation shall only extend to a third party who suffers a serious injury as contemplated in subsection (1A)

(1A) (a) For the purposes of the proviso to subsection (1) "serious injury" means a permanent injury which leads to total disablement or paralysis or dysfunction of a vital organ, and includes brain injuries, loss of sight, or loss of a limb or the use thereof or such other serious injures as the Minister may prescribe.

 

(b) Assessment of serious injuries shall be based on a prescribed method adopted after consultation with medical service providers and shall be reasonable in ensuring injuries are considered in relation to the circumstances of the third party.

(c) The method of assessment shall entail assessment by provincial medical panels consisting of a representative from the Fund and external experts representing key medical fields relevant to road accident injuries.

(d) The Fund shall set up a peer review panel to oversee the assessments made by panels contemplated in paragraph (c).

PAGE -11-

(II)II 1. The proposed clause introduces a cap of R100 000.00 on general

damages which is limited to "a serious injury", defined as "a

permanent injury which leads to total disablement or paralysis or

dysfunction of a vital organ...or such other serious injuries as the

Minister may prescribe"

The Minister is further empowered to prescribe methods of assessing serious injuries, entailing assessment by provincial medical panels (including a representative from the Road Accident Fund) and "external" experts and a "peer panel" set up by the Road Accident Fund.

2. The Coalition on the Road Accident Fund objects to the implementation of this clause for the following reasons:-

2.1 Introduction of "serious injury" as a requirement to qualify for

general damages implies the introduction of "allegedly objective tests" to assist in determining eligibility for compensation or benefits by using such test to evaluate impairment / disability. This presupposes the establishment of "an internationally accepted assessment code, individualized to the South African experience, which when adapted will give meaningful information", such as the AMA Guides and International Classification of Function ("ICF").

    1. There appears to be no agreement among healthcare providers

      2. and medical experts on the different guidelines or frameworks, which exist. The use of such criteria (AMA and ICF) is certainly not without problems. Foremost would be the danger that the standard against which the evaluation is done is too broad or too course and lacks the detail to be found in individual medical reports.

       

      PAGE -12-

    2. Arguments against the use of assessment guidelines (AMA and

ICF)

stress that, road accident victims should no more be subjected to a "sausage machine" process than anyone else. Assessment against one set of criteria is believed to totally de-individuate each claimant. Furthermore, classification applied throughout a population or across many populations is thought to assume a norm and a standard that would stigmatise road accident victims as abnormal, deviant and marginal. Finally, experience with similar systems such as Workers' Compensation contributes to mistrust of such methods of assessment because the focus is placed on the tests or yardsticks rather than on the individual victim.

2.4 The various guides such as AMA and ICF are at pains to stress

that "it must be emphasised and clearly understood that percentages of impairment derived according to the Guides' criteria should not be used to make direct financial awards or direct estimates of disabilities".

2.5 Occupational therapists Andrews and Fourie, who have had experience in the use of the AMA Guides, are strongly opposed to the use of the impairment percentage provided in the Guides being incorporated into the formulae to determine compensation. They contend that, "impairment is interesting but means nothing".

2.6 The Federal Council on Disability criticises the AMA Guides for being "medically driven", in that they focus on medical deficits but, as the Federal Council points out, where the mine worker and the attorney have each lost legs the impairment might be the same but the impact on the individual lives will be very different. Rand Mutual Assurance (which is required by COID to use the AMA Guides) concurs that, "impairment is a medical term, but the conversion into disability is completely different".

PAGE -13-

2.7 Experts who work with and make use of AMA Guides concede that "the AMA Impairment System makes no allowance for age, occupation, pain and suffering or education" and that "no regard is had for the person's life circumstances". Dr David Fish comments that this is best illustrated by the commonly used example of a little finger amputation that would be assigned the same impairment, regardless of the circumstances of the person affected. The effects of this impairment however vary considerably, and would be severe for a concert pianist, but might be minimal for a manual labourer. "The impairment estimate provides the same figure for the bodily loss and takes no account of the disabling and handicapping effects of the loss on the individuals concerned."

2.8 There is also concern that the AMA Guides are not appropriate to the South African experience. The Occupational Therapy Association of South Africa believes that the Guides are appropriate to machine intensive societies with high skills but not to labour intensive societies with low skills working environments. The Guides may look at the job but they "omit to look at the critical skills required".

2.9 The AMA Guides acknowledge that that there is no known formula by which knowledge about a medical condition can be combined with knowledge about other factors to calculate the percentage by which an employee's industrial use of the body is impaired. Although the Guides may help they cannot provide complete and definitive answers. The Guides caution that each administrative or legal system which uses impairment as a basis for disability ratings should define its own means for translating knowledge about an impairment into an estimate of the degree to which the impairment limits the individual's capacity to meet statutory requirements or personal, social, occupational and other demands.

2.10 Mulvany et al highlight concern with the use of the AMA Guides to the evaluation of permanent impairment in workers' accident and transport accident compensation schemes. Their concerns relate to what are thought to be incorporation of normative values (such as age and gender stereotyping) rather than scientific measurements, anomalies in the assessment guidelines for back and psychological impairments, the scope for observer error in making assessments and the impact of threshold requirements.

 

PAGE -14-

2.11 Essential criticism of the Guides by Mulvany fall within three broad strands:

2.11.1 The Guides are inherently flawed because they are arbitrary and internally inconsistent.

2.11.2 b) Although they represent a useful tool for assessment (more useful in some body systems than others), serious anomalies result when use of the Guides is mandated.

2.11.3 Worse than merely mandating the use of the Guides is the situation where the Guides are not only mandated but either adopted in a piecemeal fashion or are legislatively disrupted.

2.12 Mulvany argues that there is a confounding of impairment and disability notwithstanding that each edition of the Guides has stated, "the impairment estimate or rating is a simple number. Although it may have been derived from a well structured set of thorough observations, it does not contain any information about the person or the impact of the impairment on the person's capacity to meet personal, social or occupation demands". The result of breaking down the distinction between "impairment" and "disability" is that the Guides are "open to biased application". The example is given of a medical assessment of typical daily activities in accordance with the examples given in the Guides which would lead the medical practitioner to fail to enquire about and evaluate the effect of a health condition on sporting activities with the result that the impairment rating would not take into account "this functional loss".

2.13 One constant throughout the various editions of the Guides has been the warning "impairment percentages derived according to Guides criteria should not be used to make direct financial awards or direct estimates of disabilities". Mulvany is extremely critical of workers' or traffic compensation schemes, such as in Victoria, Australia, where the sole use of the Guides is for the specific purpose of making direct calculations of financial awards. Where a Whole Person Impairment is set as a precondition for certain lump sum benefits, the authors argue that a threshold of this type "discriminates between types of impairment with the result that some people will
now be unable to access lump sum benefits".

PAGE -15-

2.14 At worst it is suggested that there be detailed professional knowledge of the Guides. Information supplied or obtained must be carefully scrutinized and examiners must be credentialed.

2.15 Several people have commented that the ICF can be adapted and is appropriate to the South African context. During May 2000 the Disability Action Research Team (DART) facilitated a workshop on the use of the ICF in South Africa. Participants evaluated the ICF in a number of specific areas - children, social security, service provision, policy, language and translation.

The outcome of the DART workshop was an expression of caution in respect of classification systems in general and "the need to avoid further marginalisation and labelling of disabled people". An historical overview of disability research in South Africa highlighted current problems, which include lack of agreement on the definition of disability, lack of research expertise and consultation with disabled people and an absence of data on disability.

Feedback from a coding exercise to put the ICF into practice indicated that the ICF is a complex framework. It was agreed that a great deal of work and training is required to explore its potential value and limitations. In the sectors of children, social security, service provision, policy, language and translation it was decided that the National Disability Strategy should be used as the yardstick by which to measure the relevance and value of the ICF. Such review process should involve disabled people.

    1. The importance of recognising and responding to the South African situation is paramount. Both the AMA Guides and the ICF were criticised as requiring further development so as to be relevant to, inter alia, working and living conditions in South Africa.

      2. The DART workshop commented that the ICF classification "appears to have an orientation towards developed (as opposed to developing) countries" and also that the ICF is not gender sensitive and still seems to be medically based. The AMA Guides were generally criticised by medical practitioners and rehabilitation specialists as being directed towards the United States of America and requiring significant modification before they could be of any assistance in South Africa.

       

      PAGE -16-

      Assessments should be performed by medical practitioners and rehabilitation specialists on an individual basis. Both the AMA Guides and the ICF caution that regular diagnostic testing should not be bypassed.

      Without exception, all persons with experience in assessments advocated the need for training in the use and application of any guidelines, whether they be the AMA Guides or the ICF and their competence must be proven.

       

    2. No indication is given as to the "prescribed method" to "assess serious injuries" and who the medical service providers will be that will have to determine the method. No room is made for consultation with members of the organized-disabled-groups in South Africa. This clause introduces provincial medical panels and peer review panels which imply that:-

 

2.17(a) The Road Accident Fund would have to develop considerable infrastructure to set up these panels.

2.17(b) The cost of setting up and administering these panels will be substantial.

 

2.18 Restricted access to the panels in terms of location e.g. a claimant living in Musina, Thabazimbi, Fort Beaufort, Victoria East etc. having to attend assessment centers set up by the Road Accident Fund in various centres, and access in terms of restricted appointment dates available for such panels to evaluate the victim.

2.19 The principle of the audi alteram partem rule is ignored. Provision is made for representatives from the Road Accident Fund to be present, but no representatives for the claimant. No indication is given of the manner, process, rules etc. that will apply in respect of disputes about the assessment of the injury (disability / impairment).

2.20 The legislature is required to pass legislation by abdicating its right to legislate, and by simply empowering the Minister of Transport to make regulations on complex issues with far reaching implications for the disabled.

PAGE -17-

3. The Coalition on the Road Accident Fund has been advised by Senior Counsel that the introduction of the proposed legislation will be constitutionally open for attack in its implementation and specifically when distinguishing between various forms of disability.

  1. Similar financial savings can be achieved by simply introducing a threshold of R10 000.00 and a maximum claimable amount of R250 000.00 in respect of the adjudication of general damages within the present system. No complex costly panels, review panels, dubious and vague regulations will be required. The Road Accident Fund and the road using public will benefit from fifty years of tried and tested case law in respect of the determination of general damages,whilst the introduction of the threshold will result in similar financial savings for the Road Accident Fund, as proposed in the Bill.

Similarly, the Road Accident Fund will not have to embark on a new training program for it’s staff and Attorneys, whilst the road using public will have certainty in respect of what the Fund’s liability is under these circumstances in terms of the amount and process of determining same.

5. In conclusion, the present formulation of this clause effectively limits general damages to an inappropriately low amount for which it remains unclear who will qualify. Furthermore the requirements can change annually simply based on the alleged inability to pay by the Road Accident Fund. The rights and the needs of the injured road accident victim / claimant seems to have played no role in the design of this proposal.

PAGE -18-

(II)III: AD SECTION 17(2) OF THE ROAD ACCIDENT FUND ACT 56 OF 1996:

1) The proposed legislation seeks to delete the following Section of the existing Act:

[(2) Upon acceptance of the amount offered as compensation in terms of subsection (1) the third party shall be entitled to the agreed party and party costs or taxed party and party costs in respect of the claim concerned]

    1. The proposed intention of the legislature is to remove the Road Accident Fund’s obligatory duty to reimburse the successful claimant / victim for those costs incurred by him to prove his claim against the Road Accident Fund i.e. so called "party and party costs"

    2. Party and party costs payable by the Road Accident Fund as the unsuccessful litigant are the costs of the claimant which include Attorneys fees and expenses (who in attending to all administration on behalf of the claimant render a service and perform a function similar to that of the RAF), health care and rehabilitation professionals (who examine patients and provide expert reports on injuries sustained, costs of health care and life care, rehabilitation required, the extent and duration of any disability), accountants and actuaries (who prepare expert reports on the quantum of compensation required), advocates, (who provide legal services as and when litigation proves necessary). Included in disbursements of attorneys are stationary, photocopies, telephone calls, cost of reports from the South African Police Services, payment for hospital records and other administrative expenses.

    3. The RAF presently contributes towards the expenses of claimants because it is liable to do so. It is also liable because the system (of which the RAF is only the functionary) has obliged the claimant to incur those transaction costs. The claimant could not access road accident compensation without the assistance of a legal representative, medical representatives and other professionals, because it is the legal and medical representatives that ensure that justice is done and seen to be done.

 

PAGE -19-

 

Where the RAF does not accept liability on the merits or quantum in whole or in part, the RAF is eventually penalised for that failure by being obliged to pay the claimant’s costs where the claim is successful.

 

5. The Coalition on the Road Accident Fund objects to the implementation of this clause for the following reasons:

 

    1. Removal of the obligation to pay the successful claimant’s party and party costs necessitates the claimant having to litigate and seek the assistance of the Court in the recovery of his or her costs, which will lead to increased litigation against the Road Accident Fund.

      2.  

    2. The claimant is now placed in the position of David vs Goliath, under circumstances where he can no longer expect a contribution towards his costs but where the Road Accident Fund will continue to build an administrative infrastructure consisting of legal, medical and other professionals with whom the claimant / victim now has to compete in order to get his compensation.

Ironically the RAF will still continue to remunerate it’s own attorneys at a rate higher than the "party and party tariff" which it is presently obliged to pay to the successful claimant / victim. The Road Accident Fund Commission states: "the RAF advised that the "party and party" tariffs of the Magistrate’s Court and the High Court are considered "insufficient" to service the basis on which the RAF remunerates it’s own panel of attorneys for professional services rendered. Accordingly, an arrangement has been made comprising separate "attorney client" tariffs for High Court and for Magistrate’s Court work as well as a framework in respect of counsel’s fees."

 

 

 

 

PAGE -20-

 

The Road Accident Fund Commission also stated in this regard that "the RAF makes direct payment of disbursements to it’s own experts and in respect of other expenses incurred on it’s behalf as and when the cost arises. However, claimant attorneys usually advance money and bear both the risk and the burden of Court fees, sheriff fees and medical and other expert fees because claimants cannot afford to disburse these costs themselves. They bear such costs for months and often years until the claim is settled and the RAF finally pays over the compensation due to the claimant".

5.3 In an ideal world, members of society would be able to access justice at no cost to themselves and the State would provide legal assistance or funding through the Legal Aid Board to procure such service. In the less than ideal world, the road accident claimant will furnish the attorney with ongoing funds to provide the attorney with financial cover sufficient to meet fees and disbursements as and when they become due. It is not surprising that the majority of road accident claimants are unable so to do.

 

Most South Africans struggle to feed and clothe themselves, particularly at a time when they are confronted with the distress and inconvenience and financial burden of injuries sustained in a road accident. Few middleclass South Africans have ready cash or would want to utilize savings to meet legal expenses in order to access compensation from the RAF. This is particularly the case at a time of physical vulnerability and financial uncertainty compounded by loss of earnings and also where there is a sense of entitlement to compensation from the RAF because the claimant is the victim of the negligence of the wrongdoer for whom the RAF is responsible.

The end result is that the majority of attorneys is prepared to work "on risk". They work without fees and are prepared to make payment of advocates and doctors and therapists fees and pay other expenses in the expectation that the claim against the RAF will be successful and that they will recover "attorney-client" costs from the RAF out of the capital settlement.

 

 

PAGE -21-

 

By no longer being obliged to reimburse the successful claimant / victim his party and party costs, the legislature effectively deprives the claimant from his/her right to employ the services of an attorney and medical experts to assist him in the institution and processing of his or her claim against the Road Accident Fund.

      1. The Coalition on the Road Accident Fund has been advised by Senior Counsel that in its implementation this proposal will face constitutional challenge.

(II):IV AD AMENDMENT OF SECTION 17(4)(a) OF THE ROAD ACCIDENT FUND ACT 56 OF 1996:

 

The Coalition on the Road Accident Fund refers the Portfolio Committee to the proposals submitted by the Hospital Association of South Africa, Medi-Clinic and Netcare under separate cover.

 

(II):V AD AMENDMENT OF SECTION 17(4)(b) OF THE ROAD ACCIDENT FUND ACT 56 OF 1996:

PROPOSED AMENDMENT:

 

(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 instalments in arrear as agreed upon] the liability of the Fund or an agent shall be limited to the amount specified in subsection (4B).

 

 

PAGE -22-

(4B) (a) The liability of the Fund to compensate the third party for future loss of income or support as contemplated in section 17(4)(b) shall not exceed R160 OO0 per year.

(b) The liability of the Fund shall, in the case of future loss of income, cease upon the death of the third party or the attainment of the age of 65 years, whichever occurs first.

(c) Any compensation paid in respect of loss of support shall be divided equally amongst dependents.

(d) The liability of the Fund in respect of a claim for loss of support shall cease upon the date the deceased would have reached the age of 65 years or, if earlier "

    1. The Bill proposes that the Road Accident Fund’s liability to compensate the claimant / victim for future loss of income or support shall not exceed R160 000.00 per annum, will cease upon the death of the claimant, or when the claimant turns sixtyfive, whichever occurs first, and in the case of loss of support will cease when the deceased’s spouse would have turned sixtyfive years of age, and / or if the surviving spouse should re-marry or, in the case of a child when that child, attains the age of twenty one.

      2.  

      PAGE -23-

    2. The Coalition on the Road Accident Fund is of the opinion that this clause represents bad law for the following reasons:

    1. The object of an award of damages for personal injury is to put the claimant in the same position, financially, as he or she would have been if he or she had not been injured.

      2. Common law countries, such as South Africa, Australia, the United Kingdom, the United States and Canada have a "single recovery rule". This provides that damages for personal injury are to be recovered in a single action in the form of a single payment. This rule has long justified and encouraged the use of lump sum compensation payments.

      It is totally unclear from the formulation of the proposed Amendment Bill whether it is the intention of the legislature to:

        1. Continue to compensate victims of road accidents by way of a lump sum, whilst limiting the victims earnings for the purposes of an actuarial calculation to R160 000.00 per annum, or;

        2. Compensate victims of road accidents by way of monthly / annually reviewable installment in respect of future loss of income, where the extent of the RAF’s liability is limited to R160 000.00 per annum.

Due to the uncertainty contained in the formulation of the proposed legislation the Coalition on the Road Accident Fund liaised with Mr. D. Anderson (Director Special Projects: Road Accident Fund) as to his interpretation of the proposed legislation. Mr Anderson stated that the Road Accident Fund’s liability in respect of the victim / claimant for future loss of income will be assessed annually through panels set up by the Road Accident Fund during which the claimant / victim will have to prove:

PAGE -24-

          1. That the victim has sustained an injury which has prohibited him/her from working or will prohibit him/her from working during the next year.

          2. Annually why medical treatment has not improved his / her medical condition and resultant prospective loss of earnings.

Mr. D. Anderson stated that payment will be made in instalments on an annual basis limited to a maximum amount of R160 000.00 per annum.

 

The Coalition on the Road Accident Fund also liaised with Ms M DuToit (Manager Strategic Planning: Department of Transport) in respect of the Departments interpretation of the proposed clause.

The Coalition on the Road Accident Fund’s request for an interpretation of the said clause together with Ms Du Toit’s response is annexed hereto marked annexure "A" .

Ms Du Toit’s interpretation which she indicated was sanctioned by the State Attorney, indicated that it is the intention of the legislator to continue to compensate victims of road accidents by way of a lumpsum which will be determined actuarially after submission of the claimant’s claim and the claimant having complied with all the requirements in terms of the Act, but that the Fund’s liability will be limited to R160 000.00 per annum, which significantly might not increase on an annual basis in terms of the consumer price index.

The Coalition on the Road Accident Fund believes that the opposing interpretations by a member of the Road Accident Fund and a member of the Department of Transport clearly demonstrates a lack of clear vision and the vagueness of what Parliament is required to legislate as well as the confusion that will arise once such legislation is promulgated.

 

 

 

 

PAGE -25-

 

    1. It is important to note that payment of loss of earnings in installments (monthly or annually) will create the following problems:

        1. It would necessitate the RAF to undertake to inflate the monthly pension paid to the claimant by at least the CPI. This will result in a considerable increase in future liabilities of the RAF.

        2. The relationship with the claimant is extended over a period of time which could extend as long as fifty to sixty years, with the inevitable perpetuation of hassles between the parties.

        3. The RAF Commission states on page 656: "22.208: The actuarial society of South Africa cautions against "the cost of administration associated with effecting and controlling regular payment", while the South African Insurance Association points out that the RAF is not geared up to make monthly payments to victims of Road Accidents and that this would "add massive costs". Mr G W Jacobson believes that considerable administrative capacity would be required and questions the extent to which and by whom legal costs would be paid.

          4. 22.209: In addition the experience of Section 17 Undertakings indicates that the RAF does not currently have the capacity to administer a system of reviewable period payments." AND "Administrative skills and computerization on par with those in the private sector would be required."

        4. Actuarial calculations which previously were only necessary at the time of conclusion of the matter, will have to be repeated at regular intervals due to the changing economic data and circumstances.

          5. PAGE -26-

        5. Verification of identities, banking details and other information which presently is dealt with on a once off basis at conclusion of litigation, will now be required on a continuous basis in the future. The opportunity for fraud in this context is particularly pertinent.

          6.  

        6. The RAF will no longer have the benefit of having determined "once and for all" its liability to the claimant, and will enter an extended unquantified quagmire, which can remain so for up to sixty years in respect of each and every claimant.

          7.  

        7. The RAF eventually still has to pay the actual loss suffered in an actual month, sometimes twenty, thirty, forty or fifty years later, instead of enjoying the benefit of paying to the claimant an accelerated cash lump sum at the conclusion of the litigation process. The uncertainties and exigencies relating to the investment of RAF income, and CPI increases in respect of the petrol levy, are pertinent in this context.

          8.  

        8. Lump sum compensation for damages is not taxable in the hands of the recipient. In the event that the RAF benefits are no longer paid by way of once and for all lump sum awards but in the form of periodic payments these amounts would be taxable in the hands of the road accident victims / claimant. It is suggested that there are a number of reasons why this would be both inappropriate and anomalous as can be seen from the Road Accident Fund Commission which states at page 661: "22.240: Firstly the scheme of RAF benefits is currently funded by way of a dedicated levy on fuel by all purchases of such fuel, not by payment of premiums to a private insurer in respect of which there are any tax rebates or exemptions. It seems incongruous

PAGE -27-

 

that a tax should be raised from amongst the fuel purchasing and road using population, on which a further tax is imposed as and when benefits are paid to them.

 

22.241 secondly, the periodic payments proposed to be provided by the scheme of road accident benefits are not remuneration but part of a state regulated scheme within the broader context of social security. Other statutory benefits such as old age and disabled pensions are not taxed as income, and

 

22.242 Thirdly, the proposed income support and family support benefits are, in relation "earners" based on nett or after tax income. It would be invidious to deduct a hypothetical amount in respect of tax before calculation of the benefit and then subject the benefit itself to taxation."

It is therefore clear that at the very least the Income Tax Act no. 58 of 1962 would have to be amended to exempt all benefits payable in installments to road accident victims."

 

PAGE-28-

2.3 Further disadvantages of reviewable periodic payments are:

2.3.1 It compromises the dependants lawful right to support: Should the claimant (particularly a breadwinner) die, his pension will die with him, leaving his family destitute.

2.3.2 If it would be disputed that a death arose from the injuries sustained in a motor vehicle accident (as can be anticipated in many cases) this would lead to litigation on causation de novo.

2.2.3 Payment of compensation by way of a lump sum empowers the seriously injured road accident victim to provide for his own future and that of his family. His funds can be protected either by the establishment of a trust or the appointment of a curator bonis. He should not thereafter, be obliged to seek social welfare benefits from the state. In the event of an apportionment of fault considerable hardship would arise should future loss of income be apportioned and the reduced amount paid by way of installments. The road accident victim currently has an opportunity to replace lost income through an apportionment by way of investment. He is also able to supplement the apportioned undertaking given by the RAF for future expenses. All this would denied should his future loss of income be paid by reviewable periodical instalments.

 

PAGE -29-

 

        1. The claimant can plan for the future on the basis of a fixed award and the RAF or insurer can effectively close the case once damages are paid or the necessary annuities purchased.

        2. In the event that a claimant emigrates, he/she will be obliged to return annually to South Africa for review assessment by the RAF.

        3. Investigation of the victims loss of earnings/ capacity/ partial loss of earnings will have to be revisited de novo annually.

        4. Interminable pending litigation will produce malingering and a culture of dependency.

        5. An inability by the victim of a road accident to exercise his/her common law right of recovery of those benefits not compensated by the RAF.

2.4 The proposed clause 17(4)(B), (b), (c), and (d) defies all logic:-

 

      1. The Bill proposes that loss of support will be divided

        2. "equally between all dependants". This proposal is totally in conflict with established actuarial science. It is patently clear that inequities will arise as a result of this as it proposes that the thirty five year old wife is treated in exactly the same way as the eight year old child. Bear in mind that a husband/wife’s right to support is life long, while that of a child is until emancipation.

         

      2. No regard is given to existing Orders of Court regulating the duty of the deceased to maintain children from a previous marriage as a opposed to children in a later marriage or relationship.

        3.  

         

         

        PAGE -30-

         

      3. The proposal is inequitable in that no regard is given to the circumstances of, for instance disabled children, that would have been dependent on the deceased parent for the rest of their lives and who will now be left destitute after the age of twenty one.

      4. The well established principle of contingency deductions for remarriage is abolished and substituted with a system in terms of which surviving dependants will be required to re-apply, every year, for loss of support and, if denied fair support, be obliged to institute proceedings, time and time again, in terms of whatever system is prescribed to attempt to enforce their rights, most likely without support from a lawyer. It is quite clear that remarriage will under these circumstances not be a financially viable alternative.

      5. In the opinion of Senior Counsel provided to the Coalition, where the netto result of this clause is that claimant will no longer be able to afford legal representation due to direct payment by the Fund to the claimant over an extended period, this clause impairs an indigent persons right to obtain legal representation and thus arguably infringes upon Section 34 of the Constitution and also Section 9(1) of the Constitution. An infringement of Section 9 (3) of the Constitution (the right not to be discriminated against) is also pertinent.

These infringements are not reasonable and justifiable, and therefore are not rescued by the limitations clause.

    1. In conclusion, it should be noted that if the interpretation is that payment of future loss of income be made by way of installments in arrear, the netto result is that the claimant will no longer be in a position to secure access to a lawyer, due to the fact that he will not be able to guarantee payment of the lawyers fees, as well as the disbursements, including costs of obtaining medico legal reports and briefing counsel. Similarly, in the event that he has an apportioned claim, the claimant will no longer be in a position to pay medical suppliers for services rendered by them from his monthly damages award.

 

PAGE -31-

In the event that the claimant wishes to obtain a loan from a financial institution in order to "tiede him over", until such time as he receives his compensation, the netto result of payment of loss of earnings by installments in arrear will be that he will not be able to obtain such finance, and will not be able to make up the difference in respect of interest levied on conclusion of the litigation process.

(II):VI AD AMENDMENT OF SECTION 17(7)(a), (b), (c) OF THE ROAD ACCIDENT FUND ACT 56 OF 1996:

PROPOSED AMENDMENT:

"

(7)(a) When a person has provided a third party with emergency medical treatment as defined in paragraph (b), the Fund shall compensate such person directly, according to the prescribed tariff contemplated in subsection (4A), irrespective of any negligence or wrongfulness on the part of any person.

 

(b) For the purposes of paragraph (a) "emergency medical treatment" means the provision of reasonable and appropriate emergency treatment by a prescribed provider os such service in order to stabilize the emergency medical condition, and includes triaging, resuscitation, stabilization or monitoring of the patient.

(c) For the purposes of paragraph (b) "emergency medical condition" means an acute injury or illness which requires immediate preventative or remedial medical intervention, where failure so to intervene would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or death of the person concerned."

 

 

 

 

PAGE -32-

1. The proposed legislation introduces a restricted element of no fault compensation with a provision to pay "emergency medical treatment" irrespective of negligence or wrongfulness on the part of any person. The definition of "emergency medical treatment" limits liability to "reasonable and appropriate emergency treatment by a prescribed provider of such a service in order to stabilize the emergency medical condition" .

2. The Coalition on the Road Accident Fund would like to express concern relating to the following aspects:-

2.1 Albeit that provision of no fault emergency treatment is a goal every society should aspire to, and although the Coalition on the Road Accident Fund supports implementation of no fault/ emergency treatment, it is perturbed as to how this clause is introduced as part of this legislation, considering that the justification for all the other amendments to the Act seem to be the precarious financial position in which the Road Accident Fund finds itself in.

2.2 The clause requires each supplier to claim directly the amounts owing to it from the Road Accident Fund. The proposor clearly has not considered the implications, and additional cost in respect of:

2.2.1 The additional administrative capacity the Road Accident Fund will require to process these claims (where previously these claims almost always formed part of the claimants claim).

2.2.2 The additional medical administrative capacity the Road Accident Fund will require to determine whether the treatment in fact constituted "emergency medical treatment".

2.2.3 The opportunity for fraud/confusion within the proposed no fault system is considerable considering e.g. medical practitioners including items as having been necessary for "emergency medical treatment", or, the difficulty in proving that certain injuries in fact stemmed from a motor vehicle accident and not from an assault. The present formulation of the clause does not provide for sufficient checks and balances to prevent confusion in respect of the extent of what will qualify as emergency medical treatment and/or verifying the cause of an injury.

 

PAGE -33-

 

2.3 It remains unclear whether the proposed Act prohibits the supplier that is not prepared to treat the victim at the rates prescribed by the Road Accident Fund; but having ethically been obliged to treat the victim, and having incurred the cost; then recovering the balance of his costs from the victim directly.

3. The Coalition on the Road Accident Fund defers to further proposals relating to this clause submitted by the coalition’s health care partners, and which are submitted separately.

 

(II)VII: AD AMENDMENT OF SECTION 18 OF ACT 56 OF 1996:

PROPOSED AMENDMENT

"

7. Section 18 of the principal Act is hereby amended-

(a) by the deletion of subsection (1); and

(b) by the substitution for subsection (4) for the following subsection:

"(4) The liability of the Fund or an agent to compensate a third party for any loss or damage contemplated in section 17 which is the result of the death of a any person shall in respect of funeral expenses be [limited to the necessary actual costs to cremate the deceased or to inter him or her in a grave] fixed at R5 000."

The Coalition on the Road Accident Fund has no objection to the amendment of the said section.

 

(II)VIII: AD AMENDMENT OF SECTION 19(a)(iii) OF ACT 56 OF 1996:

PROPOSPED AMENDMENT

"8. Section 19 of the principal Act is hereby amended-

(a) by the addition at the end of paragraph (f)(ii) of the word "or" and by the addition of the following subparagraph:

PAGE -34-

 

"(iii) to attend a meeting arranged at the request of the Fund in order to elucidate matters relating to the claim, or at such meeting fails to respond and to the best of his or her knowledge to questions put."; and

(b) by the addition of the following subsection:

"(g) suffered as a result of an emotional shock sustained by that person when that person witnessed or observed or was informed of the bodily injury or the death of another person as a result of the driving of a motor vehicle."

  1. This amendment seeks to extend the right of the Road Accident Fund to interrogate all claimants regarding all aspects of the claim, and imposes the sanction that the RAF is not obliged to compensate any claimant who "fails to respond truthfully and to the best of his or her knowledge to questions put".

  2. The Coalition on the Road Accident Fund objects to the adoption of this amendment on the following grounds:

    3.  

    1. The status of the proposed interrogations in terms of their evidential value appears to be undefined.

    2. The procedure to be followed when requesting the claimant to submit for interrogation, reasonable time limits to apply for notification of the claimant of the time and place for an interrogation and the rules to be followed during such interrogation are totally unclear.

    3. Time delays as a result of the Road Accident Fund not having the capacity to interrogate all claimants and the eventual delay in furnishing compensation to the victim or of a trial date having been allocated prior to the interrogation having taken place, seem to have not been considered.

      4.  

       

      PAGE -35-

    4. No mention is made of the fact of whether the claimant will be entitled and guaranteed legal representation during such interrogation.

    5. No regard seems to have been given to logistical difficulties which may present itself in the case of the seriously disabled e.g. head injured individual for the purposes of such interrogation.

    6. The Road Accident Fund becomes judge, jury and arbitrator of the "truth", whilst the victims representative is not accorded the same right to interrogate the insured driver and witnesses for the Road Accident Fund. Similarly, the insured driver’s (wrongdoer) interests will also have to be protected by participating in the proceedings.

    7. The Court process is designed for the purpose of clarification of evidence.

    8. The proposed clause does not provide for collateral verbal evidence from eg. The head injured victims spouse.

  3. Whilst the Coalition on the Road Accident Fund supports any initiative to expedite the clarification of issues related to the victims claim, the proposed clause significantly impacts on the victims right to a fair hearing, and will not pass the constitutional test in its implementation.

 

(II)XI: AD AMENDMENT OF SECTION 19(g) OF ACT 56 OF 1996:

The Coalition on the Road Accident Fund refers the Portfolio Committee to the various presentations made to the Portfolio Committee on Transport during the public hearings of 2003 relating to this clause.

 

(Iii)X: AD AMENDMENT OF SECTION 21 OF ACT 56 OF 1996:

PROPOSED AMENDMENT

"

    1. The following section is hereby substituted for section 21 of the principal Act:

      2. PAGE -36-

       

      "Claim for compensation lies against Fund or agent [only] and others

       

      1. When a third party is entitled under section 17 to claim

from the Fund or an agent any compensation in respect of any loss or damage resulting from any bodily injury to or death of any person caused by or arising from the driving of a motor

vehicle by the owner thereof or by any other person with the consent of the owner, that third party 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-

 

    1. to the extent that the Fund or such agent has already paid or has agreed to pay or is obliged to pay the compensation; or

    2. unless the Fund or such agent is unable to pay the compensation.".

  1. The proposed amendment intends to retain the common law right of the claimant / victim to sue the wrongdoer in respect of any shortfall in the damages sustained, for which the Road Accident Fund is not

    2. liable.

  2. When the need was perceived to protect motor vehicle accident victims against the possibility of non-recovery of damage due to the fact that the wrongdoer (driver and/or owner and/or employer who caused the accident) was a "man of straw" and unable to pay the Road Accident victim’s loss or damage, the legislature intervened during 1942 with the promulgation of the Motor Vehicle Insurance Act which eventually came into effect in 1946. The act was aimed at compelling the owners of motor vehicles to take out insurance in order to cover persons suffering damage due to physical injury or death of a breadwinner arising from the negligence and unlawful driving of the motor vehicle. During 1986 the former system of compulsory insurance was replaced by a system of statutory assumption of liability. The Motor Vehicle Accident Fund was financed by levies on fuel sales and the liability resulting from the unlawful driving of a

PAGE -37-

 

motor vehicle was in terms of the Act, displaced to the MVA Fund. The Multilateral Motor Vehicle Accident Fund Act 93 of 1989 created a uniform system for South Africa. The Road Accident Fund Act 56 1996, brought the MMF Act into line with political developments within the Republic of South Africa by reincorporating the TBVC States during 1996.

During the 2004 financial year the Road Accident Fund collected a total fuel levy of 3.8 billion Rands.

3. The Road Accident Fund Commission states at page 279 of it’s report that "12.1: regard must be has to the danger of referring to the fuel levy (and interest thereon) as "RAF funds". This nomenclature suggests the RAF has ownership of and entitlement to these funds in preference to other parties (including claimants). The terminology reflects the RAF attitude that it occupies a "a quasi-judicial" position from which elevated heights it will disburse its own money to those persons whom it has judged to be deserving of such largesse.

12.2: It is more appropriate to envisage the fuel levy funds set aside for purposes of road accident compensation as being allocated to claimants to enable them to access the scheme. The RAF is merely the servant of the taxpayer and the administrative arm of the road user funded system of road accident compensation. The RAF, as an organization, is a conduit for taxpayers’ funds.

12.3: To the extent that the RAF does, indeed, reimburse claimants with expenses they have incurred that reimbursement should be offered no more begrudgingly or judgmentally than are the salaries paid to the RAF’s own staff, rentals paid for RAF equipment and fees paid to the RAF’s own experts and lawyers".

  1. The proposed legislation (2004) seeks to limit the compensation that victims of road accidents can claim from the Road Accident Fund in future whilst imposing a similar fuel levy as it did prior to the introduction of the proposed legislation yet it seeks to remove the road accident victim’s unlimited cover.

  2. The retention of the common law right to claim the excess of damages, shifts a large component of the burden onto the individual wrongdoers with the effect that modest or middle income wrongdoers

    3. PAGE -38-

     

    may be left destitute by a large claim for a high income person and a moments inattention in years of motoring may attract serious liability.

     

  3. If the proposed legislation (2004) is accepted many persons would find themselves without any financial benefits from the state or with a considerable financial shortfall by reason of the wrongdoing of another:

    4.  

    (a) There would be those who will be off work for considerable periods in the future who the Road Accident Fund would be unable to compensate in respect of those loss of earnings.

    (b) There would be those who will be unable to earn the high salary to which they were accustomed, that will now find that the Road Accident Fund would offer loss of income benefits considerably below that figure. The victim and his or her family may suffer considerable financial loss because they might be unable to pay the full mortgage bond installment on a home, the full lease on a motor vehicle, university fees for children or cover the costs of their usual standard of living.

    (c) There would be those who have sustained minor injuries which do not require medical treatment and who are still capable of working but who had suffered some pain and suffering or loss amenities of life. The Road Accident Fund will not provide financial recompense therefor in the form of general damages.

     

    In short, there would be road accident victims and their families who would receive nothing or less than they do from the Road Accident Fund.

     

     

     

     

    PAGE -39-

  4. Clearly, there is the possibility that the negligent owner or driver may be faced with extremely onerous (or even crippling) financial burdens in the event that he or she is found to be legally responsible for bodily injury suffered by a road accident victim or damage to the surviving family in circumstances where such loss is greater than the compensation provided by the Road Accident Fund. Such burden is a risk borne by every person who places a motor vehicle on a public road.

  5. Importantly the South African Insurance Association estimates that approximately 35% of people are insured. It is more than likely that this 35% will need additional cover. The additional cover would take the form of personal accident cover. If common law rights were not abrogated the additional cover that would need to be purchased would be third party liability insurance. Since only 35% of people are insured this would leave 65% of the population exposed to debilitating third party claims if they were the drivers at fault. The Coalition on the Road Accident Fund wishes to propose that the purchasing of third party liability insurance be obligatory as it is difficult to understand why owners of motor vehicles and drivers perceive themselves able to afford personal motor transport but unable to make the necessary financial arrangements to meet the costs of the harm they might cause to others. Many owners or drivers of motor vehicles will not be left destitute by any action for damages brought against them in the event that proper insurance is taken out.

    6.  

     

    PAGE -40-

  6. Note is taken that the Department of Finance advised that if the road user were to be required to insure against wrongdoing, this would be "cost raising" because compulsory insurance would remove constraints upon this kind of insurance. This could be economically depressing if it were not managed properly. Compulsory insurance should be designed so as not to have unintended spiraling costs, and hence the limitation of compensation payable by the RAF should be done with great care.

10. The Coalition on the Road Accident Fund supports the retention of the commons law right to sue the wrongdoer for the balance of the victims damages and in this regard is supported by the majority of commissioners of the Road Accident Fund Commission who at page 503 of the report states:

"the majority recommend that road accident victims and their families should retain all rights under the common law to compensation for death or bodily injury caused by or arising out of a road accident, with due allowance made for the benefits payable or provided under the proposed road accident benefits scheme. Road accident victims and their families should retain the right to sue a wrongdoing road user in common law in respect of those damages which have not been accommodated or fully covered by the State funded and regulated scheme of road accident benefits."

 

 

 

PAGE -41-

11. The most telling criticism of reviewable periodic payments is that the quantum of the liability of the common law wrongdoer is indeterminable. Is the comprehensive insurer of the wrongdoer in the event that the wrongdoer has insurance, expected to maintain a file for the duration of the life of the victim?

12. In conclusion, the Coalition on the Road Accident Fund finds it iniquitous that the motorist will continue to pay amounts in respect of the fuel levy on an annual basis to the Road Accident Fund, whilst receiving much less in exchange, and having to top up the shortfall by acquiring insurance to protect him or herself against claims, and to cater for any shortfalls in respect of his or her own compensation.

 

XI) PROPOSAL FOR THE FUTURE:-

 

1. The Coalition on the Road Accident Fund vehemently opposes the adoption of the said Amendment Bill. Instead, the Coalition proposes:

 

    1. The establishment of a Commission of Enquiry into the management practices of the Road Accident Fund; as well as the Department of Transport engaging with private management consultants in order to correct the malpractice identified by the said commission into the management practices of the RAF and the implementation of procedures to place the administration of the Road Accident Fund on a sounder footing.

    2. The establishment of committee consisting of legal and medical industry experts to simplify the procedural aspects relating to the present system and the law as it stands.

    3. To move the focus to the processes of revenue collection and practices involved in the financial investment of the funds of the RAF and financial administration of the Road Accident Fund.

    4. The outsourcing of the various functions of the Road Accident Fund in terms of:

      5.  

       

      PAGE -42-

       

       

      1. Financial (by outsourcing same to established financial institutions to administer the collection of revenue and payment of claims).

      2. Undertakings (by outsourcing the administration of undertakings to medical aids)

      3. Supplier claims processing (by outsourcing the administration of suppliers claims to medical aids)

      4. Claims processing (by engaging in a partnership with the private insurance industry in terms of the establishment of:

        1. Systems;

        2. An administration;

        3. Training facilities;

        4. Forensic departments).

      1. Research and statistics (by establishing a research and statistical facility in conjunction with an organization such as the HSRC).

    1. To establish an objective Road Accident Fund Ombudsman with the responsibility to monitor the various divisions of the Road Accident Fund and also to provide a forum for investigating complaints concerning policies and business practices of the current RAF.

      2.  

    2. The introduction of a minimum and maximum threshold for the recovery of compensation from the Road Accident Fund without reverting to complex tests and bench marks, costly and untested panels, and unrealistic monetary limits.

 

 

THE COALITION ON THE ROAD ACCIDENT FUND

11 FEBRUARY 2005