High Court order may push RAF closer to collapse

The financially-distressed Road Accident Fund (RAF) has received a significant High Court blow, which may lead to its collapse.

The RAF applied to the High Court in Pretoria for the extension, revival, or reinstatement of a 180-day moratorium on the execution of writs and warrants for capital and interest against it.

However, Judge Jabulani Nyathi struck the application from the court roll, with costs, because of a lack of urgency.

The RAF had R10.4 billion in unpaid claims at the end of its financial year to 31 March 2025 – and a total claims liability of R40.4 billion – despite this, it maintains it can meet its obligations over the next 12 months.

The moratorium provided temporary legal protection from immediate enforcement of court-ordered payments, allowing the RAF up to 180 days to settle claims.

The 180-day payment structure was first implemented informally towards the end of 2020, and then formally from April 2021, after a judgment by the full court, according to acting RAF CEO Phathutshedzo Lukhwareni, in the founding affidavit in support of the RAF’s application.

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“Claimants have become accustomed to the six-month waiting period to receive payment,” said Lukhwareni.

“A final extension is a reasonable measure in light of the alternative: the deterioration or collapse of the Road Accident Fund, which would be catastrophic.”

“Having regard to the RAF’s parlous financial situation, the sheer scale of its mandate involving over 300 000 claims, the recent governance vacuum, and the regulatory reforms aimed at establishing a permanent payment framework, the circumstances are undeniably extraordinary and warrant urgent relief.

“The granting of the orders sought is necessary to prevent the RAF’s implosion and resultant constitutional crisis, where the RAF will no longer be able to fulfil its obligations to provide social security and access to healthcare services for claimants,” he added.

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‘Technically insolvent’

Lukhwareni said that by end-March 2025, the RAF’s accumulated deficit increased to R27.8 billion from R25.5 billion in 2024, while liabilities exceeded assets by R27.7 billion compared with R25.4 billion the year prior.

“The fund remains technically insolvent as revenues (tied to litres of fuel sold rather than not accident risk) cannot cover all immediately due lump sum payments,” he said.

Lukhwareni said current assets rose to R13.8 billion from R11.9 billion in 2024, comprising R2.1 billion in cash (2024: R0.82 billion) and R11.9 billion in fuel levy receivables (2024: R10.7 billion).

“With unpaid claims at R10.4 billion (2024: R8.3 billion), the RAF maintains liquidity and can meet its obligations over the next 12 months.”

He said the RAF reported a deficit of R2.3 billion in 2025, compared with R1.6 billion in 2024. He ascribed this mainly to the impairment loss on statutory receivables caused by the SA Revenue Service (Sars) withholding portions of the fuel levy in February and March 2025.

The RAF confirmed to Moneyweb in June this year that Sars had deducted R5.07 billion of the R5.1 billion it planned to deduct from its fuel levy payments to the fund to pay Eskom – despite the tax collection agency being interdicted from doing so.

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Lukhwareni said the RAF’s total claims liability reported at end-March 2025 was R40.4 billion, of which R30 billion was for claims for which payment had not yet been requested but would be requested and paid within the next 12 months.

He said this application is the latest in a series brought by the fund for a suspension of writs of execution and warrants of attachment issued against the RAF, “to ensure the fund does not collapse.”

But Lukhwareni said unlike the previous applications, this application is grounded in the new draft regulations that will be permanently governing the 180-day repayment period. “Once in force, those regulations are intended to resolve the underlying issues and obviate further recourse to this court,” he said, adding that the interim relief it [had] sought would facilitate “an orderly transition to that regime.”

The moratorium in place was granted by Judge Soraya Hassim on 21 February 2025.

According to Lukhwareni, that judgment, among other things, suspended writs and warrants for capital claims awards not older than 180 days, as well as certain interest costs and legal costs awards.

Without the latest order it applied for, “the lifting of the moratorium will lead to a flood of executions that will severely prejudice the fund, its claimants, and the public at large”, he said.

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Regulatory proposals

Lukhwareni said the RAF and its board is at an advanced stage of submitting and recommending proposed regulations in terms of the RAF Act for consideration by Minister of Transport Barbara Creecy.

Since Judge Hassim’s February judgment, circumstances beyond the RAF’s control had delayed the finalisation of the regulations and the fund’s current application, said Lukhwareni.

The most notable of them were:

• The suspension of RAF CEO Collins Letsoalo on 2 June 2025;
• Letsoalo’s application for reinstatement in June 2025;
• Letsoalo’s application for leave to appeal against the dismissal of his reinstatement application on 1 August 2025;
• The dissolution of the entire RAF board by Minister Creecy on 14 July 2025 due to persistent governance failures; and
• The appointment of a new RAF board and chairperson on 8 August 2025.

“This governance vacuum hindered the fund’s ability to draft and recommend regulations to submit to the minister.

“In addition, the Department of Transport intends to submit for comment the Road Accident Benefit Scheme Bill 2025, which will replace the current fault-based system with a defined benefit, no-fault scheme,” he said.

Lukhwareni said the introduction of a no-fault system would make it easier for road accident victims to access benefits and would standardise those benefits.

ALSO READ: Reintroduction of Road Accident Benefit Scheme Bill ‘ill-advised’

‘Heartless and inhumane’

There were 215 respondents to the RAF’s application, including sheriffs in Pretoria, Centurion East, Johannesburg, Cape Town, East London, and Durban, as well as the Johannesburg and Pretoria attorneys’ associations and a number of attorney firms.

Advocates Ferdi Kehrhahn and L Louw, appearing for 186 of the respondents, said the RAF is seeking the court’s indulgence to limit existing rights of the fund’s judgment creditors, but the court never intended to grant the relief indefinitely.

“It is now obvious the applicant [RAF] will seek this relief forever and a day.”

They said the RAF has not complied with Judge Hassim’s order at all, and “its egregious contempt of court is ongoing”.

“This has become the applicant’s [RAF] default setting: promise the court that it would pay orders within 180 days, and then simply refuse to do what it undertook to do,” said Kehrhahn and Louw.

“Each of the respondents has placed evidence of contempt of court by the RAF on a monumental level.

“The applicant [RAF] is heartless and inhumane when it says that seriously injured, lay and disenfranchised seriously injured victims, in desperate need of compensation to fend off the adverse consequences of the accident, will suffer ‘no prejudice … herein in granting a further moratorium.’”

This article was republished from Moneyweb. Read the original here.