Head of Department of the Department of Health: Province of the Eastern Cape and Others v Grahamstown Makana Private Hospital (Pty) Ltd (ECJ 2004/016) [2004] ZAECHC 8 (17 March 2004)

FORM A

FILING SHEET FOR EASTERN CAPE JUDGMENT

ECJ NO : 016/2004

PARTIES: The Head of Department of the Department of Health: Province E.C. & 2 others v Grahamstown Makana Private Hospital

REFERENCE NUMBERS -

Registrar: CA179/2003

DATE HEARD: 30 October 2003

DATE DELIVERED: 17 March 2004

JUDGE(S): Jennett, Erasmus and Ebrahim JJ

LEGAL REPRESENTATIVES -

Appearances:

for the State/Plaintiff(s)/Applicant(s)/Appellant(s): MJ Lowe SC, EAS Ford SC,

SH Cole

for the Accused/Defendant(s)/Respondent(s): JW Eksteen SC, AG Dugmore,

MS Rugunanan

Instructing attorneys:

Plaintiff(s)/Applicant(s)/Appellant(s): Wheeldon Rushmere & Cole

Defendant(s)/Respondent(s): Dullabh & Co.

CASE INFORMATION -

Nature of proceedings : Application for leave to appeal

Topic: Review

Keywords: Administrative law –review of action – refusal of

licence for private hospital – Regulation 7(2) of

Health Regulations – s 7(2) of Promotion of Justice Act 3 of 2000 – peremptoriness – outcome of appeal largely academic interest – s 21A of Act 59 of 1959

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION)

Case no: 179/2003

In the matter between:

THE HEAD OF DEPARTMENT OF THE

DEPARTMENT OF HEALTH: PROVINCE

OF THE EASTERN CAPE First Applicant

THE MEMBER OF THE EXECUTIVE

COUNCIL FOR THE DEPARTMENT

OF HEALTH FOR THE PROVINCE OF

THE EASTERN CAPE Second Applicant

THE DIRECTOR GENERAL OF THE

DEPARTMENT OF HEALTH FOR THE

PROVINCE OF THE EASTERN CAPE Third Applicant

vs

GRAHAMSTOWN MAKANA PRIVATE

HOSPITAL (PTY) LTD

(REGISTRATION NO.: 2002/010261/07) Respondent

JUDGMENT

ERASMUS J

[1] The applicants seek leave in terms of s 20 of the Supreme Court Act 59 of 1959 to appeal to the Supreme Court of Appeal against the entire judgment of the Court delivered on 27 November 2003.

[2] For the sake of clarity and consistency I refer to the parties as they were in the application proceedings, viz the applicants as the first respondent and second respondent respectively, and the respondent as the applicant.

[3] The application constituted a special review in terms of s 6 of the Promotion of Administrative Justice Act 3 of 2000 (commonly referred to as ‘PAJA’). The subject of the review was the administrative action by the second respondent of refusing to furnish the applicant with permission in principle to establish a private hospital in terms of the regulations governing private hospitals (see Judgment p 6 for a full description of the Regulations). Paragraph 1 of the notice of appeal sets out twelve grounds of appeal. In essence these grounds are two-fold:

that the Court should have refused to the hear the application in view of the peremptory nature of the provisions of s 7(2) of PAJA; and

that the Court was clearly wrong in holding that the second respondent had erred in his decision.

[4] PAJA dictates that no court shall review an administrative action in terms of the Act unless any internal remedy provided for in any other law has first been exhausted (s 7(2)(a)); and the court, if it is not satisfied that such internal remedy has been exhausted, must direct that the person concerned must first exhaust such remedy before instituting proceedings in the court for judicial review in terms of the Act (para (b)); but subject thereto that the court may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust the internal remedy if the court deems it in the interest of justice (para (c)). In terms of reg 55, the prospective proprietor of a private hospital ‘may appeal in writing to the Minister against any decision made by the Secretary in terms of any provision of these regulations in respect of such prospective proprietor’.

[5] At the hearing of the application, the presiding Judge raised with counsel the question whether the applicant’s failure first to follow the appeal procedure did not constitute a bar to the application. The Court did not however pursue the question in view of the attitude of the respondents’ counsel. (I refer to pages 12 and 13 of the judgment.) Those counsel now contend that the provisions of s 7(2) of PAJA are peremptory and that notwithstanding their stance at the hearing, the Court should mero motu have directed the applicant first to exhaust its appeal remedy in terms of reg 55 before instituting the proceedings for judicial review.

[6] The only decision which I can find that relates to s 7(2) of PAJA is that of Marais vs Democratic Alliance [2002] 2 All SA 424 (C) paras 37, 39, 42 and 59. The learned Judge who delivered the judgment (Van Zyl J) stated (at para 39) that the provisions of s 7(2) are peremptory, but he was on the facts of the case not required to make a definitive finding on the question. Currie and Klaaren, The Promotion of Administrative Justice Act Benchbook state (at p182 para [7.9]) with reference to s 7(2), that by imposing a strict duty to exhaust domestic remedies, PAJA has considerably reformed the common law, which holds that the mere provision for statutory internal appeal remedies is not in itself enough to bar access to judicial review (fn 18). The learned authors point out that the wording of s 7(2)(a) is broad: ‘any internal remedy provided for in any other law’. They express the view that the applicant for PAJA judicial review will in future have to show that this procedural requirement has been fulfilled. I cannot fault this conclusion.

[7] We have since the hearing been furnished with a copy of a letter addressed by counsel for the respondents to their instructing attorneys. The letter contains submissions on a point not raised at the hearing. Counsel contend that for any administrative action to be procedurally fair, the administrator concerned must comply with the dictates of s 3 of PAJA. Subsection (2)(b)(iv) provides that in order to give effect to the right to procedurally fair administrative action, an administrator must give the applicant ‘adequate notice of any right of review or internal appeal, where applicable.’ Counsel submit that ‘at best for the Respondents, the failure to give notice of the internal review/appeal, should be found to disentitle the MEC from taking the point that the internal review/appeal procedure was not followed, thereby rendering the argument made for the MEC at the Application for Leave to Appeal stage unsound’.

[8] In the absence of full argument on the point, I am – at this late hour – reluctant to make any finding on the questions raised by counsel’s

contentions. I confine myself to stating that at this point in the proceedings the objective peremptory requirements of s 7(2)(a) and (b) are unmitigated by any order for exemption in terms of para (c). There is therefore, to my mind, at present a real possibility that the Court of Appeal could rule that the applicant was by those provisions procedurally barred from bringing the application.

[9] I should perhaps mention that at the hearing of the application counsel for the applicant applied for exemption in terms of para (c) of s 7(2). The Court gave no ruling on the application and in his judgment Jennett J did not refer to it, he did not need to do so in view of the conclusions of the Court. In certain cases an application from the bar might suffice for an order in terms of para (c); in the present matter, however, it was clearly inadequate and therefore out of order. Many factors and considerations would have impacted upon such an application in the present matter, and those could be canvassed properly only by way of formal application. The application by counsel was unsupported by any explanation of the applicant’s failure to comply with reg 55, as well as its failure to apply for exemption timeously and properly by way of notice of motion supported by an affidavit. The relief provided for in para (c) is not there simply for the asking.

[10] It does not necessarily follow however that because the respondents have good prospects of success on appeal on this ground, the Court is obliged to grant their application; other considerations also come into play. I return to this aspect later in the judgment.

[11] Jennett J sets out and explains fully the procedural provisions in the Regulations. This procedure is succinctly encapsulated in a single paragraph in the judgment (p 9) which I repeat here for the sake of convenient reference:

‘From the aforegoing it is clear that there are two separate and distinct steps involved in the establishment of a private hospital. First, an applicant who wants to establish a private hospital must obtain written permission to do so and the criterion for the granting of such written permission is essentially whether there is a necessity for the establishment of such a hospital; then, if the applicant has been granted the necessary written permission, the applicant must apply for and obtain the registration of the private hospital, or rather proposed private hospital, and this shall not be granted unless such registration is in the public interest.’

The correctness of this statement is unchallenged.

[12] The existence (or non-existence) of a necessity for a private hospital in a particular area is an objective fact. The applicant made out a strong prima facie case for the need for such a hospital in the area of Grahamstown and its surrounds. In her answering affidavit, the Director of District Development in the provincial Department of Health states that ‘it has long been accepted that it is “necessary” for a private healthcare component in Grahamstown’. Second respondent does not dispute that there is such a necessity. The Court accordingly adjudicated the application on the basis that such necessity existed. It is not suggested that the Court erred in this regard. Counsel for the respondent nonetheless question the finding of the Court that the second respondent had erred in his decision to refuse to furnish applicant permission for the establishment of a private hospital.

[13] Counsel’s argument runs as follows: reg 7(2) stipulates that the second respondent shall satisfy himself ‘as to the necessity … for such a private hospital … before granting or refusing permission’ (the emphasis is that of counsel); inasmuch therefore as the application related to an independant wholly private hospital, and the policy of the Department favoured a public private partnership arrangement (referred to as a ‘PPP’), the second respondent could rightly be satisfied that it was not in the public interest to furnish written permission for ‘such’ a hospital.

[14] The flaw in the argument is that at the first step in the procedure the relative merits and demerits of the various proposals for a private hospital are not in issue. As Jennett J points out, the sole criterion at this stage is whether there is a necessity for a private hospital. In his letter of 23 January 2003 (fully set out by Jennett J at pp 4-6 of the judgment), second respondent declares that approval of the application is not in the public interest ‘at this stage’. Second respondent does not state that there is no necessity for a private hospital as proposed by the applicant. It is the gist of the letter that there is a necessity for either such a hospital or a PPP arrangement. The letter further indicates that ‘the authorities’ are prepared to reconsider the application at a later stage, ‘together with any proposals of a public private partnership nature’. In the view of second respondent, it seems, both proposals met the requirement for permission in terms of regulation 7(2)(i). On the Court’s interpretation of the procedural prescripts, which is not under challenge in the leave application, the second respondent should on his own assessment of the factual situation have furnished applicant the reg 7(2)(i) permission.

[15] The public interest insofar that it is relevant to the decision to be taken in terms of regulation 7(2)(i) is reflected in the regulation itself: it requires that the second respondent shall furnish the permission if there is a necessity for a private hospital such as is proposed by the applicant. Wider considerations of public interest become relevant expressly in terms of reg 4(6) when the second respondent considers an application in terms of reg 14, read with regs 2, 3, 4, and 5, for the registration of a private hospital. At that stage, clearly, the second respondent is entitled, in fact obliged, to weigh up all competing proposals whether complete or still in preparation. Second respondent’s reply in his letter of 23 January 2003 is appropriate to such an application, but not to a request in terms of regulation 7(2) for prior approval or permission to establish a private hospital. His apparent confusion of the two stages in the procedure is understandable in view of the confusing nature of the application which is an ‘APPLICATION FOR A LICENCE TO BUILD, ESTABLISH AND OPERATE A PRIVATE INDEPENDANT HOSPITAL IN MAKANA MUNICIPALITY’. The regulations nowhere refer to such ‘a licence’. The ambiguity is perpetuated in applicant’s prayers. It seems that the parties have been propelled into litigation through misunderstanding of the procedure for the establishment of a private hospital and the nature of the application in the context thereof.

[16] This is not a case where litigants are in contest for personal gain or in their own interests. The applicant represents a number of members of the Grahamstown community who are concerned about the unsatisfactory health services available to the Grahamstown community. The first respondent is the Head of the Department of Health for the Province, the second respondent is the Member of the Executive Council for that department. They share the concern of applicant for the health and welfare of the community. The parties have a common goal. They should not be in court fighting one another, but around a table finding common ground. They are not far apart. The application in the end turns on a narrow point of dispute. The issue between them at this stage is not so much whether but rather when the steps consequent upon the granting of permission in terms of reg 7(2)(i) shall be taken. These steps are set out in reg 7(2)(ii) which provides that ‘(h)aving obtained such permission, the applicant shall complete Form 1 (Annexure B) and submit plans for approval by the Secretary, together with the necessary information, and shall supply any additional information the Secretary may require’. After obtaining the permission, the applicant proceeds to prepare a full and formal proposal for the establishment of a private hospital which must then be accepted or rejected in terms of reg 14. The real and only effect of the second respondent’s refusal to issue the permission was to delay the preparation of applicant’s proposal until the PPP proposal was complete or had fallen through. Nowhere, in the papers do the respondents explain why the submission of the application form and plans in terms of subreg (2)(ii) should be suspended; nor how the resultant delay in meeting the need for a private hospital could be in the public interest. They point to no possible prejudice should the applicant be granted the written permission (or ‘prior approval’) contemplated in reg 7(2).

[17] The Court found that second respondent failed to appreciate what precisely was required of him in terms of reg 7(2)(i), and therefore failed to exercise properly his powers in terms of that regulation (judgment p 12). The respondents point to no misdirection in the reasoning of Jennett J in arriving at his conclusion. I find that there is no reasonable prospect that the Supreme Court of Appeal will hold that the conclusions of the Court are clearly wrong. It follows that we must rule that the application for leave to appeal on grounds 1.6 to 1.12 shall not succeed.

[18] I return to the question whether leave to appeal shall be granted on the procedural point arising from s 7(2) of PAJA (grounds 1.1 to 1.5). It is necessary in this regard to consider what the practical effect of success on appeal will be. If the appeal succeeds, the applicant would have to lodge an appeal in terms of reg 55; whereas at present, on the order of the Court, the second respondent is required to reconsider the application for permission, whereafter if unsuccessful the applicant will likewise have to lodge an appeal in terms of reg 55. In other words, the parties will find themselves coming out of the Supreme Court of Appeal at the same door as in they went, with one or other or both of them considerably poorer for the costs of the appeal.

[19] In the circumstances, s 21A(1) of the Supreme Court Act 59 of 1959 becomes relevant. It provides that when at the hearing of any civil appeal the issues are of such a nature that the judgment or order sought will have no practical effect or result, the appeal may be dismissed on that ground alone. Further, ss (3) states that save under exceptional circumstances, the question whether the judgment or order would have no practical effect or result, is to be determined without reference to the consideration of costs.

[20] Counsel for respondents submit that we should nevertheless grant the application because the matter is of public interest and the respondents require clarity on the law. With respect, I fail to see what interest the parties have in obtaining the judgment of the Supreme Court of Appeal on the effect of s 7(2) of the Promotion of Administrative Justice Act. As to the interpretation of the reg 7(2), the judgment of Jennett J is quite clear. Moreover should the respondents succeed on the procedural point, it will not be necessary for the Supreme Court of Appeal to consider the other issues arising in the appeal. That Court is not given to furnishing opinions on academic issues.

[21] In the result, I would dismiss the application with costs.

_________________________

A.R. ERASMUS

JUDGE OF THE HIGH COURT

DATE:

JENNETT J:

I agree. The application is dismissed with costs.

M.P. JENNETT

EBRAHIM J:

I agree.

Y. EBRAHIM