The Mpumalanga High Court handed down a ground-breaking judgment on 24 January 2023 in which the court ordered costs de bonis propriis (paid out of their own pockets) against the CEO and the Board of the Road Accident Fund (RAF). The order was based on the conduct of the Board and the CEO conduct which, according to the court, frustrated the objectives of the judicial case management process and resulted in the parties incurring unnecessary litigation costs in a matter which should have been settled before such costs were incurred.
According to the judgement:
“The CEO and the Board are hereby directed to pay out of their own pockets, jointly and severally the one paying the other to be absolved, the costs connected to and occasioned by the late settlement in each matter.”
The court relied on the rules of the High Court as a basis for the order of costs and stated that: “As contemplated in rule 37(9)(a)(i)(ii), at any hearing, the court shall consider whether or not it is appropriate to make a special order as to costs against a party or such party’s attorneys, because such party or party’s attorney did not attend pre-trial conference or failed to a material degree to promote the effective disposal of the litigation. Similarly, in terms of rule 37A(12)(h) a case management judge may at a case management conference make an order as to costs, including an order de bonis propriis against the parties’ legal representatives or any other person whose conduct has conduced unreasonably to frustrate the objective of the judicial case management process.”
The court further referred to Rule 12(h) of the Uniform Rules of Court and remarked that “This sub-rule (12)(h) is not directed at the parties to a litigation. It is instead, aimed at the parties’ legal representatives or any person whose conduct has conduced unreasonably to frustrate the objectives of the judicial case management process.”
The court found that the reasons for the delay in settling matters by the RAF (which included financial constraints, the return of files from the RAF’s panel of attorneys and “extreme pressure on claims handlers”) did not justify the incurring of legal costs in matters that should clearly have been settled.
According to the judgment: “The CEO, the Fund’s management and the Board were fully aware time was of essence and that before the return of the many files from the panel attorneys on pending matters in our courts, a solution has to be found first. They were aware that much more time is needed to find a workable and effective solution. The real question therefore is: what did the RAF do to ensure that our courts are not brought to a stand-still at a great prejudice not only to the administration of justice affecting the claimants or litigants but also to the RAF itself.”
The court also blamed the extreme pressure faced by claims handlers on the “lack of proper planning in the face of the many files demanded from the panel attorneys by the CEO, management with the approval of the Board”
Further, the court commented that litigating, instead of investigating and settling claims without unnecessary protracted litigation, causes billions of rands in legal fees. For example, it was recorded in the pleadings that in 2005 there were 185 773 claims lodged which resulted in legal costs of R 941 million. In 2018 there were only 92 101 claims but the legal costs rocketed to R88 billion. It was noted that spending so much money on legal costs can only be described as a failure to manage and utilise the money of the Fund for the purposes of the Road Accident Fund Act, 1996.
According to section 12(2) the Act, the CEO is required to conduct the current business of the Fund subject to the directions of the Board. In the two matters which were before the court, the Fund (through its CEO and the Board) elected to dispose of the legal representatives who were dealing with these matters. It then became the responsibility of the CEO and the Board to ensure that the Fund prepared properly for these two cases and all other pending matters, and to ensure compliance with the rules of court in a manner that expedites the matter either towards early settlement or towards readiness for trial and adjudication.
In the circumstances, the court found that the failures of the Fund were the failures of the Board and the CEO. The CEO and the Board, who the court found to have acted in bad faith and therefore not protected by section 15 of the RAF Act for good faith conduct, were therefore found liable for the costs occasioned by the late settlements.
The matter is reportedly going on appeal and the final word on the facts and the law has yet to be spoken. In the meantime case management by the parties themselves must be taken very seriously.