United States: The Difficulties Of Class Action Claims In South Africa

The US is credited with being the home of class action lawsuits. Whereas, in South Africa, class actions were only introduced after 1994. The Bill of Rights, as set out in Chapter 2 of the Constitution of the Republic of South Africa 1996 (the Constitution), entrenches certain fundamental human rights, which include the recognition of a class action.

Section 38(c) of the Constitution provides "...anyone listed in this section has the right to approach a competent court, alleging that a right in the Bill of Rights has been infringed or threatened, and the court may grant appropriate relief, including a declaration of rights. The persons who may approach a court are—... (c) anyone acting as a member of, or in the interest of, a group or class of persons..."

However, the Constitution does not set out the procedure that needs be followed to give effect to section 38(c) of the Constitution. In August 1998, the South African Law Commission (Commission) published a report, entitled "The Recognition of Class Actions and Public Interest Actions in South African Law" in which it (i) discussed the class action procedure as it is in South Africa today, (ii) made recommendations, and (iii) provided a draft bill to assist with the enforcement of the class action procedures in the future.

The Commission's report emphasises the need for a statutory intervention for the formal recognition and regulation of class actions and public interest actions in South African law and proposed a draft bill to give effect thereto. However, we still await the legislature to bring this proposed piece of legislation to fruition.

In the US, in order for a group of claims to proceed as a class action, a class action must be "certified" by the relevant court. Depending on the underlying subject matter, federal or state law would govern the class action. The procedure for certifying a class action in terms of the federal system differs slightly with the different states' rules. However, many states mirror the certification procedure set out in the Federal Rules of Civil Procedure (FRCP) – the certification requirements are set out in rule 23(a) of the FRCP.

It appears that the South African courts have adopted the US's position with respect to certification of class actions. In Children's Resource Centre Trust and Others v. Pioneer Food (Pty) Ltd and Others 2013 (2) SA 213 (SCA) (Children's Resource Centre Trust Case), the court held that it is a requirement for a party seeking to represent a class in a class action to first apply to court for certification. Furthermore, the court held that the following criteria are the core considerations that should be taken into account in a certification inquiry.

  • The class must be defined with enough precision to allow for the objective determination that an individual falls into the class.
  • The cause of action raises a triable issue.
  • The right to relief depends on the determination of issues of law and/or fact that are common to all members of the class.
  • The relief sought or damages claimed flow from the cause of action and are ascertainable and capable of determination.
  • Where the claim is for damages, there is an appropriate procedure for allocating the damages to the members of the class.
  • The representative should not have any conflict of interest with the class and must have the capacity to conduct the litigation properly.
  • The tool of a class action must be the most appropriate procedure to adopt for adjudication of the underlying claims (given the composition of the class and the nature of the proposed action).

The court held that the abovementioned factors must be considered by the courts when dealing with a certification application and must be satisfied that these factors are present before granting certification.

It is against this background of years of legislative inaction in the field of class actions that the judgment in the Children's Resource Centre Trust Case is a welcome step forward.

The criteria for certification set out in the Children's Resource Centre Trust Case were applied in the separate but related matter in Mukaddam and Others v. Pioneer Food (Pty) Ltd and Others 2013 (2) SA 254 (SCA) (Mukaddam SCA Case). In the Mukaddam SCA Case, the court applied the factors set out in the Children's Resource Centre Trust Case. The court spent surprisingly little time on the conceptual nuances of class action claims and the detail of certification requirements.

However, in Mukaddam and Others v. Pioneer Food (Pty) Ltd and Others 2013 (5) SA89 (CC) (Mukaddam CC Case) (i.e. the appeal of the Mukaddam SCA Case), the court (for the most part) also accepted the judicial groundwork set out in the Children's Resource Centre Trust Case.  However, the court focused more on the (i) role and implications of judicial discretion that the courts have, and (ii) inherent power that the courts have to regulate the process by which litigants approach the court, as provided for in section 173 of the Constitution.

The court in the Mukaddam CC Case disagreed with the judgment in the Children's Resource Centre Trust Case which provided that the requirements for prior certification are conditions that must be met in order to succeed in an application for certification. Instead, the court held that the interest of justice standard should guide whether certification should be granted, and a formalistic approach to compliance with the certification requirements (as set out in the Children's Resource Centre Trust Case) should not be adopted. Furthermore, the court held that the requirements listed in the Children's Resource Centre Trust Case are the relevant factors that are to be considered by the courts (when considering a class action certification application), not the requirements in the strict sense of the word. Accordingly, the court held that the courts may permit a claim for certification where one or more of the requirements (listed in the Children's Resource Centre Trust Case) are not met, or may deny a claim for certification even where all the requirements for certification are met, if it is in the interest of justice. However, the court agreed with the Children's Resource Centre Trust Case in that before a class action may be instituted, the representative party must seek certification from the courts before proceeding with it.

In the more recent case of National Union of Metal Workers of South Africa (NUMSA) v. Oosthuizen 2017 (6) JDR 0530 (GJ), the court had to consider whether a class action may be certified after the fact (i.e. where an action has already been instituted without prior certification being granted).

Having considered the judgment in Nkala and Others v. Harmony Gold Mining Co and Others 2016 (5) SA 240 (GJ) (Nkala Case), the court found that the requirement that prior certification be obtained before instituting a class action is not settled law, and the court's interpretation of the Nkala Case is that courts have a discretion as to whether or not to grant certification ex post facto, if it is in the interest of justice. The court held that if the pre-certification requirement only relates to timing, then ex post facto certification cannot be objected, if the interests of justice justify certification – as this requirement would be regarded as a formal and not a substantive law requirement.

In conclusion, although significant ground was made in cases such as the Children's Resource Centre Trust Case in paving the way for class actions in South Africa, there are many aspects of this judgment (and in the other cases discussed above) that require further development and refinement. There is a need for the laws and rules regulating class actions to be more clearly articulated so as to ensure that the fundamental right of access to courts (as provided for in section 38 of the Constitution) is given effect to.

Nonetheless, class action suits are relatively novel in South Africa as there have been no completed trials – in all instances, the parties have settled before the class action conclusion of the trial.

In practice, it appears that in certain circumstances class action processes are abused due to the lack of judicial precedent and clear laws and/or rules governing class actions. Accordingly, it is of paramount importance that South African jurisprudence in this area of the law continues to be developed so as to ensure that the laws and/or rules governing class actions are well documented and are crystallised to ensure that it becomes a viable and effective tool for potential litigants (in the appropriate circumstances).

About Dentons

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions