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[2017] ZASCA 160
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HMI Healthcare Corporation (Pty) Limited v Medshield Medical Scheme and Others (1213/2016) [2017] ZASCA 160 (24 November 2017)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 1213/2016
In
the matter between:
HMI
HEALTHCARE CORPORATION (PTY)
LIMITED
APPELLANT
and
MEDSHIELD
MEDICAL
SCHEME
FIRST
RESPONDENT
JOHANNES
ZACHARIAS HUMAN MULLER NO
SECOND
RESPONDENT
MICHAEL
MMATHOMO MASILO
NO
THIRD
RESPONDENT
THE
MASTER OF THE GAUTENG HIGH COURT,
PRETORIA
FOURTH
RESPONDENT
Neutral
citation:
HMI Healthcare
Corporation (Pty) Limited v Medshield Medical Scheme & others
(1213/2016)
[2017] ZASCA 160
(24
November 2017)
Bench:
Ponnan and Petse JJA and Tsoka, Lamont
and Mbatha AJJA
Heard:
13 November 2017
Delivered:
24 November 2017
Summary:
Application
for rescission – whether applicant an affected party as
contemplated in Rule 42(1)
(a)
of the Uniform Rules of Court – whether rescission appealable.
ORDER
On
appeal from
:
Gauteng
Division, Pretoria (Tuchten J (Tolmay J concurring) and Makgoka J
dissenting sitting as a court of appeal):
The
appeal is dismissed with costs including the costs consequent upon
the employment of two counsel.
JUDGMENT
Ponnan
JA (Petse JA and Tsoka, Lamont and Mbatha AJJA concurring):
[1]
The appellant, HMI Healthcare Corporation (Pty) Ltd (HMI), is the
sole shareholder of Calabash Health Solutions (Pty) Ltd (in
liquidation) (Calabash). Calabash was incorporated during 1999 and
commenced business as a provider of capitation services to medical
schemes in 2005. In October 2006 it concluded a written capitation
agreement
[1]
with the first respondent, the Medshield Medical
Scheme (Medshield). The agreement commenced operating with
retrospective effect
from 1 January 2006 and was to endure for a
period of three years until 31 December 2008. During its subsistence
several disputes
arose between the parties, consequently the
agreement came to be prematurely terminated during the middle of
2008.
[2]
Calabash was liquidated by way of a creditors’ voluntary
liquidation pursuant to a special resolution dated 13 July 2009.
[2]
On 18 August 2009 Johannes Zacharias Human Muller
NO (the second respondent) and Michael Mmathomo Masilo NO (the third
respondent)
were appointed by the fourth respondent, the Master of
the Gauteng High Court, Pretoria (the Master) as the joint
provisional liquidators
of Calabash. Their appointment was
subsequently made final by the Master, who issued a certificate to
that effect on 23 October
2009. At the first meeting of creditors on
22 September 2009 HMI proved a claim in the sum of R3 530 000.00
against Calabash.
The second meeting of creditors was held on 27
October 2009 at which, a related company, Agility Global Health
Solutions Africa
Ltd (Agility) proved a claim in the sum of
R9 959 829.96 against Calabash. HMI, Agility and Calabash
are related companies,
being subsidiaries within the Bathabile Group
of Companies.
[3]
During April 2011, Medshield called for a special meeting of
creditors to be convened, at which it proved claims in the total
sum
of R39 226 814.40 against Calabash. On 29 November 2012
Medshield caused summons to be issued against Calabash, wherein
it
claimed payment as follows:
(i) R2 000 000.00 in respect of claim A;
(ii) R3 500 000.00 in respect of claim B;
(iii) R26 526 715.00 in respect of claim C;
(iv) R2 922 197.00 in respect of claim D;
(v) R2 952 831.00 in respect of claim E;
(vi) R1 025 375.20 in respect of claim F;
(vii) R299 696.18 in respect of claim G;
(viii) R935 605.00 in respect of claim H; and
(ix) R459 690.00 in respect of claim I.
[4]
Claims A to G, although initially proved at a meeting of creditors,
were subsequently expunged by the Master in terms of the
provisions
of s 45 of the Insolvency Act 24 of 1936 (the IA). Thereafter,
Medshield sought to prove claims H and I at a further
meeting of
creditors, but these claims were also rejected by the Master. In
expunging the claims, the Master stated:
‘
The
nature of the factual disputes of these claims is of such technical
intensity that the Master as a quasi-judicial officer cannot
investigate and adjudicate on these claims. It would in this instance
be prudent of the Master to expunge these claims and afford
creditors
the opportunity to prove their claims by way of action. All
interested parties can voice their respective merits of either
proving or disallowing the claims in a court of law.’
[5]
On 2 October 2012 and, at the instance of the Registrar of Medical
Schemes, Medshield was placed under provisional curatorship
by the
North Gauteng High Court, Pretoria. Mr Themba Benedict Langa was
appointed the provisional curator of Medshield.
[6] On
18 December 2012 HMI applied
ex parte
to the North Gauteng
High Court, Pretoria for an order in the following terms:
‘
1.
That, in terms of s 387(4) and s 388 of the Companies Act, 61 of
1973: –
1.1 the applicant be and is
hereby empowered to defend the action instituted by Medshield Medical
Scheme (“Medshield”)
against Calabash Health Solutions
(Pty) Ltd (in liquidation) (“Calabash”) out of the above
Honourable Court under case
number 2012/69139, in the name of
Calabash and subject to the applicant furnishing an indemnity as to
cost to the duly appointed
joint liquidators of Calabash, Johannes
Zacharias Human Muller NO and Michael Mmathomo Masilo NO (“the
joint liquidators”);
1.2 the applicant be and
is hereby empowered to defend any other legal proceedings brought
against Calabash by Medshield,
in the name of Calabash and subject to
the applicant furnishing an indemnity as to costs to the joint
liquidators;
1.3 the applicant be and is
hereby empowered to institute action against Medshield, or to launch
a counterclaim under case number
2012/69139, for recovery of the
claim articulated in the draft particulars of claim attached to the
letter addressed by the applicant’s
attorneys to the joint
liquidators on 6 September 2012, as well as for any other claim which
Calabash may have against Medshield,
in the name of Calabash and
subject to the applicant furnishing an indemnity as to costs to the
joint liquidators;
2. That the costs of this
application be costs in the action under case number 2012/69139,
alternatively
, costs in the liquidation of Calabash, unless
opposed by any third party, in which event such third party be
ordered to pay the
costs of this application.’
[7] The
ex parte application succeeded before Van der Merwe DJP, who issued
the following order:
‘
1. The
applicant is empowered and authorised to defend the action instituted
by Medshield Medical Scheme, against Calabash Health
Solutions (Pty)
Ltd (In Liquidation), in the North-Gauteng High Court under case
number 2012/69139, in the name of Calabash Health
Solutions (Pty) Ltd
(In Liquidation), subject to it furnishing an indemnity as to costs
to the joint liquidators, Johannes Zacharias
Human Muller NO and
Michael Mmathomo Masilo NO;
2. The applicant is empowered
and authorised to defend any other legal proceedings brought against
Calabash Health Solutions (Pty)
Ltd (In Liquidation) by Medshield
Medical Scheme, in the name of Calabash Health Solutions (Pty) Ltd
(In Liquidation), subject
to it furnishing an indemnity as to costs
to the joint liquidators, Johannes Zacharias Human Muller NO and
Michael Mmathomo Masilo
NO;
3. The applicant is empowered
and authorised to institute legal proceedings, either in the form of
a summons or a counterclaim,
substantially in the form of annexure
“A”, against Medshield Medical Scheme, in the name of
Calabash Health Solutions
(Pty) Ltd (In Liquidation), subject to it
furnishing an indemnity as to costs to the joint liquidators,
Johannes Zacharias Human
Muller NO and Michael Mmathomo Masilo NO;
4. The cost
of this application will be cost in the action under case number
2012/69139.’
[8] On
4 April 2013 Medshield applied to the high court to rescind the order
of Van der Merwe DJP. It sought an order in the following
terms:
‘
2.
Rescinding the
ex
parte
order of his lordship, Mr Justice van der Merwe, dated 18 December
2012 (“the
ex
parte
order”), in terms of rule 42(1)
(a)
of the Uniform Rules of Court;
3. Setting aside the further
steps taken by HMI Healthcare Corporation (Pty) Ltd (“HMI”)
pursuant to the
ex parte
order, namely:
3.1 The notice of intention to
defend Medshield’s action in case number 2012/69139, filed on
behalf of Calabash Health Solutions
(Pty) Ltd (in liquidation)
(“Calabash”);
3.2 The notice of substitution
in terms of Rule 15(2) filed by HMI on 18 December 2012; and
3.3 The special plea, plea over
and counterclaim, filed on behalf of Calabash in case number
2012/69139;
4. Declaring that HMI is not
entitled to:
4.1 defend the action
instituted by Medshield against Calabash, in the name of Calabash, in
case number 2012/69139;
4.2 defend any other legal
proceedings brought against Calabash by Medshield, in the name of
Calabash; and
4.3 institute any action against
Medshield, or launch a counterclaim against Medshield under case
number 2012/69139, in the name
of Calabash;
5. Directing HMI to pay the
costs, on an attorney and own client scale:
5.1 of this application,
including the costs of two counsel; and
5.2
associated with the notice of intention to defend, the notice in
terms of Rule 15(2) and the special plea, plea over and
counterclaim
under case number 2012/69139, including the costs of two counsel
where applicable.’
[9]
The rescission application succeeded before Tlhapi J, who
subsequently granted leave to HMI to appeal to the full court of that
division. The full court (per Tuchten J (Tolmay J concurring) and
Makgoka J dissenting) dismissed the appeal. The further appeal
by HMI
is with the special leave of this court.
[10]
I deal later in this judgment with whether
an appeal against the order of Tlhapi J is competent. Before turning
to that issue it
is necessary to first consider whether Medshield had
the necessary
locus standi
to bring the rescission application. HMI
contends that Medshield is not an affected party as contemplated in
Rule 42(1)(a) of the
Uniform Rules of Court. That rule provides:
‘
The
court may, in addition to any other powers it may have,
mero
motu
or upon the application of any party affected, rescind or vary [a]n
order or judgment erroneously sought or erroneously granted
in the
absence of any party affected thereby.’
An
applicant for an order setting aside a judgment or order of court
must show, in order to establish
locus
standi
, that ‘he has an interest
in the subject-matter of the judgment or order sufficiently direct
and substantial to have entitled
him to intervene in the original
application upon which judgment was given or order granted’.
[3]
A court will accordingly refrain from deciding a
dispute unless and until all persons who have a direct and
substantial interest
in both the subject matter and the outcome of
the litigation, have been joined as parties.
[4]
It has been held that
a
‘direct and substantial interest’ is more than a
financial interest in the outcome of the litigation.
[5]
[11]
It is important to determine what interest it is that Medshield
claims to have had in the proceedings leading to the grant
of the ex
parte order. HMI approached the court for relief in terms of s 387(4)
of the Companies Act 61 of 1973, which provides
that:
‘
[a]ny
person aggrieved by any act or decision of the liquidator may apply
to the court after notice to the liquidator and thereupon
the court
may make such order as it thinks just.’ That provision empowers
a court in the exercise of its discretion to make
any order that it
considers that justice requires.
[6]
Medshield contends that HMI failed to properly
disclose such interest as it (Medshield) had to the court hearing the
ex parte
application and that its version should have been placed before the
court so as to enable that court to properly exercise the discretion
conferred by s 387(4).
[12]
According to Medshield, that it had
locus
standi
to bring the rescission
application is evident from the following: First, Medshield has a
direct and substantial interest in the
relief sought in the
ex
parte
order. The extensive references
in HMI’s founding affidavit to its interactions with Medshield
are evidence of this. Second,
Medshield is an asserted creditor of
Calabash. It is allegedly owed a total amount of approximately R40
million by Calabash and
has instituted action against the latter for
the recovery of the money. Its claims are set out in its particulars
of claim, which
were attached to HMI’s founding affidavit in
the
ex parte
application. The Master expunged claims A to G, and rejected claims H
and I, in order that Medshield could prove its claims by
way of
action proceedings. That case is pending. Until a decision is made in
that action, Medshield retains a substantial interest
in the affairs
of Calabash and in particular, whether HMI is entitled to litigate on
behalf of Calabash. Third, Medshield’s
action against Calabash
appears to be the principal reason for the
ex
parte
application. By contrast, neither
HMI nor Agility, whose claims against Calabash were also expunged by
the Master, have attempted
to prove their claims against Calabash by
way of action. Those claims might well have since prescribed, in that
event, HMI and
Agility would no longer be creditors of Calabash.
Fourth, the terms of the
ex parte
order cite Medshield expressly.
[13]
It thus seems clear that Medshield was indeed an affected party and
that the
ex parte
order was granted in its absence, despite it having a direct and
substantial interest in the relief sought. As it was put by Streicher
JA in
Lodhi 2 Properties Investments CC
v Bondev Developments (Pty) Ltd
:
[7]
‘
Where
notice of proceedings to a party is required and judgment is granted
against such party in his absence without notice of the
proceedings
having been given to him such judgment is granted erroneously.’
It
follows that the
ex parte
order
could not stand and was correctly rescinded by Tlhapi J.
[14] I turn to a consideration of whether the
rescission order is appealable. It was stated in
Zweni v
Minister of Law and Order
[8]
that a judgment or order is a decision which, as a general principle,
has three attributes: first, the decision must be final in
effect and
not susceptible to alteration by the court that made it; second, it
must be definitive of the rights of the parties;
and, third, it must
have the effect of disposing of at least a substantial portion of the
relief claimed in the main proceedings.
Zweni,
more particularly the requirement of
finality, has been affirmed by this court in a number of subsequent
decisions.
[9]
In
Guardian National Insurance Co Ltd v Searle NO
,
[10]
Howie JA, with reference to the three
Zweni
attributes,
said:
[11]
‘
As previous decisions of
this court indicate, there are still sound grounds for a basic
approach which avoids the piecemeal appellate
disposal of the issues
in litigation. It is unnecessarily expensive and generally it is
desirable, for obvious reasons, that such
issues be resolved by the
same court and at one and the same time. Where this approach has been
relaxed it has been because the
judicial decisions in question,
whether referred to as judgments, orders, rulings or declarations,
had three attributes.’
[15]
In
Pitelli v Everton Gardens Projects
CC
[12]
Nugent JA observed:
‘
An
order is not final for the purposes of an appeal merely because it
takes effect, unless it is set aside. It is final when the
proceedings of the court of first instance are complete and that
court is not capable of revisiting the order. That leads one
ineluctably to the conclusion that an order that is taken in the
absence of a party is ordinarily not appealable (perhaps there
might be cases in which it is appealable, but for the moment I cannot
think of one). It is not appealable because such an order
is capable
of being rescinded by the court that granted it, and it is thus not
final in its effect. In some cases an order that
is granted in the
absence of a party might be rescindable under rule 42(1)
(a)
,
and if it is not covered by that rule, as Van der Merwe J correctly
found, it is in any event capable of being rescinded under
the common
law.’
[16]
It is so that the
Zweni
attributes
are not cast in stone
[13]
and that even where a decision does not bear all
those attributes it may nevertheless be appealable if some other
considerations
are evident. This includes instances where the order
disposes of any issue or any portion of the issue in the main
proceedings
[14]
or if the appeal ‘would lead to a just and
reasonably prompt resolution of the real issue between the
parties’.
[15]
This court has held that no distinction can be drawn between ‘a
decision’ in
s 16(1)
(a)
of the
Superior Courts Act 10 of
2013
and ‘a judgment or order’ in s 20 of the Supreme
Court Act 59 of 1959.
[16]
Therefore, a decision for the purposes of
s 16(1)
(a)
(i) of the
Superior Courts Act must
still bear the three attributes identified
in
Zweni
.
[17]
More recently, this court and the Constitutional Court have expanded
on this test by adapting the general principles on the
appealability
of interim orders to accord with the equitable and more
context-sensitive standard of the interests of justice.
[17]
A consideration of the interests of justice is now
of particular importance. But, this does not mean that it is the sole
consideration
or that one no longer takes into account the factors
set out by this court in
Zweni
.
Specifically, this court has held that in deciding what is in the
interests of justice, each case has to be considered on its
own
facts, including whether a judgment is dispositive of the main or
real issues between the parties.
[18]
The Constitutional Court has elaborated on this as
follows:
‘
The
test of irreparable harm must take its place alongside other
important and relevant considerations that speak to what is in
the
interests of justice, such as the kind and importance of the
constitutional issue raised; whether there are prospects of success;
whether the decision, although interlocutory, has a final effect; and
whether irreparable harm will result if leave to appeal is
not
granted. It bears repetition that what is in the interests of justice
will depend on a careful evaluation of all the relevant
considerations in a particular case.’
[19]
[18]
It is plain that a rescission order does not have a final and
definitive effect. In
De Vos v Cooper &
Ferreira
this court expressed the view
that ‘[s]o ‘n bevel [that is, a rescission order] het
immers nie enige finale of beslissende
uitwerking op die geskilpunte
in die hoofgeding nie’.
[20]
The rescission order simply returns the parties to
the positions which they were in prior to the
ex
parte
order being granted.
De
Vos
relied inter alia on
Gatebe
v Gatebe
[21]
and
Ranchod v Lalloo
.
[22]
In
Gatebe
,
De Villiers JP held:
‘
The
order therefore does not dispose of the main case or of any of the
issues in the main case, and therefore has not the effect
of a
definitive sentence in this behalf. It still remains to consider
whether it has not the effect of a definitive sentence in
that it
causes irreparable prejudice. Here again it seems to me to be clear
that an order merely rescinding a default judgment
does not cause
irreparable prejudice, for in the definitive sentence the effect of
the decision can obviously be repaired.’
[23]
In
Ranchod
, Millin J endorsed the reasoning of De Villiers JP. He
expatiated:
‘
The plaintiff's claim
remains intact. Nothing has been decided about it. All that has
happened is that the defendant has been given
an opportunity of
answering it; and the setting aside of the default judgment for that
purpose is reparable in the final stage.’
[24]
[19]
Counsel for HMI sought to escape these authorities with the argument
that the reasoning of Tlhapi J finally determined some
of the issues
between the parties and, as a result, on the facts of this case the
order was indeed appealable. That argument is
untenable. First, an
appeal lies not against the reasoning, but the substantive order of
the court below.
[25]
Second, as
Ranchod
makes plain: ‘[I]f the question
of appealability were to depend on the facts of each case, the same
order might be appealable
by one litigant but not by another; and the
court would in every case have to enter into the merits of the appeal
in order to determine
whether there should be an appeal.’
It
may be that the rescission order will cause HMI some inconvenience
but as Harms AJA pointed out in
Zweni
:
[26]
‘[t]he fact that a decision may cause a party an inconvenience
or place him at a disadvantage in the litigation which nothing
but an
appeal can correct, is not taken into account in determining its
appealability’.
[20]
In my view, the rescission order bears none of the attributes
identified by the court in
Zweni
.
This is a central consideration in determining whether the interests
of justice favour a finding that the order is appealable.
By
rescinding the
ex parte
order, the way is paved for the parties’ respective versions to
be fully ventilated and deliberated upon by a court, thereby
ensuring
a resolution of the real issues between the parties. To find that the
rescission order is appealable will therefore effectively
unnecessarily delay the resolution of the true issues between the
parties. The interests of justice therefore do not favour such
an
order being appealable.
[21] In
the result the appeal must fail and it is accordingly dismissed with
costs, including the costs consequent upon the employment
of two
counsel.
_________________
V M Ponnan
Judge of Appeal
APPEARANCES:
For
Appellant: E Kromhout
Instructed
by:
Gildenhuys
Malatji Inc, Pretoria
Honey
Attorneys, Bloemfontein
For
First Respondent: A Subel SC (with him N Rajab-Budlender)
Instructed
by:
Hogan
Lovells c/o Friedland Hart Solomon & Nicolson
Attorneys,
Pretoria
McIntyre
van der Post, Bloemfontein
[1]
In terms of the general regulations
promulgated under the
Medical Schemes Act 131 of 1998
, capitation
agreement means: ‘an arrangement entered into between a medical
scheme and a person whereby the medical scheme
pays to such person a
pre-negotiated fixed fee in return for the delivery or arrangement
for the delivery of specified benefits
to some or all of the members
of the medical scheme.’
[2]
In terms of
s 349
and
351
of the old Companies
Act 61 of 1973.
[3]
Per Corbett J in
United
Watch & Diamond Co (Pty) Ltd & others v Disa Hotels Ltd &
others
1972 (4) SA 409
(C) at 415A.
[4]
See eg
Amalgamated
Engineering Union v Minister of Labour
1949
(3) SA 637
(A) at 657 and 659;
Gordon v
Department of Health, KwaZulu-Natal
[2008] ZASCA 99
;
2008
(6) SA 522
(SCA) para 9;
City of
Johannesburg & others v South African Local Authorities Pension
Fund & others
(20045/2014)
[2015]
ZASCA 4
(9 March 2015) para 9.
[5]
See
Judicial Service
Commission & another v Cape Bar Council & another
2013 (1) SA 170
(SCA) para 12, where Brand JA stated: ‘It has
by now become settled law that the joinder of a party is only
required as
a matter of necessity – as opposed to a matter of
convenience – if that party has a direct and substantial
interest
which may be affected prejudicially by the judgment of the
court in the proceedings concerned . . . .’
[6]
Cohen NO & another v Ruskin and Smith NNO
&
another
1981 (1) SA 421
(W) at 425.
[7]
Lodhi 2 Properties Investments CC v Bondev
Developments (Pty) Ltd
2007 (6) SA 87
para 24.
[8]
Zweni v Minister of Law and Order
1993 (1) SA 523
(A) at
532I-533A.
[9]
Those judgments are usefully collated in
Maize
Board v Tiger Oats Ltd & others
2002 (5) SA 365
(SCA) para
6.
[10]
Guardian National Insurance Co Ltd v Searle NO
[1992] 2 All
SA 151 (A).
[11]
Zweni
supra fn 8
at 301B-C.
[12]
Pitelli v Everton Gardens Projects CC
2010
(5) SA 171
(SCA)
para 27.
[13]
Moch v Nedtravel (Pty) Ltd t/a American Express Travel Service
1996 (3) SA 1
(A) at 10F-11C.
[14]
Jacobs & another v Baumann NO
& others
2009
(5) 432 (SCA) at 436F-G.
[15]
Zweni
supra fn 8 at 531D-E and
Jacobs
ibid at 436E-G.
[16]
See
Neotel (Pty) Ltd v Telkom SA Soc &
others
[2017] ZASCA 47
(31 March 2017) and the cases there
cited.
[17]
Philani-Ma-Afrika & others v Mailula & others
2010
(2) SA 573
(SCA) and
International Trade Administration
Commission v SCAW South Africa (Pty) Ltd
2012 (4) SA 618
(CC)
para 53.
[18]
Nova Property Group Holdings v Corbett
2016 (4) SA 317
(SCA)
at paras 8-10.
[19]
International Trade Administration Commission
supra fn 17 at
para 55.
[20]
De Vos v Cooper & Ferreira
1999 (4) SA 1290
(SCA) at
1297A-D.
[21]
Gatebe v Gatebe
1928
OPD 145.
[22]
Ranchod v Lalloo
1942 TPD 211.
[23]
Gatebe
supra fn 21 at 149.
[24]
Ranchod
supra fn 22 at 217.
[25]
See inter alia
Absa Bank Ltd v Mkhize &
another, Absa Bank Ltd v Chetty, Absa Bank Ltd v Mlipha
2014 (5)
SA 16
(SCA);
Western Johannesburg Rent Board & another v
Ursula Mansions
(Pty) Ltd
1948 (3) SA 353
(A) at 355; and
Atholl
Developments (Pty) Ltd v The Valuation Appeal Board for the City of
Johannesburg & another
[2015]
ZASCA 55
(30 March 2015).
[26]
Zweni
supra fn 8
at
533B-C.