The Road Accident Fund and Others v Hlatshwayo and Others

Two claimants (Hlatshwayo and Masilela) instituted separate delictual claims against the Road Accident Fund (RAF) arising from motor vehicle accidents. In both cases, the RAF failed to attend rule 37 pre-trial conferences and rule 37A judicial case management hearings despite being properly notified. Both claims were settled at the last minute - the day before or on the day of trial (March 2022). The high court refused to make the settlement agreements orders of court due to the late settlement. The Judge President constituted a full court to inquire into the reasons for the late settlement and the costs occasioned thereby, pursuant to the court's practice directives. The full court issued various directives to RAF officials seeking explanations. The CEO wrote a letter to the Judge President questioning the nature of the proceedings and his role, which the Judge President did not respond to directly. The full court found that the RAF's system implemented after terminating its panel of attorneys in 2020 caused failures in pre-trial procedures and attendance. The full court ordered the CEO and the RAF Board to pay costs de boniis propriis (out of their own pockets) for the late settlement and the inquiry costs. The RAF, CEO and Board appealed. The respondents opposed only to the extent that the RAF should pay inquiry costs, but did not support personal costs orders against the CEO and Board.

• Whether it was competent for the Judge President to refer the fee inquiries to a full court for an inquiry into costs
• Whether the full court erred in ordering costs de boniis propriis against the CEO and RAF Board
• Whether it was proper to order costs against the RAF Board when it had not been joined as a party to the proceedings
• Whether costs should have been granted against the CEO and Board in light of the indemnity provision in section 15(3) of the Road Accident Fund Act 56 of 1996
• Whether malice or bad faith was established to overcome the statutory indemnity
• Whether the RAF should bear the costs of the inquiry

1. The appeal against the first appellant (RAF) is dismissed. 2. The appeal is upheld in respect of the second and third appellants (CEO and Board). 3. The first appellant (RAF) shall pay the first and second respondents' costs of the appeal, including costs of two counsel where so employed. 4. The order of the high court is set aside and replaced with: 'The defendant is ordered to pay the plaintiffs' costs of suit, including the costs of the inquiry and of two counsel in the inquiry, where so employed.'

The binding legal principles established are: (1) High courts have power under section 173 of the Constitution, rule 37A and practice directives to conduct inquiries into costs arising from late settlement, even where parties have agreed on costs. (2) Personal costs orders (de boniis propriis) against public officials require bad faith, which means intent to deceive, fraudulent, dishonest or perverse conduct, or gross recklessness revealing fundamental breakdown of orderly exercise of authority. Administrative inefficiency or poor planning alone is insufficient. (3) No costs order may be made against a party without that party being joined to proceedings and given an opportunity to be heard - this is a fundamental principle that cannot be overridden. (4) Section 15(3) of the RAF Act provides statutory indemnity to RAF officials for acts done in good faith in performance of their duties. This protection can only be displaced by proof of malice or bad faith. (5) Courts must confine themselves to deciding issues properly raised by parties and should not investigate matters not before them, particularly where those matters are subject to litigation elsewhere. This flows from separation of powers and the judicial function. (6) Where a party's conduct necessitates a costs inquiry (such as failure to attend case management hearings), that party may be liable for the costs of the inquiry as part of the costs of suit, even where the inquiry was initiated by the court mero motu.

The Court made several non-binding observations: (1) Practice directives deal with day-to-day functioning of courts, supplement the rules but should not substitute them. In case of conflict, rules prevail, but directives have the same force as rules. (2) The inquiry in this case was extensive, costly (9 months, 10 counsel) and defeated the very purpose of judicial case management which is to reduce delays and costs. While the court had power to conduct it, the extent was concerning. (3) The RAF has been in financial difficulties for a long time, with repeated deficits exacerbated by mounting legal fees. The Court expressed hope that the RAF's reorganization into settlement hub, short-term trial and long-term trial departments will improve efficiency. (4) One of the claims was prematurely set down for trial when expert reports were still outstanding, though this was not addressed by the full court. (5) Courts should not be obliged to give their imprimatur to cost orders they consider inappropriate, even where parties agree. (6) The CEO's letter to the Judge President questioning the proceedings, written without notifying other parties, was inappropriate. His claim that it was written in a personal capacity while signing as CEO was perplexing and did not bear scrutiny. (7) Judicial officers are obligated under the Norms and Standards to take control of case management from an early stage and actively take responsibility for speedy finalization of cases.

This case is significant for: (1) Clarifying the powers of high courts to conduct inquiries into costs arising from late settlement of matters, particularly involving state entities; (2) Emphasizing the limits on courts ordering personal costs against public officials - such orders require bad faith or malice, not merely administrative inefficiency or poor decision-making; (3) Reinforcing fundamental principles of natural justice - no order may be made against a party without affording them an opportunity to be heard; (4) Interpreting section 15(3) of the RAF Act's indemnity provision and the high threshold required to overcome it; (5) Recognizing separation of powers - courts should not inquire into internal administrative decisions of executive entities unless properly before them; (6) Affirming that courts should confine themselves to issues raised by parties and not create new factual issues; (7) Balancing judicial case management objectives with avoiding costly, lengthy inquiries that defeat the purpose of expediting litigation; (8) Confirming that practice directives have the force of rules and courts retain discretion on costs despite party agreements. The judgment provides important guidance on when personal costs orders against state officials are appropriate and the procedural requirements for such orders.