- The RAF withheld payments owed to successful claimants because of a dispute over costs involving another client represented by the same attorneys.
- The dispute centred on a taxed costs order for R88,063.69 granted against Amy Ford.
- The court found the conduct unlawful, declared it to be in bad faith, held the responsible officials in contempt, and ordered them to pay punitive costs.
The Road Accident Fund (RAF) unlawfully withheld compensation, interest and legal costs owed to successful claimants because of a costs dispute involving another client represented by the same law firm. This is according to a recent ruling by the High Court in Kimberley.
The case arose after 10 claimants represented by Elliott Maris Attorneys complained that the RAF had blocked or delayed payment of court-awarded compensation, taxed costs and accrued interest despite there being no dispute that the money was due and payable. The affected claimants were owed millions of rand.
Muhammad Seedat owed R500,000. Modissagaanekwe Adam Moseki owed R594,267.60, together with taxed costs of R119,020. Aletta Sibina Sauer owed R5,411,902.20 and had taxed costs of R1,192,230.84. Lebogang Ontehetse Veronica Gaarekwe owed R4,923,202 and taxed costs of R1,192,230.84.
Other claimants included Chrizelda Mercia van Niekerk, who was owed R523,956.10, Hugo Eugene Strumpher, who was owed R1,722,154.25, Susanna Catharina Nortje, who was owed R2,219,742 together with taxed costs of R624,468.38, Erasmus Albertus Schutte, who was owed R346,804 and taxed costs of R780,060.57, Maud Ellen Pretorius, who was owed R2,369,422.46 and taxed costs of R184,478.82, and Sybrands Abraham de Beer, who was owed R1,607,291.39 together with taxed costs of R1,134,727.10.
How an R88,000 costs order triggered the dispute
According to the judgment, the source of the impasse was not any debt owed by the claimants themselves. Instead, the RAF linked their payments to a taxed costs order of R88,063.69 granted against Amy Ford, another client represented by Elliott Maris Attorneys.
Ford had successfully pursued claims against the RAF in both her personal capacity and on behalf of her children. She obtained compensation awards running into millions of rand. However, a costs order for wasted costs was granted against her in April 2018 and later taxed in the amount of R88,063.69.
The court heard that RAF officials relied on that debt when dealing with payments due to other clients represented by Elliott Maris Attorneys.
Attorney Hendrik van Niekerk told the court that when he sought payment of amounts owed by the RAF, he was informed that no payments would be made because Elliott Maris allegedly owed the RAF the wasted costs arising from the Ford matter.
Van Niekerk pointed out that the costs order had been granted against Ford and not the attorneys. He also argued that the RAF itself owed Ford substantially more than the amount reflected in the costs order.
The court agreed. It found that Ford's alleged indebtedness had effectively ceased to exist because the RAF became indebted to her for amounts far exceeding the taxed costs order.
RAF's objections dismissed
The RAF opposed the application and raised several preliminary objections. Among other things, it argued that the claimants were attempting to bypass the normal execution procedures contained in Rule 45 of the Uniform Rules of Court. It also contended that the relief sought was incoherent.
The court rejected those arguments. It found that the matter concerned the legality of the RAF's conduct rather than the execution of money judgments. The court further found no merit in the contention that the relief sought was incoherent.
Judge finds conduct unlawful and in bad faith
The court found that none of the applicants was indebted to the RAF. In one of the most significant findings in the judgment, the court stated that "none of the applicants is in any way indebted to the first respondent".
The judge was sharply critical of the conduct of the RAF official involved in the dispute, finding that the attitude adopted "can only be interpreted as being mala fide".
The judgment went further, describing the conduct as "a direct defeat of the aim and purpose of the Road Accident Fund Act".
After examining the evidence, the court concluded that the RAF was effectively holding the claimants "at ransom" because of the costs order granted against Ford.
The court found that there was no lawful basis for withholding payments owed to unrelated claimants and that the payment blockade was unlawful.
Payment order and contempt finding
The court granted the applicants leave to rely on a supplementary affidavit and declared the RAF's conduct in blocking or delaying payments of compensation, costs and interest to be unlawful.
The RAF was ordered to immediately cease the conduct and take steps to pay all outstanding amounts due to the claimants within 14 days.
The court also declared the conduct mala fide and outside the protection ordinarily afforded to RAF employees and officials under the Road Accident Fund Act.
In a further blow to the Fund, the court declared the responsible official and any other officials who may later be identified guilty of contempt of court for wilfully engaging in the unlawful conduct.
The respondents were ordered to pay the costs of the application on the attorney-and-own-client scale.
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