Class ac­tion: ac­cess to jus­tice for the poor

The Star Late Edition - - INSIDE - THEO BROODRYK

WHAT do Ford, An­gloGold Ashanti, Gold Fields and Tiger Brands have in com­mon? They are a few of the well-known com­pa­nies in South Africa fac­ing class ac­tions: law­suits filed on be­half of a group.

The in­ter­na­tional re­tail group Stein­hoff could soon join the list. South African share­hold­ers and the Dutch In­vestors As­so­ci­a­tion plan to launch a law­suit against Stein­hoff fol­low­ing al­le­ga­tions of ac­count­ing fraud.

Class ac­tions against busi­nesses like these can im­prove ac­cess to jus­tice be­cause they re­duce the ex­pense of lit­i­ga­tion.

It’s much more ex­pen­sive for in­di­vid­u­als to pur­sue a case on their own, so many claims are never judged and claimants don’t get jus­tice.

Class ac­tions also de­ter an­ti­so­cial be­hav­iour by com­pa­nies.

South Africa is see­ing a grow­ing body of class ac­tions. The con­sti­tu­tion pro­vides for it and a prac­ti­cal way of go­ing about it is start­ing to emerge.

A num­ber of cases brought be­fore the courts have started to build a frame­work to guide class ac­tions.

But there is still a gap. There are still no laws passed by Par­lia­ment or rules set by courts to reg­u­late the pro­ce­dure. My re­cent doc­toral study aimed to de­velop a statu­tory struc­ture that could help fill this gap. Ex­am­ples from other coun­tries South Africa may be able to learn from the ex­am­ples of other ju­ris­dic­tions, such as the US and On­tario, Canada, that have de­vel­oped statu­tory frame­works to guide class ac­tions.

Apart from be­ing widely re­garded as the lead­ers in the field of class ac­tion lit­i­ga­tion, these coun­tries share key com­mon­al­i­ties with our jus­tice sys­tem.

Their civil pro­ce­dures are of English com­mon law ori­gin in terms of which the law is largely de­rived from ju­di­cial prece­dent, com­pared to civil law sys­tems where cod­i­fied statutes pre­dom­i­nate.

They also have an ad­ver­sary sys­tem of lit­i­ga­tion, which is char­ac­terised by party con­trol and a pas­sive and aloof judge.

One of the big­gest chal­lenges with these class ac­tion ju­ris­dic­tions is that they are be­ing in­creas­ingly in­vaded by friv­o­lous claims and set­tle­ments driven by lawyers who see the class ac­tion spa­ces as a mon­ey­mak­ing ma­chine.

They over­load the sys­tem with cases that serve their hunger for fees first – and the rights of the class ac­tion mem­bers be­come sec­ondary.

The US and Canada have put in place mea­sures to counter friv­o­lous set­tle­ments. These in­clude giv­ing courts pre-screen­ing pow­ers and a dis­cre­tion to pre-ap­prove or re­ject set­tle­ments.

South Africa may need to go the set­tle­ment pre-screen­ing route to avoid this prob­lem. Deputy Judge Pres­i­dent Phineas Mo­japelo, in the sil­i­co­sis lit­i­ga­tion, hinted at this when he said that set­tle­ments con­cluded af­ter cer­ti­fi­ca­tion, in other words af­ter the court ap­proves the in­sti­tu­tion of a class ac­tion so that it can pro­ceed to trial, should be sub­ject to court ap­proval.

It seems that South Africa will fol­low suit, notwith­stand­ing the ab­sence of leg­is­la­tion reg­u­lat­ing the mech­a­nism.

One of the ob­jec­tives of class ac­tions is achiev­ing ju­di­cial econ­omy – in other words, join­ing to­gether a num­ber of law­suits that would oth­er­wise have been brought sep­a­rately.

Ju­di­cial econ­omy in this con­text also means that the class ac­tion would con­trib­ute to the ef­fi­cient use of the courts’ re­sources and the con­sis­tency of judg­ments ren­dered by it.

In South Africa, it has been left to the courts to de­velop the pro­ce­dural frame­work for class ac­tion. This makes for an ad hoc ap­proach which is not ideal. A hap­haz­ard ap­proach could lead to le­gal un­cer­tainty or ju­di­cial in­con­sis­tency.

This is be­cause a class ac­tion could be nec­es­sary to achieve: •Ac­cess to jus­tice. • Ju­di­cial econ­omy. • Changes in be­hav­iour. South African courts need to know which of these ap­ply to each case.

But the pri­mary con­sid­er­a­tion should be class mem­bers’ right to have ac­cess to jus­tice.

Where poor claimants are un­able to lit­i­gate in­di­vid­u­ally through join­der (a sin­gle trial where the right to re­lief of the per­sons joined de­pends upon the de­ter­mi­na­tion of sub­stan­tially the same ques­tion of law or fact), a court should al­low the mat­ter to pro­ceed as a class ac­tion. This en­sures that the claimants’ fi­nan­cial and so­cial cir­cum­stances don’t pre­vent them from re­ceiv­ing jus­tice.

The pri­mary dif­fi­cul­ties as­so­ci­ated with join­der is that it is a cum­ber­some and costly process. And where in­di­vid­ual claimants are poor, un­e­d­u­cated and lack ac­cess to re­sources, or where the class is large, join­der may be in­ap­pro­pri­ate. A court or­der­ing join­der in these cir­cum­stances could po­ten­tially un­der­mine the ra­tio­nale of pro­vid­ing ac­cess to jus­tice.

Class ac­tion is more com­plex than other kinds of lit­i­ga­tion and re­quires greater ad­min­is­tra­tion and man­age­ment. If pro­ceed­ings be­come un­man­age­able, the ac­tion may have to be stopped.

Courts should con­sider whether claims are large enough to be pur­sued sep­a­rately, and the im­por­tance of the com­mon is­sues in re­la­tion to the claims as a whole.

In the fi­nal anal­y­sis, all these mat­ters would be bet­ter han­dled by a statu­tory frame­work.

South Africa’s courts have done well to start de­vel­op­ing a frame­work. But the class ac­tion law is in a state of flux as it tries to shape and po­si­tion it­self within the civil jus­tice sys­tem. South Africa needs com­pre­hen­sive leg­is­la­tion and court rules reg­u­lat­ing class ac­tions suits to bet­ter serve the prin­ci­ple of ac­cess to the jus­tice sys­tem. – The Con­ver­sa­tion

SA courts have done well to start de­vel­op­ing a frame­work Theo Broodryk is a se­nior Lec­turer and man­ager of the Law Clinic at Stel­len­bosch Univer­sity.

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