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IN THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE DIVISION, CAPE TOWN)

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(WESTERN CAPE DIVISION, CAPE TOWN)

CASE NO:

1306/2018

In the matter between:

ANDRE MAXWELL and

ROYAL ALDORANCE KHOSANA SAMWUMED MEDICAL SCHEME

THE REGISTRAR OF MEDICAL SCHEMES

In the matter between:

THE REGISTRAR OF MEDICAL SCHEMES and

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annual contribution income is in excess of R 1,2 billion, and the scheme has about R1 billion in reserves.

[5) The close connection between SAMWUMED and SAMWU is illustrated by

the fact that of the members of SAMWUMED's board of trustees, its decision- making body, at least 9 have to be nominated by SAMWU.

[6] In about 2016, problems arose when there were two rival factions in the union, both claiming the right to nominate (and remove) members of the board of trustees. It became impossible to constitute a board of trustees, and the remaining trustees sought the assistance of the third respondent, the Registrar of Medical Schemes.

[7] The Registrar did not act immediately, but the faction problem in the union persisted. Eventually, in February 2018 the Registrar applied in terms of section 56 of the Medical Schemes Act, read with section 5 of the Financial Institutions (Protection of Funds) Act, for the appointment of a curator to the scheme. The application was opposed, and was heard by Andrews AJ. On 3 May 2018, she granted an order placing SAMWUMED under provisional curatorship, and appointing Khosana as the provisional curator. The provisional curator's interim powers were set out in some detail, such powers to be exercised subject to the control of the Registrar. A rule nisi was issued, calling on any interested persons to show cause on the return day why an

Act 131 of 1998 ("the MSA")

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[12]Khosana's provisional curatorship thus began in May, about 4 months ago. The present application was launched on 16 August, when she had been curator for about 3 months.

[13] Maxwell brings this application in his capacity as a member of the scheme. He was also the deputy chairman of the board of trustees prior to the commencement of the curatorship. Maxwell seeks an order removing Khosana as interim curator of SAMWUMED, and appointing one Kevin Aron as the interim curator. The notice of motion is cast in the form of interim relief pending the outcome of an action to be instituted for the selfsame relief.

[14]The application is opposed by Khosana, who also purports to oppose on behalf of SAMWUMED. A timetable was set for the filing of further affidavits, and the matter postponed to 18 September.

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[21]As will be seen from subsection 5(9), quoted above, it does not specify who may bring an application for the removal of a curator. This is in contrast to some of the other subsections.

a. Subsection (1) provides for the registrar (and only the registrar) to apply for the appointment of a curator;

b. Subsection (3) provides for the registrar or the institution to anticipate the return day;

c. Subsection (8) provides that any person, on good cause shown, may apply to set aside or alter any decision, or any action taken, by the curator or the registrar.

[22]Subsection (9) gives the court the power to cancel an appointment. The only requirement is that "good cause" must be shown. Since the subsection gives no indication as to who may furnish such good cause, I conclude that any interested party may do so. Maxwell, as a member of the scheme is, in my view, such an interested party.

[23] It was argued by Mr Watt-Pringle SC, who appeared with Ms Drake, for Khosana, that subsection (9) deals not with the removal of a curator, but with the termination of the curatorship itself. Accordingly, he argued, it did not give Maxwell locus standi in respect of the relief claimed.

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consultants appointed by her. It is common cause that Khosana is being paid a salary of R234 000 per month, plus expenses (which Maxwell alleges to be R150 000 per month, but which Khosana states are capped at R 100 000). Maxwell also alleges various irregularities in Khosana's expenses claims, including duplication, and claiming in respect of persons other than herself.

[33] Khosana's remuneration was fixed by agreement with the Registrar. It is always difficult to assess the reasonableness of such as salary, but the amount does at first sight appear excessive. Maxwell alleges that Khosana is not even engaged full-time in the curatorship, but comes to SAMWUMED's offices only part-time on three days per week. Khosana's denial of this, and the suggestion that she does other work away from the offices, is far from convincing.

[34]As for Khosana's expenses, I note that Khosana does not reside in Cape Town, and accordingly has to travel to Cape Town and provide for accommodation while she is here. I do not intend to consider whether under these circumstances, her expenses are unreasonable. It does, however, raise the question as to

why

a suitable person could not have been found who lives in the Cape, to act as curator for a Cape Town based scheme. [35]As to the various consultants whom Khosana has appointed or used, it

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[39] In the light of all the above, I consider that good cause has been shown for the removal of Khosana. I did consider whether I should not leave this decision for the judge who hears the matter on the return day.

My

primary concern is the interests of the members of SAMWUMED, who are suffering ongoing prejudice. Having regard to the expenditure which SAMWUMED is incurring, and the prospect of further decisions being taken by Khosana which will have permanent or long-term effects, I have decided that her removal cannot wait.

[40] I am mindful of the fact that the return day of Andrews AJ's is on 25 October, and that the immediate removal of Khosana is in effect a modification of Andrews AJ's order, and is being made without notice to some interested parties, including SAMWU.

a. In my view, the crucial question to be considered on the return day is the curatorship itself. My decision to remove Khosana will not affect that aspect.

b. The court on the return day would in any event have to consider the identity of the permanent curator. The court would have been entitled to reject Khosana as permanent curator, in which case a suitable alternative would have to be found.

c. All the interested parties will therefore still have the opportunity of presenting their viewpoints and arguments, including Khosana herself.

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[45)Should a new provisional curator be appointed, the Registrar will be in a position to consider whether the previously agreed remuneration was too high, and if so, to agree on a lesser amount. In any event, the provisional curatorship may well change to a permanent one on the return day, in which case a suitable remuneration for the permanent curator will have to be determined.

[46] I accordingly intend to grant an order in term of Maxwell's application removing Khosana as curator, and an order in terms of the Registrar's application appointing Seoloane in her stead. This will not, in my opinion, prejudice any party entitled to appear on the return day, in that the identity of the proposed final curator will still be in the discretion of the court.

[47}There remains the question of costs. In the Maxwell application, he should be entitled to his costs, and the parties who opposed his application should bear those costs. This does not include SAMWUMED, on whose behalf Khosana purported to oppose the application. After much consideration, have decided not to make a punitive costs order.

[48) In the Registrar's application, the position is not quite as straightforward. The Registrar has asked that Khosana pay his costs, on the basis that she should have resigned, and not opposed the application.

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I make the following orders:

A. In Case no. 1306/2018

1. Second respondent is removed as curator of SAMWUMED with immediate effect;

2. First and third respondents are ordered to pay the applicant's costs

jointly and severally, the one paying, the other to be absolved.

B. In Case no. 16996/2018

1. JOE MALOSE SEOLOANE is appointed as a provisional curator of SAMWUMED, pending the return day of the rule nisi issued by Andrews AJ on 3 May 2018, and with the same powers and mandate set out in that order.

2. There will be no order as to costs.

S

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