Many benefit from traffic fines – a lucrative business

A recent case in the Gauteng Division of the High Court between the Johannesburg Metropolitan Municipality and one of its private contractors tasked to operate speed cameras shows to what extent law enforcement has evolved into a big and very lucrative industry.

The involvement of private companies that share in the income from traffic fines is, in itself, an indication that road safety might not be the primary goal here.

At issue in the case between Moving Violations Systems Phumelelo (MVS) and Joburg municipality was the payment of an outstanding “invoice” of more than R8 million for trapping speeding motorists with speed cameras. Or R50 million, according to a separate set of arguments made in the court documents.

Bonus payments for operator

The legal documents pertain to an appeal against a previous dismissal of a claim by MVS for payment of a “bonus” of R8 million for operating speed cameras leading into the Misgund interchange where the highways from Musina, Cape Town and Potchefstroom meet.

MVS’s responsibilities included the installation of speed cameras around the interchange, collecting photographic evidence of speeding, extracting the information and steering the cases through the court process. Up until 2009, such cases were prosecuted under the older Criminal Procedure Act of 1977, which made provision for two separate payments to MVS.

MVS received a fixed “initiation fee” when the speed violation was captured into the magistrate court’s system and a second “bonus” payment when the prosecution was successful and guilty motorists paid their fines.

The court documents state, and the court accepted, that the relationship between the municipality and MVS “amounts to the division of income generated by the traffic fines”.

It also accepted that MVS entered a large number of speeding violations into the Roodepoort magistrate court system for prosecution, all relating to the Misgund interchange.

‘Not entirely legal’

MVS received its cut of the revenue without delay, until a senior magistrate at the Roodepoort court realised that all the fines were not entirely legal. The magistrate ruled that the fines could not be prosecuted in the Roodepoort courts because the cameras were set up outside of the Roodepoort municipal border and MVS had been bringing its cases to the wrong court all along.

The precise number of fines is unknown, but is around 400 000 in total – all of which the Roodepoort magistrate dismissed with his verdict. At the time, MVS had received payment of its “bonus” of R8 million in respect of 200 000 of the speeding fines.

Despite the court ruling that these cases were legal nullities and that no fine revenue could be legally collected, MVS still argued that it was entitled to its bonus payment on the remaining 200 000 speeding tickets as if the fines had been paid.

The court documents indicate that MVS based its claim on the fact that it received the bonus payment when cases were dismissed, for instance if the court decided not to prosecute a case on compassionate grounds.

MVS argued that the court’s administrative system tagged all 400 000 cases as “withdrawn”, which is the same tag used when the court withdraws a case on compassionate grounds. MVS thus presented the municipality with an invoice for another R8 million for its bonus on the other 200 000 speeding tickets.

A twist in this tale

There is always a twist in the tail in court cases to confuse issues and ensure higher fees for the legal profession. The problem this time was that the claim for R8 million was not submitted on time. It was ruled that the debt had prescribed.

The parties nevertheless entered a process of arbitration, in which the municipality offered MVS its R8 million – and later R10 million at a second arbitration effort – to settle the matter.

Curiously, MVS had upped its claim to more than R50 million by then.

This was done on the basis of a request for an updated certificate of court cases from another private service provider, this time contracted to the Roodepoort court to manage its information technology systems. MVS issued the R50 million invoice on the strength of this certificate, referred to in court documents as “the dummy certificate”.

In pages of legalise the high court judges try to unravel if the R50 million invoice included the old R8 million, which might either make the whole claim invalid due to the issue of prescription, or, if it is a totally new invoice, only “relying on the quirk [of the information system] that deemed a prosecutorial withdrawal to be a paid matter”.

The court documents also reveal that MVS and the municipality did not have a formal contract, but relied on a letter of appointment and a list of key performance indicators. In the end, the high court dismissed the case – as had the lower courts and the lawyers involved in the two attempts of arbitration.

Good profit centre for municipalities

A look at municipal budgets confirms that enforcement of traffic regulations and the issuing of traffic tickets has grown into a huge and very profitable industry, with most municipalities relying on private companies to run these operations. The websites of these private companies indicate that they offer the whole array of services, including speed cameras, private traffic officers, administrative staff, the handling of prosecution, and debt collection.

The numbers are astounding: the City of Joburg’s recent medium term budget shows that it expects to collect R563 million in fines, penalties and forfeits in the current financial year.

Fines, penalties and forfeits are defined in municipal terms as “all compulsory receipts imposed by a court or quasi-judicial body. Out-of-court settlements are also included in this category”.

“As with taxes, this item consists of unrequited, compulsory transactions. Thus, the recipient government unit does not provide anything in return for these receipts.”

This income category would thus also include fines issued for illegal building work, stray animals and other offences.

The City of Cape Town’s 2018/2019 budget noted that the city expects revenue of R1.2 billion from this source. Even smaller municipalities rely heavily on fines and such income – for example, the municipality of Potchefstroom budgeted R85 million from fines and penalties in 2018/2019.

Strong measures

In addition, municipalities employ strong measures to collect their income from traffic fines.

Some municipalities link unpaid fines to their vehicle licensing departments and car owners cannot renew their vehicle licences if they have unpaid traffic fines.

Others, like George Municipality, contract a private company for a few weeks at least once a year to set up road blocks that use a number plate recognition camera. The camera reads the car’s registration number and checks the municipality’s database within seconds for outstanding warrants.

While a court prosecutor with a mini-van full of arrest warrants and a police officer in a police van are waiting, traffic officers offer people a lift to the closest ATM to draw money to pay the fine, or face immediate arrest.

George Municipality tries to conduct these road blocks towards the end of the year after people have received their annual bonuses to ensure that people are able to pay their fines.

Provincial traffic authorities are in keen competition with municipalities and often police the same stretch of road on the outskirts of larger towns and cities, sometimes using unmarked cars with hidden lights and sirens.

Source: MoneyWeb

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