I INTRODUCTION TO CLASS ACTIONS FRAMEWORK
Historically, the concept of a class action was foreign to South African law. The recent development of this area of law evidences a fundamental shift towards the equitable implementation of the law in a country where far too often legal redress is beyond the reach of those most in need.
Notwithstanding the evolution of this area of law, South Africa remains in its infancy insofar as its approach to class actions is concerned. Currently no legislation exists that seeks to regulate this area of law from a procedural perspective. Only once such legislation is passed will South Africa truly leave behind the relative uncertainty that often accompanies such transitional period.
That said, class actions as a field of law is alive and constantly developing through the decisions of the courts, thereby evolving the common law.
Historically, South African courts have been slow to confirm the legal entitlement to initiate any legal proceedings (also referred to as locus standi) beyond parties with a direct, personal and sufficient interest2 in the subject matter3 of the dispute.
There has, particularly since the advent of the South African Constitution,4 been a bold move towards ensuring that all people in South Africa are given access to justice.5 It was against the background of Section 34 of the Bill of Rights that the concept of a class action was formally introduced for the first time. The relevant provision of the Constitution is Section 38(c), which provides that any person can act as a member of a class, when approaching a court with an allegation that a right in the Bill of Rights has been infringed.6 No further formalities are prescribed by the Constitution.
In addition to the Constitution, certain statutes provide for the possibility of bringing class actions in order to enforce the provisions of those statutes, or in instances where there has been a breach of the provisions of that statute.7 Until recently, South African common law did not recognise a ‘general’ class action (in other words, a class action that did not relate to an infringement of a right in the South African Bill of Rights, or in regard to the aforementioned statutes).
The phrase ‘general class action’ in this context refers to an action, brought by a party seeking to enforce a substantive right or obligation, arising out of an infringement by another of some statute, obligation or legal duty. Such a class action would be brought by a representative plaintiff on behalf of a class of people.
In the case of the Children’s Resources Centre Trust,8 the South African Supreme Court of Appeal dismissed any prior notion that class actions could only be brought in the event that a right in the Bill of Rights had been infringed and stated that:
[. . .] it would be irrational for the court to sanction a class action in cases where a constitutional right is invoked, but to deny it in equally appropriate circumstances, merely because of the claimants’ inability to point to the infringement of a right protected under the Bill of Rights [. . .] Class actions are a particularly appropriate way in which to vindicate some types of constitutional rights, but they are equally useful in the context of mass personal injury cases or consumer litigation [. . .] In the meantime the courts must prescribe appropriate procedures to enable litigants to pursue claims by this means.9
Although the Constitution, certain statutes and, subsequent to recent judgments, the common law, now recognise class actions, there is unfortunately no specific legislation in force which regulates, for example, the interpretation, procedure and specific manner of bringing and implementing such a class action.
After extensive consultation and investigation into the topic, recommendations were made by the South African Law Commission (the Commission) with regard to class actions.10 In its Report, the Commission has set out its findings and a draft Bill11 has been proposed. This bill, however, has not been formally adopted (or endorsed) by the South African legislature. As such, the South African law on class actions, insofar as the procedure thereof is concerned, is guided and informed solely by case law.
Class actions in South Africa are not administered on a purely opt-in or opt-out basis. Each case will be evaluated on its own merits and the court seized with the certification of a class action will impose requirements for the further conduct of proceedings, which will invariably determine whether the proceedings are to be conducted on an opt-in or opt-out basis.
Interestingly, in the Silicosis12 case, relief was granted to the plaintiffs (who in this instance were miners who had brought a class action against mining companies) in two stages. The first stage was to determine the liability of the mining companies and in this regard, an opt-out class was certified. In other words, a determination on the liability of the mines would be binding on all members of that class, unless due notice was given of an election to opt out of that aspect of the litigation. With regard to the second phase of litigation, damages were to be established on an individual basis and in this regard, the miners were entitled to ‘opt in’ to this process.
While Silicosis laid down the procedure to be followed in regard to both opt-in and opt-out classes, each matter will be dealt with on its own merits.
In accordance with Section 38 of the Constitution, anyone acting as a member, or in the interests of a group or class of persons, or anyone acting in the public interest, may approach a court for relief on the basis of a class action. This obviously relates to class actions under the Constitution but it is submitted that the same requirements will need to be met insofar as the general class action referred to above is concerned.
There are no specialist tribunals empowered to entertain class actions of any kind in South Africa. All class actions will need to be initiated through the High Court.
In theory, almost any claim (unless precluded by law) is capable of being brought by means of a class action. For example, South African courts have been requested to certify class actions relating to damages arising out of a finding of anticompetitive conduct by certain bread distributors,13 claims by pensioners against the Transnet Benefit Fund and Pension Fund14 and more recently, claims by a class of miners against numerous large mining companies, arising out of the contraction of silicosis and or tuberculosis during mining operations.15
II THE YEAR IN REVIEW
South African law on class actions is defined by and indeed crystallised through the relevant court decisions. Unfortunately, however, there is a relative dearth of case law on the topic. Although the majority of decisions defining this area of law were not handed down within the year under review (apart from the Silicosis judgment referred to below), it is perhaps useful to understand the progression of this area of law through the courts.
In 2001, the Supreme Court of Appeal in Ngxuza16 confirmed that a class action may be used to enforce constitutional rights, despite the absence of a statute regulating such proceedings. In 2013, the same court recognised the existence of a general class action outside of the constitutional regime that could be used to enforce rights derived from sources other than the Constitution.17
In May 2016, the Gauteng Local Division of the High Court handed down the Silicosis judgment18 in terms whereof a class action was certified, paving the way for between 17,000 and 500,000 individuals to sue certain mining companies for damages arising out of the contraction of tuberculosis and silicosis from mining activities. Notably, the dependants of individuals who had since passed away due to the aforementioned illnesses were permitted to sue as members of the class so certified.
The court found that it was in the interests of justice to certify two classes, one for claims due to silicosis and the other for tuberculosis-related damages. The court found that the evidence of the miners is and would be similar enough to warrant the certification of the class, as the same or similar evidence would need to be led in each individual case brought against the mines in question. The court acknowledged that the prosecution of the respective claims in their personal capacities would in most instances not be possible due to financial constraints on the individuals concerned.
The Silicosis judgment certified the largest class action in South Africa’s history. It must, however, be noted that the mining companies have subsequently appealed this judgment to the Supreme Court of Appeal, after having been denied leave to appeal from the High Court, focusing mainly on their view that the class so certified is overly broad, making future litigation extremely difficult to manage. In addition, the mines have argued that the liability of each individual mine may be extremely difficult to determine in light of the fact that many of the miners concerned worked on a number of different mines during their working lives.
The judgment of the Supreme Court of Appeal is still pending.
i Types of action available
It is important to note that litigation in South Africa makes provision for claims to be prosecuted by numerous plaintiffs against one or more defendants. The High Court Rules provide for matters such as joinder and consolidation of actions. These procedures have been available to litigants for a long period of time and will remain so. The development of the class action procedure has occurred in parallel to these procedures and in no way affects existing practice.
As stated above, class actions in South Africa are not regulated by statute. All defining principles and guidelines have emerged from case law since the advent of the Constitution.
A class action is merely a procedural aid to facilitate the just and equitable prosecution of a claim that exists independent of the class action. The class action does not constitute a separate cause of action in itself. As such, the elements necessary to sustain a claim which is to be prosecuted by means of the class action will need to be present. A court will therefore make inquiries at the certification stage of the class action process into the underlying cause of action so as to satisfy itself that the class action certification is justified.
The case of Children’s Resources Centre Trust laid down the authority that a class action must be certified by the court, before summons can be issued in such a class action. In this regard, the party seeking to represent the class must first make a preliminary application to court for the authority to do so. The court in the certification application will also give directions as to the procedure pertaining to conduct of the class action.19
The court here indicated that certification involves not only authorising the class action, but also determining the elements that will guide a court in determining a certification application20 and which elements, although not exhaustive, should be present:21
- a the existence of a class identifiable by objective criteria;
- b that there is a cause of action raising a triable issue;
- c that the right to relief depends upon the determination of issues of fact, or law, or both, common to all members of the class;
- d that the relief sought, or damages claimed, flow from the cause of action and are ascertainable and capable of determination;
- e that where the claim is for damages there is an appropriate procedure for allocating the damages to the members of the class;
- f that the proposed representative is suitable and is permitted to conduct the action and represent the class; and
- g whether, given the composition of the class and the nature of the proposed action, a class action is the most appropriate means of determining the claims of the class members.
The court, however, declined to determine whether the outcome of a certification application is appealable or not.
With regard to the definition of ‘class’, the court stressed that it is not necessary to identify all the members of the class, ‘but that the class must be defined with sufficient precision that a particular individual’s membership can be objectively determined by examining their situation in the light of the class definition.’22 This was held to be important due to the fact that it affects the manner in which notice is given to the members of the class.
In this regard, the broader the class, the less likely it will be that the required ‘commonality’ is present. One must be careful not to find oneself in the situation that the litigation is unmanageable because of the need to take the personal circumstances of every person in the class into account. This would indicate that a class action is inappropriate.23 Wallis JJA set out a succinct test in this regard: ‘The essential question will always be whether the class is sufficiently identified that it is possible to determine at all stages of the proceedings whether a particular person is a member of the class.’24
With regard to the requirement that there must be a ‘cause of action raising a triable issue’, the court stated that this requirement will not be satisfied if it is plain that the case is legally untenable (i.e., could be the subject of a successful exception) or if the applicant has no credible evidence to sustain the cause of action.25
Therefore, the certification application must set out the basis for the proposed action, which may include annexing a copy of the draft particulars of claim to the application and it must show, in the affidavits in support thereof, that there is a prima facie case on the evidence available.26
The court stated that the requirement of ‘common issues of fact or law’ should be interpreted to mean that there must be issues of law, fact or both that are common to all members of the class and that can be appropriately determined in one action.27 It must, however, be noted that this does not mean that the action must dispose of every aspect of the claim in order to obtain certification as a class action. The class action might be restricted, for example, to the issue of liability and may leave the quantum to be dealt with by individual claimants.28
Importantly, in light of Section 38(c) of the Constitution, it is not a requirement that the representative be a member of the class. However, the court must be satisfied that a representative has no interest that conflicts with those whom he or she wishes to represent, in other words, the purpose of the litigation must not be to serve interests other than those of the class.29
The representative must:
- a have the capacity to conduct the litigation properly on behalf of the class;30
- b have the time, inclination and the means to procure the evidence necessary to conduct the litigation;31
- c have the financial means to conduct the litigation, alternatively, there must be a method of financing the litigation;32 and
- d have lawyers who have the capacity to run the litigation properly.33
In regard to the requirement pertaining to the ‘lawyers’ of the representative, Children’s Resources Centre Trust also held that if the litigation is to be funded on a contingency fee basis, details of the funding arrangements must be disclosed in order to ensure that they do not give rise to a conflict between the lawyers and the members of the class. Further it needs to be clear that the litigation is not being pursued at the instance of the lawyers, for their own gain.34 In this regard, the court indicated that, although it was not tasked to deal with the issue of settlement of a class action, it may be necessary, when the issue arises in the future, to prescribe that the court’s approval of any settlement of the class action be required.35
It is important to note that the Children’s Resources Centre Trust case was certified on the basis of an opt-out class action. In contrast, the court in the Mukkadam36 case was faced with an opt-in certification application. One of the main reasons that the Supreme Court of Appeal rejected the certification was due to the fact that it was framed as an ‘opt in’ class action. In this regard, the court held the following: ‘[. . .] I do not close the door to an “opt in” class action in my view the circumstances would need to be exceptional before one would be allowed [. . .].’37
On a further appeal to the Constitutional Court, the Court made it abundantly clear that it rejected the view expressed by the Supreme Court of Appeal outright and held that certification for an opt-in class action does not require the applicant to show ‘exceptional circumstances’.
In the Mukkadam appeal to the Constitutional Court, the Constitutional Court also confirmed the requirements as formulated in Children’s Resources Centre Trust but went further to state that:
These requirements must serve as factors to be taken into account in determining where the interests of justice lie in a particular case. They must not be treated as conditions precedent or jurisdictional facts which must be present before an application for certification may succeed. The absence of one or another requirement must not oblige a court to refuse certification where the interests of justice demand otherwise.38
As such, the Constitutional Court has, to an extent, reduced the ‘requirements’ set out by the Supreme Court of Appeal in Children’s Resources Centre Trust, to mere ‘guidelines’, which may or may not be required in each specific instance, depending on whether the interests of justice require the court to apply those factors in each particular case. Unfortunately, the Constitutional Court has offered no guidance as to when the ‘interests of justice’ would require certification.
Although this innovative development increases the scope of the discretion and flexibility afforded to courts in deciding certification applications, which in and of itself may be beneficial in certain instances, it also increases the uncertainty surrounding when a class action will be allowed, specifically in light of the fact that case law on this topic has been scant. In this regard, the need for judicial certainty and formality is, arguably, extremely important in light of the complex issues that need to be grappled with and the novelty of the type of claim.
ii Commencing proceedings
A representative of a class needs to approach the High Court for certification of the class itself, before proceedings can be initiated. The authority of the representative will be scrutinised by the court in reaching its decision as to whether to certify the class action or not. The factors laid out in Children’s Resources Centre Trust and confirmed in both Mukkadam and Silicosis will be considered.
The court will decide on a case-by-case basis as to whether an opt-in or opt-out approach is more appropriate. It is, however, for the applicant in such certification proceedings to convince the court, one way or the other.
As with most litigation, it is the party initiating the proceedings who sets the initial parameters within which it believes the claim should be prosecuted. It is not for the court to make the case for a claimant or a group of claimants. Therefore, an applicant who has not carefully applied its mind as to the class it purports to represent, runs the risk of the court simply dismissing the application.
There is currently no restriction on the ambit of a class and our courts are likely to address this question on a case-by-case basis. In light of the appeal currently pending in Silicosis, we may yet see further development in regard to the permissibility of a broadly defined class. As things stand, however, there is no prohibition against claimants based outside of South Africa. A court will, however, be required to apply the normal rules on jurisdiction when determining whether a particular claimant possesses the requisite entitlement to prosecute a claim.
There are no restrictions against third-party funding in South Africa. In fact, the Silicosis certification application was funded by a party who was not cited in the proceedings. Certain respondents in that application raised an objection to this fact and requested that the funder be joined as a party to the proceedings. The court, however, ruled that there existed no prohibition against champerty in South African law and that the funder was not in reality driving the litigation. As it was a pure funder of the proceedings and not a clandestine litigant, the court ruled that it need not be joined to the proceedings.
iii Procedural rules
In light of what has been stated above, the procedure to be followed in prosecuting such claims is anything but clear. There are no rules other than the prerequisite that a class action be certified prior to the issuing of summons on the basis of a class action.
Litigation by its very nature in South Africa is time consuming and costly. The introduction of class actions into the legislative matrix will only add to the delays as a result of the numerous complexities involved and the relative lack of certainty on procedure.
We will, however, have to wait to see the real effect of the introduction of class actions on the ultimate access to justice to those who need it most.
iv Damages and costs
Damages in class actions, although not yet specifically addressed by the courts, are likely to be addressed in the usual way in which damages are determined in South Africa.39
South Africa does not impose punitive damages and it is a specific requirement that damages be proven by the party claiming them. There is also no jury system in South African law.
It is unclear at this stage as to the potential damages that could be awarded in such actions but there would appear to be no bar to any amount of damages, provided that a party can prove such damages.
In South African litigation, costs normally follow the result.40 This is not a hard and fast rule, but it is generally applied. Different cost scales are applied by the courts. The normal scale is on a party and party basis that entitles a party in whose favour such an award is granted, to recover its costs spent on litigation in accordance with a tariff published in the High Court Rules. This scale, however, means that a party usually only recovers between 40 and 60 per cent of their actual legal spend, depending on the legal representatives chosen.
Insofar as the court is of the view that a particular litigant is worthy of a harsher cost scale than usual, it may award costs on the attorney and client scale. This would entitle such a litigant to recover costs on a higher scale than on a party and party scale, but such a successful party would still not be entitled to its actual out of pocket expenses. These would only be recovered insofar as a court awards costs on an ‘attorney and own client’ scale. This would entitle a litigant to recover actual amounts spent in litigation, on necessary attendances. It is, however, highly unusual for a court to grant costs on such a scale and is usually only granted in circumstances where the conduct of the unsuccessful litigant deserves the granting of a punitive cost scale.
There is currently no indication that our courts will deviate from this established practice in relation to class actions, although when the nature and financial position of the potential plaintiffs in such class actions are considered, one may find that a court is more inclined to be lenient towards an unsuccessful, financially disadvantaged, class of individuals in relation to costs. The court has an inherent discretion in this regard.
An overview of settling class actions, including:
- a whether court sanction is needed for a settlement; and
- b who is bound by the settlement.
There is currently no requirement for any form of court sanction in respect of settlement of class actions. The words of Wallis JJA should, however, be borne in mind41 when he stated that court involvement in the aspect of settlement may become necessary in future. This is particularly important when one is dealing with third-party funders.
Generally, all parties to the settlement will be bound to the terms thereof. Insofar as a class is certified and that class settles a claim, all members of that class will be bound by such a settlement, provided members do not opt-out of such settlement, if at all possible.
IV CROSS-BORDER ISSUES
In light of the fact that the South African law on class actions is relatively undeveloped and that case law on the topic is rather slim, to the best of the authors’ knowledge, cross-border issues have not yet been addressed by the courts.
In order to prosecute a claim in South Africa whether by means of a class action or otherwise, jurisdiction will need to be established. Insofar as South African courts have jurisdiction to entertain the claim, the matter can proceed.
In accordance with South African civil procedure, a local defendant is entitled to request security for costs from a foreign plaintiff initiating proceedings against it. It is yet to be seen whether such an option will be made available to a defendant facing a class action from a class of individuals, any number of whom may be foreign nationals.
At this point in time, the normal civil procedure rules will apply to class actions insofar as these have not been amended by relevant case law. To this end, foreign members of a class will be bound to the proceedings if they are regarded as members of the class in accordance with South African law.
South Africa does not award what is termed punitive damages and as such does not enforce awards for punitive damages based on grounds of public policy. The same approach would appear to apply to class actions prosecuted outside of South Africa that are sought to be enforced in South Africa. Provided the order sought to be enforced does not contravene public policy, it will most likely be enforced.
V OUTLOOK AND CONCLUSIONS
Although the Pioneer, Mukkadam and Silicosis judgments were huge leaps forward in the development of class actions in South Africa, this particular area of law is still in its early stages of development. To date, there appears to have been only been one class action that has been prosecuted to finality.42 There are accordingly no judgments or rulings that inform pertinent questions such as the manner in which those trials should be conducted, whether the class can be amended after it has been certified, whether international plaintiffs or defendants can form part of the class, how long such trials will take to reach completion or the level of damages that may be awarded.
It remains to be seen, through the development of the class action by the courts, how these aspects will be dealt with in the future. Importantly, the guidelines set out by the Commission in its Report on the Recognition of Class Actions and Public Interest Actions in South African Law43 appear to have influenced the thinking of the courts, which has given rise to the judgments that now regulate the administration of class actions. It is likely that these guidelines will continue to inform and shape the development of the law pertaining to class actions in the future.
Notwithstanding the developments discussed above, South Africa is in need of definitive legislation on this subject so as to remove the doubt and uncertainty that currently persists, particularly for the party facing a threat of a class action claim being initiated against it.
1 Jonathan Ripley-Evans is a director and Fiorella Noriega Del Valle is an associate at Cliffe Dekker Hofmeyr.
2 See for example, Cabinet for the Territory if South West Africa v. Eins 1988 3 SA 369 (A).
3 For example, South African Optometric Association v. Frames Distributors (Pty) Ltd t/a Frames Unlimited 1985 3 SA 100 (O).
4 The Constitution of the Republic of South Africa, Act 108 of 1996.
5 In this regard, Section 34 of the Bill of Rights (Chapter 2 of the Constitution) guarantees everyone the right of access to courts.
6 Enforcement of rights.
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.
7 Section 157(1) of The Companies Act 71 of 2008, Section 4(1) of the Consumer Protection Act 68 of 2008, Section 32 of the National Environmental Management Act 107 of 1998.
8 Children’s Resource Centre Trust and others v. Pioneer Food (Pty) Ltd and others 2013 (2) SA 213 (SCA)
9 Supra footnote 8 page 226 paragraph 21.
10 Project 88: The Report on the Recognition of Class Actions and Public Interest Actions in South African Law (‘Report’).
11 The Commission’s draft bill on Public Interest Actions and Class Actions.
12 Nkala and others v. Harmony Gold Mining Co Ltd and others 2016 (5) SA 240 (GJ).
13 Children’s Resource Centre Trust and others v. Pioneer Food (Pty) Ltd and others 2013 (2) SA 213 (SCA); Mukkadam v. Pioneer Foods (Pty) Ltd and Others 2013 (5) SA 89 (CC).
14 Pretorius and another v. Transnet second defined Benefit Fund and others 2014 (6) SA 77 (GP).
15 Nkala and others v. Harmony Gold Mining Co Ltd and others 2016 (5) SA 240 (GJ).
16 Permanent Secretary, Department of Welfare, Eastern Cape v. Ngxuza 2001 (4) SA 1184 (SCA).
17 Trustees for the time being of the Children’s Resource Centre Trust and others v. Pioneer Food (Pty) Ltd and others (Legal Resources Centre as amicus curiae) 2013 (1) All SA 648 (SCA).
18 Supra at footnote 15.
19 The Commission’s Report has recommended that the court seized with the matter should be given broad ‘general management powers’ in regard to the management of the class action proceedings, at page 54.
20 Supra footnote 8 at paragraph 26.
21 Supra footnote 8 at paragraph 28, ‘Without excluding the possibility of there being other issues that require consideration, it suffices for our purposes to say that a court faced with an application for certification of a class action must consider the factors set out in the list and be satisfied that they are present before granting certification.’
22 Supra at paragraph 29.
23 Supra at paragraph 30.
24 Supra at paragraph 34.
25 Supra at paragraphs 35 and 39.
26 Supra at paragraph 43.
27 Supra at paragraph 44
28 Supra at paragraph 45.
29 Supra at paragraph 47.
31 Supra at paragraph 48.
35 Supra. This was also recommended by the Commission in its Report.
36 Mukkadam v. Pioneer Foods and Others  ZACC 23.
37 Mukkadam and Others v. Pioneer Foods (Pty) Ltd and Others 2013 (2) SA 254 (SCA) at paragraph 14.
38 Supra at paragraph 35.
39 The Commission makes various recommendations in its Report in regard to the award of damages, but these have not been applied in practice as yet.
40 The Commission’s Report, at page 72, recommends that the Court maintain this discretion in class actions.
41 Supra footnote 8 at paragraph 48. This has also been recommended in the Commission’s Report at page 79.
42 Linkside and Others v. Minister of Basic Education and Others  ZAECGHC 36.
43 Supra footnote 10.