MVA Fund Playing God ?

The article published in the Namibian Newspaper on Thursday 11 October 2007 under the headline “MVA Fund relaxes its rules” is misleading and a direct insult on the dignity and person of every victim of a motor vehicle accident in Namibia.

As it is, the Namibian MVA compensation system is governed by statuettes. Further, that the proposed MVA Bill introduced in Parliament on Wednesday 10 October 2007 as reported in the same newspaper, is indeed a fallacy.The said document is not an original model designed to suit the Namibian economy as purported- but a rather poor attempt at ” copying and selecting” certain recommendations of the controversial Satchwell Commission of Inquiry in South Africa during 2002- and introduce it into the Namibian system.In my humble opinion, the only parties to benefit from this proposed Bill are the service providers and not the victims of motor vehicle accidents.To emphasize my point I would refer to a recent blog on the internet where a leading legal practitioner in South Africa remarked “I see former RAF CEO Chris Greenland has turned up at the Namibian MVA Fund.He seems to want to help change that system too.One wonders whether the lets change it approach, no matter what country we are in, is the right one.Each country can hardly be the same, but anyway that seems to be the approach”.The reader must also note that Mr.Chris Greenland who was the Technical Advisor to the Namibian Fund from 2004-2007, was also the Acting CEO of the Road Accident Fund from 1997-2002 and further down below, we will examine what implications the “Paradigm Shift” had on that Fund, as observed by Professor Hennie Klopper.Nonetheless, the article in the Namibian correctly goes on to state that (i) “a court of law usually determines the amount of damages to be paid out- and incorrectly goes on to state-(ii) as a result the system is plagued with disputes about money and the courts are inundated with suits against the MVA Fund”.If the above were true in terms of the Namibian context, then every victim of a motor vehicle accident in Namibia, who suffered a loss for the past 4 years, would not find themselves so worse off, as they do presently.Indeed, over the last 4 years and in direct contravention of the applicable legislature and guidelines, the MVA Fund introduced a “Paradigm Shift” into its operations which ultimately led to the deviation of the MVA practice as it is known.This evidently carried the blessings of the MVA Fund Board of Directors, as they were certain that the proposed Bill in front of Parliament which encompasses this paradigm, would eventually be passed.In the intervening 4 years the present Administration of the Namibian MVA Fund, through their vigorous and successful media campaign, have managed to convince the Namibian public that the Fund: has a deficit of N$ 500 million because of previous mal-administration; initiated and implemented the transformation process in order to sustain future operations; have infrastructure in place; have qualified professionals ready to assist the general public; encourage the public to deal directly with the fund; are eager to have settled most outstanding claims by a certain date; will table a Bill in parliament and introduce a health care dispensation system which will benefit the public; entirely rooted out bribery and corruption; effectively dealt with legal practitioners and agents alike who charged clients up to 40% and more, of the total claims settlement; THE MILLION-DOLLAR QUESTION IS: WHO’S FOOLING WHO? The report of the Auditor General regarding the Fund’s book year for 2005-2006, critically examines what the transformation and restructuring process cost the public-(who inevitably foots the bill by way of paying dedicated fuel levies)- and further, how the Fund brazenly diverted those levies away from the victims of motor vehicle accidents, who are the intended beneficiaries by virtue of the legislation in place: The restructuring process cost the Fund a staggering N$3.3 million.Because of a lack of information, this figure could unfortunately not be verified as the Auditor General is unsure whether the correct amount of tax was deducted; In one year the personnel related costs escalated by 203%; The salary bill for the 2005 book year cost the Fund N$7.8 million of which N$3 million was paid to managers, technical administrative and secretarial services of non-permanent workers; For the book year 2005 the Fund earned N$51.7 million from its appropriation of petrol levies.The total amount paid out in claims compensation for the same year amounted to a mere N$3.6 million; The Fund’s assets presently stand at N$51.1 million as opposed to the previous year of N$259.1 million.This leaves a deficit of 207 million which apparently is seen as an improvement, considering that the deficit was N$ 519.2 million in the previous book year; The Auditor General’s report also indicates that during 2005 there was 90% decline in claims pay-outs; The Fund furthermore in 2005, allegedly invested N$15 million dollars without the sanctioning of the Minister of Finance.This investment however lifted the Fund’s total investments to N$ 41.8 million; To comment on the Auditor General’s report, I would like to highlight the following concerns and deal with the above points in no particular fashion: The salary bill of N$7.8 million for one particular year does not justify the Fund’s continuous cry of “insolvency” or “bankruptcy”; If one considers that personnel increased by 203 % and that none of the staff (save for the Technical Advisor/Legal Counsel), have ever had adequate MVA experience or training prior to their engagement, it goes without saying that the Fund invested badly in human capital; The restructuring process cost the Fund N$3.3 million which included a meager N$ 279 268.00 in the form of retrenchment packages to the “old guard”.The balance thereof, one can only assume went to service providers; The alleged deficit of N$519.7 million in 2004, reduced to N$259.1 million in 2005 can be interpreted that the Fund rid itself of many claims by repudiating and closing the same; thereby presenting the Minister of Finance with a “healthy” balance sheet in terms of its liabilities.The 90 % reduction in claims pay-outs during 2005 however seems to justify the reduction of the deficit.It is hoped the Minister was also made aware of the fact that these repudiations are likely to resurface in the form of costly litigation, much to the financial detriment of the Fund.The 5 year prescription period of the relevant legislation will play come into play and already summonses are being prepared.The other interpretation is that actuarially, the Fund is trading in a state of insolvency and the so-called deficit is actually the amount needed to fund future operations in relation to operating like the Social Security Commission for instance.During a workshop held at the Country club in 2006 with all stakeholders, one of the Fund’s partners (Ernst & Young) aptly made this staggering remark during their presentation.The following are some examples of the many bad practices by the Fund as experienced by victims of motor vehicle accidents and in particular, my direct dealings with the Fund: The abrupt decision during 2006 (apparently after receiving an opinion from a Senior Advocate) to stop payment of compensation to dependants of a negligent driver in terms of the provisions of Section 10 of the MVA Act 4 of 2001.This particular Section as I recall, was specially created and intended to abolish the prejudicial provisions of Section 6 2 (b) (i) & (ii) and 7 of the MVA Act 30 of 1990- and to include these persons.I further recall that the Fund indeed paid these type claims as from the date of enactment of the MVA Act 4 of 2001 until 2006.The incidences where the Fund and totally in contravention of the applicable Act, paid cart-blanch for funeral expenses relating to 3 major accidents during 2006/7, without investigating the circumstances of the accidents; yet on the other hand, applying the provisions of the applicable Acts- by refusing to entertain claims by victi
ms who suffered a similar fate in other unrelated accidents.The decision to cap claims even further, for pain and suffering and loss of amenities for life, shock and trauma by introducing an arbitrary internal damages list, not based on legal principle or precedent- with instructions to staff not to deviate from the list.A decision to implement payment of compensation in installments for loss of income and maintenance, without agreements with the victims and also without a court order authorizing such installments, as provided for in the Act.The decision to give undertakings only for future medical expenses without providing adequate administrative resources.The appointment of inadequately-trained and unskilled Customer Service personnel who do the general public no justice with their lack of knowledge of the system(and in many instances losing important documentation of claimants)- resulting in a perceived sense of unfair treatment by the Fund.This has also resulted in creating a negative effect on productivity The creation of a “review committee” comprising mostly of claims handlers and medical personnel who, based on their interpretation of the law and the applicable legislation, provide opinions regarding settlements.It further has the possibility of discouraging staff to settle technical claims speedily and will ultimately result in a summons and costly litigation.The decision to indiscriminately repudiate all claims involving tyre-bursts and wild animals- not taking into account nor investigating the negligent/unlawful factors of the owner/driver, as required by the applicable legislation.The continued use of a Neurologist flown in from South Africa on a regular basis who examines a bundle of clients on a “once-off” basis; after which he suggests a basis of compensation to be paid to the victim.The instances where victims who are still recuperating in hospital from their ordeals, are presented with settlement offers without ever having set foot in the Fund’s offices.The Fund’s continuous public announcements discouraging victims of motor vehicle accidents not to make use of legal practitioners when in contrast, the relevant Acts endorses the use of legal representatives.At this point it becomes prudent for me to cite some similar observations made by Professor Hennie Klopper of the University of Witwatersrand (a leading expert on MVA Law and Practice), concerning the promulgated amended RAF Act as well as his visit to the South African Road Accident Fund offices in Pretoria recently “… I have noted the provisions to curtail the benefits enjoyed by victims of road accidents in terms of the Road Accident Fund Act (RAF) 56 of 1996 by the promulgation of the Road Accident Fund Amendment Act 19 of 2005.My concern is that the proposals are directed at the wrong end of the RAF’s expenditure.The RAF Commission under the chairmanship of Judge Kathy Satchwell has found that approximately 40% to 55% of each rand of fuel levy is spent by the RAF on evaluating claims and on administration.These figures are based on information for the period 2000 to 2002.This figure does not take into account the attorney-and-client fee charged by the claimant’s own attorney.It follows that the actions – or even inaction – of the RAF that may adversely influence this already unfavourable ratio of costs in relation to compensation actually delivered, should be closely monitored and effective steps taken to rectify any deficiencies in the claims-handling process, before one resorts to the drastic step of reducing road accident victim benefits.This needs to be done in order properly to substantiate any conclusion that the current system of compensation is financially unsustainable.In my view, there are two aspects that need closer scrutiny and remedial steps before any action that results in the curtailment of the existing common-law rights of an RAF victim can be justified.These are management decisions and the state of claims handling within the RAF.Management decisions Prior to and since 2002, the management of the RAF has taken decisions that have contributed to the deterioration of the RAF’s financial position.These are the following: The alteration of the staff structure by the introduction of more claims handlers and fewer claims assistants, – having a negative effect on productivity and resulting in an increase in litigation.The entertaining and encouragement by the implementation of a project called traffic, of separate claims by hospitals and doctors (although ostensibly sanctioned by s 17(5) of the RAF Act) before the claim of the actual victim is lodged and finalized.The decision to enter into a relationship with a private enterprise in the traffic project was, in my view, contrary to a provision of the RAF Act (s 19) and the provisions of the Competition Second Amendment Act 39 of 2000 as it constituted a restrictive practice.The particular private enterprise enjoyed perceived, – if not actual preferential treatment in respect of claims lodged by it on behalf of medical suppliers.It also resulted in a marked proliferation of claims, necessitating the creation of a separate division dedicated to the handling of these claims, and created anomalies inter alia; in that medical claims have sometimes been paid when there was no legal claim by the claimant or where apportionment of damages was applicable but was not applied to the medical accounts.A unilateral decision in 2004 to withdraw and suspend all offers that gave rise to a flood of summonses to the extent that some litigation officers at the RAF’s Pretoria office have to deal with up to 1 000 defended magistrate’s court matters (each case having an estimated average legal cost exposure to the RAF of R16 000 per defended claim) A decision unilaterally to implement payment of compensation in installments of loss of income and maintenance, without the RAF Act authorizing such installments and without the RAF having the administrative capacity to administer deferred payments properly, resulting in further litigation and unnecessary legal costs.The unilateral decision unofficially to cap claims for pain and suffering, loss of amenities of life, etc by introducing an arbitrary internal damages list not based on legal principle or precedent, with instructions to staff that deviation from the list carries the sanction of disciplinary steps.This resulted in more litigation and legal costs.The decision to give undertakings only for future medical expenses without providing adequate administrative resources, once more resulting in litigation and unnecessary legal costs.Recently, the instruction to staff to enter and appearance to defend in all matters where summonses are issued, irrespective of what the merits of the case, indicate that such defence is justified or and by doing so, adding to the RAF’s legal bill.The creation of a separate ‘summons section’, whereas the litigation Act is in fact designed to discourage litigation and where the section of such a section envisages continued litigation to the extent that it requires a separate section.It has the further possibility of discouraging staff to settle involved claims speedily.The negligence such claims ( or any other claim for that matter) will ultimately result in a summons that in turn will result in the file being transferred to the summons department, thereby ridding the staff member of what he perceives to be a troublesome claim.Although the accident figures have more or less stabilized during 2000, the average case load per claims handler has since 2000/2002 reportedly risen from approximately 700 to 1000 claims.According to the Sheriff in Pretoria, he and his deputies daily serve the RAF with summonses by the box full.The RAF is currently receiving more summonses in one day that it previously received in a month.Default judgments are regularly being taken against the RAF.According to the Sheriff in Pretoria, millions of rands ( which includes unnecessarily incurred legal costs) are routinely paid over to the Sheriff on writs executed against the RAF.Up to 80% of the High Court in Pretoria’s roll is taken up by matters where the RAF is the
defendant.If one considers that the Viviers Commission of Inquiry (1989) into the establishment of dedicated courts for road accident matters, found that only one per cent of all matters litigated on proceed to trial, one gets a notion of the vast amount of resources of the RAF being deviated from its intended purposes of compensating victims to conducting unnecessary litigation against it.It is rumoured that the RAF in 2004 paid approximately R44 million for legal services rendered to it to one firm on its panel of attorneys alone.The number of summonses issued against the RAF and defended matters handled by its litigation department and attorneys are a result of ill-considered management decisions and/or inefficient claims handling and/or reduced productivity.It is convenient at this stage to refer to the proposed scrapping of s 17(2) of the RAF Act (a road accident victim’s right to recover party-and-party costs from the RAF).The scrapping will not deliver any benefit as it will encourage litigation.The section was originally introduced to remedy the situation where summonses were issued as a matter of course in order to entitle a claimant to these costs.Claims Handling I have on numerous occasions spoken to staff members at the Pretoria office of the RAF.From my conversations, I have gained the impression that the inefficiency and/or lack of productivity can inter alia be ascribed to the following considerations: There is inadequate training of staff.The management of the RAF has created a culture in its Pretoria office where staff are demoralized and are very reluctant to take the initiative and make decisions.There is generally a lack of discipline within the staff of the RAF’s Pretoria offices, although there are those dedicated staff members who render excellent service.Attempts by some senior staff to apply discipline and increase productivity are resisted and have in some extreme instances been met with retaliatory threats from the staff members concerned and the subsequent resignation of skilled senior staff.Staff members arrive late for work and fail to answer their telephones promptly or at all.Staff turnover is high.The average experience of a claims handler in Pretoria is approximately 12 months, that of a senior claims handler two years and that of mangers three to five years.Unnecessary litigation and factors promoting litigation against the RAF should not be countenanced.More so, if it is taken into account that the thrust some of the provisions of the RAF Act (such as ss 17 (2), 17(3)(b), 19(c) – (f), 24(5) and 24(6) is specifically designed to promote early settlement of claims and discourage costly litigation.Unfortunately the RAF in many instances forfeits and/or seemingly neglects to avail itself of the benefits of these provisions.In terms of s 24(5) of the RAF Act the RAF may object to the validity of a claim within 60 days to register and acknowledge receipt of a claim.In terms of s 24(6) a claimant is prohibited from issuing summons before 120 days have elapsed from the date of the submission of the claim and s 19(f)(i) (submission of affidavit by the claimant) has been compiled with.It is a very rare occurrence (if at all) that any offer is made before the prescribed period has elapsed.The RAF Act (s 17(3)(b)) provides that if the RAF makes a written offer (including an offer made without prejudice) in the course of settlement negotiations before summons is issued, the court is empowered to take this offer into account when making an order for costs.Generally this provision is not being fully utilized Justification of curtailed compensation Financial solvency as a justifiable interest The above considerations may have an important bearing on the constitutionality of the provisions curtailing the rights of the road accident victim.The only basis on which the rights of a road accident victim may possibly be limited is when such limitation serves a justifiable interest ( see s 35 of the interim Constitution).In Tsotetsi v Mutual & Federal Insurance Co Ltd 1997 (1) SA 585 (CC) 590B-D it was stated that the financial solvency of the then Multilateral Motor Vehicle Accident Fund as a welfare programme may be such an interest.However, an existing restriction on the claims of certain passengers and not an intended curtailment of rights of all other claimants was in issue.I am of the view that the necessity of the curtailment of benefits of road accident victims’ rights does not serve such a justifiable interest.As was indicated above, the unfavourable financial position of the RAF cannot be ascribed solely to structural considerations within the RAF Act and thus the unavoidable and absolute necessity of the reduction of compensation of the victim, who is served by the RAF Act to extent as is provided for in the RAF Amendment Act, can therefore be questioned.Added to this, the proposed restrictions are at odds with the objective of the RAF Act.The objective of the Act is to afford the road accident victim the widest possible protection against the impecuniosity of the common-law wrongdoer (see Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A)).The amendments have the opposite effect.Inequality The road accident victim’s right to be compensated is not a right created statutorily by the RAF Act but is entirely based on common law (see s 19(a) read with s 21 of the RAF Act: Rose’s Car Hire (Pty) Ltd v Grant 1948 (2) SA 466 (A) and Da Silva and Another v Coutinho 1971 (3) SA 123 (A)).This being the case, the curtailment of the common-law rights of a road accident victim with the retention of fault creates inequality in terms of subs 9(1) and (2) of the Interim Constitution and is in principle constitutionally unjustifiable, as is the fact that the potential liability of contributor of funds (the motorist) to the Road Accident Fund is extended (see Joost v Score Supermarket Trading (Pty) Ltd ( Minister of Labour Intervening) 1999 (2) SA (CC)).The Amendment Act not only creates inequality in the above discussed respect, but also in the following specific instances: In contrast to the Compensation for Occupational Injuries and Disease Act (the COID Act) 130 of 1993 (see Schedule 4), the limitation on the loss of income does not equally affect all road accident fund victims.The restriction is applicable only to high income earners.The retention of s 18(2) of the RAF Act, while abolishing the restrictions on claims in respect of all other passengers injured by the sole negligence of their driver, is undoubtedly unequal and discriminatory towards a passenger who is subject to the COID Act of 1993 and who is injured in the course of his employment as his third-party claim against the RAF remains limited to R25 000 The limitation of a claimants claim and the retention of fault results in double jeopardy, as the claim of claimant who is contributorily negligent is further subject to reduction is terms of the Apportionment of Damages Act 34 of 1956 and a right of recourse in terms of the same Act (see Dodd v Multilateral Motor Vehicle Accidents Fund 1997 (2) SA 763 (A)).Extension of benefits to secondary victims Curtailment of the rights of primary victims is ostensibly brought about not only to justify but also to afford compensation to certain passengers who historically were never intended to be beneficiaries of the road accident compensation system but who were granted limited benefits based on affordability considerations.Previous Commissions of Inquiry held that the extension of liability to cover these passengers was unaffordable under circumstances where there was nowhere near the deficit currently faced by the RAF.Apart from this, the restrictions in respect of passengers were found to be constitutionally justifiable (see the Tsotetsi case (above) at 590B-D).It makes no sense to introduce inequitable and consequently unjustifiable restrictions and at the same to abandon existing justifiable restrictions on compensation.The obvious solution in view of the ultimate objective of the balancing of the financial affairs of the RAF would be to (based on research) lift the monetary limit on the claims of passengers wh
o have been injured by the sole negligence of their drivers to a more suitable limit (eg R125 000) instead of the RAF assuming an open ended liability in respect of this class of victim, especially if one considers that this type of claim can be readily abused if the relevant parties concerned (driver and passenger) collude.Conclusion What needs to be realized is that the road accident victim is, in terms of the RAF Act, not the beneficiary of legislative largesse, but the holder of established common-law rights that he enforces against a defendant (the RAF) that was created by legislation for the victim’s benefit.In principle, restrictions on compensation can be legally viable only if and when the rights of a road accident victim are completely taken out of the common law domain and are fully regulated statutorily.Government must now urgently take immediate responsibility for this situation and act decisively and effectively to correct the problems within the RAF without unjustifiably victimizing (by the amendment of the RAF Act) the road accident victim for the financial ills of the RAF that are not of the victim’s own doing.The problems within the RAF were acknowledged by the former Minister of Transport, the late Dullah Omar, in his keynote address at a Seminar on the Road Accident Compensation Environment held in May 2002.Problems with claims administration and resultant default judgments were also noted by the RAF Commission in its report submitted in December 2002.I want to add- that because it was identified some time ago that certain provisions of the MVA Act 30 of 1990 and MVA Act 4 of 2001 to be flawed and the Constitutionality thereof being challengeable, it does not give the Fund right to ignore the fundamental core objective of that legislature- and to operate in the fashion that it does presently.Indeed, during 1998 the Ministry of Finance recommended the revisiting of the provisions of Section 6 of the MVA Act 30 of 1990 and to invite meaningful suggestions from the stakeholders on aspects such as curtailing certain heads of damages (e.g.Past & Future medical expenses and Past & Future loss of earnings).The reason being that the lucrative private insurance industry should share some of the liabilities- (and to which some of them had already written this “automatic cover” into their comprehensive motor insurance policies).However what later transpired was that the entire Act 30 of 1990 was overhauled and consequently the Act 4 of 2001 with the “capping” came into being.The following are some examples of the discrepancies which arose as a result of that confusion: Previously Section 6 of Act 30 of 190 made provision for unlimited claims against the Fund.Controversially however and despite retaining the common law principles with delictual liabilities of the previous Act, the new Act 4 of 2001 in terms of the provisions Section 10 2 (b) thereof, repealed the open-ended liability and replaced it with limitations in the Regulations; resulting in all claims for damage being capped (i.e.a ceiling applied); Previously Section 7 of Act 30 of 1990 discriminated against certain type of passengers by either limiting or not paying their claims at all.Section 10 (1) of Act 4 of 2001 repealed the same and made provision for payment of all types of passengers, subject of course to the limitation (capping), as provided for in Section 10 (2) (b) read with the Regulations.Previously Section 8 of the MVA Act 30 of 1990 provided for the accident victim to seek recourse directly against the Fund first instead of against the wrongdoer.Although this provision was retained in Section 11 (1) of Act 4 of 2001, another provision was added by way of Section 11(2), where the accident victim could now claim the balance of his/her claim from the wrongdoer should the same exceed the imposed capping in terms of Section 10 (2) (b).I also wish to remind the Namibian public that as from 1990-2001, the Namibian MVA system was effectively and successfully managed along the certain guidelines recommended by the 1984 Viviers Commission of Inquiry and 1991 Melamet Commission of Inquiry seen below: Commissions of Inquiry- South Africa/ Namibia In 1954 the Corder Commission of Inquiry was set up under the chairmanship of CS Corder and, as a consequence of the report , a further amending Act was passed in 1959, amending the definition of a motor vehicle; making minor adjustments to sections of the Act; and introducing a new section regarding motor vehicles belonging to motor dealers.In 1960 the Du Plessis Commission of Inquiry was set up and substantial amendments resulted from its recommendations in 1964.The amendments included inter alia; the setting up of an advisory committee; a committee regarding insurance premiums; The establishment of an MVI Fund; and new procedures and requirements regarding the registration of insurers.In addition, the inter-relationship between the Act and the Workmen’s Compensation Act as well as direct recovery of expenses from an insurer was introduced.The compulsory waiting period of 60 days before summons could be issued was also introduced by this amending Act.The Act was twice amended in 1966- First; to introduce the concept of approved insurers and to make minor adjustments and-Second; to amend the definition of an insurance company and the charging of premiums.The Act was once again amended in 1969 to provide for the establishment of a MVA Fund in order to reinsure risks undertaken by approved insurers.The Compulsory Motor Vehicle Insurance Act 56 of 1972 replaced the 1942 Act- and re-enacted its predecessor with minor alterations.The 1972 Act was amended in 1974, 1976, 1978, 1980, 1982 and 1983 (introduction of lift clubs; condonation of prescription; reimbursement by the Fund of risks caused by extra-territorial vehicles and agreements regarding such vehicles, etc).In 1974 the Wessels Commission of Inquiry investigated certain aspects of the system of compulsory motor vehicle insurance.As a consequence of its recommendations, insurance remained with the vehicle; special circumstances were redefined; prescription was clarified; interest on damages was elucidated; compensation of national servicemen was introduced; and non-cooperation and non-authorized claims handling provisions were added.In addition the benefits payable to passengers were extended.In May 1981 the State President appointed the Grosskopf Commission to enquire into the existing MVA legislation regarding the size of the consortium of companies (i.e.Agents); the extension of cover to include ‘balance of third-party’ cover; the introduction of ‘no-fault’ liability and the introduction of a levy system of funding.The majority report recommended that the existing system be essentially retained.In 1984 the Viviers Commission of Inquiry was appointed to investigate the possibility of the establishment of dedicated courts and the simplification of litigation regarding MVA claims.Just prior to the publication of the Grosskopf report, the annual financial statements of the MVA fund were published during October 1984.The results revealed that the Fund’s expenditure exceeded its income by R82.6 million for the 1982 / 1983 year and by R217 million for the 1983 / 1984 year.The reasons given were- increased compensation resulting form the ravages of inflation and the government’s refusal to allow increased insurance premiums.In order to continue with the system of compulsory insurance, the premiums would have had to increase by 200% to 300%.Such a step did not find favour with the government, as being politically unacceptable.The government then considered the adoption of the minority report, favouring a levy system.As a result of representations made by the Association of Law Societies the government compromised and consequently the Motor Vehicle Accidents Act 84 of 1986 ( the MVA Act ) was adopted.The existence of ‘independent’ and self-governing states having their own motor-vehicle accident compensation systems was not conducive to tourism and to order in general.In order to remedy this situation a uniform system of compensation, based on the MVA Act of 1986, was introduc
ed.The essence of the system was that members of the so-called TBVC states (Ciskei, Transkei, Venda and Bophututswana) became partners in the Multilateral Motor Vehicle Accidents Fund (the MMF).As was the case with the MVA Act of 1986, the MMF Act 93 of 1989 was funded by a levy on fuel.In 1991 the Minister of Transport appointed the Melamet Commission of Inquiry to investigate the basis of funding; to establish whether the MMF Act provided adequate compensation; and where there were irregularities, to make recommendations regarding the administration of the MMF; to review the recommendations of other commissions regarding the simplification of the system and the introduction of a no-fault system.Certain meaningful recommendations by the Commission regarding the management of the MMF, were implemented.The no fault system was again given the thumbs down.The single most significant observation made by the chairman (Honourable Judge Melamet) of that Commission during the Inquiry was; “…this work (MVA practice) is different from other insurance work, with certain control being exercised from outside; and specialized expertise and experience are needed that are not employable or interchangeable with other insurance work…”.In conclusion I wish to make it to every clear thinking Namibian citizen that, the Namibian MVA Fund was created for the benefit of victims of motor vehicle accidents and not for the protection of owners or drivers.It essentially guards against the danger that a victim will not be able to enforce the rights which he/she has at common law, due to the fact that the wrongdoer may be a man of straw.Indeed the preamble to the MVA Act and the amendments thereto makes mention of the need to ” provide payment of compensation to victims of motor vehicle accidents and incidental matters.”Resultantly, the Namibian system of compensation as it presently stands can be classified as a common-law-driven delictual system, containing elements of insurance law.The system is further modified in certain respects by legislation in order to provide an action and funds to pay for damages to the victims of motor vehicle accidents.It is specially adapted to the special circumstances created by the wrongful and negligent driving of motor vehicles.To this end, certain provisions of the MVA Act 30 of 1990 and MVA Act 4 of 2001, enable victims of motor vehicle accidents to seek recourse against the wrongdoer (in this case the MVA Fund).Broadly speaking, the mentioned Acts make provision for the Fund to pay fair and equitable compensation to a person who suffered loss or damage, as a result of a wrongful act by another person (in this case the owner/driver of a motor vehicle).However, with the introduction of the “paradigm shift” in Namibia during 2004- and the entertaining of claims directly with the public, fraud and corruption lifted its ugly head, which resulted in bad and corrupt practices from within and outside the Fund.In reality, the MVA practice in Namibia has now become a farce and Government should urgently look at ways and means to remedy this situation.At the same time it should invite and generate public interest, discussion, and constructive and concrete proposals, which may guide the Government in the fundamental review of the compensation system for the victims of motor vehicle accidents.The MVA legislation as it should be enacted, is an effective empowerment tool if properly applied and has nothing to do with the concepts “milking cow”, “lottery” and “enrichment” as alleged by the MVA Fund Shahied Ajam ex-MVA Fund Technical Advisor and Consultant 1991-1999 (MVA experience- 25 yrs) Having said this, we would refer to the significantly profound words of the Honourable Judge Melament who chaired one of the many Commissions of Inquiry into the MVA practices in South Africa- “…This work is different from other insurance work, with certain control from outside, and specialized expertise and experience are needed that are not interchangeable with other insurance work…”, If one has regard to Judge Melamet’s observations, coupled with the intricacies of the practice, then the short-comings or deliberate deviation from the law as described above, can only be ascribed to lack of suitable, carefully considered and thorough assessment of the qualifications for such specialized employment; or inadequate training.We wish to bring to your attention of It becomes imperative to highlight the fact that for the past 3 years and despite your continuous promise of goodwill and co-operation in terms of service delivery, the Fund has failed to render such service delivery.During the said period-and despite the applicable laws, the Fund underwent an internal transformation and systematically implemented a paradigm shift in its operations.This led to the Fund adopting a totalitarian stance, in relation to implementing a certain methodology regarding the institution and execution of claims submitted by victims of motor vehicle accidents I will now proceed to deal with the above points in no particular fashion and the comments will broadly interconnect.The salary bill of N$7.8 million for one particular year does not justify the Fund’s continuous cry of “insolvency” or “bankruptcy” If one considers that personnel increased by 203 % and that none (save for the technical advisor/legal counsel) of the staff have ever had any MVA experience or training prior to their engagement, it goes without saying that the Fund invested badly in human capital.The restructuring process cost the Fund N$3.3 million which included a meager N$ 279 268.00 in the form of retrenchment packages to the “old guard”.The balance thereof, one can only assume went to service providers.The alleged deficit of N$519.7 million in 2004, reduced to N$259.1 million in 2005 can be interpreted that the Fund rid itself of many claims by repudiating and closing the same; thereby presenting the Minister of Finance with a “healthy” balance sheet in terms of its liabilities.It is hoped the Minister was also made aware of the fact that these repudiations are likely to resurface in the form of summonses and costly litigation, much to the financial detriment of the Fund.The 5 year prescription period of the relevant legislation will play come into play and already the legal practitioners are preparing their summonses.The 90 % reduction in claims pay outs during 2005 seems to justify the reduction of the deficit.The other interpretation is that actuarially, the Fund is trading in a state of insolvency and the so-called deficit is actually the amount needed to fund future operations.During a workshop held at the Country club in 2006 with all stakeholders, one of the Fund’s partners (Ernst & Young) aptly made this staggering remark during their presentation.Further, that the proposed MVA Bill introduced in Parliament on Wednesday 10 October 2007 as reported in the same newspaper, is indeed a fallacy.The said document is not an original model designed to suit the Namibian economy as purported- but a rather poor attempt at ” copying and selecting” certain recommendations of the controversial Satchwell Commission of Inquiry in South Africa during 2002- and introduce it into the Namibian system.In my humble opinion, the only parties to benefit from this proposed Bill are the service providers and not the victims of motor vehicle accidents.To emphasize my point I would refer to a recent blog on the internet where a leading legal practitioner in South Africa remarked “I see former RAF CEO Chris Greenland has turned up at the Namibian MVA Fund.He seems to want to help change that system too.One wonders whether the lets change it approach, no matter what country we are in, is the right one.Each country can hardly be the same, but anyway that seems to be the approach”.The reader must also note that Mr.Chris Greenland who was the Technical Advisor to the Namibian Fund from 2004-2007, was also the Acting CEO of the Road Accident Fund from 1997-2002 and further down below, we will examine what implications the “Paradigm Shift” had on that Fund, as observed by Professor Hennie Klopper.Nonetheless,
the article in the Namibian correctly goes on to state that (i) “a court of law usually determines the amount of damages to be paid out- and incorrectly goes on to state-(ii) as a result the system is plagued with disputes about money and the courts are inundated with suits against the MVA Fund”.If the above were true in terms of the Namibian context, then every victim of a motor vehicle accident in Namibia, who suffered a loss for the past 4 years, would not find themselves so worse off, as they do presently.Indeed, over the last 4 years and in direct contravention of the applicable legislature and guidelines, the MVA Fund introduced a “Paradigm Shift” into its operations which ultimately led to the deviation of the MVA practice as it is known.This evidently carried the blessings of the MVA Fund Board of Directors, as they were certain that the proposed Bill in front of Parliament which encompasses this paradigm, would eventually be passed.In the intervening 4 years the present Administration of the Namibian MVA Fund, through their vigorous and successful media campaign, have managed to convince the Namibian public that the Fund: has a deficit of N$ 500 million because of previous mal-administration; initiated and implemented the transformation process in order to sustain future operations; have infrastructure in place; have qualified professionals ready to assist the general public; encourage the public to deal directly with the fund; are eager to have settled most outstanding claims by a certain date; will table a Bill in parliament and introduce a health care dispensation system which will benefit the public; entirely rooted out bribery and corruption; effectively dealt with legal practitioners and agents alike who charged clients up to 40% and more, of the total claims settlement; THE MILLION-DOLLAR QUESTION IS: WHO’S FOOLING WHO? The report of the Auditor General regarding the Fund’s book year for 2005-2006, critically examines what the transformation and restructuring process cost the public-(who inevitably foots the bill by way of paying dedicated fuel levies)- and further, how the Fund brazenly diverted those levies away from the victims of motor vehicle accidents, who are the intended beneficiaries by virtue of the legislation in place: The restructuring process cost the Fund a staggering N$3.3 million.Because of a lack of information, this figure could unfortunately not be verified as the Auditor General is unsure whether the correct amount of tax was deducted; In one year the personnel related costs escalated by 203%; The salary bill for the 2005 book year cost the Fund N$7.8 million of which N$3 million was paid to managers, technical administrative and secretarial services of non-permanent workers; For the book year 2005 the Fund earned N$51.7 million from its appropriation of petrol levies.The total amount paid out in claims compensation for the same year amounted to a mere N$3.6 million; The Fund’s assets presently stand at N$51.1 million as opposed to the previous year of N$259.1 million.This leaves a deficit of 207 million which apparently is seen as an improvement, considering that the deficit was N$ 519.2 million in the previous book year; The Auditor General’s report also indicates that during 2005 there was 90% decline in claims pay-outs; The Fund furthermore in 2005, allegedly invested N$15 million dollars without the sanctioning of the Minister of Finance.This investment however lifted the Fund’s total investments to N$ 41.8 million; To comment on the Auditor General’s report, I would like to highlight the following concerns and deal with the above points in no particular fashion: The salary bill of N$7.8 million for one particular year does not justify the Fund’s continuous cry of “insolvency” or “bankruptcy”; If one considers that personnel increased by 203 % and that none of the staff (save for the Technical Advisor/Legal Counsel), have ever had adequate MVA experience or training prior to their engagement, it goes without saying that the Fund invested badly in human capital; The restructuring process cost the Fund N$3.3 million which included a meager N$ 279 268.00 in the form of retrenchment packages to the “old guard”.The balance thereof, one can only assume went to service providers; The alleged deficit of N$519.7 million in 2004, reduced to N$259.1 million in 2005 can be interpreted that the Fund rid itself of many claims by repudiating and closing the same; thereby presenting the Minister of Finance with a “healthy” balance sheet in terms of its liabilities.The 90 % reduction in claims pay-outs during 2005 however seems to justify the reduction of the deficit.It is hoped the Minister was also made aware of the fact that these repudiations are likely to resurface in the form of costly litigation, much to the financial detriment of the Fund.The 5 year prescription period of the relevant legislation will play come into play and already summonses are being prepared.The other interpretation is that actuarially, the Fund is trading in a state of insolvency and the so-called deficit is actually the amount needed to fund future operations in relation to operating like the Social Security Commission for instance.During a workshop held at the Country club in 2006 with all stakeholders, one of the Fund’s partners (Ernst & Young) aptly made this staggering remark during their presentation.The following are some examples of the many bad practices by the Fund as experienced by victims of motor vehicle accidents and in particular, my direct dealings with the Fund: The abrupt decision during 2006 (apparently after receiving an opinion from a Senior Advocate) to stop payment of compensation to dependants of a negligent driver in terms of the provisions of Section 10 of the MVA Act 4 of 2001.This particular Section as I recall, was specially created and intended to abolish the prejudicial provisions of Section 6 2 (b) (i) & (ii) and 7 of the MVA Act 30 of 1990- and to include these persons.I further recall that the Fund indeed paid these type claims as from the date of enactment of the MVA Act 4 of 2001 until 2006.The incidences where the Fund and totally in contravention of the applicable Act, paid cart-blanch for funeral expenses relating to 3 major accidents during 2006/7, without investigating the circumstances of the accidents; yet on the other hand, applying the provisions of the applicable Acts- by refusing to entertain claims by victims who suffered a similar fate in other unrelated accidents. The decision to cap claims even further, for pain and suffering and loss of amenities for life, shock and trauma by introducing an arbitrary internal damages list, not based on legal principle or precedent- with instructions to staff not to deviate from the list. A decision to implement payment of compensation in installments for loss of income and maintenance, without agreements with the victims and also without a court order authorizing such installments, as provided for in the Act.The decision to give undertakings only for future medical expenses without providing adequate administrative resources.The appointment of inadequately-trained and unskilled Customer Service personnel who do the general public no justice with their lack of knowledge of the system(and in many instances losing important documentation of claimants)- resulting in a perceived sense of unfair treatment by the Fund.This has also resulted in creating a negative effect on productivity The creation of a “review committee” comprising mostly of claims handlers and medical personnel who, based on their interpretation of the law and the applicable legislation, provide opinions regarding settlements.It further has the possibility of discouraging staff to settle technical claims speedily and will ultimately result in a summons and costly litigation. The decision to indiscriminately repudiate all claims involving tyre-bursts and wild animals- not taking into account nor investigating the negligent/unlawful factors of the owner/driver, as required by the applicable legislation.The continued use of a Neurologist flown in from South Africa on a regular basis who e
xamines a bundle of clients on a “once-off” basis; after which he suggests a basis of compensation to be paid to the victim.The instances where victims who are still recuperating in hospital from their ordeals, are presented with settlement offers without ever having set foot in the Fund’s offices.The Fund’s continuous public announcements discouraging victims of motor vehicle accidents not to make use of legal practitioners when in contrast, the relevant Acts endorses the use of legal representatives. At this point it becomes prudent for me to cite some similar observations made by Professor Hennie Klopper of the University of Witwatersrand (a leading expert on MVA Law and Practice), concerning the promulgated amended RAF Act as well as his visit to the South African Road Accident Fund offices in Pretoria recently “… I have noted the provisions to curtail the benefits enjoyed by victims of road accidents in terms of the Road Accident Fund Act (RAF) 56 of 1996 by the promulgation of the Road Accident Fund Amendment Act 19 of 2005.My concern is that the proposals are directed at the wrong end of the RAF’s expenditure.The RAF Commission under the chairmanship of Judge Kathy Satchwell has found that approximately 40% to 55% of each rand of fuel levy is spent by the RAF on evaluating claims and on administration.These figures are based on information for the period 2000 to 2002.This figure does not take into account the attorney-and-client fee charged by the claimant’s own attorney.It follows that the actions – or even inaction – of the RAF that may adversely influence this already unfavourable ratio of costs in relation to compensation actually delivered, should be closely monitored and effective steps taken to rectify any deficiencies in the claims-handling process, before one resorts to the drastic step of reducing road accident victim benefits.This needs to be done in order properly to substantiate any conclusion that the current system of compensation is financially unsustainable.In my view, there are two aspects that need closer scrutiny and remedial steps before any action that results in the curtailment of the existing common-law rights of an RAF victim can be justified.These are management decisions and the state of claims handling within the RAF.Management decisions Prior to and since 2002, the management of the RAF has taken decisions that have contributed to the deterioration of the RAF’s financial position.These are the following: The alteration of the staff structure by the introduction of more claims handlers and fewer claims assistants, – having a negative effect on productivity and resulting in an increase in litigation.The entertaining and encouragement by the implementation of a project called traffic, of separate claims by hospitals and doctors (although ostensibly sanctioned by s 17(5) of the RAF Act) before the claim of the actual victim is lodged and finalized.The decision to enter into a relationship with a private enterprise in the traffic project was, in my view, contrary to a provision of the RAF Act (s 19) and the provisions of the Competition Second Amendment Act 39 of 2000 as it constituted a restrictive practice.The particular private enterprise enjoyed perceived, – if not actual preferential treatment in respect of claims lodged by it on behalf of medical suppliers.It also resulted in a marked proliferation of claims, necessitating the creation of a separate division dedicated to the handling of these claims, and created anomalies inter alia; in that medical claims have sometimes been paid when there was no legal claim by the claimant or where apportionment of damages was applicable but was not applied to the medical accounts.A unilateral decision in 2004 to withdraw and suspend all offers that gave rise to a flood of summonses to the extent that some litigation officers at the RAF’s Pretoria office have to deal with up to 1 000 defended magistrate’s court matters (each case having an estimated average legal cost exposure to the RAF of R16 000 per defended claim) A decision unilaterally to implement payment of compensation in installments of loss of income and maintenance, without the RAF Act authorizing such installments and without the RAF having the administrative capacity to administer deferred payments properly, resulting in further litigation and unnecessary legal costs.The unilateral decision unofficially to cap claims for pain and suffering, loss of amenities of life, etc by introducing an arbitrary internal damages list not based on legal principle or precedent, with instructions to staff that deviation from the list carries the sanction of disciplinary steps.This resulted in more litigation and legal costs.The decision to give undertakings only for future medical expenses without providing adequate administrative resources, once more resulting in litigation and unnecessary legal costs.Recently, the instruction to staff to enter and appearance to defend in all matters where summonses are issued, irrespective of what the merits of the case, indicate that such defence is justified or and by doing so, adding to the RAF’s legal bill.The creation of a separate ‘summons section’, whereas the litigation Act is in fact designed to discourage litigation and where the section of such a section envisages continued litigation to the extent that it requires a separate section.It has the further possibility of discouraging staff to settle involved claims speedily.The negligence such claims ( or any other claim for that matter) will ultimately result in a summons that in turn will result in the file being transferred to the summons department, thereby ridding the staff member of what he perceives to be a troublesome claim.Although the accident figures have more or less stabilized during 2000, the average case load per claims handler has since 2000/2002 reportedly risen from approximately 700 to 1000 claims.According to the Sheriff in Pretoria, he and his deputies daily serve the RAF with summonses by the box full.The RAF is currently receiving more summonses in one day that it previously received in a month.Default judgments are regularly being taken against the RAF.According to the Sheriff in Pretoria, millions of rands ( which includes unnecessarily incurred legal costs) are routinely paid over to the Sheriff on writs executed against the RAF.Up to 80% of the High Court in Pretoria’s roll is taken up by matters where the RAF is the defendant.If one considers that the Viviers Commission of Inquiry (1989) into the establishment of dedicated courts for road accident matters, found that only one per cent of all matters litigated on proceed to trial, one gets a notion of the vast amount of resources of the RAF being deviated from its intended purposes of compensating victims to conducting unnecessary litigation against it.It is rumoured that the RAF in 2004 paid approximately R44 million for legal services rendered to it to one firm on its panel of attorneys alone.The number of summonses issued against the RAF and defended matters handled by its litigation department and attorneys are a result of ill-considered management decisions and/or inefficient claims handling and/or reduced productivity.It is convenient at this stage to refer to the proposed scrapping of s 17(2) of the RAF Act (a road accident victim’s right to recover party-and-party costs from the RAF).The scrapping will not deliver any benefit as it will encourage litigation.The section was originally introduced to remedy the situation where summonses were issued as a matter of course in order to entitle a claimant to these costs.Claims Handling I have on numerous occasions spoken to staff members at the Pretoria office of the RAF.From my conversations, I have gained the impression that the inefficiency and/or lack of productivity can inter alia be ascribed to the following considerations: There is inadequate training of staff.The management of the RAF has created a culture in its Pretoria office where staff are demoralized and are very reluctant to take the initiative and make decisions.There is generally a lack of discipline within the staff of the
RAF’s Pretoria offices, although there are those dedicated staff members who render excellent service.Attempts by some senior staff to apply discipline and increase productivity are resisted and have in some extreme instances been met with retaliatory threats from the staff members concerned and the subsequent resignation of skilled senior staff.Staff members arrive late for work and fail to answer their telephones promptly or at all.Staff turnover is high.The average experience of a claims handler in Pretoria is approximately 12 months, that of a senior claims handler two years and that of mangers three to five years.Unnecessary litigation and factors promoting litigation against the RAF should not be countenanced.More so, if it is taken into account that the thrust some of the provisions of the RAF Act (such as ss 17 (2), 17(3)(b), 19(c) – (f), 24(5) and 24(6) is specifically designed to promote early settlement of claims and discourage costly litigation.Unfortunately the RAF in many instances forfeits and/or seemingly neglects to avail itself of the benefits of these provisions.In terms of s 24(5) of the RAF Act the RAF may object to the validity of a claim within 60 days to register and acknowledge receipt of a claim.In terms of s 24(6) a claimant is prohibited from issuing summons before 120 days have elapsed from the date of the submission of the claim and s 19(f)(i) (submission of affidavit by the claimant) has been compiled with.It is a very rare occurrence (if at all) that any offer is made before the prescribed period has elapsed.The RAF Act (s 17(3)(b)) provides that if the RAF makes a written offer (including an offer made without prejudice) in the course of settlement negotiations before summons is issued, the court is empowered to take this offer into account when making an order for costs.Generally this provision is not being fully utilized Justification of curtailed compensation Financial solvency as a justifiable interest The above considerations may have an important bearing on the constitutionality of the provisions curtailing the rights of the road accident victim.The only basis on which the rights of a road accident victim may possibly be limited is when such limitation serves a justifiable interest ( see s 35 of the interim Constitution).In Tsotetsi v Mutual & Federal Insurance Co Ltd 1997 (1) SA 585 (CC) 590B-D it was stated that the financial solvency of the then Multilateral Motor Vehicle Accident Fund as a welfare programme may be such an interest.However, an existing restriction on the claims of certain passengers and not an intended curtailment of rights of all other claimants was in issue.I am of the view that the necessity of the curtailment of benefits of road accident victims’ rights does not serve such a justifiable interest.As was indicated above, the unfavourable financial position of the RAF cannot be ascribed solely to structural considerations within the RAF Act and thus the unavoidable and absolute necessity of the reduction of compensation of the victim, who is served by the RAF Act to extent as is provided for in the RAF Amendment Act, can therefore be questioned.Added to this, the proposed restrictions are at odds with the objective of the RAF Act.The objective of the Act is to afford the road accident victim the widest possible protection against the impecuniosity of the common-law wrongdoer (see Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A)).The amendments have the opposite effect.Inequality The road accident victim’s right to be compensated is not a right created statutorily by the RAF Act but is entirely based on common law (see s 19(a) read with s 21 of the RAF Act: Rose’s Car Hire (Pty) Ltd v Grant 1948 (2) SA 466 (A) and Da Silva and Another v Coutinho 1971 (3) SA 123 (A)).This being the case, the curtailment of the common-law rights of a road accident victim with the retention of fault creates inequality in terms of subs 9(1) and (2) of the Interim Constitution and is in principle constitutionally unjustifiable, as is the fact that the potential liability of contributor of funds (the motorist) to the Road Accident Fund is extended (see Joost v Score Supermarket Trading (Pty) Ltd ( Minister of Labour Intervening) 1999 (2) SA (CC)).The Amendment Act not only creates inequality in the above discussed respect, but also in the following specific instances: In contrast to the Compensation for Occupational Injuries and Disease Act (the COID Act) 130 of 1993 (see Schedule 4), the limitation on the loss of income does not equally affect all road accident fund victims.The restriction is applicable only to high income earners.The retention of s 18(2) of the RAF Act, while abolishing the restrictions on claims in respect of all other passengers injured by the sole negligence of their driver, is undoubtedly unequal and discriminatory towards a passenger who is subject to the COID Act of 1993 and who is injured in the course of his employment as his third-party claim against the RAF remains limited to R25 000 The limitation of a claimants claim and the retention of fault results in double jeopardy, as the claim of claimant who is contributorily negligent is further subject to reduction is terms of the Apportionment of Damages Act 34 of 1956 and a right of recourse in terms of the same Act (see Dodd v Multilateral Motor Vehicle Accidents Fund 1997 (2) SA 763 (A)).Extension of benefits to secondary victims Curtailment of the rights of primary victims is ostensibly brought about not only to justify but also to afford compensation to certain passengers who historically were never intended to be beneficiaries of the road accident compensation system but who were granted limited benefits based on affordability considerations.Previous Commissions of Inquiry held that the extension of liability to cover these passengers was unaffordable under circumstances where there was nowhere near the deficit currently faced by the RAF.Apart from this, the restrictions in respect of passengers were found to be constitutionally justifiable (see the Tsotetsi case (above) at 590B-D).It makes no sense to introduce inequitable and consequently unjustifiable restrictions and at the same to abandon existing justifiable restrictions on compensation.The obvious solution in view of the ultimate objective of the balancing of the financial affairs of the RAF would be to (based on research) lift the monetary limit on the claims of passengers who have been injured by the sole negligence of their drivers to a more suitable limit (eg R125 000) instead of the RAF assuming an open ended liability in respect of this class of victim, especially if one considers that this type of claim can be readily abused if the relevant parties concerned (driver and passenger) collude.Conclusion What needs to be realized is that the road accident victim is, in terms of the RAF Act, not the beneficiary of legislative largesse, but the holder of established common-law rights that he enforces against a defendant (the RAF) that was created by legislation for the victim’s benefit.In principle, restrictions on compensation can be legally viable only if and when the rights of a road accident victim are completely taken out of the common law domain and are fully regulated statutorily.Government must now urgently take immediate responsibility for this situation and act decisively and effectively to correct the problems within the RAF without unjustifiably victimizing (by the amendment of the RAF Act) the road accident victim for the financial ills of the RAF that are not of the victim’s own doing.The problems within the RAF were acknowledged by the former Minister of Transport, the late Dullah Omar, in his keynote address at a Seminar on the Road Accident Compensation Environment held in May 2002.Problems with claims administration and resultant default judgments were also noted by the RAF Commission in its report submitted in December 2002.I want to add- that because it was identified some time ago that certain provisions of the MVA Act 30 of 1990 and MVA Act 4 of 2001 to be flawed and the Constitutionality thereof being challengeable, it does not
give the Fund right to ignore the fundamental core objective of that legislature- and to operate in the fashion that it does presently.Indeed, during 1998 the Ministry of Finance recommended the revisiting of the provisions of Section 6 of the MVA Act 30 of 1990 and to invite meaningful suggestions from the stakeholders on aspects such as curtailing certain heads of damages (e.g.Past & Future medical expenses and Past & Future loss of earnings).The reason being that the lucrative private insurance industry should share some of the liabilities- (and to which some of them had already written this “automatic cover” into their comprehensive motor insurance policies).However what later transpired was that the entire Act 30 of 1990 was overhauled and consequently the Act 4 of 2001 with the “capping” came into being.The following are some examples of the discrepancies which arose as a result of that confusion: Previously Section 6 of Act 30 of 190 made provision for unlimited claims against the Fund.Controversially however and despite retaining the common law principles with delictual liabilities of the previous Act, the new Act 4 of 2001 in terms of the provisions Section 10 2 (b) thereof, repealed the open-ended liability and replaced it with limitations in the Regulations; resulting in all claims for damage being capped (i.e.a ceiling applied); Previously Section 7 of Act 30 of 1990 discriminated against certain type of passengers by either limiting or not paying their claims at all.Section 10 (1) of Act 4 of 2001 repealed the same and made provision for payment of all types of passengers, subject of course to the limitation (capping), as provided for in Section 10 (2) (b) read with the Regulations.Previously Section 8 of the MVA Act 30 of 1990 provided for the accident victim to seek recourse directly against the Fund first instead of against the wrongdoer.Although this provision was retained in Section 11 (1) of Act 4 of 2001, another provision was added by way of Section 11(2), where the accident victim could now claim the balance of his/her claim from the wrongdoer should the same exceed the imposed capping in terms of Section 10 (2) (b).I also wish to remind the Namibian public that as from 1990-2001, the Namibian MVA system was effectively and successfully managed along the certain guidelines recommended by the 1984 Viviers Commission of Inquiry and 1991 Melamet Commission of Inquiry seen below: Commissions of Inquiry- South Africa/ Namibia In 1954 the Corder Commission of Inquiry was set up under the chairmanship of CS Corder and, as a consequence of the report , a further amending Act was passed in 1959, amending the definition of a motor vehicle; making minor adjustments to sections of the Act; and introducing a new section regarding motor vehicles belonging to motor dealers.In 1960 the Du Plessis Commission of Inquiry was set up and substantial amendments resulted from its recommendations in 1964.The amendments included inter alia; the setting up of an advisory committee; a committee regarding insurance premiums; The establishment of an MVI Fund; and new procedures and requirements regarding the registration of insurers.In addition, the inter-relationship between the Act and the Workmen’s Compensation Act as well as direct recovery of expenses from an insurer was introduced.The compulsory waiting period of 60 days before summons could be issued was also introduced by this amending Act. The Act was twice amended in 1966- First; to introduce the concept of approved insurers and to make minor adjustments and-Second; to amend the definition of an insurance company and the charging of premiums.The Act was once again amended in 1969 to provide for the establishment of a MVA Fund in order to reinsure risks undertaken by approved insurers.The Compulsory Motor Vehicle Insurance Act 56 of 1972 replaced the 1942 Act- and re-enacted its predecessor with minor alterations.The 1972 Act was amended in 1974, 1976, 1978, 1980, 1982 and 1983 (introduction of lift clubs; condonation of prescription; reimbursement by the Fund of risks caused by extra-territorial vehicles and agreements regarding such vehicles, etc). In 1974 the Wessels Commission of Inquiry investigated certain aspects of the system of compulsory motor vehicle insurance.As a consequence of its recommendations, insurance remained with the vehicle; special circumstances were redefined; prescription was clarified; interest on damages was elucidated; compensation of national servicemen was introduced; and non-cooperation and non-authorized claims handling provisions were added.In addition the benefits payable to passengers were extended. In May 1981 the State President appointed the Grosskopf Commission to enquire into the existing MVA legislation regarding the size of the consortium of companies (i.e.Agents); the extension of cover to include ‘balance of third-party’ cover; the introduction of ‘no-fault’ liability and the introduction of a levy system of funding.The majority report recommended that the existing system be essentially retained.In 1984 the Viviers Commission of Inquiry was appointed to investigate the possibility of the establishment of dedicated courts and the simplification of litigation regarding MVA claims.Just prior to the publication of the Grosskopf report, the annual financial statements of the MVA fund were published during October 1984.The results revealed that the Fund’s expenditure exceeded its income by R82.6 million for the 1982 / 1983 year and by R217 million for the 1983 / 1984 year.The reasons given were- increased compensation resulting form the ravages of inflation and the government’s refusal to allow increased insurance premiums.In order to continue with the system of compulsory insurance, the premiums would have had to increase by 200% to 300%.Such a step did not find favour with the government, as being politically unacceptable.The government then considered the adoption of the minority report, favouring a levy system.As a result of representations made by the Association of Law Societies the government compromised and consequently the Motor Vehicle Accidents Act 84 of 1986 ( the MVA Act ) was adopted.The existence of ‘independent’ and self-governing states having their own motor-vehicle accident compensation systems was not conducive to tourism and to order in general.In order to remedy this situation a uniform system of compensation, based on the MVA Act of 1986, was introduced.The essence of the system was that members of the so-called TBVC states (Ciskei, Transkei, Venda and Bophututswana) became partners in the Multilateral Motor Vehicle Accidents Fund (the MMF).As was the case with the MVA Act of 1986, the MMF Act 93 of 1989 was funded by a levy on fuel.In 1991 the Minister of Transport appointed the Melamet Commission of Inquiry to investigate the basis of funding; to establish whether the MMF Act provided adequate compensation; and where there were irregularities, to make recommendations regarding the administration of the MMF; to review the recommendations of other commissions regarding the simplification of the system and the introduction of a no-fault system.Certain meaningful recommendations by the Commission regarding the management of the MMF, were implemented.The no fault system was again given the thumbs down.The single most significant observation made by the chairman (Honourable Judge Melamet) of that Commission during the Inquiry was; “…this work (MVA practice) is different from other insurance work, with certain control being exercised from outside; and specialized expertise and experience are needed that are not employable or interchangeable with other insurance work…”. In conclusion I wish to make it to every clear thinking Namibian citizen that, the Namibian MVA Fund was created for the benefit of victims of motor vehicle accidents and not for the protection of owners or drivers.It essentially guards against the danger that a victim will not be able to enforce the rights which he/she has at common law, due to the fact that the wrongdoer may be a man of straw.Indeed the preamble to the MVA Act and the amendments
thereto makes mention of the need to ” provide payment of compensation to victims of motor vehicle accidents and incidental matters.”Resultantly, the Namibian system of compensation as it presently stands can be classified as a common-law-driven delictual system, containing elements of insurance law.The system is further modified in certain respects by legislation in order to provide an action and funds to pay for damages to the victims of motor vehicle accidents.It is specially adapted to the special circumstances created by the wrongful and negligent driving of motor vehicles.To this end, certain provisions of the MVA Act 30 of 1990 and MVA Act 4 of 2001, enable victims of motor vehicle accidents to seek recourse against the wrongdoer (in this case the MVA Fund).Broadly speaking, the mentioned Acts make provision for the Fund to pay fair and equitable compensation to a person who suffered loss or damage, as a result of a wrongful act by another person (in this case the owner/driver of a motor vehicle).However, with the introduction of the “paradigm shift” in Namibia during 2004- and the entertaining of claims directly with the public, fraud and corruption lifted its ugly head, which resulted in bad and corrupt practices from within and outside the Fund.In reality, the MVA practice in Namibia has now become a farce and Government should urgently look at ways and means to remedy this situation.At the same time it should invite and generate public interest, discussion, and constructive and concrete proposals, which may guide the Government in the fundamental review of the compensation system for the victims of motor vehicle accidents.The MVA legislation as it should be enacted, is an effective empowerment tool if properly applied and has nothing to do with the concepts “milking cow”, “lottery” and “enrichment” as alleged by the MVA Fund Shahied Ajam ex-MVA Fund Technical Advisor and Consultant 1991-1999 (MVA experience- 25 yrs) Having said this, we would refer to the significantly profound words of the Honourable Judge Melament who chaired one of the many Commissions of Inquiry into the MVA practices in South Africa- “…This work is different from other insurance work, with certain control from outside, and specialized expertise and experience are needed that are not interchangeable with other insurance work…”, If one has regard to Judge Melamet’s observations, coupled with the intricacies of the practice, then the short-comings or deliberate deviation from the law as described above, can only be ascribed to lack of suitable, carefully considered and thorough assessment of the qualifications for such specialized employment; or inadequate training. We wish to bring to your attention of It becomes imperative to highlight the fact that for the past 3 years and despite your continuous promise of goodwill and co-operation in terms of service delivery, the Fund has failed to render such service delivery.During the said period-and despite the applicable laws, the Fund underwent an internal transformation and systematically implemented a paradigm shift in its operations.This led to the Fund adopting a totalitarian stance, in relation to implementing a certain methodology regarding the institution and execution of claims submitted by victims of motor vehicle accidents I will now proceed to deal with the above points in no particular fashion and the comments will broadly interconnect.The salary bill of N$7.8 million for one particular year does not justify the Fund’s continuous cry of “insolvency” or “bankruptcy” If one considers that personnel increased by 203 % and that none (save for the technical advisor/legal counsel) of the staff have ever had any MVA experience or training prior to their engagement, it goes without saying that the Fund invested badly in human capital.The restructuring process cost the Fund N$3.3 million which included a meager N$ 279 268.00 in the form of retrenchment packages to the “old guard”.The balance thereof, one can only assume went to service providers.The alleged deficit of N$519.7 million in 2004, reduced to N$259.1 million in 2005 can be interpreted that the Fund rid itself of many claims by repudiating and closing the same; thereby presenting the Minister of Finance with a “healthy” balance sheet in terms of its liabilities.It is hoped the Minister was also made aware of the fact that these repudiations are likely to resurface in the form of summonses and costly litigation, much to the financial detriment of the Fund.The 5 year prescription period of the relevant legislation will play come into play and already the legal practitioners are preparing their summonses.The 90 % reduction in claims pay outs during 2005 seems to justify the reduction of the deficit. The other interpretation is that actuarially, the Fund is trading in a state of insolvency and the so-called deficit is actually the amount needed to fund future operations.During a workshop held at the Country club in 2006 with all stakeholders, one of the Fund’s partners (Ernst & Young) aptly made this staggering remark during their presentation.