HOW THE FUTURE OF THIRD PARTY ACCIDENT COMPENSATIONS MIGHT LOOK LIKE IF THE ROAD ACCIDENT FUND ACT OF SOUTH AFRICA IS AMMENDED SUCCESSFULY

The acting Director General said the Act in its current form makes the scheme unsustainable. A committee member separately called for the Act to be changed so that it benefits South Africans, and objected to payouts to foreign nationals who are in the country unlawfully.

The announcement matters because the Fund is a large public liability that is paid for from the fuel levy, and any change to who can claim and how much is payable will affect claimants, their lawyers, medical providers and the fiscus.

The principal risks are constitutional challenge to any nationality or status based exclusion, litigation over transition from the old rules to the new, and weak delivery of any rehabilitation model.

The opportunities are faster dispute resolution, lower legal costs and a scheme that can pay claims on time. No draft text or date has been published, so everything below is conditional on what Cabinet eventually approves.

The briefing was a routine one on audit outcomes and annual performance plans, delivered alongside the South African National Roads Agency Limited, the Road Accident Fund and the Airports Company of South Africa.

The RAF Act content was a short part of a wider session, and the department gave no figures, draft text or timetable. Readers should therefore treat this as a signal of direction and not as a settled policy.

The foreign nationals item drew the sharpest response. Committee member Thalente Kubheka questioned why benefits should be paid to people who are in the country unlawfully, called the current approach a tax burden and asked the Minister and Director-General to change the Act so that it benefits South Africans. That framing sets up a political expectation that the bill may be asked to meet.

The questions that follow are practical. What would a cap look like and who would it bind? Can a compensation scheme lawfully distinguish between claimants on the basis of immigration status? What would a rehabilitation model cost, and who would deliver it? Anyone advising on injury claims, insurance, fleet operations or public finance needs a view on these before the draft arrives.

The RAF Act established the Road Accident Fund as a statutory third-party compensation scheme. Under section 17(1), the Fund is obliged to compensate a person for loss or damage caused by the negligent or wrongful driving of a motor vehicle, subject to the conditions in the Act. The Fund is financed mainly through the fuel levy collected by the South African Revenue Service and is a public entity subject to the Public Finance Management Act 1 of 1999.

The Act has been amended repeatedly. The Road Accident Fund Amendment Act 19 of 2005 introduced a cap on claims for loss of income and loss of support under section 17(4)(c), and it narrowed general damages to claimants who meet a "serious injury" threshold. That threshold is assessed under the Road Accident Fund Regulations, 2008, as amended, using a prescribed method of assessment. The Constitutional Court upheld the removal of the common law claim against the negligent driver in Law Society of South Africa v Minister for Transport 2011 (1) SA 400 (CC), which means the statutory scheme is the main route to compensation for most injured persons.

A move to a no fault benefit scheme was proposed in the Road Accident Benefit Scheme Bill published in 2014 and never enacted. The present amendments appear to be a narrower reform of the existing fault-based model and not a replacement of it.

Several other frameworks bear on the four areas. Disputes over claims are litigated in the High Court, where Rule 41A of the Uniform Rules of Court already requires parties to consider mediation. Contingency fee arrangements in claims are regulated by the Contingency Fees Act 66 of 1997. Claims by non-citizens engage the Bill of Rights, including sections 9, 10 and 27 of the Constitution, and in Khosa v Minister of Social Development 2004 (6) SA 505 (CC) the Constitutional Court held that excluding permanent residents from social assistance was unconstitutional. The Immigration Act 13 of 2002 and the Refugees Act 130 of 1998 define the statuses that may become relevant.

Rehabilitation raises a different set of rules, including the National Health Act 61 of 2003 and the arrangements between the Fund and private and public health providers.

The Act already contains a cap on loss of income and loss of support. Further capping could mean extending limits to other heads of damage, lowering the existing cap or removing the annual adjustment. Each option has a different legal risk. A new cap on general damages or medical costs would be tested against the section 25 property rights argument and the section 34 right of access to courts.

Courts have so far accepted limits on delictual claims where there is a rational link to a legitimate scheme purpose, and the Fund's sustainability would be the justification. A cap that bites hardest on the most seriously injured claimants would be harder to defend.

Claims by foreign nationals. This is the proposal with the greatest constitutional exposure. The Fund is a compensation scheme for harm caused by negligent driving. It is not social assistance, and that distinction will matter in court. A nationality or immigration status exclusion would raise the equality guarantee in section 9 and the rights to dignity and bodily integrity.

Section 27 rights are given to citizens and permanent residents in some respects, but the Act's purpose is closer to delictual compensation than to a social benefit. Government will need an evidence based rationale, and the cost of foreign claims relative to the total liability has not been put before the committee. Distinctions between lawful and unlawful presence, between permanent residents and temporary visitors and between asylum seekers and other migrants will each need separate justification.

Mediation and conciliation. Making alternative dispute resolution mandatory or a precondition to litigation is likely to be lawful if the process is accessible, time-limited and does not bar court access after it ends. The drafting question is the effect on prescription. If mediation suspends the running of time, claimants are protected. If it does not, delay by the Fund could extinguish claims.

Rehabilitation. Moving from lump-sum payment of future medical costs toward funded rehabilitation would require a statutory basis for the Fund to contract with providers and to set service standards. It would also have to deal with claimants who prefer to be compensated in cash.

Policy & Market Analysis

The department's stance reflects two pressures. One is fiscal, since the scheme's liabilities are a concern for the National Treasury. The other is political, as the committee exchange showed. Policymakers will have to separate the two, because a measure justified on political grounds is harder to defend in court than one justified on financial evidence

The department has confirmed that a reform of the RAF Act is close to tabling, and has named four areas. The fiscal case is clear in the Director-General's assessment that the scheme is unsustainable. The legal case is less settled, particularly for any restriction on claims by foreign nationals, which will need to meet constitutional standards that Parliament and the courts have applied firmly in earlier cases.