This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court....,.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict...,  was still-born. It therefore only leaves the final relief for determination.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation....,.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

It is pertinent to note that the contracts of employment where the conditions are spelt out were not displayed to the court as much of the argument is based on the alteration of the same.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation.

The point is made by counsel for the applicants that the effect of the alteration put in place by the first respondent was to fundamentally alter the structure of the Medical Fund from one based upon the principle of equal contributions from the employer and employee and equal unlimited benefits to a new principle of a scheme based on full recovery.

I accept that the entitlement to the medical aid benefit, on the basis of the equal contribution with the employer and attendant benefits is a condition of service. I do not accept, as contended by counsel for the applicants, that receiving equal benefits with other members where the one pays less than another member is a condition of service.

However, the linking of the benefits to the level of subscriptions paid by the first respondent's members does not affect the terms on which the members of the applicant are afforded employment by their respective employers.

The level and extent of benefits afforded to members is within the discretion of the first respondent and the employer has no input in such assessment.

There is no suggestion that under the new scheme the employer will contribute less than it has been contributing, because if that were the case then the applicants' members would have been on very firm ground in arguing that their conditions of service had been altered.

All the scheme does is to ensure that a contributor obtains services according to the level to which they can contribute in terms of subscriptions. The employer's obligation is not lessened in any manner as he is still obliged to contribute in equal measure to the contributions made by the member.

The condition of service is the entitlement to membership in terms of the contract of employment coupled with the employer's obligation to contribute an equal measure as the employee.

Since the employer does not determine the level of benefits afforded by the first respondent, the fact the benefits are reduced does not alter the conditions of service which remain unchanged. I am unable to find, therefore, that, the scheme has the effect of altering the conditions of service of the first respondent's members....,.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation....,.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

It is pertinent to note that the contracts of employment where the conditions are spelt out were not displayed to the court as much of the argument is based on the alteration of the same....,.

Given that the applicants wish to enforce rights arising out of a contract between their members and the first respondent, such rights have to be given effect to in accordance with the terms of the contract the parties concluded.

The court is not permitted to go outside the terms of the contract, which, however, has not been exhibited to the court.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation.

The point is made by counsel for the applicants that the effect of the alteration put in place by the first respondent was to fundamentally alter the structure of the Medical Fund from one based upon the principle of equal contributions from the employer and employee and equal unlimited benefits to a new principle of a scheme based on full recovery.

I accept that the entitlement to the medical aid benefit, on the basis of the equal contribution with the employer and attendant benefits is a condition of service. I do not accept, as contended by counsel for the applicants, that receiving equal benefits with other members where the one pays less than another member is a condition of service.

However, the linking of the benefits to the level of subscriptions paid by the first respondent's members does not affect the terms on which the members of the applicant are afforded employment by their respective employers.

The level and extent of benefits afforded to members is within the discretion of the first respondent and the employer has no input in such assessment.

There is no suggestion that under the new scheme the employer will contribute less than it has been contributing, because if that were the case then the applicants' members would have been on very firm ground in arguing that their conditions of service had been altered.

All the scheme does is to ensure that a contributor obtains services according to the level to which they can contribute in terms of subscriptions. The employer's obligation is not lessened in any manner as he is still obliged to contribute in equal measure to the contributions made by the member.

The condition of service is the entitlement to membership in terms of the contract of employment coupled with the employer's obligation to contribute an equal measure as the employee.

Since the employer does not determine the level of benefits afforded by the first respondent, the fact the benefits are reduced does not alter the conditions of service which remain unchanged. I am unable to find, therefore, that, the scheme has the effect of altering the conditions of service of the first respondent's members.

I move on.

The next issue I have to determine is whether the first respondent has the power, under the Constitution, to alter the benefit scheme in the manner that it did.

The powers of the first respondent must, of necessity, be examined in the conjunction with the provisions of the Medical Services Act [Chapter 15:13] (“the Act”) which regulates the manner in which medical aid societies conduct their business as well as the manner in which they are managed.

Although the first respondent, as an entity, was set up in 1970, which was prior to the promulgation of the Medical Services Act, its registration was deemed in terms of section 17 of the Medical Services Act.

I start with the definition section which not only describes a medical aid society but also specifies its purposes. The definition in section 2 of the Medical Services Act is as follows:

“…, any association or organization which accepts subscriptions from members or other persons wholly or mainly for the purposes of -

(a) Paying any expenses incurred by such members or persons, and, additionally, or alternatively, their dependants or employees, in respect of medical or dental treatment; and

(b) Meeting the whole or part of any expenses incurred by such members or persons, and, additionally, or alternatively, their employees, in respect of medical or dental treatment.”

The registration of a medical aid society is provided for in section 9 of the Medical Services Act.

Section 9(5) of the Medical Services Act provides that the Secretary shall be satisfied in relation to the following before he can register a medical aid society:

(a) The minimum cover for medical services to be provided by the medical aid society is adequate for the purpose of meeting the costs of medical services at such level as may be prescribed; and

(b) Adequate financial provisions have been made for the proper maintenance of the medical aid society.

In terms of section 10 of the of the Medical Services Act, the Secretary is empowered to cancel the registration of any medical aid society which fails to comply with the provisions of section 9(5).

My view is that the powers granted to the first respondent, in terms of the Constitution, have, of necessity, to be considered in conjunction with the provisions of sections 9 and 10 of the Medical Services Act.

The Constitution provides for the creation of a Board to administer the affairs of the first respondent. Ten members are required to sit on the Board; five of whom shall be appointed by National Railways of Zimbabwe and the last five from the other entities mentioned earlier on in the judgment, from those institutions whose employees or members are entitled to membership of the first respondent.

Clause 11, from which the Board derives its powers, is phrased thus:

“Powers and Functions of the Board of Management

(1) Subject to the provisions of the Medical Services Act, the regulations made in terms thereof and any other law, it shall be the duty of the Board to administer the affairs of Railmed in a judicious manner at all times and always to act in the best interest of both Railmed and its individual members and to implement the directives of the Secretary responsible for the Health Ministry and REC as may be given from time to time.

(1) It shall have the power to:

(a) Formulate and issue Rules of Railmed to include the schedule of rates payable by different categories of members;

(b) Modify, amend, repeal, substitute or suspend any or all of such Rules where general or specific circumstances require such action;

(c) Determine the range and scope of benefits to be afforded by Railmed; and

(d) Refuse, terminate or restrict benefits in respect of any beneficiary who contravenes any Rule of Railmed.”

Although they have been placed before me, I have not been referred to the Rules of Railmed specifically and I cannot comment further on them other than to say that the first respondent does have the power in formulating such Rules to regulate the rates payable by the different categories of members which, of necessity, taking into account the different levels of employees in the undertakings must go with a medical aid society.

In real terms, the first respondent would have to set the level and range that each category of membership would have to pay as subscription for the services to be availed to such member.

It follows, therefore, that, the rates of contributions set by the first respondent would then have a bearing on the range of benefits that can be accorded for the categories of rates of contributions set in the Rules. It is only fitting, therefore, that consistent with the power to regulate the schedule of rates of contributions to be paid by the various categories of the members, the first respondent also be endowed with the power to regulate the range and scope of the benefits to be afforded by Railmed.

I cannot see the practical effect of a medical aid society having the power to set the schedule of rates of contributions to be paid by the different categories of members but not having the power to set the range and scope of the benefits to be afforded to the membership. It would, in my view, be only logical that the range and scope of benefits be set and then the contributions be calculated. The one cannot exist independently of the other.

I venture to suggest, that, in arriving at the benefits and contributions that are attendant thereon the Board of the first respondent has to bear in mind the provisions of the Medical Services Act, in particular that it act in the best interests of the members and the society itself.

I am fortified in this view by the intent of the first respondent as spelt out in its objects - that, primarily of providing members the facility of obtaining medical and surgical treatment for themselves and their dependants, including the provision of drugs and medicines.

The objects of the first respondent would not be met if the first respondent were curtailed in its power as to what benefits it can offer to its members. If that were a matter for the decision of the REC then the latter would have been specifically accorded those powers.

It has not.

It merely has the power to make decisions of a strategic nature.

This brings me to the next rung. Is the decision regarding the extent of benefits to be afforded to the members of the first respondent one that can be termed strategic in nature?

According to counsel for the applicants, even though the first respondent had the power, under its Constitution, to determine the range and scope of the benefits to be afforded to its members, it did not have the power to change the society from a welfarist one to one run on market principles with the aim of full cost recovery.

I find it hard to comprehend why the restriction on the power afforded to the first respondent, under the Constitution, was framed in such a vague manner.

If it was the intention that the REC gives directives of a long-term plan to the first respondent it was simpler, in my view, to have phrased it as such.

Counsel for the applicants went further and argued that the three tier system that was adopted by the first respondent was not a mere scheduling of the rates and contributions or the mere determination of the range of scope of benefits, but, was rather the essence and product of the first respondent's strategic recovery plan which was prepared in 2004 and commissioned in 2005. He premises his view on the argument that the entitlement to medical benefits is a condition of service.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

It is pertinent to note that the contracts of employment where the conditions are spelt out were not displayed to the court as much of the argument is based on the alteration of the same.

The Constitution does not define what it means by strategic.

From the argument pursued by counsel for the applicants, it is clear that the meaning he ascribes to strategic is to do with an alleged alteration of conditions of service.

I have above already discussed on whether the introduction of the three-tier system of benefits, by the first respondent, constituted a change in the members conditions of service and my conclusion was that it did not constitute such.

I turn next to the question whether or not the REC issued a directive to the first respondent.

The REC wrote two letters to the first respondent subsequent to the adoption by it of the three tier system of benefits. The first letter to the first respondent was phrased as follows:

“RE: INTRODUCTION OF THE THREE-TIER SYSTEM EFFECTIVE 1 OCTOBER 2006

1. On 20 October 2006, the Railway Employment Council met and decided as follows:-

1.1 The introduction of the proposed Three-Tier Scheme is to be suspended with immediate effect, viz from the 20th instant and it shall remain so suspended until you are advised to the contrary in due course.

1.2 The suspension is intended to enable the Railway Employment Council to have the matter resolved and you are advised accordingly.

2. In the meantime, the deductions for the remission to you shall be as hitherto was the case before the purported introduction of the Three Tier System by yourselves.”

The letter was written by the chairman of the REC, and, on receipt of this letter, the chairman of Railmed sought clarification, as, in his view, it appeared that the four trade unions and NRZ had not resolved to direct the Board of Railmed to suspend the Three-Tier System.

A letter was dispatched from the office of the chairman of the REC in the following terms:

“I merely advised you that the feeling in Council was that the introduction of the proposed three-tier system be suspended with effect from the 20th instant. This was necessary in order to enable the members of the Council to reach an agreement.

However, you may choose to ignore my advice but you do not have any reason to misunderstand what I said.

I never pretended to say that the trade unions and NRZ resolved to direct the Railmed Board to suspend the three tier system. I have no power to direct any member or constituent member of the REC to do anything.”

What emerges from the last quoted letter is that the Board of the REC had not passed a resolution which would have issued a directive to the first respondent to suspend the introduction of the three-tier system.

It also emerges clearly from the chairman's letter that he was talking about a feeling in Council. There had been no agreement that the three tier system be suspended.

The letter from the chairman is very clear and it seems to me that if the applicants wish to contradict him and put forward a version that differs from his statement in the letter then they should have produced minutes of the meeting where the directive was given.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation.

The point is made by counsel for the applicants that the effect of the alteration put in place by the first respondent was to fundamentally alter the structure of the Medical Fund from one based upon the principle of equal contributions from the employer and employee and equal unlimited benefits to a new principle of a scheme based on full recovery.

I accept that the entitlement to the medical aid benefit, on the basis of the equal contribution with the employer and attendant benefits is a condition of service. I do not accept, as contended by counsel for the applicants, that receiving equal benefits with other members where the one pays less than another member is a condition of service.

However, the linking of the benefits to the level of subscriptions paid by the first respondent's members does not affect the terms on which the members of the applicant are afforded employment by their respective employers.

The level and extent of benefits afforded to members is within the discretion of the first respondent and the employer has no input in such assessment.

There is no suggestion that under the new scheme the employer will contribute less than it has been contributing, because if that were the case then the applicants' members would have been on very firm ground in arguing that their conditions of service had been altered.

All the scheme does is to ensure that a contributor obtains services according to the level to which they can contribute in terms of subscriptions. The employer's obligation is not lessened in any manner as he is still obliged to contribute in equal measure to the contributions made by the member.

The condition of service is the entitlement to membership in terms of the contract of employment coupled with the employer's obligation to contribute an equal measure as the employee.

Since the employer does not determine the level of benefits afforded by the first respondent, the fact the benefits are reduced does not alter the conditions of service which remain unchanged. I am unable to find, therefore, that, the scheme has the effect of altering the conditions of service of the first respondent's members.

I move on.

The next issue I have to determine is whether the first respondent has the power, under the Constitution, to alter the benefit scheme in the manner that it did.

The powers of the first respondent must, of necessity, be examined in the conjunction with the provisions of the Medical Services Act [Chapter 15:13] (“the Act”) which regulates the manner in which medical aid societies conduct their business as well as the manner in which they are managed.

Although the first respondent, as an entity, was set up in 1970, which was prior to the promulgation of the Medical Services Act, its registration was deemed in terms of section 17 of the Medical Services Act.

I start with the definition section which not only describes a medical aid society but also specifies its purposes. The definition in section 2 of the Medical Services Act is as follows:

“…, any association or organization which accepts subscriptions from members or other persons wholly or mainly for the purposes of -

(a) Paying any expenses incurred by such members or persons, and, additionally, or alternatively, their dependants or employees, in respect of medical or dental treatment; and

(b) Meeting the whole or part of any expenses incurred by such members or persons, and, additionally, or alternatively, their employees, in respect of medical or dental treatment.”

The registration of a medical aid society is provided for in section 9 of the Medical Services Act.

Section 9(5) of the Medical Services Act provides that the Secretary shall be satisfied in relation to the following before he can register a medical aid society:

(a) The minimum cover for medical services to be provided by the medical aid society is adequate for the purpose of meeting the costs of medical services at such level as may be prescribed; and

(b) Adequate financial provisions have been made for the proper maintenance of the medical aid society.

In terms of section 10 of the of the Medical Services Act, the Secretary is empowered to cancel the registration of any medical aid society which fails to comply with the provisions of section 9(5).

My view is that the powers granted to the first respondent, in terms of the Constitution, have, of necessity, to be considered in conjunction with the provisions of sections 9 and 10 of the Medical Services Act.

The Constitution provides for the creation of a Board to administer the affairs of the first respondent. Ten members are required to sit on the Board; five of whom shall be appointed by National Railways of Zimbabwe and the last five from the other entities mentioned earlier on in the judgment, from those institutions whose employees or members are entitled to membership of the first respondent.

Clause 11, from which the Board derives its powers, is phrased thus:

“Powers and Functions of the Board of Management

(1) Subject to the provisions of the Medical Services Act, the regulations made in terms thereof and any other law, it shall be the duty of the Board to administer the affairs of Railmed in a judicious manner at all times and always to act in the best interest of both Railmed and its individual members and to implement the directives of the Secretary responsible for the Health Ministry and REC as may be given from time to time.

(1) It shall have the power to:

(a) Formulate and issue Rules of Railmed to include the schedule of rates payable by different categories of members;

(b) Modify, amend, repeal, substitute or suspend any or all of such Rules where general or specific circumstances require such action;

(c) Determine the range and scope of benefits to be afforded by Railmed; and

(d) Refuse, terminate or restrict benefits in respect of any beneficiary who contravenes any Rule of Railmed.”

Although they have been placed before me, I have not been referred to the Rules of Railmed specifically and I cannot comment further on them other than to say that the first respondent does have the power in formulating such Rules to regulate the rates payable by the different categories of members which, of necessity, taking into account the different levels of employees in the undertakings must go with a medical aid society.

In real terms, the first respondent would have to set the level and range that each category of membership would have to pay as subscription for the services to be availed to such member.

It follows, therefore, that, the rates of contributions set by the first respondent would then have a bearing on the range of benefits that can be accorded for the categories of rates of contributions set in the Rules. It is only fitting, therefore, that consistent with the power to regulate the schedule of rates of contributions to be paid by the various categories of the members, the first respondent also be endowed with the power to regulate the range and scope of the benefits to be afforded by Railmed.

I cannot see the practical effect of a medical aid society having the power to set the schedule of rates of contributions to be paid by the different categories of members but not having the power to set the range and scope of the benefits to be afforded to the membership. It would, in my view, be only logical that the range and scope of benefits be set and then the contributions be calculated. The one cannot exist independently of the other.

I venture to suggest, that, in arriving at the benefits and contributions that are attendant thereon the Board of the first respondent has to bear in mind the provisions of the Medical Services Act, in particular that it act in the best interests of the members and the society itself.

I am fortified in this view by the intent of the first respondent as spelt out in its objects - that, primarily of providing members the facility of obtaining medical and surgical treatment for themselves and their dependants, including the provision of drugs and medicines.

The objects of the first respondent would not be met if the first respondent were curtailed in its power as to what benefits it can offer to its members. If that were a matter for the decision of the REC then the latter would have been specifically accorded those powers.

It has not.

It merely has the power to make decisions of a strategic nature.

This brings me to the next rung. Is the decision regarding the extent of benefits to be afforded to the members of the first respondent one that can be termed strategic in nature?

According to counsel for the applicants, even though the first respondent had the power, under its Constitution, to determine the range and scope of the benefits to be afforded to its members, it did not have the power to change the society from a welfarist one to one run on market principles with the aim of full cost recovery.

I find it hard to comprehend why the restriction on the power afforded to the first respondent, under the Constitution, was framed in such a vague manner.

If it was the intention that the REC gives directives of a long-term plan to the first respondent it was simpler, in my view, to have phrased it as such.

Counsel for the applicants went further and argued that the three tier system that was adopted by the first respondent was not a mere scheduling of the rates and contributions or the mere determination of the range of scope of benefits, but, was rather the essence and product of the first respondent's strategic recovery plan which was prepared in 2004 and commissioned in 2005. He premises his view on the argument that the entitlement to medical benefits is a condition of service.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

It is pertinent to note that the contracts of employment where the conditions are spelt out were not displayed to the court as much of the argument is based on the alteration of the same.

The Constitution does not define what it means by strategic.

From the argument pursued by counsel for the applicants, it is clear that the meaning he ascribes to strategic is to do with an alleged alteration of conditions of service.

I have above already discussed on whether the introduction of the three-tier system of benefits, by the first respondent, constituted a change in the members conditions of service and my conclusion was that it did not constitute such.

I turn next to the question whether or not the REC issued a directive to the first respondent.

The REC wrote two letters to the first respondent subsequent to the adoption by it of the three tier system of benefits. The first letter to the first respondent was phrased as follows:

“RE: INTRODUCTION OF THE THREE-TIER SYSTEM EFFECTIVE 1 OCTOBER 2006

1. On 20 October 2006, the Railway Employment Council met and decided as follows:-

1.1 The introduction of the proposed Three-Tier Scheme is to be suspended with immediate effect, viz from the 20th instant and it shall remain so suspended until you are advised to the contrary in due course.

1.2 The suspension is intended to enable the Railway Employment Council to have the matter resolved and you are advised accordingly.

2. In the meantime, the deductions for the remission to you shall be as hitherto was the case before the purported introduction of the Three Tier System by yourselves.”

The letter was written by the chairman of the REC, and, on receipt of this letter, the chairman of Railmed sought clarification, as, in his view, it appeared that the four trade unions and NRZ had not resolved to direct the Board of Railmed to suspend the Three-Tier System.

A letter was dispatched from the office of the chairman of the REC in the following terms:

“I merely advised you that the feeling in Council was that the introduction of the proposed three-tier system be suspended with effect from the 20th instant. This was necessary in order to enable the members of the Council to reach an agreement.

However, you may choose to ignore my advice but you do not have any reason to misunderstand what I said.

I never pretended to say that the trade unions and NRZ resolved to direct the Railmed Board to suspend the three tier system. I have no power to direct any member or constituent member of the REC to do anything.”

What emerges from the last quoted letter is that the Board of the REC had not passed a resolution which would have issued a directive to the first respondent to suspend the introduction of the three-tier system.

It also emerges clearly from the chairman's letter that he was talking about a feeling in Council. There had been no agreement that the three tier system be suspended.

The letter from the chairman is very clear and it seems to me that if the applicants wish to contradict him and put forward a version that differs from his statement in the letter then they should have produced minutes of the meeting where the directive was given.

In the meeting of the Railway Employment Council (REC) Board, held on 20 October 2006, the chairman had noted that “the Council had no jurisdiction to instruct Railmed to cease the implementation of the scheme.”

In fact, the meeting could not agree on what action to take and the chairman indicated that he would write to Railmed and state that Council's position was that the status quo, as it was before the introduction of the three-tier system (for whatever merit), should prevail until Council wrote to Railmed on the position. This then led to the crafting of the letter initially sent to the first respondent, which letter was subsequently clarified.

When the two letters are read in conjunction with the minutes it becomes clear that the Railway Employment Council (REC) did not take a position on the implementation because of the divergence of views expressed by the Board members present.

Further, I did not understand, from my reading of the minutes, that the Railway Employment Council (REC) had resolved to give a directive to the first respondent to stop implementing the new system.

In the absence of that, I have to find that the Railway Employment Council (REC) did not issue a directive to the applicants to suspend the introduction of the three tier system of benefits.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation.

The point is made by counsel for the applicants that the effect of the alteration put in place by the first respondent was to fundamentally alter the structure of the Medical Fund from one based upon the principle of equal contributions from the employer and employee and equal unlimited benefits to a new principle of a scheme based on full recovery.

I accept that the entitlement to the medical aid benefit, on the basis of the equal contribution with the employer and attendant benefits is a condition of service. I do not accept, as contended by counsel for the applicants, that receiving equal benefits with other members where the one pays less than another member is a condition of service.

However, the linking of the benefits to the level of subscriptions paid by the first respondent's members does not affect the terms on which the members of the applicant are afforded employment by their respective employers.

The level and extent of benefits afforded to members is within the discretion of the first respondent and the employer has no input in such assessment.

There is no suggestion that under the new scheme the employer will contribute less than it has been contributing, because if that were the case then the applicants' members would have been on very firm ground in arguing that their conditions of service had been altered.

All the scheme does is to ensure that a contributor obtains services according to the level to which they can contribute in terms of subscriptions. The employer's obligation is not lessened in any manner as he is still obliged to contribute in equal measure to the contributions made by the member.

The condition of service is the entitlement to membership in terms of the contract of employment coupled with the employer's obligation to contribute an equal measure as the employee.

Since the employer does not determine the level of benefits afforded by the first respondent, the fact the benefits are reduced does not alter the conditions of service which remain unchanged. I am unable to find, therefore, that, the scheme has the effect of altering the conditions of service of the first respondent's members.

I move on.

The next issue I have to determine is whether the first respondent has the power, under the Constitution, to alter the benefit scheme in the manner that it did.

The powers of the first respondent must, of necessity, be examined in the conjunction with the provisions of the Medical Services Act [Chapter 15:13] (“the Act”) which regulates the manner in which medical aid societies conduct their business as well as the manner in which they are managed.

Although the first respondent, as an entity, was set up in 1970, which was prior to the promulgation of the Medical Services Act, its registration was deemed in terms of section 17 of the Medical Services Act.

I start with the definition section which not only describes a medical aid society but also specifies its purposes. The definition in section 2 of the Medical Services Act is as follows:

“…, any association or organization which accepts subscriptions from members or other persons wholly or mainly for the purposes of -

(a) Paying any expenses incurred by such members or persons, and, additionally, or alternatively, their dependants or employees, in respect of medical or dental treatment; and

(b) Meeting the whole or part of any expenses incurred by such members or persons, and, additionally, or alternatively, their employees, in respect of medical or dental treatment.”

The registration of a medical aid society is provided for in section 9 of the Medical Services Act.

Section 9(5) of the Medical Services Act provides that the Secretary shall be satisfied in relation to the following before he can register a medical aid society:

(a) The minimum cover for medical services to be provided by the medical aid society is adequate for the purpose of meeting the costs of medical services at such level as may be prescribed; and

(b) Adequate financial provisions have been made for the proper maintenance of the medical aid society.

In terms of section 10 of the of the Medical Services Act, the Secretary is empowered to cancel the registration of any medical aid society which fails to comply with the provisions of section 9(5).

My view is that the powers granted to the first respondent, in terms of the Constitution, have, of necessity, to be considered in conjunction with the provisions of sections 9 and 10 of the Medical Services Act.

The Constitution provides for the creation of a Board to administer the affairs of the first respondent. Ten members are required to sit on the Board; five of whom shall be appointed by National Railways of Zimbabwe and the last five from the other entities mentioned earlier on in the judgment, from those institutions whose employees or members are entitled to membership of the first respondent.

Clause 11, from which the Board derives its powers, is phrased thus:

“Powers and Functions of the Board of Management

(1) Subject to the provisions of the Medical Services Act, the regulations made in terms thereof and any other law, it shall be the duty of the Board to administer the affairs of Railmed in a judicious manner at all times and always to act in the best interest of both Railmed and its individual members and to implement the directives of the Secretary responsible for the Health Ministry and REC as may be given from time to time.

(1) It shall have the power to:

(a) Formulate and issue Rules of Railmed to include the schedule of rates payable by different categories of members;

(b) Modify, amend, repeal, substitute or suspend any or all of such Rules where general or specific circumstances require such action;

(c) Determine the range and scope of benefits to be afforded by Railmed; and

(d) Refuse, terminate or restrict benefits in respect of any beneficiary who contravenes any Rule of Railmed.”

Although they have been placed before me, I have not been referred to the Rules of Railmed specifically and I cannot comment further on them other than to say that the first respondent does have the power in formulating such Rules to regulate the rates payable by the different categories of members which, of necessity, taking into account the different levels of employees in the undertakings must go with a medical aid society.

In real terms, the first respondent would have to set the level and range that each category of membership would have to pay as subscription for the services to be availed to such member.

It follows, therefore, that, the rates of contributions set by the first respondent would then have a bearing on the range of benefits that can be accorded for the categories of rates of contributions set in the Rules. It is only fitting, therefore, that consistent with the power to regulate the schedule of rates of contributions to be paid by the various categories of the members, the first respondent also be endowed with the power to regulate the range and scope of the benefits to be afforded by Railmed.

I cannot see the practical effect of a medical aid society having the power to set the schedule of rates of contributions to be paid by the different categories of members but not having the power to set the range and scope of the benefits to be afforded to the membership. It would, in my view, be only logical that the range and scope of benefits be set and then the contributions be calculated. The one cannot exist independently of the other.

I venture to suggest, that, in arriving at the benefits and contributions that are attendant thereon the Board of the first respondent has to bear in mind the provisions of the Medical Services Act, in particular that it act in the best interests of the members and the society itself.

I am fortified in this view by the intent of the first respondent as spelt out in its objects - that, primarily of providing members the facility of obtaining medical and surgical treatment for themselves and their dependants, including the provision of drugs and medicines.

The objects of the first respondent would not be met if the first respondent were curtailed in its power as to what benefits it can offer to its members. If that were a matter for the decision of the REC then the latter would have been specifically accorded those powers.

It has not.

It merely has the power to make decisions of a strategic nature.

This brings me to the next rung. Is the decision regarding the extent of benefits to be afforded to the members of the first respondent one that can be termed strategic in nature?

According to counsel for the applicants, even though the first respondent had the power, under its Constitution, to determine the range and scope of the benefits to be afforded to its members, it did not have the power to change the society from a welfarist one to one run on market principles with the aim of full cost recovery.

I find it hard to comprehend why the restriction on the power afforded to the first respondent, under the Constitution, was framed in such a vague manner.

If it was the intention that the REC gives directives of a long-term plan to the first respondent it was simpler, in my view, to have phrased it as such.

Counsel for the applicants went further and argued that the three tier system that was adopted by the first respondent was not a mere scheduling of the rates and contributions or the mere determination of the range of scope of benefits, but, was rather the essence and product of the first respondent's strategic recovery plan which was prepared in 2004 and commissioned in 2005. He premises his view on the argument that the entitlement to medical benefits is a condition of service.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

It is pertinent to note that the contracts of employment where the conditions are spelt out were not displayed to the court as much of the argument is based on the alteration of the same.

The Constitution does not define what it means by strategic.

From the argument pursued by counsel for the applicants, it is clear that the meaning he ascribes to strategic is to do with an alleged alteration of conditions of service.

I have above already discussed on whether the introduction of the three-tier system of benefits, by the first respondent, constituted a change in the members conditions of service and my conclusion was that it did not constitute such.

I turn next to the question whether or not the REC issued a directive to the first respondent.

The REC wrote two letters to the first respondent subsequent to the adoption by it of the three tier system of benefits. The first letter to the first respondent was phrased as follows:

“RE: INTRODUCTION OF THE THREE-TIER SYSTEM EFFECTIVE 1 OCTOBER 2006

1. On 20 October 2006, the Railway Employment Council met and decided as follows:-

1.1 The introduction of the proposed Three-Tier Scheme is to be suspended with immediate effect, viz from the 20th instant and it shall remain so suspended until you are advised to the contrary in due course.

1.2 The suspension is intended to enable the Railway Employment Council to have the matter resolved and you are advised accordingly.

2. In the meantime, the deductions for the remission to you shall be as hitherto was the case before the purported introduction of the Three Tier System by yourselves.”

The letter was written by the chairman of the REC, and, on receipt of this letter, the chairman of Railmed sought clarification, as, in his view, it appeared that the four trade unions and NRZ had not resolved to direct the Board of Railmed to suspend the Three-Tier System.

A letter was dispatched from the office of the chairman of the REC in the following terms:

“I merely advised you that the feeling in Council was that the introduction of the proposed three-tier system be suspended with effect from the 20th instant. This was necessary in order to enable the members of the Council to reach an agreement.

However, you may choose to ignore my advice but you do not have any reason to misunderstand what I said.

I never pretended to say that the trade unions and NRZ resolved to direct the Railmed Board to suspend the three tier system. I have no power to direct any member or constituent member of the REC to do anything.”

What emerges from the last quoted letter is that the Board of the REC had not passed a resolution which would have issued a directive to the first respondent to suspend the introduction of the three-tier system.

It also emerges clearly from the chairman's letter that he was talking about a feeling in Council. There had been no agreement that the three tier system be suspended.

The letter from the chairman is very clear and it seems to me that if the applicants wish to contradict him and put forward a version that differs from his statement in the letter then they should have produced minutes of the meeting where the directive was given.

In the meeting of the Railway Employment Council (REC) Board, held on 20 October 2006, the chairman had noted that “the Council had no jurisdiction to instruct Railmed to cease the implementation of the scheme.”

In fact, the meeting could not agree on what action to take and the chairman indicated that he would write to Railmed and state that Council's position was that the status quo, as it was before the introduction of the three-tier system (for whatever merit), should prevail until Council wrote to Railmed on the position. This then led to the crafting of the letter initially sent to the first respondent, which letter was subsequently clarified.

When the two letters are read in conjunction with the minutes it becomes clear that the Railway Employment Council (REC) did not take a position on the implementation because of the divergence of views expressed by the Board members present.

Further, I did not understand, from my reading of the minutes, that the Railway Employment Council (REC) had resolved to give a directive to the first respondent to stop implementing the new system.

In the absence of that, I have to find that the Railway Employment Council (REC) did not issue a directive to the applicants to suspend the introduction of the three tier system of benefits.

This matter was initially placed before me under a certificate of urgency. As the final and interim relief sought on the provisional order were the same, I wrote an endorsement on the face of the application querying the manner in which the relief had been framed.

The letter of explanation was not placed before me and it was not until after some months that the matter was then brought to my attention. In the event, it was set down before me in chambers to be argued as an urgent application.

The respondents indicated a desire to file affidavits in opposition and it was agreed between the parties that the best way was for the matter to be dealt with as an opposed application. The parties thereafter filed their documents, including heads of argument, and the matter was then argued in court.

On the date of hearing, counsel for the applicants made reference to a number of authorities to which I had no access. He promised to avail them to me shortly thereafter, but, it was not until 31 May 2007 that this request was complied with. It was, as a consequence, virtually impossible to render a judgment soon after the hearing as I then was heavily committed in other duties.

I turn now to the application before me.

The applicants are unions representing members in the employ of the second respondent. The first respondent is a medical aid society set up for the benefit of the employees of the second respondent and would appear to have been set up by virtue of a Collective Bargaining Agreement between the second respondent and its employees.

It is common cause that the first respondent was collecting subscriptions from the employees and the second respondent. Benefits which the employees received were not related to the level of payment by the beneficiary and it was, consequently, a fact that the second respondent was operating as a welfarist society with its members being afforded the same benefits.

In August 2006, the second respondent put into effect a three-tier system where benefits were structured according to the level of contributions paid by respective members.

Following representations made to the second respondent, the changes were not put into effect immediately as the parties attempted to find a common position. However, at the end of August 2006, the second respondent gave notice of its intention to put the changes into effect at the beginning of October 2006. The changes were put into effect and the system is now operational.

In view of the reasons I alluded to earlier, an attempt to have a temporary interdict stopping the implementation was still-born. It therefore only leaves the final relief for determination.

The terms of the final relief are in the following terms:

1. That the implementation and execution of the tiered system by the first respondent, effected on 1 October 2006, be and is hereby set aside.

2. That the first respondent be and is hereby ordered to cease/stop and be inducted from implementing the tiered system introduced on 1 October 2006.

3. That the first respondent pays the costs of suit.

Extensive heads of argument were filed on behalf of the parties. In addition, both counsel addressed the court orally.

Counsel for the applicants argued that there were three issues for determination:

(i) The first issue was whether or not the first respondent had powers, in terms of its Constitution, to alter the medical aid scheme in existence since its inception. Counsel invited me to look at the narrow positivist meaning of clause 11(2) as well as the context of the agreement.

(ii) The second issue was whether or not the Board of the third respondent had issued a directive to the first respondent following upon a meeting held on 20 October 2006; and

(iii) The last issue was whether or not the applicants had a legitimate interest to be heard before a decision was made to link benefits to subscriptions.

Counsel for the respondents argued almost on the same premise as counsel for the applicants viz whether the second respondent had the power to introduce the benefit structure that it did.

His argument was that the applicants had considered the structure of the third respondent in isolation of the statute. He submitted that the first respondent had the power to alter the benefits accorded to its members. In so far as the third respondent was concerned it was his contention that it had not issued a directive to the first respondent to stop implementing the alteration in the benefit structure. Lastly, it was argued, on behalf of the first respondent, that, the provision of medical services by the first respondent to members of the applicants was not a condition of service and that therefore there was no need for the applicants' members to be consulted prior to the implementation of the changes.

I think the logical place to start in this matter is the examination of the relationship between the applicants and the first respondent.

The first respondent was established by the National Industrial Council for the Railway Industry in 1970. One of its objects was to afford members the facility of obtaining medical and surgical treatment for themselves, and their dependants, including the provision of drugs and medicines.

According to the Constitution in terms of which the first respondent was set up, its members comprised of the following; employees of Railways, employees of National Railways of Zimbabwe, Railmed, National Railways of Zimbabwe Pension Fund, RAE, RAU, RAYOS, REC, RMS, and Z.A.R.W.U. who are entitled to membership in terms of their conditions of employment.

Also included in the list of people entitled to be members are pensioners of the various institutions described above and the widows or widowers of those persons who had been in employment in the same and were members of the first respondent.

The applicants, being unions, are representing the persons employed by the various bodies I have referred to. Except for those employed by the first respondent, none of the members of the applicants can say that they are employees of the same. The greater number of the applicants' members therefore are employed by the other bodies.

Going by the objects of the Constitution of the first respondent, the applicants' members have a relationship with the first respondent whereby the latter has undertaken to afford the members facility for the provision of medical and surgical treatment as well as drugs and medication. Nowhere in their papers have the applicants' alluded to any other contract with the first respondent except for the provision of the services I have described above.

Yet, in addressing the question of the first respondent's actions in altering the benefit structure being offered to their members, the applicants contend that the actions of the first respondent are in fact an alteration of their conditions of service.

In order to dispose of the issue of the relationship between the applicants and the first respondent, it then becomes necessary to arrive at a decision as to the meaning to be ascribed to the phrase “conditions of service.”

When one is in service, one is in employment, and, therefore, conditions of service are the same as conditions of employment. In the case of OK Bazaars (1929) Ltd v Madeley NO & Anor 1943 TPD392, conditions of employment were described as:

“Conditions of employment in the present context means simply the terms, either express or implied, contained in a contract of employment.”

The terms and conditions of the employment contracts of the applicants' members are not in the purview of the first respondent. In my view, conditions of service can only exist where services of a personal nature are rendered, the one being the employer the other the employee.

We do not have services of a personal nature being rendered by the applicants' members to and on behalf of the first respondent.

I presume that the contracts of employment provide for contributions by the employer for subscriptions to a medical aid society. Beyond that, I refuse to go as the contracts are not before me and any further comments on my part would be mere speculation.

The point is made by counsel for the applicants that the effect of the alteration put in place by the first respondent was to fundamentally alter the structure of the Medical Fund from one based upon the principle of equal contributions from the employer and employee and equal unlimited benefits to a new principle of a scheme based on full recovery.

I accept that the entitlement to the medical aid benefit, on the basis of the equal contribution with the employer and attendant benefits is a condition of service. I do not accept, as contended by counsel for the applicants, that receiving equal benefits with other members where the one pays less than another member is a condition of service.

However, the linking of the benefits to the level of subscriptions paid by the first respondent's members does not affect the terms on which the members of the applicant are afforded employment by their respective employers.

The level and extent of benefits afforded to members is within the discretion of the first respondent and the employer has no input in such assessment.

There is no suggestion that under the new scheme the employer will contribute less than it has been contributing, because if that were the case then the applicants' members would have been on very firm ground in arguing that their conditions of service had been altered.

All the scheme does is to ensure that a contributor obtains services according to the level to which they can contribute in terms of subscriptions. The employer's obligation is not lessened in any manner as he is still obliged to contribute in equal measure to the contributions made by the member.

The condition of service is the entitlement to membership in terms of the contract of employment coupled with the employer's obligation to contribute an equal measure as the employee.

Since the employer does not determine the level of benefits afforded by the first respondent, the fact the benefits are reduced does not alter the conditions of service which remain unchanged. I am unable to find, therefore, that, the scheme has the effect of altering the conditions of service of the first respondent's members.

I move on.

The next issue I have to determine is whether the first respondent has the power, under the Constitution, to alter the benefit scheme in the manner that it did.

The powers of the first respondent must, of necessity, be examined in the conjunction with the provisions of the Medical Services Act [Chapter 15:13] (“the Act”) which regulates the manner in which medical aid societies conduct their business as well as the manner in which they are managed.

Although the first respondent, as an entity, was set up in 1970, which was prior to the promulgation of the Medical Services Act, its registration was deemed in terms of section 17 of the Medical Services Act.

I start with the definition section which not only describes a medical aid society but also specifies its purposes. The definition in section 2 of the Medical Services Act is as follows:

“…, any association or organization which accepts subscriptions from members or other persons wholly or mainly for the purposes of -

(a) Paying any expenses incurred by such members or persons, and, additionally, or alternatively, their dependants or employees, in respect of medical or dental treatment; and

(b) Meeting the whole or part of any expenses incurred by such members or persons, and, additionally, or alternatively, their employees, in respect of medical or dental treatment.”

The registration of a medical aid society is provided for in section 9 of the Medical Services Act.

Section 9(5) of the Medical Services Act provides that the Secretary shall be satisfied in relation to the following before he can register a medical aid society:

(a) The minimum cover for medical services to be provided by the medical aid society is adequate for the purpose of meeting the costs of medical services at such level as may be prescribed; and

(b) Adequate financial provisions have been made for the proper maintenance of the medical aid society.

In terms of section 10 of the of the Medical Services Act, the Secretary is empowered to cancel the registration of any medical aid society which fails to comply with the provisions of section 9(5).

My view is that the powers granted to the first respondent, in terms of the Constitution, have, of necessity, to be considered in conjunction with the provisions of sections 9 and 10 of the Medical Services Act.

The Constitution provides for the creation of a Board to administer the affairs of the first respondent. Ten members are required to sit on the Board; five of whom shall be appointed by National Railways of Zimbabwe and the last five from the other entities mentioned earlier on in the judgment, from those institutions whose employees or members are entitled to membership of the first respondent.

Clause 11, from which the Board derives its powers, is phrased thus:

“Powers and Functions of the Board of Management

(1) Subject to the provisions of the Medical Services Act, the regulations made in terms thereof and any other law, it shall be the duty of the Board to administer the affairs of Railmed in a judicious manner at all times and always to act in the best interest of both Railmed and its individual members and to implement the directives of the Secretary responsible for the Health Ministry and REC as may be given from time to time.

(1) It shall have the power to:

(a) Formulate and issue Rules of Railmed to include the schedule of rates payable by different categories of members;

(b) Modify, amend, repeal, substitute or suspend any or all of such Rules where general or specific circumstances require such action;

(c) Determine the range and scope of benefits to be afforded by Railmed; and

(d) Refuse, terminate or restrict benefits in respect of any beneficiary who contravenes any Rule of Railmed.”

Although they have been placed before me, I have not been referred to the Rules of Railmed specifically and I cannot comment further on them other than to say that the first respondent does have the power in formulating such Rules to regulate the rates payable by the different categories of members which, of necessity, taking into account the different levels of employees in the undertakings must go with a medical aid society.

In real terms, the first respondent would have to set the level and range that each category of membership would have to pay as subscription for the services to be availed to such member.

It follows, therefore, that, the rates of contributions set by the first respondent would then have a bearing on the range of benefits that can be accorded for the categories of rates of contributions set in the Rules. It is only fitting, therefore, that consistent with the power to regulate the schedule of rates of contributions to be paid by the various categories of the members, the first respondent also be endowed with the power to regulate the range and scope of the benefits to be afforded by Railmed.

I cannot see the practical effect of a medical aid society having the power to set the schedule of rates of contributions to be paid by the different categories of members but not having the power to set the range and scope of the benefits to be afforded to the membership. It would, in my view, be only logical that the range and scope of benefits be set and then the contributions be calculated. The one cannot exist independently of the other.

I venture to suggest, that, in arriving at the benefits and contributions that are attendant thereon the Board of the first respondent has to bear in mind the provisions of the Medical Services Act, in particular that it act in the best interests of the members and the society itself.

I am fortified in this view by the intent of the first respondent as spelt out in its objects - that, primarily of providing members the facility of obtaining medical and surgical treatment for themselves and their dependants, including the provision of drugs and medicines.

The objects of the first respondent would not be met if the first respondent were curtailed in its power as to what benefits it can offer to its members. If that were a matter for the decision of the REC then the latter would have been specifically accorded those powers.

It has not.

It merely has the power to make decisions of a strategic nature.

This brings me to the next rung. Is the decision regarding the extent of benefits to be afforded to the members of the first respondent one that can be termed strategic in nature?

According to counsel for the applicants, even though the first respondent had the power, under its Constitution, to determine the range and scope of the benefits to be afforded to its members, it did not have the power to change the society from a welfarist one to one run on market principles with the aim of full cost recovery.

I find it hard to comprehend why the restriction on the power afforded to the first respondent, under the Constitution, was framed in such a vague manner.

If it was the intention that the REC gives directives of a long-term plan to the first respondent it was simpler, in my view, to have phrased it as such.

Counsel for the applicants went further and argued that the three tier system that was adopted by the first respondent was not a mere scheduling of the rates and contributions or the mere determination of the range of scope of benefits, but, was rather the essence and product of the first respondent's strategic recovery plan which was prepared in 2004 and commissioned in 2005. He premises his view on the argument that the entitlement to medical benefits is a condition of service.

I have already found that the medical benefit is not a condition of service, but that what was a condition of service was the entitlement to membership and the concomitant contribution by the employer on behalf of the employee.

It is pertinent to note that the contracts of employment where the conditions are spelt out were not displayed to the court as much of the argument is based on the alteration of the same.

The Constitution does not define what it means by strategic.

From the argument pursued by counsel for the applicants, it is clear that the meaning he ascribes to strategic is to do with an alleged alteration of conditions of service.

I have above already discussed on whether the introduction of the three-tier system of benefits, by the first respondent, constituted a change in the members conditions of service and my conclusion was that it did not constitute such.

I turn next to the question whether or not the REC issued a directive to the first respondent.

The REC wrote two letters to the first respondent subsequent to the adoption by it of the three tier system of benefits. The first letter to the first respondent was phrased as follows:

“RE: INTRODUCTION OF THE THREE-TIER SYSTEM EFFECTIVE 1 OCTOBER 2006

1. On 20 October 2006, the Railway Employment Council met and decided as follows:-

1.1 The introduction of the proposed Three-Tier Scheme is to be suspended with immediate effect, viz from the 20th instant and it shall remain so suspended until you are advised to the contrary in due course.

1.2 The suspension is intended to enable the Railway Employment Council to have the matter resolved and you are advised accordingly.

2. In the meantime, the deductions for the remission to you shall be as hitherto was the case before the purported introduction of the Three Tier System by yourselves.”

The letter was written by the chairman of the REC, and, on receipt of this letter, the chairman of Railmed sought clarification, as, in his view, it appeared that the four trade unions and NRZ had not resolved to direct the Board of Railmed to suspend the Three-Tier System.

A letter was dispatched from the office of the chairman of the REC in the following terms:

“I merely advised you that the feeling in Council was that the introduction of the proposed three-tier system be suspended with effect from the 20th instant. This was necessary in order to enable the members of the Council to reach an agreement.

However, you may choose to ignore my advice but you do not have any reason to misunderstand what I said.

I never pretended to say that the trade unions and NRZ resolved to direct the Railmed Board to suspend the three tier system. I have no power to direct any member or constituent member of the REC to do anything.”

What emerges from the last quoted letter is that the Board of the REC had not passed a resolution which would have issued a directive to the first respondent to suspend the introduction of the three-tier system.

It also emerges clearly from the chairman's letter that he was talking about a feeling in Council. There had been no agreement that the three tier system be suspended.

The letter from the chairman is very clear and it seems to me that if the applicants wish to contradict him and put forward a version that differs from his statement in the letter then they should have produced minutes of the meeting where the directive was given.

In the meeting of the Railway Employment Council (REC) Board, held on 20 October 2006, the chairman had noted that “the Council had no jurisdiction to instruct Railmed to cease the implementation of the scheme.”

In fact, the meeting could not agree on what action to take and the chairman indicated that he would write to Railmed and state that Council's position was that the status quo, as it was before the introduction of the three-tier system (for whatever merit), should prevail until Council wrote to Railmed on the position. This then led to the crafting of the letter initially sent to the first respondent, which letter was subsequently clarified.

When the two letters are read in conjunction with the minutes it becomes clear that the Railway Employment Council (REC) did not take a position on the implementation because of the divergence of views expressed by the Board members present.

Further, I did not understand, from my reading of the minutes, that the Railway Employment Council (REC) had resolved to give a directive to the first respondent to stop implementing the new system.

In the absence of that, I have to find that the Railway Employment Council (REC) did not issue a directive to the applicants to suspend the introduction of the three tier system of benefits.