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6.1.1 This Chapter embodies the Commission’s recommendations in the form of a draft bill. The recommendations and the proposed draft bill do not materially differ from the that proposed by the Commission in its Working Paper on the Recognition of a Class Action in South African Law. For ease of reference, we include an explanatory memorandum with cross references to our recommendations in this Chapter.
6.2.1 Accordingly we recommend:
REPUBLIC OF SOUTH AFRICA
PUBLIC INTEREST AND CLASS ACTIONS ACT
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(As introduced)
---------------------------------
(MINISTER OF JUSTICE)
[B - 99]
_____________________________________________________________________
REPUBLIEK VAN SUID-AFRIKA
............................................. WETSONTWERP
--------------------------------
(Soos ingedien)
--------------------------------
(MINISTER VAN JUSTISIE)
[B - 99]
BILL
To make provision for the institution of public interest and class actions; to regulate the conduct of public interest and class actions; and to provide for matters connected therewith.
TO BE INTRODUCED BY THE MINISTER OF JUSTICE
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows: -
CHAPTER 1: DEFINITIONS
Definitions
1. In this Act, unless the context otherwise indicates -
“action” means any proceeding instituted in a court, whether by way of summons or notice of motion;
“certify” means to permit an action to be maintained as a class action, but does not mean to approve the merits of the action except to the extent provided for by section 6(2) of this Act;
“class action” means an action instituted by a representative on behalf of a class of persons in respect of whom the relief claimed and the issues involved are substantially similar in respect of all members of the class, and certified as a class action in terms of section 6 of this Act;
“common issues” means common but not necessarily identical issues of fact, or common but not necessarily identical issues of law that arise from common but not necessarily identical facts;
“court” means the Supreme Court of Appeal, the Constitutional Court of South Africa, the High Court of South Africa, the Land Claims Court, the Labour Court, and any other court designated by the Minister in terms of section 15 of this Act;
"Legal Aid Board" means the Legal Aid Board established in terms of section 2 of the Legal Aid Act, 1969;
“legal practitioner” means a practising advocate or practising attorney;
“members of a class” means two or more persons with a common interest in the class action;
“Minister” means the Minister of Justice;
“person” includes an association of persons, whether vested with legal personality or not;
“public interest action” means an action instituted by a representative in the interest of the public generally, or in the interest of a section of the public, but not necessarily in that representative’s own interest;
representative” means a person designated by the court as the representative of the plaintiffs or defendants in a public interest action or class action.
CHAPTER 2: PUBLIC INTEREST ACTIONS
Instituting a public interest action
2. (1) Any person may institute action in a court claiming by way of a public interest action relief in the interest of the public generally or of any particular section thereof, irrespective of whether or not such person has any direct, indirect or personal interest in the relief claimed.
(2) The person who institutes a public interest action shall identify the action as such and shall nominate either himself or herself or any other suitable person as representative of those on whose behalf the relief is claimed.
(3) The court may give directions to the representative as to the appropriate person or persons to be served as respondents.
(4) Unless the court holds otherwise, judgment in a public interest action shall not be binding on the person or persons in whose interest the action is brought.
The representative in public interest actions
3. (1) If the court is satisfied that it is proper that the action should proceed by way of a public interest action, it shall appoint as the representative a person who, in the court’s opinion, is suitably qualified to represent the public interest in the matter concerned.
(2) The court may at any stage before judgment mero motu or on application of any interested party remove any representative and appoint another suitably qualified representative on good cause shown.
Costs
4. (1) In a public interest action the court shall not make an order as to costs or order the representative to provide security for costs unless special circumstances apply.
(2) The court may authorise a public interest action and appoint the representative subject to the rendering or making available of legal aid by the Legal Aid Board.
CHAPTER 3: CLASS ACTIONS
Instituting a class action
5. Any person, whether a member of the class concerned or not, may apply to a court for leave to institute or defend an action as a class action.
Certification
6. (1) No action shall proceed as a class action unless the court has certified the action as a class action.
(2) In deciding to certify an action as a class action, the court may take into account -
(a) evidence of the existence of an identifiable class of persons;
(b) the existence of a prima facie cause of action;
(c) issues of fact or law which are common to the claims or defences of individual members of a class;
(d) the availability of a suitable representative or representatives to represent the interests of the members of the class;
(e) the interests of justice; and
(f) whether, having regard to all relevant circumstances, a class action would be the appropriate method of proceeding with the action.
(3) The court may mero motu or on application of any interested party withdraw the certification order at any stage before judgment if the criteria in subsection (2) are no longer met.
(4) The court which certifies an action as a class action may give directions as to the appropriate court in which the action should be prosecuted.
(5) The court shall not be precluded from certifying an action as a class action merely by reason of the fact that there are issues pertaining to the claims of all or some of the members of the class which will require individual determination, or that different class members seek different relief.
(6) The refusal of the court to certify an action as a class action shall be subject to appeal.
The representative in a class action
7. (1) The court which certifies an action as a class action shall appoint one or more persons as representative or representatives of the class.
(2) The court may appoint the applicant, or any other suitable person, as representative in a class action.
(3) When appointing a person as the representative the court shall take into account -
(a) the suitability of that person adequately to represent the best interests of the members of the class;
(b) any conflict or potential conflict of interest between the representative and the members of the class;
(c) the ability of the representative to make satisfactory arrangements with regard to the funding of the class action and the satisfaction of any order as to costs, or for security for costs; and
(d) the ability of the representative to manage the class action.
(4) A representative appointed by the court shall conduct the class action in the best interests of the members of the class concerned and in accordance with the directions of court.
(5) The court may at any stage before judgment mero motu or on application of any interested party remove any representative and appoint another suitably qualified representative on good cause shown.
Notice in class actions
8. (1) The court which certifies an action as a class action may give directions to the representative with regard to -
(a) the giving of notice of the action to the members or potential members of the class concerned;
(b) the form which such notice should take;
(c) the way in which such notice is to be communicated to the members of the class.
(2) In considering the question whether notice should be given to the members of a class and, if so, what directions are appropriate in respect thereof, the court shall take into account -
(a) the extent to which the members of the class might be prejudiced by being bound by a judgment given in an action which may not have come to their attention;
(b) the potential size of the class;
(c) the general level of education and development of the members of the class;
(d) the ease with which members of the class can be identified;
(e) the type of relief claimed;
(f) where monetary relief is claimed, the amount of the claim of each member of the class;
(g) the difficulties likely to be encountered by members of the class in enforcing their actions individually;
(h) any other relevant factor.
(3) The court may -
(a) require from those members of the class who do not wish to be bound by the judgment written notice of their exclusion as members of the class;
(b) require from those members of the class who wish to be bound by the judgment written notice of their inclusion as members of the class; or
(c) order that no notice to members of the class is necessary.
Procedure in class actions
9. (1) The court in which the class action is prosecuted shall -
(a) give directions as to the procedure to be followed in the conduct of the class action;
(b) delineate the common issues to be decided in the class action;
(c) determine whether there are individual issues that require separate adjudication and, if so, give directions as to the procedure to be followed in order to adjudicate such issues;
(d) determine, where the claims are for damages or any other form of monetary relief, whether the individual claims of the members of the class should be assessed as one aggregate amount or whether the claims of the members of the class should be proved individually;
(e) determine how any aggregate award is to be distributed among the members of a class, appoint a person responsible for the administration of such distribution, and give directions as to matters incidental thereto.
(2) Any member of a class who stands to be bound by a judgment in a class action may apply for leave to intervene in the action in order to protect his or her own interests or the interests of the class or any section thereof.
Conduct of a class action
10. (1) The court in which the class action is prosecuted may first give judgment on the common issues and then adjudicate the individual issues.
(2) The court may order consolidation of actions where a number of claims are based on substantially the same cause of action.
(3) Judgment of the court in respect of a class action shall be binding on the members of the class, unless the court is of the opinion, after consideration of the factors listed in section 8(2), that members of the class may be significantly prejudiced by the fact that they will be bound by a judgment given in a class action which may not have come to their notice.
Costs
11. (1) In a class action the court shall not order the representative to provide security for costs unless special circumstances apply.
(2) The court may -
(a) authorize a class action and appoint the representative subject to the rendering or making available of legal aid by the Legal Aid Board;
(b) order those members of the class who elected to give written notice in terms of section 8(3)(b) to contribute towards costs and, where appropriate, to provide security for costs.
(3) When an award is made in a class action in respect of which funds have been made available by the Legal Aid Board the court may order the representative or any member of the class to contribute a percentage of the award to the Legal Aid Board.
Contingency fees
12. (1) Subject to the Contingency Fees Act 66 of 1997, a legal practitioner may make an arrangement in writing with the appointed representative stipulating for the payment of fees or fees and disbursements, in respect of a class action commenced under this Act only in the event of success in the action.
(2) For the purpose of this section, success in the action includes a judgment in favour of some or all members of the class on the questions of fact or law common to such members or a settlement that benefits some or all members of the class.
CHAPTER 4: GENERAL
Appointment of commissioner
13. (1) In a public interest action or a class action the court may appoint a commissioner for the purpose of -
(a) collating evidence;
(b) making a recommendation, including a recommendation relating to individual issues or the individual assessment of monetary claims in a class action.
(2) The commissioner shall report his or her findings or recommendation to the court.
(3) The findings or recommendation of the commissioner shall be subject to review by the court.
Settlement, abandonment, and discontinuance
14. An action commenced under this Act shall not be settled, abandoned or discontinued without the prior approval of the court first being obtained, and upon such terms and conditions, including notice or otherwise, as the court considers proper.
Designation of court by Minister
15. The Minister may designate by way of notice in the Gazette those courts in which public interest actions and class actions may be instituted.
Short title
16. This Act shall be called the Public Interest and Class Actions Act, 19...
The Act regulates public interest actions and class actions. It provides for the broadening of the traditional notion of standing in terms of which a direct, personal interest is required in the subject matter before the court to enable a person to institute or defend an action. The Act broadens access to justice and builds on sections 38(c) and (d) of the Constitution of the Republic of South Africa Act, 1996 where provision is made for public interest actions and class actions in constitutional litigation.
The Act defines the concepts “public interest action” and “class action”. A public interest action is an action instituted by a representative in the interest of the public generally, or in the interest of a section of the public, but not necessarily in that representative’s own interests. A class action, on the other hand, enables a group of persons to join forces to bring one action on substantially the same issues of fact or of law. The essential difference between a class action and a public interest action is that the judgment in a class action binds all the members of the class and may, therefore, be pleaded as res judicata against the members of the class. The judgment in a public interest action does not bind the person in whose interest it is brought.
As such the Act implements recommendations 1, 2, 3, 4, 8 and 9.
Section 1: This section defines the following terms: “action”, “certify”, “class action”, “common issues”, “court”, “Legal Aid Board”, “legal practitioner”, “members of a class”, “Minister”, “person”, “public interest action”, and “representative”. It specifically implements recommendations 3, 8 and 17.
Section 2: This section provides for the introduction of a public interest action in South African law. It further defines the circumstances and manner in which a public interest action may be instituted and regulates the appointment and dismissal of the representative who is to conduct the public interest action. It implements recommendations 1, 3, 4 and 7.
Section 2(1): This subsection regulates the institution of public interest actions. The traditional notion of standing (i.e. a direct and substantial interest) is relaxed to enable any person to bring a public interest action in the interests of the public generally or of any particular section thereof. It implements recommendations 1, 3 and 4.
Section 2(2): This subsection provides for the manner in which a public interest action is to be instituted. The procedure is quite simple: The person who institutes the action identifies the action as a public interest action and nominate a suitable representative. It implements recommendation 4.
Section 2(3): The person who institutes a public interest action might not know against whom the action should be brought. In such a case, the court may come to that person’s assistance by giving directions as to whom should be served as respondent or defendant in the matter. It implements recommendation 5.
Section 2(4): This section makes it possible for the court to regulate the binding effect of its judgment in a public interest action. As a public interest action by its very nature is brought on behalf of the public, judgment in such an action ordinarily cannot be binding (res judicata) on the persons in whose interests the action is brought. It implements recommendation 3.
Section 3: This section authorises the court to appoint a suitable representative to represent the public interest if the court is satisfied that the matter should proceed as a public interest action. It implements recommendation 4.
Section 3(1): This subsection provides for the appointment of a suitably qualified person as the representative. It implements recommendation 4.
Section 3(2): This subsection allows the court to remove and replace a representative in appropriate circumstances. It also implements recommendation 4.
Section 4: This section deals with the questions of security for costs in public interest actions. It implements recommendation 7.
Section 4(1): In public interest actions the court must refuse to make an order as to costs or to order the representative to provide security for cost unless special circumstances apply. It implements recommendation 7.
Section 4(2): This subsection helps the indigent representative to institute a public interest action as it allows the court to authorise a public interest action on condition that the representative obtains legal aid from the Legal Aid Board. It implements recommendation 7.
Section 5: This section allows any person to apply for leave to institute or defend an action as a class action. Such a person need not be a member of the class and as such this section incorporates the concept of the “ideological plaintiff” in our law. It implements recommendation 9.
Section 6: This is one of the critical provisions in the Act as it provides for the certification of an action as a class action. It implements recommendations 8, 9, 10, 11, 12, 13, and 26 and (a) sets out who may apply to court for leave to institute an action as a class action; (b) describes the procedure under which an action may proceed as a class action; (c) lists the criteria to be taken into account in certifying an action as a class action; (d) provides for decertification of a class action in certain circumstances; (e) allows the court to give directions as to the appropriate division or court in which the class action is to be prosecuted; (f) provides for an “avoidance of doubt”-clause; and (g) regulates appeals against non-certification orders.
Section 6(1): In order to proceed with an action as a class action a preliminary application must be brought before court requesting leave to institute the class proceeding. This certification process is of critical importance. It implements recommendation 10.
Section 6(2): This subsection implements recommendation 11 and sets out the criteria which the court has to consider before it grants the application for certification. The criteria are: (a) evidence of the existence of an identifiable class of persons; (b) the existence of a genuine cause of action; (c) common questions of fact or of law; (d) the availability of a suitable representative; (e) the interests of justice; and (f) whether a class action would be the most appropriate method of proceeding with the action.
Section 6(3): This new subsection allows the court to revoke the certification order if it considers that the prerequisite requirements are no longer being met. It implements recommendation 12.
Section 6(4): This subsection authorises the certifying court to give directions as to the appropriate court or division in which the class action should be prosecuted. The certifying court is therefore not necessarily the same court in which the class action is eventually prosecuted. It implements recommendations 19 and 20.
Section 6(5): This is the “avoidance of doubt” -provision. It directs the court not to refuse to certify an action as a class action merely by reason of the fact that there are issues pertaining to the claims of all or some of the members of the class which will require individual determination, or that different class members seek different forms of relief. It implements recommendation 17.
Section 6(6): This new subsection makes it possible to bring appeal proceedings against non-certification of an action as a class action. No–refusal to certify an action as a class action is specifically excluded from this appeal provision as the international experience shows that certification orders are almost always appealed against, usually as a delaying tactic. It implements recommendation 26.
Section 7: This section addresses the pivotal role of the representative in a class action. It deals with the appointment, criteria for appointment, and dismissal of the class representative. The section implements recommendation 9.
Section 7(1): This subsection instructs the certifying court to appoint one or more persons as the representative(s) of the class. It implements recommendation 9.
Section 7(2): In terms of this subsection the court may appoint the applicant or any other suitable person as the representative of the class. The representative need not be a member of the class. This subsection implements recommendation 9 and introduces the concept of the “ideological plaintiff” in South African law.
Section 7(3): This subsection lists the criteria the court should consider when appointing a suitable representative in a class action. The criteria are: (a) suitability of the person; (b) avoidance of conflict or potential conflict of interests; (c) the ability to make satisfactory arrangements as to the funding of the class action and as to costs or security for costs; and (d) the managerial abilities of the representative. It implements recommendation 9.
Section 7(4): This subsection instructs the representative to conduct the class action in the best interests of the class and in accordance with the directions of the court. Should the representative fail to do so, the court may dismiss him or her in terms of section 7(5). It implements recommendation 9.
Section 7(5): This subsection authorises the court to remove and replace a representative on good cause shown. It implements recommendation 9.
Section 8: This section prescribes the giving of notice in class actions. As such it deals with the questions of when and by whom class members should be given notice. The court is given the discretion to order the representative or any other person to give opt-in notice, opt-out notice, or no notice at all. It implements recommendations 13, 14, 15 , and 16.
Section 8(1): This subsection grants the certifying court the discretionary power to give directions to the representative with regard to (a) the giving of notice of the institution of the action to class members; (b) the manner and form of such notice; and (c) the way in which such notice is to be communicated. It implements recommendation 15.
Section 8(2): This subsection lists the various factors the court should take into account in considering the question whether notice, in whatever form, should be given to the members of the class. It implements recommendations 15 and 16.
Section 8(3): It is very important that the members or potential members of the class be informed and be kept informed of all aspects related to the class action as the judgment in a class action is binding (res judicata) on them. Practical realities might, however, make individual notices to all members impossible, impracticable or not affordable. This section therefore grants the court a discretion to order the appropriate form of notice. It provides that the court may (a) require from those members of the class who wish to opt-out notice of their intention to be excluded as members of the class; (b) require from those class members who wish to opt-in notice of their intention to be included as members of the class; or (c) dispense with the giving of notice. It implements recommendation 15.
Section 9: This section confers a general power on the court to prescribe the appropriate procedure in a class action. It implements recommendation 14.
Section 9(1): This subsection empowers the court in which the class action is to be heard to (a) prescribe the procedure to be followed; (b) delineate the common issues; (c) delineate the individual issues; (d) determine, where the claims are for damages or other monetary relief, whether the individual claims should be assessed as one aggregate amount or whether the claims of class members should be proved individually; and (e) determine how such an aggregate award is to be distributed among the class members. It implements recommendations 17 and 18.
Section 9(2): This subsection entitles any class member to apply for leave to intervene in order to protect his or her own interests or the interests of the class or a section thereof. The need for a provision of this nature flows from the fact that in terms of section 10(3) of this Act judgment in a class action is binding on all those class members who have not opted out. It implements recommendation 16.
Section 10: This section confers on the court in which the class action is prosecuted the power to (a) first give judgment on the common issues as delineated in terms of section 9(1)(b) of this Act and then to adjudicate the individual issues and (b) to order consolidation of actions where necessary. Subsection 10(3) makes it clear that judgment of the court in respect of the class action shall be binding on all those members of the class who have not opted-out. It implements recommendations 14 and 16.
Section 10(1): As part of its broad general management powers, the court in which the class action is prosecuted may first give judgment on the common issues and then deal with the individual issues. The term “common issues” is defined in section 1 of the Act. It implements recommendation 17.
Section 10(2): This subsection allows the court to order consolidation of actions where a number of claims are based on substantially the same cause of action. It implements recommendation 14.
Section 10(3): Unless a class member has given notice of his or her desire to be excluded from the class action in terms of section 8(3) of this Act, judgment in the class action shall be binding (res judicata) on all members of that class. This is the effect of the implementation of recommendation 16.
Section 11: The threat of a negative cost order can seriously limit or dampen class actions. In class actions courts should retain the discretion to apply the general rule that expenses follow success. Courts are therefore conferred with a general discretionary power enabling it to make any appropriate order as to cost. It implements recommendation 22.
Section 11(1): This subsection provides that the court must not order the representative to provide security for cost unless special circumstances apply. It implements recommendation 22.
Section 11(2): This subsection confers a general discretionary power on the court to (a) authorise a class action and appoint the representative subject to availability of legal aid and (b) to order whose members who opted in to contribute towards costs and, where appropriate, to provide security for costs. This latter provision stands in addition to section 8A(1) of the Legal Aid Act, 1969 which provides that whenever a litigant who has received legal aid becomes entitled to costs, it is deemed that such litigant has ceded his or her right to such costs to the Legal Aid Board. It implements recommendation 22.
Section 11(3): The purpose of this subsection is to strengthen the financial position of the Legal Aid Board in the long run by allowing the court to order the representative and successful class members to contribute a percentage of the award received to the Legal Aid Board. The proviso is that the representative and/or the class members should have relied on legal aid by the Legal Aid Board. It implements recommendation 24.
Section 12: This section implements recommendation 23 and enables a legal practitioner, subject to the Contingency Fees Act, 1997, to make an arrangement with the representative stipulating for the payment of fees or fees and disbursements in respect of a class action commenced under this Act only in the event of success in the action. Section 1 of the Act defines the term “legal practitioner” so as to include both a practising advocate and a practising attorney. In terms of section 12(2) of this Act success in the action includes a judgment in favour of some or all members of the class on the questions of fact or law common to such members or a settlement that benefits any member of the class.
Section 13: In terms of this section the court may appoint a commissioner to assist it in the gathering of evidence and to make recommendations. It implements recommendation 18. This assistance is available to the court in both public interest actions and class actions.
Section 14: Settlement, discontinuance or abandonment of a class action is made subject to the prior approval of the court. It implements recommendation 25.
Section 15: The Minister of Justice is empowered to designate those courts in which public interest actions and class actions may be instituted. Class actions should eventually be prosecuted in all our courts. Due to their complexity and likely extent, class actions should perhaps initially be introduced only in the Supreme Court of Appeal, the Constitutional Court, the High Court, the Land Claims Court, and the Labour Court. For this reason the Minister of Justice is given a discretion to designate those courts in which class actions and public interest actions can be adjudicated. It implements recommendations 6, 19, 20 and 21.
Section 16: This is the usual form provision with regard to citation.
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