Court dismisses application for ‘coercive imprisonment’ of RAF CEO

An application to have Road Accident Fund (RAF) CEO Collins Letsoalo sentenced to “coercive imprisonment” because of the failure of the fund to make payment of judgment debts has been dismissed with costs by the High Court in Pretoria.

Advocate Michelle van Antwerpen, on behalf of Scholtz JC and Paul Anton van Aswegan, applied to declare the failure by the RAF to make payment of judgment debts as being deliberate, contemptuous of the court, and inconsistent with Section 12(1) of the Constitution.

They were seeking, under Section 172 of the Constitution, that the court grant a remedy in the form of the coercive imprisonment of the CEO of the RAF as a result of the failure of the fund to make payment of judgment debts owing to the applicants, which arise from damages claims for personal injury sustained as a result of motor vehicle accidents.

ALSO READ: High Court orders Road Accident Fund to pay costs in contempt case

The RAF and its CEO were cited as respondents to the application.

Court’s power to forbid imprisonment 

In a judgment handed down on Monday, Judge Denise Fisher said the applicants conceded that such relief is extraordinary but contend that the court’s wide powers under the Constitution allow the proscription against civil imprisonment for failure to pay a judgment debt to be overridden on the facts of this case.

Fisher said the applicants argued that this is because the non-payment is not merely a debtor’s delinquency but also conduct which is inconsistent with the Constitutional function and duty of the RAF and, particularly, with its obligations under Section 12(1) of the Constitution, which accords to all the right to security of the person and freedom from violence.

She said the applicants further argued that, once it is recognised that the non-payment amounts to conduct which is unconstitutional, the court is obliged to fashion an equitable remedy under Section 172 of the Constitution.

ALSO READ: Road Accident Fund ‘biggest liability after Eskom’

“The remedy proposed is the coercive imprisonment of the CEO.

“It is argued that such an order is just and equitable in the context of what the applicants allege is a serial and deliberate failure of the board of the RAF to meet its constitutional duty,” she added.

“The CEO is cited on the basis that he is responsible for the conduct of the [RAF] board.

“He is also, presumably, intended to be cited in his personal capacity given the fact that his imprisonment is sought. This distinction was not, however, made clear.”

RAF judgment debts

The judgment debts in issue were granted during 2019 and comprise a cash component of about R11.1 million in respect of the judgment in favour of Van Antwerpen, on behalf of Scholtz JC, and about R1.8 million for Van Aswegan.

The RAF settled the capital amounts in each case but left the interest unpaid.

At the date of the launching of the application, the first applicant alleged about R1.6 million in interest was outstanding and the second applicant about R400 000 for outstanding interest.

ALSO READ: Road Accident Fund’s accounting blunder ‘of Steinhoff proportions’ slammed by MPs

Judge Fisher said it appears that it is not disputed by the RAF that there are amounts still due under the judgments.

She said the applicants’ point of departure is that this failure to pay under the judgments constitutes a deliberate flouting on the part of the RAF board of its constitutional function.

Central to this argument is the allegation the RAF is able to meet this indebtedness but simply chooses not to pay, she said.

Judge Fisher said in support of the allegation as to the RAF’s recalcitrance to pay, the applicants rely on the fact that Letsoalo reported in an affidavit in litigation in June 2021 that the RAF had an “unprecedented surplus of R3.2 billion as at the end of March 2021”.

However, Judge Fisher said it is common cause that the RAF’s bank accounts, as at the date on which execution was attempted by the applicants, were empty.

She said the central argument of the respondents, albeit reluctantly made, is that the temporary insufficiency of funds, which occasioned the failure to pay, is a feature of administering a fund that is insufficiently funded by the state.

“The central question in this matter is whether the failure to pay in accordance with the judgments can be said … to constitute a breach by the RAF of the applicants’ constitutional rights.”

Fisher said the RAF is a component of a central, governmentally run social security scheme, which demands legislative and executive co-operation in accordance with Section 41 of the Constitution.

She said the RAF cannot and does not exist in a vacuum and is entirely state funded.

“While the RAF has apparently been reluctant to admit bankruptcy in these and other proceedings, there is no option but for this position to be met head-on,” she added.

“The RAF cannot, seriously, deny that it is unable to pay its debts as and when they fall due and thus that it is technically insolvent … [and] that it appears that this insolvency … is snowballing out of control in the constitutional era.”

ALSO READ: ‘There’s boxes everywhere’: Scopa unhappy after MPs visit ‘horror story’ at RAF offices

Fisher said the minister of transport was not joined to the application, adding that this failure was a symptom of the applicants’ attempt to cast the RAF as the sole failure in what is a cohesive and co-operative constitutional scheme.

Not logical to ‘target the conduit’

Fisher said the targeting of the conduit for payment of social benefits without resort to the broader structure and in the absence of engaging the complexity of the scheme and governmental policy is patently without any legal cogency.

She added that it is not in dispute that certain judgment debts against the RAF are not being met and that this is, on the face of it, a failure of social justice is undeniable.

ALSO READ: RAF ‘crisis’: Lawyers claim accident victims ‘literally prevented from lodging claims’

But she said any such constitutional failure would, it seems, reside in the failure of all components of the scheme and not only the RAF.

“The flawed approach adopted by the applicants lies in the failure to allow for the location of the constitutional right with reference to the complex inter-governmental duties which are the source and origin of a social system which insures those who suffer injury and damages as a result of motor vehicle against their loss.

“The chosen remedy is, in the circumstances, counter intuitive.

“If, as the respondents allege, the RAF cannot within the exercise of its powers and functions, pay the balance of the amount due to the applicants because it’s [sic] obligations to manage the fund do not allow for their preference in a commercially insolvent situation, then the conduct of the CEO has not been shown to be in conflict with the Constitution,” she said.

ALSO READ: Trio imprisoned for attempting to defraud the Road Accident Fund

Judge Fisher ruled that the declaratory order sought by the applicants is incompetent.

She said the RAF and its CEO cannot appropriately be singled out as the state organ which must take direct and exclusive accountability for the failure of a scheme which is universally acknowledged to be interim in nature and presently unsustainable.

However, she said this must not be interpreted to allow impunity for non-payment of due indebtedness by this state organ.

“A constitutional challenge of this nature would have to be mounted in a considered manner with due regard being paid to the co-operative nature of the scheme.

ALSO READ: Road Accident Fund to increase claim limit

“The bringing of such a challenge may be overdue,” she said.

“The approach taken by the applicants is self-evidently devoid of achieving a proper constitutional remedy in a crucial area of social protection.

“The application must thus be dismissed.”

This article was republished from Moneyweb. Read the original here