Constitutional Court hands down judgment in the LSSA’s appeal on the RAF Amendment Act
29/11/2010

On 12 August 2010 the Constitutional Court heard the Law Society of South Africa’s appeal against the judgment and order of Fabricius AJ of the North Gauteng High Court, who on 31 March 2010 dismissed a constitutional challenge to amendments to the Road Accident Fund Act of 1996. Judgment was reserved by the Constitutional Court and on 25 November 2010, the Constitutional Court handed down judgment.

The scope of the constitutional challenge shrunk considerably from the challenge in the North Gauteng High Court. In the Constitutional Court, the applicants impugned only two provisions of the amendment and one regulation. They were firstly, Section 21 which abolishes a motor accident victim‘s common law right to claim compensation from a wrongdoer for losses which are not compensable under the RAF Act, secondly Section 17(4)(c) which limits the amount of compensation that the Road Accident Fund is obliged to pay for claims for loss of income or a dependant‘s loss of support arising from the bodily injury or death of a victim of a motor accident, and finally Regulation 5(1) in which the Minister of Transport prescribed tariffs for health services which are to be provided to accident victims by public health establishments.

There were two main constitutional issues. The first related to the rationality of the scheme of the RAF Act as amended. The second constitutional issue concerned the claim that the challenged provisions of the RAF Act infringe four specified rights provided for in the Bill of Rights.

On the question of whether the scheme was rational, the court held that there must be a rational nexus between the legislative scheme and the pursuit of a legitimate government purpose. It remained to be said that the requirement of rationality was not directed at testing whether legislation was fair or reasonable or appropriate. Nor was it aimed at deciding whether there were other or even better means that could have been used. Its use was restricted to the threshold question whether the measure the lawgiver has chosen was properly related to the public good it seeked to realise. Our Constitution instructs that no law may limit a fundamental right except if it is of general application and the limitation is reasonable and justifiable in an open and democratic society.

The court held that the real question to be asked was whether the restriction, if found to exist, was reasonable and justifiable.

When looking at the rationale for the abolition of the common law claim, the court noted that compensation claimable under the residual common law action against motorists would potentially increase in direct proportion to the level of the caps imposed. The court held that negligent motorists would have to bear the risk of substantially increased residual claims from accident victims. The colossal risk to which the new cap exposes all drivers (from which the RAF would previously have protected them by paying full compensation), as against the relatively small inattentiveness or oversight that could give rise to the risk, lend further support to the abolition of the common law action.

The court furthermore held that the retention of the common law claim does not sit well with a social security compensation system that aims to provide equitable compensation (as distinct from the right to sue for compensation) for all people regardless of their financial ability. The court held that not only the government‘s intermediate purpose in enacting this legislation must be kept in mind, but also its long-term objective. The primary and ultimate mission of the RAF was to render a fair, self-funding, viable and more effective social security service to victims of motor accidents.

The court therefore held that the abolition of the common law claim was a necessary and rational part of an interim scheme whose primary thrust was to achieve financial viability and a more effective and equitable platform for delivery of social security services. The court was satisfied that the abolition of the common law claim was rationally related to the legitimate government purpose to make the RAF financially viable and its compensation scheme equitable.

On the question of whether caps on compensation for loss of income or of dependants’ support infringe the right to property under Section 25(1) of the Constitution, the Court was unable to find an arbitrary deprivation of property, which is the threshold requirement for a limitation of Section 25(1). The court therefore held that the constitutional challenge to the amendment on the ground that it infringed Section 25(1) of the Constitution must fail.

The final challenge of the Applicants was directed at the UPFS tariff, and whether the prescribed UPFS tariff under Regulation 5(1) was rational and if so, whether it limited the right to have access to health care services. The court had no hesitation in finding that the UPFS tariff was wholly inadequate and unsuited for paying compensation for medical treatment of road accident victims in the private health care sector. The evidence showed that virtually no competent medical practitioner in the private sector with the requisite degree of experience would consistently treat victims at UPFS rates. This simply meant that all road accident victims who cannot afford private medical treatment will have no option but to submit to treatment at public health establishments.

It furthermore emerged from the evidence that the UPFS tariff did not cover material services which road accident victims require and which were provided by the private health care sector. The evidence showed that in certain material respects the public health institutions were not able to provide adequate services crucial to the rehabilitation of accident victims who were permanently disabled. Another important, but not individually decisive, consideration to the court was that actuarial evidence demonstrated that an implementation of the UPFS tariff would save the RAF no more than 6% of its total compensation bill. This relatively meagre saving seen against other compelling factors made it unreasonable to consign quadriplegics and paraplegics to a possible death by reducing their adequate access to medical care in pursuit of a financial saving of a negligible order. The court was satisfied that the UPFS tariff was incapable of achieving the purpose which the Minister was supposed to achieve, namely a tariff which would enable innocent victims of road accidents to obtain the treatment they require. UPFS is not a tariff at which private health care services are available; it does not cover all services which road accident victims require with particular reference to spinal cord injuries which lead to paraplegia and quadriplegia. The public sector was not able to provide adequate services in a material respect. The court held that the means selected were not rationally related to the objectives sought to be achieved. That objective was to provide reasonable healthcare to seriously injured victims of motor accidents. The court accordingly struck down Regulation 5(1), as being inconsistent with the Constitution, and the Minister would be obliged to make a fresh determination.

The court further held that the empowering provision, Section 17(4B), does not require the Minister to prescribe, as he did, the UPFS tariff in particular. It simply empowers the Minister to prescribe, after consultation with the Minister for Health, a tariff based on the tariffs for health services provided by public health establishments. The court was not prepared to suspend the order of constitutional invalidity. It held that whilst the Minister took time to reformulate the tariff to be made under the empowering provision, accident victims must be entitled to access adequate healthcare.

The court was also not prepared to limit its retrospective application. The retrospective application to the date the Regulation took effect, will ensure that the liability of the Fund for healthcare needs of victims of motor accidents and in particular quadriplegics and paraplegics who fell victim to road accidents from the inception of the amendment up to the date of the order remains intact. The order was intended to afford victims of motor vehicle accidents compensation for medical treatment or health services to which they would have been entitled had the Amendment Act not been passed.

The Constitutional Court’s decision to struck down Regulation 5(1) is welcomed, as the seriously injured road accident victims will be entitled to proper health care, as they were entitled to prior to the promulgation of the RAF Amendment Act.

Nicolette Koch
Partner
nicolette-k@adamsadams.co.za