21 September 2020 by , and Dispute Resolution Alert

State self-reviews: Has the Gijima principle been narrowed?

What’s in a name? Quite a lot it seems, according to a unanimous bench of the Supreme Court of Appeal in Compcare Wellness Medical Scheme v Registrar of Medical Schemes and Others (267/2020) [2020] ZASCA 91 (17 August 2020). The facts are uneventful. It concerns a medical scheme’s attempt to change its name under the Medical Schemes Act, 1998. More significantly, however, it sheds light on a potentially critical development in South African administrative law – concerning the performance of public powers and functions.

This case marks a determined distinction from the Constitutional Court’s contentious decision in State Information Technology Agency SOC Limited v Gijima Holdings (Pty) Limited 2018 (2) SA 23 (CC) which held that the Promotion of Administrative Justice Act, 2000 does not apply when an organ of state, acting in its own interest, seeks to review its own decision. This being so because the right to just administrative action enshrined in section 33 of the Constitution rights is, according to Gijima, only enjoyed by private persons. The State is a bearer of those obligations. Such self-reviews must be pursued, so Gijima held, under the broader rubric of the principle of legality. It is an open secret that Gijima has not found universal favour with many questioning its foundational basis and philosophical underpinnings. What Gijima did leave open, however, was a scenario where: in seeking a review of its own decision or of another – an organ of state is acting in the public interest in terms of section 38 of the Constitution. In Compcare, the SCA was called to determine the correct pathway in this scenario.

The facts in Compcare were at first blush rather straightforward: Compcare Wellness Medical Scheme, a medical scheme registered in terms of the Medical Schemes Act, applied to the Registrar of Medical Schemes for approval to change its name. It intended on changing its name to “Universal Medical Scheme” to align itself with its administrator, Universal Healthcare Administrators (Pty) Ltd. The Registrar is empowered to refuse to register a medical scheme’s name or to change a medical scheme’s name if this would be ‘likely to mislead the public’. The Registrar therefore denied the request on the basis that it would likely ‘mislead the public’, despite various steps that Compare was willing to implement to mitigate any potential confusion between itself and its administrator. Here, Compcare argued that with these mitigating factors, there was no ascertainable harm or prejudice to its members or to the general public if a medical scheme and its administrators share a common brand. This proposal, however, indicated that Compcare was aware of the potential for the public to be misled. The Registrar’s decision was subsequently upheld on appeal by the appeal committee of the Council of Medical Schemes.

Things then took a turn for the worse. Following the ruling of the appeal committee, Compcare elected to appeal to the Appeal Board. The Appeal Board upheld the appeal and ordered the Registrar to give effect to the name-change subject to conditions regarding the steps to be taken by Compcare to avoid the likely confusion.

The Registrar and the Council brought an application in the Gauteng Division of the High Court, Pretoria for the review and setting aside of the Appeal Board’s decision. The High Court held that the Appeal Board had misdirected itself in granting the appeal and by ordering the Registrar to approve the name-change subject to conditions. In the result, the High Court reviewed and set aside the Appeal Board’s decision to give effect to Compcare’s name change. It is the decision of the SCA that concerns us.

The central issue before the SCA was whether the correct pathway to review the decision of the Appeal Board by the Registrar and the Council was via PAJA or the principle of legality – the latter being applicable when the exercise of the public power does not fall within the definition of administrative action in PAJA. Unlike the state applicant in Gijima, the Registrar and the Council grounded their standing to review the Appeal Board’s decision on section 38(d) of the Constitution, which grants standing to approach a Court to “anyone acting in the public interest”. This was buttressed by the fact that the Medical Schemes Act contemplates the possibility of a proposed name change causing harm to the public. Both the High Court and the Supreme Court of Appeal readily accepted that the Registrar and the Council were acting in the public interest.

Ultimately, the SCA held that PAJA was the correct pathway to upset the decision of the Appeal Board. This was so because when the Registrar and the Council brought the review application in the public interest, they did so in order to safeguard the fundamental right of each member of the public to just administrative action as enshrined in section 33 of the Constitution. The SCA found that the Registrar and the Council in fact stepped into the shoes of members of the public on whose behalf they litigated and, in this sense, they were, despite being organs of state, bearers of fundamental rights to just administrative action.

To get back to the earlier query. What’s in a name? The answer remains: quite a lot. That is so because while a review in terms of the principle of legality and under PAJA may produce the same result, the path varies. So rather than narrowing Gijima, Compcare presents a significant development on the proper approach to the constraints placed on organs of state in the review of decisions by the other organs of state. The case further raises important questions regarding the State’s ability to review decisions under PAJA, when acting in the public interest. It remains to be seen whether the impact of the decision in Compcare is limited to the semantics of the name of a medical scheme, or whether it in fact opens a new chapter on which the State’s ability to review its own decisions can be further developed and interrogated. Either way, this does not appear to be the end of this saga!

download PDF

The information and material published on this website is provided for general purposes only and does not constitute legal advice.

We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter.

We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages.

Please refer to the full terms and conditions on the website.

Copyright © 2020 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us cliffedekkerhofmeyr@cdhlegal.com

You may also be interested in