Nxumalo and others v Road Accident Fund

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Legodi JP
• Judgment Date: 24 January 2023
• Citation: 2023 JDR 0246 (MN)
• Docket Number: 3207/2020
• Hearing Date: 23 August 2022
• Court: Mpumalanga Division (Main Seat)

Legodi JP:

[1]

Any offer of settlement made to any party who has entered into contingency fee agreement, may be accepted after the legal representative has filed an affidavit with the court if the matter is before the court stating- (a) the full terms of settlement; (b) an estimate of the amount or other relief that may be obtained by taking the matter to trial; (c) an estimate of the chances of success or failure at trial; (d) an outline of the legal representative's fees if the matter is settled as compared to taking matter to trial; (e) the reasons why the settlement is recommended; (f) that the matters contemplated in paragraphs (a) to (e) were explained to client, and the steps taken to ensure that client understands the explanation; and (g) that the legal practitioner was informed by the client that he or she understands and accepts the terms of the settlement. [1]

[2]

The one question in these proceedings is inter alia, whether it is lawful for the Road Accident Fund to make a payment without court order where a contingency fee agreement has been entered into and the matter that is pending in court is settled. Mr Nkosi on behalf of the plaintiffs in these matters explained in his affidavits the practice that is utilised for payment by the Road Accident Fund as follows:

". . . normally when it is computer generated offer, the Fund requires the attorneys to sign the sent offer and return it back to the Fund as a proof of acceptance of the offer. Then when a request for payment is made, the practice is that the attorney will then supply the Fund with contingency fee agreement, proof of banking details and an affidavit by both parties and tax compliance certificate".

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Legodi JP

[3]

It is this practice that prompted the court in all these three matters to issue an order on 23 August 2022 in terms of which the Fund was required to file affidavit to explain if what is explained by Mr Nkosi, is the Fund's practice. In the order, the Fund was required to indicate if such practice does not conflict with the imperative in section 4 of the Contingency Fee Act which requires an oversight of the court read with subsection (3) of section 4. Subsection (3) provides that any settlement made where a contingency fees agreement has been entered into, shall be made an order of court, if the matter was before the court. The three matters were before court when they were settled and in all these matters contingency fee agreements have been concluded. (My emphasis).

[4]

Mr Mogotsi Moumakwe employed by the Fund as a manager in one of the claims department in the Fund's Menlyn branch, stated as follows in paragraphs 8.4 to 8.7 of his affidavit deposed to on 30 September 2022:

8.4.

I have enquired from colleagues dealing with block settlement regarding the manner in which the issue of contingency fee agreement compliance is undertaken. I am informed that the standing legal position was that, when an offer is made, the attorney will only communicate acceptance of the offer by submitting a signed offer accompanied by copy of the agreement and the two affidavits.

8.5.

The court will note that according to the explanation given by Mr Nkosi, the Fund only ask for these documents at the time when payment is affected. I submit that this is because of an oversight on the part of the few officers who dealt with the position in that way which is wrong. This was never a conscious decision on the Defendant.

8.6.

Mr Nkosi and officers he dealt with were not complying in that regard but same cannot be referred to as the practice of the Defendant. Mr Nkosi is an officer of the

2023 JDR 0246 p4

Legodi JP

court and should under no circumstances form part of a practice, which is against the law.

8.7.

For him to comply, he does not require any one to chase after him for compliance. He should instead volunteer it. He cannot say I broke the law because the Defendant allowed it".

[5]

'The standing legal standing position' cannot be an oversight by the Fund in terms of the law. That oversight is given to the court in terms of section 4 of the Contingency Fee Act. It appears to be a wrong standing position that was consciously made by the Fund. Mr Moumakwe's attempt to minimise the wrongs committed by the Fund and its officials and thus seek to attribute more blame to the legal practitioners for the plaintiffs, is in the circumstances unhelpful. It is the Fund that makes payment. It is therefore obliged to pay in terms of section (3) of the Road Accident Fund Act after having investigated and settled as provided for in section 4 (1) (b) of the Fund Act. The buck therefore stops with the Fund. If the Fund has created a procedure or a practice to follow when payment must be made, it is the Fund's duty to ensure that the procedure strictly complies with the law before payment is made. Any payment without an order of court in circumstances where section 4(3) of the Contingency Fee Act applies, would offend against the law.

[6]

The procedure or the practice as explained by Mr Nkosi above, still appears to be followed by the Fund. I suspect that this might be rife in other divisions. Simply put, the procedure is unlawful and seeks to subvert the courts' powers and oversight role as contemplated in section 4 of the Contingency Fee Act read with sections 2 and 3 thereof. Hopefully, upon the handing down of this judgment, the practice will

2023 JDR 0246 p5

Legodi JP

completely be halted throughout. However, there seems to be a tendency amongst some attorneys in the division to now of late in RAF matters and matters against the MEC for Health to make an assertion that the plaintiffs have not entered into contingency fee agreements. A statement will be made to the effect that a simple fee agreement where the court's oversight is not required, has been concluded. In a number of matters where it was suggested that no contingency fee agreement has been concluded, it was actually found that the fee agreements in question were nothing else but contingency fee agreements which did not conform to the imperative in the Contingency Fee Act. The suggestion that no contingency fees agreement has been concluded, appears to be intended to frustrate and subvert an oversight role of the courts and to render the provisions of section 4 academic and not worth the paper is written on.

[7]

In paragraph 15.11.4 of the Division's Practice Directive, it is required that in damages claims, particularly against the Fund and the Department of Health, an attorney who asserts that no contingency fees agreement has been concluded where a matter pending in court is settled, such an attorney is required to file an affidavit and provide information...