Famous Idea Trading 4 (Pty) Ltd t/a Dely Road Courier Pharmacy v Government Employees Medical Scheme and Others (B1205/2023) [2024] ZAGPPHC 74 (5 February 2024)

REPUBLIC OF SOUTH AFRICA

 

 

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

 

 

1. REPORTABLE: NO

2. OF INTEREST TO OTHER JUDGES: NO

3. REVISED.

 

______________________ ______________________

DATE SIGNATURE

 

 

 

 

 

 

 

 

 

 

 

 

 

Case Number: B1205/2023

 

 

In the application of:

 

 

FAMOUS IDEA TRADING 4 (PTY) LTD t/a DELY ROAD COURIER

PHARMACY

Applicant

And

 

GOVERNMENT EMPLOYEES MEDICAL SCHEME First Respondent

 

CHAIRPERSON OF THE BOARD OF TRUSTEES OF

THE GOVERNMENT EMPLOYEES MEDICAL SCHEME Second Respondent

 

THE BOARD OF TRUSTEES OF THE GOVERNMENT

EMPLOYEES MEDICAL SCHEME Third Respondent

 

MARARA PHARMACY (PTY) LTD t/a MEDIPOST

PHARMACY Fourth Respondent

 

PHARMACY DIRECT (PTY) LTD Fifth Respondent

 

HH DURRHEIM (PTY) LTD t/a MEDIPOST PHARMACY Sixth Respondent

 

 

Delivered. This judgment was handed down electronically by circulation to the parties’ representatives by email. The date and time for hand down is deemed to be 10h00 on

5 February 2024.

 

 

JUDGMENT

 

 

RANCHOD J

INTRODUCTION

[1] This is a matter in which the applicant seeks to have the award of a tender by the first respondent to the fourth and fifth respondents reviewed and set aside and certain other ancillary relief. In terms of Rule 53 of the Uniform Rules of Court¹ the applicant called upon the first and second respondents to deliver the record of the decision challenged in this application.

 

[2] For the sake of convenience, the applicant will be referred to as ‘Famous Idea’, the first, second and third respondents as ‘GEMS’ and the fourth and fifth respondents as ‘the Joint Venture’.² The sixth respondent does not oppose the application presumably because the applicant does not seek any relief against it but is cited in the application “only insofar as it may consider itself interested in the issues raised herein”.

 

[3] GEMS did not deliver the Rule 53 record or its written reasons. Instead, it filed a notice in terms of Rule 6(5)(d)(iii)³ of the Rules, raising a point of law.

 

FACTUAL BACKGROUND

[4] Famous Idea launched the main application on 9 March 2023 seeking the following relief:

“1. To show cause, if any, why an order should not be granted in the following terms:

THAT:

 

1.1 The decision of the first respondent and/or second respondent and/or third respondent (“GEMS”), taken on or about October 2022, to reject the applicant’s bid for the appointment of a service provider to render medical courier pharmacy services under Tender GEMS/ MEDICINE COURIER PHARMACY/2022/CON003 (“the Impugned Tender”) is unlawful, invalid, and is hereby reviewed and set aside;

1.2 The decision of GEMS, taken on or about October 2022, to award the Impugned Tender to a joint venture comprised of the fourth and fifth respondents (“the Joint Venture”), is declared:

1.2.1 A nullity; alternatively

1.2.2 Unlawful, invalid, and is hereby reviewed and set aside;

1.3 Any and all contract(s) concluded between the fist respondent, and the joint venture comprised of the Joint Venture, pursuant to the Impugned Tender – is/are declared:

1.3.1 A nullity; alternatively

1.3.2 Unlawful, invalid, reviewed and set aside;

1.4 The first respondent and/or third respondent are hereby ordered to award the Impugned Tender to the applicant;

1.5 ln the alternative to prayer 1.4 above, the applicant is hereby:

1.5.1 Awarded Tender GEMS/ MEDICINE COURIER PHARMACY/2022/CON003, and the first respondent is hereby ordered to conclude a contract with the applicant on the same terms and conditions as those of the contract concluded between it (the first respondent) and the Joint Venture, alternatively

1.5.2 Awarded such compensation and/or damages, to be paid by the first respondent, as the Court may deem appropriate;

1.6 lnsofar as any respondent opposes the relief sought in this application, the applicant is awarded costs of this application to be paid by such respondent, jointly and severally with any other respondent so opposing;

1.7 The applicant is granted such further and/or alternative relief as may be just in the circumstances.

 

TAKE NOTICE FURTHER that in terms of Rule 53(1) (b) of the Uniform Rules of Court, the first and/or second respondents are required, within fifteen (15) days of receipt of this notice of motion, to dispatch to the Registrar, the record of the decisions challenged in this application."

 

[5] On 4 February 2022, GEMS issued a (second) request for bids for the appointment of a service provider to render medical courier pharmacy services (the ‘Impugned Tender’). Famous Idea submitted its bid in April 2022. In November of the same year, it learned that GEMS had rejected its bid, and that the Joint Venture’s bid had been accepted. Famous Idea, aggrieved at the outcome of its bid, launched the review application, as I said, on 9 March 2023.

 

[6] The relevant factual chronology:

6.1 On 4 February 2022, GEMS issued the second request for bids for the appointment of a service provider to render medical courier pharmacy services (the impugned tender);

6.2 On 10 April 2022, Famous Idea submitted its bid, in response to GEMS’ invitation;

6.3 On 25 November 2022, Famous Idea learnt that GEMS had rejected its bid, and that the Joint Venture’s bid had been accepted;

6.4 On 8 March 2023, Famous Idea issued the review application in terms of which it sought to review GEMS decision to award the impugned tender to the Joint Venture;

6.5 On 23 March 2023, GEMS filed its notice of intention to oppose the

review application;

6.6 On 24 March 2023, GEMS filed its notice in terms of rule 6(5)(d)(iii)

raising a point of law that GEMS’ decision to award the impugned tender to the Joint Venture is not reviewable;

6.7 On 4 April 2023, Famous Idea filed its notice in terms of rule 30A seeking to compel GEMS to disclose its record of decision to award the impugned tender to the Joint Venture;

6.8 On 5 April 2023, the Joint Venture filed its notice of intention to oppose the review application;

6.9 On 14 April 2023, GEMS filed its notice in terms of rule 30/30A alleging that Famous Idea’s rule 30A notice constitutes an irregular step;

6.10 On 9 May 2023, GEMS filed its application in terms of rule 30/30A alleging that Famous Idea’s rule 30A notice constitutes an irregular step;

6.11 On 10 May 2023, Famous Idea filed its notice of intention to oppose

GEMS’ application in terms of rule 30/30A;

6.12 On 10 May 2023, Famous Idea filed its application in terms of rule 30A seeking to compel GEMS to disclose its record of decision to award the impugned tender to the Joint Venture;

6.13 On 19 May 2023, GEMS filed a notice in terms of rule 30/30A noting that Famous Idea’s application in terms of rule 30A constitutes an irregular step.

 

[7] The issue before this Court (in this interlocutory application) is whether GEMS is obliged (and should be ordered) to deliver the record in terms of Rule 53.

 

The competence of the Rule 6(5)(d)(iii) notice

[8] Famous Idea says it instituted the review application in terms of Rule 53. It is not an application in terms of Rule 6. It contends that apart from the fact that the provisions of Rule 6 do not, without more, automatically apply to an application instituted under Rule 53, the distinction between the two provisions has been recognised by our courts, for example in Jocky Club of South Africa v Forbes.⁴ Further, that Rule 6(5)(d)(iii), relied upon by GEMS, is not one of the sub-rules which are specifically made applicable to Rule 53 applications.⁵ It is not one of the sub-rules relating to “set down of applications”. GEMS’ reliance on Rule 6(5)(d)(iii) is misplaced, says Famous Idea, and the application to compel the disclosure of the Rule 53 record should succeed on this basis alone, and the GEMS’ Rule 30/30A application dismissed.

 

[9] Counsel for Famous Idea referred to Trustees for the Time Being of the Legacy Body Corporate v Bae Estates and Escapes (Pty) Ltd and Another,⁶ where the Supreme Court of Appeal (the SCA) recently confirmed that decisions of private bodies are not immune from judicial review. The Court stated as follows:

“… The principles in this regard have mostly evolved from the so-called ‘Jocky Club’ cases, where voluntary associations are required to afford their members a fair and impartial hearing before their domestic tribunals. Counsel for the trustees sought to distinguish these cases from the present case on two bases: first, that the trustees did not act in their capacity as a domestic tribunal. Secondly, that as members of such associations, they were persons affected by the finding of a domestic tribunal which was invalid for want of observance of the rules of natural justice. ⁷”

 

“… The identity or form of the decision-maker is immaterial. What is important is the effect of its decision and its implications on the subject to whom it is directed. It is therefore irrelevant whether the body entrusted with the decision is styled ‘tribunal’, ‘committee’, ‘task team’, ‘board of trustees’, etc. As to the second, it is common cause that Bae Estates was directly and materially affected by the trustees’ decision. There is no rational and justifiable basis why the rules of natural justice should not apply to the trustees’ decision. This is particularly so in circumstances where Bae Estates had, to the knowledge of the trustees, been freely operating within the scheme for at least a year…⁸”

 

[10] The SCA then considered the grounds on which a decision of a private body could be subjected to judicial review at common law, and held as follows:

“...This would be the case where a decision-maker failed to comply with the elementary principles of justice, such as, for example, where the tribunal misconceives the nature and ambit of its powers or where it acts capriciously or mala fide, or where its findings in the circumstances are so unfair that they cannot be explained unless it is presumed that the tribunal acted capriciously or with mala fides.⁹

 

In Johannesburg Consolidated Investment Co v Johannesburg Town Council Innes CJ observed that the grounds upon which a review may be brought under common law are ‘somewhat wider’ than those that would justify a review of judicial proceedings. It is well established that common-law review, inter alia, applies also where the decision under review is taken without a hearing having taken place. And, where the duty or power is created, not by statute, but consensually, as in relation to domestic tribunals.”¹⁰

 

[11] Famous Idea argued that the submission by GEMS that the court lacks jurisdiction to entertain the review application is without merit. In its founding affidavit it says that the impugned decisions were taken by the Board of GEMS. Such boards, it contends, fall within the ambit of Rule 53 and referred the court to two decided cases¹¹.

 

[12] GEMS, for its part submitted that Uniform Rule 53(1), in terms of which the review application is brought, restricts the type of proceedings or decisions which are reviewable in terms thereof, to the decisions or proceedings of any inferior court, and of any tribunal, board or officer performing judicial, quasi-judicial, or administrative functions. It relies, inter alia, on the decision of the SCA in Government Employees Medical Scheme and Others v Public Protector of the Republic of South Africa and Others¹² that specifically deals with GEMS’s very position and the nature of powers exercised by it which, it says, is dispositive of the question of law on confined legal grounds and for that reason, the impugned decision is not reviewable. Famous Idea did not refer to the SCA decision in its heads of argument at all. The case is important, says GEMS, because it constitutes binding authority which effectively compels a finding in GEMS’s favour insofar as the legal question is concerned, without the need for a record or a consideration of the merits. I revert to the case presently.

 

[13] In Competition Commission of South Africa v Standard Bank of South Africa Ltd¹³ the Constitutional Court held that the court may only order the production of the record of a decision under Rule 53 after it has been determined that it has jurisdiction in the review.¹⁴ The majority of the court stated :

“Therefore, [Rule 53] enables an applicant to raise relevant grounds of review, and the court adjudicating the matter to properly perform its review function. However, for a court to perform this function, it must have the necessary authority. It is not prudent for a court whose authority to adjudicate a review application is challenged to proceed to enforce rule 53 and order that disclosure should be made, before the issue of jurisdiction is settled. The object of rule 53 may not be achieved in a court that lacks jurisdiction.

 

For these additional reasons, we agree with the first judgment [of Theron J] that Boqwana JA erred in ordering that the Commission should disclose its record of investigation before the question of jurisdiction was determined. Once carried out, and in the event that the Competition Appeal Court concluded that it has no jurisdiction, what is to be done in terms of the order cannot be undone.”¹⁵

 

 

[14] For purposes of determining the jurisdictional question of law raised by GEMS, the common cause fact is that the impugned decision concerns the appointment of a service provider to render medical courier pharmacy services, i.e., the exercise of a private contractual power. The SCA’s findings in Government Employees Medical Scheme and Others v Public Protector of the Republic of South Africa and Others¹⁶ are relevant. I revert to it presently.

 

[15] In Ndoro and Others v South African Football Association¹⁷ the Court extracted the following three important principles that have emerged from the case law:

15.1. Private entities may discharge public functions by recourse to powers that do not have a statutory source and may be characterised as public powers.

15.2. The mere fact that a private entity exercises public power does not mean that all its conduct amounts to the exercise of a public power or the performance of a public function – it all depends on the relevant power or function; and

15.3. The fact that a private entity is powerful and may do things of great interest to the public does not mean that it discharges a public power or function.

 

[16] The Court in Ndoro emphasised that:

“. . . it is the assumption of exclusive, compulsory, coercive regulatory competence to secure public goods that reach beyond mere private advancement that attracts the supervisory disciplines of public law.”¹⁸

 

[17] In Government Employees Medical Scheme and Others the SCA, with specific reference to GEMS, inter alia, confirmed that:

17.1 A medical scheme is a sui generis non-profit entity registered in terms of section 24(1) of the MSA, which operates for the benefit of its members;¹⁹

17.2 The powers and functions of a medical scheme are limited by its registered rules and the MSA;²⁰

17.3 The business of a medical scheme does not appear to encompass the performance of a public governmental function or the exercise of a public power;²¹

17.4 The relationship between members and a medical scheme is essentially one of a contractual nature;²²

17.5 GEMS is a restricted medical scheme and only employees qualifying to be registered as members and their dependants may be registered as beneficiaries of the scheme. GEMS’ rules are, therefore, not of general application and only apply to a restricted class of persons.²³

17.6 Although GEMS is restricted to government employees, membership is not compulsory;²⁴

17.7 GEMS does not itself provide a health service and like other medical schemes it operates in the nature of a health insurance;²⁵

17.8 GEMS is a medical scheme no different to other medical schemes and governed by the same regulatory framework, which entails that it is like all other medical schemes subject to the MSA, its registered rules and it is regulated by the Council for Medical Schemes;²⁶

17.9 GEMS is a body corporate managed by a board of twelve trustees.

The mere fact that the Minister may appoint 50% of GEMS’s does not mean that the government exercises control over the affairs of

GEMS;²⁷

17.10 Although the right to appoint 50% of the trustees as provided to the

Minister in terms of GEMS’s rules, those rules may be varied by the

Board of Trustees, without reference to the Minister;²⁸ and

17.11 With reference to Calibre Clinical Consultants (Pty) Ltd v National Bargaining Council for the Road Freight Industry (“Calibre”),²⁹ it is doubtful whether a body can be said to exercise a public power or perform a public function only because the public has an interest in the matter.³⁰

 

[18] Quintessentially, the impugned decision is simply a commercial decision

relating to the procurement of services by a medical scheme.

 

[19] Famous Idea strenuously relies on Metropolitan Health Corporate (Pty) Ltd and Others v South African Police Service Medical Scheme (POLMED) and Another³¹ for many of its contentions, including its stance that since the legal question does not concern so-called jurisdiction proper, the Court per se has review jurisdiction. However, I was informed by counsel for the Joint Venture that the SCA has since, on 4 September 2023, granted leave to appeal to the relevant medical scheme (POLMED) against the decision of the court a quo in Metropolitan.

 

[20] It appears that in the Polmed matter the Court ordered production of the record without first determining whether it has jurisdiction in the review. The Court appears not to have embarked upon that determination at all, because of its finding that the issue of jurisdiction had not been raised. The Polmed matter therefore does not constitute any authority for the proposition that a medical scheme’s decisions are susceptible to the Court’s review jurisdiction, and it lends no support for the case sought to be advanced by Famous Idea.

 

 

[21] In any event, in my view, GEMS’s position in the present matter is distinguishable from Metropolitan. In casu it is not necessary to have any regard to the merits of the main application in dealing with the jurisdictional challenge, since the SCA has already finally pronounced on GEMS’s specific sui generis position. The SCA’s findings are binding on this Court and, even considered in isolation, are sufficient to sustain GEMS’s submissions on the question of law in the notice.

 

[22] Famous Idea did not formally object against the competency of GEMS’ Notice in terms of rule 30. It instead, took a further step by launching the application to compel the filing of the record. It had also agreed³² that the issues for determination in GEMS’s Notice and the interlocutory matters overlap because they essentially turn on the same anterior legal question(s). Yet it now contended that GEMS’ Notice was not competent, because rule 6(5)(d)(iii) does not apply to a review in terms of rule 53.

 

[23] In doing so, Famous Idea primarily, but generally, without reference to specific paragraphs, relies on Jockey Club of South Africa v Forbes.³³ However, upon closer scrutiny, Jockey Club paints a very different picture than the one contended for. The Court, amongst other things, in its analysis of the position:

 

23.1 Indicated that in substance the drafter of Rule 53 has done no more than to adopt the ordinary procedure under Rule 6 to the special exigencies of a particular application on notice of motion;³⁴

23.2 Made no finding that Rule 6(5)(d)(iii), or Rule 6 generally, is not

applicable to Rule 53 and referred to the interrelationship between

Rule 6 and Rule 53;

23.3 Referred in the context of adherence to Rule 53 with approval to

Federated Trust Ltd v Botha³⁵, where it was stated that rules need not be slavishly observed, because “(R)ules are not an end in themselves to be observed for their own sake. They are provided to secure the inexpensive and expeditious completion of litigation before the courts…”.

 

[24] Rule 53(1)(a) entitles a respondent to show cause why a decision should not be reviewed. The entitlement is not circumscribed and does not preclude a respondent’s right to show such cause by virtue of a dispositive legal question, which is the very purpose of Rule 6(5)(d)(iii). A contrary interpretation would, bizarrely, entail that a respondent would never be entitled to oppose a review in terms of Rule 53 by virtue of a dispositive anterior legal question, be it in terms of Rule 6(5)(d)(iii), or otherwise. It could therefore become entangled remediless in a review where there is lack of jurisdiction and be subject to the dictates of a mala fide applicant who may abuse the rule for any potential ulterior purpose.

 

[25] The above-mentioned matter of Competition Commission of South Africa³⁶, provides a clear example of how the Court should first determine, in compliance with the above principles, whether it has review jurisdiction before it can make an order compelling delivery of a record. This determination is conducted prior to, and without making a determination in respect of the merits of the grounds of review sought to be relied upon.

 

[26] Famous Idea makes a singular bold, vague and unsubstantiated allegation in the founding affidavit that it also “relies on the grounds of review at common law, on the basis of the facts set out in this affidavit”.³⁷ The inference which it wants this Court to draw is not supported by any primary facts contained in the founding affidavit.

 

[27] A dangerous precedent would be set if it were to be held that the decisions taken by private parties to appoint service providers are capable of being reviewed. If the ambit of the common law review is broadened (which is effectively what Famous Idea is asking this Court to do) then the decisions of private parties in South Africa who invite potential service providers to quote and tender for a service would suddenly be susceptible to potential review applications by any unsuccessful party.

 

[28] The situation of private parties inviting quotes and/or tenders for a service is vastly different from a public procurement process where parties know beforehand that their information will be disclosed should a decision be reviewed.

A review application in a private commercial context will allow competitors to bypass the strict legislative requirements for obtaining information held by a private body in terms of PAIA.³⁸ Should the common law review be broadened, or if this Court takes a view that the reviewability of the decision (i.e. the review jurisdiction) is linked with the merits (which it is not), then a private party would automatically have a right to the information held by another private party by merely launching an application in terms of Rule 53. Such an approach cannot be countenanced.

 

Conclusion

[29] It follows, in my view, that the impugned decision is not reviewable in terms of the common law because it does not fall in the category of administrative action which may potentially still be subject to common law review. Consequently, the review application and the interlocutory applications launched by Famous Idea must also fail.

 

Costs

[30] Counsel for GEMS submitted that the legal questions raised should be decided in favour of GEMS and the review application should be dismissed with costs on the attorney and client scale, inclusive of the costs of two Counsel, as the review application was so manifestly ill-conceived that it constituted an abuse of process justifying a punitive costs order. The argument is persuasive. However, I do not think it was of such an egregious nature that punitive costs should be awarded in this instance.

 

[31] I make the following order:

1. The application by the first, second and third respondents in terms of the Rule 6(5)(d)(iii) notice) succeeds with costs, such costs to include the costs of opposition of the fourth and fifth respondents. The costs shall include the costs of two counsel where so employed.

2. The application for review and the interlocutory applications by the applicant fall to be dismissed with costs including the costs of two counsel where so employed.

 

 

___________________________

RANCHOD J

Judge of the High Court

Gauteng Division, Pretoria

 

 

Date of hearing: 3 October 2023

Date of judgment: 5 February 2024

 

Appearances:

 

 

For Famous Idea: Adv S Tshikila &

Adv T Kgomo

Instructed by Malatji & Co Attorneys

The Ridge

1 Discovery Place

Cnr Rivonia Road & Katherine Street

Sandton, Johannesburg

 

For First, Second and Third Respondents Adv A Bava SC &

Adv K Schabort

Instructed by Gildenhuys Malatji Inc

GMI House Harlequins Office Park

164 Totius Street

Groenkloof, Pretoria

 

For Fourth and Fifth Respondents Adv E Kromhout &

Adv H Wessels

Van Der Merwe Attorneys

62 Rigel Avenue

Waterkloof, Pretoria