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[2015] ZAGPPHC 227
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Bonitas Medical Scheme v Council for Medical Schemes and Another (27481/2015) [2015] ZAGPPHC 227 (24 April 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION. PRETORIA
Case
no: 27481/2015
In the matter
between:
BONITAS MEDICAL
SCHEME
......................................................................................................
Applicant
and
THE COUNCIL FOR
MEDICAL
SCHEMES
...................................................................
First
Respondent
THE REGISTRAR OF
MEDICAL
SCHEMES
.............................................................
Second
Respondent
JUDGEMENT
JORDAAN J:
The chronology of
the events in this matter are briefly as follows:
On 10 November 2014
the Registrar of Medical Schemes (the Registrar) (the second
respondent) appointed an inspector in terms of
Section 44(4)(a) of
the Medical Schemes Act, Act 131 of 1998 (MSA) and Section 3 of the
Inspection of Financial Institutions Act,
Act 80 of 1998.
On 24 December 2014
the Applicant (Bonitas) noted an appeal in terms of Section 49 of the
MSA to the Council for Medical Schemes
(the first respondent) (CMS)
which appeal was to be heard on 13 March 2015.
However on 26
February 2015 the CMS resolved, without hearing the appeal, that the
decision to order an inspection was not appealable.
In this regard
they clearly relied on two judgements where other medical schemes
attempted to appeal against a similar decision
and it was found that
such a decisjon was not appealable. These judgements were not
judgements of a High Court but judgements by
the Appeal Committee and
the Appeal Board of the CMS.
On 2 March 2015 the
CMS advised the applicant (Bonitas) that the decision is not
appealable and that the inspection would continue.
Bonitas then
indicated that it would appear on 13 March 2015 to argue the appeal
and sought an undertaking that the inspection
would in the meantime
not proceed.
On 12 March 2015 the
CMS acknowledged that there was a dispute with Bonitas on the
appealability of the decision but refused to
give any undertaking.
Also on 12 March
2015 the CMS issued and served an urgent application to be heard in
this court. The subject matter of this application
was to apply for
urgent relief in which the Registrar and the CMS sought a declarator
in the following terms:
“
2.
Declaring that the second applicant’s (“the Registrar’s”)
decision dated 10 November 2014 ("the
inspection decision”)
to order an inspection into the affairs of the respondent in terms of
Sec 44(4)(a) of the Medical Schemes
Act 131 of 1998 (“the MS
Act”) and Sec 2 of the Inspection of Financial Institutions
Act, 80 of 1998 (“the Inspections
Act”) is not a decision
that is appealable in terms of the provisions of Sec 49 of the MS
Act;”.
On
the
same date Bonitas wrote to the Registrar on whether the inspection
will stand over pending the hearing of the urgent application.
Such
undertaking was given provided that the application is heard
urgently.
On Monday, 13 April
2015 the CMS and the Registrar applied in the Urgent Court under case
number 18491/2015 for urgent relief in
which the Registrar and the
CMS sought the above mentioned declarator
The application was
heard before Baqwa J, who struck the application from the roll with
costs for lack of urgency.
The Registrar and
the CMS thereafter enrolled the application in which the above
declarator is sought for hearing in the Opposed
Motion Court on 15
June 2015. The Registrar’s counter-application in the matter
before me is for exactly the same relief
to be argued on 15 June
2015.
In spite of the fact
that the matter being enrolled for final determination of the
appealability of such a decision the Registrar,
on 15 April 2015
advised in a letter that the inspection will continue on 17 April
2015. The Applicant (Bonitas) then lodged this
urgent application to
stay the inspection pending the finalisation of the main application
on 15 June 2015. The Respondents oppose
the application and, as
indicated above, also lodged a counter application asking for the
very same relief it sought before Baqua
J, which was struck from the
roll for want of urgency.
The
applicant argues that due to the fact that it filed an appeal against
the inspection decision of 10 November 2014 during December
2014, in
terms of Sec 49(2) of the MS Act, any decision of the Registrar
appealed against is, upon the noting of an appeal, suspended.
The
purpose of the declarator to be argued on 15 June 2015 is to obtain
clarity on the legal position of an inspection decision,
and whether
it falls within the ambit of
“
any
decision”
in
Sec 49(2) of the MS Act. The applicant contends that the inspection
decision has been suspended as a matter of law.
It is argued on
behalf of the Applicant that the Registrar, as the responsible
regulator pertaining to inspections of Medical Schemes,
seeks clarity
on the lawfulness of proceeding with an inspection, notwithstanding
the lodging of an appeal in terms of Sec 49 against
the inspection
decision. It was submitted that a rational regulator would, in such
circumstances, await the decision of the Court
before proceeding with
the inspection. This is particularly so where the Registrar has
advanced no factual basis for contending
that the inspection is
urgent.
It was argued on
behalf of the Applicant that however, not content to await the
Court’s sanctioning of the continuation of
the inspection,
notwithstanding a Sec 49 appeal having been noted, the Registrar
notified the applicant in the afternoon of 15
April 2015 that the
inspection would commence at 09:00 on 17 April 2015. The applicant
was thereby forced to initiate this urgent
application to restore the
status quo. The applicant contends that the Registrar, in directing
that the inspection proceed on 17
April 2015 on such short notice,
notwithstanding the pending declarator aimed at ascertaining the
validity of proceeding with the
inspection, has acted irrationally.
Further, the applicant contends that the Registrar’s decision
to proceed with the inspection
on such short notice was for the
ulterior purpose of forcing the applicant to bring this application
so that the legal point, which
the Registrar was precluded from
having decided in the urgent court on 13 April 2015, could be
reargued. The counter-application
removes all doubt.
The applicant served
its urgent application on the respondents just before 17:00 on 16
April 2015, giving notice of a hearing at
18:00 before the Urgent
Court. At such hearing, the applicant would seek the relief in terms
of Part A of the Notice of Motion.
Having served the application, the
respondents agreed to an interim arrangement in terms of which the
inspection would not proceed
before Tuesday, 21 April 2015, provided
the application is finalised on Monday, 20 April 2015. Later a
further undertaking was
given that the inspection would not proceed
until judgement in this application is handed down.
The parties agreed
time periods for the exchanging of affidavits and the matter was set
down before me in the urgent court on 20
April 2015. The undertaking
by the Registrar and the arrangement to get the matter ripe for
hearing has removed the further need
for specific relief in terms of
Part A.
In terms of Part B
of the notice of motion, the applicant seeks an order interdicting
the continuation of the inspection until the
validity of such
continuation has been decided by the Court in the application set
down for 15 June 2015. The relief sought in
Part B was argued on 20
April 2015.
The main thrust of
the argument of the Respondents before me was that its counter
application be granted. In other words that I
grant them the very
same relief they sought a week before Baqua J which was struck off
for want of urgency. I was told that the
Registrar and the CMS’s
application for the urgent declarator on 13 April 2014 was struck off
because of dilatory conduct
on the part of the Registrar in launching
the application. The decision to continue with the inspection had
been taken on 10 November
2014, but the application was only brought
on 13 April 2014.
Before me the
Respondents castigated the Applicants for arguing before Baqua J that
the matter was not urgent. I have not been provided
with the
judgement by Baqua J but ! accept that the Respondents (the
Applicants before Baqua J) were given the opportunity to fully
address him on the question of urgency. They could not convince him.
The judgement of Baqua J, that the matter was not urgent,
is of
course not appealable.
1 am in agreement
that other than general propositions, no facts had been advanced by
the Registrar why the continuation of the
inspection is urgent.
The
Applicant argues that the question of urgency is rather informed by
the question whether the Court will permit the Registrar
to take the
law into his own hands by proceeding with an inspection, the validity
of which the Registrar himself has sought to
be confirmed by the
Court. Taking the law into his own hands is not only unlawful, but
irrational in such circumstances. It was
submitted that the primary
reason for urgency in this matter is based on the urgency arising
from a regulator acting unlawfully
and irrationally. The
unlawfulness, due to the inspection decision being suspended under
Sec 49(2) of the MS Act, is to be decided
on 15 June 2015. However,
the irrationality of the Registrar, forcing the issue by proceeding
with the inspection despite his application
for the declarator aimed
at establishing the legality of continuing with the inspection, is
per
se
urgent.
Hench the urgency of this application.
It was argued on
behalf of the Applicant that the decision of the Registrar of 15
April 2015 to continue with the inspection in
spite of the fact that
the Respondents set the matter down for hearing (in the normal
course) on 15 June 2015 is irrational and
unreasonable. After due
consideration I am inclined to agree.
One of the arguments
advanced by the Respondents was that the element of surprise is part
and parcel of the envisaged inspection.
That is of course correct,
but it must be kept in mind that the Applicant has been aware of the
inspection to be held since November
2014. There can hardly be any
element of surprise in this case.
It
was argued on behalf of the Applicant that Sec 33(1) of the
Constitution provides that administrative action must be reasonable.
In administrative law it is now uncontroversial that the first
element promised by reasonable administrative action in Sec 33(1)
is
rationality. See
Barto
Star Fishing (Pty)
Ltd
v Minister of Environment Affairs
2004(4)
SA 490 (CC) at par [43]
I agree that no
substantial or tenable reasons are provided for the Registrar why an
inspection which was already initiated in November
2014, has since
the striking of the roll of the main application, become so urgent
that it cannot await finalisation of the main
application on 15 June
2015.
Having stayed the
inspection of its own accord and having launched the main application
to seek clarity from the Court of an important,
complex statutory
interpretation, it is not rational or reasonable to effectively
prejudge its own application by ordering the
inspection to proceed.
I
was referred to S v Makwanyane 1995(3) SA 391 (CC) at par 156 where
it was stated that:
“
We
have moved from a past characterised by much which was arbitrary and
unequal in the operation of the law to a present and a future
in a
constitutional State where State action must be such that it is
capable of being analysed and justified rationally. The idea
of the
constitutional State presupposes a system whose operation can be
rationally tested against or in terms of the law. ”
It was argued that
no rational basis therefore exists, nor have the Registrar put
forward any reasonable grounds why the application
is so urgent that
it cannot await the outcome of the proceedings for declarator relief.
It was submitted
that the only reasonable conclusion is that the respondents’
real purpose to irrationally continue with the
inspection, is to
force the applicant to bring this application in order to allow the
respondents to oppose the application, launch
a counter-application
and thereby seek a second bite at the cherry on the merits of the
main application and a disguised appeal
against the Order on urgency
granted by Bakwa J on Monday, 13 April 2015.
I am inclined to
agree. A party cannot be allowed to slip in through the back door
when its attempt to go through the front door
was unsuccessful.
I am satisfied that
the Applicant has made out a proper case for an interim interdict
that the status quo be preserved, pending
the final determination of
the rights of the parties.
The
applicant has established a
prima
facie
right
in circumstances where the respondents are ultimately also not sure
about the correct interpretation of Sec 49(2), as evidenced
by their
launching of the main application on 15 June 2015. At the very least,
the Applicant’s
prima
facie
right
is one open to some doubt, which nevertheless suffices.
I agree that no
rational or reasonable grounds have been provided by the Respondents
why the inspection should proceed on such an
extremely urgent basis
before the main application is disposed of.
I agree with the
Applicant’s submission that the Respondents have compelled the
Applicant to launch this application which
would allow the Applicant
to abuse the process of court by seeking to reargue the matter which
served before the urgent court on
Monday, 13 April 2015.
It was submitted
that the relief sought by the Applicant should be granted with costs
on an attorney and client scale, inclusive
of the costs of two
counsel.
I agree that the
relief sought by the Applicant should be granted but in my view the
question of costs should be reserved for the
court finally
determining the matter on 15 June 2015.
In the result the
following order is made:
1. That pending the
finalisation of the main application under case number 18491/2015,
enrolled for 15 June 2015, the Respondents
are interdicted and
restrained from proceeding with the inspection into the affairs of
the Applicant in terms of
Section 44(4)(a)
of the
Medical Schemes
Act, 131 of 1998
;
2. The costs of the
application will be costs in the main application under case number
18491/2015.