THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 1297/2022

In the matter between:

SOUTH AFRICAN MUNICIPAL WORKERS’ UNION
NATIONAL MEDICAL SCHEME (SAMWUMED)
APPELLANT

and

CITY OF EKURHULENI
FIRST RESPONDENT

MOSO CONSULTING SERVICES (PTY) LTD
SECOND RESPONDENT

THE REGISTRAR OF MEDICAL SCHEMES
THIRD RESPONDENT

THE FINANCIAL SECTOR CONDUCT
AUTHORITY
FOURTH RESPONDENT
THE SOUTH AFRICAN LOCAL
GOVERNMENT ASSOCIATION
FIFTH RESPONDENT
THE SOUTH AFRICAN MUNICIPAL WORKERS
UNION (SAMWU)
SIXTH RESPONDENT
INDEPENDENT MUNICIPAL AND ALLIED
WORKERS UNION (IMATU)
SEVENTH RESPONDENT

BONITAS MEDICAL FUND
EIGHT RESPONDENT

HOSMED MEDICAL SCHEME
NINTH RESPONDENT

KEY HEALTH MEDICAL SCHEME
TENTH RESPONDENT

LA HEALTH MEDICAL SCHEME
ELEVENTH RESPONDENT

THE EMPLOYEES OF THE CITY OF
EKURHULENI
TWELFTH RESPONDENT

THE SOUTH AFRICAN LOCAL
GOVERNMENT
THIRTEENTH RESPONDENT

Neutral Citation: South African Municipal Workers’ Union National Medical
Scheme (SAMWUMED) v City of Ekurhuleni and Others (1297/2022) [2023]
ZASCA 182 (22 December 2023)
Coram:
Nicholls and Matojane JJA and Chetty, Masipa and Unterhalter AJJA
Heard:
20 November 2023
Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives via email, publication on the Supreme Court of Appeal
website and release to SAFLII. The date and time for hand-down is deemed to be
11h00 at 22 December 2023.
Summary: Collective agreement – s 23 of the Labour Relations Act 66 of 1995 –
parties to a collective agreement – medical schemes – accreditation of medical
schemes under a collective agreement – intentional and unlawful interference with
contractual relationship – s 65 of the Medical Schemes Act 131 of 1998 –
Regulation 28 – legality of territorial limitation in a broker agreement with a
medical scheme.

__________________________________________________________________

ORDER
___________________________________________________________________

On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Oosthuizen-Senekal AJ):

The appeal is upheld, the costs of the appeal, including the costs of the
application for leave to appeal, are to be borne jointly by the first and second
respondents;
The orders of the high court are set aside and substituted with the following:
‘1.
The first respondent is ordered to accept member application forms and other documents
and communications directly from the applicant, and to duly process such applications and related
documents submitted by the applicant, for so long as the applicant remains an accredited medical
scheme in terms of the collective agreement;
2.
It is declared that the second respondent is not entitled to payment of broker fees by the
applicant in respect of the employees of the first respondent, in the absence of a written broker
agreement having been concluded between the applicant and the second respondent and in the
absence of the second respondent having actually rendered broker services;
3.
The first and second respondents are interdicted, for so long as the applicant remains an
accredited medical scheme in terms of the collective agreement:
3.1
from taking any steps that would prevent or hinder the applicant from marketing its
scheme and benefit options and rendering services to its members and all prospective members
who are employees of the first respondent by way of the applicant’s own internal consultants or
independent brokers appointed by the applicant, should it so wish;
3.2
from holding out that the second respondent is the exclusive broker for the five medical
schemes accredited in terms of the collective agreement concluded on 9 September 2015, and that
no other brokers or consultants will be allowed to service employees of the first respondent;

3.3
from refusing to accept member application forms and other documents and
communications submitted to the first respondent by the applicant, and from refusing to duly
process such applications and related documents;
3.4
from insisting that all medical scheme member application forms and other related
documents and communications be submitted to the second respondent, as opposed to the first
respondent;
3.5
from insisting that payment of broker fees be made by the applicant to the second
respondent in the absence of a written broker agreement between the applicant and the second
respondent and/or in the absence of the second respondent having actually rendered broker
services;
3.6
from approaching members of the applicant and requesting them to execute service notes
in favour of the second respondent, in the absence of a written broker agreement between the
applicant and the second respondent and/or in the absence of the second respondent having
actually rendered broker services to members of the applicant.
4.
The first and second respondents are jointly ordered to pay the costs of this application.’

__________________________________________________________________

JUDGMENT
__________________________________________________________________

Unterhalter AJA (Nicholls, Matojane JJA and Chetty and Masipa AJJA
concurring)

Introduction
[1] The appellant, the South African Municipal Workers’ Union National
Medical Scheme (SAMWUMED) is a self-administered medical scheme. It is
registered in terms of s 24 of the Medical Schemes Act 131 of 1998 (the Act). In
September 2015, the South African Local Government Association (SALGA)
concluded a collective agreement with two trade unions, one of which was the South
African Municipal Workers’ Union (the collective agreement). In terms of Clause
9 of the collective agreement, the Bargaining Council, the South African Local
Government Bargaining Council (SALGBC) must annually accredit medical

schemes which qualify for employer contributions. Employees who are scheme
members may annually elect to move to another accredited medical scheme. Clause
15 of the collective agreement provides criteria for the recognition of medical
schemes. In terms of Clause 15.3.2, accredited medical schemes may market their
schemes annually between October and November (the window period) to better
inform members who might wish to switch medical schemes. SAMWUMED had
for a number of years been accredited by the SALGBC, and was so again in
September 2020. Four other medical schemes were also accredited.

[2] SAMWUMED had, through its own consultants, and prior to January 2020,
marketed its scheme, as the collective agreement permitted it to do, to employees
who were members of accredited medical schemes or wished to become members.
In January 2020, SAMWUMED received a letter from the first respondent, the City
of Ekurhuleni (COE). COE informed SAMWUMED that it had appointed
Alexander Forbes Health (Pty) Ltd (AFH) as broker service consultants to provide
services to COE employees, pensioners, and the COE itself. SAMWUMED was
informed that its medical scheme had been allocated to AFH. COE requested
SAMWUMED to ‘rescind all existing medical aid brokerage contracts’ and
stipulated that no other medical aid consultants would be allowed to service
employees of COE. SAMWUMED was required to ensure that AFH was paid
broker fees for the services it rendered. Like broker appointments were made by
COE to the other accredited medical schemes.

[3] For reasons that are not explained, the second respondent, Moso Consulting
Services (Pty) Ltd (Moso) replaced AFH as the broker appointed  by the COE to
employees, COE, SAMWUMED and the other medical schemes. SAMWUMED
did not accede to the appointment of Moso. Nor did it accept that it was required to
market its scheme in the window period through Moso, and pay Moso brokerage
fees to do so. SAMWUMED had marketed its scheme, in prior years, by using its
own internal consultants, and wished to continue doing so.

[4] SAMWUMED had, on 5 April 2019, concluded a written broker agreement
with Moso (the Moso agreement). SAMWUMED appointed Moso to market
SAMWUMED’s range of products and render services to its members. It did so on
a non-exclusive basis. And, of consequence for this matter, to perform these
services within a defined territory. That territory was defined to mean the City of
Johannesburg and its municipal entities. The territory, as defined, does not include
the COE. I shall refer to this as the territorial limitation.

[5] In November 2020, SAMWUMED wrote to COE. It requested COE to
reconsider its decision to preclude SAMWUMED’s internal consultants from
providing services to COE employees and pensioners. No response was
forthcoming. SAMWUMED also wrote to Moso and complained that Moso was
not permitted to render services outside the territory allocated to it in the Moso
agreement, without the prior written consent of SAMWUMED. Moso, it alleged,
was in breach of the Moso agreement by seeking to render services on behalf of
SAMWUMED to employees of COE.

[6] SAMWUMED did not receive the undertakings it sought from either COE or
Moso. It then applied to the high court, Gauteng Division, Johannesburg (the high
court) for the following relief, in relevant part:
‘1.
An order declaring that the first respondent [COE] is in breach of the collective agreement
concluded on 9 September 2015;
2.
An order compelling the first respondent [COE] to comply with the collective agreement
concluded on 9 September 2015, more specifically to allow the applicant to freely market its
scheme and benefit options and to render services to its members and all prospective members
who are employees of the first respondent, unhindered and by way of the applicant’s own internal
consultants or independent brokers appointed by the applicant, should it so wish;
3.
An order compelling the first respondent [COE] to accept member application forms and
other documents and communications directly from the applicant, and to duly process such
applications and related documents submitted by the applicant;

4.
An order declaring that the second respondent [MOSO] is not entitled to payment of
broker fees by the applicant in respect of the employees of the first respondent [COE], in the
absence of a written broker agreement having been concluded between the applicant and the
second respondent [Moso] and in the absence of the second respondent [Moso] having actually
rendered broker services;
5.
An order interdicting and restraining the first and second respondents [COE and Moso]:
5.1
from taking any steps that would prevent or hinder the applicant to market its scheme and
benefit options and render services to its members and all prospective members who are
employees of the first respondent by way of the applicant’s own internal consultants or
independent brokers appointed by the applicant, should it so wish;
5.2
from holding out that the second respondent [Moso] is the exclusive broker for the five
medical schemes accredited in terms of the collective agreement concluded on 9 September 2015,
and that no other brokers or consultants will be allowed to service employees of the first
respondent [COE];
5.3
from refusing to accept member application forms and other documents and
communications submitted to the first respondent by the applicant, and from refusing to duly
process such applications and related documents;
5.4
from insisting that all medical scheme member application forms and other related
documents and communications be submitted to the second respondent, as opposed to the first
respondent;
5.5
from insisting that payment of broker fees be made by the applicant to the second
respondent in the absence of a written broker agreement between the applicant and the second
respondent and/or in the absence of the second respondent having actually rendered broker
services;
5.6
from approaching members of the applicant and requesting them to execute service notes
in favour of the second respondent [Moso], in the absence of a written broker agreement between
the applicant and the second respondent and/or in the absence of the second respondent [Moso]
having actually rendered broker services to members of the applicant;
6.
That the first respondent [COE] be ordered to pay the costs of this application;
7.
Should any party/person oppose the present application, ordering such party/person to pay
the costs of this application jointly and severally with the first respondent.’

[7] Both the COE and Moso opposed the application, and filed answering
affidavits. In addition, Moso brought a counter-application which, in relevant part,

sought declaratory relief that the Moso agreement does not preclude Moso from
rendering services outside the territorial area defined in the agreement. This relief
was, in turn, opposed by SAMWUMED.

[8] The high court (per Oosthuizen-Senekal AJ) dismissed SAMWUMED’s
application, with costs, such costs to be limited to the hearing of the matter. It found
that SAMWUMED was not a party to the collective agreement, and hence,
SAMWUMED enjoyed no rights under the collective agreement. As to the
territorial limitation that SAMWUMED sought to impose upon Moso, the high
court found this limitation to offend against the right of employees to choose a
broker, and, furthermore, offended against the Financial Advisory and Intermediary
Service Act 37 of 2002 (FAIS Act) and its Code of Conduct. The high court
declined to decide Moso’s counter-application.

[9] With the leave of the high court, SAMWUMED appeals to this court. COE
elected to abide our judgment. Moso opposed the appeal but was at pains to
emphasize the limited ambit of its opposition. Moso, as in the high court, opposed
the final relief set out in prayers 4, 5.5 and 5.6 of the notice of motion. It was
common ground between the parties that this appeal was not concerned with the
alternative interim relief that was originally sought in the notice of motion. By way
of further clarification, counsel for Moso, during oral argument, made it plain that
Moso’s case rested on the proposition that the territorial limitation in the Moso
agreement was unenforceable. Moso did not seek to defend the position of COE.
Indeed it disavowed the conduct of the COE that had sought to impose Moso upon
SAMWUMED as its exclusive broker to market its scheme to employees of COE.
As Moso’s counter-application was not determined by the high-court, and Moso
had made no cross-appeal, Moso correctly submitted that the counter-application
was not before us.

The  COE appeal

[10] The principal relief that SAMWUMED sought against COE was that COE
must comply with the collective agreement and permit SAMWUMED to market its
scheme and benefit options to employees of COE. In addition, SAMWUMED
should be permitted to render services to employees of COE who are members or
prospective members of SAMWUMED. It will be recalled that clause 15.3.2 of the
collective agreement states that accredited medical schemes may market their
schemes annually during the window period. Membership of an accredited medical
scheme is an important benefit enjoyed by employees under the collective
agreement, to which employers are required to contribute. The collective agreement
permits employees who are scheme members of accredited schemes to transfer from
one scheme to another. To allow scheme members to make informed choices, the
collective agreement provides for a window period during which accredited
schemes may market their schemes.

[11] In addition, the collective agreement, in terms of clause 15.2 sets out the
criteria for the accreditation of medical schemes. Among these criteria, a scheme
must demonstrate the service levels to which it will adhere to process claims and
pay accounts. The collective agreement requires an accredited scheme to perform
these services. Part of the relief sought by SAMWUMED is that it should be
permitted to render these services to its members who are employees of COE,
without having Moso imposed upon it  as the intermediary through which this will
be done.

[12] The high court held that SAMWUMED is not a party to the collective
agreement, and therefore it cannot seek the enforcement of this agreement.
SAMWUMED is not reflected as a party to the collective agreement.  The collective
agreement makes provision, as I have sketched above, for the accreditation of
schemes so that employees may enjoy the benefit of selecting and joining a scheme
to which their employers contribute. To protect the interests of employees, the
marketing of the schemes, in the window period, secures competition between

accredited scheme to enhance informed choices by employees. Hence, Clause
15.3.2 provides that accredited medical schemes may market their schemes.

[13] Does this provision give rise to any enforceable right on the part of
SAMWUMED? SAMWUMED is not reflected as a signatory to the collective
agreement. SAMWUMED nevertheless contended that it was a party to the
collective agreement because the collective agreement was a contract for the benefit
of a third party.  Total South Africa (Pty) Ltd1 sets out what is required to find that
a provision of an agreement constitutes a stipulation for the benefit of a third party
(a stipulation alteri): the provision cannot simply be designed to benefit a third
person or merely do so; the parties to the contract must have the intention that a
third person can, by adopting the benefit, become a party to the contract.

[14] I should have been inclined to conclude that Clause 15.3.2 was designed to
benefit accredited medical schemes and that SAMWUMED had adopted this
benefit by marketing its scheme over a number of years. However, the collective
agreement cannot constitute a stipulation for the benefit of a third party because the
collective agreement is a statutory construct. A collective agreement is defined in
s 213 of the Labour Relations Act 66 of 1995 (the LRA) to mean, ‘a written
agreement concerning terms and conditions of employment or any other matter of
mutual interest concluded by one or more registered trade unions, on the one hand,
and, on the other hand – (a) one or more employers; (b) one or more registered
employers’ organisations; or (c) one or more employers and one or more registered
employers’ organisations.’

[15] A collective agreement, in terms of these provisions of the  LRA, is not an
agreement concluded with an accredited medical scheme. Section 23 of the LRA

1 Total South Africa (Pty) Ltd v Bekker NO 1992 (1) SA 917 (A) at 625.

sets out the legal effect of a collective agreement. The collective agreement binds
the parties to the agreement. Since the statutory definition of a collective agreement
identifies the parties to such an agreement, this statuory scheme makes no provision
for a collective agreement to bind parties who fall outside of the definition. The
LRA thus excludes a collective agreement containing a stipulation for the benefit
of a third party, if that third party is not a party falling within the statutory definition.
To like effect, s 31 of the LRA binds parties to the bargaining council who are also
parties to the collective agreement. SAMWUMED is not such a party. Section 32
of the LRA does permit of the extension of a collective agreement to a non-party
upon request by the bargaining council to the Minister. But there is no suggestion
this has taken place.

[16] It follows that SAMWUMED is not a party to the collective agreement. The
parties who concluded the collective agreement, whatever their intention, could not,
as a matter of law, have made SAMWUMED, upon adopting the benefit conferred
by the collective agreement, a party to the agreement. The LRA excludes such an
outcome, by definition. The COE was, in terms of clause 1 of the collective
agreement, required to observe the terms of the agreement, including clause 15.3.2.
But that duty gave rise to no right on the part of SAMWUMED to enforce that duty
because SAMUWUMED was not a party to the collective agreement.

[17] This conclusion does not entail that clause 15.3.2 had no efficacy. Section 27
of the LRA provides for the establishment of bargaining councils. Among the
powers conferred upon bargaining councils by s 28 of the LRA is to establish and
administer medical schemes for the benefit of parties to the bargaining council or
their members (s 28(1)(g)). Section 33A of the LRA empowers a bargaining council
to monitor and enforce compliance with its collective agreements.

[18] Under the collective agreement with which this case is concerned, the
SALGBC was the bargaining council that concluded the collective agreement.

Clause 9 of the collective agreement regulates membership of medical schemes and
contributions to these schemes. The SALGBC must accredit medical schemes
against stipulated criteria. Employers, which includes COE, must make
contributions on behalf of their employees to accredited medical schemes.
Employees must belong to one of the accredited medical schemes, unless they elect
to belong to no medical scheme. And, as I have referenced, on an annual basis,
employees are afforded a choice before 1 January to move to an accredited medical
scheme.

[19] The collective agreement thus confers  important benefits upon employees to
choose an accredited medical scheme; to switch schemes annually; and to enjoy the
compulsory contributions of employers. The collective agreement deputes the
SALGBC to give effect to this scheme. SALGBC has done so. The accreditation of
SAMWUMED, and four other medical schemes, by SALGBC is to be found in
circular 12/2020 issued by SALGBC. It records the schemes accredited for 2021 by
SALGBC’s executive council. It also records that the accredited schemes may
market their schemes from 1 October 2020 – 30 November 2020.

[20] The accreditation of SAMWUMED by SALGBC constitutes an agreement.
How otherwise could an accredited medical scheme be held to the obligations set
out in clause 15 of the collective agreement? The collective agreement, for example,
in clause 15.6 sets out a code of conduct to which accredited medical schemes are
obliged to adhere. Accredited medical schemes can only be bound to adhere to the
code of conduct by reason of their agreement with SALGBC.  They cannot be bound
to do so by the collective agreement because, as I have found, they are not parties
to that agreement. Thus, accredited medical schemes derive their rights and
obligations from their agreement with SALGBC, arising from their accreditation by
SALGBC.

[21] That agreement provides in express terms for the right of accredited medical
schemes to market their schemes, as reflected in circular 12/2020. The agreement
also neccesarily entails that accredited medical schemes are entitled and required to
service their members who are employees that have opted to join one or other of
the accredited schemes. That is so because the very essence of  what a medical
scheme registered in terms of the Medical Schemes Act 131 of 1998 (MSA) must
do is to process the claims of its members and provide the benefits to which their
membership entitles them. That is also the plain entitlement of employees under the
collective agreement which SALGBC is mandated to bring about by way of
accreditation. I therefore find that the accreditation of SAMWUMED constituted
an agreement between it and SALGBC that conferred a right upon SAMWUMED
to market their scheme in the window period and service those employees who
opted to become members of SAMWUMED.

[22]  SAMWUMED’s principal cause of action was to enforce what it conceived
to be its rights under the collective agreement and COE’s breach of that agreement.
That cause of action cannot prevail because SAMWUMED enjoyed no rights under
the collective agreement. However, SAMWUMED’s application framed an
alternative cause of action. It alleged that the conduct of COE ‘constitutes unlawful
and intentional interference with the rights of SAMWUMED and its employees to
lawfully participate in the market comprised of the COE’s employees’.
SAMWUMED did not elaborate upon the source of its right to participate in this
market. However, there are sufficient averments in the founding affidavit as to its
accreditation by SALGBC to derive the source of its rights to be the agreement
between SAMWUMED and SALGBC that I have identified.

[23] The question that then arises is whether SAMWUMED has made out a cause
of action based on these averments. In Lanco2 it was held that the delict of the

2 Lanco Engineering CC v Aris Box Manufacturers (Pty) Ltd 1993 (4) SA 378 (D) at 384.

unlawful and intentional interference by a third party in a party’s contractual
relationship may be sustained, even though the interference does not consist of an
inducement to breach the contract. The Constitutional Court gave further treatment
to this species of delictual liability in Masstores.3 Though  the case concerned
unlawful competition, together with the holding in Country Cloud,4 the following
may be stated of a cause of action founded upon the delict of unlawful interference
with contractual relations. First, the delict must comport with the general principles
of Aquilian liability. Second, the unlawfulness requirement is not confined to the
inducement of a breach of contract. An unlawful interference with contractual
relations is ultimately based upon the duty not to cause harm and to respect rights.
Third, fault is satisfied by proof of intent which may consist of dolus eventualis
(and perhaps even negligence). The degree of fault may also be relevant to the
enquiry as to unlawfulness.

[24] Does the conduct of COE amount to an unlawful interference with the
contractual relationship subsisting between SAMWUMED and SALGBC? It will
be recalled that what COE sought to impose upon SAMWUMED was the
interposition of Moso as the exclusive broker and intermediary that SAMWUMED
was required to use to service its members who were employees of COE and to
market its scheme during the window period. SAMWUMED was also required to
pay Moso for rendering its services as a broker, and to cancel any  agreements that
it might have concluded with other brokers. SAMWUMED was, under this
imposition, not to make use of its own employees to market its scheme and service
COE employees who were members of the scheme.

[25] Clause 1 of the collective agreement bound employers falling within
SALGBC to observe the terms of the agreement. COE is such an employer. It was

3 Masstores (Pty) Ltd v Pick n Pay Retailers (Pty) Ltd 2017 (1) SA 613 (CC).
4 Country Cloud Trading CC v MEC, Department of Infrastructure Development 2015 (1) SA 1 (CC).

bound to observe the collective agreement. The collective agreement, as I have
observed, provided for the accreditation of medical schemes and stipulated for a
regime under which employees could choose from among the accredited schemes
and benefit from their membership. That regime permitted accredited schemes to
market their schemes during the window period and to service their members.
Nothing in this regime limited the freedom of accredited medical schemes to
determine how to do so. It did not require the use by accredited medical schemes of
brokers, much less permit employers to impose the use of brokers upon these
schemes.

[26] The conduct of COE clearly interfered with the contract subsisting between
SAMWUMED and SALGBC. It did so by restricting the means by which
SAMWUMED could carry out its duties to service its members and exercise its
right to market its scheme in the window period. The collective agreement  placed
no restraints upon SAMWUMED of the kind that COE sought to impose. COE had
a duty to observe the terms of the collective agreement. It did not do so. Rather, it
sought to impose a broker upon SAMWUMED and stipulated  conditions under
which SAMWUMED could enjoy its rights and carry out its duties under the
agreement with SALGBC. That was plainly harmful to SAMWUMED because it
imposed a broker that SAMWUMED did not either need or wish to employ, and at
a cost that SAMWUMED was required to meet. This amounts to unlawful
interference in the contractual relationship subsisting between SAMWUMED and
SALGBC.

[27] Nor can there be doubt that COE interfered with the required intent. It knew
that SAMWUMED was an accredited medical scheme in terms of the collective
agreement. It knew what the collective agreement permitted SAMWUMED to do.
Yet COE decided to act as it did knowing it would interfere with the manner in
which SAMWUMED enjoyed its accreditation from SALGBC and cause it loss.

The COE is thus liable for its unlawful and intentional interference with the
contractual relationship subsisting between SAMWUMED and SALGBC.

[28] While SAMWUMED, for the reasons given, cannot enjoy the relief sought
in its notice of motion that is predicated upon breach by COE of the collective
agreement and the enforcement of that agreement, SAMWUMED has made out a
case to prevent COE from: imposing Moso upon SAMWUMED; requiring
SAMWUMED to pay Moso for its unwanted services; and restricting the basis upon
which SAMWUMED may carry out its duties and enjoy its rights under its
agreement with SALGBC.

The  Moso appeal
[29] I turn next to consider the appeal of SAMWUMED against the dismissal by
the high court of the relief it sought against Moso. It will be recalled that Moso does
not seek to defend the conduct of COE and its unilateral imposition of Moso as a
broker upon SAMWUMED. Moso confined its case to one issue. It contended that
it was not confined by the territorial limitation contained in its broker agreement
with SAMWUMED, and hence it was at liberty to offer its services to
SAMWUMED (outside of the territorial limitation), and to COE, and its employees.
If the territorial limitation is lawful and remained enforceable, Moso accepts that
SAMWUMED was entitled to restrain it from offering its services outside of the
agreed territorial limitation.

[30]  Moso sought to impugn the territorial limitation on three grounds. First, it
contended that the territorial limitation offends against s 65 of the MSA read with
Regulation 28 promulgated in terms of the MSA. Second, it submitted that the
territorial limitation offends against public policy and it is thus rendered
unenforceable. Third, it claims that SAMWUMED has waived the territorial
limitation. I consider each of these grounds in turn.

[31] Section 65 of the MSA provides for the accreditation of brokers and their
compensation. Regulation 28(1) prohibits any person from being compensated by
a medical scheme in terms of s 65, unless the broker has entered into a prior written
agreement with the medical scheme concerned. Regulation 28(6)(a) renders the
ongoing payment of a broker by a medical scheme conditional upon the broker
meeting the service levels agreed upon in the written agreement between the broker
and the medical scheme. Regulation 28(7) requires a medical scheme to discontinue
payment to a broker upon  notice that a member or employer no longer requires the
services of that broker.

[32] Moso reads these provisions to mean that members  enjoy free choice as to
whether to use a broker and which broker they wish to select. Provided the broker
is accredited and the other stipulations as to compensation are met, that choice is
sovereign and the territorial limitation is repugnant to that sovereignty. Moso, with
the high court, also rely upon the provisions in s 1(1) of the Financial Advisory and
Intermediary Services Act 37 of 2002 (the FAIS Act) read with section 20 of its
code of conduct which are said to privilege the free choice of clients to appoint (and
dismiss) a broker. Moso also placed reliance on the decision of this Court in Hlela5
and the decision of the appeals committee of the Council for Medical Schemes in
LA Health Medical Scheme.6

[33] Nothing in s 65 or Regulation 28 forbids the adoption of a territorial
limitation in the written agreement between a medical scheme and a broker. What
is required is that there should be a written agreement; and Regulation 28  regulates
some of the contents of that agreement, such as the maximum compensation payable
to a broker for the introduction of a member and the rendering of ongoing services.
Furthermore Regulation 28(3) proscribes certain differential compensation. This

5 Hlela v SA Taxi Securitisation (Pty) Ltd 2014 JOL 32305 (SCA).
6 LA Health Medical Scheme v The Office of the Registrar & Others CMS Ref: CMS 76106.

scheme of regulation contains certain prohibitions and imposes certain
requirements.  But beyond these stipulations, the Regulation runs out, and it is
permissive. Thus, there must be a written agreement between a broker and a medical
scheme; and it must comply with certain content requirements and prohibitions.
Nothing in the Regulation, however, states or implies that a broker agreement
cannot contain a territorial limitation upon where it is that the broker may render its
services.

[34] Moso contended that s 65 of the MSA read with Regulation 28 is predicated
upon the primacy of member choice. And the territorial limitation is a constraint
upon such choice and is thus prohibited. This reasoning does not hold. First, it is
the medical scheme that appoints the broker to secure introductions and render
services, on its behalf, to members for which the medical scheme compensates the
broker. It is for the medical scheme to decide whether to appoint brokers, and if it
does, how and where to deploy them under  service levels set out in a written broker
agreement. Brokers may have utility in one area, but not in another. The medical
scheme may choose, as in this case, to use its own employees to service its members
in a particular area. These are all choices for the medical scheme to make and
nothing in Regulation 28 says otherwise.

[35] Second, Regulation 28(7) simply prevents a medical scheme from
compensating a broker if a member or employer no longer requires the broker’s
services. This provision recognises that a member or employer may not wish to
receive the services of a particular broker. Upon notice of this, the broker may no
longer be compensated. It is not possible to derive from this provision that members
may dictate to a medical scheme that every broker appointed by a medical scheme
must be available to provide services to them or, more radically, that if a medical
scheme has appointed no brokers at all, they must do so to provide members with
some (unspecified) plurality of choice. Regulation 28 does not so provide. Very

considerable complexity would arise if a regulation sought to do so, requiring
detailed provisions, that are not to be found in Regulation 28.

[36] Third, as I have observed, Regulation 28 is predicated upon the premise that
it is for medical schemes to decide whether to appoint brokers and if so, how many,
in what areas  and on what terms. The logic of this is well understood. Provided
there are a sufficient number of  medical schemes competing for members, it is for
the schemes to decide how to win members and service their needs. If the medical
schemes make bad choices and service suffers, members will switch. The
Regulation could have been constructed on a different regulatory premise of broker
plurality, but nothing indicates the adoption of such a scheme.

[37] Fourth, the Hlela decision and the provisions of the FAIS Act provide no
assistance, even of an analogical kind. In Hlela, it was the clients who had appointed
the broker, and the question was whether their choice of broker could be rejected
under s 20 of the FAIS Code of Conduct. This Court held that it could not.
Regulation 28, however, is not concerned with a member’s appointment of a broker.
Under Regulation 28, the medical schemes may appoint brokers, and members can
choose whether to use their services. That entails no recognition of some
requirement that a medical scheme, at the instance of a member, must appoint a
broker or do so on particular terms. Much less, the further entailment that territorial
limitations are impermissible. I find nothing in the reasoning in LA Health Medical
Scheme that persuades me of a different conclusion. And hence, the contention of
Moso that the territorial limitation is repugnant to s 65 of the MSA and Regulation
28 falls to be rejected.

[38] Moso next advanced the submission that the territorial limitation offends
against public policy and is therefore rendered unenforceable. It relied upon

Beadica,7 and certain of the cases of the Constitutional Court analysed in Beadica.
The majority in Beadica held that the value of honouring obligations freely and
voluntarily entered into has no primacy in the pantheon of public policy, it is one
of the number of constitutional rights and values that may be implicated in deciding
whether the enforcement of a contractual term is contrary to public policy.8

[39] Following Beadica, the fact that Moso agreed to the territorial limitation does
not exhaust the considerations of public policy that might bear upon the
enforcement of such a provision. Moso reprises its invocation of the value that
should attach to the freedom of members to choose a broker, and that the territorial
limitation restricts such choice. The statutory scheme, analysed above, does not
reflect this value. Rather, it recognises that a member does not need to use a broker
if they should choose otherwise. Apart from the statutory scheme, I do not
apprehend that the territorial limitation offends against any important constitutional
right or value. It simply constitutes a means by which medical schemes may choose
to provide services through brokers. This is a matter of efficacy. Other means may
also be effective. But it is hard to see how an insistence that once a broker is
appointed by a scheme that broker must be entitled to operate without territorial
limitation infringes upon any constitutional right or value. Nor has a case been made
that the territorial limitation has led to any deterioration of the service rendered by
SAMWUMED or any lack of competitive alternatives for employees of COE who
might want to switch medical schemes. The invocation of broker choice is an
abstract claim, without an obvious constitutional mooring.

[40] It follows that I can discern no consideration of public policy that counts in
favour of rendering the territorial limitation unenforceable. On the contrary, Moso

7 Beadica 231 CC & Others v Trustees, Oregan Trust & Others  2020 (5) SA 247 (CC).
8 Ibid at para [87].

agreed to this restriction in its broker agreement with SAMWUMED, and there is
no reason why it should not be held to it. Moso’s challenge on this score must fail.

[41] Finally, Moso contends that SAMWUMED waived or abandoned the
territorial limitation during the currency of the broker agreement with Moso. Moso
avers that SAMWUMED appointed Moso to render brokerage servies in the city of
Tshwane; Moso introduced 596 new members and was paid by SAMWUMED.
SAMWUMED contests this version; it sets out the history of its broker agreements
with Moso, over the years, which have defined different territories, but these
appointments, prior in time to the current agreement, could not amount to a
preemptive waiver of a later agreement.

[42] It is unnecessary to resolve this factual dispute. The version offered by Moso
is struck by clauses 13.1 and 13.2 of the broker agreement. They provide that no
variation of the terms of the agreement shall be binding unless reduced to writing
and signed by the parties; and further, that no indulgence shall constitute a waiver,
nor preclude the grantor (of the indulgence) from exercising any rights. The
documentary evidence proferred by Moso does not meet the standard set by clause
13.1 to effect a valid variation. And to the extent that SAMWUMED permitted
Moso to introduce new members in Tshwane, no such indulgence can constitute a
waiver. The waiver challenge must be rejected.

[43] It follows that Moso’s challenges to the territorial limitation cannot succeed.
As counsel made plain at the commencement of his oral submissions, if this Court
should reach this conclusion, then SAMWUMED’s appeal must be upheld and it is
entitled to the relief that Moso contested.

Conclusion
[44] SAMWUMED has prevailed against COE, and its appeal must be upheld.
SAMWUMED is not entitled to relief predicated upon the enforcement of the

collective agreement. It is entitled to the relief in its notice of motion that protects
it from the conduct of COE that sought to impose a broker upon SAMWUMED,
and the entailments of that conduct. As against COE, the orders sought in prayers
3,5 and 6 of the notice of motion should thus be granted. Although COE abided the
judgment of this Court, it did not abandon the order of the high court in its favour.
This meant that SAMWUMED was required to come to this Court to appeal the
high court’s order. Once that is so, SAMWUMED is entitled to the costs of the
appeal as against COE, on an unopposed basis.

[45] As to the appeal against the dismissal by the high court of the relief sought
by SAMWUMED against Moso, Moso opposed the appeal on a limited basis, and,
in particular limited its opposition to the issue of the territorial limitation and
prayers 4 and 5.5. That opposition has not succeeded. SAMWUMED’s appeal is
upheld as against Moso. Costs must follow that result.

[46] The following order is made:
The appeal is upheld, the costs of the appeal, including the costs of the
application for leave to appeal,  are to be borne jointly by the first and second
respondents;
The orders of the high court are set aside and substituted with the following:
‘1.
The first respondent is ordered to accept member application forms and other documents
and communications directly from the applicant, and to duly process such applications and related
documents submitted by the applicant, for so long as the applicant remains an accredited medical
scheme in terms of the collective agreement;
2.
It is declared that the second respondent is not entitled to payment of broker fees by the
applicant in respect of the employees of the first respondent, in the absence of a written broker
agreement having been concluded between the applicant and the second respondent and in the
absence of the second respondent having actually rendered broker services;
3.
The first and second respondents are interdicted, for so long as the applicant remains an
accredited medical scheme in terms of the collective agreement:

3.1
from taking any steps that would prevent or hinder the applicant from marketing its
scheme and benefit options and rendering services to its members and all prospective members
who are employees of the first respondent by way of the applicant’s own internal consultants or
independent brokers appointed by the applicant, should it so wish;
3.2
from holding out that the second respondent is the exclusive broker for the five medical
schemes accredited in terms of the collective agreement concluded on 9 September 2015, and that
no other brokers or consultants will be allowed to service employees of the first respondent;
3.3
from refusing to accept member application forms and other documents and
communications submitted to the first respondent by the applicant, and from refusing to duly
process such applications and related documents;
3.4
from insisting that all medical scheme member application forms and other related
documents and communications be submitted to the second respondent, as opposed to the first
respondent;
3.5
from insisting that payment of broker fees be made by the applicant to the second
respondent in the absence of a written broker agreement between the applicant and the second
respondent and/or in the absence of the second respondent having actually rendered broker
services;
3.6
from approaching members of the applicant and requesting them to execute service notes
in favour of the second respondent, in the absence of a written broker agreement between the
applicant and the second respondent and/or in the absence of the second respondent having
actually rendered broker services to members of the applicant.
4.
The first and second respondents are jointly ordered to pay the costs of this application.’

_________________________
DN UNTERHALTER
ACTING JUDGE OF APPEAL

APPEARANCES

For Appellant:

E Kromhout
Instructed by:

Malatji & Co Inc., Sandton

Honey Attorneys, Bloemfontein

For Second Respondent:
Y Alli
Instructed by:
Wadee Attorneys, Johannesburg

Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:

22 December 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
South African Municipal Workers’ Union National Medical Scheme (SAMWUMED) v City
of Ekurhuleni and Others (1297/2022) [2023] ZASCA 182 (22 December 2023)
(1297/2022) [2023] ZASCA 182 (22 December 2023)
Today, the Supreme Court of Appeal (SCA) upheld an appeal from the Gauteng Division of the High
Court, Johannesburg (high court). The appeal centred around a dispute between the South African
Municipal Workers’ Union National Medical Scheme (appellant), a self-administered medical scheme
registered in terms of s 24 of the Medical Schemes Act 131 of 1998 (the Act), and the City of Ekurhuleni
(COE). In terms of a collective agreement entered into by the South African Local Government
Association, the South African Local Government Bargaining Council must annually accredit medical
schemes which qualified for employer contributions and the appellant had, for a number of years, been
accredited in this regard.

In 2020, the appellant received a letter from COE, indicating that Alexander Forbes Health (Pty) Ltd
(AFH) had been appointed as a broker to the appellant to provide services to COE and its employees.
The appellant was informed that it was to rescind all its existing broker contracts.  It also had to ensure
that AFH was paid the requisite broker fees for services rendered. Subsequently, Moso Consulting
Services (Pty) Ltd (Moso) replaced AFH as the appointed broker. The appellant declined to accede to
this appointment, nor did it accept that it was required to market its scheme or render any other service
through Moso. The appellant wished to continue to do so through its internal consultants employed by
the appellant. In light of these developments, the appellant addressed a letter to COE, requesting it to
reconsider the imposition of Moso. The appellant also wrote to Moso to inform it that it was not allowed
to render services which fell outside the confines of its agreement with the appellant. That agreement
confined Moso to particular territory, being, in essence, Johannesburg.

Before the high court, the appellant’s claim was dismissed on the basis that the appellant was not a
party to the collective agreement, and therefore enjoyed no rights under the agreement. Furthermore,
the appellant efforts to restrict Moso in the territorial performance of its activities, was found to offend it
the rights of employees to choose a broker. It would also offend against the Financial Advisory and
Intermediary Service Act 37 of 2002 and its code of conduct.

On appeal before this Court, the appellant sought to compel COE to comply with the collective
agreement and to permit the appellant to market its scheme and benefit options, as well as render
services, to employees of COE. Additionally, the appellant sought to render these services and market
its offerings without having Moso imposed upon it as intermediary. This Court examined the matter and
confirmed that the appellant was not a party to the collective agreement, and did not have any rights
under this agreement. A collective agreement, this Court found is a statutory construct. Section 23 of
the Labour Relations Act 66 of 1995 (LRA) sets out who the legal effects of a collective agreement. A
medical scheme is not recognized as a party to the collective agreement by the LRA, and thus the
appellant could claim no rights under the collective agreement.

However, the LRA provided for the establishment of bargaining councils. The collective agreement in
question deputed the South African Local Government Bargaining Council (SALGBC) to  accredit
medical schemes for the benefit of employees. SALGBC accredited the appellant and in so doing
concluded an agreement, from which these parties derived rights and obligations.

The appellant sought to enforce what it considered its rights under the collective agreement. That claim
could not prevail., But the appellant had pleaded an alternative cause of action: that the conduct of COE
unlawfully and intentionally interfered with the contractual relations of the appellant.  This Court found
that this cause of action was good in law, and then considered the proposition whether COE’s conduct
constituted unlawful interference with the agreement between the appellant and SALGBC. It found that
COE’s conduct clearly unlawfully interfered, as it restricted the means by which the appellant could
carry out its duties to its members, including its right to market its scheme. The collective agreement
did not place any restraints upon the appellant of the kind COE sought to impose. COE’s imposition of
a broker was held to constitute intentional and unlawful interference with the contractual relationship
subsisting between the appellant and SALGBC.

Additionally, the appellant sought relief against Moso. Moso contended that it was not confined to the
territory set out in its broker agreement with the appellant. Moso held that the territorial restriction In the
agreement offended against s 65 of the Medical Schemes Act; that it was against public policy and that
the appellant had waived its rights under the agreement with Moso. However, this Court decided that
the territorial restraint did not restrict the choice of brokers that the Medical Schemes Act protected; nor
was the restraint against public policy; and the appellant had not waived its rights under the agreement
with Moso.

In the result, the appeal was upheld and the order of the high court was substituted with orders
permitting the appellant to render its services as an accredited medical scheme.

~~~~ends~~~~