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[2015] ZAGPPHC 1016
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Nakekela Healthcare Consultants (Pty) Ltd v Medscheme (Pty) Ltd and Others (69130/14) [2015] ZAGPPHC 1016 (7 August 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Case
Number: 69130/14
In
the matter between:
NAKEKELA
HEALTHCARE CONSULTANTS (PTY) LTD
1
st
APPLICANT
and
MEDSCHEME
(PTY)
LTD
1
st
RESPONDENT
SOUTH
AFRICAN POST OFFICE
LTD 2
nd
RESPONDENT
SOUTH
AFRICAN POSTAL WORKERS UNION
3
rd
RESPONDENT
COMMUNICATION
WORKERS UNION
4
th
RESPONDENT
BONITAS
MEDICAL
FUND 5
th
RESPONDENT
Coram:
HUGHES J
JUDGMENT
Delivered
on: 7 August 2015
Heard
on: 10 and 26 March 2015
HUGHES
J
Introduction
1.
On 23 September 2014, Raulinga J sitting in the urgent court granted
a
rule nisi
in the form briefly set out below with the return
date being 24 November 2014. On the return date the first and fifth
respondents
filed an application for leave to appeal the
rule
nisi.
The matter was adjourned to 9 March 2015 with costs
reserved and the
rule nisi
was extended.
2.
The matter was before me on the opposed roll on 10 March 2015. The
first, fourth and fifth respondents filed their heads of argument
addressing the merit of the application late, thus the applicant was
allowed an opportunity to file its heads of agreement addressing
the
merits. In the circumstances the
rule
nisi
was
again extended to 26 March 2015 with costs reserved. I was advised
that the leave to appeal the
rule nisi
was no longer
being pursued.
Order
of urgent court
3.
The
rule nisi
called upon the respondents to show cause why a
final order should not be made revoking the termination
of the
applicant's services of 31 July 2014 and placing the applicant
in the place of any other broker that was appointed as a result of
the applicant's termination. That the appointment of brokerage so
appointed be terminated and set aside. The first respondent was
to
continue paying the monthly brokerage commission to the applicant for
its services until the effluxion of the applicant's appointment
on 14
May 2016. The order encompassed an interdict restraining the first
respondent from paying any other brokerage services other
than the
applicant and also ordered that the first respondent continue to pay
for the service until the finalisation
of the application
referred to in the
rule
nisi
granted. The
costs were reserved.
Background
4.
A brief background to the current application. The applicant was
recommended by the third and fourth respondents to render
medical aid brokerage services for a period of three years from 15
May 2013. The first and fifth respondents administered, calculated
and paid over the commission due to the applicant.
5.
On 10 May 2013 the third respondent directed correspondence to the
second respondent to extend the brokerage services of the
applicant.
The following day, 11 May 2013, the fourth respondent agreed to the
extension. The second respondent duly appointed
the applicant as per
the third and fourth respondent's recommendation on 15 May 2013 for a
three year period.
6.
The second respondent advised all the parties concerned that it
awaited a service level agreement to be concluded between the
applicant and the third and fourth respondents. Though this was not
forth coming the second applicant advised the first respondent
of the
recommendation and the applicant continued to provide the services it
was commissioned to perform. On submission of invoices
rendered the
applicant was remunerated its commission.
7.
In June 2014, some fifteen months after the applicant's appointment,
the fourth respondent resolved to appoint another broker
to replace
the applicant. The fourth respondent communicated this to the second
respondent. In turn the applicant was advised of
its services being
terminated by the first respondent on 9 September 2014.
8.
The termination took effect from 31 July 2014 and the other brokerage
services were engaged from 1 August 2014. The applicant
made
enquiries with the third respondent as regards their termination and
to their surprise they were shocked to hear of the applicants
termination. They advised the applicant that it's termination was not
in accordance with their members instructions and that it
was only
the fourth respondent who had initiated the applicant's termination.
9.
In September 2014 the applicant served its urgent application on the
respondents and on 23 September 2013 the matter was heard
with the
rule nisi
being issued.
10.
At present the applicant seeks confirmation of the
rule nisi
as
the first and fifth respondents have abandoned their leave to appeal
the order of Raulinga J.
Papers
before this
court
11.
The situation with the papers before this court is as follows, no
further affidavits have been filed by any of the respondents
after
the order of Raulinga J. At the hearing before mu brother Raulinga,
he was in possession of the answering affidavit from
the first and
fifth respondent jointly, an answering affidavit from the fourth
respondent and on the day of the hearing the second
respondent filed
a late answering affidavit. It is also noted that the replying
affidavit of the applicant is dated 25 September
2014 and had been
served via electronic mail after Raulinga J granted this order.
First
and Fifth respondent's argument
12.
The crux of the first and fifth respondents answering affidavit is
that they performed an administrative role and were responsible
for
the payment of commission to the relevant brokers. They were
advised by the employer, the second respondent, of the brokers
that
had been recommended by the employee or the union
that the employee belongs to.
13.
The first and fifth respondents contend that they acted within the
ambit of the Medical Schemes Act 131 of 1998 ('the
Medical
Schemes Act"
;) when they were advised by the second respondent
that the brokerage services of the applicant were to be terminated
and replaced
by newly recommended brokerage selected by the
forth respondent. According to the first and fifth respondent in
terms of
section 65
of the
Medical Schemes Act read
with regulation
28, they were legally obliged to follow the instructions from the
employer and/ or the employee member or their
union.
14.
Lastly, the first and fifth respondents had concluded agreements with
both the applicant and the new broker. In the circumstances
they will
pay whichever broker they are instructed to pay by the member
employee or the employer. It would be incompetent for them
to be
ordered by the court to pay a specific broker who had not been
recommended by the employee/ employee's union or as instructed
by the
employer. This would lead to them acting contrary to their mandate as
set out in the
Medical Schemes Act and
the Regulations mentioned
supra.
Fourth
respondent's
argument
15.
The forth respondent's answering affidavit deals in the main with the
fact that the letter of 14 May 2013, wherein it agrees
to the
appointment of the applicant, is not signed and is thus not
authentic. Further, they state that they became aware of such
correspondence on 14 May 2013. On or about 12 August 2013 they
advised the applicant that this letter had been sent erroneously
and
the appointment of the applicant was an error.
16.
The fourth respondent states that as a result of a meeting of their
National Executive Committee held on 24 and 25 May 2014,
a decision
was taken to terminate the services of the applicant. Having
considered this, they communicate their preferred
broker to the
second respondent. The appointment of the recommended broker was
taken into account by the second respondent.
17.
The fourth respondent contends further, that the applicant has not
produced a contract or letter of appointment confirming its
allegations that it had a contract with the fourth respondent.
Third
respondent's argument
18.
The position of the third respondent is evident from correspondence
between the second respondent and the third respondent date
16
September 2014 and 18 September 2014. The third respondent sought
that the
status
quo
remained with the
applicant being the relevant broker. The third respondent did not
agree with the forth respondent's recommendation
for the termination
of the applicant's service and the replacement thereof with another
brokerage service.
Second
respondent's argument
19.
The second respondent distanced itself from having anything
connected with the selection of the relevant brokerage services
for its employees. It denied that it was in anyway involved in
contracting the applicant as a broker for any of its employees.
20.
The second respondent persisted that on the recommendation of the
fourth respondent the applicant was appointed on 15 March
2013. On 5
June 2014 a recommendation of the fourth respondent was attained for
the second respondent to appoint Classique Medical
Aid Conultants CC
("Classique") as the new brokerage service provider.
21.
The second respondent contends that on 2 September 2014 it wrote to
the first respondent advising of the fourth respondent's
instruction
to appoint Classique and as at that specific time it was not aware of
the contract that the applicant relied upon.
It was adamant that it
played no role in the appointment of brokers as alleged by the
applicant in paragraph 4.2 of its founding
affidavit.
Applicant's
argument
22.
The applicant argued that the relief it seeks is akin to specific
performance of a prior existing agreement. The applicant disputes
the
allegations that the letter which it realises on, regarding its
appointment, is not valid because it was not signed and erroneously
sent to the applicant. It rubbished this as false, a recent
fabrication and spurious. The second respondent's attitude was that
in these circumstances the applicant had not raise a real or
substantive dispute of the fact.
23.
The applicant contends that the employment of brokers, like itself,
is the duty of the second respondent as
"these
services
constitute
an
integral
part
of
the
employees' employee benefits, the appointment are done on
recommendation
of the relevant
union."
24.
The applicant goes on further to state that it is not the third or
fourth respondents who have the authority to appoint the
broker but
rather that this lies with the second respondent. In addition, it is
not the one union alone who can recommend the broker
to be appointed,
but both unions, that is the third and fourth respondents and/or
either one of them can make a recommendation
with the other
supporting such recommendation.
25.
Section 65
of the
Medical Schemes Act provides
:
"A
medical
scheme may compensate
any
person,
in cash or otherwise,
in
accordance
with it's rules,
for
the introduction
or admission
of
a
member
to
that medical scheme."
Regulation
28(7) and (8) of the Medical Aid Schemes Act states:
"(7)
A medical scheme shall immediately discontinue payment to a broker in
respect of services rendered to a particular member
if the medical
scheme receives notice from that member (or the relevant employer, in
case of an employer group) that the member
or employer no longer
requires the services of that broker"
(8)
A medical scheme may not compensate more than one broker an any time
for broker services provided to a particular member"
Analysis
26.
It is clear that the respondents take issue with whether an agreement
had been concluded for the applicant to render the services
of
medical aid broker on behalf of the fourth respondent. What also
comes to light is that the first and fifth respondents maintain
that
it was their statutory obligation to appoint who had been
recommended. If the court made an order as to whom should be
appointed,
this would result in them acting contrary to their mandate
in terms of the
Medical Schemes Act.
27.
One
should not lose sight of the fact that the fourth respondent
vehemently disputes that it recommended the applicant on 15 March
2013 and it calls on the applicant to submit such contract or proof
of such an appointment that it places reliance upon.
28.
At all material times the first and fifth respondent's maintained
that
"the brokers represent
the members
whom they represent,
however,
the
broker
may be
appointed by
either
the member
or the employer
under certain
circumstances."
29.
When a member or the employer group informs the Scheme of a change in
broker, the Scheme is obliged to follow the instructions
of that
member or employer group. In this instance the Scheme was instructed
by the employer group (the second respondent) that
the fourth
respondent had recommended a change of their broker. In light of this
notification the services of the applicant were
terminated to ensure
that the Scheme performed in accordance with its statutory duties in
terms of
section 65
and
Regulation 28.
20
0%">
30.
What is noted of the appointment of the applicant in March 2013, the
second respondent had requested that
"all service
level
agreements
must be concluded
with both
unions.
It is
specifically
recorded
that
SA Post
Office is
not
in
any
way obligated to contractually perform
in
terms of this appointment".
31.
It would seem that even though the recommendation must be made by the
member or union/unions, the second respondent is the party
who
informs the Scheme of the recommendation. Even so, the second
respondent still requires the union and broker to conclude a
service
level agreement.
32.
The second respondent in no uncertain terms advised the parties
concerned that it was not contractually obliged to perform in
terms
of such appointment when they dealt with the recommendations of the
relevant union.
33.
The way I see it, the agreement for brokerage service is between the
union and the broker. The first and fifth respondents are
agents that
administer the payments to the broker on behalf of the member or
employer group. The second respondent is the agent
between the
employee or union and the broker. In these circumstances cannot see
how the second respondent could be contracting
with the applicant.
34.
No service level agreement was concluded between the fourth
respondent and the applicant. Both would have been contractually
bound to perform in terms of the said service level agreement which
was not concluded. In this instance there could not have been
a
contract concluded by the applicant and the third and fourth
respondent if the appointment of the applicant took place on 15
March
2013, when the recommendations were made by both these unions only
on10 and 14 May 2013.
35.
It is evident to me that there are clearly issues that need to be
dealt with by way of evidence. There is no service level agreement
only the recommendations and the letter from the second respondent
advising the applicant of the recommendation made. The applicant
places reliance upon these documents however this does not tie in
with the applicant's version of what transpired on 15 March 2013.
36.
In view of the disputes of fact between the parties I am convinced
that this is a matter that cannot be decided on the papers
before me
but should proceed to trial.
37.
I also find that it is irresponsible of the applicant to just wish
away the issue of the non-joinder of Classique. In light
of my
findings above the entire appointment of the applicant, in my view,
needs to be revisited. I say so because the fourth respondent
on 14
May 2013 confirmed the recommendation of the third respondent of 10
May 2013, however the applicant had already been appointed
by the
second respondent on 15 March 2013.
38.
There are too many issues to consider, to mention but a few:
Was
the applicant appointed by the recommendations of the unions
or not? The applicant on its own version will fall
short in
this regard taking into account what I have said in the preceding
paragraph;
-
Then there is the second respondents adamant stance that it does not
contract with brokers and is not obliged to contractually
perform in
terms of the appointment of the applicant;
-
Are the first and fifth respondent's acting in terms of their
statutory duties having regard to the revelation of the appointment
of the applicant?
-
Is the first respondent still bound to pay the commission of the
applicants with regards to the third respondent in light of the
facts
above?
39.
The applicant at its own peril proceeded with this matter by way of
motion court proceedings and as such knew of the risk it
was
embarking upon. In the circumstance, my view is that, the applicant
should be liable for costs of bring the parties alone this
risky
path. No better court would be in a position to deal with the issue
of costs than this court.
40.
Therefore the successful respondents, the first, second, fourth and
fifth, are entitled to costs of the opposed application
which would
include the costs reserved of 23 September 2014, 24 November 2014 and
10 March 2015, such costs to include the employment
of senior counsel
where so employed.
Conclusion
41.
In the circumstances as set out above it is abundantly clear to me
that the
rule nisi
be discharged with costs and the
matter is referred to trial.
Order
41.1
The application is dismissed.
41.2
The rule is duly discharged and the matter is referred to trial.
41.3
The applicant is ordered to pay the costs of the first, second,
fourth
and fifth respondents opposing the application. Such cost to
include the employment of senior counsel where so employed.
_____________________________
W.
Huges Judge of the High Court
Attorney
for the Applicant:
ATTORNEYS
PRETORIA
Tel:
012
Ref:
Attorney
for the
Respondent:
ATTORNEYS
PRETORIA
Tel:
012
Ref: