Another split decision of the Constitutional Court over fundamental issues concerning the principle of legality and the powers of the government contrasted with those of individuals. The majority disallowed the appeal. The dissenters were of the view that the majority judgment was favourable to ‘Kirland on a case that Kirland did not put up’. The majority held that a court cannot ‘exempt government from the burdens and duties of a proper review application, and deprive the subject of the protections these provide, when it seeks to disregard one of its own officials’ decisions’.
Cameron J wrote the judgment for the majority with Moseneke ACJ, Skweyiya ADCJ, Dambuza AJ, Froneman J, Mhlantla AJ and Nkabinde J concurring and Jafta J, Madlanga J and Zondo J dissenting.
[106] In summary: having failed to counter-apply during these proceedings, the Department must bring a review application to challenge the approval granted to Kirland, which remains valid until set aside. In those proceedings, the Department will no doubt explain its dilly-dallying by accounting for the long months before it acted. As respondent, Kirland will in turn be entitled to defend the decision, whether on the ground of its validity, or on the ground that it should not be set aside, even if it is invalid.
Extracts from the judgment [footnotes omitted]
in MEC for Health, Eastern Cape v Kirkland [sic] Investments (Pty) Ltd (77/13) [2014] ZACC 6 (25 March 2014)
Introduction
[64] Can a decision by a state official, communicated to the subject, and in reliance on which it acts, be set aside by a court even when government has not applied (or counter-applied) for the court to do so? Differently put, can a court exempt government from the burdens and duties of a proper review application, and deprive the subject of the protections these provide, when it seeks to disregard one of its own officials’ decisions? That is the question the judgment of Jafta J (main judgment) answers. The answer it gives is Yes. I disagree. Even where the decision is defective – as the evidence here suggests – government should generally not be exempt from the forms and processes of review. It should be held to the pain and duty of proper process. It must apply formally for a court to set aside the defective decision, so that the court can properly consider its effects on those subject to it.
[65] The reasons spring from deep within the Constitution’s scrutiny of power. The Constitution regulates all public power. Perhaps the most important power it controls is the power the state exercises over its subjects. When government errs by issuing a defective decision, the subject affected by it is entitled to proper notice, and to be afforded a proper hearing, on whether the decision should be set aside. Government should not be allowed to take shortcuts. Generally, this means that government must apply formally to set aside the decision. Once the subject has relied on a decision, government cannot, barring specific statutory authority, simply ignore what it has done. The decision, despite being defective, may have consequences that make it undesirable or even impossible to set it aside. That demands a proper process, in which all factors for and against are properly weighed.
[66] That has not happened here. Kirland instituted these proceedings to ensure that an approval communicated to it, and in reliance on which it acted, prevails. In answer, the government respondents made no move to set aside the approval. They took the attitude that they could withdraw or ignore it. They branded the approval a “non-decision”. Their principal deponent resisted Kirland’s application on the simple basis that the defective decision did not exist. That was a fundamental error. For the decision does exist. It continues to exist until, in due process, it is properly considered and set aside.
[67] In the face of government’s attitude, Kirland succeeded in the High Court and the Supreme Court of Appeal. The main judgment would reverse this, on the basis that all the evidence about the controversial approval is before us, and that it shows the approval was defective. This outcome, and the reasoning supporting it, would have untoward consequences for those subject to government decision-making. The evidence is not all before us. And it would be fundamentally unfair to Kirland to set aside the decision now, without requiring government to bring a proper application, in which it explains the history of the decision, its shifting attitudes towards it and its delay in dealing with it. In response, Kirland is entitled to be heard on whether it has been prejudiced and why it would be unfair to it to set the decision aside now. This is a protection the Constitution itself affords Kirland. The main judgment would abrogate that protection. The Court should not do so.
[68] Once we conclude, as I respectfully suggest we must, that government cannot take a shortcut across Kirland’s constitutional protections, then we have to deal with other questions the main judgment does not address. These include the Department’s contention that it was entitled simply to ignore the approval as a “non-decision”, and that this Court should reconsider the correctness of the decision of the Supreme Court of Appeal in Oudekraal.
Should the validity of the approval be decided in these proceedings?
[69] The problem arises from two decisions on applications Kirland submitted to the Eastern Cape government in 2006 and 2007 to establish private hospitals in the province. The first said No. The second said Yes. The first, the refusal, was never signed off or communicated to Kirland. This was because Mr Boya, the Superintendent-General who took that decision, became incapacitated. The second, the approval, was taken on 23 October 2007 by an Acting Superintendent-General, Dr Diliza, while Mr Boya was away. That decision was communicated to Kirland, but Dr Diliza took it in circumstances that make it vulnerable to challenge on review.
[70] Inter-related reasons indicate that the validity of the approval cannot fairly be decided in the proceedings in their present form. The first is that the government functionaries dealing with the imbroglio dallied for seven months before doing anything. They must account for that period. They have not done so. The Court and Kirland are entitled to know what happened in that time. Then, too, if government is allowed to take a shortcut, Kirland will be deprived of important procedural protections. And Kirland’s prejudice has not been adequately canvassed.
[71] To start with dilly-dallying. After being indisposed, Mr Boya returned to work in late November 2007. He then discovered that, in conflict with his uncommunicated decision, Dr Diliza had approved Kirland’s application. Yet he did nothing for over seven months. Why? His affidavit invokes the political power of the MEC on whose instructions Dr Diliza apparently granted approval. He said that, for so long as she remained in office, “it was virtually impossible to do anything about the dilemma”. That is an intriguing statement. But what does it mean? Did he have no power? Or was he too scared to exercise it? If the latter, why should Kirland be prejudiced because he stayed his hand for seven months in deference to the seemingly improper conduct of a political superior?
[72] But there is more to the seven-month period. On the strength of the approval, Kirland in November 2007 applied to the Department for an increase in the number of beds at its now-approved facilities. The Department replied, refusing the requests. It did so on the plain premise that the preceding approval was valid. The refusals, signed by Mr Boya, did not say the approval was invalid. Instead, they told Kirland that, “according to departmental norms, Nelson Mandela Metro is over serviced” by private providers, hence the refusals.
[73] This raises the question whether the Department had not in fact reconciled itself to the approval. Its correspondence to Kirland suggests that at least it was resigned to the approval. We do not know the facts, because they have not yet been put before any court. But the point is this. If Mr Boya for a time thought the approval should be accepted as valid, that may count against reversing it when a reviewing court considers how to exercise its discretion for or against the Department.
[74] Only on 16 July 2008 did Kirland for the first time receive warning that its approval was in jeopardy. Even then, it was given no glimmering of the reason. On this date, it received a fax in which Mr Boya regretted “to inform you that the Department has withdrawn the approval”. Even then, he made no mention of invalidity. His letter speaks of withdrawing a valid approval – not repudiating an invalid decision. The reason he gave Kirland had nothing to do with taint or irregularity. He said the approval was being withdrawn because it was “contrary to our view that the area is over supplied.” This, too, suggests that the Department may have thought the approval was valid, but that it also thought Mr Boya could validly withdraw it. Is this so? Again, we do not know. The facts have not been put before us.
[75] Meanwhile, the clock was ticking. Kirland acted on the approval. In its founding affidavit, it says it took substantial steps to acquire land, expend money and hire professional advisors. This is all rather vague. It is not enough to conclude that Kirland’s reliance irretrievably prejudiced it. To get there, a court would need to know much more. What precise steps, what land, how much money? But Kirland was not called on to say more. The reason it asserted prejudice in its founding papers was because it resisted delay. Its argument was that the court should not remit that matter, but should itself set aside the “withdrawal” of the approval in its favour. So setting aside the approval on the ground that it was tainted by improper political interference was not at all an issue. When it lodged its founding papers, Kirland had no inkling of this. All it knew is that the Department had “withdrawn” its approval because “the area is over supplied”. This was the issue Kirland took to court, and the issue it asked the court to adjudicate: whether the Department had power to “withdraw” a valid approval.
[76] The first time Kirland heard that irregularities allegedly tainted the approval was 28 months after receiving it, towards the end of February 2010, when the government respondents lodged their answering affidavits in this litigation. It was then that the Department proffered the whole unappetising account of political interference leading to the approval. There was never a suggestion that Kirland had a hand in any of the questionable dealings.
[77] It is against this background that the relief Kirland sought in its notice of motion must be assessed. The Department contended that since Kirland itself had sought the Court’s confirmation of the approval, the Department was obliged to defend its withdrawal and hence to disavow the approval. It would therefore, so its argument went, be needless formalism to require it to bring a counter-application to set aside the approval.
[78] It is true that Kirland in its notice of motion sought an order that the approval “be confirmed”. But in context it is clear that what it sought was not an inquiry into and vindication of the legal pedigree of the approval it received – it did not even know then that the approval was regarded as suspect. Instead, what it sought was a re assertion of the status quo before the withdrawal of the approval. For this reason, the founding affidavit asks the Court to “reinstate” the approval by setting aside its withdrawal. The High Court, in upholding Kirland’s claim to relief, mistakenly granted it an order setting aside the approval. But Kirland had never asked for that, and the Supreme Court of Appeal rightly set that order aside.
[79] So Kirland did not come to court to sustain an approval impeached by political shenanigans. It sought only to sustain an approval that, according to everything it knew, had been unfairly and invalidly withdrawn because of oversupply of hospital facilities. Indeed, nearly half of its founding affidavit advances a statistical analysis of hospital-bed supply in the region, seeking to show that the Department’s conclusion on oversupply was wrong.
[80] Against this background, it would be very unfair indeed to hold Kirland’s feet to the fire of a dispute it did not then even realise existed. What it took to court was a baffling withdrawal, on the basis of oversupply, of a seemingly valid approval. It had no interest in defending, or any need to defend, an approval impugned on grounds it did not know existed. After the state impugned the validity of Dr Diliza’s approval in its answering affidavit in the High Court, Kirland rightly took the view that that was not an issue before the Court. In its replying affidavit it stated that, if Mr Boya “wished to set aside the decision taken by Dr Diliza, he ought to have instituted review proceedings which would have enabled applicant to place its case before the tribunal or court dealing with the matter”.
[81] The Supreme Court of Appeal stated that the approval was, on Dr Diliza’s own evidence, tendered by the Department, “invalid”. This was incautious. The approval was not before the Court. But the Court itself said so. It pointed out that the validity of the approval “is not the subject of challenge in these proceedings”. So it is wrong to take its statement as a definitive finding. The Court was merely categorising Dr Diliza’s conduct for the purpose of reaching the issue that was in fact before it, namely whether Mr Boya was entitled to revoke her approval. The Court was saying that, even on the Department’s version, its legal argument must fail.
[82] All this indicates that this Court should not decide the validity of the approval. This would be in accordance with the principle of legality and also, if applicable, the provisions of PAJA. PAJA requires that the government respondents should have applied to set aside the approval, by way of formal counter-application. They must do the same even if PAJA does not apply. To demand this of government is not to stymie it by forcing upon it a senseless formality. It is to insist on due process, from which there is no reason to exempt government. On the contrary, there is a higher duty on the state to respect the law, to fulfil procedural requirements and to tread respectfully when dealing with rights. Government is not an indigent or bewildered litigant, adrift on a sea of litigious uncertainty, to whom the courts must extend a procedure-circumventing lifeline. It is the Constitution’s primary agent. It must do right, and it must do it properly.
[83] Counsel for the Department told this Court, as he told the Supreme Court of Appeal, that, if the Department had to bring a counter-application under PAJA, it would face the PAJA 180-day rule. Well, precisely. An explanation for the delay is a strong reason for requiring a counter-application. But even outside PAJA, the position is the same. This Court recently confirmed in Khumalo that litigants, including public functionaries, are bound by statutory and common-law time limits and may not circumvent them using procedural tricks. The same is true here.
. . .
[96] Pertinent to this case, PAJA provides that decisions taken because of the unauthorised or unwarranted dictates of another person or body constitute administrative action that is reviewable. If this Court were to hold that a decision taken under dictation is not a decision at all, and has no effect even before it is set aside, then there would be no need for PAJA. This provision of PAJA exists precisely because a decision taken under dictation is nevertheless a decision, and must be reviewed and set aside just like any other unjust administrative action.
[97] The point is this. Far from unjust administrative conduct not being administrative action at all, PAJA makes clear that it falls within the definition of administrative action but is subject to review. This approach to the nature of administrative action and decisions meshes with the premise inherent in both the common-law rule against unreasonable delay and PAJA’s requirement that proceedings for judicial review must be instituted without unreasonable delay and, subject to condonation, within 180 days. Both proceed on the basis that irregular administrative actions may become insulated from review because of delay. This means they will never be declared invalid. They therefore retain lawful consequence. No other approach is practicable.
[98] The outcome does not change if we consider the approval from the perspective of whether the decision-maker acted within her jurisdiction in granting approval. Jurisdictional facts refer broadly to preconditions or conditions precedent that must exist before the exercise of power, and the procedures to be followed when exercising that power. It is true that we sometimes refer to lawfulness requirements as “jurisdictional facts”. But that derives from terminology used in a very different, and now defunct, context (namely where all errors, if they were to be capable of being reviewed at all, had to be construed as affecting the functionary’s “jurisdiction”). In our post-constitutional administrative law, there is no need to find that an administrator lacks jurisdiction whenever she fails to comply with the preconditions for lawfully exercising her powers. She acts, but she acts wrongly, and her decision is capable of being set aside by proper process of law.
[99] So the absence of a jurisdictional fact does not make the action a nullity. It means only that the action is reviewable, usually on the grounds of lawfulness (but sometimes also on the grounds of reasonableness). Our courts have consistently treated the absence of a jurisdictional fact as a reason to set the action aside, rather than as rendering the action non-existent from the outset. The absence of jurisdictional facts did not entitle Mr Boya to withdraw the approval, but only to approach a court to set it aside.
. . .
[103] The fundamental notion – that official conduct that is vulnerable to challenge may have legal consequences and may not be ignored until properly set aside – springs deeply from the rule of law. The courts alone, and not public officials, are the arbiters of legality. As Khampepe J stated in Welkom, “[t]he rule of law does not permit an organ of state to reach what may turn out to be a correct outcome by any means. On the contrary, the rule of law obliges an organ of state to use the correct legal process.”
For a public official to ignore irregular administrative action on the basis that it is a nullity amounts to self-help. And it invites a vortex of uncertainty, unpredictability and irrationality. The clarity and certainty of governmental conduct, on which we all rely in organising our lives, would be imperilled if irregular or invalid administrative acts could be ignored because officials consider them invalid.
[104] It does not assist the debate to point out that what happened in this case seems to have been highly unscrupulous and deplorable. This is because, in the next case, the official who seeks to ignore departmental action may not be acting with pure motives. Though the official here seems to have been on the side of the angels, the risk of vindicating the Department’s approach lies in other cases where the revoker may not be acting nobly.
[105] The approval communicated to Kirland was therefore, despite its vulnerability to challenge, a decision taken by the incumbent of the office empowered to take it, and remained effectual until properly set aside. It could not be ignored or withdrawn by internal administrative fiat. This approach does not insulate unconstitutional administrative action from scrutiny. It merely requires government to set about undoing it in the proper way. That is still open to government.