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Minister of Health and Another v New Clicks South Africa (Pty) Ltd and Others (CCT 59/2004) [2005] ZACC 14; 2006 (8) BCLR 872 (CC) (30 September 2005)

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CONSTITUTIONAL COURT OF SOUTH AFRICA


Case CCT 59/04

MINISTER OF HEALTH First Applicant

PROFESSOR D McINTYRE NO Second Applicant

versus

NEW CLICKS SOUTH AFRICA (PTY) LTD First Respondent

PHARMACEUTICAL SOCIETY OF SOUTH AFRICA Second Respondent

UNITED SOUTH AFRICAN PHARMACIES Third Respondent

LA TANDT AND ASSOCIATES (PTY) LTD Fourth Respondent

IRVINE AND MILLER (PTY) LTD Fifth Respondent

MEDICROSS HEALTH CARE HOLDINGS LTD Sixth Respondent

NETWORK HEALTH CARE HOLDINGS LTD Seventh Respondent

I M DAVIS NO 2 CC Eighth Respondent

together with

TREATMENT ACTION CAMPAIGN First Amicus Curiae

INNOVATIVE MEDICINES SOUTH AFRICA Second Amicus Curiae


Heard on : 15-16 March 2005

Decided on : 30 September 2005


JUDGMENT



INDEX


Paragraph Number
JUDGMENT OF THE COURT 1
In the High Court 5
In the SCA 7
In this Court 9
The issues raised and the conclusions reached 13
Remedy 14
Costs 21
Order 22

JUDGMENT OF CHASKALSON CJ
Introduction 23
The hearing of the application 30
What the case is about 32
Procedural issues 38
Jurisdiction of the SCA 41
Separation of the issues 52
Section 20(4) of the Supreme Court Act 59
Constructive refusal of an application for leave to appeal 68
Leave to appeal to the SCA 74
Leave to appeal to the Constitutional Court 83
The approach of the High Court to the application for review 85
The approach of the SCA 91
The Constitution and PAJA 92
Can the application be decided without reference to PAJA? 98
Is PAJA applicable? 100
The meaning of administrative action in section 33 of the Constitution 101
The impact of the Constitution 107
Open and transparent government 110
The meaning of administrative action in section 33(1) of the Constitution 114
Is regulation-making subject to PAJA? 120
The exclusions 122
Does the making of regulations constitute a “decision”? 127
The Minister and the Pricing Committee 136
Review under PAJA 143
Procedural fairness 147
Reasonableness 186
Lawfulness 189
The pricing system 190
Price control 193
Legislative history 199
Controlling the price of medicines 208
Single exit price: section 22G of the Medicines Act 211
Wholesalers and distributors 215
The regulation of participants in the making and distribution of
medicines and Scheduled substances 218
Remuneration of wholesalers and distributors 223
The regulations dealing with the pricing system 233
The supply chain 237
Vagueness 246
The SEP 247
Manufacturers, wholesalers, distributors, and importers 249
Foreign manufacturers 252
The inclusion of the logistics fee in the SEP 258
The calculation of the SEP 262
The maximum price for the first SEP 264
Medicines sold for the first time after January 2004 274
International benchmarking 278
Increases in the SEP 282
Exceptional circumstances 293
Publication of the SEP 295
The logistics fee 297
Transparency and publication of the logistics fee 301
Is there certainty as to the SEP? 305
Appropriate dispensing fee for pharmacists: regulations 10 and 11 311
The introduction of a professional dispensing fee 319
Different types of pharmacies 322
Community pharmacies 323
The back shop and the front shop 326
Revenue from compounding 328
Calculating the profitability of the dispensary 342
Mr Jordaan’s evidence 344
Dr Stillman’s report 359
Courier pharmacies 365
Medical centres 367
Hospitals 368
Changing conditions 386
Evaluation of the evidence 389
Appropriate dispensing fee for doctors and other health
professionals: regulation 12 405
Schedule 0 medicines 406
Regulation 14(5) 407
Regulations 21(a) and (c) 411
The Director-General’s power to declare that the SEP is
unreasonable: regulations 22 and 23 416
Conclusion 420

JUDGMENT OF NGCOBO J
Introduction 421
Is it necessary to decide the question of the applicability of PAJA? 426
The nature of the process involved in making regulations under
section 22G(2) 439
Does PAJA apply to section 22G(2) 443
Administrative action in the Constitution 446
Does PAJA exclude from its ambit the powers conferred by
section 22G(2) 452
Procedural fairness 482
The Regulations 487
Regulation 5(2)(c) 487
Regulation 8(3) 492
The remaining regulations 499
The appropriate dispensing fee 501
The challenge 505
The findings of the SCA 509
Issues presented 510
The purpose of section 22G(2)(b) 514
The meaning of “appropriate dispensing fee” 518
Was the Pricing Committee bound to consider the viability of
pharmacies? 525
The nature and scope of the obligation to consider relevant factors 530
The viability of the dispensing fees for pharmacies 544
Rural pharmacies 555
Courier pharmacies 561
Compounding of medicines 564
Ignoring oral representations 567
Conclusion 575

JUDGMENT OF SACHS J 579
The applicability of PAJA 580
Applicability of the principle of legality in an open and
democratic society 611
Constitutional control of subordinate law-making: the procedural
dimension 617
Constitutional control of subordinate law-making: the substantive
dimension 631
Application to the facts of this case 641
The fixing of the dispensing fee 646

JUDGMENT OF MOSENEKE J 667
Introduction 667
Appropriate dispensing fee 679
Grounds of attack against the validity of the dispensing fee 686
Main submissions of PSSA 693
Submissions of the Minister and the Pricing Committee 697
SCA on dispensing fee 699
Constitutional and legislative background 704
What is an appropriate dispensing fee? 712
Is the determination of an appropriate fee reviewable by the courts? 715
Will the dispensing fee cause the demise of pharmacies? 726
Expert evidence of Dr Theron 739
The evidence of Mr Jordaan 753
The expert testimony of Dr Stillman 765
Courier pharmacies 767
Retail or community pharmacies 773
Pharmacies in rural areas 779
Hospital pharmacies 782
Conclusions 783
Remedy 790

JUDGMENT OF YACOOB J 792
Perspectives on section 22G 795
Regulation 5(2)(c) 801
The provisos to regulation 5(2)(c): medicines sold for the first
time after 1 January 2004 ` 814
Regulation 8 is not vague 822
Regulations 22 and 23 comply with the Constitution 836

JUDGMENT OF LANGA DCJ 842

JUDGMENT OF O’REGAN J 846

JUDGMENT OF VAN DER WESTHUIZEN J 850

***************



THE COURT:

[1]The Medicines Act was first enacted in 1965.[1] It has been amended on no less than fifteen different occasions since then. From 1965 until 1997 the main focus of the Act was quality control.[2] In 1997 measures were introduced into the legislation directed towards making medicines more affordable.[3] This, to give effect to the state’s constitutional obligation to provide everyone with access to health care services.[4]

[2]The newly introduced measures, especially those contained in sections15 A – C, sections 18A – C and sections 22B – H, do not fit comfortably into an Act designed to serve other purposes. They pose new problems for those who have to implement them, for those who are directly affected by them as well as for those who have to adjudicate them. The grafted sections make provision for controls to be introduced in respect of the production, importation, distribution and sales of medicines,[5] the relaxation of certain patent restrictions, the promotion where possible of generic substitution of medicines, and the establishment of a Pricing Committee to make recommendations for the introduction of a pricing system for all medicines sold in the Republic.

[3]The new measures provoked strong opposition from within the pharmaceutical industry, including litigation challenging the validity of certain of the provisions of the amending legislation. The 1997 Act was meant to be brought into force by proclamation. However, from 1997 until 2002 the amending legislation remained dormant.[6] In 2002 the dormant provisions were amended by the Medicines and Related Substances Amendment Act, 59 of 2002, and the sections as amended were brought into force on 2 May 2003.[7]

[4]The present litigation arises out of regulations made to give effect to the pricing system for the sale of medicines by the Minister of Health (the Minister) on the recommendation of the Pricing Committee. The validity of these regulations has been challenged, and the challenges have been the subject of contrary decisions in the Cape High Court (the High Court) and the Supreme Court of Appeal (SCA). The proceedings aroused extensive public interest and a great deal of emotion.


In the High Court

[5]In May 2004 two applications challenging the regulations on various grounds were instituted in the High Court by, in the one case, New Clicks and, in the other, the Pharmaceutical Society of South Africa (PSSA) and others (for ease, the applicants in both cases are referred to as “the Pharmacies”). The challenges included an attack on the functioning of the Pricing Committee, the procedures used by the Pricing Committee and the substance of the regulations promulgated by the Minister on the Pricing Committee’s recommendation. The Pricing Committee chose to abide the decision of the High Court.

[6]The matters were consolidated and heard by a full bench of three judges. Judgment was handed down on 27 August 2004. A majority dismissed the challenges to the regulations while a minority judgment held that the regulations should be set aside on various grounds.[8] The applicants sought leave to appeal against the order of the High Court, and the application for leave to appeal was by agreement heard in the High Court on 20 September 2004. Judgment was reserved.


In the SCA

[7]There was a delay in delivering judgment on the application for leave to appeal, and the Pharmacies decided to approach the SCA directly for leave to appeal. On 10 and 11 November 2004 they lodged applications in the SCA for leave to appeal. The SCA set the matter down for argument on 30 November and 1 December. Counsel for the Minister contended that the SCA did not have jurisdiction to hear the appeal, as no decision had yet been given on the Pharmacies’ application for leave to appeal, and asked for argument on the issue of jurisdiction to be separated from argument on the other issues raised in the application. The SCA, however, directed that both the question of jurisdiction and that of the merits be dealt with at a single hearing. At the hearing counsel for the Minister persisted in the position that only the question of jurisdiction be entertained at that stage. When the hearing went ahead on both aspects, counsel for the Minister declined to present any argument on the merits.

[8]On 3 December, after the hearing but before the SCA had given its judgment, the High Court delivered a judgment in which it ordered by a majority that leave to appeal be refused.[9] On 20 December the SCA handed down a unanimous judgment holding that it had jurisdiction to hear the matter, granting leave to appeal and holding the regulations to be invalid.[10] The Minister and the Pricing Committee then applied for leave to appeal to this Court against the decision of the SCA. They later made a separate application to this Court for a declaration to the effect that the lodging of the application for leave to appeal automatically suspended the order of the SCA. A separate judgment refusing that application is to be handed down at the same time as this judgment. The applications were heard together in this Court on 15 and 16 March.[11]


In this Court

[9]The application for leave to appeal to this Court was brought on behalf of the Minister and the Pricing Committee. The Pharmacies contended that the Pricing Committee, having elected to abide the judgment of the High Court, was not entitled to appeal against the decision of the SCA. This Court will not ordinarily grant leave to a party who has abided the decision of the lower court to appeal to this Court against the decision given by that court. There may be special circumstances where that would be permissible. This is not an issue, however, that needs be decided in this judgment. The application for leave to appeal to this Court is against the order made by the SCA. It appears from the record of the proceedings in the SCA that the Pricing Committee lodged an affidavit opposing the application for leave to appeal to that court. The SCA judgment refers to the argument being addressed to them, and the appeal being opposed by, “the respondents”. There is nothing, however, to indicate whether objection was taken to the standing of the Pricing Committee to oppose the application or whether this issue was considered by the SCA.

[10]In this Court the Minister and the Pricing Committee were both represented by the same attorneys and counsel and relied on the same record, the same application and the same arguments. Nothing turns on whether the arguments must be dealt with as having been addressed to us on behalf of them both, or on behalf of the Minister alone. In particular, there is no prejudice to the Pharmacies in so doing. In the circumstances, and since it appears that the Pricing Committee opposed the application for leave to appeal to the SCA and was party to those proceedings, we have decided that it should be allowed standing to participate in the appeal to this Court as well.

[11]The Minister and the Pricing Committee argued that the SCA had not had jurisdiction to hear the appeal on the merits and that the appeal should succeed on that ground alone. They contended further that the Minister had complied with the terms of the Medicines Act when making the regulations.[12] The Pharmacies argued that the SCA had been entitled to hear the appeal and that both in terms of the process followed and in regard to their substance, the regulations had failed to comply with the requirements of the Medicines Act. More particularly, they claimed that the fee the pharmacists were allowed to charge was not “appropriate” as required by the Medicines Act.

[12]Although the Court was aware of the need to bring to an end the uncertainty that reigned in the pharmacy sector, it was obliged to give full and appropriate consideration to the many questions raised. On most matters the Court is unanimous. On certain issues, including the question whether the dispensing fee to be charged by the pharmacists is appropriate, members of the Court adopt different positions. There are five separate judgments dealing with the merits, and three short judgments indicating concurrences. Taken together the judgments deal with a wide-ranging number of complex legal and factual issues. The summary that follows reflects the key issues raised, the positions taken by each member of the Court on those issues and the order made by the Court.


The issues raised and the conclusions reached

[13]A list of the principal issues and conclusions follows:

1. Did the SCA have jurisdiction to hear the appeal by the pharmacies? The Court holds unanimously that it did.[13]

2. Was the SCA entitled to hear argument on the merits of the appeal and to deliver a judgment on the merits in the absence of any argument on the merits by the Minister? The Court holds unanimously that it was.[14]

3. Despite the decision not to argue the merits of the case before the SCA, are the Minister and the Pricing Committee entitled to appeal to this Court? The Court holds unanimously that, given the circumstances of this case, they are.[15]

4. Does the Promotion of Administrative Justice Act, 3 of 2000 (PAJA) apply to the recommendations of the Pricing Committee and the subsequent making of regulations by the Minister? Five members of the Court hold that PAJA is applicable.[16] One member of the Court holds that PAJA is applicable to the fixing of the dispensing fee only;[17] and five other members of the Court hold that it is not necessary to decide whether PAJA is applicable, since on the assumption in favour of the Pharmacies that it is, they find the procedure followed to have been fair.[18]

5. Did the fact that not all members of the Pricing Committee were present at all its meetings, including the oral representations by interested parties in April 2004, render the proceedings of the Pricing Committee unfair or unlawful? The Court unanimously holds that it did not.

6. Does the Medicines Act permit the regulations to provide for price control in the manner in which they have? The Court unanimously holds that it does.[19]

7. Do regulations 10 and 11 fix an “appropriate” dispensing fee as contemplated by the Medicines Act? Six members of the Court hold that they do not.[20] The five remaining members of the Court hold that the dispensing fees set are in the main “appropriate”. However they also hold that the dispensing fees are not appropriate in so far as rural and courier pharmacies are concerned.[21]

8. The Court holds unanimously that the challenge to the regulations overall must fail and that the SCA was accordingly wrong in setting aside the regulations as a whole. However, it considered a wide range of challenges to individual regulations. The most important conclusions on these challenges are the following:

(a) The Court unanimously holds that regulation 5(1) is invalid in that it omits the words “and VAT” and that the invalidity can be cured by reading the words “and VAT” into the regulation after “logistics fee”.[22]

(b) By a majority,[23] the Court holds that regulation 5(2)(c) is not void for vagueness but that the words “single exit” must be severed from Appendix A of the regulations wherever they appear.[24]

(c) The Court unanimously holds regulation 5(2)(e) to be invalid on the ground that it constitutes an improper delegation to the Director-General of the powers of the Pricing Committee and the Minister. The Court holds unanimously that this can be cured by severing the words “Director-General” from the relevant regulation, and reading into the regulation in their place, the words “Minister on the recommendation of the Pricing Committee”.[25]

(d) The Court unanimously holds that regulation 5(2)(g) dealing with the determination of a maximum logistics fee is invalid because it permits the Minister to make such determination without reference to the Pricing Committee. This is an improper delegation. The Court unanimously holds that it can be cured by reading in after the word “Minister” the words “on the recommendation of the Pricing Committee”.[26]

(e) The Court unanimously holds that regulation 8(1) is invalid because it provides that the Minister may make annual determinations of price increases “after consultation” with the Pricing Committee. This is an improper delegation. The Court unanimously holds that the invalidity can be cured by severing the words “after consultation with” and replacing them with the words “on the recommendation of”.[27]

(f) By a majority,[28] the court holds that regulation 8(3), which deals with increases of the single exit price during the year, is not void for vagueness.[29]

(g) The Court holds unanimously that the failure of the regulations to make any provision for the publication of the logistics fee is inconsistent with the requirement of transparency in the Medicines Act. The Court holds that this omission can be cured by reading in the words “and in the case of the information referred to in regulation 21(2)(d) must” before the words “publish or otherwise communicate, or require” in regulation 21.[30]

(h) The Court unanimously holds that regulation 13 dealing with the appropriate fee for the sale of Schedule 0 medicines is invalid.[31]

(i) By a majority,[32] the court dismisses the objection to regulations 22 and 23, which confer a power on the Director-General to determine whether a specific single exit price is reasonable.[33]


Remedy

[14]It will be seen from the above summary that the Court has unanimously accepted the validity of a single exit price being established for medicines sold in South Africa, and the validity of the regulatory structure put in place for its realisation by the Minister on the recommendation of the Pricing Committee. Although the regulatory scheme as a whole passes muster, there are a number of detailed provisions that fall short of the requirements of the Medicines Act. In most cases the Court has decided that the defects in the regulations can be cured by severance of certain words and/or reading in other words. In other cases the defects relate to relatively unimportant aspects of the scheme, which could continue to function while the defects are being corrected. Special attention, however, needs to be given to the invalidation of regulations 10 and 11 on the ground that the dispensing fee arrived at is not appropriate.

[15]It is necessary to consider whether because of the defects in regulations 10 and 11 the entire scheme fails, or whether the remainder of the regulations can stand without a dispensing fee for pharmacists. Whilst recognising that severability in constitutional cases may often require special treatment, this Court has applied[34] the conventional test for severance laid down in Johannesburg City Council v Chesterfield House (Pty) Ltd[35]

“where it is possible to separate the good from the bad in a Statute and the good is not dependent on the bad, then that part of the Statute which is good must be given effect to, provided that what remains carries out the main object of the Statute.”

[16]Bearing in mind the important constitutional purpose served by the pricing system, we are satisfied that the correct remedy in the present case is to preserve as much of the scheme as is possible, as long as this can be done in a manner that serves the main object of section 22G of the Medicines Act. The main object of section 22G is to make medicines more accessible and more affordable by means of a transparent pricing system. Regulations 10 and 11 deal with the dispensing fee which is an important part of the pricing system, but what remains if these regulations are declared to be invalid, will not be inconsistent with the main object of the legislation. What remains will be a system which makes provision for a single exit price for each medicine and Scheduled substance, which must be the only price at which manufacturers may sell that medicine. Wholesalers, distributors and retailers may not sell medicine at a price higher than the single exit price. Wholesalers and distributors may charge only an agreed logistics fee subject to the controls imposed by the regulations. That is a coherent system, consistent with the Medicines Act, that gives effect to the main object of section 22G.

[17]There is great public interest in achieving finality in this important matter. This Court overturns the SCA’s conclusion that the regulatory scheme as a whole is invalid. However, it holds that certain individual regulations are invalid. Considerable work has already been done by the Pricing Committee, and it would not be in the public interest for the Pricing Committee to have to start its determination of the dispensing fee or the other invalid regulations from the beginning again. In terms of section 8(1) of PAJA, a court or tribunal in judicial review proceedings may grant any order that is just and equitable, including orders setting aside the administrative action and remitting the matter for reconsideration by the administrator with or without directions.[36] In the circumstances of this case, the proper course is to remit the matter to the Pricing Committee and the Minister for reconsideration in the light of this judgment.

[18]The Pricing Committee as a whole must take appropriate account of the oral representations already made to it. It will be able to determine its own procedure for hearing further representations by any interested parties, who should be given a reasonable opportunity to update or add to information already given to the Pricing Committee. In this regard, it should be emphasised that the regulations seek to introduce a new scheme with the purpose of enhancing access to affordable medicines, a goal to which all the parties to this dispute subscribe and which is in the interest of all consumers of medicines. For this goal to be achieved, the co-operation of all interested parties in both its establishment and implementation is required. Interested parties should therefore provide any information required by the Pricing Committee or the Minister as fully and timeously as possible.

[19]In its reconsideration of the issue of the appropriate dispensing fee, the Pricing Committee should look at new information that has become available in the intervening year since it made its recommendation.[37] Because single exit prices have been set for most if not all medicines during the last year, the process of establishing the viability of pharmacies on the basis of a particular dispensing fee can now be undertaken on a more certain basis than during the Pricing Committee’s previous deliberations. Moreover, the conduct of this litigation has made it plain that particular attention needs to be paid to the circumstances at least of rural and courier pharmacies to ensure that the right of access to health care is not prejudiced by driving such pharmacies out of the market. Section 172(1)(b) of the Constitution entitles a court deciding a constitutional matter to make any order that is just and equitable. It would not be just and equitable for pharmacists not to be entitled to charge a dispensing fee in the interim before the appropriate fee is determined by regulation. Section 22G(3)(b) and (c) of the Medicines Act must not be construed as precluding this, and we will make an order to that effect. There is no reason to believe that pharmacists, who are members of an ethical profession, will seek to exploit the situation by charging excessive dispensing fees. Should any pharmacist attempt to do so, that would constitute misconduct in terms of section 42 of the Pharmacy Act, 53 of 1974.

[20]One further point needs to be made. The effect of this Court’s ruling is that portions of the published regulations no longer accurately reflect the legally valid content of the regulations as the Court orders that certain words be severed, and in some cases, that other words be read into the regulations. In our view, in order to promote the transparency required by the Act and the foundational value of the rule of law, it is necessary to make an order requiring the Minister to republish the regulations as a whole so that they reflect the correct legal position as set out in this Court’s order. That publication should take place soon and this should be done within 60 days of the date of this judgment. If the process of determining the appropriate dispensing fee is not complete by that date, the regulations will have to be published without containing an appropriate dispensing fee which will then have to be published as soon as that process is complete. It need hardly be said, however, that given the great public interest in resolving this matter, it would be desirable for that process to be complete within 60 days and for the regulations to be republished then in their entirety. It is for this reason that the period we have set is longer than we would otherwise have determined.


Costs

[21]The appeal by the Minister and the Pricing Committee is upheld in part and dismissed in part. The result is that the Pharmacies have succeeded in their challenge to the appropriateness of the dispensing fee, a central feature of the dispute. On the other hand the Minister and the Pricing Committee have succeeded in overturning the declaration of invalidity in relation to the regulations as a whole. They have therefore both been partially successful in this Court. A further relevant fact in considering the costs in this Court is that the Minister failed to present either written or oral argument to the SCA which may have changed the course of the proceedings. In our view, it is appropriate in the light of these considerations for the Minister to pay half the costs of the Pharmacies in this Court. As to the proceedings before the SCA, it is our view that it is just to reflect disapproval of the Minister’s failure to present argument on the merits in that court, to require the Minister to bear the costs of the Pharmacies in full in that court. The costs in the High Court proceedings should follow the costs in this Court and the Minister should pay half the costs of the Pharmacies in the High Court.


Order

[22]In the light of all the separate judgments delivered in this matter, the following order is made:
1. The applicants are granted leave to appeal.
2. The appeal is upheld in part.
3. The orders of the Supreme Court of Appeal and the Cape High Court are set aside and replaced with the following order:
(a)(i) The omission from regulation 5(1) of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 of the words “and VAT” after the words “logistics fee” is declared to be inconsistent with the requirements of the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution.

(ii) Regulation 5(1) of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 is to be read as though the words “and VAT” appear therein after the words “logistics fee”.

(b) The words “single exit” contained in Appendix A to the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 are declared to be inconsistent with the requirements of the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution and are to be severed wherever they appear before the word “price” in Appendix A.
(c)(i) Regulation 5(2)(e) in the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 is declared to be inconsistent with the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution to the extent that it refers to the “Director-General” and not to the “Minister on the recommendation of the Pricing Committee”.

(ii) It is declared that the words “Director-General” in regulation 5(2)(e) of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 are to be severed from the regulations and the regulations are to be read as if the words “Minister on the recommendation of the Pricing Committee” appear wherever the words “Director-General” appeared.

(d)(i) The omission from regulation 5(2)(g) in the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 of the words “on the recommendation of the Pricing Committee” is declared to be inconsistent with the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution.

(ii) Regulation 5(2)(g) of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 is to be read as if the words “on the recommendation of the Pricing Committee” appear after the words “the Minister”.

(e)(i) Regulation 8(1) of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 is declared to be inconsistent with the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution to the extent that it contains the phrase “after consultation with” and not the phrase “on the recommendation of”.

(ii) It is declared that the words “after consultation with” in regulation 8(1) of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 are to be severed from the regulations and the regulations are to be read as if the words “on the recommendation of” appear where the words “after consultation with” appeared.

(f)(i) Regulations 10 and 11 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 are declared to be inconsistent with the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution and invalid.

(ii) Regulations 10 and 11 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 are remitted to the Pricing Committee and the Minister for reconsideration in the light of this judgment.

(iii)Until the Minister makes regulations in terms of section 22G(2)(b) of the Medicines and Related Substances Act, 101 of 1965, as amended, pharmacies may charge a dispensing fee.

(g)(i) Regulation 13 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 is declared to be inconsistent with the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution and invalid.

(ii) Regulation 13 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 are remitted to the Pricing Committee and the Minister for reconsideration in the light of this judgment.

(h)(i) The omission from regulation 21 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 of the words “and in the case of the information referred to in regulation 21(2)(d) must” before the words “publish or otherwise communicate, or require” is declared to be inconsistent with the Medicines and Related Substances Act, 101 of 1965, as amended, and accordingly with the Constitution.

(ii) Regulation 21 of the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 is to be read as though the words “and in the case of the information referred to in regulation 21(2)(d) must” appear before the words “publish or otherwise communicate, or require”.

(i) The Minister of Health is ordered to republish the Regulations Relating to a Transparent Pricing System for Medicines and Scheduled Substances contained in Government Notice No R553 of 30 April 2004 duly amended in compliance with this order within sixty days of the date of this judgment.
(j) The Minister of Health is ordered to pay half the respondents’ costs incurred in the proceedings in this Court and the High Court including the costs of two counsel, as well as all the respondents’ costs in the Supreme Court of Appeal including the costs of two counsel.




Chaskalson CJ, Langa DCJ, Madala, Mokgoro, Moseneke, Ngcobo, O’Regan, Sachs, Skweyiya, Van der Westhuizen and Yacoob JJ.



CHASKALSON CJ


Introduction

[23]This is an application for leave to appeal against a decision of the Supreme Court of Appeal (SCA) holding that the regulations introducing a transparent pricing system for medicines and Scheduled substances published by the Minister of Health[38] are invalid and of no force and effect.

[24]The regulations were promulgated on 30 April 2004 by the Minister of Health, purportedly in terms of section 22G of the Medicines and Related Substances Act, 101 of 1965 (the Medicines Act).[39] The operative provisions of the regulations were to come into force at the beginning of June 2004. Towards the end of May 2004 two urgent applications were brought in the Cape High Court by parties adversely affected by the regulations. In the one, the applicants were the Pharmaceutical Society of South Africa (PSSA), which is a society representing a number of companies owning and operating different types of pharmacies, the United South African Pharmacies, an association representing approximately 60% of all retail pharmacies, and five others, all companies conducting business as operators of pharmacies. I refer to this application as the PSSA application and to the applicants as PSSA. In the other, the applicant, New Clicks South Africa (New Clicks), is the owner of a chain of retail pharmacies. I refer to this as the New Clicks application. I refer to the applicants in both applications jointly as “the Pharmacies”. In both applications the Minister of Health and the chairperson of the Pricing Committee on whose recommendation the regulations were made were cited as respondents. The chairperson of the Pricing Committee did not participate in the hearing. She filed an affidavit indicating that the Pricing Committee abided the decision of the court.[40]

[25]Initially the Pharmacies sought interim relief in the form of a suspension of the regulations or some of them pending the determination of an application to be brought by them for an order declaring such regulations to be unlawful and of no force and effect.

[26]Agreement was reached between the parties that the operation of the regulations would be suspended pending the determination of the application to be brought in the High Court. This was made an order of court in the following terms:

“IT IS ORDERED:
1. That the applications for final relief are postponed for hearing on 17 and 18 JUNE 2004.
2. That the Respondents shall file the record of the proceedings before the Pricing Committee by close of business on 8 JUNE 2004, and such further answering affidavits as they require by close of business on 9 JUNE 2004.
3. That the Applicants shall file their replying affidavits by close of business on 14 JUNE 2004.
4. That the parties shall exchange their heads of argument by 15 JUNE 2004.
5. That pending determination of the applications by this court, wholesalers, distributors and retailers shall not be obliged to sell medicines and scheduled substances or charge dispensing fees in accordance with the regulations published in Government Notice R553 of the Government Gazette of 30 APRIL 2004.
6. That all issues of costs are reserved.”

[27]The sequence of events after that was as follows. The application was heard in the High Court on 17 and 18 June 2004 by a bench of three judges, Hlophe JP, Traverso DJP and Yekiso J. Judgment was given on 27 August 2004. Yekiso J, with whom Hlophe JP concurred, dismissed the application. Traverso DJP dissented and would have made an order setting aside the regulations as being unlawful.

[28]I will deal with these events and what followed in more detail later in the judgment. It is sufficient now to say that the Pharmacies applied immediately to the High Court for leave to appeal to the SCA. Judgment of the High Court on the application for leave to appeal was delayed. The Pharmacies then applied urgently to the SCA for leave to appeal against the order of the High Court. The application was lodged with the SCA before the High Court had given its judgment on the application for leave to appeal. The SCA set down the application for leave to appeal, and directed that the merits be dealt with at the same time. After argument, but before the SCA had given judgment, the High Court delivered its judgment and by a majority refused leave to appeal. On 20 December 2004 the SCA delivered its judgment. A unanimous court of five judges granted the Pharmacies leave to appeal to it and upheld the appeal. The regulations were declared to be invalid and of no force and effect.

[29]The Minister and the chairperson of the Pricing Committee then applied to this Court for leave to appeal against the judgment and order of the SCA. The application was set down for hearing during March 2005 and the parties were directed to address the merits of the appeal during their arguments so that the matter could be disposed of without hearing further arguments, should leave to appeal be granted.


The hearing of the application

[30]I pause to comment on the circumstances in which argument was heard by this Court. The disputed regulations form the core of government policy designed to reduce the costs of medicines. The Minister contends that the regulations are sanctioned by the Constitution and the Medicines Act. The Pharmacies allege that the regulations would destroy the pharmaceutical industry and retard access to health care.

[31]This seems to have created the impression in some minds that the issues were “political” and not “legal”, and led to comments in the media that the decision of the Court will be a test of its independence, implying that if it finds against the government it will be independent, but not if it finds for it.


What the case is about

[32]It is necessary to put this case in its proper context and to say first what the case is not about. This case is not about the wisdom of government policy. Government is entitled to adopt, as part of its policy to provide access to health care, measures designed to make medicines more affordable than they presently are. That has not been disputed by any of the litigants nor by any of the courts that have previously dealt with the matter.

[33]What courts are concerned with, and what this case is about, is whether the regulations have been made in accordance with the requirements of the Constitution and the law. The challenges to the validity of the regulations, and the responses to the various challenges, are based on detailed legal submissions dealing with the Constitution and the requirements of laws which make provision for just administrative action. There is nothing unusual about this. Our courts have frequently been called on to deal with similar questions in the past and will no doubt be called upon to do so in the future. This is the role of courts in a democracy.

[34]The question then is: were the regulations made in accordance with the Constitution and the law? This was what the High Court had to decide when the proceedings commenced before it. Broadly speaking there were four matters that had to be addressed in order to answer this question.

(a)Are the regulations subject to review under the provisions of the Promotion of Administrative Justice Act, 3 of 2000 (PAJA)? If not, are they subject to review under the Constitution or the common law? If they are subject to review:
(b)Did the Pricing Committee, on whose recommendation the regulations were made, conduct its affairs properly?
(c)Are the regulations consistent with the Medicines Act?
(d)Are the regulations too vague to be enforced?

[35]The majority in the High Court held that the regulations were not subject to review under PAJA but were subject to review under the Constitution and the common law. They conducted the review under the Constitution and dismissed the application.

[36]When the matter reached the SCA there was an additional question. Did the SCA have jurisdiction to entertain the application before the High Court had given judgment on the application for leave to appeal? The SCA directed that this issue be addressed in argument to it, and that the merits of the dispute concerning the validity of the regulations be addressed as well. The SCA heard argument on these issues before the High Court had delivered its judgment. Shortly afterwards, the High Court delivered its judgment in which, by a majority, it refused the application for leave to appeal. Subsequently the SCA gave its judgment. A unanimous court of five judges held that leave to appeal should be granted and that the appeal should be upheld.

[37]In its judgment on the merits the SCA held that the regulations went beyond what was permitted by section 22G of the Medicines Act and were accordingly invalid. It found it unnecessary in the circumstances to decide whether PAJA was applicable.


Procedural issues

[38]In the application for leave to appeal to this Court, the Minister and the Pricing Committee dispute that the SCA had jurisdiction to entertain the application when it did, and to make the order declaring the regulations to be invalid. They contend that the SCA’s judgment is accordingly void. The Pharmacies have raised certain procedural points relating to the application for leave to appeal. Before the SCA, counsel for the Minister and the Pricing Committee refused to address the court on the merits, arguing that the question of the SCA’s jurisdiction ought to be argued separately. The Pharmacies argue that the Minister should not be permitted to reopen the debate on the merits in this Court having refused to address the SCA on the merits. An additional procedural point taken by the Pharmacies relates to supplementary written submissions filed by the Minister shortly before the hearing. The Pharmacies argued at the hearing that those submissions were not lodged timeously and were therefore inadmissible. At the hearing we ruled that reference could be made to the arguments raised in the additional heads.

[39]The question whether the regulations are invalid is a constitutional matter. The other issues raised are all issues connected with the decision on a constitutional matter and are within the jurisdiction of this Court.[41]

[40]It is convenient to begin by addressing the challenge to the SCA’s jurisdiction and the other procedural points that have been raised.


The jurisdiction of the Supreme Court of Appeal

[41]The judgment of the High Court was delivered on 27 August 2004. The Pharmacies applied immediately to the High Court for leave to appeal to the SCA against the order that had been made. As was the case with the applications on the merits, the applications for leave to appeal were brought on an urgent basis. The applications were heard on 20 September 2004 before the same full bench of the Cape High Court and judgment was reserved.
[42]Earlier, on 2 September 2004, the attorney for New Clicks had written to the registrar of the SCA asking her to approach the Deputy President of that Court with a view to having the matter enrolled during the November term, in the event of leave to appeal being granted. The registrar responded on behalf of the Deputy President as follows:

“Subject to cases and other commitments that have already to be accommodated during the November term and others that may yet arise, and subject to the present matter becoming timeously justiciable by this Court, and subject also to the length of the record, bearing in mind that November is a short term, consideration is being given to making court time in November available for it.”

[43]The State Attorney objected to the approach taken by the attorneys for New Clicks. She wrote to the registrar voicing that objection, saying that there could be little doubt that the matter involved only constitutional issues, and would be likely to finish in the Constitutional Court. She contended that if the matter was indeed urgent, an appeal to the SCA would delay the outcome. The respondents had been asked to agree that if any appeal be brought the appeal should be directly to the Constitutional Court, but had refused to do so. In the circumstances they could not contend that the matter was urgent.

[44]On 16 September 2004 the State Attorney wrote to the Registrar of the Constitutional Court enquiring whether this Court would be able to hear an appeal in November or during the first term of 2005, if leave to appeal directly to it were granted. The response was to the effect that if proper arrangements were made in September, the matter could be heard during the November term.

[45]On 22 September 2004 the registrar of the SCA responded to the letter from the State Attorney as follows:

“Your objection to the request is noted, but it is thought that where a party has been granted leave to appeal to this Court and thereafter approaches this Court for an accelerated hearing on good grounds (urgency being the obvious) nothing prevents this Court from considering such a request. Agreement between the parties is obviously preferable, but each case will depend on the circumstances prevailing at that particular time. A party can certainly not expect a definite ‘yes’ when leave has as yet not been granted and informing the applicants in this case that their request will be considered did not necessarily mean that the appeal will be heard during the November term. It will depend on the circumstances as just mentioned. If the matter does appear to be urgent, however, it is the duty of this Court to give consideration to a request to accelerate the hearing of it. The fact that there may be constitutional issues involved in an appeal does not affect that position.”

[46]By 22 October 2004 judgment on the application to the High Court for leave to appeal had not yet been delivered. On that day attorneys for PSSA wrote to the registrar of the High Court referring to the application that had been made, and the urgency of the matter, and said that in the circumstances

“it would be appreciated if you could establish whether His Lordship the Judge President – who indicated on reserving the ruling five weeks ago that he would be writing it for the Court – would indicate when the ruling (even if reasons are to follow) may be expected.”


There was no response to this letter.

[47]On 10 November 2004, a decision on the application for leave to appeal had still not been given. The Pharmacies then applied to the SCA as a matter of urgency for leave to appeal to be granted against the whole of the judgment and order made by the majority of the High Court. In their application they alleged that the matter was urgent and that there was a need for clarity to be obtained as to the lawfulness of the regulations, contending that the applicants and other industry participants and the public were being adversely affected on a continuing basis by the lack of finality regarding the validity of the regulations.

[48]They submitted that a failure to grant leave to appeal for so long a time in the “urgent circumstances” that existed had the effect of a refusal to grant the leave sought. They mentioned that a record of the proceedings in the High Court had been prepared and could be lodged immediately if required. They attached to the application for leave to appeal heads of argument, a practice note and a list of authorities, saying that the heads of argument and list of authorities had been tendered two weeks previously to the State Attorney who had refused to accept them.

[49]On 12 November 2004, the attorneys for the parties met the Judge President of the High Court to enable the attorneys for the Pharmacies, as a matter of courtesy, to inform him of the steps that had been taken. An attempt to arrange an earlier meeting before the application to the SCA was launched had not been successful. The Judge President informed the attorneys that he was working on the second draft of the judgment dealing with the application for leave to appeal, and after enquiring whether it was still necessary to do so, went on to say that he would in fact complete and deliver the judgment.

[50]It is not necessary to deal in any detail with what took place after that. Harms JA, who had been assigned by the Deputy President of the SCA to preside in the application for leave to appeal, asked to see counsel to discuss the matter with them and a meeting was arranged for that purpose. At that meeting, which was held on 17 November, counsel for the Minister and the Pricing Committee made it clear that they objected to the procedure that had been followed, and would contend that the SCA had no jurisdiction to deal with the matter as an order had not yet been made on the application for leave to appeal.

[51]On 18 November the SCA issued a direction in the following terms:

“1. The hearing of the applications is consolidated.
2. The applications for leave to appeal are referred for oral argument in terms of s 21(3)(c)(ii) of the Supreme Court Act on 30 November and 1 December 2004.
3. The parties must be prepared, if called upon to do so, to address the court on the merits in terms of s 21(3)(c)(ii) of the Act.
4. The respondents may file any affidavits required and heads of argument if and when convenient.”


Separation of the issues

[52]On 22 November the State Attorney wrote to the registrar of the SCA acknowledging the directions. She mentioned that at the meeting with Harms JA counsel representing the Minister had placed on record that they were not briefed to deal with the appeal itself, but only with the question of jurisdiction. She asked that the directions be amended to limit the hearing on 30 November to the issue of jurisdiction. She said that the applicants would be able to file written submissions on that issue before 30 November. The registrar of the SCA responded on behalf of the Deputy President of the Court as follows:

“It must be remembered that what is before this court is an application for leave to appeal which the court is bound to consider. It is not unusual for this court, when dealing with an application for leave to appeal (petition) in which it considers that argument should be presented to it, to direct that parties be prepared to argue the merits should they be required to do so.

Obviously the question of jurisdiction will be considered as it is an integral part of the application for leave to appeal. It is, I should think, open to a party or parties to apply to the court at the hearing that the hearing of a particular issue be postponed until another issue has been decided.

The entire record has been lodged with the Registrar of this court precisely because no agreement could be reached, between the parties, on what parts of the record should be omitted.

The Acting President is accordingly unable to amend or have amended the direction as requested in the last paragraph of your letter.”

[53]It was against this background that the application for leave to appeal was heard by the SCA on 30 November and 1 December. The Minister and the Pricing Committee were represented at that hearing by counsel, who indicated to the court that they had been briefed on the issue of jurisdiction only. They contended that the SCA did not have jurisdiction to hear the appeal, as no decision had yet been given on the Pharmacies’ application for leave to appeal, and asked for argument on the issue of jurisdiction to be separated from argument on the other issues raised in the application. They contended that they had a right to a ruling on the preliminary issue and a right to appeal against an unfavourable ruling. The SCA declined to order that the issue of jurisdiction be separated from the other issues and required the parties to address it on all the issues including the merits of the appeal. The Minister and the Pricing Committee contend that this ruling was wrong and raise this as one of the grounds of appeal.

[54]In its judgment the SCA explained its ruling. It referred to its decision in S v Malinde and Others[42] where a separation of issues had been granted at the request of an appellant. Quoting from the judgment in that case it reaffirmed its approach to the separation of issues, holding that it applied both to appeals and applications:

“This Court is in principle strongly opposed to the hearing of appeals in piecemeal fashion. . . . An exception may be made, however, where unusual circumstances call for such procedure . . . .
. . . .
Substantial grounds should exist for the exercise of the power. The basis of the jurisdiction is convenience – the convenience not only of the parties but also of the Court. The advantages and disadvantages likely to follow upon the granting of an order must be weighed. If overall, and with due regard to the divergent interests and considerations of convenience affecting the parties, it appears that the advantages would outweigh the disadvantages, the Court would normally grant the application.”[43]

[55]The SCA held that the present matter was urgent, that it raised issues of national importance and that it was imperative that the litigation be brought to an early conclusion. The request for the issue of jurisdiction to be separated from the merits would have added to the delay, and the reasons given for the request did not meet the requirements laid down in S v Malinde.

[56]The SCA had taken the view that it was necessary to have regard to the merits in order to decide the application for leave to appeal and, that being so, it was appropriate to require the parties to address argument on the merits so that judgment could be given without hearing further argument should leave to appeal be granted. This is a common practice in the SCA and in this Court as well. Its purpose is to avoid unnecessary delays and costs as well as to conserve court time. Indeed, a direction to that effect was given by this Court in the present matter and without any objection having been made to this procedure, argument was addressed to us by the parties on the merits of the case, to enable us to dispose of the matter should leave to appeal be granted.

[57]The application to the SCA had been set down on short notice. The merits were complex and raised difficult legal issues. They had, however, been the subject of argument in the High Court by the same counsel some four months previously. It appears from the SCA judgment that counsel for the Minister declined the court’s request to address it on the merits. The SCA was conscious of the potential prejudice to the Minister by requiring argument from counsel who might not have been properly prepared to do so. However, counsel for the Minister who had been briefed on the issue of jurisdiction only, declined an invitation from the court to request a postponement to a date convenient to them to prepare for argument on the merits. They also declined a request from the court to furnish it with a copy of their heads of argument in the High Court.

[58]The SCA is entitled to regulate its own procedure and I cannot say that the directions given by it as to how the matter should be dealt with were wrong.[44] The contention that the SCA erred in refusing to separate the issue of jurisdiction from the application for leave to appeal, and in requiring the matter to be dealt with in accordance with the directions given on 18 November 2004, must therefore be rejected.


Section 20(4) of the Supreme Court Act

[59]I deal now with the contention that the decision of the SCA was a nullity, and for that reason alone should be set aside by this Court. This contention is based on the provisions of section 20(4) of the Supreme Court Act, 59 of 1959, which the applicants contend are mandatory and were not complied with.

[60]Section 20(4) provides:

“(4) No appeal shall lie against a judgment or order of the court of a provincial or local division in any civil proceedings or against any judgment or order of that court given on appeal to it except—
(a) in the case of a judgment or order given in any civil proceedings by the full court of such a division on appeal to it in terms of subsection (3), with the special leave of the appellate division;
(b) in any other case, with the leave of the court against whose judgment or order the appeal is to be made or, where such leave has been refused, with the leave of the appellate division.”


This section of the Supreme Court Act must now be read as referring to a High Court in place of a Provincial or Local Division, and to the Supreme Court of Appeal, in place of the Appellate Division.

[61]There is a line of cases in the Appellate Division going back to Blaauwbosch Diamonds Ltd v Union Government (Minister of Finance),[45] where matters had come before the court in circumstances where the necessary leave to appeal had not been obtained from the Provincial Division before approaching the Appellate Division.[46] In those cases the Appellate Division heard argument and deferred giving judgment on the merits until the statutory requirements had been complied with. The facts in those cases were different to the facts in the present case, but what the judgments show is that the launching of an appeal without first having complied with the statutory requirements relating to leave to appeal is not a nullity.

[62]Whilst it is necessary for the statutory requirements for leave to appeal to be complied with before a decision is given on the appeal, in a proper case the court has a discretion to defer giving judgment until those requirements have been satisfied. In Gentiruco A.G. v Firestone SA (Pty) Ltd[47] the Appellate Division, referring to these decisions, said:

“Where the necessary leave to appeal is lacking this Court may, in appropriate circumstances, defer the hearing or determination of the appeal to enable the appellant to obtain such leave – see Sita’s case, supra, 1967 (2) SA 442 (AD) at p. 450F-H, and authorities there cited.”[48]


It held, however, that on the facts of that case it was not appropriate to adopt the “extraordinary course of deferment”.

[63]Counsel for the Minister and the Pricing Committee in their argument to the SCA, which they repeated in their argument to this Court, relied strongly on the judgment of the Appellate Division in National Union of Metalworkers of South Africa v Jumbo Products CC[49] where Corbett CJ held that it was clear from section 20(4)(b) that:

“[T]his Court’s jurisdiction to grant leave itself is dependent on the Court a quo having refused such leave. The proper procedure, as imperatively laid down by s 20(4)(b), is for the would-be appellant to apply for leave first to the Court against whose judgment the appeal is to be made. If that Court grants leave, then this Court may entertain the appeal. If that Court refuses leave, then (but only then) may this Court consider an application for leave to appeal. Thus s 20(4)(b) not only prescribes the proper procedure, but it also defines the jurisdiction of this Court to entertain an application for leave to appeal. (Compare S v Cassidy 1978 (1) SA 687 (A) at 690H; Windhoek Munisipaliteit v Ministersraad van SWA/Namibia en ’n Ander 1985 (1) SA 287 (A) at 293H-294B.)”[50]

[64]The facts in that case were quite different to the facts of the present case. The applicant had been the unsuccessful party in a case in which judgment had been given by the Witwatersrand Local Division (WLD) on 21 December 1993. On 17 and 18 March 1994, approximately two months after the time prescribed for lodging an application for leave to appeal had expired, the applicant applied to the WLD for condonation of its failure to lodge its application timeously, and for leave to appeal to the Appellate Division against the judgment and order that had been made. The application for condonation was refused. The applicant then applied to the Appellate Division for leave to appeal against the judgment and order made by the WLD on the merits. It did so without having applied to the High Court for leave to appeal against the order refusing condonation. Moreover, it appears from the judgment that the applicant sought leave to appeal to the SCA on the merits without an application for leave to appeal on the merits having been considered by the WLD. The complex procedures that would be necessary to resolve these problems are referred to in the judgment, and the order made by the Appellate Division was that the application be struck off the roll. There is nothing in the judgment which suggests that the court intended to depart from what had been said in Gentiruco.

[65]In his judgment Corbett CJ refers to two cases, S v Cassidy[51] and Windhoek Munisipaliteit v Ministersraad van SWA/Namibia en ’n Ander,[52] to support his decision. The facts in those cases are also materially different to the facts in the present case.

[66]In the Windhoek Munisipaliteit case the appellant had not applied to the court a quo for leave to appeal. The court heard argument only on the issue of jurisdiction. It held that leave to appeal was necessary and struck the appeal off the roll.[53] In S v Cassidy the accused had applied for leave to appeal against sentence only. In error the order of the Appellate Division had granted leave to appeal against conviction as well as sentence. Attention was drawn to this error during argument and it was pointed out that the court had no power to make such an order because leave to appeal against the conviction had not been sought. It appears from the judgment that counsel for the accused chose not to ask for a postponement to enable him to approach the court a quo for leave to appeal on that issue.[54] In the result the appeal was confined to the issue of sentence only. Once again there is nothing to suggest that the court intended to depart from what had been said in Gentiruco.

[67]The SCA deals in its judgment with the cases to which I have referred in paragraphs 61 and 62 of this judgment and comes to the conclusion that it could and should grant leave to appeal.[55] There were unusual circumstances which justified the making of such an order. First, there was before it a substantive application for leave to appeal based on a contention that the delay by the High Court amounted in the circumstances of the case to a refusal to grant leave to appeal. It was necessary to have regard to the merits of the appeal in dealing with that issue. Secondly, the issues before the court were clearly of considerable importance affecting not only the respondents, but all participants in the pharmaceutical trade, as well as the general public which has an interest in the pricing of medicines.[56] Thirdly, it was known when the application was heard that the decision on the application for leave to appeal would be given within two days of the hearing. In those circumstances, little purpose would have been served by dismissing the application and requiring the respondents to start all over again. That would have resulted in further delays and considerable unnecessary expense.


Constructive refusal of an application for leave to appeal

[68]An application to the SCA to grant leave to appeal on the ground that there has been a constructive refusal of leave to appeal by the High Court is a legitimate cause of action. An unreasonable delay in dealing with an application for leave to appeal interferes with a litigant’s constitutional right to have access to court.[57] This is of particular concern where the issues are urgent and the delay may cause substantial prejudice. A case in point is where an accused person has been convicted and sentenced to imprisonment. A long delay in dealing with an application for leave to appeal against the conviction and sentence may result in a miscarriage of justice if the appeal is ultimately successful. The SCA gives an example of such a case in its judgment.[58]

[69]I have no doubt that a court of appeal is entitled in appropriate circumstances to treat an unreasonable delay on the part of a lower court in deciding whether or not to grant leave to appeal as a constructive refusal of the application. The delay need not be deliberate. The fact that there has been an unreasonable delay is sufficient in itself to entitle an appeal court to make such a finding.

[70]The granting of leave to appeal by an appeal court in such circumstances does not cause any prejudice. If the application for leave had been dismissed by the lower court the litigant would have been entitled as of right to apply to the appeal court for leave. The only prejudice caused is to the appeal court which will have been burdened with an unnecessary application in cases where the lower court would have given leave in any event.

[71]An application to an appeal court for leave to appeal based on an alleged constructive refusal of leave to appeal by a lower court should be a last resort. It must be accepted, however, that there may come a time when a delay in resolving an application for leave to appeal amounts to a constructive refusal of the application, entitling the aggrieved litigant to apply to the appeal court to grant leave itself. What constitutes an unreasonable delay will depend on the circumstances of the case.

[72]Superior courts have an inherent right to regulate and protect their own process.[59] In the exercise of this power they can decide whether or not to grant an application based on a constructive refusal of leave to appeal, and to penalise a litigant by a costs order where such an application is wrongly brought.

[73]The application to the SCA in the present case was clearly not frivolous. The case was of great public importance and raised issues that were complex and difficult to resolve. The SCA had heard argument and formed its own impression on the merits and whether the case was one in which leave to appeal should be granted. It was fully entitled to require argument to be addressed to it on all aspects relevant to the application to it for leave to appeal.


Leave to appeal to the SCA

[74]The High Court, which had been divided on the outcome of the main application, was also divided on the question whether leave to appeal should be granted. In their judgment dealing with the application for leave to appeal[60] the majority accepted that the case raised issues of great constitutional importance “which needed to be finalised sooner rather than later” and would be likely to end up in the Constitutional Court.[61] It is difficult to understand why, in such circumstances, they should have refused leave to appeal, and have taken so long to do so.

[75]The majority concluded that there was no reasonable prospect of another court coming to a conclusion different to that arrived at by them. In that, as subsequent events have shown, they were clearly wrong. Having regard to the importance of the case, the difficult issues it raised, and the different views on outcome within the High Court itself, this was a case in which leave to appeal should clearly have been granted. I do not consider it necessary, however, to decide whether the delay in dealing with the application for leave to appeal in such circumstances amounted to a constructive refusal of leave to appeal.

[76]The SCA has the inherent right to regulate its own process. In the present case it had before it a valid application based on an alleged constructive refusal of leave to appeal. It knew that a decision by the High Court on the application for leave to appeal would be given within two days of the conclusion of the argument. Whatever the decision of the High Court might have been, it would have had jurisdiction to deal with the matter when it came to deliver its own judgment. After considering the relevant authorities it said:

“In this case the applicants . . . took all the prescribed steps; they did apply to the Court below; they did apply to this Court. All that was missing was the ruling of the Court below. That came less than 48 hours after conclusion of argument, but, as is apparent from the body of authority cited, that is not fatal. The procedural condition for the determination of the applications for leave has now been fulfilled.”[62]

[77]The alleged constructive refusal had proved to be an actual refusal of leave before the SCA gave its judgment. It had jurisdiction at that time to deal with the application to it for leave to appeal and to decide the appeal. The contention of the Minister and the Pricing Committee that the SCA had no jurisdiction to deal with the matter, and that its judgment is a nullity, must therefore be dismissed.

[78]The SCA had given directions that the parties must be prepared, if called upon to do so, to address the court on the merits of the case. When called upon to deal with the merits, counsel for the Minister declined to do so. They had been briefed to deal only with the issue of the court’s jurisdiction and had no brief to argue the merits.

[79]What happened is recorded in the judgment of Harms JA as follows:[63]

“Already at the meeting on 17 November with me, the respondents’ counsel insisted emphatically on a separation of issues and stated that their clients would not instruct counsel to deal with the merits. During oral argument before us, the respondents’ lead counsel was specifically and repeatedly asked whether they required a postponement in order to prepare argument on the merits. The questions did not elicit a response. When asked whether the respondents could provide a date convenient to them for argument on the merits, the question failed to extract a reaction. When asked whether they needed an adjournment to consider a request for a postponement, yet again, counsel did not reply and simply proceeded to argue another point.

This is consistent with the attitude from the outset that the jurisdictional issue should be dealt with separately. They had a right, they said, to a separate hearing. And they wished to exercise that right in order that, if we dismiss their argument, they could appeal. That is why they decided in advance not to instruct counsel, why they refused – in spite of a request on 17 November – to provide copies of the heads of argument used in the Court below to assist us in preparing for the hearing, and why they were generally obstructive in relation to each suggestion relating to an expedited hearing.” (footnote omitted)

[80]In these circumstances, and having ruled against the Minister on the separation of issues, the SCA proceeded to deal with the application for leave to appeal. The consequence of this, as the SCA points out in its judgment,[64] is that it was deprived of the benefit of argument on behalf of the Minister on the merits of the case.

[81]Commenting on this and its decision to deal with the matter without having the benefit of such argument, the SCA said:[65]

“Cowed by the respondents’ refusal to be of any assistance we cannot be. Organs of State, which have a constitutional duty to, inter alia, assist courts to ensure their effectiveness, have always treated courts with respect and we assume that the refusal to argue is not indicative of a change of heart but rather of inappropriate legal advice based on overconfidence.” (footnote omitted)

[82]I would add to this only two comments. First, a further consequence of what happened has been that this Court has been deprived of the SCA’s evaluation of the arguments addressed to us on behalf of the Minister and the Pricing Committee. Secondly, courts are entitled to expect assistance and not obstruction from litigants in the discharge of their difficult duties. What happened in the present case not only failed to meet this requirement, but also evinced a deplorable lack of respect for the SCA, which is the highest court in this country in respect of all matters other than constitutional matters.


Leave to appeal to the Constitutional Court

[83]It was contended by the Pharmacies that since the Minister had deliberately refused to address argument to the SCA on the merits of the appeal, despite having been called upon to do so, she should not be granted leave to appeal to this Court on the merits. Ultimately the question whether leave to appeal should be granted depends on whether or not it is in the interests of justice to do so. In the present case though deploring what happened in the SCA, I have come to the conclusion that it is not in the interest of justice to refuse leave to appeal on that ground.

[84]If the Minister is refused leave to appeal the decision of the SCA will become final and the regulations will be set aside. If there is substance to the appeal it would mean that government’s constitutional duty to take reasonable measures to provide access to health care[66] would be defeated by an incorrect view taken concerning the jurisdiction of the SCA. It is not in the interest of justice to permit so important an issue affecting the rights of the general public and the constitutional obligations of government to be determined in this way. It is in the public interest that this Court deals with the matter, and determines the questions that have been raised as to the validity of the regulations.


The approach of the High Court to the application for review

[85]In the High Court the Pharmacies claimed:

“[A]n order reviewing and setting aside the recommendation purportedly made by the Pricing Committee to the First Respondent in terms of section 22G(2) of the Medicines and Related Substances Act 101 of 1965 and pursuant to which the Regulations were published . . . and/or an order declaring the Regulations . . . to be invalid and of no force or effect”.[67]

[86]The form in which the relief was claimed led to arguments being addressed to the High Court, and again to this Court, which treated the recommendations of the Pricing Committee, and the decision of the Minister to accept them and to promulgate the regulations, as being separate decisions, each subject to review either under PAJA, or under the Constitution.

[87]In the High Court the majority dealt separately with the challenges to the recommendations of the Pricing Committee to the Minister and the subsequent making of the regulations by the Minister. They held that the recommendations could not be construed as having had a direct, external legal effect, which is a requirement for administrative action under PAJA.[68] They would only have had external legal effect if and when they were accepted by the Minister and promulgated. The recommendations as such were accordingly not subject to review under PAJA.

[88]However, they went on to hold that, notwithstanding this, the “activities and functions of the Pricing Committee” were subject to review under the constitutional principle of legality, the provisions of section 33(1) of the Constitution, and the provisions of the common law.[69] They concluded that the functions of the Pricing Committee constituted administrative action in terms of section 33(1) of the Constitution.[70] They accordingly conducted a review for compliance with that section, holding that:

“[T]he term ‘lawfulness’ in s 33(1) is an all embracing and an umbrella concept that encapsulates all the requirements for administrative legality including all those requirements and grounds for invalidity set out in s 6 of the Promotion of Administrative Justice Act.”[71]

[89]In dealing with the regulations they concluded that they too were not subject to review under PAJA because the definition of administrative action in PAJA does not include “rule-making”.[72] But consistent with their approach to the recommendations of the Pricing Committee they held that

“the fact that rule-making does not constitute administrative action, does not render the regulations themselves to be beyond judicial scrutiny. The regulations are subject to review on the basis of the principle of legality, the principles of common law to the extent such common-law principles are not inconsistent with the Constitution, the provisions of s 33(1) of the Constitution and other relevant provisions of the Constitution.”[73]


In the result they reviewed both the Pricing Committee’s recommendations and the regulations for compliance with section 33 of the Constitution.

[90]The minority judgment held that the recommendations of the Pricing Committee had an external legal effect because it was a jurisdictional fact on which the making of valid regulations depended.[74] The judgment accordingly dealt with the issues in terms of the provisions of PAJA, but held that if PAJA was not applicable, the same result would follow from the application of the principle of legality.[75]


The approach of the SCA

[91]The SCA found it unnecessary to deal with PAJA. It approached the matter on the basis that the Minister’s power to make regulations is dependent on the recommendations of the Pricing Committee. The Pricing Committee’s recommendation

“has to be in accordance with the provisions of s 22G – ie it must be a lawful administrative action as provided for by s 33(1) of the Constitution – since the committee has no power beyond that given to it by this section. And it follows from the principle of legality that the Minister cannot accept a recommendation or promulgate a regulation that does not fall squarely within the section.”[76]


The Constitution and PAJA

[92]It is correct – and this was accepted by the majority and the dissent in the High Court as well as by the SCA – that the regulations have to comply with the provisions of section 22G of the Medicines Act.[77] This is required by section 33 of the Constitution and is given effect to in PAJA.

[93]However, I do not agree with the approach adopted both by the majority of the High Court, and later by the SCA, that notwithstanding the provisions of PAJA, the regulations were subject to an independent review for lawfulness under section 33 of the Constitution.

[94]Section 33 entrenches the right to administrative action that is “lawful, reasonable and procedurally fair”.[78] It goes on to provide, however, that

“National legislation must be enacted to give effect to these rights, and must—
(a) provide for the review of administrative action by a court or, where appropriate, an independent and impartial tribunal;
(b) impose a duty on the state to give effect to the rights in subsections (1) and (2); and
(c) promote an efficient administration.”[79]

[95]PAJA is the national legislation that was passed to give effect to the rights contained in section 33. It was clearly intended to be, and in substance is, a codification of these rights.[80] It was required to cover the field and purports to do so.

[96]A litigant cannot avoid the provisions of PAJA by going behind it, and seeking to rely on section 33(1) of the Constitution or the common law. That would defeat the purpose of the Constitution in requiring the rights contained in section 33 to be given effect by means of national legislation.

[97]Professor Hoexter sums up the relationship between PAJA, the Constitution and the common law, as follows:

“The principle of legality clearly provides a much-needed safety net when the PAJA does not apply. However, the Act cannot simply be circumvented by resorting directly to the constitutional rights in s 33. This follows logically from the fact that the PAJA gives effect to the constitutional rights. (The PAJA itself can of course be measured against the constitutional rights, but that is not the same thing.) Nor is it possible to sidestep the Act by resorting to the common law. This, too, is logical, since statutes inevitably displace the common law. The common law may be used to inform the meaning of the constitutional rights and of the Act, but it cannot be regarded as an alternative to the Act.”[81] (footnotes and emphasis omitted)


I agree.

Can the application be decided without reference to PAJA?

[98]In Minister of Home Affairs v Eisenberg & Associates: In re Eisenberg & Associates v Minister of Home Affairs and Others,[82] this Court left open the question whether the making of regulations by a Minister in terms of an empowering statute constitutes administrative action for the purposes of PAJA.[83] In that case it was alleged that the Minister had failed to comply with the provisions of section 4(1) of PAJA prior to making regulations. Section 4(1) addresses the question of procedural fairness required where administrative action materially and adversely affects the rights of the public.[84] Section 4(4) provides, however, that the provisions of section 4(1) may be departed from “[i]f it is reasonable and justifiable in the circumstances” to do so. It was assumed for the purposes of the judgment that PAJA was applicable. It was held, however, that in the circumstances of that case it was reasonable and justifiable for the Minister to depart from the provisions of section 4(1).

[99]It is necessary in the present case to consider whether the making of the regulations on the recommendations of the Pricing Committee, whether seen as one transaction, or as two, constituted administrative action within the meaning of PAJA. If it does, then the decision of this Court in Bato Star[85] must be followed, and the validity of the regulations will depend upon the provisions of PAJA, construed in the light of the provisions of the Constitution pursuant to which it was enacted.


Is PAJA applicable?

[100]Counsel for the applicants contended that the majority were correct in holding that PAJA was not applicable to the making of the disputed regulations. They sought to develop their argument by analysing the definitions of “administrative action” and “decision” in section 1 of PAJA. These definitions must, however, be construed consistently with section 33 of the Constitution.[86] The starting point of the enquiry, therefore, is what constitutes administrative action for the purposes of section 33.


The meaning of administrative action in section 33 of the Constitution

[101]Prior to the adoption of the interim Constitution in 1994 administrative action was subject to review by the superior courts. There were two overarching principles which formed the basis of judicial review. First, that the functionaries or bodies exercising delegated powers are confined to the powers vested in them by the empowering legislation. Should they exceed such powers, their actions are illegal, and invalid. Secondly, the exercise of delegated powers by such persons or bodies must ordinarily be carried out in accordance with fair procedures.

[102]An extensive body of law, initially influenced strongly by English law, was built up around these two principles, which developed into the well known doctrines of ultra vires and procedural fairness. In developing this body of administrative law, courts were careful to distinguish between their powers on appeal, which ordinarily included a power to consider the merits of the decision appealed against, and their power on review, which was ordinarily directed to consideration of issues of legality and procedural fairness. The merits of the decision were not relevant save in certain limited circumstances. In that regard, our courts followed the approach of Lord Russell CJ in Kruse v Johnson[87] where he stated:

“I do not mean to say that there may not be cases in which it would be the duty of the Court to condemn by-laws . . . as invalid because unreasonable. But unreasonable in what sense? If, for instance, they were found to be partial and unequal in their operation as between different classes; if they were manifestly unjust; if they disclosed bad faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the Court might well say, ‘Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires.’”[88]

[103]Unreasonableness in this sense was treated as part of the ultra vires doctrine “because Parliament did not intend to give authority to make such a regulation.”[89] Under the doctrine of parliamentary supremacy Parliament was entitled to make inroads into this principle, and frequently did so prior to 1994. But subject to this, unreasonableness in this “specialised sense of that word”[90] was a ground on which delegated legislation could be reviewed.

[104]There was accordingly only limited scope for reviewing the exercise of delegated powers on the grounds of “unreasonableness”. Our courts were reluctant even to exercise this limited power.[91] They tended to follow the approach of the English Court of Appeal in Associated Provincial Picture Houses Limited v Wednesbury Corporation,[92] which was that

“It is true to say that, if a decision on a competent matter is so unreasonable that no reasonable authority could ever have come to it, then the courts can interfere . . . but to prove a case of that kind would require something overwhelming”.[93]

[105]Thus, for instance, in National Transport Commission and Another v Chetty’s Motor Transport (Pty) Ltd[94] the Appellate Division held that a claimant relying on this ground of review had to show that

“the . . . decision was grossly unreasonable to so striking a degree as to warrant the inference of a failure to apply its mind (to the issues) – a formidable onus.”[95]

[106]Although the applicability of the Wednesbury test strictly to all types of review has been the subject of academic criticism,[96] review of delegated legislation on the ground of “unreasonableness” was previously of limited scope.


The impact of the Constitution

[107]The adoption of the interim Constitution in 1994 had a material impact upon the existing body of administrative law. The Bill of Rights contained a provision entitling every person to—
“(a) lawful administrative action where any of his or her rights or interests is affected or threatened;
(b) procedurally fair administrative action where any of his or her rights or legitimate expectations is affected or threatened;
(c) be furnished with reasons in writing for administrative action which affects any of his or her rights or interests unless the reasons for such action have been made public; and
(d) administrative action which is justifiable in relation to the reasons given for it where any of his or her rights is affected or threatened.”[97]


In effect these provisions entrenched in the interim Constitution as part of the right to administrative justice, the doctrines of legality and procedural fairness and to a limited extent made provision for review on the ground of “reasonableness”: the decision had to be “justifiable in relation to the reasons given for it”. This right was, however, subject to limitation under section 33 of the interim Constitution.[98] This meant that the government could limit the general powers of a court to review administrative action, but no longer had the unlimited power which previously existed to insulate such decisions against judicial review. Moreover, the scope for judicial review was broadened by other provisions of the interim Constitution, in particular the anti-discrimination provisions of the equality right,[99] the right to access to information,[100] property rights,[101] and the right to have justiciable disputes settled by a court of law.[102]

[108]The provisions of section 33 of the Constitution are similar to those contained in section 24 of the interim Constitution. There is, however, a material difference. Under the interim Constitution a requirement for just administrative action was that a decision must be justifiable in relation to the reasons given. That in substance set rationality as the review standard.[103] Under section 33 administrative decisions can now be reviewed for reasonableness. That is a variable but higher standard, which in many cases will call for a more intensive scrutiny of administrative decisions than would have been competent under the interim Constitution.

[109]When the interim Constitution was adopted the making of delegated legislation was regarded as administrative action subject to judicial review. There is nothing to suggest that the interim Constitution, or the Constitution which took its place, intended to exclude delegated legislation from what had previously been understood as being administrative action. On the contrary, the Constitutions point in the opposite direction.


Open and transparent government

[110]The interim Constitution established a constitutional state in which the Constitution was supreme and binding upon the legislature, the executive and all organs of state. The 1996 Constitution continued and strengthened this commitment making clear that the constitutional state would be one in which there would be open and transparent government.

[111]The preamble of the Constitution sets as a goal the establishment of “a society based on democratic values, social justice and fundamental human rights” and declares that the Constitution lays “the foundation for a democratic and open society”. Section 1 of the Constitution which establishes the founding values of the state, includes as part of those values “a multi-party system of democratic government, to ensure accountability, responsiveness and openness.”[104] It is apparent from section 57(1)(b) that the democratic government that is contemplated is a participatory democracy, which is accountable, transparent and makes provision for public involvement.[105] Consistently with this, section 59(1) of the Constitution provides:

“The National Assembly must—
(a) facilitate public involvement in the legislative and other processes of the Assembly and its committees; and
(b) conduct its business in an open manner, and hold its sittings, and those of its committees, in public”.


Similar provisions are also made in respect of the National Council of Provinces,[106] provincial legislatures[107] and local government.[108]

[112]Chapter 10 of the Constitution, which deals with public administration, provides in section 195:

“(1) Public administration must be governed by the democratic values and principles enshrined in the Constitution, including the following principles:
. . . .
(e) People’s needs must be responded to, and the public must be encouraged to participate in policy-making.
(f) Public administration must be accountable.
(g) Transparency must be fostered by providing the public with timely, accessible and accurate information.
. . . .
(2) The above principles apply to—
(a) administration in every sphere of government;
(b) organs of state; and
(c) public enterprises.
(3) National legislation must ensure the promotion of the values and principles listed in subsection (1).”


Functionaries who make regulations in terms of empowering legislation are “organs of state”.[109]

[113]The making of delegated legislation by members of the executive is an essential part of public administration. It gives effect to the policies set by the legislature and provides the detailed infrastructure according to which this is to be done. The Constitution calls for open and transparent government, and requires public participation in the making of laws by Parliament and deliberative legislative assemblies. To hold that the making of delegated legislation is not part of the right to just administrative action would be contrary to the Constitution’s commitment to open and transparent government.


The meaning of administrative action in section 33(1) of the Constitution

[114]In Fedsure Life Assurance Ltd and Others v Greater Johannesburg Transitional Metropolitan Council and Others[110] this Court had to consider the meaning of administrative action under section 24 of the interim Constitution. It said that:

“In addressing this question it is important to distinguish between the different processes by which laws are made. Laws are frequently made by functionaries in whom the power to do so has been vested by a competent legislature. Although the result of the action taken in such circumstances may be ‘legislation’, the process by which the legislation is made is in substance ‘administrative’. The process by which such legislation is made is different in character to the process by which laws are made by deliberative legislative bodies such as elected municipal councils. Laws made by functionaries may well be classified as administrative; laws made by deliberative legislative bodies can seldom be so described.”[111]

[115]I am not unmindful of the fact that an unqualified right to demand that delegated legislation must be “reasonable and procedurally fair” may subject such legislation to a more intense review by the courts than was the case in the pre-constitutional era. An obligation to provide written reasons for the delegated legislation, to persons whose rights have been adversely affected by it, would add to the burden.

[116]Significantly, however, the transitional provisions of Schedule 6 to the Constitution suspended the operation of sections 33(1) and (2) pending the enactment of the legislation contemplated in section 33(3). That legislation had to be enacted within 3 years and pending that being done, the provisions of section 24 of the interim Constitution would remain in place.[112]

[117]This addressed a concern that might otherwise have existed that a general and unqualified right to “lawful, reasonable and procedurally fair” administrative action might place too heavy a burden on government. The legislation to be enacted had to take into account the need to “promote an efficient administration”. Until the mandated legislation had been enacted, the provisions of section 24 of the interim Constitution, and not those of sections 33(1) and (2) of the 1996 Constitution, would be applicable. The enactment of the mandated legislation, and the limitations permissible under section 36,[113] would enable Parliament to address these concerns.

[118]It would no doubt be possible to give a narrow construction to “administrative action” in section 33 and to have two systems of review, one under the common law for delegated legislation, and the other under the Constitution for administrative action construed narrowly. But that would not be consistent with the purpose of section 33 which is to establish a coherent and overarching system for the review of all administrative action; nor would it be consistent with the values of the Constitution itself.[114] Properly construed, therefore, “administrative action” in section 33(1) of the Constitution, includes legislative administrative action.

[119]If, then, administrative action in section 33 of the Constitution must be construed as including legislative administrative action, how should PAJA be construed?


Is regulation-making subject to PAJA?

[120]“Administrative action” is defined in section 1 of PAJA as meaning

“any decision taken, or any failure to take a decision, by—
(a) an organ of state, when—
(i) exercising a power in terms of the Constitution or a provincial constitution; or
(ii) exercising a public power or performing a public function in terms of any legislation; or
(b) a natural or juristic person, other than an organ of state, when exercising a public power or performing a public function in terms of an empowering provision,
which adversely affects the rights of any person and which has a direct, external legal effect, but does not include [actions listed in subparagraphs (aa) to (ii) of this definition]”.


I deal later with the exclusions listed in subparagraphs (aa) and (ii).

[121]The Minister and the Pricing Committee are both organs of state.[115] The regulation of prices in the disputed regulations adversely affect the rights of pharmacists and other persons in the pharmaceutical industry. The regulations will therefore be “administrative action” within the meaning of PAJA, if the making of the regulations constituted a “decision”, and if they are not excluded by subparagraph (aa) to (ii) of the definition of administrative action.


The exclusions

[122]The exclusions from the definition of “administrative action” are:

“(aa) the executive powers or functions of the National Executive, including the powers or functions referred to in sections 79(1) and (4), 84(2)(a), (b), (c), (d), (f), (g), (h), (i) and (k), 85(2)(b), (c), (d) and (e), 91(2), (3), (4) and (5), 92(3), 93, 97, 98, 99 and 100 of the Constitution;
(bb) the executive powers or functions of the Provincial Executive, including the powers or functions referred to in sections 121(1) and (2), 125(2)(d), (e) and (f), 126, 127(2), 132(2), 133(3)(b), 137, 138, 139 and 145(1) of the Constitution;
(cc) the executive powers or functions of a municipal council;
(dd) the legislative functions of Parliament, a provincial legislature or a municipal council;
(ee) the judicial functions of a judicial officer of a court referred to in section 166 of the Constitution or of a Special Tribunal established under section 2 of the Special Investigating Units and Special Tribunals Act, 1996 (Act No. 74 of 1996), and the judicial functions of a traditional leader under customary law or any other law;
(ff) a decision to institute or continue a prosecution;
(gg) a decision relating to any aspect regarding the appointment of a judicial officer, by the Judicial Service Commission;
(hh) any decision taken, or failure to take a decision, in terms of any provision of the Promotion of Access to Information Act, 2000; or
(ii) any decision taken, or failure to take a decision, in terms of section 4(1)”.

[123]Subparagraph (aa) deals with the executive powers and functions of the National Executive. It refers to sections 79, 84, 85, 91, 92, 93, 97, 98, 99 and 100 of the Constitution. Sections 79 and 84 of the Constitution deal with powers vested in the President alone. They are not relevant to the present case. Nor are sections 92, 93, 97, 98, and 99. Section 85 is, however, relevant and of importance.

[124]Section 85 deals with the President and Cabinet. If it had stood alone there would have been greater force in the finding that the making of regulations by a minister is excluded from the definition of “administrative action”. But it does not stand alone. Subparagraph (aa) of the definition goes on to refer to specific subparagraphs of section 85(2), including sections 85(2)(b), (c), (d), and (e), but excludes from the list section 85(2)(a). The provisions of section 85(2)(a) to (e) are as follows:

“(2) The President exercises the executive authority, together with the other members of the Cabinet, by—
(a) implementing national legislation except where the Constitution or an Act of Parliament provides otherwise;
(b) developing and implementing national policy;
(c) co-ordinating the functions of state departments and administrations;
(d) preparing and initiating legislation; and
(e) performing any other executive function provided for in the Constitution or in national legislation.”

[125]The omission of subparagraph (2)(a) from the specified list of exclusions is significant. Subparagraph (bb) of the definition of administrative action deals with the powers of the provincial executive. Various provisions of section 125 of the Constitution are listed, but again significantly, sections 125(2)(a), (b) and (c), which refer to the implementation of legislation, are omitted from the list.

[126]In President of the Republic of South Africa and Others v South African Rugby Football Union and Others (SARFU)[116] this Court said that

“one of the constitutional responsibilities of the President and Cabinet Members in the national sphere (and premiers and members of executive councils in the provincial sphere) is to ensure the implementation of legislation. This responsibility is an administrative one, which is justiciable, and will ordinarily constitute ‘administrative action’ within the meaning of s 33.”


If sections 85(2)(a) and 125(2)(a), (b) and (c) had not been omitted from the list of exclusions, the core of administrative action would have been excluded from PAJA, and the Act mandated by the Constitution to give effect to sections 33(1) and (2) would not have served its intended purpose. The omission of sections 85(2)(a) and 125(2)(a), (b) and (c) from the list of exclusions was clearly deliberate. To have excluded the implementation of legislation from PAJA would have been inconsistent with the Constitution. The implementation of legislation, which includes the making of regulations in terms of an empowering provision, is therefore not excluded from the definition of administrative action.

Does the making of regulations constitute a “decision”?

[127]PAJA defines “decision” as follows:

“‘decision’ means any decision of an administrative nature made, proposed to be made, or required to be made, as the case may be, under an empowering provision, including a decision relating to—
(a) making, suspending, revoking or refusing to make an order, award or determination;
(b) giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;
(c) issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;
(d) imposing a condition or restriction;
(e) making a declaration, demand or requirement;
(f) retaining, or refusing to deliver up, an article; or
(g) doing or refusing to do any other act or thing of an administrative nature, and a reference to a failure to take a decision must be construed accordingly”.

[128]It is true that the making of regulations is not referred to in subparagraphs (a) to (f). But the reference in the main part of the definition to “any decision