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[2015] ZASCA 27
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Medirite (Pty) Limited v South African Pharmacy Council and Another (197/2014) [2015] ZASCA 27 (20 March 2015)
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THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
REPORTABLE
Case
No:
197/2014
In
the matter between:
MEDIRITE
(PTY)
LIMITED
......................................................................................
Appellant
and
SOUTH
AFRICAN PHARMACY
COUNCIL
................................................
First
Respondent
THE
MINISTER OF
HEALTH
....................................................................
Second
Respondent
Neutral
citation:
Medirite v South African
Pharmacy Council
(197/2014)
[2015]
ZASCA 27
(20 March 2015)
Coram:
Mpati P, Maya, Leach, Pillay and Zondi
JJA
Heard:
16 February 2015
Delivered:
20 March 2015
Summary:
Administrative law – amendment to
general rules of pharmaceutical practice neither rational nor
reasonable – amendment
set aside on review.
ORDER
On
appeal from:
Gauteng Division, Pretoria
(Mabuse J sitting as court of first instance):
1 The appeal
succeeds with costs, such costs to include the costs of two counsel.
2 The order of the
court a quo is set aside and is substituted with the following:
‘
(a)
The first respondent’s amendment of s 1.2.2 of Annexure A to
the
Rules Relating to Good Pharmacy
Practice
, published in Government
Gazette No 35095 on 2 March 2012 under Board Notice 35/2012, insofar
as it introduced subsecs (b), (c)
and (d) to s 1.2.2.1, is set aside.
(b) The first
respondent is to pay the applicant’s costs, including the costs
of two counsel.’
JUDGMENT
Leach
JA
(Mpati P, Maya, Pillay and Zondi JJA
concurring)
[1]
For obvious reasons of public interest, the pharmaceutical industry
is heavily regulated. Amongst other controls the first respondent,
the South African Pharmacy Council, a juristic person established
under s 2 of the Pharmacy Act 53 of 1974 (the Act), is empowered
under s 35A(
b
)(ii)
of that Act to make rules relating to ‘good pharmacy practice’
that are binding upon all persons licensed to provide
pharmacy
services.
[1]
On 17 December
2004, the first respondent published rules relating to good pharmacy
practice (the GPP Rules).
[2]
An
amendment to those rules, published by the first respondent on 2
March 2012,
[3]
lies at the heart
of the present dispute. As more fully set out below, the appellant
was aggrieved by certain provisions introduced
by the amendment and
sought to have them reviewed and set aside by the high court, citing
the first appellant and the Minister
of Health as respondents in its
application. No relief was sought against the Minister who was
joined solely as a potentially
interested party but who has played no
part in the proceedings, either in the high court or in this appeal.
In any event, the appellant’s
application was dismissed on 20
December 2013. The appeal to this court is with leave of the court a
quo.
[2]
Pharmacies situated within the precincts of
other business premises such as supermarkets and hospitals, but run
as separate businesses,
have become fairly commonplace in this
country as they are elsewhere in the modern world. Since 2003 the
appellant, a wholly owned
subsidiary of Shoprite Checkers (Pty) Ltd,
operating under the brand name of
Medirite,
has conducted separate pharmacy
businesses within Shoprite, Checkers and Checkers Hyper supermarkets.
Capitalising on the free flow
of foot traffic between the supermarket
in which it is situated and the pharmacy itself, its business model
proved so successful
that when the present proceedings were
instituted in the court a quo, the appellant was operating 129
licensed pharmacies in this
way and planned to expand that number
considerably within a few years.
[3]
Typically, the appellant’s pharmacies are organised as follows:
(a) The pharmacy
itself consists of a dispensary in which scheduled medicines are kept
and stored out of public reach, an office
or consultation room, a
waiting area for patients or customers, and a service counter between
the dispensary and the shop floor.
(b) Members of the
public deal with the pharmacist across the service counter, with the
patient being provided with the necessary
degree of privacy and
confidentiality by partitioning that create a booth-like structure.
The counter is directly accessible from
the supermarket floor but the
dispensary behind it may be accessed solely through a door between it
and the office or a private
consultation room.
(c) The space
between the counter and the dispensary is fitted with a retractable
and lockable vertical shutter that is closed and
locked whenever the
pharmacy is not open for business. In this way no-one other than the
responsible pharmacist, who retains the
keys, has access to the
scheduled medicines stored in the pharmacy.
(d)
Situated immediately adjacent to, but in front of the service
counter, are both the waiting area (usually near the door that
leads
to the office and dispensary, and furnished with chairs) and the
so-called ‘front shop’ which is not part of
the licensed
pharmacy premises. (I should mention that the owner of a pharmacy is
obliged to hold a license issued by the Director-General
of the
Department of Health for the premises where the pharmacy business is
conducted.)
[4]
The front shop is
stocked with health and beauty products, experience having shown that
there are valuable synergies to be exploited
between the provision of
pharmacy services and the sale of these products.
(e) The stock
offered for sale in the front shop also includes certain so-called
‘schedule 0’ medicines, such as headache
tablets. Unlike
other scheduled medicines, these may be sold by any retailer,
including supermarkets, spaza shops (tuckshops) or
liquor stores, and
therefore do not have to be processed and paid for at the pharmacy
counter. However, as certain schedule 0 medicines
are often included
in doctors’ prescriptions, a range of these are also stocked
within the dispensary for convenience in
order to be dispensed
together with other prescription medicines.
[4] As at May 2011,
s 1.2.2(b) of Annexure A to the GPP Rules provided that ‘the
pharmacy premises must be clearly demarcated
and identified from the
premises of any other business or practice’. However, on 27 May
2011 the first respondent published
for comment a draft amendment
thereto that envisaged not only revising the wording of that rule
(but not its import) but the introduction
of additional requirements
as to the method of demarcation of pharmacy premises, including the
construction of a wall. Alarmed
by this, the appellant
submitted detailed written representations to the first respondent on
25 July 2011 in an attempt to persuade
it not to effect the proposed
amendment. The appellant also met with the registrar of the first
respondent on 29 September 2011
to voice its concerns. These
representations had no effect and, on 2 March 2012, the first
respondent published the amendment.
[5] The amendment
introduced a new s 1.2.2.1 that in its entirety reads as follows:
‘
(a)
The pharmacy premises must be clearly identified and demarcated from
the premises of any other business or practice.
(b) The demarcation
must be permanent, solid and closed-off at all times, which
demarcation may be inter alia brick and mortar,
aluminium, steel,
glass, dry wall or wood partition.
(c) The demarcation
must be from floor to the ceiling height and must enclose all areas
attached to the pharmacy viz: the waiting
area, the clinic, the
semi-private area and the private area.
(d) The pharmacy
must have a single point of entry and a single point of exit in
compliance with the Occupation Health and Safety
Act 85 of 1993
(OHSA).
(e)
In order to comply with the requirement of accessibility to
pharmaceutical services, a pharmacist must have an unfettered 24
hour
access to the pharmacy.
’
[6] The appellant
has calculated that in order for members of the public not to feel
physically restricted and to enjoy a sense
of confidentiality when
consulting with the pharmacist, the proposed wall should be about
four metres from the service counter.
As the length of a pharmacy is
typically about eight metres, the wall will create a ‘box’
jutting out and enclosing
an area in excess of 30 square metres of
floor space in front of the counter. Not only will this entail
substantial construction
expenditure (the appellant estimates the
cost of building a wall meeting these requirements at approximately
R200 000) but
the presence of such a wall will in all likelihood
have a profound negative impact on the supermarket business model,
interfering
as it must with the free flow of customers between the
host supermarket and the pharmacy. The further requirement that the
wall
must extend from floor to ceiling is in itself problematic, not
only as many of the host supermarkets are in buildings that have
either extremely high ceilings or, in many cases, no ceilings at all,
but the erection of a wall of this nature may adversely impact
on the
lighting and ventilation design of the buildings in which the
pharmacies are situated.
[7]
Consequently, on 22 March 2012, relying upon s 5 of the Promotion of
Administrative Justice Act 3 of 2000 (PAJA), the appellant
asked the
first respondent to provide its reasons for passing the amendment. In
its reply of 26 April 2012, the first respondent
stressed the need to
ensure that the profession provides excellence for the benefit of
those they serve, and went on to say:
‘
(I)t
is imperative to ensure that the premises defined as a “pharmacy”
is clearly demarcated which demarcation needs
to be clearly
identified and permanent. This has proved to be problematic where a
pharmacy is situated within another business,
and has in practice
given rise to the colloquial, yet arbitrary, “white line”
concept to demarcate the area registered
as the pharmacy. This is
evident in pharmacies situated within healthcare facilities or group
practices, institutional pharmacies
which have a section directly
accessible by members of the public and pharmacies situated within an
ordinary retail environment
eg “supermarket model”.
The
absence of a permanent demarcation of the pharmacy premises has led
to a lack of definitive jurisdiction for the Council and
in some
circumstances definitive jurisdiction
vis a vis
other
statutory health councils in the application of Ethical Rules. In
addition the “white line” can be moved without
notice and
may at the extreme even vary from day to day.
It
is common cause that owners/responsible pharmacists and the Office of
the Registrar are aware of the demarcation of the pharmacy
premises
due to the fact that floor plans have to be provided for purposes of
pharmacy licenses and the recording of such pharmacies.
However, when
a pharmacy is situated within another business and in the absence of
a permanent demarcation these premises lines/boundaries/borders
are
unknown to 3
rd
parties, in particular the members of the
public, other healthcare professionals and Council’s inspectors
(should they not
have access to or be in possession of floor plans).
At
the highest level, the lack of a permanent, visible, therefore known
demarcation brings into question where does the pharmacy
begin and
end and thus where do the rules and laws begin and end in terms of
pharmacies and pharmaceutical services. In addition
the Council
identified specific areas of concern in regulating the pharmacy in
the absence of a permanent business demarcation:
(a) Confidentiality
issues, in terms of record keeping and potential access to patient
records;
(b) Access to
scheduled substances;
(c) Stock control;
(d) Access to the
pharmacy but unregistered/unauthorized; and
(e) In contrast to
point (d) above, the lack of access to the pharmacy when the main
business is closed or inaccessible.
Based on the
abovementioned details the Council identified the need to simplify
the minimum standards pertaining to the demarcation,
accessibility of
a pharmacy situated within construction of a permanent “structure”
must incorporate the entire pharmacy.’
[8] On receiving
these reasons, the appellant attempted to persuade the first
respondent to withdraw the amendment. When its efforts
were
unsuccessful, the appellant decided to challenge the amendment and
launched review proceedings in the court a quo. As appears
from its
reasons of 26 April 2012, and repetitively repeated in its answering
affidavits, the first respondent’s primary
concern in effecting
the amendment appears to have been to ensure that pharmacy premises
are clearly identifiable and demarcated
from the host businesses in
which they are situated. Certain of its expressed reasons for that
view are somewhat difficult to appreciate,
but nothing turns on this
as the appellant accepted that it is necessary for pharmacies to be
both identifiable and clearly demarcated
from the supermarkets in
which they are to be found. The appellant’s challenge on review
related solely to the provisions
of subsecs (b), (c) and (d) of s
1.2.2.1 introduced by the amendment ie the requirements relating to a
permanent wall extending
from floor to ceiling with restricted points
of entry and exit. As already mentioned, its challenge was dismissed
by the court
a quo and is now before this court on appeal.
[9]
It is necessary to record at the outset that both sides were agreed,
correctly, that the first respondent’s amendment
of the GPP
Rules constituted administrative action taken by an administrator as
envisaged by PAJA. Section 33(1) of the Constitution
requires such
administrative action to be ‘lawful, reasonable and
procedurally fair’ and PAJA is designed to ensure
the
achievement of that end. It provides that administrative action may
be set aside, inter alia, if irrelevant considerations
were taken
into account or relevant considerations were not considered,
[5]
if it was not rationally connected to either the information before
the administrator
[6]
or the
reasons given for it by the administrator,
[7]
or if it was an action that no reasonable decision-maker could
take.
[8]
The requirement of
rationality is to ensure that the action is not arbitrary or
capricious and that there is a rational connection
to the facts and
the information available to the administrator taking the decision
and the decision itself.
[9]
[10]
Whether an action may be impugned on any of these grounds involves a
fact driven inquiry having regard, inter alia, to the
information
available to the administrator, the considerations relied on, the
ends that were sought to be achieved and the effect
the proposed
action would have upon interested parties. But in considering the
lawfulness of the action sought to be impugned,
it is important for a
court to remember that it is engaged in a review and not an appeal,
and that it is not for it to usurp the
administrator’s
function. Accordingly, as long as the administrative action is
rational or reasonable it cannot be impugned,
even if it is not an
action the court would have taken. But of course questions such as
reasonableness and rationality involve
the making of a value judgment
that cannot be tested in isolation, so to speak, without considering
the so-called ‘merits’
of the action and why it was
taken.
[10]
[11] A consideration
of the merits of the decision in the present case is bedevilled by a
singular lack of information as to why
the first respondent decided
that a wall meeting the prescribed requirements was necessary. As
already mentioned, the GPP Rules
prior to the introduction of the
amendment also required pharmacy premises to be ‘clearly
demarcated and identified from
the premises of any other business or
practice’, and the first respondent had never complained that
any of the appellant’s
pharmacies breached this rule despite
having regularly inspected them. The inference is that the
appellant’s premises were
in fact clearly demarcated and
identifiable. Nor for that matter is there any suggestion that any
complaint, of any nature whatsoever,
had been made arising out of the
adoption of any similar business model by other pharmacy owners.
Significantly, when the draft
amendments were published for purposes
of comment, it was done without any motivation as to why the existing
rule had been inadequate
or why it had been felt necessary to effect
changes thereto.
[12] Nor does the
first respondent’s motivation in effecting changes to the
existing rule appear from the documents it furnished
under Uniform
rule 53 in response to the institution of review proceedings. What
does appear from those documents is that, in April
2008, the first
respondent had established a task team to develop a discussion paper
in regard to various aspects of pharmaceutical
practice. Thereafter
the first respondent’s registrar wrote to various foreign
pharmaceutical regulators, inquiring about
their respective
requirements relating to pharmacies in supermarkets. The first
respondent’s records show no response to
any of these
enquiries. All one knows is that in the minutes of a teleconference
of the task team conducted on 25 June 2009 it
was noted that
corporate pharmacies should be advised to have ‘a white line
demarcation separating the pharmacy from the
rest of the
business’(the ‘white line model’ is a system which
uses markings on the floor of the premises to
indicate the boundary
between the pharmacy and the host business), and that members of the
task team were to ‘engage with
a few corporate pharmacies
regarding the white line model’. These minutes must be
construed as an indication that the task
team favoured the
introduction of such a method of demarcation. Significantly, they
make no mention of a permanent enclosure.
[13] The first
respondent alleged in its answering affidavits that during the
teleconference there had in fact been a vigorous debate
about the
efficacy of the ‘white line model’ as it was regarded as
being problematic. It also alleged that the white
line model ‘has
rarely been properly observed’ and suggested that the line
might be moved on a daily basis, something
that with its limited
resources it could not police. However, not only did the first
respondent give no details of this ever having
happened, but even if
one accepts that there was a perception that this could occur, there
is no mention in the minutes of any
discussion concerning the
necessity of providing a box-like enclosure of the nature of that
ultimately prescribed by the amendment.
[14] So why did the
first respondent introduce subsecs (b), (c) and (d) requiring a
permanent wall extending from floor to ceiling,
with restricted
access, in order to demarcate and identify a pharmacy’s
premises? The answer to this question is shrouded
in mystery. As
already mentioned, the main issue the first respondent addressed in
resisting the review was the necessity to adequately
demarcate and
identify the premises of a pharmacy, but nowhere in the papers did it
explicitly set out its reason why it felt that
it was necessary to
build a wall of this nature in order to achieve this end. The closest
it has ever come to an explanation is
the suggestion in its reasons
of 26 April 2012 that it had identified the need ‘to simplify
the minimum standards pertaining
to the demarcation’ of a
pharmacy. This is quite simply no reason at all. Whilst there can be
no doubt that the prescribed
wall would certainly achieve the end of
demarcating and identifying the premises of a pharmacy, it can hardly
be suggested that
it is the simplest solution to achieve that end.
[15]
The fundamental difficulty facing the first respondent is, thus, that
it has neither explained what considerations it took
into account nor
provided any motivation for its introduction of a rule requiring a
wall envisaged in the introduced subsecs, the
building of which is
likely to impinge heavily upon the appellant’s business model.
Had it had any facts justifying the need
for such a wall, it can be
presumed they would have been forthcoming. As they were not, the
matter must be decided on the basis
that there were none.
[16] In these
circumstances, accepting that there was no information before the
first respondent or factual foundation that demonstrated
any existing
mischief that needed to be addressed by way of a wall of the nature
specified, the decision to oblige pharmacy owners
to build such a
wall was arbitrary and irrational in the sense that it lacked any
logical justification.
[17] Faced with this
difficulty, counsel for the first respondent argued that once it was
accepted that it was rational and reasonable
to require a demarcation
of the pharmacy premises, it was not for a court to question the
means by which it decided to achieve
this end – namely, by
erecting the wall in compliance with the subsecs. However, although
the first respondent was empowered
by s 4 of the Act to generally ‘do
all such things as the council deems necessary or expedient to
achieve the objects of
this Act’, it does not have carte
blanche to do just as it likes. Instead its discretion is fettered by
the obligation to
exercise its administrative powers lawfully.
Sub-sections (b), (c) and (d) relating to the nature and extent
of the envisaged
wall were made by it in purporting to exercise those
powers, and it is its action in doing so that may be challenged on
review.
Accordingly, even if a demarcation is justifiable, the
administrative action amending the GPP Rules to introduce the
requirement
of a wall of the nature envisaged is liable to be set
aside under PAJA if it was not properly taken. And as that decision
lacked
rationality for the reasons already given, it does not
withstand scrutiny under PAJA.
[18] Of further
importance is the first respondent’s failure to indicate why it
felt that a less onerous demarcation would
not have sufficed.
Although it is not for a court to determine on these papers what
would have been an adequate albeit less restrictive
method of
demarcation, it takes little imagination to envisage various ways in
which the premises of a pharmacy in a supermarket
or other business
premises could easily be clearly identified and demarcated at little
cost and without causing significant interference
with the free flow
of customer traffic between the two businesses.
[19] The first
respondent argued that the onerous practical implications the
appellant would bear in giving effect to the amendment
were
irrelevant as the amendment was not specifically targeted at the
appellant but at all pharmacies located in other businesses,
and that
persons who do business in a highly regulated field must proceed on
the basis that, from time to time, the regulatory
landscape will
change. It further argued that although the appellant had made much
of the adverse implications of the floor-to-ceiling
model, it would
have been amenable to considering a workable alternative that was
less invasive.
[20]
Of course persons doing business in a regulated profession cannot
expect that the regulations under which they operate will
remain
static. But that is no reason for the consequences of any proposed
changes in the regulations upon those affected to be
regarded as
irrelevant and not to be taken into account before they are
implemented. As already mentioned, s 6(2)(
h
)
of PAJA requires an administrative decision to be reasonable in the
light of the circumstances of each particular case. As O’Regan
J stressed in her seminal judgment in
Bato
Star Fishing
,
[11]
factors relevant to the determination of whether a decision is
reasonable or not will include the reasons given for the decision
(which as I have stressed are singularly lacking in this case) as
well as ‘the nature of the competing interests involved
and the
impact of the decision on the lives and well-being of those
affected’.
[12]
It has
been stated that ‘proportionality is a constitutional
watchword’
[13]
and as
was observed by Plasket J in
Ehrlich
,
[14]
quoting with approval the views of Prof Jowell, unreasonable
administrative action includes ‘those that are oppressive in
the sense that they “have an unnecessarily onerous impact on
affected persons or where the means employed (albeit for lawful
ends)
are excessive or disproportionate in their result”’.
[15]
[21]
Accordingly, in seeking to achieve a clear demarcation between
pharmacy and supermarket, the first respondent was obliged to
weigh
up the effect of its rules on those affected thereby, particularly as
the implementation of the new subsecs was likely to
have a
substantial adverse effect on the basic business model being used not
only by the appellant but by other pharmacy owners
using the
supermarket model countrywide.
[22]
Moreover, implicit in the recognition that the first respondent was
amenable to a less invasive alternative than the wall it
had
prescribed, is an acknowledgement that the floor-to-ceiling wall was
not necessary in order to achieve the objective to ensure
a clear
demarcation between the pharmacy and the host business. This is a
telling concession. By seemingly ignoring any other option
the first
respondent failed to consider less drastic but surely available means
to accomplish the desired result of a clear demarcation.
A
floor-to-ceiling wall would indeed be an absolute demarcation, but
without the first respondent providing any reason for requiring
such
a wall, the adverse consequences to the supermarket business model
and the costs flowing therefrom appear to have been wholly
disproportional to the end it sought to achieve. Instead it used ‘a
sledgehammer to . . . crack a nut’.
[16]
As the first respondent has failed to attempt to justify the
use of a sledgehammer, its action must be regarded as unreasonable.
[23] Consequently,
the first respondent’s administrative action in making the
subsecs in question ought to have been set aside
as having been both
irrational and unreasonable. For these reasons alone the court a quo
erred in concluding otherwise, and its
order cannot stand. This
renders it unnecessary to consider the various further issues debated
in this court.
[24] The following
order will therefore be made:
1 The appeal
succeeds with costs, such costs to include the costs of two counsel.
2 The order of the
court a quo is set aside and is substituted with the following:
‘
(a)
The first respondent’s amendment of s 1.2.2 of Annexure A to
the
Rules Relating to Good Pharmacy
Practice
, published in Government
Gazette No 35095 on 2 March 2012 under Board Notice 35/2012, insofar
as it introduced subsecs (b), (c)
and (d) to s 1.2.2.1, is set aside.
(b)
The first respondent is to pay the applicant’s costs, including
the costs of two counsel.’
_______________________
L
E Leach
Judge
of Appeal
Appearances:
For
the Appellant: J J Gauntlett SC (with him M W Janisch)
Instructed
by:
Werksmans
C/o
Van der Merwe Du Toit Inc, Pretoria
Phatshoane
Henney, Bloemfontein
For
the Respondent: A P H Cockrell SC (with him A B Friedman)
Instructed
by:
Potgieter-Marais
Attorneys, Pretoria
J
L Jordaan Attorneys, Bloemfontein
[1]
Regulation
20(1) of the ‘Regulations Relating to the Practice of
Pharmacy, GN R1158,
GG
21754,
20 November 2000; regulation 7(1) of the ‘Ownership and
Licensing of Pharmacies, GN R553,
GG
24770, 25 April 2003; regulation 18(8)(b) of the ‘Regulations
Relating to the Period and Manner of Appeal Against Decisions
of the
Medicine Control Council, GN R906,
GG
14826, 28 May 1993’.
[2]
Rules
Relating to Good Pharmacy Practice, GN R129,
GG
27112, 17 December 2004.
[3]
Rules
Relating to Good Pharmacy Practice, GN R35,
GG
35095, 2 March 2012.
[4]
Reg
8 of the Regulations Relating to the Ownership and Licensing of
Pharmacies, supra, fn 1.
[5]
Section 6(2)(
e
)(iii).
[6]
Section
6(2)(
f
)(cc).
[7]
Section
6(2)(
f
)(ii)(dd).
[8]
Section
6(2)(
h
).
See further
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs
[2004] ZACC 15
;
2004
(4) SA 490
(CC) para 44.
[9]
SA
Predator Breeders Association v Minister of Environmental Affairs
and Tourism
[2011]
2 All SA 529
(SCA) para 28.
[10]
See
eg, C Hoexter
Administrative
Law in South Africa
(2ed) (2012) at 351-352.
[11]
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs
[2004] ZACC 15
;
2004
(4) SA 490
(CC).
[12]
Paragraph
45.
[13]
City
of Johannesburg Metropolitan Municipality v Blue Moonlight
Properties 39 (Pty) Ltd
2011
(4) SA 337 (SCA).
[14]
Ehrlich
v Minister of Correctional Services
2009
(2) SA 373 (E).
[15]
Para
42 quoting, J Jowell ‘Judicial Review of the Substance of
Official Decisions’
(1993) 13
Acta
Juridica
117
at 120.
[16]
A
somewhat hackneyed but graphic idiom
used
,
inter
alia
,
in S v Manamela
2000
(3) SA 1
(CC) para 34.