Newnet Property (Pty) Ltd t/a Sunshine Hospital v The Road Accident Fund and Another

Newnet Property (Pty) Ltd operated a hospital treating patients injured in motor vehicle accidents, with the majority referred by the Road Accident Fund (RAF) or state hospitals. From March 2020, the RAF stopped paying Newnet for services rendered, leading to extensive litigation. Newnet obtained multiple judgments and consent orders against the RAF totaling R403,812,884.05, of which R336,316,021.13 was paid, leaving R92,085,106.36 outstanding. The RAF refused to comply with court orders, publicly announced its policy of non-payment through its spokesperson, enlisted SAPS to obstruct execution of warrants, and repeatedly bought back its own assets at auction rather than paying judgment debts. The RAF also failed to provide updated "Requested Not Yet Paid" (RNYP) lists and stopped adjudicating Newnet's claims. Newnet was forced to close its hospital in April 2023 due to non-payment, briefly reopened in August 2023, but suspended operations again in May 2025. Newnet brought an urgent application in June 2024 seeking enforcement of judgment debts and related relief including a mandamus against the CEO of the RAF. The high court dismissed the application on the basis that the relief was res judicata.

• Whether the relief sought by Newnet to enforce judgment debts was barred by the principle of res judicata
• Whether a mandamus could be granted against the CEO of the RAF to ensure compliance with court orders
• Whether the CEO or the Board of the RAF should be the subject of a mandamus order
• Whether a court can compel an organ of state to comply with judgment debts through a mandamus
• Whether the RAF's conduct constituted a breach of its constitutional obligations under section 165 of the Constitution

The appeal was upheld with costs. The high court order was set aside and replaced with an order that: (i) the RAF must pay the judgment debt of R92,085,106.36 within 7 days; (ii) the RAF must provide an updated RNYP list within 7 days; (iii) the RAF must provide updated RNYP lists every 14 days thereafter; (iv) the RAF must adjudicate all accounts within 120 days of receipt; (v) the RAF must pay all amounts due on the May 2023 RNYP list (R158,890,967.70) within 30 days and thereafter pay amounts due within 30 days of accounts appearing on the RNYP list; (vi) the Acting Chief Executive Officer, Mr Radikwena Phora, is directed and ordered to ensure the RAF complies with prayers (ii) to (vii); and (vii) the RAF must pay the costs of the application including those of two counsel.

The binding legal principles established are: (1) An application for enforcement of judgment debts is not res judicata as it constitutes a different cause of action from the original claim for payment; (2) A mandamus may be granted against the CEO (or acting CEO) of a public entity who is responsible for executive management to ensure compliance with court orders, particularly payment of judgment debts; (3) As an organ of state under section 239(b)(ii) of the Constitution, the RAF bears a constitutional obligation under section 165(3) and (4) to comply with court orders and assist and protect courts; (4) The CEO of the RAF, as the person responsible for day-to-day operations and management of the Fund's money under section 12(2) of the RAF Act, has a statutory duty to ensure payment of judgment debts; (5) A mandamus is an appropriate and necessary remedy to compel an organ of state to perform its statutory duty to pay judgment debts where other enforcement mechanisms have been frustrated; (6) Deliberate and systematic refusal by a state entity to comply with court orders constitutes a breach of constitutional obligations and undermines the rule of law.

The Court made several notable observations: (1) The Court noted that although the Board is the accounting authority of the RAF, nothing prevents a court from making an order against the CEO who is ultimately responsible for executive management; (2) The Court observed that it would be inappropriate to consider new factual defenses (such as lack of financial means) raised for the first time on appeal where the respondent chose not to file an answering affidavit but only raised points of law; (3) The Court commented that the RAF's conduct of publicly announcing its policy not to pay judgment debts and enlisting SAPS to obstruct lawful execution "undermines the rule of law and the dignity and authority of the courts"; (4) The Court noted that where an organ of state defaults on its obligation to comply with court orders, courts are "compelled to assume the invidious task of overseeing state action to secure compliance"; (5) The Court emphasized that "disobedience towards court orders or decisions risks rendering our courts impotent and judicial authority merely a mockery"; (6) The Court observed that the temporary closure of Newnet's hospital operations did not render the appeal moot as Newnet remained the owner and contemplated reopening upon payment.

This case is significant in South African law as it: (1) clarifies that enforcement proceedings for judgment debts are not barred by res judicata as they constitute a different cause of action from the original claim; (2) confirms that a mandamus can be granted against the CEO of a public entity to ensure compliance with court orders, not only against the Board; (3) reinforces that organs of state, including the RAF, have constitutional obligations under section 165 to comply with court orders and not interfere with the functioning of courts; (4) establishes that deliberate non-compliance with court orders by state entities undermines the rule of law and the dignity of courts; (5) confirms that a mandamus is an appropriate remedy to compel compliance where a public body systematically refuses to honor judgment debts; and (6) demonstrates the judiciary's willingness to take robust measures, including personal orders against officials, to ensure state compliance with judicial orders.