Kirstie Haslam
Author: Kirstie Haslam
Director, DSC Attorneys

The Road Accident Benefit Scheme Bill (“the Bill”) was published for comment on 9 May 2014. The Preamble to the Bill records the rationale for the introduction of the scheme as follows:

  1. The present fault-based system of compensation as provided for in the Road Accident Fund Act 56 of 1996 (“the Act”) is not effectively achieving the purpose for which it was created;
  2. There is a need for a reasonable, equitable, affordable and sustainable effective benefit system which inter alia provides financial support to reduce the income vulnerability of persons affected by injury or death from road accidents (own emphasis);
  3. There is a need to expand and facilitate access to benefits by providing them on a no-fault basis (own emphasis);
  4. There is a need to simplify claims procedures, reduce disputes and create certainty by providing defined and structured benefits;
  5. There is a need to establish administrative procedures for the expeditious resolution of disputes that may arise and to consequently alleviate the burden on the courts.

There is considerable opposition to the scheme which is envisaged in the Bill, from a number of quarters and on a variety of grounds. These comments are focussed solely on the envisaged impact of the scheme on that sector of the population which, to the writer’s knowledge, has not yet enjoyed the consideration which it deserves, namely children.

The Constitutional Backdrop to Considering the Position of Children

Being one of the youngest Constitutions in the world, South Africa had the opportunity to formulate its Bill of Rights with international tendencies and practices in the backdrop. Children and their rights are protected through section 28 of the Constitution. Section 28(2) of the Constitution deals with the main consideration which must be taken into account when dealing with children, which mimics the form and substance of major international conventions and treaties.1

Although the notion of the best interests of the child forms the backbone of section 28(2), it is open to interpretation. In S v M the Constitutional Court interpreted section 28 to mean: “[S]tatutes must be interpreted...in a manner which favours protecting and advancing the interests of children; and the courts must function in a manner which at all times shows due respect for children's rights”.2 To determine the best interests of a child in specific circumstances, courts should examine the “real life situation of the particular child involved.”3 It is clear that the notion of the best interest of the child cannot be the only consideration when it comes to actions affecting children. It should however in the words of our Constitution, which goes further than The Convention on the Right of the Child (one of the most widely ratified conventions in the world), be a consideration with paramount importance.4

Although the above remarks relate to the interpretation of statutes the same principles must apply when the legislature considers passing legislation which will impact on the rights of children.

The “Bath Water” – the Present Dispensation

In terms of the present dispensation children are entitled to recover the full extent of their losses, i.e future anticipated medical and related expenses (covered by the statutory Section 17(4)(a) Undertaking issued in terms of the Act), future anticipated loss of earnings / earning capacity and general damages for pain and suffering and loss of amenities of life, subject to a determination of the issue of liability.

As far as establishing liability is concerned, the following bears mentioning:

  1. Minors would ordinarily become victims of road accidents either as passengers in motor vehicles or as pedestrians. Where they are injured as passengers, only a notional 1% negligence on the part of their own driver or, in the case of a collision involving more than 1 vehicle, any other insured driver, needs to be established in order to secure recovery of their full proven damages as described above;
  2. Where the minor is injured as a pedestrian and is less than 7 years of age there is an irrebuttable presumption that the minor is doli incapax, i.e deemed not to be accountable for their actions. In such an instance, again only a notional 1% negligence on the part of the insured driver is sufficient to establish the Fund’s liability for the minor’s full damages as aforesaid;
  3. Where the minor is injured as a pedestrian and is between the ages of 7 and 14 there is a rebuttable presumption that the minor is doli capax, i.e accountable for their actions and consequently the possibility of an apportionment of negligence arises, i.e the minor may recover his or her proven damages subject to the respective degrees of negligence on their part versus that of the insured driver;
  4. Where the minor is injured as a pedestrian and is above the age of 14 he or she is treated on an even par with an adult as far as the evaluation of the respective degrees of negligence, if any, are concerned.

The damages which an injured minor is entitled to recover, as previously described, are as follows:

1. Past (incurred) hospital, medical and related expenses

These expenses are usually borne by the minor’s parents, who may claim recovery thereof in their own right;

2. Future anticipated hospital, medical and related expenses

Customarily the minor is issued a statutory Section 17(4)(a) Undertaking in this regard. In the case of minors it is often the case that it is anticipated that treatment will only be required in the distant future, however, the need for such treatment is foreshadowed in medico-legal reports obtained by the attorney on his / her behalf at the time of the institution of the claim. The Fund however only incurs liability for such expenses at the time that the treatment, goods or services are actually provided;

3. Future loss of earnings / earning capacity

Should a minor sustain a moderately severe to severe injury this can have a profound impact on their schooling, academic performance and consequently future employment prospects. Such a claim is proved with reference to relevant expert medical opinion as well as other relevant expert opinion, which takes all relevant circumstances into account as they pertain to the specific injured minor. Once it is established that future losses are anticipated, such losses are actuarially quantified by comparing anticipated uninjured earnings to anticipated injured earnings. Where there is a negative difference between these two income streams this amounts to a future loss of earnings / earning capacity. The calculation furthermore takes account of the following:

  • Mortality rates;
  • The effect of inflation;
  • Future tax liability;
  • General contingency deductions to account for the relative uncertainty of future events (in the case of minors higher contingency deductions are applied to account for the additional uncertainty which arises)

The damages arising as a result of future loss of earnings / earning capacity are capitalised, i.e only that amount which, if awarded today and carefully invested would be expected in time to grow to the extent of the actual loss, are awarded.

4. General damages for pain & suffering and loss of amenities of life

The pain and suffering which a minor endures following injury in a motor vehicle collision is often particularly distressing by virtue of their tender age and their inability to fully understand and appreciate the extent of their injuries and the need for hospitalisation and further treatment, which can be invasive and painful to endure. Children are also often required to spend time in facilities where they receive ongoing treatment following discharge from hospital, particularly where such treatment cannot be administered at home as both parents have to work and cannot provide care to their child. This means extended periods away from home with limited contact with loved ones, which further compounds their distress. This is so even where there is eventual optimal recovery with no anticipated future reduction in working / earning capacity. Even following their return home, the child’s ability to take part in sports and everyday leisure activities can be diminished, thereby impacting on their socialisation and general well-being. These losses are significant notwithstanding the fact that the child’s future work capacity may be unaffected.

Discussion of the Present Dispensation as far as it relates to Children

It is important to acknowledge at the outset that children comprise a significant proportion of road accident victims, often in situations where they are entirely vulnerable and blameless.

Statistics relating to the number of injured minor claimants were not readily available at the time of the drafting of these submissions but should be obtainable from the Road Accident Fund. As a crude estimation, a leading firm of actuaries which provides services to claimants as well as the Road Accident Fund confirmed that of their most recent 1000 new instructions, 133 were for loss of income calculations for claimants under the age of 20 (it must be stressed that these were therefore instances where the injured minor had indeed suffered a future loss of earnings / earning capacity and therefore excludes those instances where children were injured but were, by virtue of their recovery, only entitled to recover general damages).

It is submitted that the present dispensation is inherently reasonable and equitable vis-à-vis children and takes account of the relevant constitutional principles which apply to their rights. The system allows for the recovery of future anticipated losses within a reasonable period following the injury and provides certainty and finality. As indicated above, even where the child escapes long-term disability the initial recovery period following traumatic injury can be hugely disruptive and distressing to a child and it is only fair and correct that they be compensated for this. In matters where only general damages are awarded to the child these funds are often used to improve their quality of life and provide much needed funds for education.

Past accident-related treatment costs are recoverable upon proof thereof. Should a parent be forced to miss work in order to care for their injured child and lose income as a result thereof, such losses can also be claimed in their own right. As far as future treatment is concerned, this is compensated at the time that the loss is actually incurred. The injured party is entitled to seek treatment from a medical practitioner of his or her choosing which includes private facilities, thereby reducing the strain on the already heavily over-burdened public health structure.

Where future loss of earnings is awarded it is furthermore a relatively simple process to establish a Trust to administer the claim proceeds to the benefit of the injured minor and ensure that they will be accessible and available at a future date when they are needed either to replace or supplement earnings. This is actively encouraged in our practice and is in most instances achieved.

The current Chief Executive Officer of the Road Accident Fund, Dr Eugene Watson, recently implied that compensation for future loss of earnings was akin to a lottery win with such claims succeeding with “minimal proof” and further denigrated the validity of the opinions furnished by Industrial Psychologists with regard to future earning potential. These views are, with respect, without substance and cannot be supported to provide justification for the implementation of RABS.

The Position of Children as envisaged in the proposed Road Accident Benefit Scheme

Other submissions have dealt extensively with the anticipated difficulties which will arise as far as access and entitlement to health care services is concerned. These submissions therefore focus primarily on the impact of the scheme’s approach to compensating loss of income where the road accident victim is a child, with concluding comments regarding the equity and reasonableness of the scheme in general, the abolition of claims for general damages, the claims process and further the removal of the common law claim for damages exceeding the stringent limits provided for in the scheme.

1. Income benefits provided for in the scheme

The scheme provides for Temporary Income Support (section 36) and Long-Term Income Support (section 37).

By virtue of the provisions of sections 36(5)(c)(iii) and 37(7)(c)(ii) an injured minor will never qualify for Temporary or Long-Term Income Support as “…any period before the injured person reached the age of 18 years…” is expressly excluded. This completely ignores the fate of those usually less fortunate children who are forced to leave school prematurely due to personal or financial circumstances and who earn an income to help to support their families.

Further, as income support is only payable to “…an injured person…” (defined in section 1 as “a person who suffered a bodily injury”) the scheme provides no compensation whatsoever for those parents who lose income by virtue of caring for their injured child(ren).

An injured minor’s entitlement to compensation for lost income is therefore limited to Long-Term Income Support only, as provided for in section 37.

2. Long-Term Income Support

The Administrator in it’s sole discretion determines it’s liability to pay Long-Term Income Support in the manner and subject to the conditions imposed by the provisions of section 37.

The earliest opportunity that an injured minor will have to submit a claim for Long-term Income Support will be upon reaching the age of 18. The time frame for submission of such a claim is thereafter limited to one year following attaining the age of majority (section 47(3)).

In the dispensation envisaged by the scheme it is considered highly unlikely that any appropriate investigations (into the nature, extent and long term prognosis of injuries suffered in childhood) will be conducted prior to the minor reaching adulthood, in light of the fact that no benefits will be claimable during this time. Notwithstanding this fact, an 18 year old claimant who suffered injuries in a road accident as a child will be required to comply with the following conditions in order to merit consideration for any benefits:

  • A RABS 4 claim form, duly completed, must be submitted, together with a RABS 7 form (the latter being an incapacity certificate completed by a medical practitioner);
  • Proof of pre-accident income in the manner provided for in section 36(2)(a) or (b), failing which for purposes of assessing the claimant’s entitlement to benefits their income shall be deemed to be the average annual national income (currently prescribed at R43 965 per annum or R3 663.75 per month) (section 36(3));
  • The claimant must furnish proof of any income earned post-accident
  • The claimant must furnish confirmation that his or her inability to earn an income is due to physical or psychological injury caused by or arising out of a road accident (another person with the requisite knowledge of the reasons for the claimant’s disability may furnish this confirmation in the event that the injured person is unable to do so) (section 37(1)(b)(ii));
  • The claimant must furnish any such further specialist medical report which the Administrator may call for, either to establish the causal relationship between the childhood injury and the alleged inability to earn an income or to assess the claimant’s present work ability (section 37(1)(c));
  • The claim must include an assessment by an occupational therapist (or other suitable expert) relating to the claimant’s post-accident vocational ability (section 37(1)(d) read with section 37(2), (3) and (4).

What is immediately apparent is the emphasis which is placed on post-accident work ability in the absence of any comparison to the injured person’s pre-accident ability. There is therefore no longer any scope for a loss of earning capacity as has been long recognised in our law – only loss of income is compensated, within very narrow constraints.

Logistical difficulties are foreseen regarding the production of the duly completed RABS 7 form, particularly where the childhood injury is sustained several years or more prior to the institution of the claim. Access to records may be problematic and without such records medical practitioners may be unwilling or unable to complete the incapacity certificate or confirm the necessary causal relationship between the original injury and the present day reduction in work ability.

 

It has to be accepted that in the overwhelming majority of cases, the injured minor will at most be entitled to receive Long-Term Income Support calculated with reference to the average annual national income (deemed income). Assuming therefore a total inability to work and earn an income, this will amount to a monthly benefit of R3 663.75 up to the age of 60. There can be no doubt that a beneficiary will never be able to afford to fund a private pension from these limited monthly payments which means that upon reaching the age of 60 they will be reliant on a State pension for the rest of their lives. 

The Long-Term Income Support beneficiary is furthermore not entitled to inflationary increases on the benefit amount as aforesaid unless the Administrator exercises it’s discretion to adjust the benefit to take account of the effects of inflation, subject to affordability (section 37(9)).

The average annual national income of R43 965 is less than the lowest quartile of unskilled employees as per Robert Koch’s 2014 Corporate Survey Earnings (Basic Salary R49 000 per annum) [or the highest quartile of unskilled labourers / median quartile of machinists in the clothing industry and similar examples, with reference to Koch’s suggested earnings assumptions for non-corporate workers] and 30% less than the starting salary of a government employee employed as a general worker.5

In those instances where the road accident victim injured in childhood is nevertheless able to earn an income (and to reiterate, in this instance post-accident prospective work ability is taken into account), this annual earning capacity must be calculated by the Administrator (section 37(5)(a)) and is then deducted from the above described maximum benefit payable (i.e actual loss is ignored).

Using a straight forward practical example, a diligent average to well-performing scholar with pre-accident prospects of pursuing some form of tertiary education who is limited (post-accident) to menial unskilled work earning R3 663.75 or more per month will receive no income support benefits whatsoever in terms of the scheme.

Such an approach will therefore essentially rob the injured minor (or student) of any right to economic freedom and dignity and will relegate them to a life of veritable poverty, leaving them reliant on the charity of others in order to enjoy any meaningful quality of life.

3. The equity and reasonableness of the scheme vis-à-vis children

For inter alia the reasons indicated above the proposed scheme cannot be considered to be either reasonable or equitable to injured children. The limited benefits which a child can expect to recover are in no way comparable to those to which they are entitled under the present dispensation, notwithstanding the fact that it is fault-based. In our considerable collective experience it is very rare that the issue of liability has to be resolved in the Courts in matters involving children – in many instances full liability is admitted, alternatively negotiations between the attorney representing the child and the Road Accident Fund will result in a settlement of the issue, albeit perhaps on an apportioned basis. The general damages component of the successful claim can be utilised to supplement the apportioned statutory Undertaking for future medical and related expenses as well as to fund educational aids and other assistive devices which can help to restore the child’s functioning to pre-accident levels as far as it is possible to do so.

The iniquity of the limitation on compensation for future lost earnings is self-evident. This in fact extends further than only minor children and applies equally to those young adults who have gained entry into a tertiary education facility but who become victims of road accidents prior to attaining their qualification and entering the labour market. These students will also be restricted to the deemed income in terms of section 36(3) when it comes to calculating income support benefits due to them.

Proponents of the scheme are wont to draw selective comparisons with the COIDA6  legislation when it comes to assessing the overall equity and reasonableness thereof. Such comparisons are however potentially dangerous as the history, development and requirements of COIDA differ significantly from that of road accident compensation. It merits pointing out that in the much quoted decision of the Constitutional Court in the matter of Jooste v Score Supermarket Trading (Pty) Ltd (Minister of Labour intervening)7  the court held that COIDA is important social legislation “…which has a significant impact on the sensitive and intricate relationship amongst employers, employees and society at large…”. There is no such sensitive relationship when it comes to victims of road accidents. Furthermore, in a number of respects RABS does not compare favourably at all to COIDA, as illustrated in the examples below:

  1. In terms of section 36(1)(a) of COIDA an employee retains their right to recover damages from a third party who caused their occupational injury or disease [common law rights abolished in RABS];
  2. An employee may be entitled to increased compensation if his or her injury / disease is caused by the negligence of the employer (section 56) – further, section 56(4)(b) implies that an employee may be awarded total compensation up to the amount of his actual pecuniary loss [no such provision in RABS];
  3. Section 58 allows for advances on compensation where it is considered equitable [no corollary in RABS];
  4. The manner of calculating earnings for the purposes of determining the benefit due to the employee in section 63 is more favourable in terms of taking into account additional benefits received by virtue of their employment;
  5. COIDA does not go so far as to dictate a treatment plan / regime or medical practitioner, unlike RABS;
  6. Section 91(5) specifically allows for appeals to the High Court having jurisdiction in respect of decisions made by a presiding officer in relation to objections and appeals against decisions of the Director-General, whereas RABS only allows for a right of review (section 49(5));
  7. A distinction particularly relevant to the scope of these submissions (i.e the position of children and by extension, young (adult) students) is the manner in which employees in training or under the age of 26 years are compensated for permanent disablement in terms of section 51, as opposed to the position of scholars or students under RABS. In terms hereof where the employee was an apprentice or in the process of being trained for any trade, occupation or profession, their earnings “…shall be calculated on the basis of the earnings to which a recently qualified person or a person in the same occupation, trade or profession with five years more experience than the employee would have been entitled at the time of the accident, whichever calculation is more favourable to the employee…”. Similarly, where the employee is a person under the age of 26 years, their “…earnings shall be calculated on the basis of the earnings to which a person of 26 years of age would normally have been entitled if at the time of the accident he had been performing the same work as the employee or a person in the same occupation, trade or profession with five years more experience than the employee, whichever calculation is more favourable to the employee…”. Inherent in these provisions is an acknowledgment of the iniquity of restricting a trainee / young employee’s entitlement to disability benefits to the level of income which is earned whilst in training or at the start of their career.

At a recent briefing session on RABS presented by representatives from the Road Accident Fund and the Department of Transport (“DOT”), the Deputy Director-General of the DOT motivated the imposition of the envisaged caps on compensation for lost earnings by stating that the emphasis must shift to private insurance in order to supplement the limited benefits provided for under the scheme. This is however impossible from a child / young students’ perspective. Twelve of the countries’ top long-term insurers were contacted in order to enquire about the availability of insurance cover for children or students’ future earnings / earning capacity and no such products exist or are available.

4. The claims process

The stated imperative of simplifying the claims process is not achievable in terms of RABS. The process is balanced heavily in favour of the monolithic scheme, not only in terms of the wide-ranging investigative and interrogatory powers granted to it, but furthermore in the following respects:

  1. The responsibility for submitting a claim rests with the claimant in terms of section 43. The Administrator is not obliged to render assistance with the submission of claims but “may” do so, it’s own discretion;
  2. In contrast to the Administrator’s unfettered power to terminate, suspend or review benefits granted under the scheme “at any time”, a claimant / beneficiary only has a single right of appeal (to the scheme’s internal appeal body) after being notified of a decision by the Administrator (or following the deemed rejection of the claim in terms of section 48 – the implication of this provision incidentally is that it is already anticipated that claims will not be processed timeously, hence the deeming provision). Following this internal appeal the clamant / beneficiary has no further legal recourse save for the limited scope of the courts’ review jurisdiction;
  3. There is no sanction available to a claimant / beneficiary should the Administrator fail to process a claim timeously;
  4. Neither the Administrator nor it’s officials will be liable for any act or omission done in the execution of their duties unless intentional wrongdoing is proved (section 52), which places an extremely heavy burden of proof on an aggrieved party.

There is little doubt that in light of the limited avenues available to an aggrieved claimant / beneficiary there will certainly be a reduction in the number of disputes.

5. The abolition of the common law claim

The removal of the road accident victim’s right to sue for those damages which exceed the limited compensation provided for under the scheme is irrational and cannot be supported. Insurance cover is readily available for motorists who wish to protect themselves against potential claims yet, in contrast to the reported move to emphasise private insurance as far as supplementing the road accident victim’s own lost earnings is concerned, there is no corollary in respect of the wrongdoer, who is completely indemnified from any claim barring material damages. This illustrates particular imbalance when one considers the unavailability of insurance cover for children’s future loss of earnings / earning capacity as explained previously.

Conclusion

It is submitted that for the reasons mentioned in other detailed submissions as well as those alluded to herein, the proposed scheme will not meet it’s stated objective as contained in the preamble to the RABS Bill, set out in the Introduction above, in the following several key respects as far as minor and young road accident victims are concerned:

  • The scheme is neither reasonable nor equitable – children will be treated unequally merely by virtue of their age (because they have not entered the labour market at the time of injury);
  • The scheme will not reduce injured childrens’ income vulnerability and may in fact compound it;
  • There will not be any expansion of access to benefits – in most instances a child’s access to benefits is in fact reduced;
  • The process will arguably result in less certainty in light of the Administrator’s unfettered right to review, suspend or terminate benefits, in contrast with the “once and for all” rule which applies in the current dispensation (save for those future expenses recoverable under the statutory Undertaking in terms of the present dispensation).

1. Constitution of the Republic of South Africa, 1996;. Article 3 Convention on the Rights of the Child (1989);

2. S v M (Centre for Child Law as Amicus Curiae) 2008 (3) SA 232 at paragraph 15.

3. Id at paragraph 24.

4. Section 28(2) of the Constitution of the Republic of South Africa, 1996. Article 3 of The Convention on the Rights of the Child (1989) available at: http://www.ohchr.org/en/professionalinterest/pages/crc.aspx

5. The Quantum Yearbook by Robert J Koch 2014

6. Compensation for Occupational Injuries and Diseases Act 130 of 1993

7. CCT 15/98 1999 (2) SA 1