Court battle over RAF inability to pay billions in outstanding debt
Pretoria - As thousands of road accident victims are anxiously waiting to be compensated by the cash-strapped Road Accident Fund (RAF) following court orders in their favour, the Gauteng High Court, Pretoria, is expected to soon deal with the fund’s inability to pay up.
Hundreds of claimants recently turned to the court where they had obtained an urgent order to attach eight of the RAF’s Absa bank accounts. The bank was ordered to use the proceeds from the accounts to pay the 346 injured victims.
The RAF in turn headed to court last month, in which it wanted this order lifted, as it said it simply couldn't afford to pay these claimants, as its outstanding debt was more than R17billion. The fund said it couldn't operate without its bank accounts as it is was struggling to stay afloat.
This application was not entertained by the urgent court, which meant that the bank accounts remained attached. But it came to light that the RAF then instructed the bank not to honour the attachment order.
A Western Cape law firm, Simpsons Incorporated, subsequently turned to court on an urgent basis to try and force the RAF and the bank to make the payments. But it emerged that the matter was much more complex, with several lawyers telling the court that they intended to intervene in the application to try and force the RAF to also pay their clients.
One lawyer said several of his clients have no idea how they would pay school fees this month, as they bargained on the payout from the RAF, which is not forthcoming.
Counsel for Simpsons Incorporated said that this was a matter of national importance, because as things now stood, claimants were not being paid although they had court orders in their favour. It was agreed that the parties would now ask Deputy Judge President Aubrey Ledwaba for a preferential date for their urgent application to be heard. They said that the issue of non-payment was critical and the court had to assist the public in this regard.
The RAF’s legal department earlier confirmed in court papers that the fund’s liability at this stage towards injured motorists was more than R17bn. The RAF only receives on average about R3.5 billion each month.
The RAF said it intended to launch an application that they be given at least 180 days in which to pay pending claims. It said that these applicants were jumping the gun and it first had to pay those waiting the longest.
“The average claims which are settled and not paid to claimants every month, is R4.3bn, which is way more than the R3.5bn which the applicant receives every month,” it said.
But lawyers acting for the claimants said they wanted the matter resolved as soon as possible.
In the latest application, Kim Ross, of Simpsons Incorporated said there were sufficient funds in the attached bank accounts to pay their clients who had obtained the attachment order. She said there was no lawful excuse for the bank to refuse the payments.
Ross said these people would suffer irreparable harm if they didn't receive their compensation shortly because most of the clients are indigent and urgently needed the money. These claims are mostly for loss of income and earnings due to their injuries.
Ross said in spite of the court order attaching the bank accounts and forcing the bank to make payment to these people, the RAF instructed the bank not to make the payments.
The RAF’s stance is that although there is a court order in place regarding the attachment of its bank accounts, the order cannot be executed as all interested parties should have been alerted of the order.