The RAF to use new litigation model to reduce its litigation costs

May 1st, 2020
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Mabunda Inc and Others v Road Accident Fund (The Law Society of South Africa and Black Lawyers Association as amicus curiae); Diale Mogashoa Inc v Road Accident Fund (GP) (unreported case no 15876/2020, 18239/2020, 27-3-2020) (David J)

The Road Accident Fund (RAF) is a statutory body liable for payment of compensation for damages or loss wrongfully caused by the driving of motor vehicles. For the past five years the RAF has utilised a panel of attorneys to represent it in respect of actions instituted for the recovery of such compensation (the panel attorneys). The Service Legal Agreement(s) (SLA) and, indeed, the previous tender under which the panel attorneys were appointed, terminated due to the effluxion of time on 29 November 2019. The SLA was, thereafter, extended by way of a ‘second amendment’ with those panel attorneys who chose to do so until 31 May 2020. The RAF has also revised its ‘litigation model’ due to the unaffordability thereof, and cancelled its invitation to tender in respect of a ‘new’ set of panel attorneys. The RAF intends to no longer utilise such panel.

The majority of the ‘old’ panel attorneys, intended to review the RAF’s decision and sought interim relief in the urgent applications. The ‘old’ panel wanted to be allowed to continue to operate as before, while the application was being dealt with. The court said that interdicts, which applicants seek in Part A of their respective notices of motion are all interim interdicts, although some of the practical consequences may be irreversible. The court pointed out that for more than a century the law has authoritatively required an applicant seeking a final interdict to –

  • demonstrate a clear right;
  • show an injury in the form of irreparable harm actually committed or reasonably apprehended; and
  • the absence of an alternative remedy.

The court added that when an applicant seeks an interim interdict, two further qualifications are added –

  • the right need not be clear provided it is prima facie established, even if open to some doubt; and
  • the balance of convenience must favour the relief claimed.

In 2014, by way of a Request for Bids Ref RAF/2014/00023, the RAF invited bids from attorneys to tender to render services for representation of the RAF in respect of claims instituted against it in the various district, regional and High Courts in South Africa, so-called ‘third party claims’. Pursuant to a successful tender process, 103 firms of attorneys were appointed, constituting the RAF ‘panel attorneys’.

They all entered into SLA’s with the RAF. The SLA’s all had 29 November 2019 as their expiry date. During the existence of the SLA’s, the High Courts, at various stages and in numerous judgments, expressed dissatisfaction and concern at how the ‘litigation model’ of the RAF, which, particularly in the Gauteng Division of the High Court in Pretoria, clogs the civil trial roll, has been handled over the years. In his answering affidavit, the Acting Chief Executive Officer (CEO) of the RAF referred to the cases of Modise obo a minor v Road Accident Fund 2020 (1) SA 221 (GP) and Mncube v RAF (MN) (unreported case no 2606/2018) (Legodi JP). In the Mncube judgment, the court, inter alia, held:

‘[14] It is not in the interest of justice or proper conduct towards an attorney’s client to settle on the date of trial at a huge legal cost to client or public purse. By completion of a case management form, the parties’ legal representatives undertook to settle much earlier to avoid cost occasioned by attendance at court on the date of trial. Had the matter been settled in time, there would not have been a need for any of the parties to appear.

[18] To have settled in time and remove the matter from the roll without an appearance would have been in the interest of their clients because unnecessary legal costs would have been spared. On the other hand, to come to court on the date of trial and with a blink of an eye settle the matter without any blame on the part of the clients, can only have been driven by the desire to escalate legal costs to the prejudice of client and public purse. In this case, the Road Accident Fund funded through the public purse, is involved.

[24] More than 90% of matters on our trial roll are Road Accident Fund which is funded through public purse. One would have thought the parties and or legal practitioners in dealing with these matters, will be more expedient and professional. However, the contrary appears to be the case. This is despite continuous financial woes the Funds finds itself in.

[25] Things can be done much better by the legal practitioners who are practicing in his field instead of seeing the Funds as an easy quick money making machine. That amounts to an abuse and unprofessional conduct’.

The court said the judgment of Ntombela v Road Accident Fund 2018 (4) SA 486 (GJ), Kleinhans v Road Accident Fund [2016] 3 All SA 850 (GP) and many others, can be added as reference. The court added that on average, the value of the claims settled by the RAF per month amounts to approximately R 4,1 billion. The fixed operational expenses for the fund are approximately R 800 million per month whereas it receives approximately R 3,5 billion per month from the fuel levy. The monthly shortfall is immediately apparent. The RAF’s current outstanding (unpaid) amount due to claimants approximates R 19 billion.

The court said the above tendency at one stage resulted in a situation, albeit before the commencement of the panel attorneys’ SLA referred to above, where the RAF attempted to manage its cash flow by delaying concession of merits in litigation against it. On 1 March 2019 in De Rebus, an article (‘Is the Road Accident Fund’s litigation in urgent need of review?’) appeared by the Department of Private Law at the University of Pretoria, Emeritus Professor Hennie Klopper (see www.derebus.org.za). The article gives alarming statistics. The court said as an example, in 2005 there were 185 773 claims lodged, which resulted in legal costs of R 941 million. In 2018, when there were only 92 101 claims, the legal costs had ballooned to R 8,8 million. In 2019 the legal costs had increased to R 10,6 million. The court added that Prof Klopper’s conclusion was, that, should the RAF change its litigation model and properly deal with and settle all meritorious claims expeditiously, it could save up to R 10 billion of public funds.

The RAF’s ‘new model’ consists of the intention to settle as many meritorious claims as possible within 120 days. The aim is to achieve a 98% settlement rate. The immediate aim is to target those claims already on the civil rolls from 1 June 2020 onwards. For this purpose, the RAF intends capacitating itself with an integrated claims assessment system, an additional approximately 255 employees ranging from legally qualified to other skills, which may be needed, to insource the assessment and settlement process and to mediate matters where settlement appears difficult to attain.

To achieve the last-mentioned process, the RAF has already approached the South African Medico-Legal Association (SAMLA) whereby medico-legal experts from SAMLA will assist the RAF in settling the majority of its quantum claims. A confirmatory affidavit of a well-known expert, Dr Edeling was also provided, which confirmed this. In the immediate future, the RAF will be sending teams of staff from its outlying offices to the busiest High Court Divisions to cope with the influx of files in respect of matters already set down on the trial rolls.

The RAF also recognised that not all matters can or will be settled, either at all or within the 120 days. To cater for the scenario where the RAF would still need representation in court in defence of those matters with real triable issues, the RAF will either ad hoc instruct attorneys or utilise some of the attorneys on its corporate panel (of which there are some 20, some which are also panel attorneys such as the eight applicants in the Mabunda case currently before court).  As a further resource, the RAF has approached the State Attorney, who has in principle agreed to employ attorneys dedicated to handling RAF matters at the RAF’s costs but operating within the State Attorney Act 56 of 1957 and the Legal Practice Act 28 of 2014.

Of the 84 remaining attorneys acting in terms of the extended SLA’s, 42 launched an urgent application on 4 March 2020 in the Mabunda case with extremely truncated time periods for the exchange of affidavits (the Mabunda application). The relief claimed in the Mabunda application is in two parts. In part A, the applicants therein simply claim that, pending the adjudication and finalisation of the review in part B, the RAF be ‘interdicted and restrained from implementing and/or giving effect to its notices of handover addressed to the applicants and all panel attorneys … dated 18 February 2020 and 20 February 2020 respectively’.

In part B of the Mabunda application, the applicants seek a review of the decision to demand a handover of the non-finalised files and of the ‘purported’ cancellation of the 2018 tender and setting aside of both the decision and cancellation. The Mabunda application was allocated by the Judge President of Gauteng Division to be heard as a special urgent application on 17 March 2020. At the hearing of the matter, Davis J granted the Law Society of South Africa (the LSSA) and the Black Lawyers Association (the BLA) leave to intervene as amici curiae (friends of the court) pursuant to application by them in this regard. The LSSA’s interpretation necessitated a standing down of the matter to 18 March 2020, to accommodate further papers to be filed, dealing with issues raised by them.

The RAF on 25 July 2019 directed a ‘handover letter’ to the panel attorneys with the following wording: “‘The Services Level Agreement (SLA) entered into between you and the RAF is due to expire on 25 November 2019. Pursuant to clause 14 of the SLA, you are hereby noticed of your obligation to prepare all unfinalised files in your possession for handover to the RAF”. (An attached excel spreadsheet template indicating certain required information per file as required by clause 14 was also sent. Nothing turns on the difference between the alleged expiry date of 25 November 2019 and that of 29 November 2019 as mentioned elsewhere or in respect of certain of the panel attorneys).’

The court said that counsel in the urgent applications confirmed that, on the evidence before court, the panel attorneys did nothing to comply with the notice. The panel attorneys were required to sign the addendum, should they wish their SLA were to be extended. Eighty-four of the panel attorneys signed the addenda, resulting in the validity period of their SLA’s being extended to 31 May 2020. During the investigation of alternate litigation models, the Acting CEO of the RAF met with, inter alia, the Legal Aid South Africa (who had also discovered that in-sourcing 96% of its work had considerably reduced its litigation costs), various Judge Presidents of at least three Divisions, the Legal Practice Council, Prof Klopper and the Office of the State Attorney.

The court said as part of their legal attack, the applicants attacked the cancellation of the tender on the basis of rationality. The court added that it did not wish to encroach on the jurisdiction of the court, which is to hear part B of the application by dealing with this attack. The court pointed out that it had been informed from the Bar that another application by yet another panel attorney for review of the cancellation is on the roll for hearing on 21 April 2020. The court further said it was informed that parts B of the Mabunda and Diale applications would be consolidated with that review but no one could furnish the court with particulars of the status of the matter or papers therein.

The court added that it might well be that the review will not be heard on 21 April 2020 as in the nature of these things, experience has shown that all kinds of disputes regarding the furnishing of the record, the sufficiency thereof and any number of interlocutory issues might result in the envisaged review only being dealt with or finality being reached in respect thereof at some, possibly distant date in the future. The court pointed out that this is without even considering any possible appeal process, which may follow.

The court said the applicants failed to satisfy the requirements of indicating a prima facie right in law. It added that absent any such right, there could also be no harm or perceived imminent harm against which an interim order should offer protection. The following order was made:

  • In the Mabunda case, the applicants’ claim for relief in part A of the Notice of Motion was dismissed.
  • The applicants in the Mabunda case are ordered to pay the respondent’s costs, including costs of two counsel, where employed, in respect of that application.
  • In the Diale case, the applicant’s claim for relief in part A of the Notice of Motion is dismissed.
  • In the Diale case, the applicant is ordered to pay the respondent’s costs, including the costs of two counsel, where employed, in respect of that application.
  • The applicant in the Diale case is ordered to comply with the RAF’s handover notice of 20 February 2020 and, insofar as any time period mentioned therein may already have expired, then within seven days from date of this order (which is electronically submitted to the parties). If, due to national emergency measures the said applicant is unable to comply, it is to inform the RAF electronically thereof and to furnish all possible information requested electronically, starting with matters with trial dates from 1 June 2020.
  • The LSSA and the BLA shall bear their own costs.

Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

This article was first published in De Rebus in 2020 (May) DR 22.