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[2020] ZAGPJHC 286
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M T v Road Accident Fund; H M v Road Accident Fund (37986/2018) [2020] ZAGPJHC 286; [2021] 1 All SA 285 (GJ); 2021 (2) SA 618 (GJ) (16 November 2020)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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Policy
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
Number: 37986/2018
In
the matter between:
T,
M
Plaintiff
and
ROAD
ACCIDENT
FUND
Defendant
Case
Number: 13753/2019
In
the matter between
M,
H
Plaintiff
and
ROAD
ACCIDENT
FUND
Defendant
JUDGMENT
Summary:
Settlement of RAF matters under circumstances where the RAF
unrepresented and deliberate misrepresentations made by plaintiff’s
attorneys. Parties don’t seek that settlements be made an order
of court but settlements constitutionally invalid. Payment
by RAF in
terms of settlement would constitute irregular expenditure in the
circumstances and would be ultra vires. Conduct of
legal
representatives referred to the Legal Practice Counsel; conduct of
doctors referred to Health Professions Counsel of SA;
conduct of
actuary referred to Actuarial Society of SA.
Common
cause that the RAF is trading under insolvent circumstances.
FISHER
J:
Introduction
[1]
These two cases represent a cautionary tale for the RAF and those who
rely on it – which is all South Africans and especially
those
who are made vulnerable and suffer greatly as a result of motor
vehicle accidents. This judgment deals with the reach of
courts under
circumstances where the parties have acted in concert with one
another to settle a trial action under dubious circumstances
and seek
to avoid court oversight of the settlement.
[2]
In both matters the plaintiff and defendant say that they have
settled and they are adamant that they neither need nor want
the
Court’s imprimatur. This is perplexing because it has
always been the practice in our courts that, when settlement
of
matters which are before a court ensues, the court in which the
claim was instituted is asked to make the settlement agreement
an
order of court. Indeed, it is unusual for this not to occur, in that
it allows for execution of the orders. However, both the
attorneys
for the plaintiffs, De Broglio Inc (De Broglio) and the RAF have
strenuously sought to avoid this Court’s
oversight of the
settlement agreements.
[3]
What is of most concern, is that these two cases are not isolated
instances, but are examples of a general approach which most
courts
are met with daily in their attempts at fostering and maintaining
judicial oversight in the RAF environment. These cases
expose defiant
attempts by legal representatives to avoid judicial scrutiny of
settlements entered into with the RAF under circumstances
which are
strongly suggestive of dishonesty and /or gross incompetence on the
part of those involved.
[4]
I have thus, notwithstanding that the parties are agreed that I have
no jurisdiction and seek a removal of the matters from
the roll,
asked that I be addressed on the validity of the settlements and the
legality of the RAF’s position in the matter.
Fraud
and maladministration in the RAF arena
[5]
The
Road Accident Fund (RAF) is a juristic person established by the Road
Accident Fund Act
[1]
(the RAF
Act) as amended. The RAF is a critical organ of state which provides
compulsory social insurance cover to all users of
South African
roads. The RAF Act is a social security measure which is part of the
arsenal of the State in fulfilling its constitutional
duty to protect
the security of the person of the public and in particular of victims
of road accidents.
[2]
The primary and ultimate mission of the RAF is to render a fair,
self-funding, viable, and effective social security service to
victims of motor accidents.
[3]
[6]
The
main source of income received by the Road Accident Fund is a levy
that is based on fuel sales (the RAF Fuel Levy)
[4]
the RAF Fuel Levy is, in effect, a compulsory contribution by the
public to social security benefits. The amount of the Fuel Levy
collected annually is more than R 40 billion
[5]
.
[7]
A
central power of the RAF is ‘the investigation and settling,
subject to this Act, of claims arising from loss or damage
caused by
the driving of a motor vehicle.
[6]
[8]
Thus, it stands to reason, that if there is no loss or damage, the
RAF does not have the power to settle a claim and if
it
purports to do so, this would be
ultra vires.
[9]
Since May 2020, RAF cases which are currently in their various
stages of litigation before the courts have been relieved
of
external legal representation in the form of the firms of attorneys
who ply their trade (some exclusively) in acting for
the RAF in
personal injury cases. The new policy has been approved by both the
Board of the RAF and the Minister of Transport (the
Minister).
Apparently, it is part of a drive to settle trial matters
rather than run them. The premise is that this will
save legal costs.
[10]
Whilst this may seem to be a cost cutting and thus money saving
measure, it has, in my view and experience, rendered the RAF
system,
which is already on the verge of total collapse, even more exposed
and vulnerable to malfeasance and incompetence.
[11]
The answering affidavit of Collins Phutane Letsoalo, the
current Acting Chief Executive Officer (CEO) of
the RAF,
recently filed in case number: 17518/2020, was placed before me. This
was an application by firms of erstwhile RAF panel
attorneys to
review and set aside the decision of the RAF to dispense with
services of its panel attorneys with effect from
1 June 2020. In such
affidavit Mr Letsoalo said the following in explanation for the move:
‘
the
current system is fraught with irregularities, fraud and corruption.
It involves panel attorneys, plaintiffs' attorneys, the
Fund's own
claims handlers and officials in the finance department. Some firms
of attorneys receive disproportionately more files
than other firms.
This is not supposed to happen because the Fund has a vendor rotation
system ("VRS") in terms of which
firms are allocated files
on a rotational basis, to ensure equal distribution of work.
Fraudulent claims are settled by some of
the panel attorneys without
a proper investigation the quantum of claims exaggerated in collusion
between the panel and plaintiffs'
attorneys. Some of the attorneys
belonging to the panel attorneys charge the Fund multiple times for
appearing in Court on a single
day. They also falsify invoices
rendered by medical experts. All this has come at a huge cost to the
Fund.’
[12]
The
most recent available Annual Report of the RAF - being for the year
ending March 2019 (the Annual Report) refers to the fact
that there
were, during that year, 560 attachments of RAF bank accounts. Simply
put, the RAF is unable to pay its debts when they
fall due and is
thus bankrupt.
[7]
[13]
Recent attempts have been made to change what is universally deplored
as an unjust and inefficient use of State funds. The
Road Accident
Benefit Scheme (RABS) Bill (B17 2017) has been introduced by
the Minister in an attempt to change the existing
system by
establishing a Road Accident Benefit Scheme Administrator to
administer and implement a scheme which is not based on
fault and
which, inter alia, allows for income support to be paid
monthly rather than in large actuarially calculated
lumps sums and
for benefit payments to cease once a beneficiary returns to work or
dies. General damages claims are also to be
limited in terms thereof
as are claims by persons who are not South African citizens. I make
no comment on the benefits or otherwise
of RABS, save to state that
the present system is unworkable, unsustainable and corrupt and that
a viable alternative must be found
if the RAF is to perform its
statutory function. Recent news reports suggest that the approval by
Parliament of the Bill is currently
stymied in Parliament.
The
Courts as bulwark against corruption
[14]
One of the main bulwarks against venality and incompetence in public
bodies is judicial oversight. It must be recognised that,
by far the
largest percentage of litigation in most courts in the country (in
some, more than 90%), is undertaken against the RAF.
[15]
The courts have, for years, worked tirelessly in their attempts to
stem the tide of fraud in the RAF arena, however the task
has always
been and continues to be an intractable one. The approach of
attorneys and the RAF seeking to avoid the court’s
jurisdiction
by forgoing orders of court in settled matters is just the latest
gambit. It comes as part of backlash to concerted
attempts by the
judiciary to enhance its oversight role where pubic funds are at
stake in personal injury claims. This area is
clearly vulnerable to
corruption in that people are not litigating with their own money but
with a seemingly endless supply of
State funds. This can tend make
them less vigilant and more careless and there is broadened scope for
malfeasance.
[16]
The RAF is
sui generis
in relation to its funding model. It is
a constantly and automatically renewable fund. The RAF is
regarded by National Treasury
as the second largest contingent
liability after Eskom. The large sums flowing into the RAF make it an
attractive target for fraudsters
in form of syndicates and
individuals. The Annual Report recounts that for the year
ending 2019 ‘a large
number of attorneys have been struck
off the roll, doctors and SAPS officials arrested, and several touts
sentenced for fraud related
matters’. It reports further that
‘Close on 2,100 fraudulent claims to the value of R1.45 billion
were identified before
payments were made and nine people were
arrested for fraud against the RAF.’
[17]
Whilst it is unsurprising that plaintiffs’ attorneys should opt
for less judicial scrutiny of their settlements, it is
difficult to
understand why the RAF should seek to avoid such oversight. It
currently seems that, as fast as the Judiciary puts
in place measures
in an attempt to stem the tide of corruption in this field, the more
moves are contrived by plaintiff’s
attorneys and the RAF to
circumvent these attempts. This is obviously of greater concern
now that the RAF is unrepresented
by attorneys as there is now even
more scope for malfeasance and manipulation. This unprotected
position that these public funds
find themselves in has obviously not
escaped those who wish to exploit the Fund. These cases are but two
instances of widespread
exploitation.
[18]
The fact that the firm, De Broglio happens to be the attorney
representing the plaintiff in both the cases before me, whilst
more
than co-incidental in that it shows a pattern of doing business,
should not be taken as an indication that De Broglio stands
alone in
its approach. In my experience, similar tactics are used by attorneys
across the board each day in our courts. And attorneys
learn tactics
from each other. Whilst there are many attorneys in this field who
behave in a manner which embraces openness and
honesty, there is, in
my experience, a trend towards avoiding transparency and court
oversight and this has intensified in the
wake of the decision to
stop external legal representation of the RAF and the drive to settle
all matters, seemingly at any cost.
[19]
I move now to dealing with steps taken by the judiciary in an attempt
to enhance transparency in the process.
Recent
steps taken to put in place controls and to enhance scrutiny by the
judiciary
[20]
On 05 July 2019 the Judge President of the Gauteng Division, Dunstan
Mlambo (the JP) issued a Practice Directive 2 of 2019
which was aimed
at regulating trial actions for damages against the State, including
the RAF (Practice Directive 2).
[21]
A new daily Case Management Court was set up pursuant to this
directive to provide for a process which would allow for judges
to
manage cases more closely before certifying them trial ready.
Practice Directive 2 was carefully crafted to allow for
the Case
Management Court to be alerted to any problems or inconsistencies
including those between the expert forensic reports
filed and the
pleaded claim. The benefit to the plaintiff’s in this matter
was that they were provided with machinery to
compel the Defendant to
co-operate in trial preparation and compliance in moving the matters
forward. The plaintiff was often hamstrung
by the dilatory conduct of
the RAF in these matters and the Directive sought to alleviate this
situation by allowing for the closer
case management of cases by a
judge. A new Trial Interlocutory Court with enhanced resources
was also set up to complement
the Case Management scheme so that
court orders for non-compliance could be obtained more expeditiously.
[22]
On 02 October 2019, the JP issued Practice Directive 2.1 (Practice
Directive 2.1) directed specifically at settlement agreements
which
had been identified by the courts as a vulnerable area where
practical oversight by the courts was needed in that vast amounts
of
public funds were at stake and no evidence was led. Paragraphs 2 and
3 of Practice Directive 2.1 reads as follows:
“
Every
settlement/consent draft order presented [should] be interrogated by
a Judge who is requested to make the settlement/consent
draft order
to determine whether or not the circumstances upon which order is
premised are justified in relation to the law, the
facts, and the
expert reports upon which they are based.
Because
no evidence is adduced under oath, as might have been presented on
the trial, the Court may further require that the submissions
relied
upon should be confirmed by affidavit or oral evidence as more fully
stipulated hereunder.”
[23]
The powers and function of the RAF have been dealt with above. It is
helpful to set out a description of the other role players
- i.e
.
the main protagonists- in any claim in respect of which the
plaintiff has filed a summons and the RAF its plea and
possible
counterclaim. This will assist in understanding how the respective
rights and duties operate within the process.
Dramatis
Personae
[24]
The plaintiff
- the plaintiff is the person who has
suffered a loss as a result of the motor accident for which he or she
seeks to be compensated.
Plaintiffs who have suffered a loss which
they believe was due to the fault of the driver/owner of the
insured motor vehicle
( the insured driver) will either seek
compensation directly from the RAF or approach an attorney for
assistance. Many attorneys
advertise themselves as experts in the
field of RAF and personal injury claims. Some survive exclusively on
such custom.
De Broglio is one of the larger of such firms. On
the other end of the scale there are touts who devote themselves to
sourcing
potential clients for firms. They can often be found in
hospitals and mortuaries and have contacts who are ambulance drivers,
paramedics,
and tow-truck drivers. Even the police can be persuaded
to be of assistance in the furnishing information. It hardly needs to
be
said that information of this nature is furnished in exchange for
cash. All that is needed to make a claim is for a collision to
have
occurred and some evidence of injury. The investigations leading to
the construction of the claim proceed from these facts.
[25]
The
Loss
[8]
-
can
take the form of the loss occasioned to those who were dependants of
a person who has died as a result of an accident or a claim
by the
person injured himself.
[26]
The loss falls into two types. The first is known as special damages.
This is actual patrimonial loss and generally takes the
form of loss
suffered by having to pay for medical treatment; loss suffered due to
the fact that the claimant is not able to carry
out his employment
obligations (past loss of earnings) and loss that is suffered as a
result of the fact that the plaintiff has
suffered an incapacitation
which is likely to affect his ability to earn an income in the future
(loss of earning capacity). The
second is known as general damages
and its purpose is to compensate the plaintiff for damages which
cannot quantified with reference
to actual patrimonial loss. The
object of such damages is to compensate the plaintiff for damages
which, although non- patrimonial
in nature, are nonetheless
considered to be worthy of compensation – such as pain,
suffering, discomfort, loss of amenities
of life, disfigurement.
There are times when the award of damages for loss of amenities or
discomfort may dovetail with each other
– such as where the
doing of one’s job is not impossible but is made more arduous
and requiring of more fortitude by
the injury. One can discern from
this that a court must exercise some wisdom in determining these
matters – with the help
of evidence of course.
[27]
For
accidents that occurred after 1 August 2008, general damages are only
paid if a serious injury has been sustained, which is
in line with
the RAF Amendment Act
[9]
(the
Amendment Act).
T
he Amendment
Act amended the RAF Act to limit the RAF's liability for compensation
in respect of claims for general damages to
instances where a
"serious injury" has been sustained.
[10]
A medical practitioner has to determine whether or not the claimant
has suffered a serious injury by undertaking an assessment
prescribed
in the RAF Regulations. The practitioner performing the injury
assessment has to prepare an RAF 4 report which
deals with the
assessment of the injury in terms of the
American
Medical Association's Guides to the Evaluation of Permanent
Impairment
(
AMA
Guides
). If
the injury is found to have resulted in 30% or more the whole person
impairment (WPI) according to the methodology provided
for in the
AMA
Guides,
the
injury should be assessed as serious.
[11]
[28]
I
f
the evaluation is that the 30% of WPI cannot be reached,
non-patrimonial loss may still be claimed if the injuries fall within
the “narrative test”, namely (a) resulting in a serious
long-term impairment or loss of a body function; (b) constituting
permanent serious disfigurement; (c) resulting in severe long-term
mental or severe long-term behavioural disturbance or disorder;
or
(d) resulting in the loss of a foetus. A plaintiff may use either of
the two tests to establish serious injury and in such a
manner
qualify for compensation for non-patrimonial loss.
[29]
A
medical practitioner must complete and submit a serious-injury
assessment report on the RAF. If the RAF is not satisfied
that
the injury has been correctly assessed it must reject the
serious-injury assessment report within 60 days and furnish reasons
for the rejection; or direct that the third party submit
himself or herself, at the cost of the Fund, to a further assessment.
Thereafter, the RAF must either accept the further assessment or
dispute the further assessment within 90 days. An Appeal Tribunal,
consisting of three independent medical practitioners, has been
created to hear these disputes.
[12]
[30]
The
composition of the compensation portion of claims as it is set out in
the Annual Report, however, indicates that a major component
of
claims that the RAF pays out (in cash) is in respect of general
damages and loss of amenities of life.
[13]
This is an area where there is much scope for misrepresentation of
the true position. I will come to this point again with
reference to
the facts of these cases.
[31]
The plaintiff’s attorney
- the attorney (or the firm-
often represented by a team of attorneys) are the recipients of the
plaintiff’s custom as client.
The financial relationship
proceeds on the understanding that if the plaintiff does not succeed
in his or her claim she will not
have to pay for the services of the
attorney but if he/she does succeed, even partially, the attorney
will be paid his attorney
client fee from the proceeds received from
the RAF. By law, it should work out that the attorney will take
fees in the region
of 25% of the capital amount received. In the
Annual Report it was estimated that as much as 26% (28% incl.
VAT) of all claims
disbursements (excluding direct claims) processed
by the RAF are paid to plaintiffs’ attorneys as opposed to
claimants. The
attorney thus has an incentive from a personal point
of view as well as that of serving the interests of his client: the
bigger
the settlement the bigger the fee. The clients are, as a
rule, asked to sign an agreement with the attorney which deals
inter
alia
, with how the fees will be earned in accordance with the
success attained.
[32]
The
RAF’s (erstwhile) attorney -
The
RAF is a national public entity listed in Schedule 3A of the
PFMA
[14]
.
The RAF, as part of its function under the PFMA, appointed a panel of
attorneys by way of public tender which panel it drew on
for the
appointment of attorneys to any given case. As I have said, since May
2020 the mandate of these attorneys in respect of
the matters that
they are dealing with has terminated and the RAF is currently not
represented in actions before the courts. This
has had the effect
that the personnel who are dealing with the actions have been called
upon to manage same without the assistance
of a firm of attorneys –
and all the resources that this brings, including advice and
administrative assistance. Of course
this purported cost saving comes
at a price. The effect of the RAF being unrepresented includes the
inability to run trials that
are set down for hearing and to deal
with interlocutory applications and other matters preparatory to
trial. I will say more on
this later.
[33]
I was informed by Mr Lance Johnstone, a Senior Litigation Manager of
the RAF who appeared at my request to deal with the T
case, that
there had been a general instruction from superiors in the RAF to
settle all trials. It seems that this may be preparatory
to a new
regime which is hoped for in the form of the RABS. However, as these
cases show, such an approach, if not properly managed,
is a recipe
for abuse of the Courts’ process, the provisions of the RAF
Act, the PFMA and ultimately of the Constitutional
prescripts to
which the RAF and those that serve and interact with it are bound.
[34]
The South African Police Services-
Every motor vehicle road
accident is by law required to be reported to the police. The
police have a special form which is
completed by the officer
receiving the report of the accident. This is usually supplemented
with further investigation depending
on the severity of the accident
in relation to casualties. The form provides fields for manuscript
completion and so elicits salient
information relating to the
incident.
[35]
Hospitals and Clinics-
The medical facilities which
attend to victims of motor accidents are enjoined to keep records in
relation to the nature and extent
of the injuries and the treatment,
and investigations undertaken in relation thereto. These records are
objective evidence and
are relied on by the medico legal experts.
[36]
The medico-legal experts
- From a general perspective in this
field, opinion evidence in reports and otherwise is often framed in a
manner which is tendentious
to either one or the other side’s
position. Experts often work exclusively for plaintiffs or for the
defendant. This has
the potential to cause a particular bent and
often yields diametrically opposed opinions which arise from the same
injuries. Furthermore,
the experts are employed on the basis that
ultimately their fees will be paid by the RAF in the event of an even
partially successful
claim. I have no doubt that many experts operate
on the basis that if the RAF is not ultimately ordered to pay their
costs they
will not get paid.
[37]
In
the United Kingdom, the conduct of expert witnesses was recently
scrutinized in the landmark case of
Jones
v Kaney
[15]
,
which resulted in the expert’s immunity from being sued for
professional negligence being abolished by the Supreme Court.
The
possibility that a South African Court may follow this approach
would, no doubt, have a chastening effect on experts in our
courts.
[16]
[38]
Of particular pre-eminence in the expert coterie is the industrial
psychologist. The task of the industrial psychologist is
to work
closely with the other experts in order to set up probable scenarios
as to how the injuries as identified and reported
on by the other
experts are likely to affect the plaintiff in the workplace. By far
the largest claims are those for loss
of earning capacity. It is in
this realm of suppositions, projections and contingencies that there
should be an assessment by the
court of how the individual plaintiff
should be compensated for his or her loss, accepting the opinions of
the experts who are
qualified in the particular field such as
orthopaedic surgeons and neurologists. These experts are of
importance in the enquiry
as by far the most common injuries in motor
accidents are broken bones and brain injuries. In the case of more
obvious injuries,
such as coma, broken limbs or open wounds, which
have received emergency treatment in hospitals pursuant to the
accident and which
are thus usually a matter of record, a court will
more readily accept that the injuries were sustained in the accident
and the
RAF will generally admit this. It is in cases where the
injuries relied on are not so obvious or so obviously caused by the
accident
that more care is required as to this inquiry and more
reliance is placed on the expert opinions in order to establish a
causal
nexus between injuries and loss.
[39]
In
Lee
v Minister of Correctional Services
[17]
(per Nkabinde J for the majority) recognised that the ‘but for’
(or
sine
qua non
)
test as stated in
International
Shipping Co (Pty) Ltd v Bentley
[18]
was the most frequently employed theory of causation but found that
it was not always satisfactory when determining whether a specific
omission caused a certain consequence. In finding that there was a
need for flexibility in the causation assessment
[19]
she had the following to say:
‘
Indeed
there is no magic formula by which one can generally establish a
causal nexus. The existence of the nexus will be dependent
on the
facts of a particular case’.
[40]
Nugent
JA’s assessment as to causation in
Minister
of Safety and Security v Van Duivenboden
[20]
is also apposite here. He stated as follows:
‘
A
plaintiff is not required to establish the causal link with
certainty, but only to establish that the wrongful conduct was
probably
a cause of the loss, which calls for a sensible
retrospective analysis of what would probably have occurred, based
upon the evidence
and what can be expected to occur in the ordinary
course of human affairs rather than metaphysics.’
[21]
[41]
It is only once the causation (both in the sense that the injury was
caused by the accident and that these injuries resulted
in the
sequelae contended for) has been established by the plaintiff that
the evaluation of the amount to be awarded for the plaintiff’s
loss can ensue. If causation is not established the enquiry ends and
the plaintiff must fail.
[42]
However,
the inquiry is not always clear-cut. The assessment described
by Colman J in
Burger
v Union National South British Insurance
Company
[22]
is instructive as to the application of the inquiry to be
undertaken by a court in assessing damages:
‘
It
was pressed upon me that, as the burden of proof was on the
plaintiff, it would be for her to prove the effects of the collision,
and that she was entitled to compensation only for those effects
which she proved. In so far as that submission relates to pure
questions of causation, I accept it, as other Courts have done in
such cases as Ocean Accident and Guarantee Corporation Ltd v
Koch
1963 (4) SA 147
(AD). It is on that basis that I exclude from
consideration the black-outs, which have not been shown to my
satisfaction to be
causally related to the collision. I disregard for
the same reason the plaintiff’s theory or suggestion that the
collision
was the primary cause, or a cause, of her matrimonial
troubles. I do not think, however, where the available evidence
established
a likelihood of some fact, situation or event as a
consequence of the collision which is incapable of quantification
within narrow
limits, that I am obliged, because the onus is on the
plaintiff, to act on the possibility least favourable to her.
Causation is
one thing and quantification is another, although I
readily concede that it is not always possible to distinguish clearly
between
them in cases like the present one. It has never, within the
range of my knowledge and experience, been the approach of our
Courts,
when charged with the assessment of damages, to resolve by an
application of the burden of proof such uncertainties as I have
referred
to. I am not dealing with a case in which the plaintiff
could have called evidence to remove the uncertainty, but neglected
to
do so. I am referring to cases like Turkstra Ltd v Richards
1926
TPD 276
, in which the plaintiff has laid before the Court such
evidence as was available, but that evidence has necessarily failed
to remove
uncertainties with regard to matters bearing upon the
quantum of damage. The Court, in such a case, does the best it can
with the
material available. If it can do no better, it makes the
‘informed guess’ referred to by Holmes JA in Anthony and
Another
v Cape Town Municipality
1967 (4) SA 445
(AD).’
[43]
The
expert witnesses are enjoined by court directive and general
procedure to meet and see if they can find common ground on salient
aspects of the matter. They are expected to prepare and sign what is
known as a joint minute. In terms of Practice Directive 2
the
parties’ attorneys are required to jointly, prepare and sign a
document, styled SUBMISSIONS IN SUPPORT OF SETTLEMENT/CONSENT
DRAFT
ORDER in which the facts and opinions upon which the agreements are
premised, are set out, appropriately cross-referenced
to the source
documentation relied upon, and the connection demonstrated between
the facts and the conclusions of the experts
[23]
.
[44]
Whilst a court is not bound by the agreements reached by the experts
and they are thus not conclusive of any issue, the importance
of
agreement on various points hardly needs be emphasised.
[45]
The Assessor-
Assessors are appointed by the RAF to conduct
investigations and fact checks into the claims. They verify matters
such as employment
details, familial connections as to dependants,
eye-witness accounts of the accident and other matters which
require verification
in the trial preparation and settlement
process. Assessors fees are, for the most part, disbursements
of the RAF and the
fact that expenditure is often curbed due to lack
of funds can lead to a failure to investigate properly and a reliance
on the
facts as stated by the plaintiff in making the claim. It is
not unusual for the RAF to have no version as to the facts of an
accident
to put forward at trial because no investigation has been
undertaken, even at a most fundamental level.
[46]
The Claims Handler/s and other internal RAF checks and balances-
the RAF has within its structures checks and balances designed to
facilitate investigations by the RAF into the prospects
of success in cases, with a view to its further prosecution or
settlement. There is generally one or more Claims Handler dealing
with a case. I am not privy to the internal workings of the RAF
infrastructure however it is clear that the claims handlers are
called upon to make decisions and recommendations as to the conduct
of the matters and particularly whether the RAF should settle
on
proposed terms. It seems that the larger the amount involved, the
more senior the officials called upon to approve settlements.
However, the command chain of officials vetting any
settlement is only as strong as its weakest member and the team
members rely on each other for information and especially for
recommendations as to settlement. As I have said, the claims handlers
could previously have relied on the expertise of the RAF’s
attorneys, but this avenue is now closed to them.
[47]
The cases under examination are examples of how the system can fail
if proper scrutiny is not applied. The reveal also that
the RAF is
dependent, to a large extent, on the motivations as to settlement of
plaintiff’s attorneys. These RAF officials
can be forgiven for
expecting plaintiff’s attorneys to furnish them with facts as
to the injuries and prospects which, at
very least, accord with the
evidence and which are not false. This is true also of a court called
upon to approve a settlement.
Whilst it is appreciated that a
plaintiff’s attorney should enter a negotiation with the RAF
with the aim of maximising the
amount settled on, this should not to
be achieved by way of chicanery.
[48]
The Actuary –
The parties
routinely seek to assist the court in its assessment of the
appropriate amount payable by resort to the
expertise of an actuary.
Actuaries rely on look-up tables which are produced with reference to
statistics. Such statistics
are derived,
inter alia,
from
surveys and studies done locally and internationally in order to
establish norms, representativeness, and means. From these
surveys
and studies, baseline predictions as to the likely earning capacity
of individuals in situations comparable to that of
the plaintiff are
set. These baseline predictions are then applied to a
plaintiff’s position using various assumptions
and scenarios
which should obviously have some foundation in fact and reality.
[49]
The general approach of the actuary is to posit the plaintiff, as she
is proven to have been in her uninjured state and then
to apply
assumptions ( generally obtained from the industrial psychologists )
as to her state with the proven injuries and their
sequela. The
deficits which arise between these scenarios (if any) are then
translated with reference to the various baseline means
and norms
used. These exercises are designed with the aim of suggesting the
various types of employment which would hypothetically
be available
to the plaintiff both pre and post morbidity. The loss is calculated
as the difference in earnings derived between
the pre- accident or
pre morbid state and post- accident or post morbid state.
In this exercise, uncertainty as to
the departure from the norms,
such as early death, the unemployment rate, illness, marriage, other
accidents, and other factors
unconnected with the plaintiff’s
injuries which would be likely, in the view of the court, to have a
bearing both on the
established baseline used by the actuary and on
the manner in which the plaintiff, given his particular
circumstances, would fare
as compared the established norm are dealt
with by way of “contingency” allowances. These are
applied by the court
dealing with the case in order to adjust the
loss to reflect as closely as possible to real circumstances of the
plaintiff. This
is a delicate exercise which is an important
judicial function.
[50]
The report of the industrial psychologists is pivotal to the
actuarial calculation. This is because the actuarial calculation
must
be performed on an accepted scenario as to income, employment,
employment prospects, education, training, experience and other
factors which allow for an assessment of the likely career path pre–
and post the injuries.
[51]
It thus stands to reason that, if the base scenarios adopted by the
actuary are fallacious, the actuarial calculation is of
no value to a
court or to the RAF officials engaged in negotiating a settlement.
If the income at date of the accident is
over-stated even by a few
thousand rand, this will lead to a significant inflation of the
proposed loss in that the calculation
is exponential. Thus for
example the difference between an income of R 5000 per month as
opposed to one of R7000 is calculated
over a period of 15 years is
R610 000 extra on the claim. Thus even a relatively modest claim
is easily and significantly
inflated by means of this ploy.
[52]
A further variable is the plaintiff’s career prospects - for
example the probability of promotion pre and post-accident.
Often
suggestions as to the likelihood of promotion and furtherment of
education to this end are without any evidential foundation
and
wholly improbable. Put simply, if the scenario presented to the
actuary is contrived, the result will be significantly
inaccurate.
[53]
The
locus
classicus
as
to the value of actuarial expert opinion in assessing damages
is
Southern
Insurance Association Ltd v Bailey
NO
[24]
where
Nicholas JA said the following :
‘
Where
the method of actuarial computation is adopted in assessing damages
for loss of earning capacity, it does not mean that the
trial Judge
is ‘tied down by inexorable actuarial calculations’. He
has ‘a large discretion to award what he
considers right’.
One of the elements in exercising that discretion is the making of a
discount for ‘contingencies’
or differently put the
‘vicissitudes of life’. These include such matters as the
possibility that the plaintiff may
in the result have less than a
‘normal’ expectation of life; and that he may experience
periods of unemployment by
reason of incapacity due to illness or
accident, or to labour unrest or general economic conditions. The
amount of any discount
may vary, depending upon the circumstances of
the case’
[25]
[54]
Where an official of the RAF is called on to perform this delicate
judicial assessment, one would hope that this would occur
on the
proper facts and untrammelled by the plaintiffs’ attorneys
machinations. However, this is not the case here.
[55]
The Court -
As I have said, the court must hear the trial if
it runs and generally is called on to make an order of any
settlement.
[56]
It is against this background that the treatment and handling of the
two cases before me must be viewed.
The
T Case
[57]
When the trial action commenced before me on 12 October 2020 on
the TEAMS virtual platform, I was told by counsel
for the
plaintiff, Mr van den Barselaar that the matter was ‘almost
settled’, that five signatures had had to be obtained
in
relation to the offer to be made by the RAF and that it was his
information that much headway had been made as to the outstanding
approvals.
[58]
The litigation officer/claims handler handling the case, Mr Ngoaka
Nkgapela confirmed this at the hearing telephonically via
the
telephone of Mr van den Barselaar as he was not on the TEAMS
link. I thus, at the instance of Mr van den Barselaar,
allowed
the matter to stand down to the following morning (Tuesday 13
October). Mr van den Barselaar made it clear that he was
fully
prepared to conduct the trial if the matter did not settle and that
he would ask for a default judgment.
[59]
The settlement negotiations had been initiated
a
week before the trial in terms of a written settlement
proposal contained in an email dated 06 October 2020 ( the
Proposal) signed by Ms Zandalee de Swart of De Broglio and
addressed to Mr
Nkgapela. In terms of the Propsal the
plaintiff’s attorneys
offered to settle at
an amount in excess of R 3.3 million. The Proposal is important as to
the function that it was meant to play
in the determination of the
settlement. It presented not only an offer but also a detailed set of
representations as to fact.
[60]
The next morning I was duly addressed by Mr van den Barselaar, who
expressed that he was ‘disappointed’ as the
offer which
had been forthcoming from the RAF was not at the figure which was
being discussed the previous day with Mr Nkgapela.
In fact, he said,
the offer was ‘less than half’ of that amount. He asked
that I allow the matter to stand down for
what I assumed was a
further attempt at settlement. He offered that it would be
regrettable if the plaintiff had to take
a default judgment against
the RAF – given its present state of being unrepresented.
[61]
I had taken the opportunity presented by the delay in proceedings to
read the pleadings, expert reports, and actuarial report
and I had
some serious concerns. These included that there did not seem to be a
compelling case for the plaintiff – even
on her own experts’
reports - and the fact that a significant amendment to the
pleadings had been effected by the filing
on Caselines of amended
pages a matter of days before the hearing and pursuant to a
notice delivered electronically some three
weeks before the hearing.
This amendment sought to inflate the quantum claimed
from R1 080 600 in
the original pleadings to R
3 348 530 in the ‘newly amended’
pleadings. In the normal course, any
self-respecting attorney for the
RAF would have objected to a notice of intention to amend which was
purportedly filed three weeks
before trial or at least would have
sought a postponement to deal with the amendment.
[62]
It is important that the Trial Certification process had been
undertaken on the basis of the relatively modest
original
claims on the various heads of damages (the loss of earning capacity,
for example, was initially only R 285 000, but
after
amendment it had swelled to R 1 639 777).
[63]
The case involves a claim by an office assistant who had been earning
a salary of R 5500, she was 45 years old at the time
of the accident
and is currently 49 years old. Her injuries are orthopaedic and, by
all accounts, completely healed. There are
only anecdotal reports of
pain especially on exertion.
[64]
In the joint minutes of the orthopaedic surgeons it is agreed that
the plaintiff does not qualify for general damages. This
is
definitively the end of any claim for general damages or, at least,
it should be.
[65]
The plaintiff did not return to work after the accident. She
indicated variously to experts who assessed her position for the
trial, including her own witnesses, that she was retrenched or
replaced or dismissed on her return to her employment. An objective
corroboration undertaken by the RAF’s Industrial Psychologist
reveals, however, that she was neither replaced, retrenched
nor
dismissed and that she would have been given her job back if she had
wanted it. In fact, the objective evidence suggests that
she
resigned.
[66]
I put some of the more material concerns to Mr van den Barselaar and
indicated that I would require that I be addressed as
to the quantum
and perhaps he would like to lead evidence, if indeed he was of
a mind to move for a default judgment. It was
submitted to me that he
would argue that I should have no regard to the RAF’s medico –
legal reports as they were not
on oath. De Broglio, on the other
hand, had hastily filed confirmatory affidavits of its experts some
days before trial. Having
heard my concerns about the case, Mr van
den Barselaar sought to stand the matter down for further
instruction.
[67]
On his return a short time later he had done a complete turnabout. He
said that he had now advised his client to accept the
offer of the
RAF and that ‘sanity had prevailed’. As I have said, he
had told me that she was previously adamant that
she would only
settle for the amount initially discussed ( i.e. one that was double
the amount of the settlement offer now made).
He said that he
now believed that it was a fair offer and that he had made a mistake
as to the quantum involved previously.
[68]
I thus asked that the draft settlement order be drawn up for my
approval so that I could vet the agreement and give an order.
Mr
van den Barselaar submitted that the settlement did not require the
Court’s approval as no order was being sought.
I was informed
that the new policy for De Broglio and the RAF was to settle trial
matters between themselves and not require
a court order as per the
JP’s Practice Directive re Settlement Procedure. I was told
that this was ‘to save costs’
– but this does not
make sense in relation these matters as I was available and fully
prepared to vet the settlement agreement
and no further costs would
have been incurred by my doing so.
[69]
It is clear to me that this new approach is more about avoiding court
scrutiny than it is about saving costs.
[70]
The amount ultimately settled for was R 1 300 000, but
a lot more was proposed and motivated for on the basis
of the
Proposal. I will say more about this later. There was no doubt that
the amount settled on was significantly inflated.
[71]
I indicated that I would not relinquish my oversight in the matter
and that, in the circumstances, I was, at very least, entitled
to
enquire into the validity or otherwise of the settlement. I thus
asked that the Mr Nkgapela and Mr Johnstone, both of whom had
signed
off on the settlement to appear and confirm the settlement
agreement.
[72]
On 14 October 2020, Messrs Johnstone and Nkgapela of the RAF duly
appeared on TEAMS according to my direction. They confirmed
that the matter had indeed become settled.
[73]
Mr Johnstone told me at the hearing that he had been given a very
short time to vet the matter for approval (only hours) but
did his
best because the matter was set down for hearing. He confirmed that
he agreed that the Proposal by De Broglio had been
significantly
inflated. He said he had thus reduced it. He indicated that he had to
approve many settlement offers in a day and
that he relied on his
staff and the plaintiff’s legal representatives for accurate
information in relation thereto.
[74]
There can, in my view, be no doubt that Mr van den Barselaar and Ms
de Swart were both well aware of the force of the contents
of the
Proposal in the context of the settlement engagement and the
representations made therein.
[75]
It is apposite, at this stage, to highlight some of the more material
irregularities in this matter.
[76]
As I have said, Mrs T’s job involved, in the main, making tea
and coffee for staff members, some light cleaning
and keeping
stock of refreshments and cleaning products for a salary of R 5
500.
[77]
She completed Grade 9 at school. She reported to the industrial
psychologists that she was however now studying further to
obtain her
grades 10, 11 and 12. However, notwithstanding that the Industrial
psychologists both pertinently note that there is
no proof of these
further studies, none was ever put forward. A career
progression is, however, squarely relied on in the
actuarial
calculation based on these alleged studies.
[78]
The injuries contended for on behalf of Mrs T going into the hearing
were a fractured pelvis and a ruptured bladder.
These were repeated
in the Proposal and added to these was an injured knee. The
plaintiff’s expert urologist however confirmed
that there
was no case for a ruptured bladder. There had been blood in Ms T’s
urine after the accident but this resolved
with bedrest. Some
obstruction and congenital weakness in the bladder was established by
means of a cystogram ( scan of the bladder).
There was no evidence of
a knee injury, other than Ms T’s anecdotal account.
[79]
The injury to the pelvis, being orthopaedic, meant that the main
expert witnesses for the parties’ were their orthopaedic
surgeons. Both doctors expressed that there were anecdotal complaints
of pain by Mrs T. These, if true, would have an impact of
her work as
an office administrator. However both orthopaedic surgeons stated
emphatically in their joint minute that, in their
opinion, Mrs T did
not qualify for general damages. This indicates that they did not
regard the injury as serious for these purposes.
[80]
The plaintiff’s representatives however ignored this and made
their bid for settlement to the RAF officials based on
a report of Dr
Kevin Scheepers, a general practitioner. Dr Scheepers’ report,
on the face of it, constitutes a gross overstatement
of the injuries.
His ‘findings’ are also completely at odds with the
plaintiffs own urologist and, to a large extent,
with the
orthopaedic experts. There is no basis on which the
conflicting report of Dr Scheepers, who is not specialist
in urology
or orthopaedics can be relied on to establish a proper quantum. The
report of the plaintiff’s orthopaedic surgeon
Dr Hans H
Volkersz appears to be based, for the most part, on the plaintiff’s
anecdotal accounts of pain. He also ventures
his opinion in relation
to her allegedly painful knee – which is not related to the
accident. His report does concede however
that at the time of the
accident x-rays of the knee were normal.
[81]
In the joint minute prepared by the orthopaedic surgeons ( Dr Bogatsu
being the RAF’s expert witness) the following is
stated in
relation to the effects of the injuries on the plaintiff’s
future earning capacity: ‘Both doctors note
that she
never returned to work following this particular accident, Dr Bogatsu
feels that she is currently not incapacitated. Dr
Volkersz is of the
opinion that she is not able to stand for long, walk far or sit for
any length of time, severely compromising
her possible
employability’. And most importantly, ‘both doctors defer
to the opinion of an occupational therapist.’
[82]
Reference to the report of the plaintiffs occupational therapist
however shows inconsistency with the report of Dr Volkersz.
In
his report, Dr Volkersz indicated that Ms T walked with a ‘normal
gait’ whereas the plaintiff’s occupational
therapist
reported that ‘The claimant ambulated at a self-selected slow
pace despite requests to increase her pace. She ambulated
with a
deviation in her gait cycle (i.e. a limp in her left lower limb and
her steps were unequal in length). She held her right
limb stiff at
her side when walking.’
[83]
As I have said, a further difficulty with the plaintiff’s case
is that there is an independent collateral source from
the plaintiffs
erstwhile employers which is to the effect that her version that she
was dismissed because of her inability to work
due to the alleged
injuries, is false.
[84]
All this notwithstanding, the Proposal included a
claim for
general damages of R950 000 which was motivated
for on the basis that the plaintiff suffered the following damages:
‘A
complex fracture of the pelvis; a blunt trauma ruptured
bladder injury causing bladder obstruction; a fractured lumbar spine
of
the 5th vertebrae; injury to left knee.’
[85]
Reference to the plaintiffs own expert reports and other medical
evidence shows this statement of the injuries is a misrepresentation,
save in regard to the pelvic fracture.
[86]
Loss of earnings in an amount of R 2 534 826 was claimed.
In this regard Ms de Swart wrote ‘we furthermore
refer to the
actuarial report and calculation, based on the report of the
Plaintiff’s Industrial Psychologist, as prepared
by I. Kramer,
annexed hereto marked “E”. It provides for a future loss
of R2,534,826 after application of a 12,5% pre-morbid
and 27,5% post
morbid, contingency.’
[87]
Thus
a total amount of R 3 484 826 was proposed by Ms de Swart
in settlement of the claim.
[26]
As I have said, Mr van den Barselaar suggests that the amount of R
2 534 826 for loss of earnings was proposed in error.
[88]
Reference to the actuarial report of Mr Ivan Kramer dated 06 May 2020
does not support the contention as to loss of earnings
.
He states, under oath, that he has done the valuation as at 1 June
2020. He states that he has based his report on information
obtained
from the report of the plaintiff’s industrial psychologist and
from the joint minutes of the industrial psychologists.
[89]
He states that, according to her payslip dated
January 2016, Ms T earned a total income of R79,121 in the 11
months of the
tax year to date and that thus she earned an average
income of R7,193 pm (R86,316 pa). But this is patently false.
Reference
to the payslip in question reflects an income of only R
5 500 per month ( which translates into R66 000 per annum).
This
is, in fact, confirmed in the joint minute of the industrial
psychologists. Thus the information purportedly used by Mr Kramer is
at odds with the objective evidence of salary and significantly
misstates it. Recall the example above which shows that an
elevation of the base salary figure has a significant impact on the
actuarial calculation.
[90]
Mr Kramer assumed on the basis that she had
allegedly started to study towards a matric, that Ms T had
aspirations for career develpment.
He thus assumed a career
progression until age 55. In doing this he ignored the caveat of the
industrial psychologists to the effect
that there was no evidence of
further studies. He thus worked on the assumption that her
income would have risen evenly (in
real terms) from R88,320 per annum
at the accident date, to reach R136 000.
[91]
It is on this basis that the figure for future
loss of earnings was purportedly amended to raise the original claim
for loss of
earning capacity from R 250 000 - which, though
still inflated in my opinion, was more in line with reality –
to R
1 639 777 ( ie nearly six times the original
claim).
[92]
An even more glaring anomaly in the calculation is this: The
proposed amendment seeks to increase the claim for
past loss of
earnings to R 348 753.00 whilst this amount is already taken
account of as part of the amount of R 1 639 777.
[93]
Recall also, that from a factual point of view, there is objective
evidence to the effect that the plaintiff was laid off work
for only
four months – which would equate to little more than R 2 200
past loss.
[94]
I must explain why I refer to the amendment as ‘purported.’
The process of amendment in the present context
is beset with
complexity both procedurally and on the merits. This is exacerbated
by the fact that the RAF has no attorneys.
There are
questions as to whether the electronic delivery of the purported
amendment constituted proper delivery in terms of the
rules of court.
It seems to me that the persons served were neither qualified nor
authorized to accept and deal with applications
for amendment of this
magnitude. At any rate, the amendment was to my mind not perfected.
Conclusion
on T
[95]
Thus
on the heads of damages in the original summons which remained as
claims in the ‘amended’ particulars of claim
-
i.e. past loss of earnings; future loss of earnings; and
general damages - there was an inflation of the figures
purely on the
basis of Mr Kramer’s contrived report as follows : future
loss from R285 600 to R 1
639 777; past loss
from R 35000 to R 348 753; and general damages from R250 000
to R500 000. In total this
is the amendment of the claim from R
570 600
[27]
to one
of R 3 348 530. The following phrase was specifically added
by amendment:
‘
The
amount is as per the actuarial calculation of I Kramer dated 6 May
2020, attached hereto as annexure A.’
[96]
To my mind the approach adopted by the plaintiff’s legal
representatives is nothing more than sleight of hand. There
is no
evidence that Ms T lost her job as a result of the accident; the use
of Mr Kramer’s actuarial calculation as a basis
of the amended
claim bears no scrutiny; and Mrs T does not qualify for general
damages on her own case. And yet, through the machinations
of Ms de
Swart of De Broglio and Mr van den Barselaar an offer of R
1 300 000 was extracted from the RAF. And this
after there
had been an internal recommendation of twice this amount –
before this was reduced by Mr Johnstone.
[97]
It is important that the proposal was far more than merely an offer.
It contained a detailed motivation in the form of accepted
facts that
were materially at odds with the true facts and constituted, on the
face of it, a deliberate misrepresentation of the
claim and the
evidence available to prove it. This raises questions as to the
obligations of the plaintiffs’ attorneys in
the context of
these negotiations. Officers of this court have obligations not
to mislead RAF officials under circumstances
where public funds are
at stake.
[98]
Mr van den Barselaar, duly instructed, persisted in the argument that
I had no further jurisdiction in the matter as both parties
had
confirmed the settlement of the matter. As I have said, I thus
asked that I be addressed by all parties as to whether,
in the
circumstances, there was a valid settlement and the extent of my
jurisdiction given that I was not asked to make the settlement
an
order.
[99]
I thus stood the matter down so that heads of argument could be filed
and the matter fully dealt with. I also secured the appointment
of an
amicus curiae, in the form of Ms Adila Hassim SC and Mr Salukazana
and admitted as a further amicus the Personal Injury Plaintiff
Lawyers Association (PIPLA).
The
M case
[100]
Having postponed the T case, I was allocated this new matter for
trial. I was advised, prior to the hearing, through my Registrar
that
the matter had settled. The settlement proposed was R 400 000 in
respect of general damages and R 1 375 360
in respect of
future loss of earnings, giving a total of R 1 775 360. I
was not provided with the settlement but certain
submissions were
made as to the reasonableness of the settlement.
[101]
As I had similar concerns with this matter to those I had raised in
T, I postponed the matter for hearing on the same day
as the argument
in T.
[102]
The facts of the case are briefly the following. Mr M was a passenger
in a taxi. The merits were conceded by the RAF. The
injuries
contended for were a fracture of the left Clavicle, scarring, and
Multiple soft tissue injuries and abrasions (which generally
don’t
make for lasting disabilities). At the time of the accident Mr M was
employed as a warehouse supervisor by a pharmaceutical
company.
[103]
The plaintiff’s occupational therapist records that there is
‘mild impairment’ in movement of the arm and
shoulder as
a result of the injury. Mr M did not lose his employment and was paid
his salary whilst convalescing. By all accounts,
Mr M is a valued
employee who meets his targets and has won a number of awards. One
could be forgiven for concluding that Mr M
has suffered no damages at
all. His injuries were well treated in State institutions and this
has enabled him to return to work
with only mild impairment, on the
evidence of his own experts.
[104]
The original claim pleaded was for R963 600 made up as follows: Past
hospital - R10 000,00; Future medical – 200 000;Past
loss
of earnings – R 16 000; Future loss of earnings – R
537 000; General damages – R200 000.
[105]
De Broglio also happens to be the firm of attorney representing the
plaintiff in this matter. Ms Prishani Singh was the attorney
concerned. The RAF, again, was unrepresented.
[106]
As in the T case this claim translates into a real claim for past
loss of earnings, future loss of earnings, and general damages.
The
medical expenses are accommodated by direct payment by the RAF to the
service providers.
[107]
Thus, the total original claim in real terms amounted to R753 000
(made up of past loss of earnings in the amount of
R16 000;
future loss of earnings of R 537 000; and general damages of R
200 000).
[108]
As in the T case, there were purported amendments close to the
hearing date. There were two notices for amendment brought
in quick
succession. A notice of intention to amend dated 18 August 2020 was
purportedly delivered electronically to personnel
at the RAF. The
same difficulties as to authorization to accept service and
qualification to deal with such an amendment as are
set out in
relation to the purported amendments in T also apply here.
[109]
In terms of this proposed amendment the general damages claimed were
increased from R 200 000 to R 500 000 bringing
the total
claim to R 1 263 600. A further attempt to amend was
made by notice dated 20 September 2020. In terms
of this notice which
was also served electronically, the future loss of earnings is
increased from R 537 600 to R 1 754 234.
Thus the
claim was increased in accordance with this latest amendment by more
than R 1 million to R2 480 234,00. Again, there
are concerns
that the claims officer on whom electronic service was effected does
not have the assistance of an attorney.
[110]
Once again, it is sought that the amendment be substantiated by means
of the following insertion into the particulars of claim:
‘
The
amount is as per the report of Actuary, Ivan Kramer attached hereto
as Annexure ‘A’.
[111]
As in the T, the Case Management Certification took place before
amendment was sought in accordance with Mr Kramer’s
actuarial
report. Again, the RAF only pleaded to the original claim and thus
there was no formal engagement with the purported
amendments on
behalf of the RAF.
[112]
The Serious Injury Report was, again, drawn by Dr Scheepers. In fact,
the same team of Dr Scheepers (general practitioner),
Dr Volkersz
(orthopaedic surgeon) and Mr Kramer (actuary) were appointed by
De Broglio to deal with this case.
[113]
Mr Kramer did his calculations and prepared his report as at 14
October 2020. His report states that he has based his assumptions
on
the findings of the Industrial Psychologist.
[114]
The report of the industrial psychologist says the following as
to Mr M’s salary at the time of the accident:
‘
At
that stage, his IRP5 show his earnings as being R108 938. This
document, however, does not reflect his total income, as he earns
other non-taxable allowances. In total, his earnings amounted to
about R147 000 per annum.’
[115]
There is no sign in the document bundles of any evidence of this
alleged non- taxable extra income. Neither the industrial
psychologist’s report nor any of the documents reveal such
income and no attempt was made to point me to any basis to accept
the
extra income. Thus, yet again, I was faced with added income assumed
by Mr Kramer which is unsupported by any evidence.
The income
added translates to an amount of in excess of the R3 000 per
month. I reiterate that the exponential effect
of such
additions on an actuarial calculation results in a greatly inflated
lumpsum.
[116]
As to the qualification for general damages, yet again, Dr Volkersz
did not give his certification and Dr Scheepers’
report
was relied on. It seems that the plaintiff’s attorneys were
aware of the fact that Dr Scheepers report would not suffice
to
establish that the injury was serious enough to allow for a claim for
general damages. Thus, approximately three weeks before
the trial, a
further report of Dr Leslie Berkowitz, Plastic Surgeon was filed. In
terms of the report Dr Berkowitz opines that
‘The patient has
been left with a serious permanent disfigurement of his left shoulder
as a result of this accident’.
[117]
This is inaccurate if not deliberately false. The reports of the
orthopaedic surgeons are to the effect that there is no disfigurement
of the shoulder itself. Photographs of the scarring show a relatively
neat and thin scar from the surgery. From my evaluation,
this injury
would not qualify as a serious disfigurement and thus does not
qualify the plaintiff for general damages on the narrative
test.
[118]
Once again, the general damages were motivated for on the basis of
the report of Dr Scheepers. I must also record my disquiet
with the
manner in which the evidence of Dr Scheepers has been placed before
this court. Dr Scheepers purportedly attested to an
affidavit
confirming his report. However, reference to this affidavit shows
that it is signed but not commissioned. Presumably,
the intention was
to obtain a commissioning ex post facto the signature. This is
improper and adds to the general sense that the
matter has been dealt
with in a dishonest and cavalier manner.
[119]
There was furthermore no proper discovery in the matter. Only an
unsigned discovery affidavit was filed on 11 September 2020.
[120]
Case Management Certification, again, took place on the original
cause of action on 03 September 2020. It is reflected on
the practice
note filed that the RAF has not provided the plaintiff’s
attorney with its attitude regarding the serious injury
report of Dr
Scheepers. As I have said, the evidence of Dr Berkowitz was latterly
obtained in an attempt to qualify the plaintiff
for general damages.
[121]
Against this, background proposals were made to the RAF which
generated a settlement offer from the Fund in an amount of R
1 775 360, which was accepted.
Conclusion
on M
[122]
The plaintiff did not lose his employment due to the fractured
clavicle. He was paid during his absence from work and
suffered
no discernible damages to his patrimony. Yet the RAF settled the
claim for future loss of earnings in an amount of in
excess of
R 1.3 million and agreed to pay general damages of R 400 000
when the injuries were not serios enough to qualify
the plaintiff for
a claim for general damages. This occurred pursuant to a substantial
amendment which was, again, purportedly
effected after the Case
Management Court had certified the matter ready for trial on the
original pleadings. The reports of Dr
Scheepers and Mr Kramer were,
once again, employed to dubious end. I reiterate – if there had
been serious injuries arising
from injury the orthopaedic surgeon
would have certified this and the belated filing of the report of Dr
Berkowitz does not, in
my view, serve to qualify the plaintiff for
general damages.
Modus
Operandi which emerges from both cases
[123]
From these two cases, and others which I have heard, a modus operandi
emerges as follows:
·
A relatively modest claim is brought and the Case Management Court
process is undertaken on these pleadings.
·
In the actuarial calculation, the income of the plaintiff
pre-accident is inflated and / or the aspirations of the
plaintiff are exaggerated or even fabricated in order to suggest a
career progression when there is none.
·
These fallacious assumptions are used by the actuary to calculate a
loss of earning capacity which yield significantly
inflated figures
because of the exponential nature of the calculation.
·
This actuarial report is then used as a basis for an amendment of the
claim without any oversight.
·
The RAF is not represented and is overwhelmed by the sheer volume of
cases and/or the officials are pliable. They thus
place undue
reliance on the representations of the plaintiff’s attorney as
to the loss.
·
As to general damages, under-qualified and sometimes pliable
doctors are used to suggest the injuries are more serious
than they,
in fact, are.
[124]
Ironically, the RAF would have been substantially better off in both
these cases if the RAF had simply allowed default
judgment to
be taken in that the Court would have been allowed to perform its
function of evaluating whether there was evidence
for the claim
and whether the matter was procedurally compliant.
The
effect of the purported settlements
[125]
I was in due course addressed by four senior and junior counsel
teams for each of the parties in the T case and the
two amici.
[126]
As I have said, the plaintiff, the defendant, and PIPLA all made
common cause. Their argument was as follows: Once the parties
have
settled a case, the Court’s jurisdiction is terminated and it
is of no consequence to the validity of the agreement
whether it is
extra – judicial or embodied in a court order. It was
sought that the Court should simply remove the
matter from its roll
and have no further part in the matter. Ms Hassim on the other hand
provided an invaluable analysis of the
legal prescripts pertaining to
the Court’s constitutional functions.
[127]
The
RAF is, of course, empowered to settle. But the settlement has to be
lawful; it must be consistent with the Act and the Constitution.
The
RAF is obliged to comply with the fundamental values and principles
governing the public administration under the Constitution,
including
section 195, which provides that the RAF has to ensure that
disbursement or use of its funds is an efficient, economical
and
effective use of public resources. It is also required to be
transparent and accountable.
[28]
Froneman
J, on behalf of the majority in
Airports
Company South Africa v Big Five Duty Free (Pty) Ltd
[29]
confirmed
that ‘a settlement agreement between litigating parties can
only be made an order of court if it conforms
to the Constitution and
the law.’
[30]
[128]
The commencement, defence and conduct of litigation by organs of
state constitutes the exercise of public power. It must be
done in a
constitutionally compliant manner upholding legality and the rule of
law. The RAF has chosen to ignore this Court’s
pointed concerns
and instead of insisting on an order of Court as a precondition to
its settlement, which would be the rational
approach it has
chosen to acquiesce in the tactic adopted by De Broglio on
behalf of the plaintiff. That the RAF is conducting
its business in
this reckless manner under insolvent circumstances is of great
concern to this Court.
[129]
What is clear in relation to these two cases is that the RAF
officials did not act lawfully to conclude the settlements and
for
this reason they are void
ab initio
. Thus on this issue, I
agree with Ms Hassim that there is no settlement.
[130]
An audit of other matters settled since May 2020 is likely to yield
similar concerns to those that arise in these matters.
The fact that
these settlements are subject to being reviewed and set aside is
ultimately prejudicial to the plaintiffs.
Conclusion
Whilst
De Broglio might believe that it has served the interests of
its clients and itself in achieving a settlement agreement
for a
grossly inflated amount in circumstances where it has avoided this
Court’s jurisdiction, in fact it has placed
them in
jeopardy. To the extent that the settlements are unconstitutional
they are unenforceable. And if payment is made
pursuant thereto
this would constitute irregular expenditure by the RAF and
potentially make those approving such payments vulnerable
to personal
scrutiny by the Courts. The RAF is a public entity, as contemplated
in Part A of Schedule 3 of the Public Finance Management
[31]
(PFMA) and is therefore subject to the onerous prescripts relating to
public expenditure set out in the PFMA.
[32]
Thus, without further collusion by the RAF in relation to payment,
the settlements are, in effect, worthless.
[131]
Having said all of this however, both parties agree that the matter
be removed from the role. Notwithstanding this court’s
concerns, it cannot interfere with the settlement but by review
brought by an interested party. Such a review application is not
before me.
[132]
As I have said however, to my mind this cannot be the end of the
enquiry. I have significant concerns about the manner in
which the
legal representatives of the plaintiffs and the RAF officials who
have handled these matters have comported themselves.
I also believe
that the manner in which the reports of Dr Scheepers and Mr Kramer
have been obtained, requires fuller investigation.
I will thus not
remove the matters from the roll. I have decided to refer their
conduct to their respective professional
bodies. To my
mind, the conduct of the RAF officials involved in the matters should
also come under investigation, but that
is a matter for the RAF. It
is furthermore my view that the conduct of De Broglio, Mr van den
Barselaar and Ms de Swart should
be more fully investigated. I have
thus referred their conduct to the Legal Practice Council (LPC)
[133]
In my view, the fund should be liquidated and/or placed under
administration as a matter of urgency. This is the only way
that this
haemorrhage of billions of rands in public funds can be stemmed and
proper and valid settlement of the plaintiffs’
claims be
undertaken in the public interest. I have asked that this judgment be
brought to the attention of the Minister of Transport,
the Acting
Chief Executive Officer of the Road Accident Fund, and
the National Director of Public Prosecutions.
Costs
[134]
Only De Broglio for the plaintiff sought costs for the hearing. It
was conceded by both amici and the defendant that it was
proper that
no award of costs be made.
Order
[135]
I make the following orders:
1.
In case 37986/2018 T v RAF the following order is made:
a.
The matter is postponed sine die.
b.
This judgment is to be brought to the attention of any court called
upon to enforce the purported settlement agreement.
c.
The conduct of De Broglio inc, Ms de Swart, and Mr van den Barselaar
is referred to the Legal Practice Counsel.
d.
The conduct of Dr Kevin Scheepers in this matter is referred to the
Health Professions Council of South Africa (HPCSA).
e.
The conduct of Mr Ivan Kramer is referred to the Actuarial Society of
South Africa.
2.
In case 13753/2019 M v RAF the following order is made:
a.
The matter is postponed sine die.
b.
This judgment is to be brought to the attention of any court called
upon to enforce the purported settlement agreement.
c.
The conduct of De Broglio inc is referred to the Legal Practice
Counsel.
d.
The conduct of Dr Kevin Scheepers in this matter is referred to the
HPCSA.
e.
The conduct of Mr Ivan Kramer is referred to the Actuarial Society of
South Africa.
3.
A copy of this judgment is to be delivered to:
a.
the Minister of Transport;
b.
the Acting Chief Executive Officer of the Road Accident Fund;
and
c.
the National Director of Public Prosecutions.
4.
Each party shall pay their own costs.
D
FISHER
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Electronically
submitted therefore unsigned
This
judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation to
the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The date
for
hand-down is deemed to be 16 November 2020.
Date
of Hearing:
3 November 2020.
Judgment
Delivered:
16 November 2020.
APPEARANCES:
In
Case Number 37986/2018
For
the Plaintiff
:
Adv G J Strydom SC with Adv M Van den Barselaar.
Instructed
by
:
De Broglio Attorneys.
For
the Defendant
:
Adv M Antonie SC with Adv M Chauke.
Instructed
by
:
Mpoyana Ledwaba Inc.
Amicus
Curiae
:
Adv A Hassim SC with Adv M Salukazana.
In
Case Number: 13753/2018
For
the Plaintiff
:
Adv N Motala
Instructed
by
:
De Broglio Attorneys.
For
the defendant
: The defendant was unrepresented.
[1]
1996 (Act No. 56 of 1996 - the RAF commenced operations on 1
May 1997, assuming at the time, all the rights, obligations,
assets
and liabilities of the Multilateral Motor Vehicle Accidents Fund.
Prior
to 1997, the system of compulsory motor vehicle accident insurance
was governed at various times by the Motor Vehicle Insurance
Act 29
of 1942; theCompulsory Motor Vehicle Insurance Act 56 of 1972; the
Motor Vehicle Accident Act 84 of 1986); the Multilateral
Motor
Vehicle Accidents Fund Act 93 of 1989)
[2]
Road
Accident Fund and Another v Mdeyide
2011
(2) SA 26
(CC), paras 66 and 80
[3]
Law
Society of South Africa and Others v Minister for Transport and
Another
2011
(1) SA 400
(CC), para 54
[4]
The RAF Fuel Levy income is a charge levied on fuel throughout the
country and the quantum of the RAF Fuel Levy per litre is
determined
by the National Treasury on an annual basis. The RAF Fuel Levy is
currently at 193 cents per litre for the 2018/19
financial year. The
South African Revenue Service (SARS) administers the collection of
the Fuel Levy and pays it to the RAF.
[5]
The RAF Annual Report for the year ending March 2019 shows the
following : Total revenue during the 2018/19 financial year
increased to R43.24 billion from R37.34 billion in the previous
year. This increase was mainly due to 30 cents per litre (c/l)
increase in the RAF Fuel Levy from the beginning of the financial
year. This represents almost 13% of the total pump price
for
the period. The net deficit of the RAF continued to climb sharply
during the 2018/19 financial year the despite the increase
in
the Fuel Levy.
[6]
Section
4(1)(b)
[7]
On average, the Fund was R11.3 billion in arrears per month with
finalised claims that could not be paid due to cash constraints.
As
at 31 March 2019, current liabilities of the RAF exceeded current
assets by R31 billion (2017/18: R29 billion).
[8]
I have
personified
some aspects of the process for the sake of form and continuity in
setting out the background.
[9]
19 of 2005.
[10]
Road
Accident Fund Regulations
,
2008.
GG
31249,
Notice number 770 of 21 July 2008, The Regulations became effective
on 1 August 2008.
[11]
Section
17 (1) rw s 17(1A) of the RAF Act
[12]
RAF
Regulation 3
[13]
RAF
Annual Report for year ending 2019.
[14]
Public Finance Management Act 1 of 1999
.
[15]
2011] UKSC 13
[16]
The case involved a psychologist (Kaney) instructed as an expert
witness in a personal injury claim, who was said to have negligently
signed a statement of matters agreed with the expert instructed by
the opposing side, in which she made a number of concessions
that
weakened the claim considerably. As a result, according to the
injured claimant (Jones), he had to settle the claim for
much less
than he would have obtained had his expert not been careless.
[17]
2013
(2) SA 144 (CC); 2013 (1) SACR 213 (CC).
[18]
1
990
(1) SA 680
(A).
[19]
Ibid
at
[41].
[20]
2002
(6) SA 431
(SCA).
[21]
Ibid at [24].
[22]
1975 (4) SA 72(W)
at 74F-75F.
[23]
Practice
Directive 2 para 4.
[24]
1984 (1) SA 98 (A).
[25]
bid
at
116G-117A
.
See also
Shield
Insurance Co Ltd v Booysen
1979
(3) SA 953 (A).
[26]
The
total in the proposal is stated as R 2 689777 but this is erroneous.
[27]
Bearing
in mind the original claim for R 1008 000 took into account heads of
damages not ultimately pursued such as past and future
medical
expenses.
[28]
Khumalo
and Another v MEC for Education, KwaZulu-Natal
2014
(5) SA 579
(CC), para 62
Mvoko
v South African Broadcasting Corporation SOC Limited
2018
(2) SA 291
(SCA), paras 32 to 35
[29]
[2018]
ZACC 33
;
2019
(2) BCLR 165
(CC)
para 13
[30]
Ibid.
See also
Eke
v Parsons
[2015]
ZACC 30
;
2016
(3) SA 37
(CC)
paras 25 and 26.
[31]
Act 1 of 1999
[32]
See for example Sections 2, 50, 51, and 57 of the PFMA