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[2016] ZASCA 154
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Bonitas Medical Fund v The Council for Medical Schemes and Another (814/2015) [2016] ZASCA 154; [2016] 4 All SA 684 (SCA) (3 October 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 814/2015
In
the matter between:
BONITAS
MEDICAL
FUND
APPELLANT
and
THE
COUNCIL FOR MEDICAL
SCHEMES FIRST
RESPONDENT
THE
REGISTRAR OF MEDICAL SCHEMES SECOND
RESPONDENT
Neutral
citation:
Bonitas Medical Fund
v The Council for Medical Schemes
(814/2015)
[2016] ZASCA 154
(3 October 2016)
Coram:
Mpati AP, Bosielo, Petse, Swain and Van
der Merwe JJA
Heard:
5 September 2016
Delivered:
3 October 2016
Summary:
Interpretation of statute ─ a
decision to order an inspection in terms of
s 44(4)
(a)
of the
Medical Schemes Act 131 of 1998
is not appealable under
s 49(1)
─ Costs ─ no genuine and substantive
constitutional issue raised ─ Cross-appeal in respect of costs
allowed.
ORDER
On
appeal from
Gauteng Division of the
High Court, Pretoria (Tuchten J
sitting as court of first
instance):
1 The appeal is dismissed
with costs.
2 The cross-appeal is
upheld with costs and paragraph 2 of the order of the court a quo is
set aside and replaced with the following:
‘
The
respondent is directed to pay the costs of the application.’
JUDGMENT
Van
der Merwe JA (Mpati AP, Bosielo, Petse and Swain JJA concurring):
[1]
The appellant in this appeal, Bonitas Medical Fund (the scheme), is a
medical scheme registered under Chapter 4 of the Medical
Schemes Act
131 of 1998 (the MSA). The first respondent is the Council for
Medical Schemes (the council), a juristic person established
in terms
of s 3 of the MSA. The second respondent is the Registrar of
Medical Schemes (the registrar), appointed in terms
of s 18(1)
of the MSA. The registrar is the executive officer of the council and
manages its affairs.
[2] Section 44 of the MSA
deals with inspections and reports. Subsection 44(4) provides as
follows:
‘
(4)
The Registrar may order an inspection in terms of this section─
(a)
if he or she is of the opinion that such an
inspection will provide evidence of any irregularity or of
non-compliance with this
Act by any person; or
(b)
for purposes of routine monitoring of compliance
with this Act by a medical scheme or any other person.’
Section 49(1) of the MSA
states:
‘
Any
person who is aggrieved by any decision of the Registrar under a
power conferred or a duty imposed upon him or her by or under
this
Act, excluding a decision that has been made with the concurrence of
the Council, may within 30 days after the date on which
such decision
was given, appeal against such decision to the Council and the
Council may make such order on the appeal as it may
deem just.’
The
central issue in the appeal is whether a decision of the registrar to
order an inspection in terms of s 44(4)
(a)
, is appealable
in terms of s 49(1).
[3]
The issue arose in the following manner. On 10 November 2014 the
registrar appointed Mr Cornelius Jacobus Potgieter as an inspector,
and ordered him to inspect the affairs of the scheme as well as of
specified institutions associated with the scheme. The certificate
of
appointment stated that the inspector was appointed in terms of
s 44(4)
(a)
of the MSA and s 2 of the Inspection of
Financial Institutions Act 80 of 1998 (the FIA). The inspector was
principally directed
to investigate whether or not irregularities
occurred or existed in respect of: (a) the election of the board of
trustees of the
scheme; (b) the commercial relationship between
officers of the scheme and service providers contracted to the
scheme; and (c)
increases in the non-healthcare expenditure,
marketing expenditure and managed care expenditure of the scheme.
[4]
On 24 December 2014 the scheme delivered a notice of appeal to the
registrar. In terms of the notice, the scheme lodged an appeal
to the
council against the decision to order the inspection. However, on 26
February 2015, the council resolved that the registrar’s
decision to order the inspection was not appealable in terms of
s 49(1).
[5]
As the scheme insisted that the decision to order the inspection was
appealable, a dispute arose between the parties. The council
and the
registrar approached the Gauteng Division, Pretoria for declaratory
relief aimed at resolving the dispute. They sought
an order declaring
that the registrar’s decision of 10 November 2014, to order an
inspection into the affairs of the scheme
in terms of s 44(4)
(a)
of the MSA, is not a decision that is appealable in terms of the
provisions of s 49(1) of the MSA. The scheme opposed the
application but did not file answering affidavits. The court a quo
(Tuchten J) granted the declarator but made no order as to costs.
It
granted leave to the scheme to appeal to this court against the
declaratory order. The court a quo also granted leave to the
council
and the registrar to cross-appeal in respect of costs.
[6]
It is necessary, therefore, to determine the meaning of the word
‘decision’ in s 49(1) of the MSA. As is the
case
with almost any word, the word ‘decision’ is capable of
more than one meaning. In the present matter the word
may mean a
decision of a dispute or issue in the sense of the determination
thereof or simply a decision to do something, ie the
making up of
one’s mind. It is not necessary to quote authority for the
principle that the meaning of the word must be determined
in the
context in which it is used. The context includes the apparent scope
and purpose of the MSA.
[7]
Medical schemes are of great public importance. They receive and
control vast amounts in members’ contributions. The scheme,
for
instance, has approximately 297 000 members and more than
650 000 beneficiaries. It receives contributions from members
in
excess of R10,2 billion per year.
[8]
The MSA provides for the regulation of medical schemes in the public
interest. Its long title indicates that its objects include
the
control of certain activities of medical schemes and the protection
of members’ interests. Section 7 of the MSA deals
with the
functions of the council. Section 7
(a)
states that it is a
function of the council to protect the interests of the beneficiaries
of medical schemes ‘at all times’.
[9] The power in terms of
s 44(4)
(a)
is intended to promote these objects. The
power is no doubt intended to be an effective regulatory mechanism.
For it to be effective,
the registrar ought to be able to act in
terms of s 44(4)
(a)
with expedition and without notice. A
medical scheme or person suspected of irregularities or
non-compliance with the Act, should,
in the public interest, not be
provided with the opportunity to hide or destroy evidence. Without
the element of surprise, the
effectiveness of the power will in many
instances be lost or severely undermined. I agree with counsel for
the respondents that
the right of medical schemes to privacy should,
in the light of these considerations, be attenuated.
[10]
In terms of s 49(2) of the MSA, the operation of a decision
which is the subject of an appeal under s 49(1), is suspended
pending the decision of the council on the appeal. And in terms of
s 50(3), a person aggrieved by a decision of the registrar
acting with the concurrence of the council or by a decision of the
council, may within 60 days after the date on which such decision
was
given, appeal to the appeal board established by s 50(1). Thus,
if a decision to order an inspection in terms of s 44(4)
(a)
were to be subject to an appeal, the inspection could be effectively
stymied by simply noting an appeal. This would be subversive
of the
intended effective intervention and militates strongly against the
interpretation contended for by the scheme.
[11] Before us, counsel
for the scheme recognised the need for urgent investigation and the
element of surprise. He argued, however,
that that could be achieved
by expedition of an appeal to the council or by taking the decision
to order an inspection with the
concurrence of the council. There is
no provision in the MSA for the suspension of the operation of a
decision of the council pending
an appeal to the appeal board. But
both of these proposals require that a meeting of the council be
convened. This is hardly practical.
In terms of s 4(1) of the
MSA, the council shall consist of up to 15 members appointed by the
Minister of Health. In making
the appointments, the Minister is
enjoined to inter alia take into account expertise in law,
accounting, medicine, actuarial sciences,
economics and consumer
affairs. It can therefore safely be accepted that the members of the
council are mostly not available on
a fulltime basis. This is
underscored by the provisions of s 10 of the MSA. In terms of
s 10(1), the council shall hold
at least four ordinary meetings
per year. Section 10(2) provides:
‘
Special
meetings of the Council may be convened by the chairperson or at the
written request of the majority of the members setting
forth clearly
the purpose for which the meeting is to be held.’
[12]
As I have pointed out (para 2 above), the registrar may also order
routine inspections in terms of s 44(4)
(b)
. On the
argument of the scheme, a decision to order such routine inspection
would also be appealable in terms of s 49(1).
This is an absurd
result that could not have been intended by the Legislature.
[13] In addition,
ss 44(2) and (3) provide:
‘
(2)
The Registrar, or such other person authorised by him or her, shall
in addition to the powers and duties conferred or imposed
upon him or
her by this Act, have all the powers and duties conferred or imposed
upon an inspector appointed under section 2 of
the Inspection of
Financial Institutions Act, 1984 (Act 38 of 1984), as if he or she
has been appointed an inspector under that
Act.
(3) Any reference in this
Act to an inspection made under this section shall also be construed
as a reference to an inspection made
under the Inspection of
Financial Institutions Act, 1984.’
The
Inspection of Financial Institutions Act 38 of 1984 was repealed by
the FIA with effect from 28 October 1998. The parties accepted
that
the reference to Act 38 of 1984 should be read as a reference to the
FIA. Section 2 of the FIA provides for the appointment
of an
inspector to carry out an inspection of the affairs of a financial
institution. In terms of ss 4 and 5 of the FIA, such inspector
is
clothed with very wide powers. The FIA does not provide for an appeal
against the appointment of an inspector. The argument
of the scheme
would thus lead to the anomalous result that a decision to order an
inspection in terms of s 44(4) would be
appealable, but not a
decision to appoint an inspector in terms of s 2 of the FIA.
[14]
An inspection in terms of s 44(4)
(a)
is purely
investigative. The inspector merely gathers evidence. The inspection
does not determine or affect any rights. It follows
that there is no
need to provide for the protection of substantive rights by way of an
appeal against a decision to order an inspection
in terms of
s 44(4)
(a)
. This may, for instance, be contrasted with
the powers of the registrar under s 33(4) (withdrawal of
approval of a benefit
option of a medical scheme), s 33(5) and
s 44(11) (amendment of the rules of a medical scheme) or s 38
(rejecting
of the annual financial statements of a medical scheme).
[15]
There is no material difference between the nature of an inspection
in terms of s 44(4)
(a)
of the MSA and that of the
investigation of a complaint by the Competition Commission in terms
of the
Competition Act 89 of 1998
. Such investigation may culminate
in a referral of the matter to the Competition Tribunal. In
Competition Commission of SA v Telkom SA Ltd & another
[2010] 2 All SA 433
(SCA) para 11, this court held that a decision to
refer a matter to the Competition Tribunal and the referral itself,
are of an
investigative and not an administrative nature and are not
subject to review under the
Promotion of Administrative Justice Act 3
of 2000
. In my judgment the same applies to
s 44(4)
(a)
of
the MSA. Nevertheless, a decision to order an inspection in terms of
the MSA, would be subject to review under the rule of law,
on the
ground that it was arbitrary or irrational (
Pharmaceutical
Manufacturers Association of SA & another: In re ex parte
President of the Republic of South Africa & others
[2000] ZACC 1
;
2000 (2)
SA 674
(CC) para 85) or offended against the principle of legality
(
Telkom
(above) para 12 and
Competition Commission v
Computicket (Pty) Ltd
[2014] ZASCA 185
paras 18 and 22).
[16] The English text of
the MSA was signed by the President. Our courts have over many years
referred to the unsigned text of a
statute to elucidate an ambiguity
in the signed text. (See, for instance,
Commissioner for Inland
Revenue v Witwatersrand Association of Racing Clubs
1960 (3) SA
291
(A) at 302A-B.) The rule remains applicable in the constitutional
era. In
Du Plessis & others v De Klerk & another
[1996] ZACC 10
;
1996
(3) SA 850
(CC) para 44, Kentridge AJ dealt with the words ‘all
law in force’ in s 7(2) of the Constitution of the
Republic of South Africa Act 200 of 1993. He said that these words
may have some ambiguity, but that any ambiguity was removed by
the
Afrikaans version of the section that read ‘alle reg wat van
krag is’. He added that the English version would
prevail in
case of a conflict between the two versions but proceeded to say:
‘
But
where there is no conflict between them, there is another
well-established rule of interpretation: if one text is ambiguous,
and if the ambiguity can be resolved by the reference to unambiguous
words in the other text, the latter unambiguous meaning should
be
adopted. There is no reason why this common-sense rule should not be
applied to the interpretation of the Constitution. Both
texts must be
taken to represent the intention of Parliament.’
[17]
In the Afrikaans text of s 49(1) of the MSA, the word
‘beslissing’ is used for ‘decision’. The
word
‘beslissing’, as opposed to the word ‘besluit’,
generally denotes the determination of a dispute or
issue. The
Afrikaans text therefore provides a further indication that the word
‘decision’ in s 49(1) should bear
the meaning of the
decision of a dispute or issue.
[18]
To summarise, the purpose of the MSA, the context of s 44(4)
read with s 49(1), the nature of an inspection in terms
of
s 44(4)
(a)
and the Afrikaans version of s 49(1) lead
me to the firm conclusion that the interpretation favoured by the
court a quo is
correct.
[19]
A decision to order an inspection in terms of s 44(4)
(a)
is clearly not a decision envisaged in s 49(1). It follows that
the appeal must fail.
[20]
I now turn to the cross-appeal. The court a quo declined to make an
order as to costs, primarily upon application of the principles
set
out in
Biowatch Trust v Registrar, Genetic Resources & others
[2009] ZACC 14
;
2009 (6) SA 232
(CC). It was submitted on behalf of
the respondents that these principles did not find application in
this matter. Counsel submitted
that the application of the principles
in
Biowatch
constituted a misdirection that entitled this
court to interfere with the exercise of the discretion of the court a
quo in respect
of costs.
[21] Counsel for the
scheme referred to what was said in
Justice Alliance of South
Africa v Minister for Safety and Security & others
[2013]
ZACC 12
;
2013 (7) BCLR 785
(CC) para 10, namely:
‘
The
Minister contends that because there was no challenge to the
constitutional validity of any of the provisions of the Act, no
constitutional issue in the
Biowatch
sense was raised. That is not, without more, a proper basis for
finding that no constitutional issue was raised. The attack on
the
validity of the guidelines as being
ultra
vires
s 137 of the Act is based on
the principle of legality. Legality is decidedly a constitutional
issue. The interpretation of
the provisions of the Act in order to
decide whether the guidelines fell within their ambit is also a
constitutional issue because
statutory interpretation must be done in
accordance with the dictates of the Constitution. In addition it is
clear that the original
order forcing the Minister for Police to
promulgate guidelines was founded on his failure to comply with the
provisions of the
Constitution.’ (Footnotes omitted.)
[22] As I understood it,
the argument was that the mere fact that the interpretation of a
statutory provision is at stake, means
that a constitutional issue is
raised. I am unable to agree. The principles in respect of costs set
out in
Biowatch
apply ‘where matters of genuine
constitutional import arise’ (para 24). In para 25 of
Biowatch
it was stated:
‘
Merely
labelling the litigation as constitutional and dragging in specious
references to sections of the Constitution would, of
course, not be
enough in itself to invoke the general rule as referred to in
Affordable Medicines
[2005] ZACC 3
;
[2006 (3) SA 247
(CC); {2005] ZACC 3]. The issues must be genuine and
substantive, and truly raise constitutional considerations relevant
to the
adjudication.’
[23]
Paragraph 10 of
Justice Alliance
must of course be read in
context. There the applicant sought leave to appeal against an
adverse costs order. The court stated
that the central issue was
whether a genuine and substantive constitutional issue was at stake.
In paras 12 and 13, the court pointed
out that in order to ascertain
whether the interpretation of a statute raised a genuine
constitutional issue, it has to be considered
whether it was alleged
that any specifically articulated right under the Bill of Rights
would be adversely affected by the interpretation
of the statute.
What has to be weighed is whether the interpretation of the statute
held an adverse effect on an underlying fundamental
right. In the
final analysis, the court refused leave to appeal on the ground that
the applicant did not seek to vindicate any
fundamental right in the
litigation.
[24]
The case of the scheme was about the avoidance of the inspection of
its affairs by relying on an interpretation of the statute
per se. It
did not assert a right under the Constitution nor did it seek to
vindicate any fundamental right. In the result, I am
persuaded that
the costs in the court a quo should have followed the result.
[25] Accordingly, the
following order is made:
1 The appeal is dismissed
with costs.
2 The cross-appeal is
upheld with costs and paragraph 2 of the order of the court a quo is
set aside and replaced with the following:
‘
The
respondent is directed to pay the costs of the application.’
__________________
C H G van der Merwe
Judge of Appeal
APPEARANCES:
For Appellant: E
Labuschagne SC (with him J W Schabort)
Instructed by:
Gildenhuys Malatji Inc,
Pretoria
Honey
Attorneys Inc, Bloemfontein
For Respondents: M C
Maritz SC
Instructed by:
Savage, Jooste and Adams
Inc, Pretoria
Symington
& De Kok, Bloemfontein