Thursday 18 March 1999
The President has issued a proclamation requiring the Heath Commission’s Special Investigating Unit to investigate the defrauding of road crash victims by members of the legal profession.
The establishment of the investigation follows a Memorandum from the Minister of Transport Mac Maharaj to the Minister of Justice that certain legal practises be investigation by Judge Heath’s unit where road crash victims have been defrauded by their legal representatives. The proclamation will be published in the Government Gazette soon.
Maharaj said that the Road Accident Fund, of which he is the shareholding minister, has been aware of unethical and illegal behaviour by some members of the legal fraternity for a while after numerous complaints to both his office and the RAF. Of 143 cases investigated by the RAF and the Department of Transport, on average 56% of what was supposed to be paid to victims was kept by their lawyers and in six instances is appears that 100% of the amount the claimants were awarded was kept by their lawyers.
These practices occurred after payment and settlement, and were therefore outside the jurisdiction of the Fund. However, the Fund had referred many of the complaints it had received to the Law Society for action.
Maharaj said that the RAF covered party-to-party costs (the cost arising between lawyers from both parties in settling the claim) and these were lodged with the Master of the High Court and open to public inspection.
Attorney-client costs (the costs between the victim and his/ her lawyer) is out of the ambit of the Fund and is not public.
Maharaj said that because the abuse of attorney-client relations involved the use of public money, he had decided to recommended that the President refer the alleged failure of attorneys to pay over to claimants the total nett amount received in respect of compensation from the RAF after deduction of a reasonable amount and/or taxed amount in respect of "attorney-client" costs. This would involve invoking section 2(2) (c) and (g) of Act 74 of 1996.
Under Section 2(1) of the Special Investigating Units and Special Tribunals Act, 1996 (Act No. 74 of 1996), the cut-off date for the investigation would be 1st January 1990.
Maharaj said that the vulnerability of road accident victims to unscrupulous attorneys arises at various points in the procedures according to which claims are handled:
There are widespread reports of attorneys using touts to persuade potential claimants to sign a power of attorney entrusting the claim to be persued by the attorney. There are many complaints that claimants often sign such powers of attorney in circumstances where the claimant is unclear as to what the claimant has agreed to.
An attorney submits a claim on behalf of a client. The RAF investigates the claim, and if necessary, requests the attorney to supply further proof and details of the claim.
If the Fund accepts the claim, the matter is settled without recourse to the courts; if there is no agreement between the Fund and the attorney the matter is resolved by recourse to the courts. In either case, once the matter is resolved, the attorney submits a Bill of Costs in respect of legal fees to the Fund. These fees relate to "party to party costs" due to the claimant’s attorney.
If the RAF finds the itemised costs in the Bill of Costs to be too high steps may be taken to have the Bill of Costs "taxed" by the Master of the Supreme Court. In either case, once resolved, the RAF pays the claimant’s attorney
(a) the sum awarded to the claimant and
(b) the "party to party" costs due to claimant’s attorney.
Once the above amount (a) and (b) has been paid to the claimant’s attorney, the Fund has discharged its legal obligation.
However, in practice the attorney makes a further deduction from amount (a) above, under the category "attorney-client" and/or "attorney-and-own client" costs. Complaints then arise that many attorneys fail to pay over to their clients the total nett amount of the claim or pay too small a portion to the claimant.
Minister Maharaj said that the work of the Heath Special Unit is separate from the Commission of Inquiry into the Road Accident Fund to investigated numerous problems facing the Fund.
Parliament last year passed the Road Accident Fund Commission Act to set up a three-member Commission, chaired by a judge of the Constitutional Court or of a High Court, which is required to complete its work and report back to the President within one year of its appointment.
The object of the RAF Commission is "to inquire into and to make recommendations regarding a reasonable, equitable, affordable and sustainable system for the payment by the Road Accident Fund of compensation or benefits, or a combination of compensation and benefits, in the event of the injury or death of persons in road accidents in the Republic" [Section 2(2)].
Issued by Didi Moyle: PA and Media Liaison Officer to the Minister of Transport
Didi Moyle
PA and Media Liaison Officer to the Minister of Transport
Pretoria: (012) 309 3131 (phone) or (012) 328 3194 (fax)
Cape Town: (021) 457260 (phone) or (021) 461 6845 (fax)
email: moyle@mweb.co.za
or moyled@ndot.pwv.gov.za
(Pretoria only)
cell: 082 808 5108