THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no:396/2023

In the matter between:
OPTIVEST HEALTH SERVICES (PTY) LTD APPELLANT
and
THE COUNCIL FOR MEDICAL SCHEMES FIRST RESPONDENT
THE REGISTRAR OF THE COUNCIL
FOR MEDICAL SCHEMES SECOND RESPONDENT
OPEN WATER ADVANCED RISK
SOLUTIONS (PTY) LTD THIRD RESPONDENT

Neutral citation: Optivest Health Services (Pty) Ltd v The Council for Medical
Schemes and Others (396/2023) [2024] ZASCA 64 (30 April
2024)
Coram: MOCUMIE ADP, WEINER and GOOSEN JJA and COPPIN and
BLOEM AJJA
Heard: 5 March 2024
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email, published on the Supreme Court of Appeal

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website, and released to SAFLII. The date and time for hand-down is deemed to
be 11h00 on 30 April 2024.
Summary: Whether s 44(4) of the Medical Schemes Act 131 of 1998 (the Act)
enables the Council and Registrar of Medical Schemes to investigate the conduct
of a broker – whether the Council was obliged to utilise the mechanisms of s 47
of the Act – whether the Council’s conduct was lawful, procedurally fair and
rationally connected to the purpose of the Act.

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_______________________________________________________________
ORDER
_______________________________________________________________
On appeal from: Gauteng Division of the High Court, Pretoria (Nyathi J,
sitting as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.
_____________________________________________________________
JUDGMENT
_______________________________________________________________
Weiner JA (Mocumie ADP, Coppin and Bloem AJJA concurring):
Introduction
[1] The appellant is Optivest Health Services (Pty) Ltd (Optivest), which is
accredited as a broker by the Council for Medical Schemes (the Council) in terms
of s 1, 1 read with s 65 2 of the Medical Schemes Act 131 of 1998 (the Act) and
the regulations made in terms of the Act (the regulations).


1 Section 1 of the Act defines a broker to mean ‘a person whose business, or part thereof, entails providing broker
services. . .’
‘broker services’ are defined as:
‘(a) The provision of service or advice in respect of the introduction or admission of members to a medical
scheme; or
(b) The ongoing provision of service or advice in respect of access to, or benefits or services offered by, a medical
scheme.’
2 Section 65 provides as follows:
‘(1) No person may act or offer to act as a broker unless the Council has granted accreditation to such a person
on payment of such fees as may be prescribed.
(2) The Minister may prescribe the amount of the compensation which, the cate gory of brokers to whom, the
conditions upon which, and any other circumstances under which, a medical scheme may compensate any broker.
(3) No broker shall be compensated for providing broker services unless the Council has granted accreditation
to such broker in terms of subsection (1).
(4) An application for accreditation shall be made to the Council in the manner and be accompanied by such

information as may be prescribed, and any other information as the Council may require.
(5) A medical scheme may not directly or indirectly compensate a broker other than in terms of this section.
(6) A broker may not be directly or indirectly compensated for providing broker services by any person other
than —
(a) a medical scheme;
(b) a member or prospective me mber, or the employer of such member or prospective member, in respect of
whom such broker services are provided; or
(c) a broker employing such broker.’

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[2] The first respondent is the Council. Section 3 of the Act provides for the
establishment of the Council. The second respondent is the Registrar of the
Council appointed in terms of s 18 of the Act . In terms of s 18(3), the Registrar
shall act in accordance with the provisions of this Act and the policy and
directions of the Council. (The first and second respondents will either be referred
to collectively as ‘the respondents’, or individually as ‘the Registrar’ or ‘the
Council’ where appropriate).

[3] The third respondent, Open Water Advanced Risk Solutions (Pty) Ltd
(Open Water), is the company which was appointed by the Registrar in terms of
s 44(2) of the Act, read with s 134(1)(a) of the Financial Sector Regulation Act
9 of 2017 (the FSR Act), to undertake an inspection into Optivest after a tip -off
was received from an anonymous for mer employee of Optivest regarding
conduct that was alleged to be unlawful, which required further investigation.

[4] This appeal concerns the powers of the Council to investigate the alleged
non-compliance with the provisions of the Act by a broker accredit ed by the
Council in terms of s 65 of the Act , by way of an inspection in terms of s 44(4)
of the Act , read with the relevant provisions of the FSR Act. The Gauteng
Division of the High Court, Pretoria (the high court) held that it did have such
power and dismissed an application by Optivest challenging the exercise of that
power with costs. This is an appeal against that order with the leave of that court.

[5] The preamble of the Act sets out its purpose as follows:
‘To consolidate the laws relating to registered medical schemes; to provide for the
establishment of the Council for Medical Schemes as a juristic person; to provide for the
appointment of the Registrar of Medical Schemes; to make provision for the registr ation and
control of certain activities of medical schemes; to protect the interests of members of medical

schemes; to provide for measures for the co -ordination of medical schemes; and to provide
for incidental matters.’ (Emphasis added.)

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[6] The issues in this appeal are whether, upon a proper construction of inter
alia ss 7 and 44(4) of the Act, the respondents have the power to investigate a
complaint concerning a broker, in this case , Optivest. It also involves the
question as to whether the respondents were obliged to utilise the mechanisms
in s 47 of the Act, by giving Optivest the opportunity to respond to the complaint
before embarking on the investigation of Optivest’s activities. Related to these
issues are the defences raised by Optivest that the de cision by the Council to
appoint Open Water to investigate Optivest was unlawful, procedurally unfair
and lacked rationality.

The legislative scheme
[7] The functions of the Council are outlined in s 7 of the Act. Section 7 (a)
provides for the duty to protect the interests of beneficiaries at all times. Section
7(h) gives the Council the power to perform any other functions conferred on it
by the Minister under the Act. Section 8 (h) empowers the Council to take any
appropriate steps which it deems necessary or expedient to perform its functions
in accordance with the provisions of the Act. The Council is a financial sector
regulator and the executive officer of the Council refers to the Registrar, whose
functions include the management of the affairs of the Council (s 18(2)). The
decision to investigate a Medical Scheme or ‘any person’ for non-compliance
with the Act is exclusively within the powers of the Registrar in terms of the Act.

[8] Section 44(4) provides for inspections. In terms thereof:
‘The Registrar may order an inspection in terms of this section—
(a) if he or she is of the opinion that such an inspection will provide evidence of any
irregularity or of non-compliance with this Act by any person; or
(b) for purposes of routine monitoring of compliance with this Act by a medical scheme or
any other person.’ (Emphasis added.)

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[9] Related to the powers referred to above, are those contained in s s 129(2)
and (3), 134, 135, 136 and 137 of the FSR Act , which respectively provide as
follows:
‘129. Application and interpretation of Chapter. –
. . .
(2) The Council for Medical Schemes may exercise powers in terms of this Chapter in respect
of powers and functions set out in the Medical Schemes Act, and powers and functions granted
to it in this Act.
(3) In relation to the exercise of the powers in terms of this Chapter by the Council for Medical
Schemes in respect of a medical scheme, a reference in this Chapter to –
(a) a financial sector regulator or the responsible authority must be read as incl uding a
reference to the Council for Medical Schemes;
(b) the head of a financial sector regulator must be read as including a reference to the
Registrar of Medical Schemes appointed in terms of section 18 of the Medical Schemes Act;
(c) a financial sector law must be read as including a reference to regulatory instruments and
to the Medical Schemes Act; and
(d) a licensed financial institution must be read as including a reference to a medical scheme
registered in terms of the Medical Schemes Act or an administrator of a medical scheme
approved in terms of the Medical Schemes Act.
. . .
134. Investigators. –
(1) A financial sector regulator may, in writing, appoint a person as an investigator and may
appoint any person to assist the investigator in carrying out an investigation.
. . .
135. Powers to conduct investigations. –
(1) A financial sector regulator may instruct an investigator appointed by it to conduct an
investigation in terms of this Part in respect of any person, if the financial sector regulator—
(a) reasonably suspects that a person may have contravened, may be contravening or may be
about to contravene, a financial sector law for which the financial sector regulator is the
responsible authority; or

responsible authority; or
(b) reasonably believes that an investigation is necessary to achieve the objects referred to in
section 251(3)(e) pursuant to a request by a designated authority in terms of a bilateral or
multilateral agreement or memorandum of understanding contemplated in that section.’

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Section 136 deals with the powers of investigators to question and require
production of documents or other items .3 The powers of the inve stigator are set
out in s 137 of the FSR Act.4

3 Section 136 provides as follows:
‘136. Powers of investigators to question and require production of documents or other items.
(1)(a) An investigator may, for the purposes of conducting an investigation, do any of the following:
(i) By written notice, require any person who the investigator reasonably believes may be able to provide
information relevant to the investigation to appear before the investigator, at a time and place specified in the
notice, to be questioned by an investigator;
(ii) by written notice, require any person who the investigator reasonably believes may be able to produce a
document or item relevant to the investigation, to—
(aa) produce the document or item to an investigator, at a time and place specified in the notice; or
(bb) produce the document or item to an investigator, at a time and place specified in the notice, to be questioned
by an investigator about the document or item;
(iii) question a person who is complying with a notice in terms of subparagraph (i) or (ii)(bb);
(iv) require a person being questioned as mentioned in subparagraph (i) or (ii)(bb) to make an oath or affirmation,
and administer such an oath or affirmation;
(v) examine, copy or make extracts from any document or item produced to an investigator as required in terms
of this paragraph;
(vi) take possession of, and retain, any document or item produced to an investigator as required in terms of this
paragraph; and
(vii) give a directive to a person present while the investigator is exercising powe rs in terms of this section, to
facilitate the exercise of such powers.
(b) An investigator who takes a document or item in terms of paragraph (a)(vi) must give the person producing
it a written receipt.

it a written receipt.
(c) Subject to paragraph (d), the investigator mus t ensure that a document or item taken in terms of paragraph
(a)(vi) is returned to the person who produced it when—
(i) retention of the document or item is no longer necessary to achieve the object of the investigation; or
(ii) all proceedings arising out of the investigation have been finally disposed of.
(d) A document or item need not be returned to the person who produced it if —
(i) the document or item has been handed over to a designated authority; or
(ii) it is not in the best interest of the public or any member or members of the public for the document or item
to be returned.
(e) A person otherwise entitled to possession of a document or item taken in terms of paragraph (a)(vi), or its
authorised representative, may, during normal office ho urs and under the supervision of the financial sector
regulator, examine, copy and make extracts from the document, or inspect the item.
(2) A person being questioned in terms of this section is entitled to have a legal practitioner present at the
questioning to assist the person.’
Section 137 provides as follows:
‘137. Powers of investigators to enter and search premises. –
(1) An investigator may, for the purposes of conducting an investigation, do any of the following
(a) Enter any premises
. . .
(ii) without prior consent and without prior notice to any person—
. . .
(bb) with the prior authority of the head of a financial sector regulator or a senior staff member of the financial
sector regulator delegated to perform the function, if the head of a financial sector regulator or senior staff
member on reasonable grounds believes that —
. . .
(CC) it is necessary to enter the premises to conduct the investigation and search the premises as referred to in
paragraph (b) or (c), and to do anything contemplated in subsection (6);
(b) if the investigation is one referred to in section 135(1)(a), search the premises for evidence of a contravention

of a financial sector law; or

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[10] Insofar as the FS R Act refers to the Council as ‘a financial sector
regulator’, as stat ed above, this must be understood as referring to the Counc il
acting through the Registrar. That is so because the Registrar is its executive
officer and has the responsibility , in terms of the Act , to manage the Council’s
affairs, and to initiate investigations or inspections as envisaged in the Act.

[11] Section 47 of the Act provides:
‘(1) The Registrar shall, where a written complaint in relation to any matter provided for in
this Act has been lodged with the Council, furnish the party complained against with full
particulars of the complaint and request such party to furnish the Registrar with his or her
written comments thereon within 30 days or such further period as the Registrar may allow.
(2) The Registrar shall, as soon as possible after receipt of any comments furnished to him or
her as contemplated in subsection (1), either resolve the matter or submit the complaint
together with such comments, if any, to the Council, and the Council shall thereupon take all
such steps as it may deem necessary to resolve the complaint.’

[12] Section 65(1) of the Act deals with accreditation of brokers. It prohibits
parties from acting or offering to act as brokers unless the Council has granted
accreditation to such persons on payment of such fees as may be prescribed.

[13] Regulation 28B(1) provides that any person desiring to be accredited as a
broker must apply in writing to the Council. The Council is responsible for the
accreditation of brokers to provide broker services, which are defined to include
the provision of services or advice in respect of: (a) the introduction or admission
of members to a medical scheme; or ( b) the ongoing provision of service s or

(c) if the investigation is one referred to in section 135(1)(b), search the premises pursuant to the request, subject
to section 251

to section 251
(6)(a) While on the premises in terms of this section, an investigator, for the purpose of conducting the
investigation, has the right of access to any part of the premises and to any document or item on the premises. .
.’

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advice in respect of access to, or benefits or services offered by, a medical
scheme.

[14] Regulation 28C provides for the suspension or withdrawal of accreditation
given to a broker (for example) under Regulation 28B, if the Council is satisfied
on the basis of available information, that the relevant broker inter alia has, since
the granting of such accreditation, conducted his or her business in a manner that
is seriously prejudicial to clients or the public interest.

Background
[15] On 27 May 2019, an anonymous tip -off was made by a former employee
of Optivest through the Deloitte tip -off line. The tip -off was in the form of an
email which was brought to the attention of the Registrar on or about the 31 May
2019. The author of the email containing the anonymous tip -off requested that
this issue be forwarded to the correct department for investi gation. In the email,
it was alleged that the author had been working for Optivest and could not
approach anyone at the company. The author alleged that:
‘Optivest Heath Services gives medical aid members an option to pay a service fee.
Many members opt to have it, and some don’t even know that it was added.
Down the line, members resign from the m edical scheme, not knowing they still paying a
service fee to Optivest.
I have come across profiles of members paying service fees for years, without a medical ai d
profile.
When asked if we can inform members, I was told we are not allowed to inform members that
they are still paying a service fee.
There are more than ten thousand “orphan” service fee profiles.’

[16] The Council’s Compliance and Investigation Unit (the Investigation Unit)
prepared a report to the Registrar on 29 July 2019. It had formed the view that
the allegations, if true, indicated that there were irregulariti es and non -

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compliance with the Act and its regulations by Optivest, which warranted further
investigation in the form of an inspection in terms of s 44(4) (a) of the Act, read
with the FSR Act.

[17] On 30 August 2019, Open Water was appointed in terms of s 44(2) of the
Act5 read with s 134(1), 129(2) and (3) of the FSR Act, to conduct an inspection,
in terms of s 44(4)(a) of the Act, ‘into the affairs of Optivest or any part of the
affairs of the financial institutions and/or any person that directly or indirectly
manages the affairs of Optivest. . .’. The purpose of the investigation was to -
‘5.1 investigate Optivest’s compliance with the MSA and its regulations regarding the receipt
of and dealing with commissions/service fees received from medical schemes and/or medical
scheme members; and
5.2 obtain and investigate all documentation relating to all broker commissions/ service fees
paid to Optivest by medical schemes and or members of schemes as well as the circumstances
surrounding such payments.’

[18] The appointment letters of the investigators set out detailed directions with
clear parameters in respect of the issues to be inspected. The Registrar approved
the recommendation from the Investigation Unit on 30 July 2019. On 21 October
2019, Open Water attended at the premises of Optivest to investigate Optivest’s
affairs as per the mandate granted to it in its appointment letter. No notice was
given to Optivest of the investigation, considering that it was based on a tip-off
from a former employee and involved alleged fraudule nt conduct, which could
be concealed if notice was given.


5Section (44)(2) stipulates that:
‘The Registrar, or such other person authorised by him or her, shall in addition to the powers and duties conferred
or imposed upon him or her by this Act, have all the powers and duties conferred or imposed upon an inspector

appointed under section 2 of the Inspection of Financial Institutions Act, 1984 (Act No. 38 of 1984), as if he or
she has been appointed an inspector under that Act.’

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[19] The initial inspection took place at Optivest ’s premises on 21 and
22 October 2019. Optivest co-operated with Open Water on these occasions. The
inspectors returned to the premises on 14 November 2019 to continue its
inspection and interview Optivest officials. At this point, Optivest withdrew its
co-operation and sought to challenge the Council’s authority to conduct an
inspection into its affairs. It refused to hand over certain documentation whi ch
Open Water required to complete i ts investigation. These include d audited
financial statements and its agreements with its affiliated entities. As a result ,
Open Water produced ‘a second draft investigation report ’ dated the
29 November 2019 (the draft report), which contained certain preliminary
findings against Optivest, which the respondents contend are ‘damning’.

[20] On 10 December 2020, Optivest instituted review proceedings seeking to
review and set aside the decisions taken by the Registrar, alternatively, the
Council, to:
(a) initiate an investigation into Optivest’s affairs;
(b) appoint Open Water to undertake the investigation on its behalf; and
consequently,
(c) to review and set aside the second draft report.
Optivest also sought an order for the return of all information and documentation
obtained in the course of the investigation.

[21] Optivest’s review was based on three main grounds. It contended that:
(a) the Council was not empowered by the Act or the FSR Act to initiate an
investigation into it bec ause it is a br oker and not a medical scheme ( the
lawfulness challenge);
(b) the investigation was allegedly initiated pu rsuant to a written tip -off.
Accordingly, Optivest should have been afforded audi alterem partem (audi) in
terms of s 47 of the Act (the procedural challenge); and

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(c) the investigation was not rationally connected to the p urpose sought to be
achieved (the rationality challenge).

[22] The high court dismissed Optivest’s application and found that:
(a) the Council acted intra vires the powers statutoril y vested in them in
initiating the investigation;
(b) Optivest, having applied for and been granted accreditation, is subject to the
regulatory regime provided for by the Act; and
(c) the mischief which the Council was called upon to investigate also occurred
within the ambit of Optivest’s accreditation.

[23] In the appeal, Optivest contends that the high court ’s findings were
incorrect and it seeks to challenge the decision on five grounds . These are
encompassed in the three grounds raised in the high court. Optivest claims that
the high court erred in the following respects:
(a) in finding that the Registra r and Council acted within their powers in
investigating Optivest’s affairs. This is rooted in the first three related grounds
of appeal referred to above;
(b) in its construction of the Council’s investigatory powers both under the Act
and FSR Act in finding that the Council and the Registrar acted intra vires;
(c) in its construction of section 44(4) of the Act and the provisions of the FSR
Act;
(d) in finding that the power to investigate brokers is reasonably incidental to
the power to accredit brokers;
(e) by failing to consider properly Optivest’s contention that the investigation
was not rationally related to the complaint received; and
(f) in finding that the Council was not required to furnish Optivest with a copy
of the complaint before pursuing the investigation.

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[24] The challenges and basis for the review of the actions taken by the
respondents must be seen in the light of what was said in this Court in Bonitas
Medical Fund v The Council for Medical Schemes (Bonitas),6 where it was held
that:
‘The MSA provides for the regulation of medical schemes in the public interest. Its long title
indicates that its objects include the control of certain activities of medical schemes and the
protection of members’ interests. Section 7 of the MSA deals with the functions of the council.
Section 7(a) states that it is a function of the council to protect the interests of the beneficiaries
of medical schemes “at all times”.
The power in terms of s 44(4)(a) is intended to promote these objects. The power is no doubt
intended to be an effective regulatory mechanism. For it to be effective, the registrar ought to
be able to act in terms of s 44(4)(a) with expedition and without notice. A medical scheme or
person suspected of irregularities or non -compliance with the Act, should, in the public
interest, not be provided with the opportunity to hide or destroy evidence. Without the element
of surprise, the effectiveness of the power will in many instances be lost or severely
undermined. I agree with counsel for the respondents that the right of medical schemes to
privacy should, in the light of these considerations, be attenuated.’

[25] Significantly, this Court in Bonitas, in dealing with s 44(4)(a) stated that:
‘An inspection in terms of s 44(4)(a) is purely investigative. The inspector merely gathers
evidence. The inspection does not determine or affect any rights. It follows that there is no
need to provide for the protection of substantive rights by way of an appeal against a decision
to order an inspection in terms of s 44(4)(a).
. . .
There is no material difference between the nature of an inspection in terms of s 44(4)(a) of
the MSA and that of the investigation of a complaint by the Competition Commission in terms

the MSA and that of the investigation of a complaint by the Competition Commission in terms
of the Competition Act 89 of 1998 . Such investigation may culminate in a referral of the
matter to the Competition Tribunal. In Competition Commission of S A v Telkom SA Ltd &
another [2010] 2 All SA 433 (SCA) para 11, this court held that a decision to refer a matter
to the Competition Tribunal and the referral itself, are of an investigative and not an

6 Bonitas Medical Fund v The Council for Medical Schemes [2016] ZASCA 154; [2016] 4 All SA 684 (SCA)
paras 8-9.

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administrative nature and are not subject to review under the Promotion of Administrative
Justice Act 3 of 2000 . In my judgment the same applies to s 44(4)(a) of the MSA.
Nevertheless, a decision to order an inspectio n in terms of the MSA, would be subject to
review under the rule of law, on the ground that it was arbitrary or irrational . . . or offended
against the principle of legality. . .’7(Footnotes omitted.)

The lawfulness challenge
[26] Optivest submitted that the Council can only investigate or inspect the
affairs of medical schemes, (or other perso ns related thereto), but not brokers
despite them having been accredited by it under the A ct. Optivest contends that
the provisions of s 44 of the Act (save for ss (2), (3) and (4)) indicate that the
powers stated therein are limited to medical schemes. Although s 44(4) refers to
‘any person’ or ‘any other person’, this reference, so Optivest contends, is to one
upon whom the Act imposes a positive duty in relation to their duties to a medical
scheme, for example, a trustee. It submits, as Goosen JA finds in the dissenting
judgment, that the entire apparatus of s 44 is aimed at medical schemes.

[27] The respondents contend for a wider construction of s 44(4) (a). They
submit that the legislature , in including the words ‘any person’, as opposed to
citing only a medical scheme or seeking to limit the list of persons which qualify
as such in s 44(4) made a clear policy decision. Section 44(1) specifically
contemplates an inspecti on into the affairs of a medical scheme, 8 but the
provisions of s 44 (4) must be read to mean something other than a medical
scheme (whilst it may include it).


7 Ibid paras 14-15.
8 S 44(1) of the Act provides:
‘A medical scheme shall, at the written request of the Registrar, or during an inspection of the affairs of a medical
scheme, by the Registrar or such other person authorised by him or her, produce at any place where it carries on

business, its books, documents and annual financial statements in order to enable the Registrar or such other
person authorised by him or her to obtain any information relating to the medical scheme required in connection
with the administration of this Act.’

15

[28] The respondents also submit that the words in s 44(4)(a) must be given
their ordinary grammatical meaning , unless it would resul t in absurdity or
inconsistency.9 As Wallis JA opined in the seminal case of Natal Joint Municipal
Pension Fund v Endumeni Municipality:
‘The present state of the law can be expressed as follows. Interpr etation is the process of
attributing meaning to the words used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by reading the particular
provision or provisions in the light of the docu ment as a whole and the circumstances
attendant upon its coming into existence. Whatever the nature of the document,
consideration must be given to the language used in the light of the ordinary rules of grammar
and syntax; the context in which the provisi on appears; the apparent purpose to which it is
directed and the material known to those responsible for its production. Where more than
one meaning is possible each possibility must be weighed in the light of all these factors.
The process is objective no t subjective. A sensible meaning is to be preferred to one that
leads to insensible or unbusinesslike results or undermines the apparent purpose of the
document. Judges must be alert to, and guard against, the temptation to substitute what they
regard as reasonable, sensible or businesslike for the words actually used.
. . .
. . . “the exercise of construction is essentially one unitary exercise.”.’10(Footnotes omitted.)

[29] In Cool Ideas 1186 CC v Hubbard,11 the Constitutional Court summarised
the principles applicable to statutory interpretation as follows:
‘A fundamental tenet of statutory interpretation is that the words in a statute must be given
their ordinary grammatical meaning, unless to do so would result in an absurdity. There are
three important interrelated riders to this general principle, namely:
(a) that statutory provisions should always be interpreted purposively;

(a) that statutory provisions should always be interpreted purposively;
(b) the relevant statutory provision must be properly contextualised; and
(c) all statutes must be construed consistently with the Constitution, that is, where reasonably
possible, legislative provisions ought to be interpreted to preserve their constitutional validity.

9 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA)
para 18.
10 Ibid paras 18-19.
11 Cool Ideas 1186 CC v Hubbard [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC) para 28.

16

This proviso to the general principle is closely related to the purposive approach referred t o
in (a).’ (Footnotes omitted.)

[30] The Registrar's powers are set out in Chapter 9 of the Act and include the
powers to, inter alia, require additional particulars, make inquiries and conduct
inspections and produce reports. The respondents contend that the high court
was correct in finding that the ir powers to conduct inspections appear from the
Act, the regulations and the FSR Act, all of which should be read together.

[31] Optivest claims that the Council ’s additional powers under s s 129, 134
and 135 of the FS R Act only apply to the inspection of medical schemes. The
respondents contend that this does not align with the express wording of the
sections. The subsection expands upon and/or extends the Council’s
investigatory powers into others besides a medical scheme. The Financial
Services Tribunal considered the proper construction of s s 134 and 135 in
MediHelp Medical Scheme v the Registrar for Medical Schemes and Another12
and stated thus:
‘The appointment of investigators is regulated in the FSR Act by sections 134 and 135.
Reading the provisions in the light of the definitions in sec 129, the Council [financial sector
regulator] may, in writing, appoint a person as an investigator and may instruct the investigator
appointed by it to conduct an investigation in terms of this Part in respect of any person, if the
Council reasonably suspects that a person may have contravened, may be contravening or may
be about to contravene, the Medical Schemes Act [a financial sector law] for which the
Council [financial sector regulator] is the responsible authority.’

[32] The Act does not expressly provide for an inspection into the affairs of
brokers, but it does use the words ‘any person.’ Optivest contends that it is a
reference to one upon whom the Act imposes a positive duty in relation to their
duties to a medical scheme, for example, a trustee. The respondents submit that,

duties to a medical scheme, for example, a trustee. The respondents submit that,

12 Medihelp Medical Scheme v Registrar For Medical Schemes and Another [2020] ZAFST 88 para 10.

17

Optivest does perform a positive duty as it is required in terms of the Act to
provide services and advice to beneficiaries. And, in its affidavit, Optivest refers
to those that perform a positive service by including ‘[t]he supplier of a s ervice,
which has rendered a service to a beneficiary, that is obliged, under s 59(1) of
the Act to furnish that beneficiary with a statement reflecting the particulars of
the service supplied’. It is clear that a broker falls into that category, as defined.13

[33] The respondents contend that Optivest’s submissions are inconsistent with
the express wording of s s 134 and 135 of the FSR Act, read with s 129. They
submit that o n a contextual and purpo sive interpretation of the A ct, the only
jurisdictional fact required for an inspection under s 44(4)(a) is that the Registrar
must be of the opinion that such an inspection will provide evidence of any
irregularity or non- compliance with the Act by ‘any person’.

[34] The respondents submit that a broker must be certified in terms of s 65 of
the Act and that regulation 28C empowers the Council to suspend or withdraw
accreditation given to a broker if the Council is satisfied that the broker has, since
the granting of such accreditation , conducted their business in a manner that is
seriously prejudicial to clients or the public interest. These powers, t he
respondents submit, give rise to an implied primary power or, at the very least,
an ancillary power in s 44(4)(a) and (b) that an inspection can be commissioned
into the affairs of a broker of a medical scheme to ensure compliance with th e
Act. This, the respondents argue, is consistent with the maxim of construction
encapsulated in the phrase ex accessorio aius, de quo verba loquuntur 14,which
the Constitutional Court has held to be a useful tool of interpretation. 15

13 Op cit fn 1.
14Which translates to:

13 Op cit fn 1.
14Which translates to:
‘if the principal thing is prohibited or permitted, the accessory thing is likewise prohibited or permitted’.
15 AmaBhungane Centre for Investigative Journalism NPC and Another v Minister of Justice and Correctional
Services and Others; Minister of Police v AmaBhungane Centre for Investigative Journalism NPC and Others
[2021] ZACC 3; 2021 (4) BCLR 349 (CC); 2021 (3) SA 246 (CC). (Amabhungane).

18

[35] Where legislation grants certain powers, whatever is reasonably incidental
to the proper carrying out of an authorised power is considered as impliedly
authorised. This princip le finds application in this context. This question of an
implied primary power as opposed to an ancillary power was dealt with in the
Constitutional Court as follows:
‘A primary power is a power to do something required to be done in terms of an Act and which
does not owe its existence to, or whose existence is not pegged on, some other power; it exists
all on its own. That is what makes it primary, and not ancillary. If it owed its existence to
another primary power, then it would be an ancillary power.’16

[36] The Constitutional Court, in AmaBhungane, stated the following
regarding the difference between an implied primary and an ancillary power as
follows:
‘A distinction must be drawn between an implied primary power and an ancillary implied
power. I consider it necessary to draw this distinction because quite often discussions of
implied powers entail ancillary implied powers, and not primary implied powers. The
distinction will be better understood if I first discuss the well -known concept, the anci llary
implied power. An ancillary implied power arises where a primary power – whether express
or implied – conferred by an Act cannot be exercised if the ancillary implied power does not
also exist. For example, in Masetlha Moseneke DCJ, considering the President’s power to
dismiss a head of an intelligence agency under section 209(2) of the Constitution, held:
“The power to dismiss is necessary in order to exercise the power to appoint. . . Without the
competence to dismiss, the President would not be a ble to remove the head of the Agency
without his or her consent before the end of the term of office, whatever the circumstances
might be. That would indeed lead to an absurdity and severely undermine the constitutional

might be. That would indeed lead to an absurdity and severely undermine the constitutional
pursuit of the security of this cou ntry and its people. That is why the power to dismiss is an
essential corollary of the power to appoint. . .”17
There, the power to dismiss was found to be an essential corollary of the power to appoint,
and this Court thus interpreted the power in section 209(2) of the Constitution to appoint the

16 Ibid para 69.
17 Ibid paras 63-67.

19

head of the NIA to include a power to dismiss. The power to dismiss was an ancillary implied
power, ancillary because it flowed from t he power to appoint. In Matatiele
Municipality Ngcobo J wrote:
“It was . . . inevitable that the alteration of provincial boundaries would impact on municipal
boundaries. This is implicit in the power to alter provincial boundaries. It is trite that the power
to do that which is expressly authorised includes the power to do that which is necessary to
give effect to the power expressly given. The power of Parliament to redraw provincial
boundaries therefore includes the power that is reasonably necessary fo r the exercise of its
power to alter provincial boundaries.”
What I refer to as an ancillary power arises in the context of one power being necessary in
order for an unquestionably existing power to be exercised.
Examples of implied powers that I have picked up from academic writings have also been
about implied ancillary powers. Hoexter says:
“As a general rule, express powers are needed for the actions and decisions of
administrators. Implied powers may, however, be ancillary to the express powers, or exist
either as a necessary or reasonable consequence of the express powers. Thus ‘what is
reasonably incidental to the proper carrying out of an authorised act must be considered as
impliedly authorised’.”
According to De Ville—
“[w]hen powers are granted to a public authority, those granted expressly are not the only
powers such public authority will have. The powers will include those which are reasonably
necessary or required to give effect to and which are reasonably or properly ancillary or
incidental to the express powers that are granted.’ 18

[37] Although the Act does not define the meaning of the phrase ‘any person’
in s 44(4)(a) or (b), a contextual and purposive interpretation is required in order
to determine whether there is an implied ancillary power to investigate a broker

to determine whether there is an implied ancillary power to investigate a broker
under the Act. The following indicators are, the respondents submit, relevant:

18 Ibid.

20

(a) Section 135 of the FSR Act also provides that a financial sector regulator
may instruct an investigator appointed by it to conduct an investigation in respect
of ‘any person ’, if the financial sector regulator ‘reasonably suspects that a
person may have contravened, may be contravening or may be about to
contravene, a financial sector law for which the financial sector regulator is the
responsible authority.’
(b) The Council’s functions (as set out in s 7) include the protection of the
interests of beneficiaries19 and the performance of any other function conferred
on it by the Act.20 The Act, therefore, provides the Council and Registrar with a
wide scope of functions to ensure that the interests of beneficiaries are protected
from practices that do not comply with the Act. No limitation is indicated in
relation to this function. The power in s 44(4)(a) exists to promote the object of
the Council’s functions.21
(c) The Council’s’ powers (as set out in s 8 of the Act) entitles it to take any
appropriate steps which it deems necessary or expedient to perform its functions
in accordance with the Act.22 No limitation applies in respect of this power and
the Council could take any steps necessary to fulfil its functions which, are
outlined in ss 7(a) and (h).
(d) In relation to accreditation of brokers, Regulation 28C empowers the Council
to suspend or withdraw accreditation given to a broker if the Council is satisfied
that the broker has, since the granting of such accreditation, conducted their
business in a manner that is seriously prejudicial to clients or the public interest.
(e) Section 65 of the Act regulates broker services and commission as well as
accreditation by the Council. Regulation 28 of the Act regulates the fees payable
to brokers.

19 Section 7(a) of the Act.
20 Section 7(h) of the Act.
21 Op cit fn 6 and 7.
22 Section 8(k) of the Act.

21

(f) Regulation 28 (9) of the Act provides that any person who has paid a broker
compensation where there has been a material misrepresentation, or where the
payment is made consequent to unlawful conduct by the broker, is entitled to the
full return of all the money paid in consequence of such material
misrepresentation or unlawful conduct. The Council is thus empowered to direct
a broker to refund a beneficiary in respect of payments which fall foul of
regulation 28(9). The implied (ancillary) power to i nvestigate such a breach,
must be included in the Council’s functions. Without such power, the remedy is
ineffectual.

[38] Section 135 of the FSR Act must be read together with ss 8 and 44(4) (a)
of the Act. These sections encompass not only an express power to conduct an
inspection, but the im plied power to rely upon the relevant regulations , which
provide some of the remedies which may be utilised to deal with a non-compliant
broker. The Act regulates the accreditation, de -accreditation, remuneration and
refunds to members as result of a misr epresentation or unlawful conduct of a
broker. The regulations provide the remedies which the respondents can utilise
to deal with such non -compliance. Thus , on a contextual and purposive
interpretation, taking into account the inter-relationship between the Act and the
regulations, the phrase ‘any person’ must be interpreted to include a broker and
the Council must have the implied auxiliary power to investigate a broker.

[39] The interpretation, proffered by Optivest , which would exclude or limit
this power to investigate brokers in the context of the Act and regulation 28, is
untenable. It means that the Council would not be entitled to conduct an
inspection in order to perform its functions of monitoring or investigating any
non-compliance with the Act and regulations, or determining whether a broker
has received payment from beneficiaries as a result of a misrepresentation or

has received payment from beneficiaries as a result of a misrepresentation or
unlawful conduct under any applicable legislation. A court must construe the

22

language in a statute against the background of the perceived mischief which the
statute aims to address. 23 The interpretation proffered by Optivest would fly in
the face of this.

[40] The Council and its duly appointed inspectors may exercise powers in
terms of ss 129, 134, 135, 136 and, 137 of the FSR Act, which encompasses the
powers set out in the Act. Section 129(2) provides that the Council may exercise
powers in terms of Chapter 9 of the FSR Act in respect of its powers and
functions in the Act and the FSR Act. The contention by the respondents that the
Act, the regulations, and the FSR Act point to an implied power for the Council
to inspect brokers on the grounds that it is reasonably incidental to the proper
carrying out of its authorised powers under ss 44(4) and 65 of the Act and ss 134
and 135 (read with s 129) of the FSR Act, read with Regulations 28 B and C of
the Act, has merit.

[41] This approach is apposite to the interpretation of statutes which requires
them to be read alongside each other so as to make sense of their provisions
together. The ‘mischief rule’ directs a Court to construe the language in a statute
against the background of the perceived mischief that the statu te addresses. It is
clear that the ‘mischief’ addressed by the Act is the non -compliance with the
provisions of the Act and the regulations.

[42] I therefore find that the Council, in terms of s 44(a), read with the relevant
regulations and provisions of the FSR Act, has the power to inspect and
investigate the conduct of brokers, such as Optivest.

The procedural challenge

23 Op cit fn 11 above.

23

[43] Section 47 deals with written complaints against a party and stipulates the
timelines for the representations from the person /s against whom a complaint
has been laid. This complaint may or may not, lead to an inspection, but the
respondents submit, it is not perempt ory or a jurisdictional requirement for
s 44(a) to be triggered. Section 44 operate s independently of the complaints
procedure set out in s 47 of the MSA. Section 44 gives the Registrar the power
to appoint an investigator, whilst s 47 regulates the complaints process. The
respondents contend that the purpose of s 44(4) would be defeated if the right of
audi was required, in all circumstances. Section 44(4) provides for a regulatory
mechanism,24 and the power under s 44(4), read with the relevant provisions of
the FSR Act must enable the Registrar to act in terms of s 44(4) (a) with
expedition and without notice, in order to be effective.

[44] It is in the public interest for a medical scheme or ‘any other person’
suspected of non-compliance with the A ct or improper conduct not to be
provided with the opportunity to hide or destroy evidence. Without the element
of surprise, the effectiveness would be lost. The right to audi is properly provided
for by a response to the draft report, which Optivest chose not to deal with.
Optivest had the opportunity to exercise its rights provided for in s 47, after it
received the draft report, which sets out the details of the complaint. It chose not
to do so.

The rationality challenge
[45] The purpose of the power contained in s 44(4) of t he Act, as the
respondents correctly submit, is rationally connected to achieving the purpose of
the Act and the rationale behind the power provided for in the sub -section. The
Council is empowered to monitor and investigate non -compliance with the Act

24 Bonitas para 7.

24

in order to protect the interests of beneficiaries. The Council is then empowered
to take any appropriate steps which it deems necessary or expedient to perform
its functions in accordance with the provisions of the Act. The power in terms of
s 44(4) of the Act were entrusted to it to achieve such purpose.

[46] Open Water’s report was based upon an examination of the following
information and documents: ( a) documentation describing Optivest’s business
processes; (b) Optivest’s marketing and business framework; (c) the operation
of the Optivest’s call centre; ( d) documentation in respect of refunded service
fees; (e) statistics on the collection, rejection and refunding of service fees; and
(f) data in respect of service fees raised for Optivest’s clients. The fu rther
documentation obtained from Optivest (including publicly available
information) was also referred to in the draft report. Optivest refused to provide
Open Waters with any further documentation.

[47] Based upon the limited information available to it, Open Water was able
to make certain preliminary and critical findings in the draft report based upon
the fact that Optivest, in charging its clients a service fee, contravened the Act
and regulation 28 in that:
(a) Open Water found no agreement setting out the terms of the service fe e
agreement between the parties;
(b) call centre staff did not explicitly explain the purpose of the serv ice fee or
that it was optional;
(c) call centre staff were instructed by management not to discuss the service fee
with clients and was only to respond when clients enquired;
(d) the services offered to clients as justification for the service fee are the same
as the services expected to be provided by brokers;
(e) Optivest charges a service fee which is recovered from its clients per debit
order, separate from the commissions received from medical aid schemes, and

25

the debit forms do not appear to meet the requirements of a legal contract which
would be required to debit such fee;
(f) the services provided by Optivest and its related entities constitutes both
‘advice’ as well as ‘intermediary services’ and is, therefore, subject to both the
Act and the FSR Act; and
(g) debit orders are made without consent or agreement and are therefore,
unenforceable. Thus, all the fees derived therefrom constitute irregular
transactions under the Act and the Regulations.

[48] Open Water accordingly recommended that:
(a) ‘due to the compliance deficiency on the part of [Optivest] and/or its related
parties, the Council should consider implementing the remedies contained in
regulation 28(9) of the [Act], particularly what the Act sought to achieve
regarding payment of fees in that:
‘Any person who has paid a broker compensation where there has been “material
misrepresentation” or where the payment is made consequent to unlawful conduct by the
broker, is entitled to the full return of all of the money paid in consequent [sic] of such material
misrepresentation or unlawful conduct’; and
(b) the serv ice fees collected from clients under the above misrepresentation
should be retrospectively quantified and reimbursed to the respective clients; as
such funds would be proceeds of an unlawful transaction.’

[49] Accordingly, and keeping in mind the limited test for review set out in
Bonitas, I hold that the conduct of the Council and the Registrar was lawful and
in accordance with the rule of law, was not procedurally unfair, or arbitrary, was
rationally connected to the purpose sought to be achieved by the Act and did not
offend against the principle of legality .25


25 Bonitas para 15.

26

[50] In the result the following order is granted.

The appeal is dismissed with costs, including the costs of two counsel.
______________________
S E WEINER
JUDGE OF APPEAL

Goosen JA (dissenting):
[51] I have had the privilege of reading the judgment prepared by my colleague
Weiner JA (the main judgment). Regrettably, I do not agree with the outcome
and the reasoning employed to sustain it. I would uphold the appeal with costs
and set aside the order of the high court. I would replace the high court order
with one granting the relief sought by the appellant in its notice of motion, save
that I would only award costs of the application on an ordinary scale.

[52] The main judgment holds that s 44( 4)(a) of the Act applies and therefore
authorises the Registrar to conduct an inspection of the business activities of a
broker accredited in terms of the Act. It also holds that, as far as there may be a
complaint which is subject to s 47 of the Act, the existence of the complaint does
not preclude the use of the powers conferred by s 44.

[53] The central issue is one of interpretation. The principles applicable to the
interpretation of a statutory provision are clear. What is required is a unitary
exercise to assign meaning in which text, context and purpose are considered.
This Court, with reference to the oft cited passage from Endumeni,26 explained
in Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 194
(Pty) Ltd and Others that:

26 Endumeni fn 9 above.

27

‘It is the language used, understood in the context in which it is used, and having regard to the
purpose of the provision that constitutes the unitary exercise of interpretation. I would only
add that the triad of text, context and purpose should not be used in a mechanical fashion. It
is the relationship between the words used, the concepts expressed by those words and the
place of the contested provision within the scheme of the agreement (or instrument) as a whole
that constitutes the enterprise by recourse to which a coherent and salient interpretation is
determined.’27

[54] The legislative context consists of the provisions of the A ct read as a
whole. The history of the particular enactment may also serve as context. As
noted in Nissan SA (Pty) Limited v Commissioner for Inland Revenue:
‘Whatever the permissible scope for, and the limitations upon, the use of the legislative history
of a particular provision as an aid to interpretation may be, I think it is obvious that where a
provision has been amended and the a mendment is deemed to have taken effect while the
provision in its unamended state was operative, one is entitled to examine the implications of
that in order to see whether they throw any light upon the interpretation which should be
accorded to the amendment.’ 28

[55] In this instance, ss 44(2) and (3) of the A ct refer to the Inspection of
Financial Institutions Act, 34 of 1984. That Act was repealed by the Inspection of
Financial Institutions Act, 80 of 1998 (the 1998 Inspection Act) which was, in
turn, repealed by the FSR Act. 29 The Act has yet to be amended to r eflect the
current state of affairs. In light of this, s 12(1) of the Interpretation Act 33 of 1957,
applies. It reads as follows:
‘Where a law repeals and re-enacts, with or without modifications, any provision of a former
law, references in any other law to the provision so repealed shall, unless the contrary intention
appears, be construed to refer to the provision so re-enacted.’

appears, be construed to refer to the provision so re-enacted.’


27 Capitec Bank Holdings Limited and Another v Coral Lagoon Investments 94 (Pty) Ltd and Others [2021]
ZASCA 99; [2021] 3 All SA 647 (SCA); 2022 (1) SA 100 (SCA) para 25.
28 Nissan SA (Pty) Limited v Commissioner for Inland Revenue [1998] ZASCA 59; [1998] 4 All SA 269 (SCA);
1998 (4) SA 860 (SCA) at 870H-I; see also Joosub Ltd v Ismail 1953 (2) SA 461 (A) at 466.
29 The FSR Act came into operation on 1 April 2018.

28

[56] In the circumstances, an examination of both the repealed provisions and
the re-enacting provisions, is required to come to a proper understanding of the
legislative context within which meaning is to be assigned to the language of
s 44 of the Act. One further relevant aspect is that s 44(4) was introduced by way
of the Medical Schemes Amendment Act, 55 of 2001. 30 The long title of the
Amendment Act describes its purpose, inter alia, ‘to determine the circumstances
under which inspections may occur’. At the time that s 44(4) was introduced, the
provisions of the 1998 Inspection Act applied. The consequence, as will be
demonstrated, was to circumscribe the ambit of the authority to conduct
inspections in unequivocal terms, at least until the subsequent repeal of the 1998
Inspection Act.

[57] Before turning to this, the following provisions of the A ct provide the
immediate legislative c ontext within which s 44 must be read. The Council ’s
functions are set out in s 7. They include the obligation to protect the interests of
beneficiaries of medical schemes;31 to control and co-ordinate the functioning of
medical schemes;32 and to investigate complaints and settle disputes ‘in relation
to the affairs of medical schemes ’ as provided by the MSA. 33 The Council ’s
powers are spelt out in s 8. Its regulatory authority is expressed as the power to
approve the registration, suspension, and cancellation of registration of medical
schemes.34 To facilitate the performance of its functions, it is granted the power
to take all steps necessary or expedient in accordance with the Act.35


30 The Medical Schemes Amendment Act, 55 of 2001 came into operation on 1 March 2002. It is noteworthy
that this Amendment Act did not amend s 44(2) and (3) to refer to the 1998 Inspection Act.
31 Section 7(a) of the Act.
32 Section 7(b) of the Act.
33 Section 7(d) of the Act.
34 Section 8(f) of the Act.
35 Section 8(k) of the Act.

29

[58] Section 24 of the MSA requires the registration of a medical scheme. The
effect of such registration is addressed in s 26. This section sets out an array of
requirements regulating the conduct of the business of a medical scheme.
Section 35 provides for the financial arrangements of a medical scheme and the
prudential requirements for the conduct of the business of a medical scheme. 36
These provisions bear emphasis because they encapsulate the affairs of a medical
scheme which are subject to supervisory control by the Council, in the interests
of members of medical schemes.

[59] Chapter 9 of the A ct deals with the powers of the Registrar. In terms of
s 42, the Registrar has the right to request information additional to that disclosed
in an application for registration or in a return submitted by a medical scheme.
Section 43 permits t he Registrar to address enquiries to a medical scheme ‘in
relation to any matter connected with the business or transactions of a medical
scheme.’37 Section 44 which deals with the power to conduct inspections reads
as follows:
‘(1) A medical scheme shall, at the written request of the Registrar, or during an inspection
of the affairs of a medical scheme, by the Registrar or such other person authorised by him or
her, produce at any place where it carries on business, its books, docum ents and annual
financial statements in order to enable the Registrar or such other person authorised by him or
her to obtain any information relating to the medical scheme required in connection with the
administration of this Act.

36 The ‘business of a medical scheme’ is defined in s 1 of the Act to mean:
‘the business of undertaking, in return for a premium or contribution, the liability associated with one or more
of the following activities:
(a) Providing for the obtaining of any relevant health service;

of the following activities:
(a) Providing for the obtaining of any relevant health service;
(b) granting assistance in defraying expenditure incurred in connection with the rendering of any relevant health
service; or
(c) rendering a relevant health service, either by the medical scheme itself, or by any supplier or group of
suppliers of a relevant health service or by any person, in association wit h or in terms of an agreement with a
medical scheme.’
37 Section 43 provides that:
‘The Registrar may address enquiries to a medical scheme in relation to any matter connected with the business
or transactions of the medical scheme, and the medical scheme shall reply in writing thereto within a period of
30 days as from the date on which the Registrar addressed the enquiry to it, or within such other period as the
Registrar may specify.’

30

(2) The Registrar, or such other person authorised by him or her, shall in addition to the powers
and duties conferred or imposed upon him or her by this Act, have all the powers and duties
conferred or imposed upon an inspector appointed under section 2 of the Inspection of
Financial Institutions Act, 1984 (Act No. 38 of 1984), as if he or she has been appointed an
inspector under that Act.
(3) Any reference in this Act to an inspection made under this section shall also be construed
as a reference to an inspection made under the Inspection of Financial Institutions Act, 1984.
(4) The Registrar may order an inspection in terms of this section—
(a) if he or she is of the opinion that such an inspection will provide evidence of any
irregularity or of non-compliance with this Act by any person; or
(b) for purposes of routine monitoring of compliance with this Act by a medical scheme or
any other person.
(5) The Registrar may, at any time by notice in writing, direct a medical scheme to furnish to
him or her within a period specified in that notice, or within such further period as the Registrar
may allow—
(a) a statement of its assets and liabilities, including contingent liabilities; and
(b) any other document or information specified in the notice, relating to the financial or other
affairs of the medical scheme over a period likewise specified.’38 (Emphasis added.)

[60] In Bonitas,39 this Court described the nature and purpose of s 44 as ‘purely
investigative’. In that matter, a registered medical scheme lodged an appeal
against a decision by the Registrar to conduct an inspection of its affairs in terms
of s 44(4)(a) of the Act. This Court held that no appeal lay against the decision
to invoke the power. The Court did not deal with the reach of the power to
conduct an inspection.

[61] Section 44(1) uses the word ‘inspection’ to convey an examination of
records, documents, and other materi al at the place of business of a medical

records, documents, and other materi al at the place of business of a medical
scheme. It also qualifies the subject matter of the inspection by specifying that it

38 I have emphasised certain phrases which appear in the section for purposes of the discussion to follow.
39 Bonitas para 14.

31

is an inspection of the affairs of a medical scheme . This qualification accords
with the defined ambit of the powers and functions of the Council. It also accords
with the purpose of the regulatory scheme, namely to place the conduct of the
business of a medical scheme under the supervisory control of the Council.

[62] It is important to note that the A ct does not specify or define the p owers
of an inspector. It does so with reference to the now repealed 1998 Inspection
Act. This latter Act contained provisions which specifically limited the powers
of inspection to the affairs of the financial institution.40 The 1998 Inspection Act
also sp ecifically defined the powers of an inspector in relation to ‘any other
person’. Section 5(1) provided that:
‘In order to carry out an inspection of the affairs of an institution under section 3 or 3A an
inspector may—
(a)(i) summon any person, if the inspector has reason to believe that such person may be able
to provide information relating to the affairs of the institution or whom the inspector
reasonably believes is in possession of, or has under control, any document rel ating to the
affairs of the institution, to lodge such document with the inspector or to appear at a time and
place specified in the summons to be examined or to produce such document and to examine,
or against the issue of a receipt, to retain any such document for as long as it may be required
for purposes of the inspection or any legal or regulatory proceedings;
(ii) administer an oath or affirmation or otherwise examine any person referred to
in subparagraph (i);
(b) on the authority of a warrant, at any time without prior notice—

40 Section 3 of the 1998 Inspection Act dealt with the power to inspect institutions (for which read medical
scheme in light of the definition of a financial institution contained in the Act). It reads:

scheme in light of the definition of a financial institution contained in the Act). It reads:
‘3(1) The registrar may at any time instruct an inspector to carry out an inspection of the affairs, or any part of
the affairs, of a financial institution or associated institution.
(2) If the registrar has reason to believe that a person, partnership, co mpany or trust which is not registered or
approved as a financial institution, is carrying on the business of a financial institution, he or she may instruct an
inspector to inspect the affairs, or any part of the affairs, of such a person, partnership, company or trust.’
Section 4 provided for the powers of the inspector in relation to institutions. Subsection (1) qualified the exercise
of the powers as follows:
‘(1) In carrying out an inspection of the affairs of an institution under section 3 or 3A an inspector may—. . .’

32

(i) enter any premises and require the production of any document relating to the affairs of the
institution;
(ii) enter and search any premises for any documents relating to the affairs of the institution;
(iii) open any strong -room, safe or other container which he or she suspects contains any
document relating to the affairs of the institution;
(iv) examine, make extracts from and copy any document relating to the affairs of the
institution or, against the issue of a receipt, remove such document temporarily for that
purpose;
. . .
but an inspector may proceed without a warrant, if the person in control of any premises
consents to the actions contemplated in this paragraph.’ (Emphasis added).

[63] These provisions demonstrate, unequivocally, that an investigative
inspection carried out in terms of s 44 of the Act, as read with the 1998 Inspection
Act, was plainly intended to relate only to the affairs of a medical scheme. That
was the case both prior to , and after s 44(4) was introduced. 41 The purpose of
s 44(4) was, as the long title of the Amendment Act indicated, to provide for the
circumstances in which inspections could be conducted. It provided for two
scenarios, namely routine inspections (s 44(4)(b)) and ‘investigative’ inspections
(s 44(4)(a)) where some impropriety was under investigation. At the stage that
s 44(4) was introduced, there was no amendment of the 1998 Inspection Act to
expand the powers of the Registrar or inspector to undertake an investigation of
the affairs of ‘any other person’ or entity. Section 5 of the 1998 Inspection Act
remained extant. At that stage, therefore, and until the subsequent repeal of the
1998 Inspection Act, s 44(4) did not entitle the Registrar to conduct an inspection
of ‘any other person ’, except in the cont ext of an inspection of the affairs of a
medical scheme.


41 See para 57 and fn 30 above.

33

[64] The question that arises is whether the repeal of the 1998 Inspection Act,
without amendment of the A ct, brought about an extension of the powers of
investigation or inspection beyond that which was contemplated prior to the
repeal and the enactment of the FSR Act.

[65] The FSR Act is a comprehensive omnibus legislative instrument enacted
with the stated purpose of establishing a system of regulation of the financial
services sector.42 It provided for the establishment of two principal regulatory
authorities to supervise financial product providers, namely a Prudential
Authority and the Financial Sector Conduct Authority (the FSCA). 43 Chapter 9
of the FSR Act is headed ‘Information gathering, Supervisory on-site inspections
and investigations’. It deals with matters which were previously regulated by the
1998 Inspection Act.

[66] In Ex parte Glavonic , it was held, with reference to the application of
s 12(1) of the Interpretation Act, that:
‘To ascertain whether there is a re-enactment, with or without modifications, it is necessary to
examine the object of the new legislation, and the scheme and pattern of it, and then to see
whether this does not show an intention to put on the statute book what previous ly existed,
with or without modification. D. v. The Minister of the Interior , 1962 (1) S.A. 655 (T) at
p. 658H.’44


42 The Long Title states, inter alia, that it seeks:
‘. . . to establish a system of financial regulation by establishing the Prudential Authority and the Financial Sector
Conduct Authority, and conferr ing powers on these entities; . . . to regulate and supervise financial product
providers and financial services providers; . . . to make comprehensive provision for powers to gather information
and to conduct supervisory on -site inspections and investigat ions; [and] to provide for information sharing
arrangements. . .’.
43 Sections 32 and 56 of the FSR Act.

arrangements. . .’.
43 Sections 32 and 56 of the FSR Act.
44 Ex parte Glavonic 1967 (4) SA 141 (N) at 142H.

34

[67] This Court, in Berman Brothers (Pty) Ltd v Sodastream (Pty) Ltd and
Another,45 explained the nature of modifications contemplated by s 12(1) o f the
Interpretation Act as follows:
‘The question then is whether or not, bearing in mind these aforementioned differences, there
has been a re -enactment with modifications of the relevant provisions of the 1916 Act. In
D v Minister of the Interior 1962 (1) SA 655 (T), at p 659 D, the Full Bench of the Transvaal
Provincial Division, approving the finding of WILLIAMSON J in the same case (see 1960 (4)
SA 905, at 909) held that in this context the word “modifications”:
“is not limited to the action of limit ing or qualifying or toning down or restricting any
statement; it can mean to make partial changes or to make changes in respect of certain
qualities or to alter or vary without radical transformation. Insofar as the meaning of the word
‘modifications’ in sec. 12 (1) of the Interpretation Act is concerned it seems to me that
WILLIAMSON J was correct when he held that it must mean any alteration which does not
change the essential nature or character of the repealed provisions.”
This interpretation and the t est adopted were followed in Nkomo and Others v Minister of
Justice and Others 1965 (1) SA 498 (SR, AD), at p 505 D-G; Ex parte Glavonic 1967 (4) SA
141 (N), at pp 142 H – 143 A and S v Msitshana 1978 (1) SA 386 (W), at pp 388 H – 389 C;
and it seems to me that they should be followed by this Court. Applying the test in the present
case, the question is whether or not the relevant provisions of the 1963 Act, in repealing and
re-enacting with alterations the corres ponding provisions of the 1916 Act, changed “the
essential nature or character” of the repealed provisions.’ (My emphasis.)

[68] Section 129 of the FSR Act concerns the application and interpretation of
the chapter. It provides, in relevant part, as follows:
‘(2) The Council for Medical Schemes may exercise powers in terms of this Chapter in respect

‘(2) The Council for Medical Schemes may exercise powers in terms of this Chapter in respect
of powers and functions set out in the Medical Schemes Act, and powers and functions granted
to it in this Act.
(3) In relation to the exercise of the powers in terms of this Chapter by the Council for Medical
Schemes in respect of a medical scheme, a reference in this Chapter to ─

45 Berman Brothers (Pty) Ltd v Sodastream (Pty) Ltd [1986] ZASCA 27; [1986] 2 All SA 252 (A); 1986 (3)
SA 209 (A) at 240.

35

(a) a financial sector regulator or the responsible authority must be read as including a
reference to the Council for Medical Schemes;
(b) the head of a financial sector regulator must be read as including a reference to the
Registrar of Medical Schemes appointed in terms of section 18 of the Medical Schemes Act;
(c) a financial sector law must be read as including a reference to regulator y instruments and
to the Medical Schemes Act; and
(d) a licensed financial institution must be read as including a reference to a medical scheme
registered in terms of the Medical Schemes Act or an administrator of a medical scheme
approved in terms of the Medical Schemes Act.’

[69] The balance of the chapter contains provisions relating to information
gathering (s 131); powers to conduct supervisory on-site inspections (s 132); the
appointment of an investigator (s 134); the power to conduct investigations
(s 135) and the powers that may be exercised by investigators (ss 136 and 137).
I shall touch upon these where necessary. Chapter 9 therefore re-enacts the 1998
Inspection Act with modifications. The most obvious modification is that the
FSR Act no longer provides for the appointment of ‘inspectors’. It now provides
for the appointment of ‘investigators’. In light of the investigative nature of an
inspection envisaged by s 44(4) of the Act, nothing turns on this. It does not alter
the essential character of th e repealed provisions authorising an investigative
investigation of the affairs of a medical scheme.

[70] The second modification concerns the distinction between supervisory
inspections and ‘investigations’. Section 132 provides that a financial sector
regulator (for which read the Council of a Medical Scheme)46 may, upon notice,
conduct a supervisory on -site inspection at the business premises of ‘a
supervised entity ’. The FSR Act defines a ‘supervised entity ’ to include a
‘licenced financial institution’. Section 129(3)(d) specifies that for the purposes

‘licenced financial institution’. Section 129(3)(d) specifies that for the purposes
of the exercise of the powers conferred by the chapter, a licence financial

46 Section 129(3)(a) of the FSR Act.

36

institution must be taken to include a medical scheme registered in terms of the
Act. The purpose of a supervisory inspection is to check compliance with a
financial sector law (read with the Act)47 for which the regulator ‘is the
responsible authority’.48

[71] Upon a careful reading of s 44(4)(b), which concerns routine inspections,
the Registrar’s power to conduct a supervisory on-site inspection can only relate
to the supervised entity under its regulatory or supervisory control. In this
instance, it concerns a registered medical scheme. As concerns such inspection,
the repeal of the 1998 In spection Act and re -enactment of its provisions in the
FSR Act, did not bring about an extension of the powers to inspect entities which
are not supervised entities in terms of the Act.

[72] The same applies in relation to s 44(4) (a). The qualification, however, is
not expressed with reference to ‘supervised entity’. Section 135, which confers
the power to investigate, is framed in broad terms. It states, in relevant part, that:
‘(1) A financial sector regulator may instruct an investigator appointed by i t to conduct an
investigation in terms of this Part in respect of any person, if the financial sector regulator—
(a) reasonably suspects that a person may have contravened, may be contravening or may be
about to contravene, a financial sector law for which the financial sector regulator is the
responsible authority; or . . .’

[73] The main judgment places reliance upon this broad formulation to support
the conclusion that Optivest is subject to the exercise of the Registrar ’s
investigatory powers because it is a licenced financial services provider
accredited by the Council. In my view, there are two respects in which the
conclusion is incorrect. First, the broad ambit of the powers of investigation are
qualified by s 129 of the FSR Act. Subsection (3) refers to the exercise of Chapter

47 Section 129(3)(c) of the FSR Act.

47 Section 129(3)(c) of the FSR Act.
48 Section 132(2)(a) of the FSR Act.

37

9 powers by the Council ‘in respect of a medical scheme ’. When this
qualification is applied to the substitution of terms as explained in sub -
paragraphs (a) to (d), it is clear that the Chapter 9 powers can only be applied in
relation to a medical scheme which falls under the supervisory control of the
Council. Furthermore, the qualification is entirely consonant with the overall
qualification of the Council’s supervisory powers as expressed in the provisions
of the A ct read a s a whole. Secondly, the qualifying phrase ‘in respect of a
medical scheme’ expressly ensures that the modifications effected by the FSR
Act do not alter the essential character of the powers conferred by the 1998
Inspection Act.

[74] Counsel for the respondent s argued that the FSR Act had, in effect,
broadened the regulatory powers of the Council. The argument did not, however,
account for the legislative mechanism by which these changes were said to have
been introduced. If it had been intended to broaden the ambit and scope of the
powers which may be exercised by the Council, then an amendment of the
provisions of the Act and s 44(4), in particular, could have been expected. In this
regard, this Court ’s approach to the limitations of reliance upon the provisio ns
of the Interpretation Act to support such alteration are instructive. In Spinnaker
Investments (Pty) Ltd v Tongaat Group Limited, it was observed that:
‘I deem it unlikely that the Legislature would depend solely on the provisions of the
Interpretation Act if there were an intention to legislate with such far reaching consequences.
The words of Lord MORRIS of Borth -Y-Gest (reported in Blue Metal Industries v R.W.
Dilley (1969) 3 AER 437 at 442) are apposite:
“The Interpretation Act is a drafting convenience. It is not to be expected that it would be used
so as to change the character of legislation.”
See too Floor v Davis (1979) 2 AER 677 at 681 (H.L.). I do not think that the Interpretation

See too Floor v Davis (1979) 2 AER 677 at 681 (H.L.). I do not think that the Interpretation
Act 1957 can be used to extend the ambit of the definition of “take -over scheme” so as to

38

fortify and lend weight to the meaning for which plaintiff contends. If that meaning had been
intended, the draftsman would surely have said so.’49

[75] In addition, the accreditation of Optivest as a broker who is entitled to
offer specific broker services in terms of the Act does not render it subject to the
supervisory control of the Council in terms of the A ct. ‘ Broker services ’ is
defined by the Act to include ‘(a) the provision of service or advice in respect of
the introduction or admission of members to a medical scheme ; or ( b) the
ongoing provision of service or advice in respect of access to, or benefits or
services offered by, a medical scheme ’. These services are plainly advisory or
intermediary services rendered in relation to a financial product. 50 Optivest was
obliged to be, and was in fact, licenced as a financial services provider in terms
of the FAIS Act.51 As a matter of fact, therefore, Optivest’s conduct as a licenced
financial services provider rendering advisory services, was subject to the
conduct codes issu ed under the FAIS Act, 52 and fell under the supervisory
authority of the Financial Sector Conduct Authority (the FSCA).53

[76] These provisions establish that the regulatory and supervisory power of
the FSCA is based upon the nature of the service, and not upon the content of
the service. Thus, the fact that a broker service is provided in relation to a
particular type of financial product, namely the benefits offered by a medical
scheme, is of no significance insofar as the control of the service is concerned.
Nor, in my view, does it matter that s 65 of the A ct imposes upon an accredited
broker, restrictions as to fees or any other obligations. A failure to comply with

49 Spinnaker Investments (Pty) Ltd v Tongaat Group Limited 1982 (1) SA 65 (A) at 75G-H.
50 See the definition of the terms ‘advice’, ‘financial product’ and ‘intermediary services’ as set out in s 1 of the

Financial Advisory and Intermediary Services Act 37 of 2002 (the FAIS Act).
51 See ss 7 and 8 of the FAIS Act.
52 See s 15 of the FAIS Act. Section 16, significantly, provides that the published codes must comply with certain
principles. One of those is to encapsulate the requirement that the service provider ‘comply with all applicable
statutory or common law requirements applicable to the conduct of business’ (s 16(1)(e)).
53 See s 58(1)(a), read with s 5 and Schedule 2 of the FAIS Act. The effect is that the FSCA is the regulatory
authority responsible for supervisory control of supervised entities which fall under the ambit of the FAIS Act.

39

such statutory obligations would render the broker concerned in breach of the
conduct requirements imposed by the FAIS Act and that, in turn, would render
the broker subject to regulatory sanction at the instance of the FSCA.

[77] ‘Accreditation’ in terms of the A ct is not the equivalent of licencing. It
serves, as the term suggests, to permit or authorise the provision of advice in
relation a particular product, and no more. Accreditation does not, in my view,
place the broker concerned under the supervisory control of the Council and,
upon such basis, subject to investigation by the Registrar utilising the power
conferred by s 44 of the Act. To hold that accreditation places a broker under the
supervisory control of the Council, even if only in relation to compliance with
s 65 of the A ct, as the main judgment does, would give rise to considerab le
regulatory conflict and inefficiency. This can be illustrated as follows. Assume
that an accredited broker, in breach of s 65 is paid fees in excess of those which
are prescribed and also receives indirect benefits for advising clients to become
members of a particular medical scheme. Such conduct would entitle the Council
to suspend or cancel the accreditation of the broker. The conduct would also
constitute a breach of prescribed conduct rules in terms of the FAIS Act and a
breach of the conditions of the licence issued to the broker. Yet, the Council
would have no authority to take any action against the broker in terms of the
FAIS Act. That authority rests with the FSCA. For such action to be taken, the
Council would have to report the matter to the FSCA so that it, as the regulatory
authority responsible for the supervision of the conduct of brokers, might act.
The converse situation poses no such problems. The FSCA is entitled to
investigate any conduct on the part of a broker, including possible no n-
compliance with the Act. The FSCA could act upon its findings. So too could the

compliance with the Act. The FSCA could act upon its findings. So too could the
Council since the accreditation of a broker is subject to the fit and proper
requirements established and regulated by the FAIS Act.

40

[78] The main judgment places some reliance u pon the judgment of the
Constitutional Court in AmaBhungane,54 which concerned circumstances in
which the existence of authority or power to act may be implied in a statute. As
I understand the main judgment , it calls in aid the potential for an implied
authority to investigate the conduct of a broker as an interpretative tool. It is,
however, not clear upon what basis the authority is to be implied. The
Constitutional Court drew a careful distinction between ancillary powers and
primary powers. Both forms m ay be implied in consequence of the interpretive
exercise of determining meaning and giving effect to statutory provisions. It is,
however, necessary to determine whether the implied power derives from and is
therefore ancillary to an existing conferred power, or if it is implied as a primary
power by virtue of a reading of the statute as a whole.

[79] In the latter instance, the power is implied in order to render the statutory
instrument effective. That was the situation in AmaBhungane where it was
implied that the Minister was empowered to appoint a ‘designated judge’ despite
the absence of an express provision to that effect.

[80] In this instance , the power to conduct an investigative inspection of the
affairs of an accredited broker does not meet the requirements for implying it as
a primary power. The absence of an express authorisation to conduct such
investigative inspection does not render the A ct inoperative nor, for the reasons
proffered above, does it exempt a broker from proper r egulatory control and
supervision.

[81] Is the power to be implied as ancillary to some other expressly conferred
power? The main judgment appears to accept that it must be on the basis of the
existence of the power to accredit a broker and to enforce complian ce with

54 AmaBhungane para 65.

41

regulation 28 of the regulations. In light of the reasoning adopted by the main
judgment this issue does not arise, since the judgment accepts that the use of the
phrase ‘by any other person’ in s 44(4)(a) of the Act is broad enough to expressly
cover application of the section to brokers. There is therefore no need for an
implied ancillary power.

[82] In any event, I am unable to agree that such power is to be implied as
ancillary to the power to accredit for the reasons I have already set out.
Furthermore, reliance upon regulation 28 is misplaced. In Moodley and Another
v Minister of Education and Others,55 this Court held, unequivocally, that:
‘It is not permissible to treat the Act and the regulations made thereunder as a single piece of
legislation; and to use the latter as an aid to the interpretation of the former.’

[83] Still less may one use the regulations promulgated under an act as a source
of primary power from which one might imply that an ancillary power has been
conferred by the act. The main judgment suggests that this course is appropriate
insofar as it suggest s that the remedy provided by regulation 28(9) would be
ineffective unless the power to conduct an investigative inspection of a broker is
implied.56 Regulation 28(9), in any event, does not confer any remedial power
upon the Council. It merely provides that a broker is liable to repay fees received
in consequence of unlawful conduct.57

[84] This brings me to the procedural challenge based upon s 47 of the A ct.
The language of s 47 indicates that the Council is entitled to adjudicate
complaints in relation to bot h registered entities (medical schemes) and

55 Moodley and Others v Minister of Education and Culture, House of Delegates and Another [1989] ZASCA
45; 1989 (3) SA 221 (AD) at 233E.
56 See paras 38(e) and 40 of the main judgment.
57 Regulation 28 (9) reads as follows:

56 See paras 38(e) and 40 of the main judgment.
57 Regulation 28 (9) reads as follows:
‘Any person who has paid a broker compensation where there has been a material misrepresentation, or where
the payment is made consequent to unlawful conduct by the broker, is entitled to the full return of all the money
paid in consequence of such material misrepresentation or unlawful conduct.’

42

accredited persons (in this case Optivest as an accredited broker). The section
requires that if a written complaint is received, a copy of the complaint must be
furnished to the party concerned to afford it the opportunity to respond to the
complaint.

[85] The main judgment holds that the Registrar is entitled to proceed to
employ the machinery of s 44(4) (a) notwithstanding the existence of s 47 and
the peremptory language used in the latter section. It therefore concludes that the
complaint procedure does not serve as a bar to an investigative inspection as
contemplated by s 44(4)(a). In light of my conclusion that the Registrar does not
have the authority or power to conduct an investigative inspection of the business
or affairs of a broker, the interplay between s s 44 and 47 does not arise. I
accordingly express no view on whether the existence of a s 47 complaint
precludes the employment of s 44(4) to parties to whom it applies.

[86] For these reasons I would uphold the appeal on the terms indicated at the
outset.
__________________
G GOOSEN
JUDGE OF APPEAL

43

Appearances

For the appellant: J J Meiring with P S MacKenzie and
S Mathe
Instructed by: Von Lieres Cooper and Barlow, Cape
Town
Hendre Conradie Inc, Bloemfontein

For the first and second respondent: R Tshetlo with Z Ngakane and
S Mashiane
Instructed by: MacRobert Inc, Pretoria
Claude Reid Attorneys, Bloemfontein.