IN
 WESTERN ,
CASE :/
In the matter between:
ANELE MVUMVU 
LOUISE PEDRO
JIANCA SMITH 	
versus
MINISTER OF TRANSPORT
THE ROAD ACCIDENT FUND

JUDGEMENT   :   28 JUNE 2010

INTRODUCTION

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THE PERSONAL CIRCUMSTANCES OF THE APPLICANTS

First Applicant

[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.

Third Applicant

LEGISLATIVE BACKGROUND

[8] The relevant provisions, s 18(1) and (2), were amended by the Road Accident Fund Amendment Act4("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".

(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-

(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:

[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.

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 equality5, the right to dignity6, the right to security of the person7, the right to an effective remedy8, the right to healthcare and social security9. 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.

"(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.

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

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.

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.

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[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.

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[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.

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[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.

[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:

(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 -

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"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.

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[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.

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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

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"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.

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as would any other victim of a motor vehicle accident whose claim arose before 1 August 2008.

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[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

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"...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:

(c) have not been finally determined by settlement duly concluded.

, J
JUDGE OF THE HIGH COURT