The Constitutional challenge to the RAF Amendment Act has faltered at the first step.

On 31 March the High Court ruled against the Law Society of South Africa, the South African Association of Personal Injury lawyers, the Quad Para Association of South Africa and other applicants in finding that the amendments to the act are not inconsistent with the Constitution. In a 202 page judgment the court declined to declare the amendments invalid and dismissed the application .The applicants have sought leave to appeal, probably to the Supreme Court of Appeal, to pursue the matter.

The judgment deals in some detail with section 21 of the Amendment Act which abolishes the common law claims for loss or damage resulting from bodily injury or the death of any person resulting from the driving of a motor vehicle.

The applicants contended that the abolition constitutes a breach of the victim's rights to security of person, the right to an appropriate and effective remedy for breaches of that right, and of the obligation of the State to protect those rights. The Court found that section 12(2) of the Constitution which deals with the right to security of person does not apply, nor was it intended to apply, to victims of motor vehicle accidents.

The applicants also contended that the rationale behind the abolition is flawed because it protects the wrongdoer rather than the victim. The abolition of common law rights entails the abrogation of established rights which required justification by the RAF and other respondents. It was also contended that section 21 is irrational and unreasonable because it reduces the compensation victims were entitled to while simultaneously depriving them of the right to obtain effective relief.

The Minister of Transport contended that the new "scheme" introduced by the amendment act is rational having regard to purpose which the government wished to achieve. The rationale for abolishing the common law rights is

• The compensation payable remained fault based in that road accident victims are entitled to compensation only if the loss was due to someone else's fault
• The substitution of a statutory claim is to the advantage of claimants as the "debtor " ( the Fund) would have the ability to pay.

• The trade off for this is that the compensation is limited, because there is a need to meet basic needs from public funds
• The immunity afforded to drivers and owners of vehicles arises because they are the funders of the schemes through fuel levies.

In dealing with the rationality of the law, the court pointed out that it is not empowered to interfere with a law because it considers it ineffective or because there are better ways of dealing with a problem. As long as the law is objectively rational the court cannot interfere with it or second guess policy decisions taken by duly elected bodies. For the applicants to succeed on the basis of irrationality they would have had to show that the amendment of the Act serves no legitimate governmental purpose and the court declined to make this finding.

The court then turned to the attack on the constitutionality of the regulations. The obligation of the RAF to pay for general damages only for "serious injury" was dealt with on the same basis as the abolition of common law rights. The removal of the right to claim damages for losses other than "serious injury" is nothing more than an abolition of a common law right and the above arguments relating to rationality apply equally.

The limitation of a claim for loss of income to an amount of R160 000 (adjusted quarterly in terms of the Act) was described by the applicants as "especially irrational". The respondents, which included the Minister of Finance, who intervened in the application, explained the reasoning behind the cap of R160 000. They allege that the capped amount will only adversely affect one percent of the population whereas the savings achieved by the introduction of the cap will be in the region of 35%.

Claims by foreign visitors would generally be for amounts higher than the capped amount yet they hardly contributed to the fuel levy at all. It was also contended that to fund uncapped loss of income claims would negatively affect the economy because the increased fuel levy would result in slower investment and economic growth.

The court therefore found that cap does not infringe on any constitutional rights nor is it irrational or unreasonable.

The various other challenges to the reasonableness of the tariff for emergency and other care, the deprivation of access to court by the establishment of an appeal tribunal, and the method of assessment of serious injuries were rejected.

In dealing with the costs of the application the court found that the applicants had raised many legitimate concerns and declined to award costs against the applicants. This may have been comforting for the applicants, as the court record was in excess of 6000 pages and the application involved 6 senior counsel , 8 juniors and a number of attorneys.

It is likely that the matter will be taken on appeal, ultimately to the Constitutional Court. Until such time as the appeal is dealt with it would be prudent to obtain personal accident and public liability insurance cover for personal injury. The Act may well survive the attack.

Insurers are likely to find themselves in a quandary with regard to what should be reserved for potential passenger liability claims. Most Motor policies still provide third party liability cover and in the event that the challenge succeeds with retrospective effect claims will have to be met.

Section 32 read with Schedule 2 of the Short-term Insurance Act requires insurers to value their liabilities. Insurers are required to estimate what will become payable in respect of claims incurred. and liabilities for potential future claims must be determined in accordance with financial reporting standards. It would be unusual to provide for liabilities that do not currently exist in law on the basis that the law may change

Written by: Craig Woolley, Director at Deneys Reitz.