- November 21, 2022
- |Civil Law, Practice, And Procedure, Concise Law Reports (CLR)
CIVIL PRACTICE – APPEAL – REVIEW OF ANNUAL CONTRIBUTION INCREASE OF MEDICAL AID FUNDS – WHETHER SUCH INCREASE FORMED PART OF AN AMENDMENT OF THE RULES OF APPLICANT; COSTS – PARTY NOT COMPLYING WITH RULES In Re THE RECORD ORDERED TO PAY COSTS
The appellant brought an application for review against the first respondent seeking declaratory relief regarding the annual contribution increase of medical aid funds, and whether such an increase forms part of an amendment of the rules of the appellant, therefore requiring approval from the first respondent. This contention arose from the registrar of Medical Aids’ rejection to approve the appellant’s application to approve the annual contribution increase for 2019.
The court a quo refused to grant the declaratory relief sought. It was found that the annual contribution amount and/or calculation forms part of the rules of the fund. Thus, the approval of the registrar was seen as necessary for any changes to the contribution amount. Further, the court a quo found that there were indeed numerous opportunities for audi created during the process of dealing with the application of amendment of the rules submitted by Heritage Health to the registrar of Medical Aid Funds. Further, the court a quo was also satisfied with the process that was followed by the registrar in dealing with the matter, hence was not inclined to grant the requested relief.
On appeal, the issues were whether the decision of the registrar could be set aside based on the alleged non-compliance with the audi alteram partem rule or on any other recognized review grounds for which a case had been made on the record. The appellant particularly contended the unreasonableness of the decision by the registrar as a ground for setting aside. Per FRANK AJA (DAMASEB DCJ and SMUTS JA concurring):
The court reasoned that there were two reasons underpinning the decision of the registrar, the first related to reinsurance or insurance that was recommended by the actuaries of the Fund. The second related to the ‘30 per cent self-fund gap’ which was a feature of some of the benefit structures offered by the Fund. While the registrar conceded that the ‘self-fund gap’ formed part of the business plan of the Fund from the outset, that the product was offered from its inception, and that complaints in respect thereof had been made to his office, he maintained that he could not sanction a 30 per cent increase in respect of the removal of the ‘self-fund gap’ as this was attributable to the removal of the ‘unapproved and unlawful self-fund gap practice’. Held that:
- The general rule in applications, of which review applications are an example, is that the case the respondent(s) must meet is that set out in the founding affidavit and nothing more. Deviation from this general rule may cause prejudice to a respondent as it would amount to a finding against such respondent without she/he having been given the opportunity to deal with such grounds or allegations.
- As a principle of natural justice, audi alteram partem depends on the circumstances of the case, the nature of the enquiry, the rules under which the decision-maker acts, and the subject matter that is dealt with. Further, fairness is not static but tailored to the particular circumstances of the case. Thus, an applicant cannot complain of lack of audi if the registrar on the application itself declines it. In such a case, the registrar’s decision can still be assailed on review, provided of course there are grounds for review.
- The Fund had a full opportunity to state its case, which it did. In these circumstances, the complaint of a lack of audi rings hollow. The real complaint seems to be that the registrar did not agree with the submissions made by the Fund and did not change his view. However, the audi point in relation to the self-funding gap was never an issue in the proceedings and needed no further consideration as this was not raised in the founding papers.
- The directive of the registrar that the Fund immediately cease to apply the self-funding gap was not challenged along the lines indicated by the court on appeal and the registrar was not called to answer such challenge. This was despite it being unlikely that he may have a satisfactory explanation in an attack based on a misdirection and misapprehension of his discretion.
- For the purpose of considering the reasonableness of the decision of the registrar to direct the Fund to immediately cease to implement the self-funding gap without granting it a concomitant increase in contributions, it was accepted for purposes of determination that he was faced with an irregular and unlawful situation (in contravention to s 30(1)(l) and (m) of the Medical Aid Funds Act 23 of 1995 (the Act)). However, in making this decision, the court on appeal noted certain facts and circumstances that the registrar should have been aware of.
- The court on appeal was satisfied that a reasonable registrar, in the circumstances of the present matter, would not have made the decision that the registrar made but would have resolved the matter in a manner so as not to cause prejudice to either the Fund or its members. Rather, the decision was neither in the interest of the Fund nor its members, with potentially serious adverse consequences to both.
- The court on appeal agreed that the directive of the registrar in relation to the removal of the self-funding gap – without addressing the additional costs this would entail to the fund – was unreasonable.
- It could not be suggested that the registrar acted unreasonably and irrationally to seek assurance that the stated risk was addressed by insurance or a viable alternative when the Fund itself was of the same view and sought to address the issue. Thus, the Fund failed to make out a case that the registrar’s insistence on insurance or viable alternative was unreasonable or irrational.
- It appeared that rule 11(5) of the Rules of the Supreme Court was not kept in mind as numerous duplications of documentation and documents not relevant to the appeal were included in the record of appeal. Furthermore, there was also a failure to comply with rule 11(1)(h) of the Rules concerning the page numbers in the appeal record. As a consequence, it greatly inconvenienced anyone attempting to read the record and made preparations for the appeal more time-consuming.
Non-compliance with the rules when it comes to the records filed in the court was too commonplace and this issue must be addressed. The court on appeal did so in the costs order to send out a message that laxity in preparing records would have adverse consequences.
- Held further, the registrar is to consider the matter of self-funding gap de novo and determine the modalities (inclusive of the costs) in respect of the termination of the said gap, with cognizance of the present judgment.
As a result, the appeal partly succeeded. The Costs were to be borne by the respondents, save the costs in respect of the compilation and perusal of the record which was limited to 70 per cent of such costs.
Heritage Health Medical Aid Fund v Registrar of Medical Aid Funds (SA 77-2020) [2022] NASC (21 November 2022)