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THE COMMISSION’S RECOMMENDATIONS

Introduction

1. The principles underlying class actions and public interest actions should be introduced by an Act of Parliament and the necessary procedures by rules of court. The Act and the rules should be introduced as a matter of urgency.

2. Class actions and actions in the public interest should be treated as two separate and distinct procedures. The two procedures serve different purposes and have to comply with different requirements. The essential difference between a class action and a public interest action is that the judgment given 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 bound the people in whose interest it is brought.

Public Interest Actions

3. The Act should define the term “public interest action”. The Commission proposes the following definition: “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. Judgment of the court in respect of a public interest action shall not be binding (res judicata) on the persons in whose interest the action is brought.

4. Any person should be able to institute action in a court claiming relief by way of a public interest action 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. Such person shall identify the action as a public interest action and nominate a suitable person (with that person’s prior consent) to represent the public interest in the matter concerned. Before the court appoints the representative, it must be satisfied that the contemplated action is a bona fide public interest action. The representative acts in the public interest and for this reason the court should be able to remove and replace him or her on good cause shown.

5. If the remedy sought is an interdict or a mandamus, then a defendant should be cited in a public interest action. If the public interest litigant seeks a declaration of rights, then it is not necessary to cite a defendant.

6. The Supreme Court of Appeal, the Constitutional Court, the High Courts, the Land Claims Court, the Labour Court, and the Magistrates’ Courts should be designated by the Minister of Justice to hear public interest actions with immediate effect. In addition, the Minister should be given the discretion to designate any other court to adjudicate public interest actions.

7. The court hearing the public interest action shall not make an order as to costs or order the representative to provide security for costs unless special circumstances apply.

Class actions

8. The Act should define the term “class action”. The Commission proposes the following definition: “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 which action is certified as a class action in terms of the Act.

9. The person commencing the class action or the person appointed as representative in the class action need not be a member of the class. Since the quality of the representative may be relevant, only suitable persons should be appointed as representatives. The Act should accordingly provide that the person who brings the application for certification may request the court to appoint him or her, or any other suitable person (with that person's prior consent), to be the representative. Before the court appoints the representative, it must be satisfied that the contemplated action is a bona fide class action. The Act should further provide that the court may dismiss a representative on good cause shown.

10. In class actions a preliminary application should be brought before court requesting leave to institute or defend an action as a class action proceedings and to ask for directions as to procedure.

11. An application for certification as a class action may be granted by the court where:

(a) there is an identifiable class of persons;
(b) a cause of action is disclosed;
(c) there are issues of fact or law which are common to the class;
(d) a suitable representative is available;
(e) the interests of justice so requires; and
(f) the class action is the appropriate method of proceeding with the action.

12. At any time after a certification order has been granted the court should be entitled to order that the action no longer proceeds as a class action because the criteria for certification, or any of them, are no longer satisfied.

13. The court should be asked for directions as to procedure as part of the certification process. In this regard the court should have a wide discretion to determine its own procedures.

14. The courts should be given broad general management powers exercisable either on the application of a party or class member or on the court’s own motion.

15. The Act should deal with the questions of when, by whom, to whom, and how notice should be given. As a general rule, notice to class members and prospective class members should always be given. The court should have the discretion to make opt-in, opt-out or no notice orders. In all cases it should be necessary for the court to consider whether notice of the application for certification should be given to all persons eligible to elect to join the class.

16. The court should have the discretion to make an order in respect of the binding effect of its judgment on the members of the class.

17. Common issues should be determined together and issues requiring the participation of individual class members should be determined individually. The term “common issues” should be defined. The court should not refuse to authorise a class action merely by reason of the fact that there are issues pertaining to the claims of some or all of the members of the class which will require individual determination or that different relief is sought for different class members.

18. In determining the amount of damages to be awarded the court may make an aggregate assessment or individual assessments. In this regard the court may appoint a commissioner to assist the court. When an aggregate assessment is made the court should give directions regarding distribution of the award to class members and may, where appropriate, require the defendant to distribute the award directly to the class members. The Act should contain an express provision with regard to the aggregate assessment of monetary awards and the disposal of any undistributed residue of an aggregate award.

19. It should eventually be possible to institute class actions in any court. Initially, however, only the Supreme Court of Appeal, the Constitutional Court, the High Courts, the Land Claims Court, and Labour Court should be designated by the Minister of Justice to adjudicate class actions. The Minister should, however, have the discretion to designate other courts in which class actions may be prosecuted. The appropriate procedure in the different courts should be prescribed by the authorities empowered to make rules for those courts.

20. The court hearing the application for certification as a class action should have the power to give directions as to the appropriate court in which the action should be instituted.

21. In determining whether a particular class action falls within the jurisdiction of the Magistrates' Courts the individual value of the claims should be the deciding factor. In this regard it must be borne in mind that in terms of section 50 of the Magistrates' Courts Act, 1944, the defendant may apply for the removal of any action from the Magistrates' Courts to the High Court.

22. In awarding costs in class actions the court should retain its discretion to apply the general rule that costs follow the result. The court must, however, refuse to order the representative to provide security for costs unless special circumstances apply. The court may also authorise a class action on condition that the Legal Aid Board grants the necessary funds or indemnifies the defendant(s) for his or her costs. Those members of the class who opt-in may be ordered to contribute towards costs and, where appropriate, to provide security for costs.

23. A legal practitioner may, subject to the Contingency Fees Act 66 of 1997, make an arrangement with the representative stipulating for the payment of fees, or fees and disbursements, only in the event of success in the class action.

24. Contrary to our recommendation in the Working Paper, we no longer recommend the establishment of a separate public interest action and class actions fund. The Commission believes the existing Legal Aid Board should be utilized as the mechanism to provide legal aid to indigent litigants in class actions and public interest actions.

25. Settlement, discontinuance or abandonment of a class action should require the prior approval of the court.

26. The decision to certify an action as a class action is only the first step in the proceedings and should not be subject to appeal. The Act should, however, specifically provide that non-certification of an action as a class action is subject to appeal. If the representative does not appeal, or does not proceed with an appeal, it should be competent for another member of the class to do so with leave of the court.

27. The certification of an action as a class action should suspend limitation periods for all class members until the member opts out, the member is excluded from the class, or the action is decertified, dismissed, abandoned, discontinued or settled.

28. The Act should deal only with class actions and public interest actions and not with organisational or derivative actions.

29. In the light of these recommendations and the draft Bill proposed in the Working Paper, the Commission recommends the adoption of the legislation contained in Chapter 6 of this report.