Johannesburg, South Aftrica -- (SBWIRE) -- 07/09/2013 -- Class actions are expressly and constitutionally recognised in South African law. Although the process of identifying and defining classes of people has been laid down, two recent applications have failed because the common characteristics were defined too broadly and the applicable questions of law were not identified sufficiently.
Class actions in South Africa
Class action - a device by which a single plaintiff can pursue an action on behalf of all persons with a common interest in the action, and with the ruling of the court being binding upon all class members - is a novel concept in South African law.
Section 7(4) of the Interim Constitution of 1993 and section 38 of the Constitution of the Republic of South Africa, 1996 (the Constitution) introduced the concept of class action into South African law with the limitation that class actions could only be used for the protection of Constitutional rights.
In Ngxuza & others v Permanent Secretary, Department of Welfare, Eastern Cape Provincial Government 2001 (2) SA 609 (E) (Ngxuza v Department of Welfare) and Firstrand Bank Ltd v Chaucer Publications (Pty) Limited 2008 (2) SA 592 (C), however, the Court held that class actions should not be limited only to the protection of Constitutional rights, but should also be available in cases when damages are sought as a result of the unlawful conduct of private entities.
In 1996, the South African Law Commission (SALC) recommended that various principles underlying class actions in other jurisdictions should be introduced into South African law by way of an Act of Parliament.
In particular, the SALC proposed that class actions should be initiated by applying for a court to:
- Certify that a specific group of people sharing identical or similar characteristics constitutes a specific class of persons; and
- Grant the applicant(s) leave to institute an action on behalf of all the members of the certified class (the Certification Procedure).
The identical or similar characteristics would then function as the requirements to be included as members of the certified class. These requirements or characteristics would also form the boundaries of the certified class.
The Certification Procedure as a requirement for class actions was eventually confirmed by the Constitutional Court in Ngxuza v Department of Welfare and by the SCA in the case of Trustees for the Time Being of the Children's Resource Centre Trust & others v Pioneer Foods (Pty) Limited & Others  JOL 27549 (WCC) (Children Resource Centre Trust).
The Certification Procedure was invoked for the first time in this case, in terms of which two separate applications to certify two classes of persons were brought before the High Court in the Western Cape Division. The applicants in both applications (consumers of bread and distributors of bread) intended to institute action proceedings by way of class actions against the respondents (three of the four main bakeries in South Africa) for damages allegedly suffered by members of the two classes as a result of the respondents' involvement in the bread cartel debacle.
Both applications were dismissed by the High Court, which held, inter alia, that the two classes which the applicants' requested the Court to certify were defined too broadly; (ie the applicants failed to sufficiently identify the class of persons they wish to represent and the common questions of law or fact that exist among the various class members).
The matter eventually went on appeal before the SCA. The SCA expressly recognised the need to protect and regulate class actions and to develop the procedural requirements for class actions. The SCA, however, held that it was only willing to determine the broad parameters within which class actions are to be pursued.
The SCA further held that it was the legislature's role to make the policy decisions in determining the structure of class actions and as a result, the SCA is not in a position to make such decisions for fear of encroaching upon the domain of the legislature, which the doctrine of separation of powers, fundamental to the Constitution, explicitly prohibits.
About Webber Wentzel
Webber Wentzel is a leading law firm in Africa, being consistently ranked at the top by a diversity of international ratings agencies in 2012.
The firm has a staff complement of approximately 800 people (including almost 150 partners and more than 450 professionals in a variety of legal disciplines) in offices in Johannesburg and Cape Town. Its client base includes many of South Africa’s Top 100 companies in banking & finance, insurance & legal liability, media, telecommunications & intellectual property, mining, oil & gas, private equity, and property law.
Webber Wentzel is a full service corporate law firm offering expertise in various legal areas including Dispute Resolution, Mergers & Acquisitions , Project Finance and Tax .
Webber Wentzel’s strategy is to help clients wherever they do business. Work in Africa represents a growing area of practice and, together with a network of best friend law firms; the firm has assisted clients in cross-border deals in most of the countries in sub-Saharan Africa.
Webber Wentzel has entered into a collaborative alliance with global law firm, Linklaters, which is recognised for its leading African practice having worked on numerous landmark transactions in almost every country on the continent over the past 30 years. The alliance will see the two firms working closely together for the benefit of clients in Africa.
The firm is also associated with ALN, a group of leading law firms in Africa.
For more information visit http://www.webberwentzel.com/. Follow Webber Wentzel on Twitter: @WebberWentzel.