Class/collective actions in South Africa: overview

A Q&A guide to class/collective actions in South Africa.

The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.

To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.

This Q&A is part of the Class Actions Global Guide.

Pieter Conradie, Cliffe Dekker Hofmeyr
Contents

Overview of class/collective actions and current trends

1. What is the definition of class/collective actions in your jurisdiction? Are they popular and what are the current trends?

Definition of class/collective actions

South Africa has not yet promulgated class action legislation. Therefore, there is currently no statutory definition of a class action that defines the requirements of a class action or what constitutes a class action. However, generally a class action can be described as a lawsuit by individuals (or an entity or individual in a representative capacity in which claims are asserted on behalf of others) that have suffered similar damage or loss caused by the same defendants. The procedure to be applied for group or class-related claims is in development, and judgments by the Supreme Court of Appeal and the Constitutional Court are significant developments in jurisprudence on the development of class actions in South Africa. Before 1994, there were no class actions in South Africa. The Supreme Court of Appeal began the process by laying down procedures for the certification of class actions (Children's Resources Centre Trust versus Pioneer Foods (Pty) Ltd. and Others [2013] (2) SA213 (SCA)). It is now accepted that class or group actions can be instituted and that class or group action must be certified.

Use of class/collective actions

Because punitive damages are not awarded, class actions are available but are generally not as popular as in jurisdictions such as the US. Only proved damages are awarded to claimants.

Recently, gold miners (the claimants) have applied to the High Court to certify a class action. The matter relates to thousands of gold miners that work in South African gold mines and are claiming damages from the owners of the gold mines because of silicosis-related diseases allegedly caused by the negligence of the owners of the gold mines. This is a test case in South Africa regarding the certification of a class. The gold mines have contested the order sought and the matter was heard during October 2015 and is awaiting a judgment. This matter may eventually be settled between the gold mines and the claimants. If this happens, this will be one of the first major settlements of a class action suit and will also set a precedent for future litigation.

Current trends

Due to the developing nature of class actions there are no current trends or developments of note.

 

Regulatory framework

2. What are the principal sources of law and regulations relating to class/collective actions? What are the different mechanisms for bringing a class/collective action?

Principal sources of law

The court applies civil procedure as regulated by the High Court Rules to regulate the process and the sources of law are the common law as developed in South Africa over decades. The law is not codified. The common law is generally based on Roman Dutch Law and English Law, as well as precedents set by judgments delivered by judges of the:

  • High Court.

  • Supreme Court of Appeal.

  • Constitutional Court.

In terms of the Constitution of the Republic of South Africa (Constitution), the courts must consider international law and can consider foreign law in interpreting the rights contained in the Bill of Rights.

Principal institutions

Only High Courts have jurisdiction to deal with class actions effectively. Tribunals or other bodies do not have the power to bind parties with the orders being made. For example, with "opt-in" or "opt-out" procedures, the advertising of a class action (requesting claimants to opt-in or opt-out) in the media have no force or effect unless ordered by a High Court.

Whether a court has jurisdiction to hear the matter is mostly determined by the location of the defendant. For example, if there are thousands of claimants scattered all over South Africa and the defendant is conducting business in Cape Town, then the High Court situated in Cape Town will have jurisdiction to hear the class action.

Where a third party is joined by a defendant to an existing action, the court of first instance has jurisdiction to hear the matter, even if the first court would not have jurisdiction over the third party in normal circumstances.

Different mechanisms

To bring a class action, the claimants must first apply for certification by motion proceedings in the High Court. The class or claimants must make a case on affidavit that their cause of action raises a triable issue and that there are sufficient common issues of fact or law. Therefore, certain principles have been laid down by the Supreme Court of Appeal for certification applications. The respondent or defendant can file an answering affidavit to oppose the relief being sought and the potential class or claimants can file a replying affidavit to deal with the allegations made by the respondent or defendant. The applicants cannot incorporate new matters into the replying affidavit and can only respond to averments made by the respondent or defendant. The motion application is set down for a hearing and a judge will rule on it.

 
3. Are class/collective actions permitted/used in all areas of law, or only in specific areas?

The procedures applicable in the High Court apply for all areas of the law and claims instituted. All claims where a cause of action can be pleaded are governed by the same rules or procedures. Class actions are suited to matters relating to:

  • Product liability.

  • Environmental law.

  • Competition law.

  • Pension's disputes.

  • Financial services.

  • Consumer redress.

However, potential claimants must be able to identify a triable issue and must have sufficient commonality in terms of facts and law.

Although there is a statutory Competition Tribunal that hears competition law related matters, any class action for damages resulting from an order made by a Competition Tribunal (where it was found that there was anti-competitive conduct that may have caused damage to consumers) must be instituted in the High Court. The Competition Tribunal does not have jurisdiction to hear these matters.

Recently, a class action was launched by about 60,000 pensioners against their ex-employer for damages suffered by the pensioners as a result of the failure of the ex-employer to invest the pensioners' money properly and safely. The court ordered that the class was certified.

However, the High Court Rules of South Africa also allow for any number of persons to be joined as claimants in the same action, provided the same question of law or fact would arise in each action should the claimants have instituted their actions individually. Therefore, all the claimants must have the same interest. For example, thousands of members of a particular pension fund claiming that a directive issued is ultra vires of the rules of the pension fund, and must be declared null and void, can all be joined as claimants in this action. If the action by the pensioners is successful, a judgment in favour of the pensioners has the same effect as if the pensioners instituted the action in their individual capacities. Such a claim is not a class action and does not have to be certified. The relief also only applies to the specific claimants in the action.

Other areas of law/policy

Criminal proceedings cannot be used as a means of pursuing damages claims on behalf of a group or class. For example, where criminal proceedings are instituted successfully against a company unlawfully contaminating a river that is used by many farmers downstream and the farmers' cattle die because of drinking the contaminated water, the farmers can bring a class action against the company that caused the water to be contaminated. The mere fact that the company was found guilty in a criminal court does not necessarily mean that the farmers will succeed with their claims, as different elements must be proved by the claimants in a civil action. However, as the standard of proof to be found guilty in a criminal court (beyond reasonable doubt) is higher than the standard of proof to succeed in a civil suit (balance of probabilities), a guilty verdict will greatly assist the farmers to prepare their case and succeed.

 

Limitation

4. What are the key limitation periods for class/collective actions?

There are time limits on bringing or issuing court proceedings. In terms of the Prescription Act No. 68 of 1969, claims for damages must be started within three years from the date when the cause of action arose. Prescription will not run against a claimant until he has knowledge of the identity of the debtor and of the facts from which his claim arose, provided that if the claimant could have acquired such knowledge by exercising reasonable care, prescription will not be halted.

There are other circumstances when the commencement of the running of prescription will be interrupted, for example, when a claimant is:

  • A minor.

  • Insane.

  • Outside of South Africa.

  • A person under curatorship.

  • Prevented by a superior force from interrupting the running of prescription.

However, in terms of the law, a court cannot assist a claimant where his claim has prescribed or interfered with the stipulations of the Prescription Act. The law of equity does not apply.

 

Standing and procedural framework for bringing an action

Standing

5. What are the rules for bringing a claim in a class/collective action?

Definition of class

As class or group actions are a relatively new phenomenon in South Africa, only a few certification applications have been brought since 2012 (see Question 1). There is no standard definition of "class actions" in South Africa.

Potential claimant

The persons that can approach a court are "anyone acting as a member of, or in the interest of, a group or class of persons" or "anyone acting in the public interest" (section 38, Constitution). Therefore, individual groups and representative bodies are entitled to bring these actions.

The requirements stipulated by the Supreme Court of Appeal for the certification of a class are as follows:

  • The existence of class identifiable by objective criteria.

  • The existence of a cause of action raising a triable issue.

  • That there are issues of fact, or law, or fact and law, common to the members of the class.

  • That the relief or damages sought flow from a cause of action and are ascertainable and capable of determination.

  • That there is an appropriate procedure to allocate damages to class members.

  • That a representative has been proposed suitable to conduct the action and to represent the class.

  • That the class action has appropriate means to determine class members' claims in light of the composition of the class and the nature of the proposed action.

Claimants outside the jurisdiction

Claims can be brought by individuals from other jurisdictions, but the claimants must satisfy the court that the court has jurisdiction to hear the matter. Jurisdiction is determined using factors regarding the whereabouts of the defendant or where the cause of action arose.

Professional claimants

Champerty is allowed and professional commercial claimants can therefore fund consumers' claims in exchange for a share of the proceeds of the action.

Qualification, joinder and test cases

6. What are the key procedural elements for maintaining a case as a class action?

Certification/qualification

A judge of the High Court determines whether an application for the certification of a class is successful or not. The determination is made by way of motion proceedings. If a case is not certified as a class action, the members of the class have the option of instituting their claims in terms of the High Court Rules on an individual basis and the standard civil procedure rules must be followed. The claimants must then commence their individual proceedings by serving a summons.

Minimum/maximum number of claimants

There is no minimum or maximum number of claimants required before an action can be brought.

Joining other claimants

For class actions, the High Court has accepted the "opt-in or opt-out" procedure. In one of the silicosis-related matters by gold miners against the owners of the gold mines (see Question 1, Use of class/collective actions), relief is sought to pursue the class action in two stages:

  • Firstly, to obtain declaratory relief in respect of the respondent's liability on behalf of the class as opt-out classes. The members of the first class will be bound by the judgment in the class action that applied to all members of the class unless they give notice that they wish to be excluded as a member of the class.

  • Secondly, if successful at the first stage, to claim damages on an individual basis on behalf of the classes as opt-in classes.

Therefore, there is no specific procedure regarding opt-in or opt-out elections and each matter will be dealt with on its own merits. As there is also no legislation giving guidance on opt-in or opt-out classes, principles will have to be developed over time and precedents created.

In the pending application for certification before the High Court, the class requested that the court make an order that the members of each class are to be notified of the action by way of:

  • Mail.

  • Publication in daily newspapers.

  • Disseminating by radio, where practicable.

  • Displaying a notice in prominent places.

  • Maintaining a call centre for three months to answer questions and to accept all opt-out members.

It will be within the discretion of the judge hearing the application for certification of a class to impose a "cut-off" date by which claimants must join the litigation. There are no specific rules in this regard at present.

Test cases

Only time will tell, with the development of class or group actions jurisprudence and the procedures relating to them, how the courts in future will use test cases as precedents in class actions. In terms of the law, High Court judges are bound by the judgments of the Supreme Court of Appeal and the Constitutional Court. Also, a single judge will be bound by the judgment of a full bench (two or more judges) of the High Court. A single judge can differ from a previous judgment of a single judge and give a different judgment or ruling if the judge is of the view that the judgment of the single judge was incorrect.

Therefore, judges are bound by certain judgments of other judges and courts and will form the development of class actions through "test cases".

Timetabling

7. What is the usual procedural timetable for a case?

It depends in which legal jurisdiction the action was instituted, as well as the complexities of the matter, to determine how long it will take for the matter to get to trial. On average, it takes approximately one to one and a half years for a matter to be brought to trial.

Effect of the area of law on the procedural system

8. Does the applicable procedural system vary depending on the relevant area of law in which the class/collective action is brought?

The procedural system does not vary from jurisdiction to jurisdiction. The High Court Rules are applicable for all the High Court jurisdictions in South Africa.

 

Funding and costs

Funding

9. What are the rules governing lawyers' fees in class/collective actions?

Contingency fees are allowed. However, the "success fee" cannot exceed the normal fee by more than 100%, provided that, for claims based in money, the total of any such success fee payable by the client to the legal practitioner does not exceed 25% of the total amount awarded or any amount obtained by the client in consequence of the proceeding concerned, which amount cannot, for purposes of calculating excess, include any costs.

 
10. Is third party funding of class/collective actions permitted?

According to the judgment of the Supreme Court of Appeal in Price Waterhouse Coopers Inc and Others v National Potato Co-operative Ltd 2004 (6) SA 66 (SCA), an agreement in which a person provides a litigant with funds to prosecute an action in return for a share or the proceeds was not considered void contrary to public policy. Therefore, third party funding is permitted. Funding can be provided by any legitimate means.

 
11. Is financial support available from any government or other public body for class/collective action litigation?

Legal assistance is made available by institutions such as the:

  • Legal Aid Board.

  • Legal Resources Centre.

  • Certain Legal Aid Clinics.

However, it is doubtful whether public funding will be made available for class actions.

There is a "means" test that determines the indigence of someone applying for legal aid. In civil matters, the income and assets of the applicant or his spouse are both taken into account to qualify for aid. However, there are certain restrictions regarding the types of claims, and financial assistance is often not provided for monetary claims for damages based on contract and tort. Although it may be available, it is doubtful that the institutions mentioned above will accept or have the capacity to deal with class or group actions.

 
12. Are other funding options available to claimants in class/collective actions?

Funds provided by insurance companies are dependent on whether an insurance company is prepared to issue a policy to be purchased after the dispute arose. The insurance premium is not recoverable as it does not fall within the category of party and party costs to be taxed.

Costs

13. What are the key rules for costs/fees in class/collective action litigation?

Court and legal fees are recoverable on a party-and-party scale that provides that a successful party is entitled to recover its legal fees in terms of the High Court Rules as per a taxed bill of cost, subject to the discretion of the taxing master.

Where an order to pay attorney-and-client costs is granted by the court, the successful party can recover more legal costs than the party-and-party scale provides for, but also subject to the discretion of the taxing master. If an order to pay attorney-and-own-client costs is granted, the successful party can recover all legal costs reasonably incurred to prepare for the filing of pleadings and the trial, including all the fees and reasonable costs incurred by the attorney and counsel.

There is no judgment yet on how costs of litigation can be shared among the members of the group or class. A cost order is usually made against the unsuccessful parties on a joint and several basis. Whether the same approach will be followed in class or group actions remains to be seen.

Depending on the agreement between the members of the group or class, if a member discontinues a claim before the conclusion of the matter, this may result in legal costs being due by this member to the representative acting on behalf of the group. The defendant may also be entitled to recover legal costs from a member who withdraws from the case. It is doubtful that the courts will accept the responsibility to manage the costs incurred by parties and limiting same with a cap. To make provision for a procedure to manage costs, the High Court Rules will have to be amended to cater for class or group actions specifically.

The Constitutional Court in South Africa (the highest court) does not tend to grant costs to defendants in certain situations, even where the claimants are unsuccessful. These are usually cases of public interest.

Key effects of the costs/funding regime

14. What are the key effects of the current costs/funding regime?

Funding may be by individual claimants with each contributing a small amount of money, but with thousands of claimants the amount available for the conduct of the case may grow substantially with claimants joining the class.

Where there is a cost order against a defendant in circumstances where the individuals contributed, the reimbursement of the claimants for the legal costs may be problematic. These will all have to be sorted out between the various claimants and will have to be settled between them. The court will not get involved if there is a dispute regarding the reimbursement of costs to claimants.

There are no rules on this at present.

 

Disclosure and privilege

15. What is the procedure for disclosure of documents in a class/collective action?

Before litigation

In certain cases, records can be requested in terms of the Promotion of Access to Information Act 2000 before the litigation process is started.

Apart from this, there is no procedure for discovery in anticipation of litigation.

During litigation

In terms of the discovery procedure, a party must make full disclosure of all documents, tape recordings and correspondence relevant to the case and make copies of these available to the other side but only after action has been instituted. The discovery procedure is usually completed by the time the first pre-trial meeting is held.

Discovery does not include the taking of evidence. Depositions do not form part of South African procedure.

The discovery procedure in class actions is the same as in ordinary litigation.

 
16. Are there special considerations for privilege in relation to class/collective actions?

The legal principle of privilege is well established. Privilege belongs to the client and only the client can waive privilege. Where reliance is placed on a privileged document or a privileged communication, then a party can refuse to disclose the document or information. At present, there are not any special considerations in the context of class actions and the rules of privilege should not be different for class action. Any communication with absent class members can result in the waiver of privilege. The privileged communication remains protected within the members of the class.

A party can be challenged on whether a claim of privilege is justified. Where there is a dispute between the parties as to whether or not a particular document is a privileged, the party disputing the claim of privilege must bring a motion application to the court for this to be determined as an interlocutory application.

 

Evidence

17. What is the procedure for filing factual and expert witness evidence in class/collective actions?

The rules of the court does not provide for the filing of pre-trial witness statements.

The rules of the court provides for the filing of a summary of the evidence or testimony of an expert witness. An expert witness cannot be called to testify unless the summary has been filed at least ten court days before the start of the trial. The expert witness can only testify as to what has been pleaded in the pleadings by a party.

It is customary for expert witnesses to meet before the start of a trial to endeavour to find common ground as to what the experts can and cannot agree on. This is part of an endeavour to curtail the duration of the proceedings.

 

Defence

18. Can one defendant apply to join other possible defendants in a class/collective action?

Joining other defendants

It is possible for one defendant to apply to join another defendant. In terms of the third party procedure of the Court Rules, a defendant can apply to join another party as a defendant where a defendant alleges that another defendant may have caused the damage suffered by the class or that another defendant contributed to the damages suffered by the class. An example of this could be in relation to environmental matters where

  • One pollutant company is sued.

  • The company being sued then applies for the joinder of another defendant as a third party, alleging that this defendant also has a factory in the same area where the alleged pollution took place.

  • The company alleges that the other defendant caused or contributed to the polluted air and must make a contribution to the damages claimed by the class.

Rights of multiple defendants

It is not a common practice for multiple defendants to enter into a "joint defence agreement". Arrangements can be made to allow the sharing of confidential information without waiver of privilege including other protections, such as a process to be followed if conflicts arise. Defendants that are preparing together to defend an action will not waive privilege in the event of sharing privileged information.

There is a distinction between confidential information and privileged information in terms of the law. Confidential information is not protected and a party can be compelled to make available confidential information. The same does not apply to privilege information.

Multiple defendants are usually represented by different legal teams but they may also instruct the same lawyers. There is the risk that when multiple defendants instruct the same lawyers that, halfway through the trial, a conflict may arise and then the lawyers may have to withdraw from the matter to the prejudice of the defendants they have been acting for and the conduct of the defence in general.

Multiple defendants can instruct joint experts.

 

Damages and relief

19. What is the measure of damages under national law in the field of class/collective actions?

Damages

Punitive damages cannot be claimed. The members of the class must prove the damage they have actually suffered. A court can find a defendant liable for the damage caused to the claimants or class, but the court will not make an award to be shared by the members of the class without each member proving that it is entitled to the amount it is claiming from the defendant. It has not yet been established how the claimants will be awarded. Each individual claimant must prove its claim and evidence must be provided that is specifically relevant regarding that individual claimant's circumstances. Therefore, there is currently no precedent on how damages will be apportioned between claimants.

There is no cap on the quantum that can be recovered. Defendants can be ordered jointly and severally to pay the damages suffered by a claimant and it will then be for the various defendants to agree on the apportionment of the damages to be paid to the individual claimants. Where there is only one defendant, this complication obviously will not arise.

The courts will have to develop a mechanism to make it cost effective for members of a class in South Africa to prove the damage they have suffered and not to force the claimants to institute actions separately to prove such claims.

Recovering damages

The Third Party Procedure in terms of the Court Rules must be used for the joinder of a defendant to the proceedings.

In terms of legislation, a defendant can also claim an apportionment of the damages suffered by a claimant (a defence of contributory negligence), in the event of the claimant being successful. A defendant must endeavour to make out a case that, for example, in a product liability matter that damages to be awarded must be apportioned because the claimant did not use the goods it bought from the manufacturer in a way that it was intended.

Interest on damages

There are no special rules applying to the payment of interest in the field of class actions at present. These special rules will have to be developed.

Generally, interest can be claimed at the rate prescribed by the legislator. The date from which interest is calculated will be from:

  • The date of demand.

  • The date of the summons.

  • When the amount claimed became due, depending on the circumstances.

In the event of class actions, interest will probably only commence from the date of the judgment against a defendant.

 
20. What rules apply to declaratory relief and interim awards in class/collective actions?

Declaratory relief

Declaratory relief is available under the law and is also available for class actions.

Interim awards

Interim awards can be made in general and are therefore also available to a class. The general rules for applying for an interim award apply to class actions and, at present, there no special rules applicable to class actions when applying for an interim award. An application for an interim award can usually be made before the main action is instituted.

 

Settlement

21. What rules apply to settlement of class/collective actions?

Settlement rules

A matter can be settled between the parties and the parties can agree that the settlement agreement be made an order of court. In this case, any amount of damages that is settled between the parties becomes executable in the event of a defendant failing to pay the damages as agreed on in the settlement agreement.

Settlements are usually reached out of court and a judge does not become a participant in the settlement negotiations. There are no rules at present for settling class actions. Where claimants decide to opt-in, the terms of the settlement will probably have to be approved by all those claimants.

The judge's overall function is to approve the settlement and to make it an order of court. The judge will only intervene in the event of the judge being of the opinion that the settlement is not in the interest of justice.

Separate settlements

Where there is more than one defendant, a defendant can settle separately. The danger of settling separately is that another co-defendant is not bound by the terms of the settlement and can still claim a contribution from the defendant who settled.

 

Appeals

22. Do parties have a right to appeal decisions relating to class actions, such as a decision granting or denying certification of a class action?

Parties do have a right to appeal decisions in general and also have a right to appeal decisions relating to class actions. From the judgement of a single judge, an appeal to the full bench (three judges) sitting in the High Court or to the Supreme Court of Appeal is available. However, leave to appeal is required from the single judge. If leave to appeal is not granted by the judge that heard the matter in the first instance, a petition to the Chief Justice of the Supreme Court of Appeal must be made to obtain leave to appeal. From the Supreme Court of Appeal, a further appeal is available to the Constitutional Court.

 

Alternative dispute resolution

23. Is alternative dispute resolution (ADR) available in class/collective actions?

Alternative dispute resolution is not available in class actions.

 

Proposals for reform

24. Are there any proposals for reform concerning class/collective actions?

Since class actions are in their infancy, the entire field of class action rules will need to be developed. Therefore, there are presently no proposals to change any rules in this regard. The only rules are those in the Supreme Court of Appeal judgment (Children's Resources Centre Trust versus Pioneer Foods (Pty) Ltd. and Others [2013] (2) SA213 (SCA)), which started class actions in South Africa. Ideally, legislation should be promulgated to make provision for class actions in South Africa and the rules to be followed.

 

Online resources

Southern African Legal Information Institute

W www.saflii.org.za/content/south-africa-index

Description. The Southern African Legal Institute publishes legal information for free public access which comprises mainly of case law and legislation from South Africa. SAFLII also hosts legal materials from other countries in the region which are obtained through partnerships, collaborative efforts and more recently through linking to other Legal Information Institutes established in these regions. All information is offered on a free and open basis subject to the terms of use. The website is continuously updated.



Contributor profiles

Pieter Conradie, Executive Consultant

Cliffe Dekker Hofmeyr

T +27 11 562 1071
F +27 11 562 1671
E pieter.conradie@cdhlegal.com
W www.cliffedekkerhofmeyr.com

Professional qualifications. South Africa, Attorney, 1976; South Africa, Advocate

Areas of practice. Commercial litigation; arbitration; product liability; regulatory work; telecommunications; dispute resolution; competition, construction and media law; corporate recovery; general litigation; mine enquiries.

Recent transactions. Attorney for various large corporations in South Africa, representing them in the US, the UK and Europe.

Non-professional qualifications. BA LLB, University of Johannesburg

Languages. English, Afrikaans


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