- RAF ordered to pay R92 million within 7 days, and enforcement of existing judgments confirmed.
- Court rejects res judicata defence, ruling that the case is about compliance, not new claims.
- Acting CEO Radikwena Phora ordered to ensure RAF obeys court orders.
In April 2023, Sunshine Hospital closed its doors. Critically ill patients were transferred to other facilities, around 150 staff members lost their livelihoods, and a private hospital that had treated hundreds of road accident victims simply ceased to exist.
This was not because of mismanagement or financial recklessness, but because the Road Accident Fund had stopped paying its bills.
The hospital did reopen in August 2023 after some limited payments were made, but it limped along under the constant threat of closure, treating patients in need of continuous and critical care while fighting in court for money it was already owed.
That fight has now ended with a decisive ruling from the Supreme Court of Appeal, compelling the RAF to honour its court orders and settle outstanding judgment debts of more than R92 million.
Newnet Property (Pty) Ltd operated Sunshine Hospital, a facility that treated patients injured in motor vehicle accidents. Many of these patients were referred directly by the Road Accident Fund or transferred from state hospitals that were unable to provide the required level of care.
In some cases, the RAF had already accepted liability and issued undertakings to cover future medical expenses, while in others, Newnet treated patients at its own risk, with no certainty of ever being paid.
The Road Accident Fund is a statutory body tasked with compensating road accident victims and funding their medical care. It had an established process for approving and paying claims. Once invoices were audited and approved, they were placed on the Requested Not Yet Paid list, signalling that payment was due. Despite this, the Fund stopped paying Newnet for services rendered around March 2020, and a series of legal battles followed.
Over time, Newnet obtained multiple court orders against the RAF, whether by agreement, default or consent, each confirming that substantial amounts were owed. Together, these judgments required the RAF to pay hundreds of millions of rand. Despite some partial payments being made, a balance of R92,085,106.36 remained outstanding.
Radikwena Phora, the acting Chief Executive Officer of the RAF, was cited in his official capacity as the person responsible for the day-to-day operational management of the Fund.
Escalating dispute and failed enforcement
The dispute intensified as the RAF repeatedly failed to comply with court orders requiring payment. Earlier orders had directed the Fund to pay Newnet in structured instalments to keep the hospital running. Those payments were not maintained.
Newnet attempted to enforce its rights through execution proceedings. Warrants were issued to attach RAF assets, including movable property, but these efforts came to nothing. The Sheriff was prevented from removing attached assets, with police assistance being used to block removal, and scheduled auctions failed when the RAF simply bought back its own assets rather than settling the debt.
Further attempts to attach funds through institutions including the South African Revenue Service, the South African Reserve Bank, National Treasury and the Department of Transport also came to nothing. Each institution indicated that it did not hold any attachable funds on behalf of the RAF.
To compound matters, the RAF withheld updated Requested Not Yet Paid lists and stopped adjudicating new claims, effectively leaving Newnet unable to track or enforce payment.
The financial consequences were as severe as they were predictable. The court accepted that without payment of the judgment debts, the hospital would not be able to keep its doors open, placing patient care and lives directly at risk.
What the court had to decide
The central legal question before the Supreme Court of Appeal was whether Newnet’s application to compel payment of existing court orders was blocked by the principle of res judicata.
The RAF argued that the matter had already been decided in earlier proceedings and that Newnet was simply trying to obtain the same relief a second time.
Newnet countered that its application was fundamentally different. It was not asking for a new judgment establishing liability but was seeking the enforcement of existing court orders that the RAF had simply refused to honour.
Court findings on res judicata
Acting Judge F Kathree Setiloane rejected the RAF’s argument and drew a clear distinction between enforcing a judgment and re-litigating a claim.
The court held, “Newnet does not seek to enforce a civil claim for payment of debt by asking for a new judgment… but it rather seeks to enforce payment of judgment debts.”
The court found that the earlier proceedings had determined the RAF’s liability, while the present application was aimed at compelling compliance with those judgments. The requirements for res judicata were therefore not met.
Mandamus and accountability of the CEO
The court also considered whether it was appropriate to direct relief against the acting Chief Executive Officer. The RAF argued that its Board, as the accounting authority, should have been cited in his place.
The court rejected this argument, confirming that the CEO is responsible for the day-to-day operations of the Fund, including financial administration and claims processing. The court found that the CEO carries a statutory duty to ensure that the Fund complies with court orders.
The court recognised that a mandamus is an appropriate remedy where a public body fails to fulfil its obligations, particularly where other enforcement mechanisms have been blocked or rendered ineffective.
Findings on RAF conduct
The court was critical of the RAF’s conduct throughout the dispute. It found that the Fund had deliberately refused to comply with court orders and had actively obstructed execution processes. This included preventing the removal of attached assets and making a practice of buying back its own goods at auction rather than paying its debts.
The court held that this conduct violated both statutory duties and constitutional obligations, most notably the duty of organs of state to comply with court orders. The court emphasised that failure to obey court orders undermines the rule of law and the authority of the courts, warning that behaviour of this kind risks rendering judicial authority meaningless.
The order
The Supreme Court of Appeal upheld the appeal and set aside the High Court order, replacing it with its own.
The Road Accident Fund was ordered to pay R92,085,106.36 within 7 days. It was further required to provide an updated Requested Not Yet Paid list within 7 days and every 14 days thereafter, to adjudicate all accounts within 120 days, and to pay a further R158,890,967.70 from the May 2023 list within 30 days.
Radikwena Phora was directed to ensure that the Fund complies with these obligations. The RAF was also ordered to pay the costs of the application, including those of two counsel.
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