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[2015] ZAGPPHC 476
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Council for Medical Schemes and Another v Bonitas Medical Fund (18491/2015) [2015] ZAGPPHC 476; 2015 (5) SA 577 (GP); [2015] 3 All SA 688 (GP) (4 July 2015)
IN
THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, PRETORIA
CASE
NO: 18491/2015
In
the matter between:
THE
COUNCIL FOR MEDICAL
SCHEMES
First Applicant
THE
REGISTRAR FOR MEDICAL
SCHEMES
Second Applicant
and
BONITAS
MEDICAL
FUND
Respondent
JUDGMENT
Tuchten
J
:
1
This is a dispute about the correct interpretation of s 49(1)
of the
Medical Schemes Act, 131 of 1998 (the MSA). On 10 November 2014 the
second applicant (the Registrar)
[1]
,
acting under powers conferred on that functionary by s
44(2) of the MSA read with s 2 of the Inspection of Financial
Institutions
Act, 80 of 1998 (the FIA), issued a written direction
(the inspection order) in which he appointed Mr CJ Potgieter as an
inspector
and instructed Mr Potgieter (the Inspector) to inspect the
affairs of the respondent and some 17 other institutions (described
in the inspection order as the respondent's "associated
institutions").
2
The purpose of the inspection was stated to be to obtain
evidence of
whether or not certain transactions were irregular and contravened
the MSA. The Inspector was instructed to report
his findings to the
Registrar.
3
The powers conferred by the Registrar on the Inspector
were contained
in an annexure A attached to the inspection decision. They were to
exercise any of the powers stipulated in the
MSA and in the FIA and
in particular to perform acts in relation to the respondent and the
alleged associates which amount to searches
within the premises of
these institutions and to retain and seize documents, including those
which might be needed for criminal
or other proceedings.
4
On 24 November 2014, the Inspector visited the premises
of the
respondent and gave its representative a copy of the inspection
order. He asked the respondent for a great deal of documentary
information. The Inspector gave the respondent until 12 December 2014
to provide the information. By letter dated 11 December 2014,
the
respondent undertook immediately to provide what was "readily
available" and to provide the balance of the material
sought by
the second working week of January 2015. The respondent then
proceeded to query the need for any inspection at all and
sought
certain information from the Registrar.
5
The response from the Registrar did not satisfy the respondent
and by
notice
of
appeal dated 24 December 2014, the respondent delivered
what it described as a notice of appeal in terms of s 49(1) of the
MSA.
The appeal was stated to be directed to the first applicant (the
Council) and to be against the decision of the Registrar to order
the
inspection which I have described.
6
This led to certain abortive or inconclusive litigation between
the
parties. I shall not describe the background to the current
application because the sole question for my consideration is whether
an appeal to the Council lay at all against the decision of the
Registrar embodied in the inspection order. I received submissions
from counsel for the respondent regarding the legality of the
decision and rights of the respondent which had allegedly been
infringed
by the inspection order. I shall not deal with these
submissions in depth because I do not think that they take the matter
very
much further. I shall accept that the inspection order had the
potential to infringe the respondent's
rights
and
that
the
notional
possibility
exists
that
the
inspection
decision
may
be
illegal. But
none
of
that, in
my
view,
really
matters
for
present
purposes.
7
The
question
is not whether,
if the
respondent's
rights have been
infringed
or
the
inspection
order is
illegal, the respondent
should
have
a
remedy.
I
f
that
is
the
case,
i
t
self-evidently
should.
Nor
i
s
the
question
whether
s
49(1)
passes
constitutional
muster.
No
such
constitutional
challenge
is
before
me.
The
question
i
s
whether
s
49((
1
)
of
the
MSA,
having
regard
to
the
l
anguage
used
and
seen
i
n
its
context
which
includes
the
purpose
for
which
the
measure
was
enacted,
confers a right of appeal on the respondent to the Council
against
the
i
nspection
order.
8
To
decide
this question I have
to interpret
s
49(1)
of
the MSA.
Section
49
reads:
(1)
Any
person
who is
aggrieved
by
any
decision of
the
Registrar
under
a
power
conferred
or
a
duty
i
mposed
upon him or her by or under this Act,
excluding a
decision
that
has
been
made
with
the
concurrence
of
the Council, may within
30 days after the date on
which
such
decision
was
given,
appeal
against
such
decision to the Council
and the Council may make
such
order
on
the
appeal
as
it
may
deem
just.
(2)
The
operation
of
any
decision
which
is
the
subject
of
an
appeal
under
subsection
(1)
shall
be
suspended pending
the
decision
of
the
Council
on
such
appeal.
(3)
The Registrar or any
other person who
l
odges
an appeal in
terms
of subsection (1) may in person or
through
a
representative
appear
before
the
Council
and tender
evidence
or submit
any
argument
or
explanation
to
the
Council
in
support
of
the
decision
which
is
the
subject
of
the
appeal.
9
The inspection order
was made, as I have
said, under
a power conferred
on
the
Registrar
by
ss
44(1)
to
(3)
of
the
MSA.
These provisions
read:
(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,
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.
(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
I
nstitutions
Act,
1984
(Act
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
I
nspection
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
compl
i
ance
with this
Act
by
a
medical
scheme
or
any
other
person.
10
Act 38
of 1984
(the
old
I
nspection
Act) was however repealed
by
s 13 of
the FIA. Counsel on both
sides argued the matter
on
the basis
that
the
reference
to
the old Inspection
Act
in
the
MSA
should
be read as
if
i
t
were a reference to the F
I
A.
11
The question to be
decided actually reduces
to this: is a decision by
the
registrar to
order
an
inspection
a
decision for
the
purposes
of
s
49(1)?
12
The modern approach to
the interpretation
of
documents,
including
statutory provisions, has been
authoritatively set out in a number of
cases decided
i
n
the Supreme Court
of
Appeal.
I
n
Natal
Joint
Municipal
Pension
Fund
v
Endumeni
Municipality
2012
4
SA
593
SCA paras
18 and 25-26, the
SCA set out
how a court should
interpret
documents,
whether contractual
or
statutory
or
otherwise:
[2]
18
The present state of the
Jaw can be expressed as follows: Interpretation is the process of
attributing meaning to the words
used in a document,
be
it
l
egislation,
some
other
statutory instrument, or
contract, having regard to the context provided by reading
the particular provision
or provisions in
the
light
of
the
document
as
a
whole
and
the circumstances
attendant
upon
i
ts
coming
i
nto
existence. Whatever the nature of the document, consideration
must
be
given
to
the
l
anguage
used
in the
light
of
the
ordinary
rules
of
grammar
and
syntax; the
context
in
which
the
provision
appears;
the
apparent
purpose to
which
it
is directed
and the
material
known
to
those responsible
for
i
ts
production. Where more
than one meaning is
possible
each
possibil
i
ty
must
be
weighed
i
n
the
light of all these
factors. The process is objective,
not 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.
To
do so
in
regard to
a statute
or statutory instrument
is
to
cross the divide between
interpretation and
l
egislation;
in
a
contractual context it is
to make
a
contract for
the parties
other
than
the
one
they
in
fact made. The
'inevitable point of
departure is
the
l
anguage
of
the
provision
i
tself,
read in context and having
regard to the purpose of
the provision
and
the background
to
the preparation and
production
of
the
document.
[25] Which
of
the
interpretational factors
I have
mentioned
will
predominate
in
any
given
situation
varies.
Sometimes
the
l
anguage
of
the
provision, when read in its particular context,
seems
clear and admits
of
l
ittle
if any ambiguity.
Courts
say in such cases that they adhere to the ordinary grammatical
meaning of the words used. However, that too is a misnomer.
It is a
product
of a time when
language was viewed
differently and regarded as likely to have a fixed and
definite meaning; a
view
that the experience of
lawyers
down
the
years,
as
well
as
the
study
of linguistics,
has shown to be mistaken.
Most words can
bear
several
different
meanings
or
shades
of meaning and to try to
ascertain their meaning in the
abstract, divorced
from
the
broad
context of
their
use,
is an unhelpful exercise.
The expression can mean
no
more
than
that,
when
the
provision
is
read
in context,
that is
the
appropriate
meaning to
give
to
the
l
anguage
used.
At
the
other
extreme,
where
the context makes it
plain that adhering to the meaning suggested by apparently plain
l
anguage
would
l
ead
to glaring absurdity, the court will ascribe a meaning
to
the
l
anguage
that avoids
the
absurdity. This is
said
to
i
nvolve
a departure from the plain meaning of the words used. More accurately
it is either a
restriction
or
extension of
the
l
anguage
used by
the
adoption of a
narrow
or
broad
meaning of the words,
the
selection of a
l
ess
immediately apparent meaning or sometimes
the
correction of an
apparent
error in
the
language in
order to avoid the
i
dentified
absurdity.
[26]
In between these
two extremes,
in
most cases the
court
i
s
faced with two
or
more possible meanings that are
to a
greater or
l
esser
degree available
on
the
l
anguage
used. Here it is usually
said
that
the
l
anguage
is
ambiguous,
although the only ambiguity lies in selecting the proper meaning (on
which views
may
l
egitimately
differ). In
resolving
the problem, the apparent
purpose of the provision and
the context in
which
i
t
occurs will be
i
mportant
guides to
the
correct interpretation. An interpretation will
not be given that
l
eads
to
impractical,
unbusinesslike
or
oppressive consequences
or
that
will
stultify
the
broader operation of
the
l
egislation
or
contract under
consideration.
13
I
n
Dexgroup (Pty)
Ltd v Trustco Group
International (Pty)
Ltd and Others
2013
6
SA
520
SCA para
1
6,
the court held:
Chartered Accountants (SA) v
Securefin Ltd and Another and Natal Joint Municipal Pension Fund v
Endumeni Municipality
...
make
i
t clear
that in
interpreting
any document the starting
point
i
s
inevitably the
l
anguage
of the document but
i
t
falls to be
construed
in
the
l
ight
of
i
ts
context, the apparent purpose to
which
it
is
directed
and
the material
known
to
those
responsible for
i
ts
production.
Context,
the purpose of the provision
under
consideration
and
the
background
to
the preparation and
production of the document in
question are
not
secondary
matters
introduced
to
resolve
linguistic
uncertainty but
are
fundamental to
the process
of interpretation
from
the
outset.
14
In
Bothma-Batho
Transport
(Edms)
Bpk
v
S
Bothma
&
Seun
Transport
(Edms)
Bpk
2014 2 SA 494
SCA
para
12, the court
held in relation to
the
interpretation
of
a
provision
in
a
contract:
Whilst
the
starting point
remains
the
words of
the
document,
which
are
the
only
relevant
medium
through
which
the
parties
have expressed their
contractual
i
ntentions,
the process of interpretation does not
stop at
a perceived
l
i
teral
meaning
of
those words,
but
considers them in the light of all relevant
and
admissible
context,
includin
g
the
circumstances in
which
the document came into
being.
The
former distinction
between permissible background and
surrounding
circumstances,
never
very
clear,
has fallen
away.
Interpretation
is
no
longer
a
process
that
occurs in
stages
but is
'essentially one
unitary
exercise'.
15
I
n
Commissioner,
South African
Revenue
Service
v Bosch
and Another 20
1
5
2 SA
1
74
SCA para 9, the court held in relation to the
interpretation
of a provision
in
an
income
tax
statute:
The words of the section provide
the starting point and are considered
i
n
the light
of
their context, the
apparent purpose of
the
provision
and
any
relevant
background
material.
There may
be
rare
cases
where words used
in
a
statute or
contract are only capable
of bearing a single
meaning,
but
outside of
that situation it is pointless to speak of a
statutory provision or a clause in a contract as having a plain
meaning. One meaning
may strike the reader as syntactically and
grammatically more plausible than another, but, as soon as more than
one possible meaning
is available, the determination of the
provision's proper meaning
will
depend as much on context, purpose and background as on
dictionary definitions ... .
16
Among the purposes of the MSA as expressed in its
long title are to
control certain activities of medical schemes and to protect the
interests of members of medical schemes. The
respondent is a medical
scheme as contemplated by the MSA. The concept of medical scheme is
not defined in the MSA but in order
for an entity lawfully to operate
at all, it must be registered.
[3]
A scheme so registered becomes a body corporate. It must enact a set
of rules, which must also be registered.
[4]
A scheme assumes liability for and guarantees the benefits offered to
its members and their dependants under its rules.
17
A medical scheme must at all times maintain its
business in a
financially sound condition and must have unencumbered assets which
on any day are not less than its aggregate liabilities.
A medical
scheme is restricted in the manner in which it may invest its
assets.
[5]
Every medical scheme must appoint at least one auditor who, in
addition to the other duties to which an auditor is subject must
certify in relation to every return or statement which he or she is
required under the MSA to examine, that the return or statement
in
question complies with the requirements of the MSA.
[6]
18
Medical schemes are of great importance in the lives
of many people
in this country. The benefits provided by schemes are essentially.
related to medical treatment of members and their
dependents. In
return for a subscription, a scheme provides access to medical
services at no cost or a reduced cost as contemplated
in the rules of
the scheme. It is of the utmost importance that schemes are, and are
seen to be, well run and operate without irregularities.
The lives
and well being of members of schemes and their dependants literally
depend on this. A medical scheme is at bottom simply
a mechanism
whereby the contributions of members are gathered in a fund and then
paid out to finance medical treatments for those
same members and, of
course, the administration of the medical scheme. All the money in a
medical scheme has as its source the
contributions of those members.
The only other source of revenue of a medical scheme which comes to
mind is the returns on investments
made by medical schemes of
members' contributions not immediately needed for medical treatments
or administration costs.
19
The MSA has instituted a regulatory scheme to ensure
that the
purposes of the MSA are achieved. At the apex of this regulatory
scheme stands the Council. The Council consists of up
to 15 members
appointed by the Minister of Health, taking into account the
interests of members and of medical schemes, expertise
in law,
accounting, medicine, actuarial sciences, economics and consumer
affairs.
[7]
The Council is required by law to meet at least four times a year.
Special meetings may be convened in certain circumstances. Its
resolutions must be taken by majority vote.
[8]
20
The
functions
and
powers
of
the
Council
[9]
are,
with
one
exception,
broadly
those
of
a board
of directors
of
a
company.
The
exception, contained
in s
7(d),
i
s
that
the
Council
must
investigate
complaints and
settle disputes
in
relation
to
the
affairs
of
medical
schemes
as
provided for
in the
MSA.
21
The
Registrar is the
executive officer of the Council and manages the
Council's
affairs. The
Registrar must act in
accordance with the MSA
and the policy of the
Council and supervises
the staff of the Council.
[10]
The
Registrar
is afforded
wide
regulatory
powers
under the
MSA.
[11]
Among those powers are, as I
have mentioned, the power to
i
nspect
medical
schemes.
The Registrar
may
exercise the
powers
conferred
on
him
or
her either personally or
through inspectors. Those
powers
are
broadened
by
the
conferment
by
reference
on
the
Registrar
of
the
powers
conferred
on
the
functionary
(also
called
a
registrar)
who
i
s
the
executive
officer of the Financial
Services Board (the FSB registrar)
as
defined
i
n
s 1
of
the F
I
A.
22
The powers of inspection of the FSB registrar were described in
Platinum
Asset Management
(Pty)
Ltd
v
Financial
Services Board and Another; Anglo
Rand Capital House
(Pty) Ltd and Others v Financial Services Board and Others.
[12]
Quoting from
Mistry
v Interim
Medical
and
Dental
Council,
[13]
the court in
Platinum
pointed
out that in the case of any regulated enterprise, the proprietor's
expectation of privacy with respect to premises, equipment,
materials
and records must be attenuated by the obligation to comply with
reasonable regulations and to tolerate the administrative
inspections
that are an inseparable part of an effective regime of regulation.
The greater the potential hazards to the public,
the less invasive
the inspection. People involved in such undertakings must be taken to
know from the outset that their activities
will be monitored. If they
are licensed to function in a competitive environment, they accept as
a condition of their licence that
they will adhere to the same
reasonable controls as are applicable to their competitors. Persons
who choose to engage in a pervasively
regulated business and to
accept a license do so with the knowledge that their business and
records will be subject to effective
inspection. As was the case with
the financial institution under scrutiny in
Platinum,
the Registrar has the power under s 44(4) of the MSA to
order an inspection both where irregularities are suspected and for
routine
purposes.
23
To return to the question: is the decision to order an inspection a
"decision"
for the purposes of s 49(1)? Counsel addressed
arguments to me on the ordinary meanings of the words
decision
and
beslissing
(the equivalent word used in the Afrikaans
text). I do not derive much guidance from this debate. The words in
question
might
grammatically encompass an inspection
order. But the question is which meaning is appropriate and for that
purpose, in my view,
precedent and the principles of construction in
the line of cases culminating for the present in
CSARS v
Bosch, supra,
provide the answer.
24
In
Simelane and Others
NNO v Seven-Eleven
Corporation SA (Pty) Ltd
and
Another,
[14]
the SCA found that a decision by the Competition Commission to refer
to the Competition Tribunal complaints regarding prohibited
competition practices was not an administrative decision. The court
adopted the reasoning in a judgment of the Competition Tribunal
in
Norvatis
SA
(Pty)
Ltd
and
Others
v
Competition
Commission
and
Others.
[15]
The court held that the function of the
commission
was investigative and not
subject to review, save
in
cases
of
ill-faith,
oppression, vexation
or the like.
25
I
n
this Division, there are a number of decisions which bear upon the
point. In
Herbert
Porter
& Co
Ltd
and Another
v
Johannesburg
Stock
Exchange,
[16]
the court observed, with
reference to the
work
Words
and
Phrases Legally
Defined,
[17]
that the word
decision
implies
the exercise
of judicial
determination
as the
final
and
definite
result
of
examining
a
question. In
Kruger v
the
Master
and
Another no;
Ex
Parle
Kruger,
[18]
the court found, in review
proceedings under s 151
of
the
I
nso
l
vency
Act, 24 of 1936,
with reference
to
the
Shorter
Oxford
English
Dictionary,
that
the word
decision
did
not
mean any
resolution or
expression
of will
whatsoever
and
therefore
did
not
embrace
the
exercise
of
a
power
of
the Master
not
to recommend
the rehabil
i
tation
of
an
i
nsolvent.
In
Strauss
and
Others
v
the
Master
and
Others
NNO,
[19]
a decision not to provide
a person required to
testify
at
an
i
nsolvency
enquiry under the insolvency
l
aw
with certain information
before
he
testified was held
not
to have
those attributes of
final
i
ty
and
invasiveness of
rights
which
permitted
a
review
and
that
the
appl
i
cant
was
not, for the
purposes
of s
1
51
of the
I
nso
l
vency
Act
a
person
aggrieved because no right of the applicant had by the
ruling been infringed or invaded. In
Nedbank
Ltd
v Master
of
the
High
Court Witwatersrand Local Division and Others,
[20]
the court found that the institution of an enquiry pursuant to s 417
of the Companies Act, 61 of 1973, was purely investigative
and
therefore not subject to review.
[21]
26
The weight of authority within this Division
is therefore that not
every expression of will by a functionary will constitute a decision;
and that an expression of will setting
in motion investigative
procedures will (at the lowest) often not constitute a decision in
this context. The context and purpose
of the measure in question must
therefore be examined to determine whether, on a proper
interpretation of that measure, the expression
of will under scrutiny
constitutes a decision.
27
If the interpretation advanced by counsel
for the respondent were
correct, it would mean that a medical scheme could prevent the
Registrar or his inspector from even entering
the premises of the
scheme by the simple means of producing a notice of appeal. That
would, following the regime submitted by counsel
for the respondent,
require either that the appeal be considered at one of the relatively
infrequent scheduled meetings of the
Council or that a special
meeting of the Council would have to be convened. It is highly
unlikely that such an appeal would be
disposed of with any
expedition. The members of the Council, in the main probably legal
lay persons, might be expected to consider
and deal with complex
issues of procedural and constitutional law. And the matter would not
necessarily end after the Council had
pronounced on the validity or
probity of the inspection decision. Section 50 of the MSA provides
for a further appeal from the
Council to a body called the Appeal
Board. The Appeal Board is also vested with the power to summon
witnesses and take evidence
on oath. And after that, of course, the
aggrieved medical scheme could take· any one or all of the
three administrative
organs I have mentioned to court. It is not
unreasonable to conclude that a determined medical scheme could, on
this hypothesis,
delay any inspection for a number of years, by which
time evidence could be destroyed or lost, recollections become vague
and witnesses
unavailable. If the interpretation submitted on behalf
of the respondent is correct, the power conferred in regard to both
inspections
for suspected irregularities and routine inspections
would be severely attenuated.
28
There
is a complete absence of
any provisions in
the
MSA to mitigate
the
mischief which,
on such
an
interpretation,
would
inevitably
result from the
employment
by a
medical scheme
of the
supposed
right of
appeal. The Registrar
would (leaving aside
Anton
Piller
rel
i
ef)
only be able
to
gather the evidence and preserve it
agains
t
the eventual
i
ty
that
the
medical scheme
might
be unsuccessful
in
i
ts
appeal or appeals
i
f
he were then entitled to approach the court for relief under s 51.
This
i
s
because the effect
of s 49(2)
would be, if the
inspection decision is subject
to
appeal
under
s
49(1),
to
stop
the
inspection
in
i
ts
tracks until after the
appeal had been determined. However, counsel for the
respondent submitted that
the power of the Registrar to approach the
court under s 51 would
mitigate the
undesirable
consequences
which
would otherwise flow from
the
construction proposed
by them.
29
Section 51
reads:
(1)
The
Registrar
may,
with
the
concurrence
of
the
Council,
in
regard
to
any
medical
scheme
apply
to
the
High
Court
for an
order contemplated
in
paragraph
(b), (c),
(d)
or (e)
of
subsection (5)
if
the Registrar is of
the opinion
that it is
in
the interest of
beneficiaries
or
because
material
i
rregularities
have
come
to
his
or her notice.
(2)
A medical scheme may, in
regard
to itself, apply to
the
High Court
for
an order
contemplated
in
paragraph
(b),
(d)
or
(e)
of
subsection
(5),
if the
medical
scheme
is
of
the
opinion
that it
is
desirable,
because
the
medical
scheme
i
s
not
in
a
sound
financial
condition
or
for
any
other
reason
that
such
an
order
be
made
in
regard
to
the
medical
scheme:
Provided
that a medical
scheme shall
not
make
such
an
appl
i
cation
except
by
l
eave
of
the
High
Court
and the
court
of
appeal
shall
not
grant
such
l
eave
unless the medical
scheme has
given
security to an
amount
specified
in the
Rules
of
the
High
Court
for
the
payment of such costs.
(3)
Any member or one or more
creditors of a medical
scheme may make an
appl
i
cation
to the High Court for
an
order
in
terms
of
paragraph
(b), (d)
or
(e) of
subsection
(5),
and
the
proviso
to
subsection (2)
shall
apply in regard to such
an application.
(4)
If
an
appl
i
cation
to the High
Court
in
terms
of subsection
(3) is made by a person
other than the Registrar
-
(a)
it shall not
be heard unless a copy of
the notice of motion and of all accompany
i
ng
affidavits and other
documents filed
in
support of
the application are
also
l
odged
with the
Registrar
at
l
east
15 days,
or such shorter period as
the High Court may allow on good
cause shown,
before the appl
i
cation
is set down for hearing; and
(b)
the Registrar may, if he
or she is of the opinion that
the application
i
s
contrary to
the
i
nterest
of
the
beneficiaries of the medical
scheme concerned,
make
application
to
join the application
as
a
party
and
file affidavits and other
documents
in opposition to
the appl
i
cation.
(5)
Upon
any application in
terms of the preceding
subsections,
the
High Court may-
(a)
refuse
the application;
(b)
order
that
an
investigation be made and may issue
such directions regarding
such investigation as the High
Court may
deem desirable;
(c)
order that the
rules of the medical
scheme relating to
the
appointment,
powers,
remuneration
and
removal
from
office
of
any
officer,
or
relating to
such
other
matter as
the High
Court may regard
appropriate, be
altered in a manner to be
specified in such order;
(d)
order
that the medical
scheme
be
placed
under
judicial management in
terms of section 52; or
(e)
order
that the whole
or
any part of
the
business of
the
medical
scheme be
wound-up in
terms of
section 53.
(6)
The
High
Court
shall,
i
n
exercising its
discretion under
subsection
(5),
consider
the
equitable
interests
of the
members
and of any
other
person who
has rendered or who
intends to
render
financial assistance
to
the
medical
scheme,
and,
subject
to
such considerations
as aforesaid, shall make
such order
as
it
deems
most
advantageous
to
the
members.
(7)
When a High Court
has made an order
under paragraph (b)
of
subsection (5) in
regard
to a
medical
scheme, it may at any
time
thereafter
make
an
order under paragraph
(c),
(d)
or (e) of that
subsection in regard
to
that
medical
scheme,
and
when
a
High
Court
has
made
an
order
under
paragraph
(
d)
of
subsection
(5)
in regard
to the
medical scheme,
it
may
at
any
time
thereafter
make
an
order
under paragraph
(e)
of
that
subsection
in
regard
to
that medical
scheme.
(8)
Notwithstanding
anything
to
the
contrary
contained
in
the rules of a medical
scheme, an order of the High
Court
made under
paragraph
(c) of subsection
(5) shall take effect
as from
the date specified for
that
purpose
in the
order,
or
if no date
has
been
so specified, as
from the date of
the order, and
thereupon the said rules
shall be deemed to have been
amended
in
the manner
specified by
the High
Court.
(9)
Unless
the High
Court
otherwise
orders,
the
costs
of the
Registrar
in
or
in
connection
with
an
application
in
terms of this section,
shall be paid by the medical
scheme
and
shall
be
a
first
charge
upon
the
assets
of such medical scheme.
30
To
my
mind,
s
51
cannot be
used
i
n
the
way suggested by
counsel for
the
respondent. The construction advanced implies that if the
Registrar were dissatisfied by
the noting of an appeal,
the Registrar
could
use
s 51
to obtain an order from a
court that
despite
the
noting
of an appeal, the
i
nspection
should
go
ahead. That, in
its
turn, would
render
the
supposed benefit
of
a
right
of
appeal against
an
inspection
order
illusory.
I think
that
the
construction
advanced
by
counsel
for
the
respondent
would
therefore lead
to
absurdities.
31
Furthermore,
it
i
s
entirely at variance with
the
inspection
regime created
b
y
the MSA that the
Registrar should, if resistance on the part
of a medical scheme to
the
inspection
be encountered
or anticipated,
have to go to
court to
obtain an
inspection
order.
That
would
render
the inspection
regime unwieldy and could
result in a situation
i
n
which
the Registrar could not
even be confident that
his decision to carry out
a routine inspection would be implemented without a court
order against a multiplicity of medical schemes.
32
An interpretation that the inspection order is not subject to
appeal under s 49(1) would not leave an aggrieved medical scheme
without
a remedy. It could, as explained in
Simelane,
supra,
bring what is now described as a review for
legality or proceed under the Promotion of Administrative Justice
Act, 3 of 2000 (PAJA)
if an inspection order is subject to review
under PAJA (something I need not decide). There would be no
unwieldiness in the inspection
regime if the burden were cast on an
aggrieved medical scheme rather than the Registrar to approach the
court for relief. A review
court has wide powers to do what is just
and equitable and could in its order balance any consideration of
urgency and the need
to preserve evidence against the rights of the
medical scheme said to have been infringed.
33
Inspections against the will of participants in regulated
industries
are the rule rather than the exception in our statute book. I have
already referred to financial institutions.
Mistry,
supra,
reflects that this is the case too in relation to
medical practitioners. I invited counsel to refer meto any statutory
provision,
ignoring for the moment the MSA, which permits an industry
participant to stifle inspections by its regulator until after an
administrative
appeal. Counsel were unable to do so. I therefore find
that the general policy in our law in this regard is (always subject,
as
every exercise of public power is, to reviews for legality) that
such inspections should go ahead rather than be stifled by
administrative
appeal procedures. The present case, relating as it
does to matters of great importance to members and their
contributions, seems
to me a
fortiori
as a matter of policy to require that the inspection go
ahead.
34
For these reasons, I prefer the construction that
the inspection
decision is not subject to appeal under s 49(1) of the MSA. Counsel
for the applicants asked for costs. I think
that this is a case in
which the
Biowatch
[22]
principle should be applied: as a general rule in constitutional
litigation, an unsuccessful litigant in proceedings against the
State
ought not to be ordered to pay costs unless there are circumstances,
such as frivolousness or vexatiousness, which justify
a departure
from this rule. The respondents seem to me in good faith to have
advanced a contention which although in my view wrong,
was arguable.
The conclusion to which I have come settles the issue for the entire
industry. As I have not had the benefit of argument,
I shall provide
in the order for the parties to revisit the question of costs, if so
minded.
35
I make the following order:
1
It is declared that the second applicant's decision dated
10 November
2014 to order an inspection into the affairs of the respondent in
terms of
s 44(4)(a)
of the
Medical Schemes Act, 131 of 1998
, is not a
decision that is appealable in terms of the provisions of
s 49
of the
same Act.
2
There will be no order as to costs; provided, however,
that any party
may on notice to all other parties delivered within 10 days of the
date on which this order is handed down, set
the costs order down for
reconsideration by the court. If no such notice is delivered, the
costs order will, upon the effluxion
of the period of ten days,
become final.
_____
NB
Tuchten
Judge of
the High Court
4 July 2015
For the applicants:
Adv MC Maritz SC
Instructed by Savage
Jooste and Adams Inc Pretoria
For the respondent:
Adv EC Labuschagne
SC and Adv K Schubart Instructed by Gildenhuys Malatji Inc
Pretoria
RegMedSchemesBonitas18491.15
[1]
The second applicant is in fact
the acting Registrar. Nothing turns on that.
[2]
In
the quotations which
follow, I
have
omitted references to footnotes.
[3]
Section 22 read with s 24 of the MSA
[4]
Section 24(3) of the MSA
[5]
Section 35 of the MSA
[6]
Section36(8) of the MSA
[7]
Section 4(1) of the MSA
[8]
Section 10 of the MSA
[9]
Sections 7 and 8 of the MSA
[10]
Sections 18(2),(3) and (5) of the MSA
[11]
Chapter 9 of the MSA
[12]
2006 4 SA 73
W
[13]
1998 4 SA 1127
CC para27
[14]
2003 3 SA 64
SCA
[15]
CT22/CR/8/Jun 01, 2.7.2001
[16]
1974 4 SA 781
W 794
[17]
Vol 2 at 33
[18]
1982 1 SA 754
W 7570
[19]
2001 1 SA 649
T
[20]
2009 3 SA 403
W
[21]
In Firstrand Bank Ltd (Tia Rand Merchant Bank) and Another v Master
of the High Court, Cape Town, and Others
2014 2 SA 527
WCC, Nedbank
Ltd v Master of the High Court Witwatersrand Local Division and
Others was not followed.
[22]
Biowatch Trustv Registrar, Genetic Resources, and Others
2009 6 SA
232
CC para 21