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[2026] ZAGPPHC 680
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Council for Medical Schemes v Special Investigating Unit (2024-052800) [2026] ZAGPPHC 680 (8 June 2026)
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KHUTSO-NAKETSI
COMMUNAL AND OTHERS v KHUTSO-NAKETSI AGRI (PTY) LIMITED AND
OTHERS-2024.147172-REPUBLIC OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE
NO: 2024-052800
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED:
YES
/NO
DATE 08/06/2026
SIGNATURE
In
the matter between:
COUNCIL
FOR MEDICAL SCHEMES
Applicant
and
SPECIAL
INVESTIGATING UNIT
Respondent
JUDGMENT
MBONGWE,
J:
INTRODUCTION
[1]
This is an opposed review application brought by the Council for
Medical Schemes (“CMS”)
against the Special Investigating
Unit (“SIU”).
[2]
The Applicant seeks to set aside the SIU’s report dated 4
December 2023, together
with its findings and recommendations, on the
alleged grounds that the SIU exceeded its mandate, acted
irrationally, and violated
principles of procedural fairness.
[3]
The Respondent opposes the application, contending that its report is
investigative in
nature, not determinative, and therefore not
reviewable under the Promotion of Administrative Justice Act 3 of
2000 (“PAJA”).
It further submits that the report is
rational, lawful, and within the scope of Proclamation R29 of 2019.
APPLICANT’S
CASE
[4]
The Applicant argues that the SIU exceeded its mandate by
investigating systemic and structural
issues within CMS rather than
confining itself to corruption or maladministration in regulatory
interventions.
[5]
It contends that the SIU made adverse findings against board members
and Dr Kabane without
affording them the right to be heard, thereby
breaching the
audi alteram partem
principle.
[6]
The Applicant submits that the SIU’s recommendations, including
referrals for criminal
prosecution and disciplinary action, are
irrational, arbitrary, and
ultra vires
.
[7]
It further argues that the CMS, as the institution against which the
proclamation was issued,
has locus standi to challenge the report,
and that joinder of individual members is unnecessary since they were
implicated in their
official capacities as Council members.
RESPONDENT’S
CASE
[8]
The SIU contends that its report is investigative, not determinative,
and therefore lacks
the “direct, external legal effect”
required for review under PAJA.
[9]
It submits that its recommendations are rationally connected to the
purpose of the investigation,
namely, to identify maladministration,
improper and/or unlawful conduct and propose remedial measures.
[10]
The SIU argued that it acted squarely within its mandate under
Proclamation R29 of 2019.
[11]
The Respondent further contended that the CMS lacks locus standi to
litigate on behalf of individuals
such as Dr Kabane and former
Council members, none of whom have been cited nor have instituted
review proceedings themselves. It
consequently raised non-joinder as
a bar to the relief sought.
ANALYSIS
On
PAJA
[12]
The jurisprudence in
Grey’s
Marine
[1]
,
Motau
[2]
,
and
Prudential
Authority v Msiza
[3]
establishes that investigative reports lacking finality and binding
effect do not constitute administrative action under PAJA.
The SIU’s
report, being advisory and subject to acceptance or rejection by the
Minister, NPA, or CMS, falls within this category.
On
Legality
[13]
Even where PAJA does not apply, exercises of public power remain
subject to legality review. The SIU’s
report demonstrates a
rational connection between the investigation authorised by the
President and the recommendations made. Procurement
irregularities,
complaint-handling failures, and maladministration were identified,
and referrals were made to competent authorities.
This satisfies the
rationality standard.
On
Mandate
[14]
The proclamation expressly authorised investigation into
maladministration and related matters, including
those incidental or
ancillary thereto. It would be artificial to confine the SIU to
narrow acts while ignoring systemic weaknesses
that enabled
misconduct. The SIU acted within its mandate.
On
The Scope of the Mandate of the SIU
[15]
The Scope of the Mandate of the SIU is set out in the Proclamation of
R29 of 2019, and the relevant portion
of the Proclamation empowers:
“…
the
Special Investigating Unit to investigate, as contemplated in the
Act, any alleged:
(a)
serious maladministration in connection with the affairs of
the Council;
(b)
improper or unlawful conduct by employees or officials of the
Council;
(c)
Offence referred to in Parts 1 to 4, or section 17, 20 or 21
(in so far as it relates to the aforementioned offences) of Chapter
2
of the Prevention and Combating of Corrupt Activities Act, 2004 (Act
No. 12 of 2004), and which offences were committed with
the affairs
of the Council; or,
(d)
unlawful or improper conduct by any person which has caused or
may cause serious harm to the interests of the public or any category
thereof,
which took place
between 1 January 2014 and the date of publication of this
Proclamation or which took place prior to 1 January
2014 or after the
date of publication of this Proclamation,
but is relevant
to, connected with, incidental or ancillary to the matters mentioned
in the Schedule or involve the same persons,
entities or matters
investigated under authority of this Proclamation, and to exercise or
perform all the functions and powers
assigned to or conferred
upon the said Special Investigating Unit by the Act, in relation to
the said matters in the Schedule
.”
(emphasis)
On
Procedural Fairness
[16]
While the Applicant raises
audi alteram partem
concerns, the
SIU’s role is investigative, not determinative. The duty to
afford hearings arises at the stage where disciplinary
or
prosecutorial decisions are made, not at the investigative stage.
On
Locus Standi
and Non-Joinder
[17]
The CMS has standing to challenge findings directed at its
institutional functioning. However, insofar as
relief is sought to
protect the personal interests of Dr Kabane and former Council
members, the Applicant lacks
locus standi
. Those individuals,
have a direct and substantial interest and ought to have been joined.
THE
SCOPE OF THE SIU’S MANDATE
[18]
Counsel for the Applicant submitted that a strict and narrow
interpretation must be given to the SIU’s
mandate. He
emphasised that reference must always be made not only to the
Proclamation, but essentially to the Schedule. In his
submission, the
SIU exceeded its authority by investigating systemic and structural
issues within CMS rather than confining itself
to maladministration
in regulatory interventions. Reliance on authorities underscoring the
principle that statutory powers must
be construed restrictively,
including
United
Watch & Diamond Co v Disa Hotels Ltd
[4]
and
Amalgamated
Engineering Union v Minister of Labour
[5]
was
misplaced on the facts of the present matter.
[19]
Counsel for the Respondent, on the other hand, argued that the SIU is
entitled to rely on the SIU Act in
addition and, in particular,
section 4(a)–(d), which empowers it to investigate
maladministration, unlawful expenditure,
irregular acquisitive acts,
and corruption-related offences. She submitted that the Act provides
the framework within which proclamations
must be understood, and that
the Proclamation cannot be interpreted so narrowly as to disable the
SIU from addressing systemic
failures encountered in the course of
its investigation. In support, she referred to
Pharmaceutical
Manufacturers Association of SA: In re Ex parte President of the
Republic of South Africa
[6]
,
Democratic
Alliance v President of South Africa
[7]
,
and
Affordable
Medicines Trust v Minister of Health
[8]
,
all of which affirm that public power must be exercised lawfully,
rationally, and within the scope of the enabling legal instrument.
ANALYSIS
[20]
In my view, the SIU Act as the enabling statute, and the Proclamation
must be read together. To interpret
the SIU’s written mandate
in the manner contended for by counsel for the applicant would be to
ignore the express language
of section 4(a)–(d) and the
Proclamation itself. The argument that any authority given must be
confined to the wording in
the schedule is contrived. The Schedule he
referred to directs investigations to aspects of maladministration,
whereas the Proclamation
directs investigations to both
maladministration and improper and unlawful conduct. The SIU’s
investigation of
serious maladministration and corruption affecting
public institutions was, consequently, well within its mandate and
cannot be
faulted.
[21]
The Constitutional Court has consistently held that the exercise of
public power must be rationally related
to the purpose for which it
was conferred. In
Motau
[9]
,
the Court reaffirmed that legality requires every exercise of public
power to be rational. Similarly, in
Grey’s
Marine
[10]
Nugent JA explained that administrative action must have direct,
external legal effect to be reviewable under PAJA. The SIU’s
investigative role, by contrast, is preliminary and advisory.
[22]
Once the SIU lawfully investigates procurement and maladministration,
it cannot turn a blind eye to systemic
weaknesses that enabled the
misconduct and corruption or other forms of misconduct. To do so
would undermine the very purpose of
the SIU Act and the prescripts of
the Proclamation. The systemic recommendations made to CMS were
recommendations for consideration,
not binding commands. They are
consequently not reviewable.
[23] I
therefore reject the Applicant’s contention that the SIU
exceeded its mandate and conclude that
the Respondent acted within
the scope of both the Proclamation and the SIU Act.
PROCEDURAL
FAIRNESS: THE AUDI ALTERAM PARTEM PRINCIPLE
[24]
The Applicant contends that the SIU made adverse findings against
members of the CMS board and Dr Kabane
without affording them an
opportunity to be heard. It submits that this omission violates the
audi
alteram partem
principle, a cornerstone of natural justice entrenched in both the
common law and section 33(1) of the Constitution. Counsel for
the
Applicant relied on
Masetlha
v President of the Republic of South Africa
[11]
,
where the Constitutional Court held that fairness requires that a
person whose rights or interests may be adversely affected by
administrative action must be afforded a hearing. He also referred to
Albutt v
Centre for the Study of Violence and Reconciliation
[12]
,
which emphasised that procedural fairness is context-dependent but
requires a meaningful opportunity to respond.
[25]
Further reliance was placed on
Du
Preez and Another v Truth and Reconciliation Commission
[13]
,
where the Appellate Division held that even investigative committees
must act fairly when their findings may accuse or condemn
individuals. Similarly, in
Chairman,
Board on Tariffs & Trade v Brenco Inc
[14]
,
the Supreme Court of Appeal affirmed that fairness often requires an
opportunity to make representations before a decision is
taken.
[26]
The Respondent disputed that any duty of
audi
alteram partem
arose at the investigative stage. Counsel for the Respondent
submitted that the SIU’s role is investigative and advisory,
not determinative. The SIU does not finally pronounce on guilt or
impose binding consequences; its recommendations are subject
to
acceptance and implementation or rejection by competent authorities
such as the Minister of Health, the NPA, or CMS itself.
In support,
she referred to
Prudential
Authority of the South African Reserve Bank v Msiza
[15]
,
where the Court held that an investigator’s report was not
administrative action because it “decided nothing, made
no
finding on culpability” and left the authority free to accept
or reject its recommendations. Likewise, in
Mthembu
v Special Investigating Unit
[16]
,
the Court confirmed that SIU reports are preliminary and non-binding,
and therefore not subject to PAJA review.
[27]
In the context of reviews, the
audi
alterum partem
principle applies where a decision has direct, external legal effect
on rights. The SIU’s report, however, is investigative
and
advisory. It does not itself impact on public rights or impose
sanctions. Any binding consequences would arise only if and
when the
Minister, the NPA, or CMS acts upon the recommendations.
[28]
This distinction is consistent with the jurisprudence in
Grey’s
Marine
[17]
and
Motau
[18]
,
which emphasise that administrative action under PAJA requires
finality and direct external legal effect. The SIU’s report
lacks these qualities.
[29]
While fairness is a constitutional value, its content depends on
context. At the investigative stage, the
SIU is not obliged to afford
implicated individuals a full hearing. That duty arises at the
disciplinary or prosecutorial stage,
where binding consequences may
follow.
[30]
Accordingly, I reject the Applicant’s contention that the SIU’s
report is invalid for want of
audi alterum partem
. The duty to
afford a hearing lies with the authorities the SIU report is intended
for and handed to who may act upon its recommendations.
LOCUS
STANDI AND NON JOINDER
[31]
The Applicant contended that it has standing to challenge the SIU’s
report because the Proclamation
was issued against the institution
itself, not against individuals. Counsel argued that the SIU made
systemic recommendations aimed
at augmenting the administration of
CMS, which fall squarely within the ambit of the Council. Reliance
was placed on
United
Watch & Diamond Co v Disa Hotels Ltd,
[19]
where the Court held that locus standi requires a sufficiently direct
and substantial interest in the subject matter of the litigation.
[32]
In my view, the joinder of individual members of the board of the
applicant was necessary as those implicated
have direct and
substantial interests that may be prejudicially affected. The failure
to cite those members in these proceedings
or to obtain and attach
their confirmatory affidavits would be fatal to this application. The
matter of
Amalgamated
Engineering Union v Minister of Labour
[20]
,
remains the cornerstone for standing and joinder, and well as that of
ABSA
Bank Ltd v Naude NO
[21]
,
where the Supreme Court of Appeal restated the test for non joinder
– substantial interest and prejudice. The contention
of
misjoinder was appropriately raised in
Judicial
Service Commission v Cape Bar Council
[22]
and
Pheko
v Ekurhuleni City
[23]
,
both of which emphasise that joinder is required only where a party
has a direct interest in the matter and may be impacted by
the order
given. In
ABSA
Bank Ltd v Naude NO
[24]
,
Schoeman AJA confirmed that if an order cannot be sustained without
prejudicing the interests of third parties not joined, then
those
parties must be joined.
CONCLUSION
[33]
The SIU report is not reviewable under PAJA as it does not constitute
administrative action.
[34]
On legality review, the report is rational and lawful, and the SIU
acted within its mandate.
[35]
The application must therefore fail.
COSTS
[36]
The general rule is that costs follow the result. The Applicant has
failed to establish that the SIU’s
report is reviewable under
PAJA, or that it is irrational under the principle of legality. The
Court has further found that the
SIU acted within its statutory
mandate, and that the application suffers from material non joinder
insofar as it seeks to
vindicate the personal interests of
individuals named in the report.
[37]
In these circumstances, the application must be dismissed. The
Respondent has been put to the
expense of opposing proceedings that
were misconceived. There is no reason to depart from the ordinary
rule that costs follow the
results. The Respondent is accordingly
entitled to its costs, including the costs of two counsel.
ORDER
[38]
In the result, the following order is made:
1.
The application is dismissed.
The
Applicant is ordered to pay the costs of the Respondent, including
the costs of two counsel one of whom is senior counsel
on scale C.
MPN
MBONGWE
JUDGE OF THE HIGH
COURT
GAUTENG DIVISION,
PRETORIA
APPEARENCES
For Applicant:
JA MOTEPE SC
With:
I HLALETHOA
Instructed by:
Diale Mogashoa
Attorneys
For the Respondent:
F NALANE SC
(absent)
With:
J MAISELA
Instructed by:
Salijee Govender
Van Der Merwe Inc.
Date of Hearing:
06 May 2026
Date of
Judgement:
08 June 2026
THIS
JUDGEMENT WAS ELECTRONICALLY TRANSMITTED TO THE PARTIES’ LEGAL
REPRESENTATIVES AND UPLOADED ONTO CASELINE ON 08 June
2026.
[1]
Grey’s
Marine Hout Bay (Pty) Ltd v Minister of Public Works 2005 (6) SA 313
(SCA).
[2]
Minister
of Defence and Military Veterans v Motau and Others
2014 (5) SA 69
(CC).
[3]
Prudential
Authority v Msiza
[2023]
ZAGPPHC 2098
.
[4]
United
Watch & Diamond Co v Disa Hotels Ltd
1972 (4) SA 409
(C) at 415A.
[5]
Amalgamated
Engineering Union v Minister of Labour
1949 (3) SA 637
(A).
[6]
Ex
parte President of the Republic of South Africa
2000 (2) SA 674 (CC).
[7]
2013
(1) SA 248 (CC).
[8]
2006
(3) SA 247 (CC).
[9]
Ibid
2.
[10]
Ibid
1.
[11]
2008
(1) SA 566 (CC).
[12]
2010
(3) SA 293 (CC).
[13]
[1997] ZASCA 2
;
1997
(3) SA 204
(A).
[14]
2001
(4) SA 511 (SCA).
[15]
[2023]
ZAGPPHC 2098.
[16]
[2024]
ZAGPPHC 865.
[17]
Ibid
1.
[18]
Ibid
2.
[19]
1972
(4) SA 409 (C).
[20]
1949
(3) SA 637 (A).
[21]
2016
(6) SA 540 (SCA).
[22]
2013
(6) SA 170 (SCA).
[23]
2015 (5) SA 600 (CC).
[24]
Ibid 21
.