A critical evaluation of the RABS Bill and the common law right to delictual claims

April 1st, 2018
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By Prof Hennie Klopper

In April 2017 the Minister of Transport gave notice in the Government Gazette (GenN 302 GG40788/18-4-2017) of the intention to introduce the Road Accident Benefit Scheme Bill, 2017 (RABS Bill) into Parliament in terms of r 241(1)(b) of the National Assembly. The RABS Bill excludes non-patrimonial benefits. It has been suggested that the Compensation for Occupational Injuries and Diseases Act 130 of 1993 (COIDA) presents a basis for RABS justifying the abolition of non-patrimonial compensation and the common law right to recover statutory regulated insufficient compensation. This point of view calls for critical evaluation.

Similarity

If the subject matter of the two Acts is considered, one may be forgiven for concluding that the Acts are similar. COIDA provides for compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees or for death in the course of their employment. The Road Accident Fund Act 56 of 1996 (the RAF Act) deals with the establishment of the Road Accident Fund (the Fund) and matters connected therewith. The object of the Fund is the payment of compensation in accordance with the RAF Act for loss or damage wrongfully caused by the driving of motor vehicles. The RAF Act provides that a third-party claimant is entitled to recover loss or damage, which the third party has suffered as a result of any bodily injury to themselves or the death of or any bodily injury to any other person, caused by or arising from the negligent driving of a motor vehicle.

These Acts have common ground in that both deal with compensation for bodily injury and death, albeit in different circumstances. But is this similarity conclusive?

Objects

  • Determination essential

The fundamental difference between Acts of Parliament is to be primarily found in the purpose and in the field of application of the Acts.

COIDA

  • Historical background

The basic premises of the Acts preceding COIDA varied from a choice to pursue common law or statutory remedies following an injury during employment (requiring either no fault or fault) to purely statutory prescribed compensation out of a statutorily created fund on a no fault basis with the absolution of liability of the employer but with retention of defined common law rights. A very important recurring common principle of all these Acts was that an employee could not claim where the injury or death was of their own doing, which emphasises the common law basis for liability (see Wilhelm Coetzee Die Toepassingsterrein van Ongevalle-wetgewing in die Suid-Afrikaanse reg (unpublished LLD thesis University of Pretoria 1981) 8ff).

  • Philosophy

Work-related injuries affect a person’s ability to earn and provide for their dependents leading to the creation of socio-economic problems, which become a societal burden. Based on the governmental obligation to govern and create order, it can be said that government is called on to create measures to counteract the negative impact of occupational injuries, death and diseases. The financial means to ensure such measures fall on the employers as they have the means, have control over the workplace and are, therefore, the best placed to shoulder the financial implications of such measures.

  • Purpose

This Act is the product of a long development of enactments having their genesis with the Employer’s Liability Act 35 of 1886 (Cape of Good Hope) and culminating in the Workmen’s Compensation Act 30 of 1941. COIDA is the successor to the latter Act and essentially consolidated legislation dealing with occupational injuries and diseases into one Act. The legislation seeks to partially compensate employees for loss of income caused by occupational accidents and diseases (see Coetzee (op cit) 52; Williams v Workmen’s Compensation Commissioner 1952 (3) SA 105 (C) at 109; McDonald v Enslin 1960 (2) SA 314 (O) at 317-8 and Birkett v Ongevallefonds en ’n Ander 1965 (2) SA 630 (A) at 635).

A coincidental consequence of the protection of employees is that s 35(1) absolves the employer from any liability regarding occupational injuries and diseases. It must be noted that the s 35(1) exclusion only relates to claims caused by the negligence of the employer. Section 36(1)(a) authorises the recovery of common law damages caused by a person other than the employer.  Clearly the common law right of an employee to claim damages from other parties other than the employer remains intact. Compensation received in terms of COIDA must be deducted from any common law damages recovered by the employee (s 36(2)).

Viewed from this perspective an ancillary purpose and/or effect can be construed. The protection of the employer is essential to ensure job security. This is illustrated by the unintended practical outcome of Mankayi v AngloGold Ashanti Ltd 2011 (3) SA 237 (CC) where it was held that an employee was entitled to claim non-patrimonial damages from the employer for a respiratory occupational disease contracted during his employment. The added liability for occupational disease has put more pressure on an already financially beleaguered gold mining industry and will ultimately result in further job losses –  a consequence which the legislator could not have intended (see ‘Costs related to layoffs, lawsuit, take toll on AngloGold results’ www.mining.com, accessed 29-1-2018).

The RAF Act

  • Historical background

The Motor Vehicle Insurance Act 29 of 1942 (the MVA Act) became law in 1942. It was succeeded by the Compulsory Motor Vehicle Insurance Act 56 of 1972, The Motor Vehicle Accidents Act 84 of 1986, the Multilateral Motor Vehicle Accidents Fund 93 of 1989 and finally, the RAF Act. In 1986 all reference to insurance was removed from the title because the compensation system was no longer funded by insurance – premiums previously paid by the owner or driver of a motor vehicle was now funded by a fuel levy. Essentially the basic structure and mechanisms of these Acts have over time remained unchanged. The initial Act was introduced in reaction to the potential danger created by motor vehicles to, initially, protect mainly pedestrians against the consequences of motor vehicle accidents (see A Suzman, G Gordon and LH Hodes The Law of Compulsory Motor Vehicle Insurance in South Africa (Cape Town: Juta 1982) at 1 et seq; the report of the Commission of Inquiry into certain aspects of compulsory motor vehicle insurance (the Grosskopf Commission) (1981) at 3 et seq). The objects of all the Acts impliedly indicate that the socio-economic interests of the motor vehicle accident victim were at stake. The system has recently been correctly classified as ‘social security’ (see Law Society of South Africa [LSSA] and Others v Minister for Transport and Another 2011 (2) BCLR 150 (CC) at para 50). Prior to 1986, insurance was employed as a vehicle to deliver the security benefits. The actual rights afforded a victim were not created by the insurance contract. The right of the road accident victim was their common law delictual right to compensation. Legislation only regulated access to the social security engineered by the insurance based acts using compulsory insurance as a funding mechanism. The RAF Act employs a fuel levy but uses the same structure as before 1986.

  • Philosophy

The philosophy behind the introduction of the MVA Act of 1942 and its successors is like that of COIDA – protection of society against the socio-economic consequences of road crashes by providing full compensation for injury or loss caused by or arising from the driving of motor vehicles. The state has exercised its regulatory function by retaining and using the common law right of a road accident victim, but legislating for security of recovery of such damages by substituting the original wrongdoer by a deep-pocket defendant (currently the Fund). The burden of providing social security is spread among the actors in society who create the socio-economic consequences of road crashes – namely, drivers by requiring them to contribute through a fuel levy to the funding of the Fund.

  • Purpose: Widest possible protection

It is settled law that the purpose of third party compensation legislation is the protection of the road accident victim. In this regard it has often been stated that the road accident victim is afforded ‘the greatest possible protection’ against the inability to recover delictual common law damages due to the impecuniosity of the wrongdoing driver (see Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A) at 285 and, also inter alia, Rose’s Car Hire (Pty) Ltd v Grant 1948 (2) SA 466 (A) at 471; Op’t Hof v SA Fire and Accident Insurance Co Ltd 1949 (4) SA 741 (W); Workmen’s Compensation Commissioner v Norwich Union Fire Insurance Society Ltd 1953 (2) SA 546 (A)). The RAF Act has no possible ancillary or concomitant purpose. Full indemnification of a crash victim does not have any beneficial ancillary socio-economic result or consequence other than avoiding and/or negating the societal consequences of road crashes.

Mechanisms

  • COIDA

The employer is legally obliged to contribute to a statutory fund and absolved from liability.  The employee is on the other hand, obliged by s 35 of the COIDA to claim compensation from the statutory fund represented by the Compensation Commissioner (see Jooste v Score Supermarkets Trading (Pty) Ltd (Minister of Labour Intervening) 1999 (2) SA 1 (CC) at para 14). A feature of COIDA is the s 36(1) retention of an employee’s common law rights against all persons except the employer. The employee may at common law recover damages not paid in terms of COIDA, including non-patrimonial damages not caused by the negligence of the employer. In terms of s 36(2) COIDA benefits recovered are deducted from the common law damages recovered by an employee. In the context of motor vehicle related occupational injuries, the shortfall not recovered in terms of COIDA is recovered from the Fund. The Constitutional Court approved of the abolition of the wrongdoer’s liability by the Road Accident Fund Amendment Act 19 of 2005 (the Amendment Act) in the LSSA case. This creates a clear case of discrimination between employees who are injured in a motor vehicle accident during employment and other road accident victims to claim the shortfall in compensation occasioned by the limitations introduced by the Amendment Act.

  • The RAF Act

Section 21 of the RAF Act, prior to its amendment, compelled the third party to institute their claim for damages from the Fund unless the Fund was unable to pay compensation and contained an explicit reference to s 17. After its amendment by the Amendment Act there is no reference to s 17, which is the section that creates liability for the Fund and the wrongdoer is entirely absolved from liability unless the Fund is unable to pay any compensation or for a claim for emotional shock.

The new s 21 seemingly proceeds from the mistaken premise that the action against the Fund is based on the RAF Act itself and not on common law. As stated above it is quite clear that the basis of a road accident victim’s claim is rooted in the common law and based on delict. To this end the wrongdoer’s liability is suspended on condition that the Fund can pay, and the claimant complies with the provisions of the RAF Act (see in this regard Rose’s Car Hire at 474 – 475 and Da Silva and Another v Coutinho 1971 (3) SA 123 (A)). It also in error assumes that the RAF Act must protect the wrongdoer, where in fact and in law, the road accident victim is the sole beneficiary of the RAF Act (see Smith v Road Accident Fund 2006 (4) SA 590 (SCA)).

The common law basis of the Fund’s liability is clearly established by the wording of s 19(a), which was not amended by the Amendment Act. Section 19(a) states that if the wrongdoer is not liable the Fund’s liability is excluded but for s 21. As the amended s 21 after amendment by the Amendment Act contains no reference to liability of the Fund, the effect of s 19 is that the common law delictual claim, which is the premise of s 19(a) is abolished except where the Fund is unable to pay or where it is a claim for emotional shock by a secondary road accident victim. In addition to the legislative short-circuit created by the amendment of s 21 and the retention of s 19(a) it has a discriminatory consequence as it is the only Act that is based on common law where the common law liability on which the Fund is liable is all but abolished and in addition where no residual common law rights are retained as is the case with s 36(1) of COIDA. In short, the common law based RAF Act as amended fully abolishes the common law right to claim from the wrongdoer (except where the Fund is unable to pay and where it is a claim for emotional shock) and the no-fault based legislation (COIDA) retains the right to claim from a wrongdoer.

Conclusion

A presumption that COIDA is like the RAF Act is an oversimplification. COIDA has a secondary effect and ancillary purpose to protect the employer against claims of employees based on occupational injuries and diseases to conserve employment. In the case of the RAF Act, the only single object is to protect the road accident victim against the possibility of non-recovery of their common law delictual claim for damages caused by or arising from the unlawful and negligent driving of motor vehicles. The notion that COIDA is a suitable model for the introduction into the RABS Bill is of no fault the abolition of all rights to a common law remedy for recovery of that which is not statutorily compensated, is entirely false. Employees retain their full common law rights in terms of COIDA except claims caused by the negligence of an employer where their common law claim is excluded. The secondary consequence of COIDA or ancillary object makes the argument for the transplant of the COIDA legislative structure to an Act intended for the protection of road accident victims false and COIDA can consequently not be used as a model or justification for a no fault compensation system where the common law rights of road accident victims are not recognised and retained. In fact, the current Fund dispensation brought about by the Amendment Act, which limits compensation without retention of the common law claim to recover the shortfall from the wrongdoer is in view of those provisions of COIDA (s 36(1)) that confirm employers’ common law rights, discriminatory and consequently unconstitutional. Any attempt to fully substitute the road accident victim’s common law rights with limited statutory compensation benefits without retention of the right to a residual common law claim to serious and justifiable constitutional challenge. This is precisely what the proposed Road Accident Benefit Scheme sets out to do.

Professor Hennie Klopper BA LLB LLD (UFS) is an Emeritus Professor in the Department of Private Law at the University of Pretoria.

 This article was first published in De Rebus in 2018 (April) DR 24.

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