Sweeping local government reform proposed; RAF hit with punitive costs

The Minister of Cooperative Governance and Traditional Affairs has published the Reviewed Draft White Paper on Local Government (Government Notice 7457, Gazette 54630) for public comment by 28 May 2026. The draft contains approximately 65 policy change recommendations proposing the most comprehensive restructuring of South Africa's local government system in two decades. Key proposals include replacing the current two-tier district/local municipal model with a single-tier, differentiated system; establishing independent economic regulators for water services and solid waste management; creating a national policy coordination centre within three months of Cabinet adoption; professionalising municipal administration with binding competency requirements; reforming municipal procurement and public-private partnership frameworks; and embedding climate resilience and spatial transformation in municipal planning. Implementation is phased across short-term (pre-2027), medium-term (2027-2031), and long-term (post-2031) horizons, with some proposals requiring constitutional amendments.

The plaintiff, acting as curator for an incapacitated road accident victim, claimed R2,231,081.34 in past hospital and medical expenses from the RAF. Of that amount, R552,248.76 had already been paid by Discovery Health medical aid. The RAF opposed the claim, arguing that medical-aid-paid amounts should be deducted from its liability, relying on internal RAF directives and the speculative prospect of a future appeal against the binding full court precedent in Road Accident Fund v Van Wyk (9 February 2026).

The court held: The court held the RAF liable for the full R2,231,081.34, applying the binding Van Wyk full court precedent and the doctrine of res inter alios acta. The medical aid contract was a private arrangement with no bearing on the RAF's statutory obligations. The court rejected the RAF's reliance on internal directives (already declared unlawful) and on a speculative future appeal, holding that courts decide cases on the law as it stands, not on hypothetical future proceedings. Critically, the court awarded costs on the punitive attorney-and-client scale against the RAF for persisting in a frivolous defence contrary to binding authority.

Legal impact: While the substantive holding confirms settled Western Cape Division law on medical-aid deductibility, the punitive attorney-and-client costs order is a significant escalation. It provides a directly citable precedent for costs applications in all pending RAF matters where the Fund continues to oppose medical-aid-deductibility claims contrary to the Van Wyk full court judgment. This materially changes the risk calculus for the RAF's litigation strategy: continued resistance now carries a concrete costs penalty beyond ordinary party-and-party scale.