By Duncan Wild on 28 September 2014

This is an application for leave to appeal against a judgment of the Supreme Court of Appeal (“SCA“), handed down on 16 May 2013. The matter involves the application of the maxim of functus officio. In addition, one of the central questions before the Constitutional Court is the extent to which the decision in Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA) applies to the facts of the matter, and whether the principle in Oudekraal needs to be developed or relaxed in certain instances. In particular, the principle that once an administrative decision is made it exists as a fact and has legal effect until it is set aside by a court in proceedings for judicial review.

The majority of the Constitutional Court, in a decision written by Cameron J, dismissed the appeal with costs. 

The respondent, which conducts business as an owner and operator of private hospitals, applied for approvals to build and operate private hospitals in Port Elizabeth and Jeffreys Bay. The relevant legislation at the time vested the Superintendent-General of the Department of Health in the Eastern Cape (“the Department“) with the power to grant or refuse the approvals, and provided for an internal appeal against the Superintendent-General’s decision to the Member of the Executive Council responsible for Health in the Eastern Cape (“the MEC“).

The Superintendent-General (“the S-G“) refused both of the respondent’s applications and gave instructions that letters be drafted to this effect. However, before the letters were signed and sent, the S-G was involved in a motor-vehicle accident and was consequently away from the office for six weeks. The decisions he made were never communicated to the respondent.

In the S-G’s absence, the acting Superintendent-General (“the acting S-G“) approved both of the respondent’s applications and informed the respondent. Subsequently, when the S-G returned to work, he purported to withdraw both approvals granted to the respondent, without prior notice. The respondent approached the High Court on review, asking that the withdrawals be set aside.

The High Court set aside the S-G’s withdrawal of the approvals on the basis that he did not have the power to withdraw the approvals, and also set aside the approvals by the acting S-G on the basis that she had allowed herself to be influenced in taking the decision to approve the applications. The MEC and Superintendent-General appealed to the Supreme Court of Appeal. On appeal, Plasket AJA, writing for a unanimous panel of the SCA (Mthiyane DP, Maya JA, Saldulker and Meyer AJJA concurring) held:

That the effect of the failure to communicate the decisions to the respondent was that the decisions were not final and were thus open to revision. The Court approached the matter on the basis that, unless and until set aside by a court having jurisdiction, the “approvals” of the acting S-G had legal effect and consequences and the respondent was entitled to rely thereon;

The SCA noted that the decisions taken by the acting S-G were unlawful and invalid (as a result of unauthorised dictation contrary to section 6(2)(e)(iv) of the Promotion of Administrative Justice Act, 2000 (“PAJA“). However, the SCA held that the obviousness of the unlawfulness has no relevance, and that even an obvious illegality cannot simply be ignored. The SCA held that the decisions of the acting S-G “existed in fact and had legal consequences” despite their invalidity. Thus, they could not merely be treated as a nullity and revoked by the S-G, and accordingly the S-G was functus officio when he made the decisions revoking the approvals.

The Constitutional Court affirmed the judgment of the SCA. The majority judgment by Cameron J and concurred in by Moseneke ACJ, Skweyiya ADCJ, Dambuza AJ, Froneman J, Mhlantla AJ and Nkabinde J, held that the validity of the Acting S-G’s decision was not before the Court. Kirland did not ask the Court to rule on its validity. The state parties also did not seek to have that decision declared invalid or set aside.

To set that decision aside despite these considerations would mean that Kirland would have lost the opportunity to present its evidence on the validity of the decision, together with important procedural protections. In addition, the state parties would evade the requirement in PAJA that a review application must be brought within 180 days; and the Court would have to exercise its discretion to set the decision aside without adequate evidence on the potential prejudice to Kirland.

Cameron J further held that our law does not regard an unlawful decision as a “nondecision”, and that the state cannot simply ignore a decision that it considers unlawful. The decision of the Acting S-G, even if flawed, therefore remained effectual until properly set aside by a court.

Froneman J wrote a separate judgment in which he agreed with the finding of the majority, but emphasised the even if there was a review application before the Court, it would still have to consider the applicable time period.

Jafta J wrote a minority judgment in which Justices Madlanga and Zondo concurred in which he found that he would have set aside the Acting S-G’s decision as it was properly before the High Court and so the Constitutional Court. Justice Zondo also wrote a separate judgment (concurred in by Jafta J) in which he agreed that the decision was properly before the courts and should be found invalid and remitted to the S-G for the applications to be considered.

Download the judgment here.