Member of the Executive Council for Health, Province of the Eastern Cape v Kirland Investments (Pty) Limited t/a Eye & Laser Institute

Kirland Investments applied to establish two private hospitals in the Eastern Cape (a 120-bed hospital in Port Elizabeth and a 20-bed hospital with operating theatres in Jeffreys Bay) under the Health Act 66 of 1977. The Superintendent-General, Mr Boya, decided to refuse the applications based on advice that the area was over-serviced, but before the refusal letters were signed, he was involved in a motor accident and took sick leave. During his absence, the Acting Superintendent-General, Dr Diliza, approved both applications on 23 October 2007, allegedly under political pressure from the MEC, Ms Jajula, who instructed her to grant the approvals despite the advisory committee's recommendations to refuse. Upon Boya's return, and after receiving legal advice, he purported to withdraw the approvals by letter dated 20 June 2008, claiming the area was over-serviced. Kirland Investments appealed to the MEC, Ms Majodina, who dismissed the appeal, holding that Boya was entitled to withdraw Diliza's decision and was not functus officio. Kirland Investments then brought review proceedings.

• Whether the Superintendent-General's decisions of 9 October 2007 to refuse the applications, which were never communicated to the applicant, had any legal effect
• Whether the Acting Superintendent-General's decisions of 23 October 2007 to approve the applications were valid, despite being taken under political dictation
• Whether the Superintendent-General was functus officio when he purported to withdraw the Acting Superintendent-General's approvals on 20 June 2008
• Whether the Superintendent-General could unilaterally revoke administrative decisions he believed to be invalid without bringing proper judicial review proceedings
• Whether the MEC's decision on internal appeal to uphold the withdrawal of approvals was lawful
• Whether the High Court had jurisdiction to set aside the Acting Superintendent-General's approvals in the absence of an application or counter-application seeking that relief

The appeal was dismissed with costs, including costs of two counsel. The cross-appeal was upheld with costs, including costs of two counsel. The order of the court below was amended by deleting paragraphs 1 and 4, which had purported to set aside the Acting Superintendent-General's approvals and remit the applications for reconsideration.

The binding legal principles established are: (1) Administrative decisions that have not been communicated or made public are not final and can be changed without offending the functus officio principle. (2) Once an administrative decision becomes final (by being communicated to those affected), the decision-maker becomes functus officio and cannot revoke the decision in the absence of statutory authority to do so. (3) Even unlawful or invalid administrative actions exist in fact and have legal consequences until they are set aside by a court in proceedings properly brought for judicial review - an administrator cannot simply ignore or unilaterally revoke a decision because they believe it to be invalid. (4) Administrative action may only be set aside in proceedings properly brought for judicial review in terms of s 6(1) of PAJA - a court has no jurisdiction to set aside administrative action unless an application or counter-application seeking that relief has been instituted. (5) An error of law that is material to the outcome of a decision renders that decision reviewable under s 6(2)(d) of PAJA.

The court made several significant observations: (1) The fact that administrative action has not been set aside does not mean it has become valid - it is merely treated as though it is valid until a court pronounces authoritatively on its invalidity. (2) The department could remedy the situation by bringing a proper application for judicial review to set aside Diliza's invalid decisions, and their standing to do so would likely not be challenged. (3) Although considerable time had elapsed since the decisions were made (since 23 October 2007), an application for condonation of the delay under s 9(1) of PAJA could be brought with a good explanation, as demonstrated by the condonation of a 47-year delay in the subsequent Oudekraal proceedings. (4) The court made pointed observations about the "maladministration and failures of moral courage" involved, including political interference in administrative decision-making and officials succumbing to improper political pressure. (5) The reference to "quasi-judicial decisions" in older case law can now be read as referring to administrative decisions generally (excluding subordinate legislation).

This case is a leading authority on the functus officio principle and the effect of invalid administrative decisions in South African administrative law. It confirms and applies the principle established in Oudekraal Estates that even unlawful administrative actions cannot simply be ignored or unilaterally revoked by administrators - they exist in fact and have legal consequences until set aside by a court in proper judicial review proceedings. The judgment reinforces procedural safeguards in administrative law, emphasizing that: (1) administrative decisions are final once communicated, after which the decision-maker becomes functus officio; (2) even obviously invalid decisions must be challenged through proper judicial review procedures; (3) courts have no jurisdiction to set aside administrative actions unless proceedings seeking that relief have been properly instituted; and (4) the rule against administrative decisions being taken under political dictation (s 6(2)(e)(iv) of PAJA). The case demonstrates the importance of legal certainty and procedural fairness in administrative decision-making, preventing administrators from capriciously reversing decisions based on their own assessment of validity.