Mec for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute

• Jurisdiction: South Africa
• Judge: Moseneke ACJ, Skweyiya ADCJ, Cameron J, Dambuza AJ, Froneman J, Jafta J, Madlanga J, Mhlantla AJ, Nkabinde J and Zondo J
• Judgment Date: 25 March 2014
• Citation: 2014 (3) SA 481 (CC)
• Docket Number: CCT 77/13 [2014] ZACC 6
• Hearing Date: 12 November 2013
• Counsel: R Buchanan SC (with G Bloem SC) for the applicants. L Rose-Innes SC (with H du Toit) for the respondent.
• Court: Constitutional Court

Jafta J (Madlanga J and Zondo J concurring): [*]

Introduction C

[1] This case concerns decisions taken by various functionaries in relation to the establishment of private hospitals in the Eastern Cape. The relevant subordinate legislation requires approval of the head of Department of Health, Eastern Cape, before a private hospital may be D established. [1]

[2] Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute (Kirland) instituted a review application impugning some of those decisions [2] in the Eastern Cape High Court, Grahamstown (high court). It cited, as respondents, the then Member of the Executive Council for Health, E Eastern Cape (MEC); the Superintendent-General for Health, Eastern Cape; and the Director-General of Health, Eastern Cape (state parties). [3] The high court set aside the impugned decisions. The state parties' appeal to the Supreme Court of Appeal was unsuccessful, hence this application for leave before us.

The legislative scheme F

[3] Before setting out the facts, I must outline the relevant legislation for a better understanding of the case. At the relevant time, the establishment of private hospitals was governed by the Health Act [4] and the G regulations made under it. [5] Regulation 7 empowers the superintendent-general to approve the establishment of private hospitals in the province of the Eastern Cape. But before approval, the regulation requires that two conditions be met. First, the superintendent-general must consult

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the director responsible for hospital services in the provincial A administration. Second, the superintendent-general must satisfy himself or herself that the proposed private hospital is necessary.

[4] Regulation 7 provides:

'1. No person shall erect, alter, equip or in any other way prepare any B premises for use as a private hospital or unattached operating-theatre unit without the prior approval in writing of the Head of Department.

2(i) Any person intending to establish a private hospital or an unattached operating-theatre unit shall first obtain permission in writing from the Head of Department, who, after consultation with the Director, shall satisfy himself as to the necessity or otherwise for such a private hospital or unattached operating-theatre unit before granting or refusing permission. C

(ii) Having obtained such permission, the applicant shall complete Form I (Annexure B) and submit plans for approval by the Head of Department, together with the necessary information, and shall supply any additional information which the Head of Department may require.

3. Permission and approval in terms of regulation 7 are not transferrable.' D

[5] This regulation forbids the establishment of a private hospital without prior approval of the superintendent-general. Approval granted under it must be in writing. Having obtained written permission, an E applicant is required to complete the relevant form and submit his or her plans, together with any information demanded by the superintendent-general. The establishment of a private hospital without prior approval constitutes a criminal offence in terms of reg 59. [6]

The facts

[6] It is now convenient to set out the facts. They are largely not in F dispute. In July 2006 and May 2007 Kirland applied for approvals to

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A establish a 120-bed hospital in Port Elizabeth, two unattached operating theatres and a 20-bed hospital in Jeffreys Bay. These applications were among a number of applications received by the superintendent-general.

[7] An advisory committee considered Kirland's applications and B recommended that they be refused. Accepting the recommendation, the superintendent-general declined to approve them. The decisions taken by the superintendent-general were reduced to writing. But before he signed them, the superintendent-general was involved in a motor-vehicle accident and as a result he took sick leave for six weeks.

C [8] During his absence an acting superintendent-general was appointed. Meanwhile the MEC who was then in office had a meeting with officials to inform them that she was going to meet and discuss Kirland's applications with the provincial chairperson of the African National Congress, the ruling political party in the provincial government. This meeting occurred in September 2007, before the superintendent-general's D decision to refuse approval. The meeting convened by the MEC illustrated her willingness to be involved improperly in a matter where she had no role to play. The superintendent-general declined the applications on 9 October 2007 and, two days later, he had the accident.

[9] Having realised that approval was refused, the MEC summoned the E acting superintendent-general to her office on 23 October 2007. At this meeting the MEC had in her possession a file that contained the superintendent-general's decision in which he refused approval.

[10] In her affidavit the acting superintendent-general avers:

F 'On 23 October 2007 Ms Jajula [the then MEC] summoned me to her office. Upon my arrival in her office Ms Jajula:

7.1

(H)ad a file in her possession;

7.2

said that she saw in the file that the applicant's applications for private hospitals in Port Elizabeth and Jeffreys Bay respectively had not been approved;

7.3

G informed me that she was under political pressure to approve the applicant's applications because the refusal to grant the applicant's applications put her in a bad light in the political arena; and

7.4

gave me the file and instructed me to approve the applicant's aforesaid applications.'

H [11] According to the acting superintendent-general, both she and the MEC were aware of the superintendent-general's decision to refuse approval. They were also aware that the refusal was based on a recommendation by the advisory committee. When this was pointed out, the MEC is reported to have said that, as the political head of the department, 'she had authority to make the final decision on behalf of the Department'. She handed the file to the acting superintendent-general. I

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[12] Apart from the letter addressed to Kirland, the acting A superintendent-general signed all the letters which recorded the superintendent-general's decisions and dispatched them to various applicants. With regard to Kirland, the acting superintendent-general states that '(i)n accordance with the verbal instruction from Ms Jajula I drafted a letter to the applicant informing it that its applications had been approved'. B

[13] Although Kirland attempted to dispute the facts deposed to by the acting superintendent-general, it failed to place on record evidence by the then MEC. It was content to base its denial of the allegations by the acting superintendent-general on hearsay evidence. It explained that the MEC refused to sign an affidavit but she was willing to testify in court. C Despite her willingness to testify, Kirland did not ask that the matter be referred for the hearing of oral evidence in the high court. Instead, it chose to proceed on the basis of evidence contained in affidavits.

[14] As these are motion proceedings, the averments by the acting superintendent-general must, in the present circumstances, be taken to D be correct. The attempt by Kirland to deny them does not rise to the level of raising a genuine dispute of fact. [7] This is the footing on which the Supreme Court of Appeal approached the matter.

[15] To continue with the narrative of the facts, having received the purported approvals, Kirland sought to increase the capacity of the E proposed hospitals. To this end, it applied for further approvals. Meanwhile, the superintendent-general had resumed duties. Again he declined to approve Kirland's applications. By that time Kirland had already submitted its plans in compliance with reg 7.

[16] By letter dated 20 June 2008 the superintendent-general informed F Kirland that the approval by the acting superintendent-general was withdrawn. This letter reads:

'I refer to the above matter, more particularly the letter dated 23 October 2007 that the acting superintendent-general of this department addressed to you. In that letter you were informed that your applications for a licence in respect of the above hospitals had been approved. G This approval is contrary to our view that the area is over supplied.

I regret to inform you that the Department has withdrawn the approval. I point out that on 9 October 2007 and after I had considered all applications, I decided to refuse the application because Port Elizabeth is over serviced with private health facilities. H

I advise that you have a right to appeal in writing to the MEC for Health against my decision. That appeal must be lodged with the MEC within 60 days from the date of this letter and must set out the grounds of appeal.'

Litigation history I

[17] In the high court, Kirland sought orders: overturning the MEC's decision rejecting its appeal against the withdrawal of the purported

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A approval; reinstating the approval; and setting aside the initial decision of the superintendent-general in terms of which Kirland's applications were refused. However, the main challenge was directed at the withdrawal of the purported approval and the MEC's decision that upheld it.

B [18] The withdrawal was impugned on two broad grounds. First, Kirland asserted that 'the superintendent-general was functus officio and could not set aside the decision of the acting superintendent-general'. Second, it contended that, in any event: the withdrawal was irrational, arbitrary and capricious, and so unreasonable that no reasonable person could have taken such decision; the decision-maker took...