The Road Accident Fund (RAF) suffered two major blows in the Supreme Court of Appeal this week after the court ruled that it is always liable for interest on late payments as well as that the fund is liable to pay more than R92 million to Sunshine Hospital within seven days.
In the matter regarding interest on payment judgments, the RAF turned to the SCA for an order declaring that it is not liable for interest on late payments in cases where judgments are silent on interest.
The fund appealed two matters in this regard which were consolidated. In the first matter referred to as the Stoffels case, the RAF paid capital awards months after the judgment but refused to pay interest on the delayed payments. This was despite that the summons included a request for interest.
Stoffels successfully prosecuted her claim against the RAF and was awarded judgment in February 2021 in the amount of R3,7 million. The Stoffels judgment was silent as to post-judgment interest on the damages awarded. The RAF only paid the judgment debt several months after the court order.
The same occurred in the Herold judgment, where the RAF was ordered to pay her R4,4 million. Likewise, no express provision for post-judgment interest on the damages awarded was made by the court. The RAF argued that writs of execution issued by the Sheriff levying interest which were not ordered by the court are invalid. According to the fund, these writs should be accompanied by sworn calculations by creditors before being allowed to enforce payment. It also raised issues of uncertainty regarding the calculation of interest.
The court ruled that post-judgment interest on RAF awards accrue automatically under the Prescribed Rate of Interest Act (PRIA), from 14 days after a judgment. Silence in a judgment does not exclude interest, the court said.
In an unrelated case, the SCA ordered the fund not only to pay more than R92 million to the Sunshine Hospital within seven days, but it also has to pay the hospital nearly R159 million it owed within 30 days.
Newnet operated as the Sunshine Hospital, and it treated patients who were injured in vehicle accidents. A large majority of these patients were referred or transferred to the hospital by either the Fund or state hospitals that were unable to provide them with the necessary medical care.
Newnet invoiced the fund for payment of services rendered by it, as well as those provided by its associate doctors. It experienced payment challenges prior to 2020 and by March of that year, the Fund stopped paying. The hospital had to close its doors at a stage due to non-payment, but later re-opened. While the courts over the years ruled in favour of the hospital, and no payments were forthcoming, efforts to attach the Fund’s moveable assets were also fruitless.
The Fund forwarded various legal excuses for non-payment and as a final endeavour to overcome its persistent non-payment of the judgment debts to Newnet, it submitted that it lacked the financial means to satisfy those debts. But Judge Fayeeza Kathree-Setiloane said: “As an organ of state, the Fund bears a constitutional obligation to comply with court orders… It has deliberately and publicly demonstrated its refusal to comply with the orders for payment to Newnet.”
What’s more, she added, is that it had enlisted the police to obstruct the removal of RAF assets pursuant to the lawful execution of the court orders. She ordered the Acting CEO of the Fund, Radikwena Phora, to ensure that the RAF complied with the SCA’s orders.
Zelda Venter
iol.co.za
