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Transitional Measures for Road Accident Fund Claims

This presentation discusses the Road Accident Fund (Transitional Provisions) Bill, 2012, which aims to provide transitional measures for categories of road accident victims whose claims were previously limited. It also highlights the Constitutional Court judgment of Mvumvu v Minister of Transport and the need for a new regime applicable to pre-August 2008 accident victims.

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Transitional Measures for Road Accident Fund Claims

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  1. PRESENTATION TO THE NATIONAL COUNCIL OF PROVINCES (TRANSPORT) ON THE ROAD ACCIDENT FUND (TRANSITIONAL PROVISIONS) BILL, 2012

  2. BACKGROUND Prior to 1 August 2008, the RAF Act, provided that most categories of road accident victims could claim full compensation from the Road Accident Fund , 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 their driver’s negligence was solely responsible for the accident in question.

  3. BACKGROUND (Cont …) In enacting the Road Accident Fund Amendment Act, 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 limits apply to all claimants. The constitutionality of this new approach was upheld by the Constitutional Court.

  4. BACKGROUND (Cont …) The Amendment Act however, applies only to causes of action arising after its commencement on 1 August 2008. As a result, 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 are still subject to the unfair, inequitable and discriminatory limitations to their claims under section 18 of the oldAct.

  5. On 17 February 2011, the Constitutional Court in Mvumvu v Minister of Transport and another, CCT 67/10 [2011] ZA CC 1 concluded that the limitations in section 18 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. BACKGROUND (Cont …)

  6. BACKGROUND (Cont …) The Constitutional Court agreed that it would not be appropriate to declare the sections invalid with immediate or retrospective effect. Instead the Constitutional Court held that “Parliament is best suited to determine the extent of compensation to which the applicants are entitled”. The Constitutional Court suspended the declaration of invalidity for 18 months.

  7. BACKGROUND (Cont …) The Constitutional Court also added that while its judgment only concerned three of the caps created by section 18 of the old Act, there were three other caps created by the same section which had not been before the Constitutional Court. It held that “it is desirable that Parliament address the plight of those affected by these subsections as well.”

  8. BACKGROUND (Cont …) It is therefore clear from the judgment of the Constitutional Court that: 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 are capped by section 18 of the old Act.

  9. BACKGROUND (Cont …) The legislation proposes an increase in the compensation available to passengers which is at least equal to the entitlements of any other victims under the post Amendment Act, and; The legislation should not have the effect of forcing all road accident victims affected to be subject to the Road Accident Fund Act, 1996 (Act No. 56 of 1996), as it stood after 1st August 2008 as this would retrospectively remove the rights that they had under the old Act.

  10. DISCUSSION 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 old Act, and give effect to the Constitutional Court judgment of Mvumvu v Minister of Transport.

  11. CLAUSE 1 • Clause 1 defines the following words. • “Fund”- Refers to Road Accident Fund as defined in the principal act. • “New Act”- Means the Road Accident Fund Act, 1996(Act No.56 of 1996) as it stood from 1st August 2008 on wards; • “Old Act”- Means the Road Accident Fund Act 1996 (Act No. 56 of 1996) as it stood prior to 1st August 2008.

  12. CLAUSE 1 • (d) “Prescribed”- Refers to regulations • prescribed by the Minister in the Gazette. • (e) “Third Party”- Refers to a person who has a right to claim compensation from the Fund in terms of section 17 of the old Act whose claim is subject to limitations imposed by section 18(1) or (2) of that Act, and whose claim has upon this Act taking effect, not prescribed or been finally determined by settlement or judgment.

  13. CLAUSE 2 Clause two deals with transitional arrangements for certain third parties. Clause 2(1) provides that if a third party intends to have their claim considered in terms of the old Act, they must expressly and unconditionally indicate this on the prescribed form within one year of the Act taking effect.

  14. CLAUSE 2 Clause 2(1) further provides that if the third party does not elect and indicate their election on the prescribed form , then the claim of the third party will be dealt with in terms of the new Act and shall be subject to the transitional arrangements set out in clauses 2(1)(a) to 2(1) (g)

  15. CLAUSE 2 (1)(a) Clause 2 (1) (a) provides that subject to the remaining provisions of the Act, the cause of action of the third party is deemed to have arisen on the 1st August 2008 for purposes of section 12 of the RAF Amendment Act, 2005 (Act No. 19 of 2005) and section 17 (4A)(b) of the new Act.

  16. CLAUSE 2 (1)(b) Clause 2(1)(b) provides that the right of the third party to claim non-pecuniary ( general damages) loss is limited to a maximum amount of R25 000-00 unless; The third party submits a serious injury assessment report as prescribed by regulation 3 of the RAF Regulations 2008, indicating a serious injury, within two years of this Act taking effect and

  17. CLAUSE 2 (1)(b) (ii) It is determined in accordance with Regulation 3 of the RAF Regulations, 2008, that the third party suffered a serious injury.

  18. CLAUSE 2 (1)(c) Clause 2 (1)(c) prohibits double dipping or double compensation by allowing the deduction of certain amounts from the claim of the third party if; The third party recovered certain monies from the owner, driver or employer of the driver of the motor vehicle involved in the accident (ii) Payments were made to suppliers for goods and services provided to the third party

  19. CLAUSE 2 (1)(C) iii) Interim payments were made to the third party in terms of (17)(6) of the old Act; (iv) Payments were received in terms of the Compensation for Occupational Injuries & Diseases Act, 1993 ,the Defence Act , 2002 or any other Act governing the South African National Defence Force.

  20. CLAUSE 2 (1)(d) Clause 2 (1)(d) imposes a duty on the third party to declare in writing any monies received in terms of paragraph (c) .

  21. CLAUSE 2 (1) (e) Clause 2(1)(e) states that a third party is not required to lodge a new claim form. It also states that if action has 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.

  22. CLAUSE (2)(1)(f) Clause 2(1)(f ) provides that the transitional regime does not affect the claims of suppliers of medical goods and services contemplated in terms of section 17(5) of the old Act in respect of costs incurred by the third party prior to the Act taking effect .

  23. CLAUSE 2 (1)(g) Clause 2 (1)(g) absolves the owner, driver and employer of the driver, from any liability to the third party.

  24. CLAUSE 2(2) This clause exempts the third party from prescription in certain circumstances such as being a minor, any person detained as patient i.t.o mental health legislation or a person under curatorship and prescription will start running once the impediments cease to exist.

  25. CLAUSE 3 This is a standard clause providing for the short title and commencement and provides that this Act will come into operation on a date fixed by the President by proclamation in the Gazette

  26. CONSULTATION Draft Bill was published in the Government Gazette No.3453 for public comments on 15 August 2011. Comments were received and where necessary , these have been incorporated into the Draft Bill Office of the Chief State Law Adviser FOSAD Joint SP,CD and HD Cluster Cabinet Committee (Social Sector).

  27. FINANCIAL IMPLICATIONS 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.

  28. COMMUNICATION IMPLICATIONS Once the Bill has been approved by Parliament and assented to by the President, it will be published in the Government Gazette for general information. The implications of the Act will be communicated to the affected third parties and ultimately the Act will be proclaimed for commencement.

  29. PARLIAMENTARY PROCEDURE The State Law Advisers and the Department of Transport are of the opinion that this Bill must be dealt with in accordance with the procedure established by section 75 of the Constitution since it contains no provision to which the procedure set out in section 74 or 76 of the Constitution applies.

  30. PARLIAMENTARY PROCEDURE The State Law Advisers and the Department of Transport are of the opinion that it is not necessary to refer this Bill to the National House of Traditional Leaders in terms of section 18(1)(a) of the Traditional Leadership and Governance Framework Act, 2003 (Act No. 41 of 2003), since it does not contain provisions pertaining to customary law or customs of traditional communities.

  31. REQUEST We request the National Council of Provinces (NCOP) to consider and approve the Bill.

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