The Road Accident Fund (RAF) had for approximately four years been processing and paying claims submitted by suppliers of medical services (hospitals, doctors, etc.) who had treated third party claimants injured in motor vehicle accidents. These suppliers had entered into agreements with Alexander Forbes Accident Compensation Technologies (A-Fact), a company that assessed the merits of third party claims and suppliers' prospects of recovery from the RAF. A-Fact is not a firm of attorneys. The agreements provided that suppliers would pay fees to A-Fact after the RAF settled their claims. A-Fact would have panel attorneys submit claims to the RAF. Once approved, the RAF paid the attorney, who paid A-Fact, which deducted its fees and paid the net amount to the supplier. On 27 October 2006, the RAF stopped paying these claims, refusing to process approximately 49,000 affected claims totaling R284 million. The RAF took the position that the agreements between A-Fact and the suppliers contravened section 19(d) of the Road Accident Fund Act 56 of 1996, rendering the supplier claims unenforceable.
The appeal was dismissed with costs. The RAF was ordered to pay the costs of both the suppliers (1st-1238th respondents) and A-Fact (1239th and 1240th respondents), with A-Fact's costs to include the costs of two counsel.
Section 19(d) of the Road Accident Fund Act 56 of 1996 applies only to agreements entered into by third party claimants, not to agreements entered into by suppliers of medical services. The phrase 'subject, mutatis mutandis, to the provisions applicable to the claim of the third party concerned' in section 17(5) means that the supplier's right to claim from the RAF is conditional upon the validity and enforceability of the third party's claim, but does not incorporate section 19(d)'s restrictions on the supplier's own contractual arrangements. It is not necessary to substitute 'supplier' for 'third party' in section 19(d) to give effect to section 17(5). The supplier's claim is accessory to the third party's claim in the sense that it depends on the third party's entitlement to compensation, but the supplier's own agreements with third parties (such as claims processing companies) do not render the supplier's claim unenforceable under section 19(d).
The Court observed that section 19(d) probably intends to prevent third parties from entering into champertous agreements, protecting indigent and often illiterate claimants from being overreached by unscrupulous touts and claims consultants who would deprive them of their compensation. However, these considerations do not apply to suppliers who are usually institutions and professionals capable of looking after themselves and who should have contractual freedom to engage whomever they choose to process their claims. The Court also noted that the RAF's interpretation would achieve nothing from the RAF's perspective because if a third party's claim is valid and enforceable but the supplier's is not, the RAF would still be liable to compensate the third party who in turn remains contractually liable to the supplier, with the result that a third party may be faced with a claim from a supplier without having been paid - a result that could hardly have been what the draftsman intended.
This case is significant in South African law for several reasons: (1) It clarifies the interpretation of section 17(5) read with section 19(d) of the Road Accident Fund Act 56 of 1996, establishing definitively that section 19(d)'s restrictions on agreements with non-attorneys apply only to third party claimants, not to suppliers of medical services; (2) It affirms the purposive approach to statutory interpretation, holding that provisions must be interpreted in light of the Act's main purpose of providing the widest possible protection to third parties; (3) It recognizes the different positions of third parties (often indigent and vulnerable to exploitation) versus suppliers (professional entities capable of protecting their own interests) and holds that restrictions designed to protect the former need not apply to the latter; (4) It has practical significance for the medical services industry and the RAF's claims processing system, allowing suppliers to engage claims processing companies to assist with recovery from the RAF; (5) The decision affected approximately 49,000 claims worth R284 million that had been frozen by the RAF. The case demonstrates the Court's willingness to adopt a commercially sensible interpretation that promotes the effective operation of the statutory scheme.
Explore 1 related case • Click to navigate