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[2010] ZAWCHC 105
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Mvumvu and Others v Minister of Transport and Another (7490/2008) [2010] ZAWCHC 105; 2010 (12) BCLR 1324 (WCC) ; [2011] 1 All SA 90 (WCC) (28 June 2010)
IN THE HIGH COURT
OF SOUTH AFRICA
WESTERN CAPE
HIGH COURT, CAPE TOWN
CASE NO: 7490 / 2008
In
the matter between:
ANELE
MVUMVU
First
Applicant
LOUISE PEDRO
Second
Applicant
JIANCA SMITH
Third
Applicant
versus
MINISTER OF
TRANSPORT
First
Respondent
T
HE ROAD
ACCIDENT FUND
Second
Respondent
JUDGEMENT
: 28 JUNE 2010
B
OZALEK
J
:
INTRODUCTION
[
1 ] The applicants in this matter seek a declaration that s 18(1) and
(2) of the Road Accident Fund Act
1
("the Act") are inconsistent with the Constitution and
invalid to the extent that they limit the claims against the second
respondent, the Road Accident Fund ("the Fund"), of the
classes of persons identified therein to a maximum a
ct
56 of 1996.
of
R25 000.00. The order sought is opposed by the Fund and by the first
respondent, the Minister of Transport ("the Minister").
[2]
it is as well to set out the attitude of the respondents to the
applicants' case. The Minister, although initially opposing
the
declaration of invalidity, now abides the decision of this Court on
whether the impugned provisions ought to be declared invalid,
subject
to the precise breadth of the order. The Fund likewise abides the
decision of the Court in this regard. Both respondents
contend,
however, that any declaration of invalidity should have no
retrospective effect. Instead, they contend that any such declaration
should be suspended in terms of s 172 of the Constitution
2
until 1 August 2008, the date on which the Amendment Act came into
force. This would mean that the applicants, and other claimants
in
their position, would obtain no substantive relief from any
declaration of invalidity.
THE
PERSONAL CIRCUMSTANCES OF THE APPLICANTS
First
Applicant
[3]
The first applicant, Ms Mvumvu, was seriously injured on 14 February
2005 when the driver of the minibus taxi in which she was
travelling
lost control of the vehicle which then rolled. No other vehicles were
involved in the accident and the driver was fatally
injured. The
applicant was seriously injured and hospitalised for two months. Her
right foot had to be partially amputated. She
is now permanently
disabled and has been unable to retain employment because of her
injuries. The first applicant lives in an informal
settlement,
inter
alia,
with
the two children of her deceased sister and her own two children. The
only income of the household is the disability grant
which she
receives and a child support grant.
[4]
The Fund has admitted its liability to compensate the first
applicant. However, it has pointed out that because she was a
passenger
in the taxi her claim is limited to a maximum of R25
000.00. As the Fund has already paid medical claims from the
hospitals which
treated the first applicant, which extended beyond
its liability of R25 000.00, first applicant has no claim against the
Fund for
further compensation for the injuries which she suffered in
the accident.
[5]
At the hearing it was agreed that the first applicant alleges that
she suffered her injuries whilst travelling in an unlicensed
taxi and
that she need not file an affidavit to this effect. She was therefore
not conveyed "for reward", regard being
had to the
definition thereof in s 1. In the result, her claim is limited by the
provisions of s 18(1 )(b) of the Act.
Se
cond
Applicant
[6]
In June 2007 the second applicant, Ms Pedro, was travelling in a
minibus taxi. The driver lost control of the vehicle which
crashed
into rocks on the side of the road seriously injuring the second
applicant. She was hospitalised for some three weeks as
a result of
the fracture of both of her arms and ankle. As a result of the
injuries which she suffered, which involved
inter
alia
the
insertion of a screw in her right arm and a plate in her left arm,
she has suffered a reduction in her ability to function effectively
and cannot, for example, walk far because of her unstable leg. The
second applicant was a passenger for "reward" and
accordingly her claim is limited by the provisions of s 18(1 )(a)(i).
Third
Applicant
[7]
In May 2007 the third applicant, Ms Smith, was travelling, in the
course of her employment, as a passenger in a vehicle owned
by her
employer. The driver lost control of the vehicle which left the road
and rolled. The driver was fatally injured and the
third applicant
suffered a minor head injury and severe injuries to her back, left
shoulder and left knee. She remained in hospital
for two months and
underwent surgery. Section 18(2) of the Act limits the third
applicant's claim to the difference between o maximum
of R25 000.00
and any lesser amounts which she can claim under the Compensation for
Occupational Injuries and Diseases Act
3
("COIDA").
In terms of COIDA more than R25 000.00 will be paid for her
hospitalisation and other medical treatment with
the result that she
will have no claim at all against the Fund.
LEGISLATIVE
BACKGROUND
[8]
The relevant provisions, s 18(1) and (2), were amended by the Road
Accident Fund Amendment Act
4
("the
Amendment Act") which came into effect on 1 August 2008,
subsequent to the launch of the present application. However,
the
constitutional challenge remains alive because the present
applicants, like all other persons similarly injured in motor vehicle
accidents prior to 1 August 2008, remain bound by the provisions in
their unamended form.
[9]
Before the Amendment Act came into effect, s 17(1) of the Act
provided that the Fund was:
"obliged
to compensate any person (the third pdrtyj for any loss or damage
which the third party has suffered as a result of
any bodily injury
to himself or herself or the death of or any bodily injury to any
other person, caused by or arising from the
driving of a motor
vehicle by any person at any place within the Republic, if the injury
of death is due to the negligence or other
wrongful act of the driver
or of the owner of the motor vehicle or of his or her employee in the
performance of the employee's
duties as employee".
[
10
]
This comprehensive obligation to provide full delictual compensation
was, however, not applicable to passengers in what may be
termed "the
offending vehicle", as a result of the provisions of s 18(1) and
(2) which read as follows:
18.
(1)
The liability of the Fund or an agent to compensate a third party for
any loss or damage contemplated in section 17 which is the
result of
any bodily injury to or the death of any person who, at the time of
the occurrence which caused that injury or death,
was being conveyed
in or on the motor vehicle concerned, shall, in connection with any
one occurrence, be limited, excluding the
cost of recovering the said
compensation,...
(a)
to the sum of R25000 in respect of any bodily injury or death of any
one such person who at the time of the occurrence which
caused that
injury or death was being conveyed in or on the motor vehicle
concerned-
(i)
for
reward; or
(ii)
in
the course of the lawful business of the owner of that motor vehicle;
or
(Hi)
in the case of an employee of the driver or owner of that motor
vehicle, in respect of whom subsection (2) does not opply,
in the
course of his or her employment; or
(iv)
for the purposes of a lift club where that motor vehicle is a motor
car; or
(b)
in the case of a person who was being conveyed in or on the motor
vehicle concerned under circumstances other than those referred
to in
paragraph (a), to the sum of R25000 in respect of loss of income or
of support and the costs of accommodation in a hospital
or nursing
home, treatment, the rendering of a service and the supplying of
goods resulting from bodily injury to or the death
of any one such
person, excluding the payment of compensation in respect of any other
loss or damage.
(2)
Without derogating from any liability of the Fund or an agent to pay
costs awarded against it or such agent in any legal proceedings,
where the loss or damage contemplated in section 17 is suffered as a
result of bodily injury to or death of any person who, at
the time of
the occurrence which caused that injury or death, was being conveyed
in or on the motor vehicle concerned and who was
an employee of the
driver or owner of that motor vehicle and the third party is entitled
to compensation under the Compensation
for Occupational Injuries and
Diseases Act, 1993 (Act No. 130 of 1993), in respect of such injury
or death-la) the liability of
the Fund or such agent, in respect of
the bodily injury to or death of any one such employee, shall be
limited in total to the
amount representing the difference between
the amount which that third party could, but for this paragraph, have
claimed from the
Fund or such agent, or the amount of R25000
(whichever is the lesser) and any lesser amount to which that third
party is entitled
by way of compensation under the said Act; and
(b)
the Fund or such agent shall not be liable under the said Act for the
amount of the compensation to which any such third party
is entitled
thereunder....
[
11] Section 18(1) thus imposes a limit of R25 000.00 on the liability
of the Fund to compensate a third party who was a passenger
in the
offending vehicle. Section 18(2) deals with road accident victims who
are entitled to compensation under COIDA. The sections
as a whole
would appear to affect six different categories of passenger claims,
namely:
1.
passengers
for reward - in terms of s 18(l)(a)(i);
2.
passengers
conveyed in the course of the lawful business of the owner of that
motor vehicle - in terms of s 18(1)(a)(ii);
3.
passengers
who were the employees of the driver or owner of the motor vehicle
and who were conveyed in the course of their employment
but where
there was no claim under COIDA-in terms of s 18(l)(a)(iii);
4.
passengers
being conveyed for the purposes of a lift club where the motor
vehicle was a motor car - in terms of s (18)(l)(a)(iv);
5.
passengers
not falling within ss 18(1)(a) or 18(2), such as social passengers -
in terms of s 18(1); and
6.
passengers
who were the employees of the driver or owner of the motor vehicle
and who had a claim under COIDA-in terms of s 18(2).
[12]
The Amendment Act effected certain fundamental changes to the system
of compensation for road accident victims. In no particular
order it
limited claims for loss of earnings to R160 000.00 per year (s
17(4)(c) of the Act). It abolished the impugned provisions
of the Act
limiting the liability of the Fund to R25 000.00 in respect of
certain claims, and it provided that the obligation of
the Fund to
compensate a third party for non-pecuniary loss would be limited to
compensation for "a serious injury".
The assessment of a
serious injury is based on a prescribed method adopted after
consultation with medical service providers.
[13]
The memorandum on the objects of the Amendment Bill stated,
inter
alia,
as
follows:
"These
amendments
are aimed at improving the governance of the Fund, providing for a
more equitable, fair and transparent compensation
system and whilst
limiting the liability of the Fund.
It
is proposed in the Bill to put a monetary limit on claims for future
loss of income or support.
The
Bill seeks to limit the liability of the Fund to compensate for
general damages only for those seriously injured and provides
guidelines for the assessment of injuries. This amendment will result
in substantial savings needed to compensate all passengers.
The
Bill furthermore seeks to repeal s 18(1) and 19(b) (ii) of the Act in
terms of which the liability of the Fund for certain claims
(e.g.
claims in respect of persons who were conveyed for reward) are
limited or excluded. It is believed to be unfair to have a
specific
limitation on such claims and that such claims should be treated the
same as any other claim.
The
Act will only apply to claims that arose after the commencement of
the Act"
THE
CONSTITUTIONALITY OF THE IMPUGNED PROVISIONS
[14]
The applicants' case is that the impugned provisions are in breach of
the Bill of Rights' guarantees of the right to equality
5
,
the right to dignity
6
,
the right to security of the person
7
,
the right to an effective remedy
8
,
the right to healthcare and social security
9
.
The applicants were content, however, to argue their case purely on
the right to equality and I will approach it on that basis.
[15]
Section 9 of the Constitution provides:
"9.
Equality
(1)
Everyone
is equal before the law and has the right to equal protection and
benefit of the law.
(2)
Equality
includes the full and equal enjoyment of all rights and freedoms. To
promote the achievement of equality, legislative and
other measures
designed to protect or advance
persons,
or
categories
of persons, disadvantaged by unfair discrimination may be taken.
(3)
The
state may not unfairly discriminate directly or indirectly against
anyone on one or more grounds, including race, gender, sex,
pregnancy, marital status, ethnic or social origin, colour, sexual
orientation, age, disability, religion, conscience, belief,
culture,
language and birth.
(4)
No
person may unfairly discriminate directly or indirectly against
anyone on one or more grounds in terms of subsection (3). National
legislation must be enacted to prevent or prohibit unfair
discrimination.
(5)
Discrimination
on one or more of the grounds listed in subsection (3) is unfair
unless it is established that the discrimination
is fair."
[16]
In
Harksen
v Lane N.O. and Others
10
the
Constitutional Court set out the proper approach to the issues raised
when an attack is made on a provision in reliance on the
equality
clause in Constitution. Goldstone J held that the stages of enquiry
were the following:
"(a)
Does the provision differentiate between people or categories of
people? If so, does the differentiation bear a rational
connection to
a legitimate government purpose? If it does not then there is a
violation of s 8(1)
11
.
Even it does bear a rational connection, it might nevertheless amount
to discrimination.
(b)
Does the differentiation amount to unfair discrimination? This
requires a two-stage analysis:
(iii)
Firstly, does the differentiation amount to "discrimination"?
If it is on a specified ground, then discrimination
will have been
established. If it is not on a specified ground, then whether or not
there is discrimination will depend upon whether,
objectively, the
ground is based on attributes and characteristics which have the
potential to impair the -fundamental human dignity
of persons as
human beings or to affect them adversely in a comparably serious
manner.
(iii)
If the differentiation amounts to "discrimination", does it
amount to "unfair discrimination"? if It has
been found to
have been on a specified ground, then unfairness
will
be presumed. If
on
on
unspecified
ground, unfairness will have to be established by the complainant.
The test of unfairness focuses primarily on the impact
of the
discrimination on the complainant and others in his or her situation.
If,
at the end of this stage of the enquiry, the differentiation is found
not to be unfair, then there will be no violation of s
8(2).
(c)
If the discrimination is found to be unfair, then a determination
will have to be made as to whether the provision can be justified
under the limitations clause (s 33 of the interim Constitution]."
[17]
It is clear that the Act distinguishes between two broad categories
of people and treats them differently. On the one hand,
pedestrians
and the occupiers (including passengers) of an "innocent"
vehicle who have unlimited claims for compensation
and, on the other
hand, passengers in an "offending" vehicle, whose claims
are capped by s 18.
[18]
The question which arises is whether this differentiation bears a
rational connection to a legitimate government purpose. Two
explanations are offered on behalf of the Minister for the
differentiation between the two classes. Firstly, it is stated the
funding of the Fund is not designed to compensate all victims for all
losses they might suffer as a result of motor vehicle accidents.
Were
it otherwise, the Fund would long since have been bankrupt. The
Minister's representative goes on to say that:
"The
parameters within which compensation is to be paid have been
developed in a manner that is intended to distribute as fairly
and
equitably the limited funds that are made available to the Fund in
accordance with a range of criteria and considerations that
are
regarded
as most appropriate at the time. These considerations and criteria
change from time to time."
However,
as counsel for the applicants pointed out, this constitutes no
explanation for differentiating between classes of innocent
road
accident victims, nor for explaining why the claims of some victims
are singled out for very limited compensation whilst others
receive
full compensation.
[19]
Secondly, the Minister's representative states that the decision as
to what limitations ought to apply was a
"complex
policy choice, apparently resolved along the following lines. A
pedestrian, or occupant of another vehicle, has no
choice in choosing
the driver or owner of the offending vehicle. The same is not
necessarily so in respect of a passenger in an
offending vehicle".
However,
what is put up as the apparent justification for the unequal
treatment appears to be unsupported by fact or logic. In the
first
place, it is artificial to suggest that a person in a taxi queue
"chooses" the driver of the taxi which he/she
will board.
The passenger seldom has knowledge of the competence of the driver or
the roadworthiness of the vehicle. Similarly,
employees have little
or any say regarding the identity or competence of the drivers of
employers' vehicles. In any event, even
if one does attribute such a
"choice" to a passenger, this still provides no explanation
of what rational government
purpose is served by treating such a
passenger differently from other people who are also innocent victims
of road accidents.
[20]
As previously mentioned, not only did the Department of Transport
acknowledge the unfairness of the existing system in its
Explanatory
Memorandum to the Bill, but the Fund's Chief Executive Officer and
deponent to its answering affidavit, Mr. Jacob Modise,
explicitly
acknowledged this. In a letter to the attorney's magazine, De
Rebus
in
January/ February 2008 he stated that the amendments to the Act were
informed by
"the
recognition that in its effects the present dispensation perpetuates
disparities between rich and poor, rural and urban,
employed and
unemployed"
,
and that one of
"the
most urgent of the reforms needed"
was
"doing
away with the untenable R25 000.00 limitation on the claims of
passengers of negligent drivers
[21]
In my view the differentiation legislated by the impugned provisions
falls at the first hurdle stipulated in
Harksen
v Lane
(supra),
in that it bears no rational connection to a legitimate government
purpose. It is, therefore, in violation of s 9(1) of
the
Constitution. However, even if I am incorrect in this conclusion, I
consider that the impugned provisions do not clear the
second hurdle,
since the differentiation amounts to unfair discrimination.
UNFAIR
DISCRIMINATION
[22]
The applicants asserted, and it was not disputed by the respondents,
that persons affected by the provisions of s 18 are overwhelmingly
poor and black and that, generally, poor people do not have their own
means of transport and are obliged to make use of public
transport.
They assert too, again without being challenged, that poverty is
racially distributed in South Africa. The vast majority
of poor
people are black, in disproportion to the number of black people in
the country as a whole. It follows then that a measure
which impacts
disproportionately on poor people therefore also impacts
disproportionately on black people.
12
Race is one of the grounds specified in s 9(3) upon which the State
may not unfairly discriminate and thus the unfairness of the
discrimination is, in terms of s 9(5), presumed unless it is
established that such discrimination is fair. No viable attempt has
been made by the respondents to suggest that the differentiation or
discrimination is fair.
[23]
It is also contended on behalf of the applicants that the
differentiation occurs on a further specified ground, namely social
origin, in that the impugned provisions discriminate against road
accident victims who travel in their employer's motor vehicle
in the
course of their employment. This, it is submitted, discriminates
against working class people. The allegation was not disputed
by the
respondents.
[24]
In the result, the conclusion is unavoidable that discrimination on
the ground of race, if not social origin as well, has been
established and, these being specified grounds, unfairness must be
presumed.
A
JUSTIFIABLE LIMITATION OF RIGHTS?
[25]
The discrimination having been found unfair, a determination must be
made as to whether the provisions can be justified under
the
limitations clause. The Minister's representative asserted in this
regard that, to the extent that the impugned provisions
do limit the
constitutional rights upon which the applicants rely, such
limitations are reasonable and justifiable as contemplated
by s 36 of
Constitution. However, no explanation was proffered as to how such
discrimination could be justified in an open and
democratic society
based on human dignity, equality and freedom. Nor were any facts
alleged in support of any such claim.
[26]
The closest that the Minister comes to this is in the assertion that
it is difficult to conceive of any scheme, except one
offering full
compensation to all victims, which will not be subject to attack on
the grounds of unfair discrimination. This assertion
is, however,
belied by the fact that, if the intention is to limit the financial
cost of the scheme, it must clearly be possible
to achieve this by
treating all road accident victims on an equal basis and limiting all
claims. Furthermore, to the extent that
it may well be necessary to
distinguish between classes of claimants, this can obviously be done
on a basis which is not racially
discriminatory. In fact, this
appears to be what the Minister has attempted to do with the
introduction of the Amendment Act which
restricts the claims which
road accident victims may make and which, although treating different
classes of victims in a different
manner depending of the nature of
injuries which they have suffered, presumably does not do so on an
unfairly discriminatory basis.
[27]
Under the circumstances, the only conclusion which can be reached is
that the impugned provisions discriminate unfairly and
are in breach
of the Constitutional guarantee of equality.
REMEDY
The
Scope of any Declaration of Invalidity
[28]
Notwithstanding that the applicants were representative of only three
of the six classes of person hit by the impugned provisions,
an order
of invalidity was sought against sections 18(1) and (2) as a whole.
This was opposed by the respondents, who point out
that there was and
is no need for the applicants to challenge the constitutionality of s
18(1) (a) (ii), (iii) and (iv). They call
attention to the fact,
furthermore, that the applicants have no standing to challenge the
remaining provisions of the sections
given that they approach the
court in their own interests and not on any other basis.
[29]
In
Lawyers
for
Human
Rights
v
Minister
of
Home
Affairs
13
,
Yacoob
J stated that it was ordinarily
"not
in
the
public
interest
for
proceedings
to
be
brought
in
the
abstract
although
this
was
not
an
invariable
principle".
Given
the potentially far-reaching financial implications of any
declaration of invalidity, I consider it appropriate to limit any
order to those provisions directly impugned i.e. ss 18(l)(a)(i),
(l)(b)
and 18(2).
[30]
The applicants sought an order which would allow claimants whose
claims against the Fund had clearly been resolved or prescribed,
but
who were actively pursuing their common law remedies against
negligent drivers or vehicle owners, to reinstitute action against
the Fund and nonetheless claim the balance of full compensation. This
category of claimants, however, was not taken into account
in the
applicant's actuarial projections. In any event, there is no good
reason why the Fund should, as it were, be placed in double
jeopardy
in such cases.
[31]
The real point of dispute in this matter is what remedy, if any, the
applicants must be afforded. They seek an unsuspended
declaration of
invalidity coupled with wording such as that which was used in
Engelbrecht
v
Road
Accident
Fund
14
to
the following effect:
"Such
declaration of invalidity will apply to and govern all claims
instituted or to be instituted under the Road Accident
Fund 56 of
1996, which at the
dote
of
this
order have neither prescribed nor been finally determined by
judgments at first instance or on appeal or by settlement duly
concluded."
[32]
On the other hand, the respondents submit that any declaration of
invalidity should be suspended until 1 August 2008, the date
on which
the Amendment Act came into force. The nett effect of such a
suspension would be that the impugned provisions would continue
to
apply to all motor vehicle accident claims which arose before such
date and thus the position of the applicants, and all persons
with
similar unsettled or unresolved claims, will effectively be the same
as if the applicants had obtained no relief at all.
[33]
The arguments about remedy dealt largely with the financial
implications for the Fund and the State of an unsuspended order.
It
was contended on behalf of the respondents that any such order would
be disastrous for the Fund, producing additional
liability
of several billion rand in a situation where the Fund's financial
position remains precarious. The respondents based their
financial
calculations on the assumption that this matter is unlikely to be
concluded in the Constitutional Court before the middle
of 20ll, an
assumption which appears realistic. Relying on certain dicta of the
Constitutional Court in
Tsotseti
v Mutual & Federal Insurance Co
Ltd
15
,
it was further contended that in the present circumstances, the Court
should exercise its discretion in favour of suspending the
declaration of invalidity until 1 August 2008.
[34]
The applicants firstly disavow any relief having retrospective effect
by limiting the order sought to claims which have not
prescribed or
which have been resolved by the time that any declaration of
invalidity may be confirmed by the Constitutional Court.
A suspension
order is resisted by the applicants on various grounds. It is firstly
submitted that neither of the conditions for
a suspension order exist
and, furthermore, that an order in the present circumstances would
not align with the purpose of such
an order in terms of s 172(1
)(b)(ii) of the Constitution. As far as the financial conseauences of
an unsuspended declaration of
invalidity are concerned, it is
submitted that there is no evidence that the government is unable or
unwilling to meet any cash
shortfall such an order might cause the
Fund. In any event, it is argued that a decision not to suspend any
declaration would not
create any material cash flow problem for the
Fund.
[35]
The evidence of the Fund's CEO, as set out in a supplementary
affidavit filed by agreement shortly before the hearing, is that
by
the financial year end at 31 March 2010 the Fund's accumulated
deficit was R41 billion; that it is facing a severe cash crisis
and
that it is only just barely able to cover its payment obligations on
a day to day basis.
[36]
The Fund has no independent asset base.or capacity to generate
income. It is entirely dependent for its funding upon payments
from
the National Treasury, which are largely funded by a levy on fuel.
Such funds as it will require in order to meet any increased
liability will simply have to be provided by National Treasury.
Although the Fund's primary source of revenue is the fuel levy,
in
the past where this has been inadequate to meet the claims of the
Fund it has been the practice of the government to make
appropriations
to the Fund for it to meet its obligations. A
distinction must also be drawn between two aspects of the Fund's
operation: its cash
flow requirements and its "liability".
The Fund is not a commercial insurer but a statutory compensation
fund
funded,
and in practice guaranteed, by the State through levies and
appropriations. Unlike an insurer, it is not obliged to hold
assets
or reinsurance policies which either cover or provide a guarantee of
cover in respect of its future liabilities. Rather
it operates on a
cash flow basis, its operations requiring that each year its
expenditure, including compensation paid and all
other costs, should
exceed its income.
[37]
The applicants' papers establish that the National Treasury has
accepted that it is government's responsibility to ensure that
the
Fund's cash flow requirements are met. Under the present system it
chooses to do so not by placing funds to cover the future
liability
under the management of the Fund, but rather by meeting its cash flow
needs as and when they arise. The government has
met past shortfalls
and it is not suggested that it cannot or will not meet any
shortfalls which may arise under the present circumstances.
[38]
Section 172 of the Constitution provides as follows:
"(l)
When deciding a constitutional matter within its power, a court -
(a)
must declare that any law or conduct that is inconsistent with
the Constitution is invalid to the extent of its inconsistency;
and
(b)
may make any order that is just and equitable, including -
(i)
an
order limiting the retrospective effect of the declaration of
invalidity; and
(ii)
an
order suspending the declaration of invalidity for any period and on
any conditions, to allow the competent authority to correct
the
defect."
[39]
The starting point for the enquiry into an appropriate remedy was
explained as follows by Moseneke DCJ in
Steenkamp
N.O. v Provincial Tender Board, Eastern
Cape
16
:
"It
goes without saying that every improper performance of an
administrative function would implicate the Constitution and
entitle
the aggrieved party to appropriate relief. In each case the remedy
must fit the injury. The remedy must be fair to those
affected by it
and yet vindicate effectively the right violated."
[40]
In opposing any suspension order, the applicants point out that the
ultimate authority, Parliament, has already corrected the
defect or
inequality in issue through the Amendment Act which is presently in
operation. Furthermore, add the applicants, the respondents
expressly
state that they seek nothing less than the suspension of any
declaration of invalidity until 1 August 2008. Neither do
the
Minister or the Fund profess any interest in any measures which would
bring relief to those persons who remain affected by
the impugned
provisions.
[41]
It is further contended on behalf of the applicants that in any event
a suspension order would not be appropriate. Dealing
with such
orders, Bishop
17
gives as the primary reasons therefor, firstly,
"the
most common and obvious use for a suspension order is when an
immediate order of invalidity will create a lacuna in the
law that
would create uncertainty, administrative confusion or
potential
hardship"
and,
secondly,
"where
multiple legislative cures to the constitutional defect exist. This
rationale is based on the separation of powers doctrine.
It is for
the legislature, not the judiciary, to make policy decisions where
the Final Constitution does not require a particular
outcome".
These
circumstances do not pertain to the present matter since the
enactment of the Amendment Act and the respondents' declared
attitude
make it clear that the government contemplates no further legislative
steps. There is, thus, no
lacuna.
Notwithstanding
these considerations, given the wide discretion which must be
exercised, bounded only by justice and equity, in
my view the Court
must, nonetheless, have regard to the consequences of suspending, or
not, the declaration of invalidity.
[42]
There are powerful considerations weighing against an immediate
declaration of invalidity, notwithstanding that its effect
will be
limited by time and by the numbers of third party claims likely to be
affected thereby. The parties placed actuarial evidence
before the
Court projecting the likely financial implications for the Fund in
the event that the order was not suspended. On behalf
of the
applicants, Mr. Munro prepared a detailed analysis showing the impact
of the removal of the R25 000.00 cap, projecting that
it would reach
its peak in 2013 and decline thereafter. He also calculated the
likely "savings" to the Fund caused by
the limitations
placed on compensation by the Amendment Act. It would appear that
these have already commenced and will reach their
peak in 2012/2013.
On his projection, such savings, when fully realised by 2012/2013,
will be some R3.19 billion to R3.56 billion
annually in 31 March 2009
terms. This sum is roughly of the same order as the total capital
value of additional payments which
by estimation will be brought
about by an unsuspended order of invalidity, namely R4.0 billion -
R4.14 billion, in 31 March 2009
terms.
[43]
Obviously both the projected savings and the increase in the Fund's
liability resulting from an unsuspended declaration of
invalidity,
incorporate an appreciable margin of error and can be debated at
length. What is clear is that the effect of such a
declaration will
be to require the Fund to assume liability, in due course, of several
billion rands for compensation which it
would otherwise not have
borne.
[44]
On behalf of the respondents, it was argued that this would mean that
money which would otherwise have been utilised by government
for
other purposes such as education, housing or healthcare would be
redirected simply for the benefit of a relatively small class
of
claimants. Not only would this be unfair but it would amount to this
Court infringing the doctrine of the separation of powers
by
impinging upon those powers properly exercised by the other branches
of government. The argument relating to a re-allocation
of State
resources may be oversimplified, however, since the financial history
of the Fund indicates that its deficits are generally
met by
increases in the fuel levy. In this sense they are ultimately made
good by a direct tax on motorists and the likely effect
of an
unsuspended declaration of invalidity will be to require the State to
increase the fuel levy in order to meet the Fund's
increased
liability. Even this step, however, can be seen as amounting to the
government's hand being forced in regard to what
tax or levies it
should impose on the population or a portion thereof.
[45]
The applicants seek to reduce the impact of the greatly increased
Fund liability, should there be no suspension of the order,
by
reference to savings which the Fund will make as a result of the
provisions of the Amendment Act. However, such savings are
illusory
inasmuch as the reduction in the Fund's liability would have been
taken into account by it and the Minister when the Amendment
Act was
put into operation.
[46]
The consequence, however, of denying the applicants, and those in the
same position as them, some form of effective relief
are similarly
far reaching, not only in financial terms but from the perspective of
a constitutional state, one of whose founding
values is a right to
the equal protection and benefit of the law. The capped claims under
the impugned provision are not the only
hang-over from the Act. Over
the next 5 years or so, a much greater volume of claims by persons
with uncapped claims will be processed
and, where appropriate, met by
the Fund. The injustice of unequal treatment for a small minority of
road accident victims, based
on racial discrimination or on their
social origin, will thus continue for some years to come. In my view
this will be an unjust
and unacceptable outcome, the effect of which
will be, in many cases, to deny to those most in need thereof,
adequate compensation
for injuries and loss sustained as a result of
motor vehicle accidents.
[47]
It is relevant, furthermore, that the inequality inherent in the
impugned provisions must have been known to the Minister and
the Fund
for several years before they chose to remedy it. The report of the
Satchwell Commission was tabled in Parliament on 20
January 2003 and
recommended, amongst other measures, the repeal of the discriminatory
capped claim provisions. When, in 1996,
the Act was enacted the R25
000.00 capping provision contained in its predecessor were repeated.
The Amendment Act was assented
to on 23 December 2005, although those
sections which are material to the present action only commenced with
effect from 1 August
2008. As long ago as 1994 the capping provisions
were challenged in
Tsotetsi's
18
case,
albeit unsuccessfully, and thus the Minister and the Fund are
unlikely to have been taken by surprise by the equality challenge
raised in the present matter.
[48]
The challenge launched in
Tsotsetsi
was
against equivalent provisions in earlier legislation, but related to
causes of action which arose prior to the interim Constitution
coming
into force. Counsel for the respondents placed considerable reliance
on the following dicta from the judgement of O'Regan
J
19
:
"Nor
are
fhere
special
and peculiar reasons which would require that an order having
retroactive effect be made in this case. Indeed the converse
may be
true. The statute challenged by the applicant contains one of the
major social benefit programmes established by the State.
Were the
Court to declare the provisions unconstitutional and sever them .
from the Schedule with retrospective effect, the financial
implications would be considerable. From the expert reports provided
to us, the additional costs imposed upon the government would,
in the
case of a retrospective order, impose an additional annual cost on
the Fund of R200 million, as well as an additional non-recurring
liability of R440 million. In 1993/4, the Fund had expenses of R855
million and in 1994/5, the Fund's expenses just exceeded
Rl
billion. In both years, the Fund's income was in the region of
Rl
billion. The amount that would have to be paid by the fund if the
Court were to make a retrospective order, therefore, would have
a
grave impact on the financial status of the Fund. The Court would not
lightly make an order the effect of which would be to grossly
distort
the financial affairs of a welfare programme.
It
may well be, as the respondent argued, that the interests of justice
and good government would best be met in such a case by
an order in
terms of the proviso to s 98(5) of the Constitution which would
suspend the order of invalidity for a period of time
in order to give
the Legislature an opportunity to attend to the matter. It is true
that the applicant was seriously injured in
a motor vehicle accident
and that the provisions of the Schedule deprive him of full
compensation
for
those
injuries (although it appears that the applicant has received a
significant payment from the Workmen's Compensation Commissioner).
But the effect of declaring the impugned provisions invalid would
have such an inordinate effect on the financial structure of
the Fund
that it may be that those interests of justice would be outweighed.
That may well have been the case even if the accident
had occurred
after the Constitution came into operation. In the circumstances, I
am not persuaded that this is a case in which
public policy would
require, not merely that a retrospective order be made, but
an
order
which would result in the Constitution operating retroactively. In
the circumstances, it must be held that the referral in
terms of s
102(1) by the Transvaal Provincial Division was not valid on the
grounds that the issue referred to this Court cannot
be decisive of
the case before that Court."
[49]
Although O'Regan J's remarks concerning the merits of the challenge
must be given their due weight, they were
obiter
inasmuch
as that issue was, for various reasons, not squarely before the
Court. Furthermore, as the applicants' counsel pointed
out, there are
differences between the circumstances of the present matter and those
in
Tsotsetsi.
The
question in the present matter, as opposed to the circumstances in
Tsotsetsi,
is
whether, given that the impugned provisions must be held to have been
invalid when the applicants' causes of action arose, there
are
special circumstances which require a departure from the ordinary
rules of objective invalidity i.e. that the impugned law
became
invalid from the moment when the Constitution came into effect. Had
there been a ruling adverse to the government in
Tsotsetsi,
it
would in all probability have been afforded an opportunity by the
Court to legislatively correct the situation. By contrast,
in the
present matter the respondents are content with the legislative steps
taken thus far. Furthermore, different financial scenarios
apply in
each case.
[50]
Apart from the far-reaching financial consequences of a declaration
of invalidity with immediate effect, further arguments
made in favour
of a suspended order centre around the undesirability of the Court
taking a decision which will disturb what was
described as the
considered compromise arrived at by Parliament in the form of the
Amendment Act. In support of this argument,
reliance was placed on
the following statements by the Constitutional Court in
Minister
of Health and Others v Treatment Action Campaign and Others
20
:
"Courts
are not institutionally equipped to make the wide-ranging tactual and
political enquiries necessary ... for deciding
how public revenues
should most effectively be spent. There are many pressing demands on
the public purse. As was said in Soobramoney:
'The
State has to manage its limited resources in order to address all
these claims. There will be times when this requires it to
adopt a
holistic approach to the larger needs of society rather than to focus
on the specific needs of particular individuals within
society.'"
The
Court went on to say:
"Courts
are ill-suited to adjudicate upon issues where Court orders could
have multiple social and economic consequences for
the community. The
Constitution contemplates rather a restrained and focused role for
the Courts, namely, to require the State
to take measures to meet its
constitutional obligations and to subject the reasonableness of these
measures to evaluation. Such
determinations of reasonableness may in
fact have budgetary implications, but are not in themselves directed
at rearranging budgets.
In this way the judicial, legislative and
executive functions achieve appropriate constitutional balance."
[51]
The full Court in that matter was faced with the argument that the
doctrine of separation of powers demanded that even if it
should find
that government policies fell short of what the Constitution
required, the only competent order that it could make
was to issue a
declaration of rights to that effect, leaving the Government free to
pay heed to the declaration and to adapt its
policy insofar as that
might be necessary to bring it into conformity with the Court's
judgment. In response the full Court stated
as follow:
"This
Court has made it clear on more than one occasion that, although
there are no bright lines that separate the roles of
the Legislature,
the Executive and the Courts from one another, there are certain
matters that are pre-eminently within the domain
of one or other of
the arms of government and not the others. All arms of government
should be sensitive to and respect this separation.
This does not
mean, however, that Courts cannot or should not make orders that have
an impact on policy.
The
primary duty of Courts is to the Constitution and the law, 'which
they must apply impartially and without fear, favour or prejudice'.
The Constitution requires the State to 'respect, protect, promote,
and fulfil the rights in the Bill of Rights'. Where State policy
is
challenged as inconsistent with the Constitution, Courts have to
consider whether in formulating and implementing such policy
the
State has given effect to its constitutional obligations. If it
should hold in any given case that the State has failed to
do so, it
is obliged by the Constitution to say so. Insofar as that constitutes
an intrusion into the domain of the Executive,
that is an intrusion
mandated by the Constitution itself. There is
a/so
no
merit
in the argument advanced on behalf of government that a distinction
should be drawn between declaratory and mandatory orders
against
government. Even simple declaratory orders against government or
organs of State can affect their policy and may well have
budgetary
implications. Government is constitutionally bound to give effect to
such orders whether or not they affect its policy
and has to find the
resources to do so. Thus, in the
Mpumalanga
]
21
case, this Court set aside a provincial government's policy decision
to terminate the payment of subsidies to certain schools and
ordered
that payments should continue for several months.
A/so,
in
the
case
of
August
22
the Court , in order to afford prisoners the right to vote, directed
the Electoral Commission to alter its election policy, planning
and
regulations, with manifest cost implications.
23
as
would any other victim of a motor vehicle accident whose claim arose
before 1 August 2008.
[54]
Should this Court suspend any order until 1 August 2008, as urged by
the respondents, the result will be a ringing but empty
declaration
of invalidity. In
Fose
v Minister of Safety and Security
24
Ackermann
J held:
"Given
the
historical context in which the interim Constitution was adopted and
the extensive violation of fundamental rights which had
preceded it,
I have no doubt that this Court has a particular duty to
ensure
that,
within the bounds of the Constitution, effective relief be granted
for the infringement of any of the rights entrenched in
it. In our
context an appropriate remedy must mean an effective remedy, for
without effective remedies will breach, the values
underlying and the
rights entrenched in the Constitution cannot properly be upheld or
enhanced."-
[55]
In my view, in the circumstances of this matter, a declaration of
invalidity of the impugned provisions, based as it is on
the
fundamental right to eguality before the law, requires that effective
and not merely declaratory relief be granted. However,
should the
declaration not be suspended without any further qualification, the
effect will be to create a relatively small and,
by comparison
privileged class of claimants able to claim full compensation from
the Fund for their injuries and losses. A further
effect will be to
burden the Fund, or rather its guarantor, the government, with
billions of rands of additional liability for
which no provision has
been made at the very time that it is moving
towards
a more egalitarian system of compensation. Such an outcome also
strikes me as inequitable as well as being fiscally undesirable.
[56]
During argument it was put to counsel that an appropriate remedy
might be to, in effect, extend the reach of the Amendment
Act to the
applicants and others in their position. Although the suggestion
found favour with neither the applicants nor the respondents,
I
consider that such an outcome would be far preferable to both a
suspended, and thus empty, declaration of invalidity on the one
hand,
and an unqualified and immediate declaration, on the other. Such a
dispensation will reflect, to a large measure, the legislative
choice
already made by Parliament as to how to deal with such claims and
will avoid the creation of a relatively small class of
claimants
privileged over others who were in the same position, but whose
claims have been finalised. Although such an order will
inevitably
mean increased liability for the Fund, such increased liability will
be substantially less than if the Fund's liability
for such claims
was unlimited. An order in the terms which I envisage will thus avoid
the judicial imposition of what is, by any
standards, hugely
increased and unforeseen liability on the part of the Fund and its
guarantor, the State.
[57]
Accordingly, for the reasons given, I consider that it would be just
and equitable that there be no suspension of the declaration
of
invalidity but that it be qualified, as described above, to bring it
into alignment with the provisions of the Amendment Act.
COSTS
[58]
The applicants seek an order for their costs in this matter whilst
the respondents contend that it would be appropriate for
each party
to pay their own costs. In
Biowatch
Trust v Registrar, Genetic Resources and Others
25
the
Constitutional Court stated:
"...particularly
powerful reasons must exist for a Court not to award costs against
the State in favour of a private litigant
who achieves substantial
success in proceedings Prought against it."
No
such reasons have been suggested in this matter and in the
circumstances a costs order must follow.
[59]
In the result the following order is made:
(1)
It
is declared that
sections 18(1)(a)(i)
and
18
(1)(b) of the
Road
Accident Fund Act 56 of 1996
, as they stood prior to 1 August 2008,
were inconsistent with the Constitution and invalid.
(2)
It
is declared that
section 18(2)
of the
Road Accident Fund Act 56 of
1996
, as it stood prior to 1 August 2008, was inconsistent with the
Constitution and invalid.
(3)
Such
declarations of invalidity will apply to and govern all claims
instituted or to be instituted under the
Road Accident Fund Act 56 of
1996
, which at the date of this order:
(a)
have
not prescribed; and
(b)
have
not been finally determined by judgments at first instance or on
appeal; and
(c)
have not been finally determined by settlement duly concluded.
(4)
All
such claims referred to in para 3 above shall qualify for no greater
compensation than that which would accrue under the provisions
of the
Road Accident Fund Amendment Act, 19 of 2005
, as it stood on
1
August
2008.
(5)
This
order is referred to the Constitutional Court for confirmation of the
order of constitutional invalidity.
(6)
The
respondents are ordered, jointly and severally, to pay the costs of
this application, including the costs of the expert witness
Munro.
BOZALEK
,
J
JUDGE
OF THE HIGH COURT
1
Act
56 of
1996.
2
Act 108
of
1996.
3
Act
130
of
1993.
4
Act
19
of 2005.
5
9
of the Bill of Rights.
6
10
of the Bill of Rights.
7
12
of the Bill of Rights.
8
38
of the Bill of Rights.
9
27
of the Bill of Rights.
10
1398
(1) SA 300
(CC).
11
Section
8(1) of the Interim Constitution was materially the same as the
current section 9
(1).
It
provided:
"Every
per
;on
shall
have the right to equality before the law and to equal protection of
the law'.
12
7
See
Victoria
& Alfred Waterfront (Pty) Ltd v Police Commissioner. Western
Cape
2004
(4) SA 444
(C) at 448 G.
13
[2004] ZACC 12
;
2004 (4) SA 125
(CC) para 18.
14
2007
(6) SA 96
(CC) at para 47(3)(ii).
15
[1996] ZACC 19
;
1997
(1) SA 585
(CC).
16
2007
(3) SA 121
(CC) para 29.
17
Bishop
Remedies
in
Woolman and Others (eds) Constitutional Law of South Africa (2 ed) 9
-121.
18
Supra.
19
Cited
at paras 9 and 10.
20
(2)
[2002] ZACC 15
;
2002 (5) SA 721
(CC) paras 37 - 38.
21
Premier.
Mpumalanga. and Another v Executive Committee. Association of
State-Aided Schools. Eastern Transvaal
[1998] ZACC 20
;
1999
(2)
SA 91
(CC)
(1999 (2) BCLR 151).
22
August
and Another v Electoral Commission and Others
[1999] ZACC 3
;
1999
(3) SA 1
(CC)
(1999 (4) BCLR 363).
23
Minister
of Health v Treatment Action Campaign
(supra)
at paras 98 - 99.
24
1997 (3) SA786 (CC) at para 69.
25
2009
(6) SA 232
(CC) at para 24.