Netcare Hospitals (Pty) Ltd v. KPMG Services (Pty) Ltd and Another

CASE NO: 47505/2013
Download Judgment: English
Country: South Africa
Year: 2014
Health Topics: Health information
Human Rights: Right of access to information
Tags: access to information, Health information

Netcare approached the High Court in order to protect its confidential information from being disclosed by KPMG to the Competition Commission. The Commission had launched a market inquiry into the private health sector and had employed KPMG as a consultant for this purpose. Netcare alleged that KPMG had a conflict of interest because it was in possession of Netcare’s confidential information from its former employment with Netcare, the direct or inadvertent disclosure of which by KPMG could prejudice Netcare’s interests during the course of the market inquiry.

On 28 November 2013, the Commission gave notice in the Government Gazette that it intended to conduct a market inquiry into the private healthcare sector. The inquiry commenced on 6th January 2014. The Commission has chosen to conduct the inquiry through an independent panel of experts. A team of Commission staff members and external consultants supports the panel. The services of KPMG were procured to provide expert, technical and administrative support to the Commission during the enquiry.

Netcare sought to bar KPMG from working for the Commission, because KPMG’s Business Intelligence Unit (the “BIU”) provided IT services to Netcare between September 2010 and 26 September 2013 and gained access to Netcare͛s confidential information in doing so.

Netcare launched the first urgent application on 18 October 2013 seeking, inter alia,
1. An interdict against KPMG to prevent it from disclosing to the Commission ͚any of the information, data, reports, correspondence or any other material pertaining to or belonging to [Netcare] or work product generated by KPMG in the course of Netcare’s engagement of KPMG, which is currently in the possession of KPMG….’;

2. Removal of Netcare’s information from KPMG’s IT System and sterilization of such information (or in the alternative, safeguarding and securing of the information);

3. Directing an IT firm to investigate KPMG’s IT System in order to establish who within KPMG had had access to Netcare’s information;

4. Directing KPMG to provide affidavits by the KPMG healthcare unit stating that they have not received and would not receive the Netcare information (or have any discussions with any KPMG employee who has the Netcare information).

On the 23 December 2013, as a result of an agreement between Netcare and KPMG, the High Court of South Africa made an Order, by consent, against KPMG (the Consent Order͛) interdicting KPMG, inter alia from disclosing or using any information which had come to it from its employment by Netcare in three separate engagements to provide certain services to the Commission.

In May 2014, Netcare contended that KPMG failed to comply with the Order and sought in its amended relief a range of final orders declaring that KPMG breached the Consent Order and interdicting KPMG from acting for the Commission.

The Court dismissed the case on the grounds that the applicant failed to establish its case. In particular, the Court underlined how Netcare failed to pass the test which is a requirement for an interdict measure, as set out in the cases of Setlogelo v Setlogelo, and Prince Jefri Bolkiah v KPMG ("Bolkiah).
The requirements are:
(i) Firstly, there must be a prima facie right on the part of the applicant;
(ii) Secondly, there must be a well-grounded apprehension of irreparable harm if the interim relief is not granted and the ultimate relief sought by the applicant is eventually granted;
(iii) Thirdly, the balance of convenience must favour the granting of the interim relief; and
(iv) Fourthly, there must be no other ordinary remedy to give adequate redress to the applicant.
Netcare failed to show that it had a prima facie right, because the engagement letters concluded by the parties did not provide for any barring out͛͛ relief or restraint of trade. They explicitly permitted KPMG to work for conflicting parties and to transfer data and information, including confidential information, across national and international borders.

Furthermore, Netcare's interest was not adverse to those of KPMG (and of the Commission, which was conducting an independent inquiry). KPMG then proved there was no appreciable risk of disclosure of Netcare information, and Netcare did not establish a well-grounded apprehension of irreparable harm if the interdict was not granted (Netcare was in fact obliged by law to disclose any information that was relevant to the market inquiry voluntarily and in a candid manner. The information could in any event be obtained by subpoena.
The only irreparable harm that Netcare seemed to suffer was that the truth could have leaked out irregularly as opposed to regularly through a subpoena).
Moreover, the balance of convenience lied in the Commission favour (as the broader public interest and not only the interest of litigating parties must be placed in the scales, and KPMG was the only firm that bid for the tender. If the interdict was granted, the Commission would have needed to re-open the procurement process with the hope of finding an alternative service provider with comparable resources who has never represented any other stakeholder in the market inquiry within the stipulated deadline for the market inquiry, thus putting in risk the market inquiry itself). At last, the interim interdict was an inappropriate remedy in the matter (as there was no real risk that KPMG would disclose Netcare's confidential information and the interdict would not protect the information, provided that the Commission could subpoena it).

The Judge then stated that KPMG did not breach the Consent Order made on December 2013. The only remedy available to Netcare was, therefore, the enforcement of its contractual claim against KPMG to the protection of its confidential information in the event of breach.

"Mr. Marcus SC argued, correctly in my respectful view that it seems Netcare will keep secret and withhold from the Commission relevant documentation if it is not identified by KPMG instead of voluntarily disclosing the information. The only irreparable harm that Netcare, it seems might suffer is that the truth might leak out irregularly as opposed to regularly through a subpoena. This court is loath to come to Netcare's assistance in this regard as Netcare is obliged by law to disclose any information that is relevant to the market inquiry voluntarily and in a candid manner. This information can in any event be obtained by subpoena. For these reasons I am of the view that Netcare has not established a well-grounded apprehension of irreparable harm if the interdict is not granted. That being so, there is no basis for the grant of the interim interdict on this ground alone. (Section B, A well-grounded apprehension of irreparable harm if the interim relief is not granted, paragraph 110).

A court must carefully consider whether the grant of the temporary restraining order pending a review will cut across or prevent the proper exercise of a power or duty that the law has vested in the authority to be interdicted. Thus courts are obliged to recognize and assess the impact of temporary restraining orders when dealing with those matters pertaining to the best application, operation and dissemination of public resources. What this means is that a court is obliged to ask itself not whether an interim interdict against an authorised state functionary is competent but rather whether it is constitutionally appropriate to grant the interdict. When it evaluates where the balance of convenience rests, a court must recognise that it is invited to restrain the exercise of statutory power within the exclusive terrain of the Executive or Legislative branches of Government. It must assess carefully how and to what extent its interdict will disrupt executive or legislative functions conferred by the law and thus whether its restraining order will implicate the tenet of division of powers.
Whilst a court has the power to grant a restraining order of that kind, it does not readily do so except when a proper and strong case has been made out for the relief and, even so, only in the clearest of cases. (Section C, ͞The balance of convenience must favour the granting of the interim relief, paragraph 112, when recalling the case of National Treasury and Others v Opposition of Urban Tolling Alliance and Others).