Going for bust: Piet van Rensburg
There are several class-action suits pending in South Africa, largely because of a high court decision to give a group of pensioners the right to proceed with an R85-billion class-action lawsuit against Transnet.
Lerato Zikalala, a senior advocate for Bowman Gilfillan, and Lloyd Langenhoven, a candidate attorney, warn that people should tread carefully when choosing this route. They had to understand that, in a class-action suit, decisions made by appointed representatives are binding on all claimants.
It was still early days in South Africa for these kinds of claims, and unsuccessful claimants could find themselves with a hefty legal bill should the case, and an award of costs, go against them, lawyers warn.
Zikalala and Langenhoven said that, before starting a class action, claimants should ask themselves:
– Am I happy with the possibility that the case strategy will be determined by popular vote? Once a person becomes part of a class action, the litigation strategy, such as whether to settle, is determined by the majority vote; and
– Would it be cheaper and more effective to seek damages in an individual capacity?
In terms of the Transnet case, the court recognised the right of two pensioners, Johan Kruger and Johan Pretorius, to represent 65?000 affected pensioners in an R85-billion claim.
All the pensioners will be included in the class action, unless they decide to opt out. The Pretoria high court told the two men that they would need to inform members of the Transnet Second Defined Benefit Fund and the Transport Pension Fund that they plan to institute a claim on behalf of all the pensioners.
Kruger and Pretorius claim that the Transnet fund administrators were negligent and incompetent, leaving the pensioners impoverished.
Kruger and Pretorius want Transnet to abide by its previous undertakings that pensioners would get the benefits they were entitled to at the time of their retirement.
Zikalala said that, initially, “while the Constitution and other laws like the Consumer Protection Act made provision for class actions, the lack of procedural rules for bringing such actions in our courts resulted in this only being a theoretical possibility”.
That was until November 2012, when the Supreme Court of Appeal and the Constitutional Court, stepped in and set a legal precedent in the case of the Children’s Resource Centre Trust vs Pioneer Food, finding that class actions were not limited to constitutional claims.
The case emerged from a Competition Commission investigation into the fixing of the bread price.
Neil Kirby, the director of Werksmans attorneys, said the first requirement stipulated by the appeal court was that the “class needed to be defined with sufficient precision so that a particular individual’s membership may be objectively determined by examining their situation in the light of the class definition”.
The next requirement was that there had to be proof of a valid claim against another party.
“It was due to the failure to meet this requirement that the attempted class action in the ‘R699 car scheme’ was squashed by the high court in August this year,” Zikalala said.
About 24?000 people had invested in the “drive a new car for R699 per month” scheme, which saw them receiving payment for the advertising on the vehicles. When the advertising stopped, they were unable to pay their instalments. Some claimants say they can prove that their financial data had been altered by the company running the deal, Satinsky, to make them more attractive to the banks financing the schemes. However, they could not afford the repayments.
Efforts to have the R699 scheme group recognised as a class failed, Zikalala said, because the legal team could not prove that there was a valid claim against another party. There was no proof that the financial statements of the chosen representative had been altered or that the bank involved had not properly assessed his ability to afford the car.
Judge Dayalan Chetty rejected the case, saying the legal representatives had “dismally failed to disclose any cause of action whatsoever”.