THE EVOLUTION OF CLASS ACTIONS IN SOUTH AFRICA

Unlike development driven by legislative reform, the evolution of the common law through the process of judicial precedent takes time. Here, development only occurs when the courts are seized with a case worthy of an evolutionary push and this means that, even when deficiencies in the law are self-evident, one has to wait for the judiciary to address the issue.

The law surrounding class actions in South Africa has not had the benefit of a legislative punt which would have sped up the process of legal development. It is therefore no surprise that any new (potential) class action raises excitement at the prospect of developing new law.

Against that background, the South African High Court’s recent decision refusing to certify a shareholder class action against a company’s directors, in the case of De Bruyn v Steinhoff International Holdings N.V. and Others (“Steinhoff”), is of great interest – particularly in illustrating the significant hurdles involved.

CERTIFICATION

South Africa is no old hand at class actions, with the earliest cases emerging as recently as the mid-nineties. Since then the courts have only adjudicated on a handful of cases, the majority of which never made it past the certification stage.

Certification is the first hurdle which any enthusiastic class of claimants has to overcome, obtaining the court’s stamp of approval to speak from one mouth. Only once the court is satisfied that the certification of a class is appropriate, will the matter move on to the more substantive aspects of the dispute. However, as was seen in Steinhoff, the merits of a particular claim do play an important role, even as early as at the certification stage of proceedings.

The party applying for certification usually attaches a draft particulars of claim and draft notice of class action in respect of the proposed action to be brought. The application is required to deal with the following factors:

1. The existence of an objectively identified class of claimants;
2. The suitability of a proposed class representative;
3. The existence of a valid cause of action, which raises a triable issue;
4. The issue/s to be determined must be common to all members of the class;
5. The relief sought must flow from the cause of action and must be ascertainable and capable of determination;
6. If damages are claimed, there must be a procedure by which damages can be allocated to members of the class which is appropriate given the composition of the class and the nature of the proposed action; and
7. The class action must be the most appropriate means by which the claims of the class may be determined

These factors are not necessarily exhaustive, nor are they prerequisites for the certification of a class. They are simply considerations which must be considered and weighed against the interests of justice.

In addition, the applicants are expected to provide details of how the class is to be notified of the proposed action and whether it is proposed as an opt in or opt out action.

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For more information, please contact Jonathan Ripley-Evans and Fiorella Noriega Del Valle or your usual Herbert Smith Freehills contact: