Law & Society

Section 17(4)(c) of the Amendment Act provides that a claim for loss of income or support, irrespective of the actual loss, is limited to R167 071 per year, regardless of how much money an injured or deceased individual earns or has the potential to earn in the future. This position differs markedly from previous legislation which allowed a victim to claim in full their actual loss of income or support. Furthermore, section 21 of the Amendment Act expresses that no claim for compensation for bodily injuries may be made against the driver or owner of the vehicle that caused the collision, precluding victims from claiming the shortfall in compensation arising from the limitation from the negligent driver.
Protection
The RAF's rationality behind the implementation of such legislation is to protect its limited availability of funds. It is funded by the fuel levy allocated by the Minister of Transport. The RAF is of the opinion that under the previous legislation, due to the fact that everyone paid the same levy, high income earners were receiving incredibly large loss of income or support payments subsidized by lower income earners, which it considers unfair. Instead the RAF maintains that it should be the high income earners who subsidies the compensation paid to lower income earners.

In South Africa the majority of people earn less than R167 071 annually. The RAF expressed that only 1% of all claims exceed R167 071 per year for loss of earnings, and as such, a cap of this nature will only affect a small number of claimants.

An application was launched to challenge the constitutionality of section 17(4)(c) of the Amendment Act by various parties, including the Law Society of South Africa (the applicants).

The applicants contended that the imposition of such a limit is irrational for a number of reasons. Firstly, the cap is introduced in conjunction with a provision which specifically denies the victim’s common law right to claim the residual value form the wrongdoer. They contend that the exclusion of the common law rule does not aid in the protection of the RAF's funds.

The applicants further alleged that the value of the cap applied is irrational, that there is no evidence suggesting how this particular value was reached and what “purpose it intends to serve”.

Top Up Insurance
The RAF has maintained that individuals earning more than R167 071 annually can afford to obtain additional “top up insurance” to compensate them for any additional loss. However, the applicants expressed that it is unfair and irrational to expect individuals to obtain additional cover to protect themselves against the negligence of other drivers; such legislation has little regard to the victim and completely disregards the ability of the wrongdoer to pay compensation. Finally, the applicants contended that such "top up insurance" is not available to the youth who will be disproportionately affected.

The respondents to this application, the RAF and the Minister of Transport, contested the rationality argument in that it would be difficult for the applicants to prove that there is no rational link between section 17(4)(c) of the amended legislation and the object it seeks to achieve; that the cap is rationally connected to protecting the RAF from further financial difficulty; and that it is not irrational in that it promotes equitable payment of compensation.

The application has recently been dismissed in the North Gauteng High Court and the applicant's have sought leave to appeal. At this stage it is advisable to invest in so called "top up insurance". This is available in the form of personal accident insurance, income replacement disability insurance and non-income replacement disability insurance. If in a position where such cover is affordable, it seems that the certainty of being fully compensated after an accident far outweighs the financial burden it requires.