THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No:  293/07
REPORTABLE

In the matter between:

ROAD ACCIDENT FUND                                                          APPELLANT

v

ABDOOL-CARRIM ATO AND OTHERS         1st-1238th RESPONDENTS

ALEXANDER FORBES COMPENSATION
TECHNOLOGIES (PTY) LTD                                    1239th RESPONDENT

ALEXANDER FORBES ACCIDENT
COMPENSATION TECHNOLOGIES (PTY) LTD  1240th RESPONDENT

Coram:
Streicher, Navsa, Heher, Maya, Cachalia JJA

Heard:
4 March 2008

Delivered: 27 March 2008

Summary:
Section 19(d) of the Road Accident Fund Act 56 of 1996 is applicable only to agreements
made by third parties, not to those by suppliers.

Neutral citation:  This judgment may be referred to as Road Accident Fund v Abdool-
Carrim (293/2007) [2008] ZASCA 18 (27 March 2008).

CACHALIA JA
[1] This appeal concerns the proper interpretation of s 17(5) read with
s 19(d) of the Road Accident Fund Act 56 of 1996.

[2] The appellant is the Road Accident Fund, established in terms of the s 2
of the Act. It has the statutory responsibility in terms of s 17(1) to compensate
third parties for loss or damage suffered as a result of injury or death
wrongfully caused by the driving of motor vehicles.1 Such compensation may
include the third party’s medical costs incurred in respect of accommodation,
treatment or services, which for convenience, I will refer to as medical
services.

[3] Where a third party is entitled to compensation and has incurred costs in
respect of medical services which are recoverable from the Fund, s 17(5)
permits ‘suppliers’ who have rendered such services the right to claim their
costs directly from the Fund without having to claim from the third party. It
also provides, and this is the contentious part, that ‘such claim shall be subject,
mutatis mutandis, to the provisions applicable to the claim of the third party
concerned . . ..’ Section 19(d) renders a third party claim unenforceable
against the Fund if he or she has entered into an agreement with someone
other than an attorney or someone who falls within a class of persons referred
to in s 19(c)(ii) in accordance with which he or she has undertaken to pay the
person for their services after settlement of the claim. The narrow question in
this appeal is whether the phrase ‘subject mutandis mutandis to’ in s 17(5)
renders s 19(d) applicable not only to third party claims but also to those of

1‘ Section 17(1): The Fund or an agent shall —
. . .
be obliged to compensate any person (the third party) for any loss or damage which the third party has
suffered as a result of any bodily injury to himself or herself or the death of or any bodily injury to any other
person, caused by or arising from the driving of a motor vehicle by any person at any place within the
Republic, if the injury or death is due to the negligence or other wrongful act of the driver or of the owner of
the motor vehicle or of his or her employee in the performance of the employee's duties as employee.’

suppliers in the sense that should a supplier enter into such an agreement the
supplier’s claim against the Fund becomes unenforceable.2 It is necessary to
refer briefly to the factual matrix within which this dispute arises.

[4] Of the 1st to the 1238th respondents in this matter the majority are
suppliers of medical services. I refer to them as ‘the respondents.’ The 1239th
and 1240th respondents are public companies which may conveniently be
referred to together in the singular as ‘A-Fact’. A-Fact provides services to its
clients, the respondents. The services include an assessment of the merits of
the third party’s claim and also of the supplier’s prospects of recovery from
the Fund. They are rendered in terms of written agreements which provide that
the respondents pay fees to A-Fact for its services after the Fund has settled
their claims. As A-Fact does not purport to practice as attorneys, these
agreements would, on the face of it, be hit by s 19(d) if it is applicable to
agreements of suppliers.

[5] The way the system works is that when a third party’s claim is ready for
submission to the Fund the documents are handed to an attorney serving on an
A-Fact panel. The attorney then submits the claim to the Fund. Once the Fund
approves the claim, it pays the attorney who in turn pays A-Fact. Thereafter
A-Fact deducts its fees and pays the nett amount to the supplier. If it is
necessary to resort to litigation the attorney attends to that.

[6] The system worked this way for a period of four years with the Fund’s
knowledge and agreement. However on 27 October 2006 the Fund stopped
paying these claims after it took the view that the agreements between A-Fact
and the respondents fell foul of s 19(d) – thus precluding the Fund’s liability.
It consequently refused to process some 49 000 affected claims involving a

2 The relevant provisions appear below at para 6.

total claim value of R284 million. In the ensuing litigation the Pretoria High
Court rejected the Fund’s view. Mynhardt J held that s 19(d) applied only to
agreements entered into by third parties, not to those by suppliers. He also
refused the Fund leave to appeal. The present appeal is with this court’s leave.
I turn to the relevant statutory provisions.

The Statutory Provisions

Section 17(5): ‘Where a third party is entitled to compensation in terms of this section and
has incurred costs in respect of accommodation of himself or herself or any other person in
a hospital or nursing home or the treatment of or any service rendered or goods supplied to
himself or herself or any other person, the person who provided the accommodation or
treatment or rendered the service or supplied the goods (the supplier) may claim the amount
direct from the Fund or an agent on a prescribed form, and such claim shall be subject,
mutatis mutandis, to the provisions applicable to the claim of the third party
concerned, and may not exceed the amount which the third party could, but for this
subsection, have recovered.’ (Added emphasis).

19  Liability excluded in certain cases
‘The Fund or an agent shall not be obliged to compensate any person in terms of section 17
for any loss or damage —
(a)
. . .
(b)
. . .
(c)
if the claim concerned has not been instituted and prosecuted by the third party, or
on behalf of the third party by —
(i)
any person entitled to practise as an attorney within the Republic; or
(ii)
any person who is in the service, or who is a representative of the state or
government or a provincial, territorial or local authority; or
(d)
where the third party has entered into an agreement with any person other than the
one referred to in paragraph (c) (i) or (ii) in accordance with which the third party has
undertaken to pay such person after settlement of the claim —
(i)
a portion of the compensation in respect of the claim; or

(ii)
any amount in respect of an investigation or of a service rendered in respect of the
handling of the claim otherwise than on instruction from the person contemplated in
paragraph (c) (i) or (ii); or
(e)
. . .
(f)
. . ..’

[7] I turn to the point of contention – how the phrase ‘subject mutatis
mutandis to’ in s 17(5) is to be interpreted. The starting point is to consider the
statutory context within which the phrase is used. The object of the Act is to
establish the Fund to pay compensation for loss or damage to third parties
wrongfully caused by the driving of motor vehicles.3 The Act’s main purpose
is to provide the widest possible protection to third parties.4

[8] Section 17(5), as I have mentioned, confers on a supplier the statutory
right to recover its costs directly from the Fund. The benefit to the supplier is
that the Fund guarantees payment subject only to the condition that the third
party must be entitled to claim the amount as part of his or her compensation
and that the amount that the supplier may recover may not exceed the amount
which the third party is entitled to recover.5 The advantage to third parties,
who are often indigent, is that they receive medical services comforted by the
knowledge that their medical costs are covered and that they are less likely to
be faced with a claim before having been paid. So while the subsection was
enacted for the benefit of suppliers, it sits neatly with the Act’s main purpose
referred to above. This is the statutory lens through which the contentious
phrase must be interpreted.

[9] A-Fact and the respondents contend that the purpose of s 19(d) is to

3 See sections 3 and 17(1).
4 Aetna Insurance Co v Minister of Justice 1960 (3) SA 273 (A) at 286E-F; Padongelukkefonds v Prinsloo
1999 (3) SA 569 (SCA) at 574B.
5 Van Der Merwe v Road Accident Fund 2007 (6) SA 286 (SCA) para 7.

protect third party claimants who are often illiterate and indigent from being
overreached by unscrupulous touts and claims consultants who deprive them
of their compensation. These considerations, they say, do not apply to
suppliers who are usually institutions and professionals.

[10] The Fund’s case on the other hand is that the service which A-Fact
renders brings the respondents’ claims within the ambit of sections 19(d) of
the Act. This is because, in its submission, the effect of s 17(5) is to render the
provisions of s 19, in so far as they are applicable to the claim of the third
party, equally applicable to the claim of the supplier, but subject to the
necessary changes to s 19 so as to afford logical sense to the provision when it
is adjusted to apply to the claim of the supplier. Understood in this way,
submits the Fund, the agreements between the respondents as suppliers and A-
Fact, which as I have mentioned, is not a company of practising attorneys, fall
foul of s 19(d), thus precluding any liability on the Fund’s part to them.

[11] The phrase ‘subject mutatis mutandis to’ means literally ‘subject, with
the necessary changes, to’. Any alterations must in their context be
‘necessary.’6 By making the supplier’s claim ‘subject, mutatis mutandis, to the
provisions applicable to that of the third party, the legislature, in my view,
intended to make the supplier’s right to claim from the Fund conditional upon
the validity and enforceability of the third party’s claim7 and not to render the
supplier’s claim unenforceable against the Fund by reason of an agreement
with a person other than an attorney to pay such person, after settlement of the
claim a portion of the compensation in respect of the claim.

6 Touriel v Minister of Internal Affairs, Southern Rhodesia 1946 AD 535 at 545; Big Ben Soap Industries Ltd
v Commissioner For Inland Revenue 1949 (1) SA 740 (A) at 751.
7 See Van der Merwe v Road Accident Fund 2007 (6) SA 286 (SCA) para 7.

[12] Support for the above interpretation is to be found in the main purpose
of the Act referred to earlier and also to the accessory nature of the supplier’s
claim. In my view, the Fund’s interpretation of the effect of s 17(5) is
incorrect. It is not necessary to substitute ‘supplier’ for ‘third party’ in s 19(d)
to give efficacy to the subsection. On the contrary the substitution places it at
odds with the Act’s purpose, and from the Fund’s perspective, achieves
nothing. For if a third party’s claim is valid and enforceable and the supplier’s
is not, the Fund would still be liable to compensate the third party who in turn
remains contractually liable to the supplier. The consequence is that a third
party may be faced with a claim from a supplier without having been paid and
would be denied the benefit of s 17(5) without any fault on his or her part.
This result could hardly have been what the draftsman intended. Moreover, it
is illogical for the third party claim to be valid and enforceable but the
supplier’s accessory claim not (except where the supplier has not complied
with the prescribed formalities).8

[13] It is understandable that the legislature would seek to protect third
parties, many of whom are indigent, from entering into champertous
agreements, which is probably what s 19(d) intends to achieve. But there is no
apparent reason to restrict the contractual freedom of suppliers, many of
whom are professional people, institutions or companies from contracting with
whoever they choose to process their claims. They should be capable of
looking after themselves.

[14] It follows that s 19(d) is not applicable to the agreements which are the
subject of this appeal. The Fund was therefore wrong to impugn the
agreements and to refuse to process the respondents’ claims.

8 In Van der Merwe v Road Accident Fund 2007 (6) SA 286 (SCA) para 7, the supplier’s claim is
characterised as an ‘accessory claim’.

[15] A-Fact and the respondents were separately represented in this appeal,
the former by two counsel. The Fund is liable for their costs incurred in
opposing the appeal.

[16] The following order is made: The appeal is dismissed with costs. In the
case of the 1239th and 1240th respondents, such costs are to include the cost of
two counsel.

________________
A CACHALIA
JUDGE OF APPEAL
CONCUR:
STREICHER JA
NAVSA JA
HEHER JA
MAYA JA

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal

Date:
27 March 2008

Status:
Immediate

Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.

Road Accident Fund v Abdool Carrim

The Supreme Court of Appeal (SCA) today dismissed an appeal by the Road
Accident Fund against a ruling of the Pretoria High that s 19(d) of the Road
Accident Fund Act 56 of 1996 is applicable only to agreements made by third
parties and not to those made by suppliers of medical services to third parties
who have suffered loss or damage arising from motor vehicle accidents.

The consequence of the dismissal of the appeal is that the Fund must now
settle some 49 000 claims involving a total claim of R284 million.

There are 1240 respondents in this matter. The first to the 1238th respondents
are suppliers of medical services to third parties. They entered into written
agreements with the last two respondents, who are companies in the Alexander
Forbes stable (Alexander Forbes Compensation Technologies (Pty) Ltd and
Alexander Forbes Accident Compensation Technologies (Pty) Ltd) in terms of
which they paid the companies for their services. These services include an
assessment of the merits of the third party’s claim and also of the supplier’s
prospects of recovery from the Fund.

The Fund was aware of these agreements and had accepted claims from the
companies for a period of four years before taking the view that the agreements
fell foul of s 19(d). Its submission was that because s 19(d) renders a claim by a
third party unenforceable against the Fund where the third has entered into an
agreement with someone who is not entitled to practice as an attorney, the
agreements which the respondents (as suppliers) had entered into with the
companies, which do not practice as attorneys were similarly unenforceable.
This is because, so it said, s 17(5) of the Act, which deals with claims of
suppliers makes the provisions of s 19, in so far as they are applicable to third
parties equally applicable to suppliers.

The SCA rejected this submission. It held that the Fund’s interpretation was at
odds with the Act’s purpose, which was to provide the widest protection to third

parties. The effect of the Fund’s interpretation, so the SCA held, would be that
a third party claim may be valid but not the supplier’s. The consequence would
be that the third party may, through no fault on his or her part, face a claim from
the supplier that would otherwise have been settled by the Fund. This, the SCA
held could not have been what the intention of the legislation was.

It accordingly dismissed the Fund’s appeal with costs.