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[2008] ZASCA 18
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Road Accident Fund v Abdool- Carrim and Others (293/07) [2008] ZASCA 18; [2008] 3 All SA 98 (SCA); 2008 (3) SA 579 (SCA) (27 March 2008)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
Case
No: 293/07
REPORTABLE
In
the matter between:
ROAD
ACCIDENT FUND ...
APPELLANT
v
ABDOOL-CARRIM
ATO AND OTHERS ... 1
st
-1238
th
RESPONDENTS
ALEXANDER
FORBES COMPENSATION
TECHNOLOGIES
(PTY) LTD ... 1239
th
RESPONDENT
ALEXANDER
FORBES ACCIDENT
COMPENSATION
TECHNOLOGIES (PTY) LTD ... 1240
th
RESPONDENT
Coram: Streicher,
Navsa, Heher, Maya, Cachalia JJA
Heard: 4
March 2008
Delivered: 27
March 2008
Summary:
Section
19(d)
of the
Road Accident Fund Act 56 of 1996
is applicable only to
agreements made by third parties, not to those by suppliers.
Neutral
citation: This judgment may be referred to as
Road
Accident Fund v Abdool-Carrim
(293/2007)
[2008]
ZASCA 18
(27 March 2008).
JUDGMENT
CACHALIA
JA
[1] This
appeal concerns the proper interpretation of
s 17(5)
read with
s 19(d)
of the
Road Accident Fund Act 56 of 1996
.
[2] The
appellant is the Road Accident Fund, established in terms of the
s 2
of the Act. It has the statutory responsibility in terms of
s 17(1)
to compensate third parties for loss or damage suffered as a result
of injury or death wrongfully caused by the driving of motor
vehicles.
1
Such compensation may include the third party’s medical costs
incurred in respect of accommodation, treatment or services,
which
for convenience, I will refer to as medical services.
[3] Where
a third party is entitled to compensation and has incurred costs in
respect of medical services which are recoverable
from the Fund,
s
17(5)
permits ‘suppliers’ who have rendered such services
the right to claim their costs directly from the Fund without having
to claim from the third party. It also provides, and this is the
contentious part, that ‘such claim shall be subject,
mutatis
mutandis,
to
the provisions applicable to the claim of the third party concerned .
. ..’
Section 19(d)
renders a third party claim unenforceable
against the Fund if he or she has entered into an agreement with
someone other than an
attorney or someone who falls within a class of
persons referred to in
s 19(c)(ii)
in accordance with which he or she
has undertaken to pay the person for their services after settlement
of the claim. The narrow
question in this appeal is whether the
phrase ‘subject
mutandis
mutandis
to’
in
s 17(5)
renders
s 19(d)
applicable not only to third party claims
but also to those of suppliers in the sense that should a supplier
enter into such an
agreement the supplier’s claim against the
Fund becomes unenforceable.
2
It is necessary to refer briefly to the factual matrix within which
this dispute arises.
[4] Of
the 1
st
to the 1238
th
respondents
in this matter the majority are suppliers of medical services. I
refer to them as ‘the respondents.’ The
1239
th
and 1240
th
respondents are public companies which may conveniently be referred
to together in the singular as ‘A-Fact’. A-Fact
provides
services to its clients, the respondents. The services include an
assessment of the merits of the third party’s
claim and also of
the supplier’s prospects of recovery from the Fund. They are
rendered in terms of written agreements which
provide that the
respondents pay fees to A-Fact for its services after the Fund has
settled their claims. As A-Fact does not purport
to practice as
attorneys, these agreements would, on the face of it, be hit by
s
19(d)
if it is applicable to agreements of suppliers.
[5] The
way the system works is that when a third party’s claim is
ready for submission to the Fund the documents are handed
to an
attorney serving on an A-Fact panel. The attorney then submits the
claim to the Fund. Once the Fund approves the claim, it
pays the
attorney who in turn pays A-Fact. Thereafter A-Fact deducts its fees
and pays the nett amount to the supplier. If it is
necessary to
resort to litigation the attorney attends to that.
[6] The
system worked this way for a period of four years with the Fund’s
knowledge and agreement. However on 27 October 2006
the Fund stopped
paying these claims after it took the view that the agreements
between A-Fact and the respondents fell foul of
s 19(d)
– thus
precluding the Fund’s liability. It consequently refused to
process some 49 000 affected claims involving a
total claim value of
R284 million. In the ensuing litigation the Pretoria High Court
rejected the Fund’s view. Mynhardt J
held that
s 19(d)
applied
only to agreements entered into by third parties, not to those by
suppliers. He also refused the Fund leave to appeal.
The present
appeal is with this court’s leave. I turn to the relevant
statutory provisions.
The
Statutory Provisions
Section
17(5):
‘Where a third party is entitled to compensation in
terms of this section and has incurred costs in respect of
accommodation
of himself or herself or any other person in a hospital
or nursing home or the treatment of or any service rendered or goods
supplied
to himself or herself or any other person, the person who
provided the accommodation or treatment or rendered the service or
supplied
the goods (the supplier) may claim the amount direct from
the Fund or an agent on a prescribed form, and
such
claim shall be subject, mutatis mutandis, to the provisions
applicable to the claim of the third party concerned,
and may not exceed the amount which the third party could, but for
this subsection, have recovered.’
(Added
emphasis).
19
Liability excluded in certain cases
‘
The
Fund or an agent shall not be obliged to compensate any person in
terms of
section 17
for any loss or damage —
(a) .
. .
(b) .
. .
(c) if
the claim concerned has not been instituted and prosecuted by the
third party, or on behalf of the third party by —
(i) any
person entitled to practise as an attorney within the Republic; or
(ii) any
person who is in the service, or who is a representative of the state
or government or a provincial, territorial or local
authority; or
(d) where
the third party has entered into an agreement with any person other
than the one referred to in paragraph (c) (i) or (ii)
in accordance
with which the third party has undertaken to pay such person after
settlement of the claim —
(i) a
portion of the compensation in respect of the claim; or
(ii) any
amount in respect of an investigation or of a service rendered in
respect of the handling of the claim otherwise than on
instruction
from the person contemplated in paragraph (c) (i) or (ii); or
(e) .
. .
(f) .
. ..’
[7] I
turn to the point of contention – how the phrase ‘subject
mutatis
mutandis
to’
in
s 17(5)
is to be interpreted. The starting point is to consider
the statutory context within which the phrase is used. The object of
the
Act is to establish the Fund to pay compensation for loss or
damage to third parties wrongfully caused by the driving of motor
vehicles.
3
The Act’s main purpose is to provide the widest possible
protection to third parties.
4
[8] Section
17(5), as I have mentioned, confers on a supplier the statutory right
to recover its costs directly from the Fund. The
benefit to the
supplier is that the Fund guarantees payment subject only to the
condition that the third party must be entitled
to claim the amount
as part of his or her compensation and that the amount that the
supplier may recover may not exceed the amount
which the third party
is entitled to recover.
5
The advantage to third parties, who are often indigent, is that they
receive medical services comforted by the knowledge that their
medical costs are covered and that they are less likely to be faced
with a claim before having been paid. So while the subsection
was
enacted for the benefit of suppliers, it sits neatly with the Act’s
main purpose referred to above. This is the statutory
lens through
which the contentious phrase must be interpreted.
[9] A-Fact
and the respondents contend that the purpose of s 19(d) is to
protect third party claimants who are often illiterate
and indigent
from being overreached by unscrupulous touts and claims consultants
who deprive them of their compensation. These
considerations, they
say, do not apply to suppliers who are usually institutions and
professionals.
[10] The
Fund’s case on the other hand is that the service which A-Fact
renders brings the respondents’ claims within
the ambit of
sections 19(d) of the Act. This is because, in its submission, the
effect of s 17(5) is to render the provisions of
s 19, in so far as
they are applicable to the claim of the third party, equally
applicable to the claim of the supplier, but subject
to the necessary
changes to s 19 so as to afford logical sense to the provision when
it is adjusted to apply to the claim of the
supplier. Understood in
this way, submits the Fund, the agreements between the respondents as
suppliers and A-Fact, which as I
have mentioned, is not a company of
practising attorneys, fall foul of s 19(d), thus precluding any
liability on the Fund’s
part to them.
[11] The
phrase ‘subject
mutatis
mutandis
to’
means literally ‘subject, with the necessary changes, to’.
Any alterations must in their context be ‘necessary.’
6
By making the supplier’s claim ‘subject,
mutatis
mutandis,
to
the provisions applicable to that of the third party, the
legislature, in my view, intended to make the supplier’s right
to claim from the Fund conditional upon the validity and
enforceability of the third party’s claim
7
and not to render the supplier’s claim unenforceable against
the Fund by reason of an agreement with a person other than
an
attorney to pay such person, after settlement of the claim a portion
of the compensation in respect of the claim.
[12] Support
for the above interpretation is to be found in the main purpose of
the Act referred to earlier and also to the accessory
nature of the
supplier’s claim. In my view, the Fund’s interpretation
of the effect of s 17(5) is incorrect. It
is not necessary to
substitute ‘supplier’ for ‘third party’ in s
19(d) to give efficacy to the subsection.
On the contrary the
substitution places it at odds with the Act’s purpose, and from
the Fund’s perspective, achieves
nothing. For if a third
party’s claim is valid and enforceable and the supplier’s
is not, the Fund would still be liable
to compensate the third party
who in turn remains contractually liable to the supplier. The
consequence is that a third party may
be faced with a claim from a
supplier without having been paid and would be denied the benefit of
s 17(5) without any fault on
his or her part. This result could
hardly have been what the draftsman intended. Moreover, it is
illogical for the third party
claim to be valid and enforceable but
the supplier’s accessory claim not (except where the supplier
has not complied with
the prescribed formalities).
8
[13] It
is understandable that the legislature would seek to protect third
parties, many of whom are indigent, from entering into
champertous
agreements, which is probably what s 19(d) intends to achieve. But
there is no apparent reason to restrict the contractual
freedom of
suppliers, many of whom are professional people, institutions or
companies from contracting with whoever they choose
to process their
claims. They should be capable of looking after themselves.
[14] It
follows that s 19(d) is not applicable to the agreements which are
the subject of this appeal. The Fund was therefore wrong
to impugn
the agreements and to refuse to process the respondents’
claims.
[15] A-Fact
and the respondents were separately represented in this appeal, the
former by two counsel. The Fund is liable for their
costs incurred in
opposing the appeal.
[16] The
following order is made: The appeal is dismissed with costs. In the
case of the 1239
th
and 1240
th
respondents, such costs are to include the cost of two counsel.
________________
A
CACHALIA
JUDGE
OF APPEAL
CONCUR:
STREICHER
JA
NAVSA
JA
HEHER
JA
MAYA
JA
1
‘
Section 17(1): The Fund or an agent shall —
.
. .
be
obliged to compensate any person (the third party) 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 or 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.’
2
The
relevant provisions appear below at para 6.
3
See
sections
3 and 17(1).
4
Aetna Insurance Co v Minister of Justice
1960 (3) SA 273
(A) at 286E-F;
Padongelukkefonds
v Prinsloo
1999 (3) SA 569
(SCA) at 574B.
5
Van
Der Merwe v Road Accident Fund
2007
(6) SA 286
(SCA) para 7.
6
Touriel
v Minister of Internal Affairs, Southern Rhodesia
1946 AD 535
at 545;
Big
Ben Soap Industries Ltd v Commissioner For Inland Revenue
1949
(1) SA 740
(A) at 751.
7
See
Van der Merwe v Road Accident Fund
2007 (6) SA 286
(SCA) para 7.
8
In
Van der Merwe v Road Accident Fund
2007
(6) SA 286
(SCA) para 7, the supplier’s claim is characterised
as an ‘accessory claim’.