Road Accident Fund v Patrick Norman Arendse NO

In September 1991, the respondent's minor daughter Cindy was severely injured in a road accident. The respondent brought an action against the Multilateral Motor Vehicle Accidents Fund (MMF), claiming damages including costs of future hospital accommodation and medical treatment. In terms of a settlement agreement in April 1996, SA Eagle (the MMF's appointed agent) gave an undertaking under article 43(a) of the MMF Act to pay future accommodation and medical costs as they were incurred. The settlement also included R22,810.00 for the costs of a curator bonis to administer the damages award. Instead of appointing a curator bonis, the respondent's legal advisers formed a trust to administer the award, with the respondent's attorney Mr Halliday as one of the trustees. The R22,810.00 was paid to the trust. The respondent later sought a declaratory order that the costs incurred by Mr Halliday in administering the article 43(a) undertaking fell within the meaning of the undertaking and that the RAF (which had taken over the MMF's liabilities) was liable to compensate him for these costs.

• Whether the costs of administering an article 43(a) undertaking fall within the scope of the undertaking itself
• Whether costs not claimed as damages in the original claim for compensation can subsequently be claimed under an undertaking given in terms of article 43(a)
• Whether the Road Accident Fund is liable to pay administrative costs beyond what was agreed for a curator bonis when trustees are appointed instead

The appeal succeeded. The order of the Court a quo was altered to read: 'The application is dismissed.' No costs order was made in either the Supreme Court of Appeal or the Court below.

The binding legal principle established is that an undertaking given by the Road Accident Fund (or its predecessor funds) under article 43(a) of the MMF Act (now section 17(4)(a) of the RAFA) only covers future costs of the specific type set out in the provision (accommodation, medical treatment, services, goods) that were included in the claimant's original claim for compensation and in respect of which liability was accepted or established. The costs of administering the undertaking itself do not fall within the scope of the undertaking and cannot be claimed subsequently if they were not included in the original claim for compensation. The purpose of article 43(a) is solely to address the quantification problem by allowing certain future damages to be paid as incurred, rather than assessed and paid in a lump sum.

The Court expressly declined to decide whether the costs of administrative services of the kind rendered by Mr Halliday could, in an appropriate case, justifiably be claimed in a summons as future 'loss or damage' and thus qualify for inclusion in an undertaking offered by the RAF or ordered by the Court. Conradie JA stated: 'Whether the costs of services of the kind rendered by Mr Halliday could in an appropriate case justifiably be claimed in a summons as future "loss or damage," and so qualify for inclusion in an undertaking offered by the RAF or ordered by the Court, is a matter that does not arise for decision. I refrain from saying anything about it one way or the other.' The Court also made an observation about the unusual nature of the claim, noting that if a curator bonis had been appointed as originally intended, that person would have been obliged to administer the undertaking as part of their duties for the agreed remuneration, and it seemed 'extraordinary' for trustees to claim additional remuneration for doing the same work.

This case is important for clarifying the scope and purpose of undertakings given by the Road Accident Fund (and its predecessor funds) under article 43(a) of the MMF Act and section 17(4)(a) of the Road Accident Fund Act. It establishes that such undertakings are limited to covering future costs that were specifically claimed as damages in the original compensation claim, and do not extend to the administrative costs of managing the undertaking itself. The judgment reinforces the principle that the RAF's liability is confined to compensating third parties for 'loss or damage' actually claimed and accepted or adjudged. It has practical implications for how claims against the RAF should be structured and what costs can be recovered under undertakings for future expenses.