Hospital Association of South Africa Ltd v Minister of Health and Another (37377/09, 37505/09, 21352/09) [2010] ZAGPPHC 69; 2010 (10) BCLR 1047 (GNP) ; [2011] 1 All SA 47 (GNP) (28 July 2010)

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[2010] ZAGPPHC 69
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Hospital Association of South Africa Ltd v Minister of Health and Another (37377/09, 37505/09, 21352/09) [2010] ZAGPPHC 69; 2010 (10) BCLR 1047 (GNP) ; [2011] 1 All SA 47 (GNP) (28 July 2010)

IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG DIVISION, PRETORIA)
Case
No. 37377/09
DATE:
28/07/2010
In
the matter between:
THE
HOSPITAL ASSOCIATION OF SOUTH AFRICA LTD. Applicant
and
THE
MINISTER OF HEALTH First Respondent
THE
DIRECTOR GENERAL OF THE
DEPARTMENT
OF HEALTH Second Respondent
Consolidated
with:
Case
No: 37505/09
ER24
EMS (PROPRIETARY) LIMITED First Applicant
NETCARE
911 (PROPRIETARY) LIMITED Second Applicant
and
THE
MINISTER OF HEALTH First Respondent
THE
DIRECTOR GENERAL OF THE
DEPARTMENT
OF HEALTH Second Respondent
and
consolidated with
CASE
NO 21352/09
In
the matter between:
SOUTH
AFRICAN PRIVATE PRACTITIONERS FORUM First Applicant
SOUTH
AFRICAN HEART ASSOCIATION Second Applicant
OPHTHALMOLOGICAL
SOCIETY OF SOUTH AFRICA Third Applicant
SOUTH
AFRICAN ORTHOPAEDIC ASSOCIATION Fourth Applicant
SOUTH
AFRICAN RHEUMATISM AND ARTHRITIS ASSOCIATION Fifth Applicant
THE
ASSOCIATION OF PLASTIC AND RECONSTRUCTIVE SURGEONS OF SOUTH AFRICA
Sixth Applicant
THE
SOUTH AFRICAN GASTROENTOROLOGY SOCIETY Seventh Applicant
THE
FACULTY OF CONSULTING PHYSICIANS Eighth Applicant
THE
GYNAECOLOGICAL MANAGEMENT GROUP LIMITED Ninth Applicant
THE
SOUTH AFRICAN UROLOGICAL ASSOCIATION Tenth Applicant
THE
SOUTH AFRICAN SOCIETY OF OTORHINOLARYNGOLOGY HEAD AND NECK SURGERY
Eleventh Applicant
THE
SOUTH AFRICAN ASSOCIATION OF AUDIOLOGISTS Twelfth Applicant
THE
SOUTH AFRICAN SPEECH LANGUAGE AND HEARING ASSOCIATION Thirteenth
Applicant
SURGICOM
LIMITED Fourteenth Applicant
THE
ASSOCIATION OF SURGEONS OF SOUTH AFRICA Fifteenth Applicant
THE
SOCIETY OF NEUROSURGEONS OF SOUTH AFRICA Sixteenth Applicant
THE
SOUTH AFRICAN SOCIETY OF PHYSIOTHERAPY Seventeenth
Applicant
THE
SOUTH AFRICAN PODIATRY ASSOCIATION Eighteenth Applicant
SOUTH
AFRICAN SOCIETY OF PSYCHIATRISTS Nineteenth Applicant
THE
DERMATOLOGICAL SOCIETY OF SOUTH AFRICA Twentieth
Applicant
GENERAL
PRACTITIONERS MANAGEMENT GROUP Twenty First Applicant
SOUTH
AFRICAN MANAGED CARE COOPERATIVE Twenty Second
Applicant
PAEDIATRIC
MANAGEMENT GROUP LIMITED Twenty Third Applicant
and
THE
DIRECTOR-GENERAL OF HEALTH First Respondent
THE
MINISTER OF JUSTICE AND CONSTITUTIONAL DEVELOPMENT Second Respondent
THE
CHAIRPERSON OF THE ADVISORY COMMITTEE ESTABLISHED IN TERMS OF
SECTION
91(1) OF THE NATIONAL HEALTH ACT Third Respondent
CORAM
EBERSOHN AJ
DATE
HEARD 22ND AND 23RD FEBRUARY 2010
JUDGMENT
HANDED DOWN ON 28th JULY 2010
Reportable:
Medicine - Medicines -
National Health Act 61 of 2003
- Regulations
promulgated thereunder - Validity of - Regulations Relating to the
Obtainment of Information and the Process of Determination
and
Publication of Reference Price List made in terms of
section 90(1)
of
Act in GN 681 on 23 July 2007 invalid and of no force and effect.
JUDGMENT
EBERSOHN
AJ.
[1]
The three matters dealt with in this judgment were consolidated by
orders of this court. Contained in the orders was an undertaking
by
the respondents that the Director-General of the Department of Health
("DOH") would not publish a Reference Price
List ("RPL")
for 2010 before the date of the hearing of the matters. At the
hearing of the matter, without advancing
any reasons for her
attitude, the acting Director-General refused to extend the
undertaking until the final determination of the
matters which
attitude compelled this court to
mero
motu
make the following order:
"The
Director-General is interdicted until the final determination of this
matter from publishing any Reference Price List."
[2]
The three review applications were brought under the provisions of
Rule 53
of the Uniform
:
Rules
of Court, in terms of the provisions of the
Promotion
of Administrative Justice Act,
3
of
2000
("PAJA").
[3]
The administrative conduct or decisions which are the subject of the
review are those of the Minister of Health and the Director-General

of the DOH.
[4]
The applicant in the first application, the Hospital Association of
South Africa C'HASA"), the applicants in the second
application
Netcare 911 (Pry) Ltd ("Netcare 911") and ER24 EMS (Pty)
Ltd ("ER24") and the twenty-three applicants
("SAPPF")
in the third application, seek relief in respect of the promulgation
by the Minister of Health of Regulations
in terms of section 90 of
the
National
Health Act,
No.
61 of 2003 ("NHA") and the determination and publication by
the Director-General of the Department of Health, of a
national
health reference price list ("NHRPL") and the process
prescribed the Director-General prescribed and subjected
the
applicants to. In the HASA and ER24 matters the Minister of Health
and her Director-General were cited as the first and second

respondents respectively. In the SAPPF application the
Director-General of the DOH. the Minister of Justice and
Constitutional
Development and the Chairperson of the Advisory
Committee established in terms of Section 91(1) of the ("NHA")
were cited
as respondents.
[5]
Section 22 of the NHA reads as follows:
"(1)
A council known as the National Health Council is hereby established.
(2) The National Health Council consists of-
(a)
the Minister, or his or her nominee, who acts as chairperson;
(b)
the Deputy Minister of Health, if there is one;
(c)
the relevant members of the Executive Councils;
(d)
one municipal councillor, representing organised local government and
appointed by the national organisation contemplated in
section 163(a)
of the Constitution;
(e)
the Director-General and the Deputy Directors-General of the national
department;
(f)
the head of each provincial department;
(g)
one person employed and appointed by the national organisation
contemplated in section 163(a) of the Constitution; and
(h)
the head of the South African Military Health Service."
[6]
Section 90 of the NHA provides for the proclamation of regulations,
and reads
inter
alia
,
as follows:
"90.(1)
The Minister, after consultation with the National Health Council,
may make regulations regarding-
(u)
the processes and procedures to be implemented by the
Director-General in order to obtain prescribed information from
stakeholders
relating to health financing, the pricing of health
services, business practices within or involving health
establishments, health
agencies, health workers and health care
providers, and the formats and extent of publication of various types
of information in
the public interest and for the purpose of
improving access to and the effective and efficient utilisation of
health services;
(v)
the process of determination and publication by the Director-General
of one or more reference price lists for services rendered,

procedures performed and consumable and disposable items utilised by
categories of health establishments, health care providers
or health
workers in the private health sector which may be used -
(i)
by a medical scheme as a reference to determine its own benefits; and
(ii)
by health establishments, health care providers or health workers in
the private health sector as a reference to determine
their own fees,
but which are not mandatory;....".
[7]
The Minister of Health, in fact, promulgated the
Regulations
Relating to the Obtainment of Information and the Process of
Determination and Publication of Reference Price List
("the
Regulations") in terms of section 90(1 )(u) and (v) of the NHA
in Government Gazette No. 681 on the 23rd July 2007.
[8]
The applicants attacked the validity of the Regulations on several
grounds.
[9]
The main attack was that the Minister allegedly did not first consult
with the National Health Council as is required in section
90(1) of
the NHA, before promulgating the Regulations, which requirement is
mandatory and that any regulations promulgated without
there first
having been compliance with this requirement would be invalid in
terms of subsections 6(2)(b), 6(2)(f)(i) and 6(2)(i)
of PAJA and the
principle of legality. "Consultation" in the light of the
vast impact such regulations would have on
the medical professions
and services, the medical aid funds, the public interest and the
responsibility resting upon the shoulders
of the Minister and each
individual member of the National Health Council to solve the
problems regarding medical care in the country,
dictated proper
consultations and not merely a rubber-stamping of a one-sided process
driven by the Minister and her Department.
[10]
There is nothing
ex
facie
the Regulations or any other aspect of the drafting history of the
Regulations to indicate that the Minister in fact consulted
with
either the National Health Council or with the Advisory Committee
with regard to the Regulations.
[11]
In its founding affidavit HASA drew attention to the fact that it had
submitted a request under PAJA for the record of the
National Health
Council and the record of the Department of Health pertaining to the
promulgation of the Regulations and the consultations
that took place
between the Minister and the National Health Council prior to the
promulgation of the Regulations. These requests
under PAJA were
refused by the respondents.
[12]
Despite the fact that HASA drew express attention to the absence of
any such minutes or proof of consultations and. further,
despite the
express challenge directed at the Regulations on the ground of
non-compliance with the material provisions of the NHA,
the
respondents failed to include in the Record, filed in terms of the
provisions of Rule 53, any documents or minutes evidencing

consultations having occurred prior to the promulgation of the
Regulations and also failed in the answering affidavit to advance
any
proof bar the
ipse
dixit
of Dr. Chetty, the present acting Director-General of the DOH, in the
answering affidavit to the effect that consultation took
place.
[13]
The respondents initially relied exclusively on the bald allegations
of Dr. Chetty in this regard. The respondents did not
reveal when
those alleged consultations took place, who were present at the
consultations, what the nature and import of the consultations
were,
(See
New
Clicks SA (Pty) Ltd
v
Minister
of
Health
2005
(3) SA 238
(SCA)), which conclusions, if any, were arrived at, what
the minutes of the National Health Council reflect in relation to
those
consultations, or even what the attitude of the National Health
Council or the Advisory Committee were to the proposed Regulations.
[14]
In the replying affidavit filed on behalf of the applicants the
applicants challenged the
locus
standi
of Dr. Chetty to make certain factual averments, especially with
regard to the consultations, on the basis that the facts she deposed

to were not within her personal knowledge as she was not the
Director-General at the relevant time and that the averments thus

constituted inadmissible hearsay evidence.
[15]
At the hearing of the matter the respondents' counsel handed up, by
consent, a further affidavit consisting of two and a half
pages of
text, deposed to by Dr. Chetty wherein she confirmed the contents of
her answering affidavit. Attached to the further
affidavit of Dr.
Chetty was an affidavit, consisting of one and a half pages of text,
of the erstwhile Director-General of the
DOH, one Thamsanqua Dennis
Mseleku ("Mseleku"). Paragraph 5 of his affidavit reads as
follows:
"5.1
confirm that:
5.1
I attended meetings of the National Health Council ("NHC")
in which the Minister of Health, prior to the promulgation
of the
Regulations Relating to the Obtainment of Information and the Process
of Determination and Publication of Reference Price
List ("the
Regulations"), consulted with the NHC in relation thereto; and
5.2
the decisions and steps referred to by Chetty as having been taken by
the Director-General under the Regulations were taken
by me."
In
the quoted paragraph Mseleku restricted his affidavit to meetings
"held" and he specifically did not say that he attended
all
the
meetings held and he also did not say that he attended the meeting
where the Minister and the National Health Council finally
agreed to
the contents of the promulgated Regulations. This failure is most
important when it comes to deciding the issue eventually.
[16]
The Minister and Director-General attacked the applicants' contention
that the Regulations were invalid as prior consultation
with the
National Health Council did not take place and argued that the HASA
and the ER24 applicants provided absolutely no factual
basis to
dispute that consultations between the National Health Council and
the Minister in fact took place prior to the promulgation
of the
Regulations and relied on Dr. Chetty's bland statement, supported by
the equally bland statement of the erstwhile Director-General,
that
consultations in fact did take place. Dr. Chetty stated that at the
time it was, and the court finds her assertion in this
regard
unacceptable,
not the practice of the National Health Council to have the
proceedings of its meetings recorded and that there were
therefore no
minutes of the meetings and no documentary proof that the meetings
took place existed. Surely correspondence between
the
Director-General's office and the members of the National Health
Council arranging the consultations must exist somewhere and
there
must be diaries in which the dates of the consultations were recorded
in, or hotel reservation documents confirming reservations
that were
made for the members of the National Health Council coming from all
over the country to wherever the consultations were
held, and the
accounts were paid, lunches were paid for etc.. But to say that no
documentary proof exists that consultations were
held, is so
far-fetched and clearly untenable that the court is justified in
rejecting them on the papers for the reasons already
stated and those
set out hereunder. Even if the National Health Council did not keep
minutes of their meetings, the Minister of
Health and the
Director-General must keep minutes and must have created documents
with regard to and in connection with the consultations.
Surely the
Director-General must have sent out correspondence regarding the date
of each meeting, the venue, the time and the agenda
and even the
draft regulations for the members of the National Health Council to
study and to discuss beforehand with their local
advisors and
departments. The Advisory Committee surely must also have generated
documents with regard to the consultations and
these documents must
still exist.
[17]
The presence or absence of consultation is a jurisdictional fact the
presence or absence of which is objectively justiciable
by a court.
The leading case on jurisdictional facts is
South
African Defence and Aid Fund
v
Minister
of Justice
1967
(1) SA 31
(C). (See also
President
of the Republic of South Africa
v
SARFU
2000
(1) SA 1
(CC)
(1999 (10) BCLR 1059)
;
Pharmaceutical
Society of SA
v
Tshabalala-Msimang
NNO
2005
(3) SA 238
(SCA)).
[18]
For that purpose, there must be some evidence placed before the court
to demonstrate that consultation in fact occurred and
that it
occurred as contemplated in the NHA and, more particularly, that it
occurred prior to the promulgation of the Regulations.
[19]
HASA and the ER24 applicants, already in their written heads of
argument, filed before the hearing of the consolidated matter,

contended that there must be some evidence to demonstrate that
consultations in fact took place and in their heads quoted from
the
judgment of the Ciskei High Court in the matter of
Maqoma
v
Sebe
NO
1987
(1) SA 483
(Ck GD) to support their contention that the mere
ipse
dixit
of Chetty was insufficient to show and prove compliance with section
90(1) and referred especially to pages 489G—493B of
the
judgment in support of their contentions regarding the need for the
administrative repository to place some evidence of the
nature and
extent of consultations before the court and which is particularly
acute where - as in this case - the nature and extent
of
consultations is left to the discretion of the repository. The
passage referred to reads as follows:
"It
is common cause that the powers so granted to the first respondent
may only be exercised 'after consultation', making such
consultation
a condition precedent to the exercise thereof.
If
the condition precedent is not fulfilled, the necessary consequence
will be that the act of exercising the power granted under
the
section will be invalid.
Vide
Government of the Republic of South Africa and Another v Government
of Kwazulu and Another
1983
(1) SA 164
(A) at 199H; Baxter
Administrative
Law
at
445; Rose Innes
Judicial
Review of Administrative Tribunals in South Africa
at
107;
Virginia
Cheese & Food Co (1941) (Pty) Ltd v Minister of Agricultural
Economics and Marketing and Others
1961
(1) SA 229
(T); on appeal at
1961 (4) SA 415
(T).
The
question which falls to be decided in this matter is whether or not,
on the facts placed before us, the prerequisite of 'consultation'
as
provided for in s 2 has been adequately complied with.
Before
dealing with the allegations of fact in this matter it seems
advisable to consider in general terms the meaning, characteristics

and implications of the word 'consultation'.
The
principle of providing in legislation that an authority is empowered
to exercise its powers only after it has 'consulted' bodies
or
persons who have an interest in the subject-matter or will be
affected thereby is well known in the statute law of this and
other
countries. Several such provisions have been quoted in argument and
numerous authorities dealing therewith have been referred
to.
I
shall attempt to summarise the principles that may be extracted from
a study of these authorities.
1.
The
Concise
Oxford Dictionary (New Edition)
consulted,
equates 'consultation' with 'act of consulting; deliberation;
conference' stating that it is derived from the Latin
consultatio.
2.
'Deliberation' in turn is given as 'weighing in mind, careful
consideration; discussion of reasons for and against, debate; care,

avoidance of precipitancy; unhurriedness of movement.'
From
the aforementioned it seems that 'consultation' in its normal sense,
without reference to the context in which it is used,
denotes a
deliberate getting together of more than one person or party (also
indicative of the prefix 'con-') in a situation of
conferring with
each other where minds are applied to weigh and consider together the
pro's and cons of a matter by discussion
or debate.
The
word 'consultation' in itself does not presuppose or suggest a
particular forum, procedure or duration for such discussion or

debate. Nor does it imply that any particular formalities should be
complied with. Nor does it draw any distinction between
communications
conveyed orally or in writing. What it does suggest is
a communication of ideas on a reciprocal basis.
The
provisions of s 2 of the Administrative Authorities Act 37 of 1984
(hereinafter referred to as "the AA Act") do not
expressly
prescribe or lay down the form that the required 'consultations'
should take, nor the nature or extent thereof. Accordingly,
it seems
to me that the submission of Mr Dison for the first respondent may be
accepted that the procedure to be adopted in order
to comply with the
section was in the discretion of the first respondent who was
entitled to adopt any reasonable procedure she
chose providing it
allowed her and those parties or persons entitled so to consult with
her reasonable opportunity for achieving
the objects for which the
requirement of prior consultation was inserted in the enactment. As
regards the time when consultations
had to be embarked upon, suffice
it to say that the enactment specifically requires it to be done
prior to exercising the powers
therein granted to her.
This
view is supported by the
dictum
of
Van den Heever JA in
R
v Ntlemeza
1955
(1) SA 212
(A) where a similar enactment was considered. The learned
Judge of Appeal at 218D - E states the following:
"These
considerations lead inevitably to the conclusion that, even if the
direction to consult is a categorical imperative,
the section
contains no imperative direction as to how consultation should be
had; that the manner in which the Natives should
be consulted was
largely left to the discretion of the Minister. I do not see
therefore how the efficacy of any method not manifestly
unreasonable
adopted by him in
good
faith
can be questioned.'(My italics.)
In
considering the requirement of reasonableness it seems that various
considerations are appropriate. The number of people or bodies
to be
consulted; the urgency of the matters under consideration; the
background knowledge of the persons being consulted on the
issues
under consideration; the distances between parties and persons
concerned and the available lines of communication; the nature
of the
powers intended to be exercised; the effect of the exercise of such
powers on the rights of the persons affected; the practicalities
of
the case and such other considerations as I may not now have thought
of but which, in a particular case, may be indicative of

reasonableness.
Not
only the method of consultation but also the nature and extent of the
consultations envisaged by the enactment are not specified
therein.
In my view this aspect was left largely to the first respondent's
discretion subject again to the requirement that the
nature and
extent thereof should at least be such as to allow him and the
persons entitled so to consult, reasonable opportunity
to achieve the
objects for which the requirement of consultation was inserted in the
enactment. Again, the test of what would reasonably
suffice, would
vary in each case according to the considerations which I have
attempted to enumerate supra as being appropriate
with regard to the
method to be adopted. Vide Port Louis Corporation v Attorney General
of Mauritius
1965 AC 1111
(PC) at 1116).
The
requirement of good faith referred to in the Ntlemeza case
supra
(a
requirement which clearly must exist if proper discussion or debate
is to be had) seems to me to be one of the cornerstones of
any
meaningful consultations. Donaldson J in Agricultural, Horticultural
and Forestry Industry Training Board v Aylesbury Mushrooms
Ltd [19721
1 All ER 280
(QB) at 284E - F refers thereto in the following terms:
'The
essence of consultation is the communication of a genuine
invitation,extended with a receptive mind, to give advice....'
However
convinced the empowered authority may be at the outset, of the wisdom
or advisability of the intended course of action,
he is obliged to
constrain his enthusiasm and to extend a genuine invitation to those
to be consulted and to inform them adequately
of his intention and to
keep an open and receptive mind to the extent that he is able to
appreciate and understand views expressed
by them; to assess the
views so expressed and the validity of objections to the proposals
and to generally conduct meaningful and
free discussion and debate
regarding the merits or demerits of the relevant issues. So receptive
must his mind be that, if sound
arguments are raised or other
relevant matters should emerge during consultation, he would be
receptive to suggestions to amend
or vary the intended course to the
extent that at least a possibility exists for those with whom he
consults to persuade him to
alter his intentions if not to abandon
them.
In
stating the aforesaid, I am fully mindful of the fact that despite
the imperative requirements of consultation in the Act, he
is not
obliged to give effect to the wishes of those whom he has to consult.
He is the sole decision-maker regarding the actions
eventually to be
taken but, nevertheless, he is enjoined by the enactment not to act
in terms thereof until and unless he has given
full, proper and
bona
fide
consideration
to the views expressed during consultations conducted as I have
attempted to set out hereinbefore.
For
the sake of a clearer and more comprehensive appreciation of what I
have stated, the following quotes from various other authorities
are
of assistance.
In
the Port Louis Corporation matter
supra,
counsel
for the appellants are reported as having formulated argument as
follows (at 1116):
'The
English authorities may be relied on to determine the right approach
to the question what a true "consultation" should
be. The
authorities indicate that, while the nature and extent of the
communications between the consulting parties which are sufficient

for "consultation" to have taken place will vary in each
case, even under the same enactment, sufficient information
must be
supplied to the local authority to enable it to tender advice, and,
on the other hand, sufficient opportunity must be given
to the local
authority to tender that advice. The statutory obligation is not
fulfilled unless sufficient opportunity is given
to the local
authority to ask the executive questions and to put inquiries to the
executive, so that the questions and answers
amount to a free and
frank exchange of views on all the questions raised by the local
authority. That is the foundation stone of
the appellants' case.
Further,
there must be some essential factor without which no consultation can
be said to have taken place. It is not sufficient
for the executive
to inform the local authority of its intentions, but the local
authority must be given an opportunity to make
adequate
representations and to tender advice. It is essential for the
executive to approach that advice with an open mind, that
is, to be
open to persuasion and open to appreciate the advice tendered;
"Consultation" connotes an exchange of ideas,
information
and views, in which each side has a full opportunity of contributing
to such an exchange; it is not a one-way process
but a two-way
process:'
This
view seems to be to me the correct approach in matters of this
nature. Nor does the judgment of the Court suggest that the
argument
was not accepted.
In
the judgment of the Court at 1124 the following view is expressed:
'If
there is a proposal to alter the boundaries of a town, or the
boundaries of a district, or the boundaries of a village, such

alteration must not be made until after consultation with the local
authority concerned. It follows that the local authority must
know
what is proposed before they can be expected to give their views.
This does not however involve that the local authority are
entitled
to demand assurances as to the probable form of the solutions of the
problem that may be likely to arise in the event
of there being an
alteration of boundaries. The local authority must be told what
alterations of boundaries are proposed. They
must be given a
reasonable opportunity to state their views. They might wish to state
them in writing or they might wish to state
them orally. The local
authority cannot be forced or compelled to advance any views but it
would be unreasonable if the Governor
in Council could be prevented
from making a decision because a local authority had no views or did
not wish to express or declined
to express any views. The requirement
of consultation is never to be treated perfunctorily or as a mere
formality. The local authority
must know what is proposed: they must
be given a reasonably ample and sufficient opportunity to express
their views or to point
to problems of difficulties: they must be
free to say what they think.'
Fletcher
and Others v Minister of Town and Country Planning
[1947] 2 All ER
496
at 500B:
'The
word "consultation" is one that is in general use and that
is well understood. No useful purpose would, in my view,
be served by
formulating words of definition.
Nor
would it be appropriate to seek to lay down the manner in which
consultation must take place. The Act does not prescribe any

particular form of consultation. If a complaint is made of failure to
consult, it will be for the Court to examine the facts and

circumstances of the particular case and to decide whether
consultation was, in fact, held. Consultation may often be a somewhat

continuous process and the happenings at one meeting may form the
background of a later one.'
Finally
I should also refer to the matter of
Sinfield
and Others v London Transport Executive
[1970]
2 All ER 264
(CA) at 269 where the learned Judge stated the
principles in the following terms:
'It
is apposite first to mention that counsel for the Executive
emphasised not once but several times that whatever be the true

construction of s 23(3) and whatever order this make, it was in the
end the executive and no one else who would make the decision.
If
that was intended to intimate that the executive merely looked on
consultations as being an opportunity for those consulted
to make
ineffective representations, it would represent an approach that, to
put it mildly, cannot be supported. Consultations
can be of very real
value in enabling points of view to be put forward which can be met
by modifications of a scheme and sometimes
even by its withdrawal. I
start accordingly from the viewpoint that any right to be consulted
is something that is indeed valuable
and should be implemented by
giving those who have the right an opportunity to be heard at the
formative stage of proposals -before
the mind of the executive
becomes unduly fixed."
[20]
Regarding the need to place evidence regarding the consultations
before the court see also
S
v Smit
2008
(1) SA 135
(T) at 147H—153J;
Hayes
v Minister of Housing, Planning & Administration, Western Cape
1999
(4) SA 1229
(C) at 1240B—1243B and
McDonald
v Minister of Minerals and Energy
2007
(5) SA 642
(C) at [18].
[21]
In the light of the overwhelming authority and the timeous and clear
attack of the applicants regarding the lack of evidence
regarding
consultations one would have expected the respondents to duly meet
this point in full. The answering affidavit deposed
to by Dr. Chetty
consists of 360 pages with 54 pages of annexures. As the court have
already stated, except for the bland allegation
by her in the
answering affidavit to the effect that consultations took place she
imparted no further information regarding the
alleged consultations.
After the clear attack of the applicants in their replying affidavit
and in their heads of argument on her
locus
standi
and on her failure to provide information and particulars regarding
the alleged consultations she clearly had ample time, and was
invited
to do so by the applicants, to prepare and depose to a proper
supplementary affidavit wherein all the facts regarding the
alleged
consultations were set out in and to put it before the court. As
already stated her further answering affidavit, which
was put before
the court at the hearing of the consolidated matters, amounted to
only two and a half pages and that of the erstwhile
Director-General.
Mseleku, to only one and a half pages of text. It must have been
clear to them, when they deposed to these two
affidavits, that they
were called upon to properly meet the attack of the applicants
regarding the alleged consultations, yet they
elected to repeat the
mere bland allegations that consultations did take place, without
imparting the required information regarding
the consultations. If
they could not lay their hands on any documents then surely they must
have resorted to verifying affidavits
of at least some of the members
of the National Health Council who attended the consultations, and
must still have documents relating
to the consultations at their
local bases. Yet this was apparently not even attempted by the
respondents.
[22]
The mere
ipse
dixit
of Chetty
7
and Mseleku. in circumstances such as these, is insufficient to
satisfy the evidentiary burden resting on the respondents to show

compliance with the mandatory provisions of section 90(1) of the NHA
requiring consultation between the Minister and the National
Health
Council prior to the promulgation of the Regulations. The mere
ipse
dixit
of a repository of power can never be satisfactory as the standard of
review for reasonableness is part of our law.
[23]
Jafta AJ in
Walele
v City of Cape Town
[2008] ZACC 11
;
2008
(6) SA 129
(CC), which case deals with a subjective jurisdictional
fact, at [60] to [61], said the following:
"Nor
does the mere statement by the City to the effect that the
decision-maker was satisfied suffice. In the past, when
reasonableness
was not taken as a self-standing ground for review,
the City's
ipse
dixit
could
have been adequate. But that is no longer the position in our law.
More is now required if the decision-maker's opinion is
challenged on
the basis that the subjective precondition did not exist. The
decision-maker must now show that the subjective opinion
it relied on
for exercising power was based on reasonable grounds. In this case,
it cannot be said that the information, which
the City admitted had
been placed before the decision-maker, constituted reasonable grounds
for the latter to be satisfied.
[24]
The determination of whether the decision-maker in the
Walele
case
was satisfied that the disqualifying factors would not be triggered
by the erection of the block of flats concerned entailed
a factual
enquiry. The fact that the Building Control Officer had considered
those factors was irrelevant to the enquiry unless
it was established
that this fact was communicated to the decision-maker. There was no
evidence in the record showing that such
communication took place.
Consequently the court in that matter found that it was not correct
for the City to assert that, since
the relevant factors were
considered by the Building Control Officer, it must be accepted that
the decision-maker had also considered
them. The position would, all
the more so, be the same in relation to objective jurisdictional
facts.
[25]
The reliance of the Minister and Director-General on an argument
regarding the test set out in the well-known case of
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd.
1984
(3) SA 620
(AD) and in
Fakie
v CCTI Systems (Pty) Ltd
[2006] ZASCA 52
;
2006
(4) SA 326
(SGA), must be considered. The SCA cautioned that while
courts have tended to adopt a robust approach to finding whether
bona
fide
disputes of fact exist, a respondent's version can only be rejected
if it is fictitious or so far-fetched and clearly untenable
that it
can confidently be said to be unworthy of credence. Cameron JA stated
at page 348 [56]:
"Practice
in this regard has become considerably more robust, and rightly so.
If it were otherwise, most of the busy motion
courts in the country
might cease functioning. But the limits remain, and however robust a
court may be inclined to be, a respondent's
version can be rejected
in motion proceedings only if it is 'fictitious' or so far-fetched
and clearly untenable that it can confidently
be said, on the papers
alone, that it is demonstrably and clearly unworthy of credence."
On
the facts before this court the defence by the respondents based on
the
Plascon
case
must fail.
[26]
Counsel of the Minister and the Director-General argued that in any
event, section 90(1) of the NHA simply requires the Minister
to
consult with the National Health Council and it neither proscribes a
procedure that must be followed nor formalities that must
be complied
with to give effect thereto. They argued that the position was in
fact on all fours with the case of
R
v Ntlemeza
1955(3)
SA 212 (A) at 218D - E, (a case where it had to be decided if an area
was to be declared a "betterment" area for
the residents)
(on which the court in the
Magoma
case
relied upon), wherein Van den Heever J stated:
"These
considerations lead inevitably to the conclusion that, even if the
direction to consult is a categorical imperative,
the section
contains no imperative direction as to how consultation should be
had; that the manner in which the Natives should
be consulted was
largely left to the discretion of the Minister. I do not see how the
efficacy of any method not manifestly unreasonable
adopted by him in
good faith can be questioned".
The
Ntlemeza
case
is clearly distinguishable from the facts before this court and does
not assist the respondents.
[27]
In meeting the attack of the applicants that there was insufficient
evidence before the court to demonstrate the reasonableness
of the
Minister's conduct in relation to the requisite consultations, the
Minister and the Director-General responded by arguing
that it has
never been the applicants' case that the process of consultation
undertaken by the Minister was unreasonable. Such
a case made out in
the founding papers, so went the respondents' argument, may have
invited a different response which delved more
deeply into the nature
and extent of the consultations held. It was already pointed out in
this judgment that it was the case of
the Minister and the
Director-General that no documentary proof existed that the
consultations took place. How they would have
adopted
"a
different response which delved more deeply into the nature and
extent of the consultations held"
this
court fails to understand as the respondents already had a prolonged
period of time, after the replying affidavit and the applicants'

heads of argument were filed and the hearing of the matter took
place, in which to
"delve
more deeply"
into
the matter and come up with a supplementary affidavit wherein they
could have detailed the nature and extent of the consultations
held.
All they did produce, in the end, was the two and a half pages
affidavit of Dr. Chetty wherein she repeated her previous
ipse
dixit
and the affidavit of the then Director-General Mseleku, consisting of
one and a half pages of text wherein he merely stated that
the
consultations were held. This court rejects this reasoning by the
respondents regarding them
"delving
more deeply.".
[28]
Under the circumstances this court is compelled to find that there is
no acceptable evidence before the court upon which the
court can
find, as a fact, that the Minister consulted with the National Health
Council prior to and in respect of the promulgation
of the
Regulations and rejects the bald statements of Dr. Chetty and Mseleku
in this regard and the attack on the validity of the
Regulations
regarding the lack of prior consultations must therefore succeed.
[29]
Furthermore, the Regulations were attacked on other valid grounds by
the applicants too.
[30]
It is apparent, from the stated terms of Government Notice R681 of 23
July 2007. that the Minister relied, in promulgating
the Regulations
upon the provisions of sections 90(1 )(u) and (v) of the NHA.
[31]
Any regulations promulgated pursuant to the provisions of section 90
of the NHA constituted delegated legislation in the sense
that
parliament entrusted to the Minister the task of making law.
[32]
It must now be considered whether the promulgation on the 23rd July
2007 under GN R681 of the Regulations constituted administrative

action.
[33]
In the Government Notice it is recorded that
"The
Minister of Health has, in terms of section 90(l)(u) and (v) of the
National Health Act, 2003 (Act No 61 of 2003), made
the regulations
in the Schedule."
[34]
It is not stated in the Government Notice, the Regulations, or in any
document pertaining to the legislative history of the
Regulations,
that the promulgation of the Regulations was preceded by consultation
between the then Minister and the National Health
Council.
[35]
The majority decision of the Constitutional Court in the
New
Clicks
case
found that the making of regulations constituted administrative
action which was susceptible to review under PAJA. This included
a
review on the grounds of unreasonableness.
[36]
The court will now consider the intention and purpose of the
legislation and Regulations -including the legislative background
to
the introduction of the Regulations and the proposed amendments - for
purposes of interpreting the Regulations
(New
Clicks
case
at [199 to 203]. That is, the court will accept the legislative
purpose as a guide for purposes of understanding how the Regulations

are to be understood and applied and for purposes of deciding whether
or not the Regulations are reasonable or not.
[37]
In considering a review on the grounds of reasonableness, the context
of the regulations and the subject matter thereof will
be paramount
(the
New
Clicks
case
at [345]).
[38]
In
Merafong
Demarcation Forum v President of Republic of South Africa
[2008] ZACC 10
;
2008
(5) SA 171
(CC) at
[62]
to [66] the Constitutional Court accepted
that the promulgation of new legislation was subject to challenge for
rationality (See
also at [72] and at [165] to [175]). This case dealt
with the promulgation of legislation aimed at the amendment of the
Constitution
and not to subordinate legislation. The principle of
rationality would, however, by extension, apply also to the
promulgation of
regulations. On this basis, the challenge to the
regulations on the grounds of rationality would not be confined to
PAJA but finds
its force in the provisions of section 1 of the
Constitution. In this regard,
'objectively
viewed, a link is required between the means adopted by the
legislature and the end sought to be achieved'
(at
[62]). At [114] this test was described as follows:
"What
is required, insofar as rationality may be relevant here, is a link
between the means adopted by the legislature and
the legitimate
governmental end sought to be achieved."
[39]
Even if the promulgation of the regulations was not susceptible to
review under PAJA or section 1 of the Constitution for rationality,

those regulations must nonetheless meet the
requirements
of legality:
"The
Commission's decision may, however, be set aside on the principle of
legality even if it is not reviewable under PAJA
[Eskom Holdings Ltd
and Another v New Reclamation Group (Pty) Ltd
2009 (4) SA 628
(SCA)
para 9; Minister of Health and Another NO v New Clicks South Africa
(Pty) Ltd and Others (Treatment Action Campaign and Another
as Amici
Curiae)
2006 (2) SA 311
(CC) para 97; Fedsure Life Assurance Ltd and
Others v Greater Johannesburg Transitional Metropolitan Council and
Others
[1998] ZACC 17
;
1999 (1) SA 374
(CC) paras 56-9; President of the Republic of
South Africa and Others v South African Rugby Football Union and
Others
2000 (1) SA 1
(CC) para 148.]. The principle of legality
entails that no public power may be exercised and no function
performed beyond that
conferred by law [Masetlha v President of the
Republic of South Africa and Another
[2007] ZACC 20
;
2008 (1) SA 566
(CC) para 80.].'
(Per
Malan JA in
The
Competition Commission of South Africa v Telkom SA Ltd
(623/2008)
[2009] ZASCA 155
at
[12]
, This finding of the Supreme Court of Appeal
in relation to review for legality is. in turn, based upon the
decisions of the Constitutional
Court in
New
Clicks
at
[97],
Fedsure
Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan
Council
[1998] ZACC 17
;
1999
(1) SA 374
(CC) at
[56]
—[59],
President
of the Republic of South Africa v SARFU
2000
(1) SA 1
(CC) at [148] and
Masetlha
v President of the Republic of South Africa
[2007] ZACC 20
;
2008
(1) SA 566
(CC) at
[80]
; and the Supreme Court of Appeal in
Eskom
Holdings Ltd v New Reclamation Group (Pty) Ltd
2009
(4) SA 928
(SCA) at [9].
[40]
In all of the circumstances it is clear that the promulgation of the
Regulations by the then Minister constituted administrative
action on
her part.
[41]
That the Minister conflated subsections (u) and (v) of section 90 of
the NHA, is apparent from the provisions of regulation
2(1), which
provides that
'The
Director-General shall, annually by notice in the Gazette, require
from any stakeholder contemplated in section 90(1 )(v) of
the Act,
the submission of certain information:
(a)
relating to health financing, the pricing of health services,
business practices within or involving health establishments,
health
agencies, health workers or health care providers; and
(b)
as is necessary for the development and publication of the reference
price list/
[42]
It is immediately apparent from a reading of this regulation that the
information called for in regulation 2(1 )(a) derived
from subsection
90(1 )(u) of the NHA, but was not information that falls within the
scope of subsection 90(1 )(v) of the NHA. Put
simply, compiling a
reference price list under subsection (v) on the strength of the
information contemplated in (u) is an impermissible
conflation of the
two subsections.
[43]
Sub-sections (u) and (v) of section 90(1) of the NH Act also contain
within them qualifications as to:
a)
the type of regulations which may be made by the Minister;
b)
the nature and extent of the Minister's powers as well as the
obligations resting on the Minister when making regulations; and
the
purpose/s which the regulations under (u) and (v) are intended to
serve.
[44]
The only provisions in the NHA that are concerned with a reference
price list are to be found in sub-section 90(1 )(v) of
the NHA and
that the same could not be said insofar as concerns the obtaining of
information via regulations.
[45]
It is clear that sections 12 to 14 of the NHA are concerned with the
provision of and access to information and records pertaining
to
health sendees and that section 12 of the NHA imposes an obligation
on the national and provincial departments of health to
disseminate
information concerning health care. The section reads as follows:
"The
national department and every provincial department, district health
council and municipality must ensure that appropriate,
adequate and
comprehensive information is disseminated on the health services for
which they are responsible
..
[46]
Sections 74, 75 and 76 of the NHA also make provision for the
publication and the provision of access to information relating
to
health care. Subsections 74(1) and (2), in particular, bear quoting:
"(1)
The national department must facilitate and co-ordinate the
establishment, implementation and maintenance by provincial

departments, district health councils, municipalities and the private
health sector of health information systems at national,
provincial
and local levels in order to create a national health system.
(2)
The Minister may, for the purpose of creating, maintaining or
adapting databases within the national health information system

contemplated in subsection (1), prescribe categories or kinds of data
for submission and collection and the manner and format in
which and
by whom the data must be compiled or collated and must be submitted
to the national department."
[47]
It is clear that the provisions of subsection 90( 1 )(u) and (v) of
NHA are designed and are intended to achieve different
and discrete
purposes under the NHA. That this is so derives from a reading of the
subsections on their own, as well as within
the context of the NHA as
a whole:
a)
The purpose of section 90(1 )(u) is to obtain information and
thereafter to publish that information or various parts of it as
may
be in the public interest and in order so as to improve access to and
the efficient utilisation of health services in the Republic
of South
Africa. The process under (u) is confined to gathering and thereafter
publishing information, absent any process of determination.
b)
Subsection 90(1 )(v). in contradistinction, is intended to provide
for the compilation of reference price lists, the dual purposes
of
which are stipulated in subsections 90(1 )(v)(i) and (ii). These
purposes differ markedly from the purposes of subsection 90(l)(u)
and
involve something more than the mere gathering of information and the
subsequent publication thereof. Under (v), the Director-General
is
required to exercise a discretionary role in "determining"'
one or more reference price lists.
c)
It is apparent from a plain reading of the words used in subsection
(u) as compared with (v) that the nature and extent of the

information that can be relied upon by the Director-General in
determining a reference price list differs from that information

which the Director-General is otherwise entitled to assimilate and
publish under subsection (u). Not the least of these differences
is
the exclusion from (v) of
"health
financing"
and
"business
practices within or involving health estab care providers".
d)
Subsection (v) requires the Director-General to determine one or more
reference
lishments,
health agencies, health workers and health
price
lists on the strength of
"services
rendered, procedures performed and consumable and disposable items
utilised".
In
this regard, the reference price lists to be determined by the
Director-General are intended, by the subsection, to be a reflection

of actual prices for services rendered, procedures performed, and
items utilised. This is consistent with the meaning of the word
"reference
1
*
used
in context.
[48]
When regard is had to the provisions of the NHA. the following
principles emerge:
a)
It is only in terms of subsection 90(1 )(v) of the NHA that the
Minister is afforded the power to prescribe the processes to
be
followed by the Director-General in determining a reference price
list.
b)
The Minister is not empowered to prescribe under section 90(1 )(u)
how the Director-General is to determine and publish an NHRPL.
c)
The purpose of a reference price list publishable under section 90(1
)(v) is confined to those purposes set out in subsections
(i) and
(ii).
d)
A reference price list is intended to reflect the actual prices
charged for services actually rendered, procedures actually performed

and consumable and disposable items actually utilised.
[49]
It was already detailed
supra
how subsection 90(1 )(u) is intended to serve a different purpose
from and is distinct from the aims of subsection 90(1 )(v).
[50]
Reliance on the one subsection for purposes of informing the
reference price list published under the other subsection is
ultra
vires
the powers of the Minister as they were delegated by the legislature.
[51]
In the answering affidavit of the Minister and the Director-General,
(it is apparent that the answering affidavit deposed to
by Chetty,
despite what is said therein, is not also filed on behalf of the
Minister of Justice, who has been cited as second respondent
in the
SAPPF matter and who filed his own answering affidavit which is at
odds with the answering affidavit of the Director-General
and the
Minister of Health), a number of allegations were made regarding the
purpose of a reference price list in the context of
the South African
health care industry. The stated purpose, on the part of the
respondents, of an NHRPL. is as is encapsulated
by the following
paragraph of the answering affidavit:
"71.
It is evident from the above that it is imperative that the
healthcare industry be regulated in the public interest. This
is the
case in all countries. The healthcare industry, itself, accepts that
there is a compelling need for it to be regulated.
The government is
obliged in terms of section
27
of
the Constitution to take measures to ensure that healthcare is
accessible to all. The publication of the RPL is one such measure."
[52]
These purposes are attributable to the then Minister of Heath in her
promulgation of the Regulations and discloses the reason
for the
Minister having promulgated the regulations.
[53]
On a plain reading of the NHA, these quoted purposes or reasons for
the promulgations of the regulations were contrary to the
provisions
of section 90(1 )(v) of the NHA.
[54]
Our law is abundantly clear to the effect that powers granted to the
Minister for one purpose cannot be used for a different
purpose,
however laudable.(See
Van
Eck NO and Van Rensburg NO v Etna Stores
1947
(2) SA 984
(A)). It is trite law that any statutory function could
only be validly performed within the limits prescribed by the statute
itself
Where administrative action was taken substantially for an
ulterior purpose that administrative action was thereby rendered
invalid.(See
Administrator,
Cape v Associated Buildings Ltd.
1957
(2) SA 317
(A) at 325D and sections 6(2)(e)(i), (ii), (f)(i),
(ii)(aa) and (bb) of PAJA.)
[55]
Ulterior purpose does not necessarily bear a sinister meaning. It can
simply mean the use of a discretionary power for a purpose
not
expressly or impliedly authorised by the empowering statutory
enactment.(See
Goldberg
v Minister of Prisons
1979
(1) SA 14
(A) at 48E.)
[56]
In meeting this attack on the Regulations counsel of the Minister and
Director-General argued:
a)
that it was proper and valid for the Minister to issue the
Regulations in terms of both subsections, and that, in any case,
reference to subsection (u) in the Regulations is superfluous and did
not of itself rendered the Regulations invalid. At worst,
so it was
argued, the Regulations simply failed to provide for processes and
procedures contemplated in subsection (u) and this,
however, did not
mean that the information referred to in subsection (u) may not be
obtained for purposes other than what is set
out in the subsection.
This is so, so went the argument, because subsection (v) granted the
Minister wide powers in regard to the
determination of a reference
price list and the subsection empowers the Minister to
"make
regulations regarding the processes of determination and publication
by the Director-General of one or more reference
price lists for
services rendered".
b)
The process contemplated in sub-section (v) included the obtainment
of information from medical aid schemes, health establishments,

health care providers and/or health workers in the private sector.
This was clear from the reading of the subsection which provided
that
a reference price list was:
"for
services rendered, procedures performed and consumable and disposable
items utilised by categories of health establishments,
health care
providers or health workers in the private health sector."
This
information was obtainable only from the health establishments,
health care providers or health workers that rendered the services,

performed the procedures and/or utilised the consumables and
disposable items.
c)
The NHA did not prescribe the process of determination of the RPL.
Neither did it prohibit the Minister from including in such
process
the obtainment of information as he/she, deemed necessary for the
development and publication of the RPL. The power to
determine the
process, therefore, was left entirely to the discretion of the
Minister. This process was what is reflected in Regulation
2.
d)
Following thereon. Regulation 3 proceeded to identify in more detail
the nature of the information contemplated in Regulation
2.
e)
HASA and the ER24 challenged the validity of Regulations 2 and 3 on
the basis that:
(i)
the information required in terms of Regulation 2 derived from
subsection 90(1 )(u). and was not information falling within
the
scope of subsection 90(1
Xv);
and
(ii)
the Minister was not empowered to delegate her functions set out in
subsections 90(1 )(u) and (v).
f)
That a clear line should not have been drawn between sub-sections
90(1 )(u) and (v). However, in the event that the court was
to hold
that the Regulations did not serve the purpose set out in subsection
90(1 )(u) of the NHA, counsel submitted that the Regulations
were not
invalid for that reason alone. At best, whereas the Regulations
purported to set out process and procedures contemplated
in
subsection 90(1 )(u) on the one hand and process of determination of
the RPL in terms of subsection 90(1 )(v) on the other,
the
Regulations were really based on section 90(1 )(v).
g)
Setting the Regulations aside would thus have no bearing on the
processes envisaged in sub-section 90(1 )(u) as, according to
this
contention, they were not based on this sub-section; it would however
adversely affect the determination of the RPL in circumstances
where
the Regulations relating to the processes envisaged in sub-section
90(l)(v) have been properly promulgated. Such an approach
would not
be warranted.
h)
In the event the court was to hold that the Regulations were invalid
due to the fact that though they purport to include processes

contemplated in sub-section 90(1 )(u) in effect they do not, counsel
submitted that an appropriate order would be to uphold the
invalidity
only to the extent they purport to regulate matters listed in
sub-section (u) when they should not have done so. Such
an order
would not invalidate the Regulations for purposes of sub-section (v)
of the Act.
i)
To the extent that reference to section 9l(l)(u) was invalid, counsel
submitted that the remedy proposed by Jafta J in
Kruger
v
President
of South Africa
[2008] ZACC 17
;
2009
(1) SA 417
(CC), where the Constitutional Court considered the
validity of Proclamations, is appropriate.
j)
The purpose of section 90(1 )(u) could not be realised through the
Regulations as they currently stand. This is because the Regulations

were solely geared towards the processes of determination of a
reference price list. In fact the Regulations would be inapplicable

to the processes contemplated in section 90(1 )(u) and that the
process of severing should be employed so as to retain the
Regulations
in their entirety. This would be effected by severing the
words "(u) and " from the preamble of the Regulations.
[57]
The submissions by the counsel of the Minister and Director-General
cannot be sustained in the light of the valid grounds stated
by the
applicants and the general failure of the Regulations and the lack of
consultations by the Minister with the National Health
Council.
[58]
The Regulations are clearly invalid on the said ground too.
[59]
The applicants, furthermore, maintained that to the extent that the
court may find that the Regulations were lawfully promulgated,
there
were nonetheless provisions contained in the Regulations that were
unlawful and fall to be struck down. These included provisions
that
were
ultra
vires
the
enabling legislation and provisions which were vague and irrational
and it was clear that even if the Regulations as a whole
survived
scrutiny, these individual provisions could not.
[60]
Furthermore, the regulations were subject to review under the
provisions of PAJA as well as review for rationality and
reasonableness
under the Constitution. In addition, the exercise by
the Minister of her powers under the NHA to promulgate the
Regulations was
subject to the requirement of legality that derived
from section 1 of the Constitution.
[61]
To the extent that the Regulations contained within them provisions
that offended against the rights contained in the Constitution,
then
they would additionally be liable to be set aside to the extent of
such conflict in accordance with sections 2, 7, 8, 36(2),
and
172(l)(a) of the Constitution.
[62]
In the first place, it was apparent from section 90(1 )(u) and (v),
that the Minister was required to prescribe, under both
of those
subsections, the processes and procedures to be followed by the
Director-General in calling for information and in determining
and
publishing a reference price list respectively. The plain reading of
these subsections was unambiguous to this extent: it is
the Minister
in whom the power vested to determine the processes and procedures to
be followed and, in so determining, she was
required to establish the
limits of the Director-General's powers and duties.
[63]
In regulation 3(2)(a), the Minister stipulated that information
submitted must
'be
in
accordance
with the pricing methodology contemplated in regulation 4(2)(a)',
and
regulation
4 in turn provided as follows:
(1)
The submission of information referred to in regulation 3 must be in
accordance with the guidelines as determined by the Director-General

in the notice contemplated in regulation 2.
(2)
The guidelines referred to in subregulation (1) shall include, but
not limited to:
(a)
pricing methodology', for determination of reference prices for
items;
(b)
procedures for addition, deletion or change of items; and
(c)
calculation of responsibility values. Responsibility value means the
increased responsibility for providing a service relative
to a
standard service for providers and is calculated by taking into
account experience and knowledge, judgment and mental effort,
skill
and physical effort as well as risk and stress to the patient."
[64]
It must be noted that regulation 2 obliged the Director-General,
annually, by notice in the Gazette, to require from any "stakeholder"

the submission of certain information.
[65]
An instance of the methodology determined by the Director-General,
which was detailed and far-reaching in both its scope and
content, is
to be found at file 1, pages 182—215 of the record. This draft
methodology was changed from time to time by the
Director-General in
and at the time of the publication of the notice contemplated in
regulation 2.
[66]
It is apparent from sub-regulation 4(2) read with 3(2)(a) that the
Minister left to the Director-General the determination
of how a
reference price list was to be compiled insofar as it concerned the
guidelines that were to be followed by anyone submitting
information.
a)
It was the Director-General that determined the scope and content of
those guidelines and thereby the manner in which a reference
price
list would be determined.
b)
This is particularly so insofar as concerns regulation 4(2)(a) being
the methodology for the determination of reference prices
for items
to be included on the NHRPL and the procedures for the addition,
deletion or change of items as referred to in regulation
4(2)(b).
c)
As far as concerns regulation 4(2)(c), the applicants made the point
that there was nothing in either subsection 90(1 )(u) or
(v) of the
NHA that afforded the Minister the power to allow the
Director-General to determine what price
should
be charged with reference to any of the factors contemplated in
regulation 4(2)(c) or at all. This regulation - and the power it

afforded the Director-General - was therefore
ultra
vires
the NHA.
[67]
In promulgating the Regulations in this manner the Minister failed to
prescribe the processes or procedures to be followed
by the
Director-General and has instead afforded to the Director-General the
discretion to himself determine how he will call for
information,
what information he will call for, and how this information will be
relied upon for the compilation of a reference
price list.
[68]
In so doing, the Minister has impermissibly delegated to the
Director-General the powers afforded the Minister under subsections

90(1 )(u) and (v) of the NHA. In so doing, the Minister offended
against the principle that a person to whom the power to make

legislation was delegated may not delegate those powers further - a
principle expressed in the maxim
delegatus
delegare non potest
and which finds expression in the provisions of section 6(2)(a)(ii),
(f)(1)
and
(i) of PAJA. The proscription on further delegation is also a
function of the principle of legality and constitutional sovereignty,

including the legislative authority of parliament.
[69]
In this regard, the maxim
delegatus
delegare non potest
"is
based upon the assumption that, where the Legislature has delegated
powers and functions to a subordinate authority, it
intended that
authority itself to exercise those powers and to perform those
functions, and not to delegate them to someone else,
and that the
power delegated does not therefore include the power to delegate. It
is not every delegation of delegated powers that
is hit by the maxim,
but only such delegations as are not, either expressly or by
necessary implication, authorised by the delegated
powers."
(Per
Botha JA in
Attorney-General,
OFS v Cyril Anderson Investments (Pty) Ltd.
1965
(4) SA 628
(A) at 639C - D. See also
Aluchem
(Pty) Ltd. v Minister of Mineral and Energy Affairs
1985
(3) SA 626
(T) at 631F - G;
SA
Freight Consolidators (Pty) Ltd v Chairman, National Transport
Commission
1987
(4) SA 155
(W) at 164B - C;
SA
Airways Pilots Association v Minister of Transport Affairs
1988
(1) SA 362
(W) at 371C - D;
Veldsman
v Overberg Regional Services Council; Martin v Overberg Regional
Services Council
1991
(2) SA 651
(C) at 656E - F;
Chairman,
Board on Tariffs and Trade v Teltron
(Pty)
Ltd
1997 (2) SA 25
(A) at 34E;
Government
of the Province of the Eastern Cape v Frontier
Safaris
(Pty) Ltd
1998 (2) SA 19
(SCA) at 32B - D;
Spier
Properties (Pty) Ltd and Another v Chairman, Wine and Spirit Board
1999
(3) SA 832
(C) at 846D – E.)
[70]
The Legislature could not have intended that the Minister would be
entitled to delegate to the Director-General her powers
under the NHA
inasmuch as the relevant subsections provided that the Minister was
to prescribe to the Director-General how those
functions were to be
performed. It could never have been intended that the Minister could
delegate to the Director-General the
power to prescribe to himself
how he is to perform his functions.
"Such
an incompetent subdelegation may occur where the repository of the
legislative
power, the
delegatus,
in
the purported exercise of that power (say, by regulation) confers
upon another an unlimited discretion to deal with the matter
which is
the subject of the regulation. In such a case the effect of the
regulation is to make such other person, and not the
delegatus,
the
legislator on the matter with which the regulation seeks to deal. It
amounts to an abdication by the
delegatus
of
his power to legislate. This, in general, the delegatus cannot do,
unless authorised thereto by the empowering statute. (See
generally
Natal Organic Industries (Pty) Ltd v Union Government
1935 NPD 701
at
714 - 15;
Arenstein
v Durban Corporation
1952
(1) SA 279
(A) at 297A - 298F;
United
Democratic Front
v
Staatspresident
en Andere (supra
at
652H - 1, 654F - H);
Staatspresident
en Andere v United Democratic Front en 'n Ander (supra
at
861H - 863C).)'
(Per
Corbett CJ in
Catholic
Bishops Publishing Co v State President
1990
(1) SA 849
(A) at 863H—864B.)
[71]
This delegation of powers to the Director-General - as reflected in
regulations 2(1), 3(2)(a) and 4 read together - was impermissible.
In
the absence of the guidelines or methodology, the Regulations became
unworkable.
a)
This is a further indication why the delegation of the power to the
Director-General was an impermissible sub-delegation in that
the
guidelines and methodology lie at the very heart of the process of
determining a reference price list.
b)
In the absence of this power of sub-delegation, the Regulations could
operate and must themselves be set aside. There is nothing
else in
the Regulations that describe how the guidelines were to operate,
what is to be contained in them, or what their purpose
was - these
are matters left entirely to the discretion of the Director-General.
(See
Staatspresident
v United Democratic Front
1988
(4) SA 830
(A) at 83 6D - F;
Catholic
Bishops Publishing Co v State President
1990
(1)SA 849 (A)at865B.)
[72]
The problem posed by the Minister having abdicated to the
Director-General the responsibility for determining the process of

determining a reference price list has had very real ramifications
for the applicants.
a)
The Director-General did not, in the guidelines, put forward a
methodology that was suited to the health services provided by
the
applicants.
b)
The Director-General instead invited alternative methodologies to be
submitted in respect of, inter alia, private hospitals and
emergency
medical services.
c)
As is set out hereunder, the Director-General therefore not only
recognised that the guidelines and methodology published by
him were
ill-suited to their assigned task in relation to private hospitals
and emergency medical services, but thereafter failed
to deal
properly with alternative and more suitable guidelines proposed to
him by HASA, Netcare 911 and ER24.
d)
Suffice to state for present purposes, that the impermissible
delegation by the Minister to the Director-General resulted
in real
prejudice to the applicants.
[73]
In addition the 2008 and the 2009 guidelines published by the
Director-General also fall to be reviewed and set aside on the
basis
that the Director-General was not authorised by the NHA to publish
those guidelines. The guidelines therefore offend against
the
principle of legality and constitutionality reflected in section 1 of
the Constitution and also fall to be reviewed and set
aside under the
provisions of sections 6(2)(a)(i) and (ii), (f)(i), and (i) of PAJA.
[74]
The provisions of regulation 2 must now be considered. It required
the submission of information from "any stakeholder
contemplated
in section 90(l)(v) of the Act".
[75]
Section 90(1 )(v) does not define or identify any "stakeholders'
1
and indeed the use of such an inappropriate word is regrettable.
Indeed, there is no reference to the term at all in the subsection,

as compared with section 90(1 )(u), which refers expressly to the
Director-General obtaining the "prescribed information from

stakeholders" albeit without defining who those "stakeholders"
are.
[76]
There is no indication in the regulations who the "stakeholders"
are and neither did any clarity emerge in this regard
from the NHA.
In particular, it is not apparent from the wording of section 90(1
)(v) which - of the persons referred to —
could be a
"stakeholder" and hence be required to submit information
when called upon to do so by the Director-General.
[77]
A further difficulty arose in relation to the ordinary meaning of the
word "stakeholder", which is defined in our
case law in
accordance with its ordinary grammatical meaning: to wit, "an
independent party with whom each of those who make
a wager deposits
the money etc. wagered" (Shorter Oxford English. Dictionary).
[78]
The term "stakeholder" is vague and irrational when regard
is had to the terms of section 90(1 )(v) of the NHA and,
more
particularly, the absence of any definition of who "stakeholders"
may be. This vagueness renders the regulations
invalid. In
Affordable
Medicines Trust v Minister of Health
[2005] ZACC 3
;
2006
(3) SA 247
(CC) in para [108] Ngcobo J, with reference to the
relevant authorities, said the following:
"The
doctrine of vagueness is founded on the rule of law, which, as
pointed out earlier, is a foundational value of our constitutional

democracy. It requires that laws must be written in a clear and
accessible manner. What is required is reasonable certainty and
not
perfect lucidity. The doctrine of vagueness does not require absolute
certainty of laws. The law must indicate with reasonable
certainty to
those who are bound by it what is required of them so that they may
regulate their conduct accordingly.'
[79]
It is not possible, from the Regulations, to determine who is
affected by them or how they are required to respond thereto.
[80]
The vagueness associated with the term "stakeholders" is
exacerbated rather than clarified by the remaining provisions
of the
Regulations and the manner in which the Regulations have been
applied.
[81]
Regulation 3(2)(d) stipulates as a mandatory qualification to the
submission of information that the information
must
"provide for representative samples and how the sample sizes
used have been calculated". The term "representative

sample" is in turn defined in the Regulations as meaning
"a
sample of health establishments, health agencies, health care
providers or health workers that will result in a statistically

significant result at the 95% confidence limit."
[82]
On the 4th February 2008 the Director-General, acting in terms of
regulation 2 of the Regulations, issued an invitation for
the
submission of information for purposes of the determination and
publication of a reference price list for 2009 ('the 2008 invitation"

and "the 2008 guidelines'" respectively).
[83]
On the 22nd January 2009 the Director-General, again acting in terms
of regulation 2 of the Regulations, issued an invitation
for the
submission of information for purposes of the determination and
publication of a reference price list for 2010.
[84]
In both the 2008 and 2009 invitations the Director-General repeated
the phraseology used in item 2(1) of the Regulations regarding

calling for submission of information from stakeholders. The wording
of the 2008 invitation reads as follows:
"The
Director-General of the National Department of Health hereby invites
submissions from all stakeholders contemplated in
section 90(l)(v)
of
the
National Health Act, 2003
, read together with
regulation 2
of the
regulations."
The
wording of the 2009 invitation, whilst not in identical terms, is to
similar effect.
[85]
The second numbered paragraph of the 2008 invitation published by the
Director-General reads as follow:
"Who
may make submissions:
It
is preferred that submissions be made by professional associations
representing particular disciplines, or a statutory body established

to regulate the relevant profession. Where several sub disciplines
are represented by an umbrella professional association which

provides an interdisciplinary peer review process, submissions must
preferably be made through that umbrella body.'
[86]
The 2009 invitation contains an even more restricted delineation of
who may make submissions:
"2.1
RPL submissions are expected to have gone through a rigorous peer
review process prior to submission of the RPL. As a
consequence of
this and the fact that the RPL affects all providers in the relevant
disciplines, submissions will not be accepted
from individuals or
individual companies.
2.2
Submissions will therefore only be accepted if they are received from
a professional association representing the discipline
concerned, or
a statutory body established to regulate the relevant profession,
provided that there are no legal impediments to
the relevant bodies
making the submission. Where several sub disciplines are represented
by an umbrella professional association
which provides an
interdisciplinary peer review process, submissions must be made via
that umbrella body.
2.3
The submissions made in 2008 for 2009 [ie, that formed part of the
2008 process] that were accepted, but are still in the process
of
verification should not make a submission for 2010."
[87]
In the 2009 invitation the Director-General further restricted who
may be consulted by and commissioned on behalf of "stakeholders"

to submit information.
[88]
In paragraph 3 of the 2008 invitation (the 2009 invitation is to
similar effect) it is stated that
"The
stakeholder making a submission must warrant that the procedures
listed in the submission fall within the scope of practice
of the
relevant profession, as determined by the relevant statutory
council."
[89]
The difficulty in understanding who the "stakeholders" are,
is all the more perplexing when regard is had to the
2008 guidelines
(once again, there is a similar provision in the 2009 guidelines),
which provide in paragraph 1 that
"Reference
price components will be based on country wide averages, with the
result that actual price components:
i.
Will differ geographically; and
ii.
Will depend on individual practice efficiencies and practice specific
factors."
[90]
On the 18th March 2009 the Director-General published a further
document headed
"Notice
Number 4 Population sizes for Reference Price List 2010",
in
which was included certain information pertaining to the number of
practitioners and practice areas. The Director-General stipulated
in
Notice 4 that the sample size for purposes of the submission of any
information -should be not less than the total population
of
practitioners reflected on a document referred to as "FAIT' as
being active in any particular area. Insofar as it concerned
private
hospitals and ambulance services the population size necessary for
any submission would therefore have included all private
hospitals
and all ambulance services practicing in the Republic of South
Africa.
[91]
As is apparent from the Regulations and the invitations and
guidelines, the identity of the persons who may make submissions
is
restricted so as to exclude submissions from individuals or from any
association or professional council that represents less
than 95% of
the discipline in question. This process of curtailing submissions
did not serve to identify who the relevant "stakeholders"

were as identified in
section 90(1
)(v) or as described in the
Regulations.
[92]
The application of these Regulations, however, has had the effect of
excluding HASA, ER24, NETCARE and most of the applicants
in the SAPPF
matter from making acceptable submissions.
a)
Netcare 911 and ER24 are private companies providing emergency
medical and ambulance services in South Africa. These two companies

are unique in being the only private service providers in South
Africa to operate a dedicated nationwide call service. Together

Netcare 911 and ER24 account for more than 80% of all emergency
medical services and ambulance calls across the Republic of South

Africa. Neither company belongs to a representative association as
the only organisation that exists is largely ineffectual and
is not
representative of the interests of either company.
b)
In its founding affidavit HASA explained its position as a company
incorporated under the provisions of section 21 of the Companies
Act,
61 of 1973, representing the collective interests of private
hospitals in South Africa. Its members have joined HASA voluntarily

and, on the strength of its current membership, HASA is
representative of 85.7% of private hospitals in South Africa by
number
and 89.9% of private hospitals in South Africa as a percentage
of licensed hospital beds.
c)
There is no professional council or statutory body applicable to
either private hospitals or to private emergency and ambulance

services.
d)
Both HASA and Netcare 911/ER24 explained that it was not possible for
them, as privately constituted bodies, to compel any entity
or
individual to join in association with them for purposes of making
submissions under and in terms of the regulations or at all.
That
this is so is self-evident as a matter of law and a matter of fact,
as is demonstrated below.
[93]
Notwithstanding the level of HASA's and Netcare 911/ER24's
representation in their respective industries, it is apparent that

they did not meet the very unreasonable, irregular and non-sensical
requirement of representation stipulated by the Regulations
and
demanded by the Director-General.
[94]
In this regard and despite the quoted facts the Director-General
rejected the Netcare 911/ER24 submission by reason of it not
being
"sufficiently representative" of all of the industry -
despite the fact that the services provided by ER24 and
Netcare 911
were, according to the undisputed evidence before the court, unique
across the industry. The same problem afflicts
HASA's submission.
[95]
On the 19th May 2008 a consolidated submission in response to the
Director-General's notice requiring such submissions, was
timeously
submitted by SAMA (the South African Medical Association) to the DOH
in respect of the following medical disciplines:
cardiology,
cardiothoracic surgery, ENT, general practitioners, gynaecology and
obstetrics, neurosurgery, ophthalmology, orthopaedics,
paediatrics,
physicians, plastic and reconstructive surgery, psychiatry, surgery
and urology.
[96]
The purpose of the SAMA submission was to record accurately and
fairly the true costs of running medical practices and thereby
to
ensure a RPL which would, as the RPL Regulations put it, ensure "the
need for private health establishments and health
agencies to have a
return on investment" and "the need for health care
providers to earn an income" (regulation
7(2)(b) and (c)).
[97]
In addition timeous submissions were made by other associations on
the 18th April and the 19th May 2008, including by SASOP
in respect
of psychiatry; SAAA for audiology; SASLHA in respect of speech and
language therapy; the Podiatry Association for podiatry;
the
Psychological Society of South Africa ("PsySSA") in respect
of psychology; and SASP in respect of physiotherapy.
[98]
A perusal of the submissions indicated that they were prepared on the
basis of extensive research, including a comprehensive
costing study
which involved considerable person hours and significant costs to the
applicants. For example, a total of 1 296 practitioners
participated
in the costing study that was performed for purposes of the SAMA
submission, which obtained detailed financial information
relating to
the running of a professional practice.
[99]
A statement was published on the DOFFs web site on 12 September 2008
(i.e. before the publication of the Draft 2009 RPL on
3 October 2008)
("the Statement")- It indicated that:
"the
48 submissions received [by the DOH], 37 submissions did not comply
with regulation 3(2) of the Regulations relating to
the obtainment of
information and the process of determination and publication of a
reference price list. These 37 price submissions
were not
satisfactory for one or more of the following reasons;
•
non-representative
sample size
•
unacceptable
costing methodology
•
unacceptable
coding methodology".
[100]
The Statement continued: "it was therefore not possible to make
a determination about the reference price list from the
information
presented in these submissions". The Statement provided that as
a result "all 48 submissions have been increased
by 8.7% of the
2008 Reference Price Lists Schedule".
[101]
Further, the Statement indicated that the "remaining 11
submissions complied with the information requirements as outlined
in
regulation 3(2) and are currently being verified". The 11
submissions that were "being verified" were listed
as that
from cardiologists, ENT, general practitioners, obstetric and
gynaecology, ophthalmology, orthopaedics, paediatricians,
psychiatry,
acupuncture and Chinese medicine, optometry and physiotherapists.
These submissions will further herein be collectively
referred to as
"the accepted submissions"; and the remaining submissions
as "the rejected submissions".
[102]
It must be noted that the accepted submissions were in the end not
truly accepted by the DOH - since none of the proposals
or
recommendations made therein were factored into the draft or the
final 2009 RPL. Accordingly, they were accepted only in the
sense
that they were said to have complied with the requirements in
regulation 3(2) of the RPL Regulations. They otherwise appear
to have
been ignored by the Director-General in his determination of the
draft and final 2009 RPL.
[103]
The Statement thus did no more than provide a generic account of why
the bulk of the submissions were rejected and did not
furnish reasons
as to why a particular submission was rejected and was manifestly and
singularly unhelpful to the affected associations
and societies.
Thereafter numerous requests were directed to the Director-General
for an explanation for the rejection of submissions
- but no adequate
reasons were furnished in response.
[104]
After the Statement was published on the website of the DOH, a
meeting was convened between representatives of the DOH and
SAM A on
the 2nd October 2008. At this meeting the Deputy Director-General, Dr
Chetty of the DOH, indicated that the rejected submissions
had been
rejected because of inadequate sample sizes. She further indicated
that the DOH did not consider the proposals regarding
coding
structures or costing methodologies for the rejected submissions. She
also stated that the sample size, costing methodology
and coding
structure of the accepted submissions were accepted.
[105]
The RPL Regulations required that, after verification of submissions,
a draft RPL must be determined and published in the
Government
Gazette for at least four weeks for public comment (regulations 7 and
8 of the RPL Regulations). The Director-General
is then obliged to
consider the comments and publish the final RPL by the end of
September of each year. This fact was drawn to
the Director-General's
attention on numerous occasions by Healthman, on behalf of some of
the applicants and thereafter by Webber
Wentzel (the attorneys who,
at the time, also represented a number of the applicants).
[106]
Most unfortunate and without having completed, or, for that matter,
even starting the verification of any of the submissions,
the
Director-General published the Draft 2009 RPL for public comment in
GNR 31469 in the Government Gazette of 3 October 2008 ("the

Draft 2009 RPL")- The deadline for submissions was 31 October
2008. The question inevitably arises as to why the submissions
were
required if the Director-General, without even starting the
verification of the contents of any of the submissions, proceeded
to
publish, in an equally unfortunate fashion, the Draft 2009 RPL.
[107]
A number of professional associations submitted comments on the Draft
2009 RPL on 31 October 2008. They were obviously hampered
from doing
so meaningfully by virtue of the fact that no reasons were provided
for the rejection of the rejected submissions.
[108]
In terms of the RPL Regulations, the Director-General is required in
his annual determination of the RPL to publish the final
RPL by the
end of September. This did not occur in respect of the 2009 RPL which
was only published almost three months late, on
the 24th December
2008.
[109]
The 2009 RPL, like the Draft RPL before it, was published without the
verification of the accepted submissions. From the record
it is noted
that it was only during the course of September 2008 that the
Director-General indicated (in the Statement) that he
wished to
verify the accepted submissions and that this would include an audit
of the practices which participated in the costing
surveys that were
included in these submissions. It is clear that the auditing
(verification) process was inordinately slow. The
DOH only commenced
with the auditing of selected practices in January 2009 after a
period of some eight months had passed since
the submissions,
containing the costing studies, were submitted on 19 May 2008, and
some three or four months after the identifying
details of the
participating practices were disclosed to the DOH as per its request.
Thereafter on numerous occasions meetings
with doctors were set up
with unreasonably short notice and/or cancelled at the last minute,
or, in some cases, appointments were
not kept by the DOH. While the
respondents submitted in the answering affidavit that the
verification process was "now complete"
(they studiously
avoided saying precisely when this completion occurred), the fact of
the matter was that even if one assumed the
completion occurred
around the time the answering affidavit was finalised, then the
process took from early September 2008 to November
2009.
[110]
The Director-General eventually published the 2009 RPL on 24 December
2008. The official version of the 2009 RPL contained
numerous errors
which fact was conceded by the Director-General.
[Ill]
The decision by the Director-General to publish such a flawed RPL
("the RPL Decision"), so went the argument of
the
applicants, represented the culmination of a crisis situation that
existed for an unhealthy period of time in the health care
industry,
that apparently was exacerbated over the years and that will not be
resolved without this court's intervention. The apparent
unacceptable
status
quo ante
which private health care practitioners have had to endure under
sufferance was fully described in the SAPPF founding affidavit
and
need not be
repeated
here.
[112]
The Minister of Health and the Director-General, however, attacked
the
locus
standi
of some of the applicants in the SAPPF mattter, and in doing so, they
relied on the wording of the Regulations and the requests
and
directives of the Director-General, and the challenge was
inter
alia
on the following bases:
a)
SAMA was the only entity entitled to challenge the decision by the
D-G to reject its submissions. Submissions made by certain
of the
SAPPF applicants were accepted by the D-G. In these circumstances,
these applicants were constrained to challenge the manner
in which
their submissions were handled by the D-G. It had some of the
applicants as its members.
b)
The SAMA submissions were prepared by Healthman, appointed by it to
assist its two private practice committees - the Specialist
Private
Practice Committee ("SPPC") and the General Private
Practice Committee ("GPPC")- and its Private Practice
Unit
with preparing the SAMA's submission in terms of the National Health
Reference Price List (NHPRL) for 2009.
c)
The SAMA submissions did not constitute submissions by any of the
individual applicants in the SAPPF application, notwithstanding
the
fact that they may have been members of SAMA and they participated in
the compilation of the submissions.
d)
SAMA did not challenge the D-G's decision to reject its submissions.
It must therefore be deemed to have accepted the decision.
In so
doing SAMA acted for and on behalf of all its affected members.
Having authorised SAMA to act on their behalf and in their
interests
these applicants could not seek to usurp the power and authority of
SAMA and assume its submissions as their own.
e)
In seeking relief, the cause of action upon which the SAPPF
applicants relied is the alleged illegality of the decision to reject

the SAMA submissions. The rejection of these submissions would
constitute a wrong against the entity that made them, in this case

SAMA and in this regard the respondents relied on
Petersen
and Another v Amalgamated Union of Building Trade Workers of SA
1973(2)SA
140 (E) at 145B-D and
Edwards
and Another v Halliwell and Others,
(1950)
2 All. E.R. 1064 at p. 1066.
[113]
This attack on the
locus
standi
of the applicants in the SAPPF matter is not sound and the question
in any case became academic in the light of this court's finding

regarding the invalidity of the Regulations. The wrong was not done
to the company SAMA and in any case the applicants still retained

their right of recourse and also did not cede that right to SAMA.
Whether or not the challenge to the rejection of the SAPPF
submissions
was brought as a
derivative
action or not is immaterial in view of the court's ultimate decision
against the Minister of Health and the Director-General
on the merits
of the consolidated action.
[114]
At this juncture it must be recorded that the record of the
consolidated cases before the court consists of 7 007 pages and
of
the Rule 53 record another 752 pages. The answering affidavit of the
Director-General numbered 360 pages but despite that fact
the
Director-General omitted to deal in the answering affidavit with the
following material aspects of the consolidated cases raised
by the
applicants:
a)
The failure to verify prior to publication of the Draft 2009 RPL and
the final 2009.
b)
The failure to take into account the views of the Advisory Committee
of the DOH.
c)
SAPPF's second review ground: the process followed by the
Director-General was procedurally unfair.
d)
Sources of the duty to comply with procedural fairness.
e)
SAPPF's fifth review ground: the 2009 RPL set rates at an
inappropriately low level.
1)
SAPPF's
sixth review ground: the failure to amend certain item codes was
irrational or unreasonable.
g)
SAPPF's seventh review ground: irrational and unreasonable
distinctions between «
groups
of practitioners.
[115]
It is the case of the applicants that they harboured the belief and
relief that the process by which the 2009 RPL Decision
was to be
arrived at would herald the prospect of a promising change. Under the
statutory framework, there was reason for them
to believe that the
time had come for the Department of Health to follow a process of
properly procuring, considering and verifying
submissions from
"stakeholders" in order to determine a true cost-based RPL
for 2009 and onwards. For that reason the
applicants and other
service provider groupings committed significant amounts of time,
energy and money to make submissions to
the Director-General and to
comply with the elaborate regime that was put in place to determine
the RPL for 2009.
[116]
The applicants contended that unfortunately that opportunity was
squandered by the
Department
of Health and the Director-General. Instead of a 2009 RPL which
accurately and properly reflected the costs of running
of private
health care practices, the defects of the previous years were simply
perpetuated. After inordinate delays and deficient
procedural steps,
the Director-General published a 2009 RPL which effectively defaulted
to a RPL which provided an across-the-board
10.7% increase for all
health care disciplines in the private sector, with no material
variations across disciplines, and no change
to the structure of the
2008 RPL (other than in relation to the coding of audiology). In
short: the cost-based outcome that "stakeholders"
(and
ostensibly the Department of Health) had committed to by engaging in
the 2009 RPL process was not achieved, and the 2009 RPL
was not
updated to keep pace with new coding structures and refinements to
existing codes required within and by the medical profession.
Two
aspects of the non-variation of the 2008 RPL's coding structure stood
out: the failure to put in place tiered, time-based consultations;

and the coding changes proposed on behalf of,
inter
alia
.
ENT, gynaecology, podiatry, physiotherapy and urology are not
reflected at all in the 2009 RPL. This failure is strikingly
anomalous
in the light of the fact that the proposed coding changes
in respect of audiology came to be reflected in the 2009 RPL. It is
these
defects that clearly necessitated the SAPPF application.
[117]
The publication of the 2009 RPL had a profound effect on the health
care profession and the public. It was already having
a damaging
impact on private health care service providers and on health care
consumers. As the applicants pointed out. this impact
manifested
itself in two principal ways.
[118]
Firstly:
although
the 2009 RPL purported to be a non-binding guideline for the
determination of levels at which medical schemes reimburse
(and
health care providers charge) for health care services, it in many
instances effectively determined the levels at which medical
schemes
reimbursed for these services and the amount that service providers
were able to charge for these services. In other words,
the 2009 RPL
to some extent
de
facto
determined
levels of reimbursement and fees in the health care industry. The
fact that the 2009 RPL reflected rates that were unreasonably
low
meant that private health care providers would continue to struggle
to cover their costs (let alone make a reasonable return
on
investment) - a burden many of them have already carried for a number
of years.) Ultimately, there was the real risk that the
effect of the
RPL Decision would play out on patients who may face the burden of a
declining number of doctors within the country,
and who may be
confronted with general and specialist practitioners who, in an
attempt to make ends meet, would be forced to focus
on high-volume
turnover of patients at the expense of quality provision of medical
services.
[119]
Secondly:
to
the extent that the RPL was no more than what it purported to be - a
non-binding guideline - it was, at a minimum, required to
act as an
effective
guideline.
If the RPL fell short on this score, it operated to the particular
detriment of patients:
a)
At the time that a member contracted with a medical scheme, he or she
agreed to pay the scheme's premiums in return for the right
to
certain medical benefits. As the applicants demonstrated in their
founding affidavit, the RPL in many respects determined the
levels of
reimbursement for medical schemes (which was what is envisaged in the
legislation which empowered the RPL).
b)
If the RPL was set at an appropriate level, patients would know at
the time that they
contracted
with a medical scheme which adopted the RPL, that if they pay the
stipulated premiums, they would receive the medical
benefits in
respect of which they have contracted without the need to make
dramatic co-payments out of their own pockets. This
certainty not
only arose where the medical scheme was able to afford to reimburse
at the full amount of a properly-determined RPL
rate. It was also
created in circumstances in which medical schemes (or particular
benefit options) catered for lower income members
and thus chose to
reimburse at less than the properly-determined RPL rate (but still
use RPL as a reference point). In such circumstances,
the scheme
could set its benefits at an appropriate level for that scheme or
benefit option (e.g. at, say, 80% of the RPL rate).
If the RPL rates
were at an appropriate level, the member would then know, for
example, that he or she would need to pay the medical
scheme premiums
and roughly 20% of the cost of medical treatment received. In other
words, it was only through an accurate, cost-based
RPL that a scheme
member was able to predict accurately what the true cost of medical
services would be to him or her within a
given year.
c)
If, however, there was a dramatic difference between the actual
costs of providing
medical
services (together with a reasonable rate of return) and the RPL
rates, two things could happen. Either
(a)
a
medical scheme would not determine its benefits with reference to the
RPL (in which case, the RPL did not serve its purpose as
a reference
for medical scheme reimbursement); or
(b)
if
the medical scheme used the RPL rate, practitioners would be forced
to demand co-payments from patients in their attempts to
keep pace
with the financial reality of running general and specialist medical
practices. This undermined the certainty that was
meant to flow from
a statutory guideline and turned the utility of the RPL as a pricing
guideline on its head. It could not be
in the interests of the public
for medical scheme rates not to reflect the real amounts that scheme
members may ultimately have
to pay for the provision of medical
services. In fact, if the RPL was not grounded in the reality of the
cost of medical service
provision, the entire statutorily required
process for determining the RPL became a futile exercise and a
monumental waste of resources.
[120]
It was therefore incumbent upon the Director-General to produce an
effective RPL which set rates at an appropriate, reasonable
level
that was grounded in the reality of the costs
or
operating private meaical practices.
R
egrettably,
this did
not
occur ana tne zouv
k^l
ien
well short of the statutory requirement.
[121]
The Director-General failed to explain on what basis he required
submissions to be "representative" in the manner
which he
did and why he rejected submissions which were for all practical
reasons substantially representative.
[122]
The manner in which the Regulations have been formulated and the
manner in which the Director-General applied these Regulations
had
the effect, in respect of both private hospitals and emergency
medical and ambulance services, of excluding submissions from

representatives of more than 80% of each of those industries.
[123]
The corollary of this is necessarily that the remaining members of
the industry could also not be sufficiently representative
to meet
the threshold stipulated in the regulations and required
by
the
Director-General.
[124]
Thus, through the vague definition of "stakeholder", the
exclusion of submissions from anyone other than representative

associations, professional bodies or statutory councils, and the
requirement of a representative sample at the 95% threshold, the

Minister and the Director-General have excluded any submissions being
made at all in respect of either private hospitals or emergency

medical and ambulance services.
[125]
Implicit in the Regulations and the approach taken by the
Director-General is a requirement that individuals and companies
from
across South Africa must join together in sufficient numbers so as to
achieve the requisite representative sample size demanded
by the
regulations and the Director-General. This amounts to a compulsion on
people to form associations and, in the case of Netcare
911 and ER24,
against their wishes, to join the existing association SAPESA.
[126]
This is a direct and unjustifiable infringement of the right to
freedom of association contained in section 18 of the Constitution,

which necessarily carries with it the right not to associate.
"There
are a number of other provisions designed to protect the rights of
members of communities. They underline the constitutional
value of
acknowledging diversity and pluralism in our society and give a
particular texture to the broadly phrased right to freedom
of
association contained in s 18. Taken together, they affirm the right
of people to be who they are without being forced to subordinate

themselves
to
the cultural and religious norms of others, and highlight the
importance of individuals and communities being able to enjoy what

has been called the 'right to be different'. In each case, space has
been found for members of communities to depart from a general
norm.
These provisions collectively and separately acknowledge the rich
tapestry constituted by civil society, indicating in particular
that
language, culture and religion constitute a strong weave in the
overall pattern."
(Per
Sachs J in
Christian
Education SA v Minister of Education
[2000] ZACC 11
;
2000
(4) SA 757
(CC) at
[24]
. Reaffirmed in
Minister
of Home Affairs v Fourie (Doctors For Life International And Others,
Amici Curiae); Lesbian and Gay Equality Project v
Minister of Home
Affairs
[2005] ZACC 19
;
2006
(1) SA 524
(CC) at
[61]
)
[127]
In the absence of some legislative provision for enforcement, this
requirement was, in any event, impossible of being implemented
or
enforced as against all of the service providers across the private
hospital or private emergency medical and ambulance service

industries. No single entity, association or individual can compel
any other individual, association or entity to join with it,
let
alone make available information for purposes of a joint submission
of that information to the Director-General.
[128]
It is clear that these provisions are at odds with any semblance of
rationality or reasonableness. They are such that no reasonable

administrator - whether in the position of the Minister or the
Director-General - could have exercised the powers under the NHA
and
the regulations in this way. The provisions of regulation 2, read
with the definition of "representative sample",
and the
provisions of the 2008 and 2009 guidelines and invitations referred
to above, fall to be reviewed and set aside under the
provisions of
section 6(2)(h) of PAJA read with the residual power of review for
reasonableness deriving from section 1 of the
Constitution and the
principle of legality.
[129]
The requirement that administrative conduct be rational is an adjunct
of the rule of law: all exercises of public power are
required to
comply with this principle.(See
Pharmaceutical
Manufacturers of SA: In Re Ex Parte President of the Republic of
South Africa
[2000] ZACC 1
;
2000
(2) SA 674
(CC) at
[90]
;
Merafong
Demarcation Forum v President of Republic of South Africa
[2008] ZACC 10
;
2008
(10) BCLR 969
(CC) at
[62]
to [66].) If it did not, it fell short of
the standards demanded by our Constitution for such action.(See for
example: the
Pharmaceutical
Manufacturers
case
par 85-86.)
[130]
There must be some rational objective basis justifying the conduct of
the Director-General and the Minister, which basis is
not too remote
or removed from the facts before
them.(See
Carephone
(Pry) Ltd v Marcus NO
1999
(3) SA 304
(LAC);
Rustenburg
Platinum Mines Ltd (Rustenburg Section) v CCMA
2007
(1) SA 576
(SCA);
Trinity
Broadcasting (Ciskei) v Independent Communications Authority of SA
2004
(3) SA 346
(SCA).) Put differently, there should, when viewed
objectively, be a rational connection between the outcome of the
decision of
an administrative decision-maker and the material on
which it is based. (See
Derby-Lewis
v Chairman, Amnesty Committee of the Truth and Reconciliation
Commission
2001
(3) SA 1033
(C);
Bel
Porto School Governing Body v Premier, Western Cape
[2002] ZACC 2
;
2002
(3) SA 265
(CC).)
[131]
The question here is not whether the decisions and conduct of the
Minister and the Director-General were capable of being
justified,
but whether the Minister and Director-General properly exercised the
powers entrusted them. The focus is on the process
and on the way in
which they arrived at the challenged conduct.
[132]
The presence of some grounds for justification, in the midst of other
factors pointing to the fact that the decision was incorrectly

arrived at. does not save the conduct from being set aside.(See: the
Rustenburg
Platinum Mines
case.)
[133]
Where the evidence is such that the decision maker failed to apply
his/her mind to the questions before him/her. then the
decision can
validly be set aside on the basis of unreasonableness - as all
administrative action and exercises of public power
are required to
be reasonable.(See:
Bato
Star Fishing (Pry) Ltd v Minister of Environmental Affairs &
Tourism
[2004] ZACC 15
;
2004
(4) SA 490
(CC).)
[134]
Furthermore, and inasmuch the very purpose of the NHA is defeated by
precluding the submission of information on the strength
of which a
reference price list could be determined, the provisions referred to
also fall to be reviewed and set aside on the basis
that they
contravened the NHA and were not rationally connected to the purpose
thereof. Hence, the provisions of the Regulations
and the 2008 and
2009 invitations and guidelines referred to above fall to be reviewed
and set aside in terms of section
6(2)(f)(i)
and
(ii)(aa)
and
(bb) of PAJA and is the reason why the interim interdict was issued
by this court when the respondents refused to give an undertaking
not
to issue further RPL's.
[135]
Two further aspects arose from the Regulations that require
consideration and which relate to the provisions of regulation
7(2).
That regulation stipulated certain factors that the Director-General
was obliged to take into account in determining a reference
price
list.
[136]
Two of these considerations are respectively the need for private
health establishments and health agencies to have a return
on
investment (regulation 7(2)(b)) and the need for health care
providers to earn an income (regulation 7(2)(c)).
[137]
Significantly, the draft regulations, when referring to the need for
private health establishments and health care providers
to earn an
income qualified that income as being "reasonable". The
final regulations, as promulgated, deleted any reference
to that
income as being needing to be "reasonable".
[138]
In order for the regulations to have meaning, the word "reasonable"
should be read into regulations 7(2)(b) and
(c). (Cf the
New
Clicks
case.)
[139]
That said, it is clear that the provisions of regulation 7(2)(e),
(f), (g), (h) and (i) are
ultra
vires
section 90( 1 )(v) of the NHA. There is nothing contained in section
90( 1 )(v) that affords the Minister any power to stipulate
that
these were considerations that must be taken into account in
determining a reference price list or that a reference price
list
must be adjusted so as to meet these criteria.
[140]
To that extent, these provisions of the Regulations also fall to be
set aside on the principles of legality and in accordance
with the
provisions of section 6(2)(a)(ii), (e)(i) and (ii). (f)(i),and (i)
ofPAJA.
[141]
Reference was made
supra
how the Director-General, in 2008 and 2009, published invitations for
the submission of information for the determination and publication

of a 2009 and 2010 NHRPL respectively. Attached to those invitations
were the guidelines contemplated in regulations 3(2)(a) and
4(2)(a)
of the regulations. Reference has also been made how those
methodologies or guidelines served,
inter
alia
,
to restrict the number of persons who could submit information.
[142]
It is clear that the guidelines were not apposite to the businesses
and practices of the applicants. In paragraph 3.6 of the
2008
guidelines and in paragraph 10 of the 2009 invitation, the
Director-General drew attention to the fact that the methodology
or
guidelines were not suitable to all health care disciplines or
service environments.
[143]
In paragraph 3.6 of the 2008 guidelines the Director-General recorded
the following:
"It
is acknowledged that the costing methodology described in this
document is not suitable for all health care disciplines
or service
environments. This is particularly applicable to facilities such as
hospitals, pathology laboratories and emergency
services. If an
intended costing methodology deviates substantially from the
methodology documented here, then the methodology
must be properly
documented and submitted for approval prior to its use in costing
studies for the RPL."
[144]
In paragraph 10 of the 2009 invitation the Director-General stated
the following:
"10.1
It is acknowledged that the costing methodology described in this
document
may not necessarily be suitable for all health care disciplines or
service environments. Any modifications to the methodology
may be
appropriate but the Department of Health must be informed of such
process, for example, in relation to private hospitals,
pathology
laboratories and emergency services.
10.2
If an intended costing methodology deviates substantially from
the
methodology
documented here, then the parties and the Department of Health, in
consultation with the provider group will develop
an appropriate
costing methodology.'
[145]
There are two significant factors that emerge from the statements
reflected above.
[146]
Firstly
,
the
conduct of the Director-General in inviting changes to the
methodology is contrary to and therefore
ultra
vires
the provisions of the Regulations. The court supra, have set out the
provisions of the Regulations dealing with the methodology
and
guidelines. These provisions require that:
a)
the Director-General publish the methodology together with the
invitation for submissions, and the provisions of the Regulations

insofar as concerns this requirement are mandatory;
b)
persons submitting information must comply with the methodology, a
requirement that is again mandatory.
c)
there is no provision made in the Regulations for the
Director-General or for any person submitting information to deviate
from
the methodology provided for in the guidelines. There is also no
provision made for the Director-General to approve a methodology

different to the one published together with the invitation for
submissions.
d)
Under these circumstances, the Director-General did not have the
authority to publish
a
methodology and thereafter to call for deviations to that methodology
and the Director-General did not have the authority to approve
any
such alternative methodology other than at the time of publishing an
invitation for submissions.
f)
To the extent that the Director-General purported to do otherwise, he
has acted outside of the authority conferred on him by
and contrary
to the Regulations. His decision to call for an alternative
methodology would, therefore, in any event, fall to be
reviewed and
set aside under the provisions of section 6(2)(a)(i), (e)(i), (f)(i)
and (i) of PAJA as well as in terms of the doctrine
of legality
founded on section 1 of the Constitution.
g)
In those circumstances, the conduct of the Director-General in
purporting to call for alternative methodologies was unlawful,

invalid and null and void.
[147]
Secondly,
a
further significant feature, which flows from the first, lies in the
fact that the Director-General acknowledged that the methodology

prepared by him was not suited to private hospitals and emergency
services.
a)
The Director-General knew, when he published the methodology
according to which information
must
be submitted, that the methodology was inapposite to that task. In
the answering affidavit the acting Director-General denied that
the
methodology, which was developed on the basis of the practice of a
general practitioner, is completely at odds with the business
of
private hospitals, but recognises that it would require modification
or adaptation for use in the context of private hospitals.

Substantial modification would require the approval of the
Director-General.
b)
The publication by the Director-General of a mandatory guideline that
is, to the knowledge of the Director-General, ill-suited
for use in
the determination of a reference price list, is irrational,
unreasonable, and arbitrary.
c)
To publish such a guideline/methodology under circumstances where the
Director-General has no authority under the Regulations
to permit of
an alternative methodology is a further indication of the
unreasonable and irrational nature of the Director-General's

decision.
d)
The Director-General had the opportunity, when he published the 2009
invitation, to then approve and publish an alternative methodology

applicable and apposite to the businesses of the applicants. The
Director-General failed to do so, but instead again published
an
unsuitable methodology and again requested that alternatives be
proposed.
e)
In those circumstances, it is self-evident that the decision on the
part of the Director-General to publish the methodology falls
to be
reviewed and set aside as provided for in section 6(2)(e)(iii) and
(vi), (f)(ii)(aa), (bb) and (dd), (h) and (i) of PAJA
as also on the
principle of legality and reasonableness.
[148]
Inasmuch as the methodology was published in and formed part of the
2008 and 2009 invitations, it follows that those invitations
fall to
be reviewed and set aside. In this regard it is clear that the
Director-General could not publish the invitations under
the
Regulations unless and until an appropriate methodology was in place.
The Director-General's failure to implement such a methodology
was
contrary to his obligations under the Regulations and is accordingly
illegal and unlawful.
[149]
The publication of the invitations for submissions, in those
circumstances, offended against the principle of legality and
falls
to be set aside.
[150]
HASA and Netcare 911/ER24, clearly as a testament to their good faith
in the process and in an attempt to ensure that a responsibly

formulated and representative NHRPL was drafted, in fact engaged with
the Director-General in relation to an alternative methodology.
[151]
In response to the 2008 invitation and the contents of clause 3.6 of
the guidelines, both HASA and Netcare 911/ER24 submitted
alternative
methodologies to the Director-General.
[1
52]
The deviations proposed on behalf of Netcare 911 and ER24 were not
substantial and, accordingly, the alternative codings and
pricing
methodologies were incorporated in the Netcare 911/ER24 submission
made to the Director-General.
a)
These alternative proposals were rejected at the time that the
Director-General rejected the entire Netcare 911/ER24 submission
on
the grounds that the sample size was insufficiently representative of
the industry.
b)
The rejection of this alternative proposal was clearly irrational,
arbitrary and unreasonable. In rejecting the alternative proposal
the
Director-General did so on the strength of the sample size and not on
the merits of the alternative proposal itself.
c)
In the circumstances, the Director-General's refusal to accept or
rejection of the alternative proposal was wrongful.
d)
In the case of HASA, the deviation from the alternative methodology
was substantial and, in accordance with the requirements
of clause
3.6 of the guidelines, HASA sought the prior approval of the
Director-General for the use of this alternative methodology.
e)
The HASA founding affidavit set out the attempts that were made on
behalf of HASA to engage with the Department and the
Director-General,
during both 2008 and the first half of 2009, for
purposes of having the alternative methodology approved.
f)
These attempts included the exchange of a plethora of correspondence
which was largely ignored by the Department and the Director-General.
g)
It is common cause that, as at the end of 2008 - by when the
Director-General had already published an NHRPL for 2009, which

included reference price lists for private hospitals - the
Director-General had neither approved nor rejected the alternative
methodology submitted on behalf of HASA.
h)
Instead, in January 2010, the Director-General caused the 2009
invitation to be published which again drew attention to the
deficiencies in the methodology/guidelines insofar as concerned
private hospitals. Reference in this regard to the position of HASA

is apposite. It is set out in paragraphs 108—114 of the
founding affidavit:
"108.
In this way, the process that had been set in motion by the 2008
Notice and Invitation was commenced afresh under circumstances
where
the same issues and the same procedural iniquities and unlawfulness
that had arisen in the course of the 2008 RPL process
were carried
over into the 2009 process.
109.
Yet again, HASA and its members found themselves in a situation of
limbo where - yet again - an alternative methodology was
invited and
HASA was precluded from submitting information until such time as an
alternative methodology had been developed by
HASA, the Department
and "provider groups".
110.
HASA was, in the circumstances, left with little option but to
re-engage with the Department, including Jikwana, in an attempt
to
try and progress the issues in a meaningful manner.
111.
I have been advised that little purpose would be served in
incorporating into this affidavit, details concerning the
correspondence
that was exchanged and the meetings that took place
between HASA and its representatives and the Department. Some of
these details
are to be derived from Schedule "A" and, to
the extent that they are disputed, will be dealt with by me in the
fullness
of time and in further affidavits.
112.
Suffice to state that, when the prescribed deadline came for the
submission of information by 3 April 2009, HASA had still
not
received any response from the Department or the Director-General
regarding an alternative methodology or the basis upon which
HASA was
to submit its information.
113.
For the sake of completeness, I record that neither was there any
response received by the time of the revised deadline which
had been
improperly stipulated by Jikwana in his RPL Notice Number 3.
114.
In the circumstances, HASA has once again been denied the
opportunity
- within the requisite time periods - to submit information on the
basis of which an RPL for private hospitals can be
established."
i)
On 8 June 2009 the Director-General wrote to HASA in relation to the
alternative methodology. This correspondence, which is equivocal
at
best and, at worst, hopelessly vague and uncertain, was considered by
HASA as being short of an outright acceptance or rejection
of the
alternative methodology. This approach is consistent with the terms
of the letter and was communicated on those terms in
correspondence
and in the founding affidavit.
j)
The Director-General construed this letter as having been a proposal
of another methodology in the answering affidavit, which
HASA did not
agree to and therefore HASA could not make any submissions.
k)
In their answering affidavit the Minister and the Director-General
construed the letter of 8 June 2009 as being a rejection of
a portion
of the alternative methodology as proposed by PWC. As far as concerns
the remainder of the proposed alternative methodology,
the answering
affidavit recorded simply that it was rejected, but did not state
when, where, how, or the reasons for that rejection.
1)
These contentions were inconsistent with the facts, but in any event
did not assist the respondents: if the alternative methodology
had
been rejected, then the Director-General was left in the position
that his own methodology was unsuitable, he rejected the
alternative
methodology proposed by HASA, and he proposed no better alternative.
m)
In effect, therefore, the Director-General foreclosed on the
possibility of HASA or its members having any input into a reference

price list for private hospitals.
[153]
The approach of the Director-General to the approval or refusal of an
alternative methodology as proposed by HASA, lacked
the essential
requirement of procedural fairness that, by law, must prevail in any
and every administrative process.(See, for example.
New
Clicks
at
[151]
ff.)
The
requirement that the Director-General should have conducted himself
in a manner that is lawful and procedurally fair also embraces
the
principle of legality, on which our Constitution is founded and which
informs all administrative conduct and the exercise of
public power.
(See, for example, the
New
Clicks
case.)
[
154] The Director-General failed to respond timeously to the proposal
submitted by HASA in relation to the alternative methodology.
In so
doing, he effectively barred HASA from making any submission in
relation to either the 2009 or 2010 NHRPL. The correspondence
reveals
a consistent failure on the part of the Director-General to engage
meaningfully with, or to listen to submissions from,
or thereafter,
to provide reasons and rational responses to the proposals
submitted
by and on behalf of HASA. The process of interaction on the part of
the Director-General could best be described as one
of disdain for
and disregard of the rights of HASA.
[155]
This conduct on the part of the Director-General, and his subsequent
publication of an RPL in the face of these attempts by
HASA to be
heard, tainted the process and the subsequent publication of an RPL
with procedural unfairness such that the entire
process and the
resultant publication falls to be reviewed and set aside.
[156]
In addition to the principle of fairness inherent in the obligation
of rule of law, the process also falls to be reviewed
and set aside
under the provisions of section 6(2)(c) of PAJA.
[157]
The Director-General's publication of the 2008 and 2009 invitations,
which included the methodology/guidelines attached thereto,
omitted
to provide for a methodology apposite and suited to private hospitals
and emergency medical and ambulance services.
[158]
In the absence of a reasoned and reasonable methodology that is
apposite to private hospitals and emergency medical services,
the
Director-General failed to comply with the mandatory requirements of
regulations 3(2)(a) and 4(2)(a).
[159]
The publication, in those circumstances, of the 2008 and 2009
invitations was not only contrary to the provisions of the
Regulations, but was furthermore irrational and unreasonable. This is
particularly so in relation to the publication of the 2009
invitation
- by when the Director-General knew of the deficiencies in the
methodology published by him. knew that an alternative
had been
proposed, and failed properly to consider that alternative
methodology or apply his mind to it.
[160]
In those circumstances, for the Director-General to issue the 2008
and 2009 invitations calling for submissions in respect
of private
hospitals and emergency and ambulance services and for him thereafter
to publish an NHRPL in relation to private hospitals
and emergency
and ambulance services, was manifestly unreasonable, irrational and
unlawful.
[161]
The 2008 and 2009 invitations for submissions and the resultant 2009
NHRPL accordingly fall to be set aside on the grounds
of legality,
embracing the principles of fairness, lawfulness, reasonableness and
rationality. They also fall to be reviewed and
set aside under the
provisions of section 6(2)(b), (c), (e)(iii). (v) and (vi), (f)(i)
and (ii). (h) and (i) of PAJA.
[162]
The applicants have given notice that, at the hearing of the
application, they would move for amendments of the notices of
motion
filed by them in order so as to claim further relief aimed at setting
aside such further invitations as may have been published
by the
Director-General in respect of a 2011 NHRPL and seeking further
interdictory relief.
[163]
In spite of an invitation to them to do so, the respondents have
declined to address either
this further relief sought or the contents of the applicants'
supplementary affidavit, in the supplementary affidavit by Dr. Chetty

and the affidavit by Mseleku.
[164]
It is abundantly clear that both in respect of the use of the powers
afforded her under subsection 90(1 )(u) for purposes
of promulgating
regulations for the determination of an NHRPL as also for her motives
in attempting to regulate health care in
South Africa through an
NHRPL, the Minister's promulgation of the Regulations was in any case
for an ulterior purpose and invalid
and it must be set aside on those
grounds too.
[165]
It is clear that the Regulations must be set aside, firstly, due to
the lack of the required consultations between the Minister
of Health
and the National Health Council, and, secondly, on the other grounds
referred to in this judgment. As nothing that was
done in terms of
the ill-fated Regulations is salvageable it is clear that all that
was done
qua
the Regulations must also be set aside and that the whole process
commence
de
novo
and in a proper, open and transparent manner and in terms of
reconsidered regulations.
[166]
With regard to costs it is clear that costs must follow the event and
a special order will be made with regard to the costs
the applicants
incurred as a result of the Regulations being published.
[167]
The following order is accordingly made:
1.
The promulgation, by the Minister of Health on 23 July 2007, under GN
681, and purportedly in terms of the powers afforded her
by
section
90(1)
of the
National Health Act, No. 61 of 2003
. of the Regulations
Relating to the Obtainment of Information and the Process of
Determination and Publication of Reference Price
List ("the
Regulations") is hereby reviewed and declared invalid and is set
aside together with the Regulations.
2.
In consequence of the order in paragraph
1
h
ereof,
all acts and on the part of the
Director-General
of the Department of Health, purportedly in terms of the Regulations
-including the promulgation of guidelines
and methodologies, notices
and invitations, and the publication of any one or more national
reference price lists - is hereby declared
to be invalid and null and
void and of no force and effect with retro-active effect.
3.
The Minister and the Director-General, the one paying the other
to be absolved, are ordered to pay the costs of the three

applications, including the costs consequent upon the employment of
two counsel in cases number 37377/09 and 37505/09 and the costs

consequent upon the employment of three counsel in case number
21352/09. The costs shall include as taxable costs the professional

fees and all other costs incurred by each of the applicants in the
three applications to cause costing surveys to be done and
submissions prepared and filed to meet the purported requirements of
the Regulations and subsequent further requirements of the

Director-General and/or alternative methodologies, and all costs of
meetings held and/or attended by or on behalf of the applicants,
and
all other costs reasonably incurred in connection therewith.
P.Z.
EBERSOHN
ACTING
JUDGE OF THE HIGH COURT
Counsel
for the applicants in matters
37505/09
and 37377/09 ADV. J.J. GAUNTLETT, SC
ADV. B.B. LEECH
Counsel
for the applicants in matter
21377/09
ADV. P. KENNEDY SC
ADV.
A. COCKRELL
ADV.
M. DU PLESSIS
Counsel
for the Minister of Justice and
Constitutional
Development in matter 21377/09 ADV. S. CILLIERS
Counsel
for all the other respondents
in
all three matters ADV. B. VALLY
ADV. K. PILLAY
ADV. M. SELLO
Attorneys
of the applicants in matter
37505/09
and 37377/09 Werksmans
Ref.
Me M. Pansegrouw
Tel.
011-535 8000
Attorneys
of the applicants in matter 21352/09 Webber Wentzel
c/o
Savage Jooste & Adams
Ref.
Mrs. Kartoudes/YVA/72237
Tel.
012-452 8200
Attorneys
of the Minister of Health and the
Director-General
in all three matters Mpoyana Ledwaba Inc.
Ref.
Mr, Ledwaba 012 - 346 4093
Attorneys
of the other respondents attorneys in matter
21352/09
State Attorney
Ref.
J.Meier/2271/09/249
Tel. 012 -309 1500