Key changes to rules regulating class action lawsuits

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For the first time, the Uniform Rules of Court now formally define a ‘class action’ and set out a clear, regulated process for obtaining court certification to proceed with such claims.

What is new?Definition of a ‘class action’

A class action is now defined in the Uniform Rules of Court as:

An action instituted by a representative on behalf of a class of persons, which may include the representative, in respect of whose claims the issues of fact or law involved are substantially similar, and where the members of the class are bound by the outcome of the common issues in the action.

This definition focuses on the similarity of legal or factual issues, not identical claims or losses, and confirms that every class member is bound by the outcome on common issues.

Certification a prerequisite

The new Rule 11A sets out the procedure for certifying a class action, which codifies the judicial precedent established by the Supreme Court of Appeal in Children’s Resource Centre Trust and Others v Pioneer Foods (Pty) Ltd and Others [2013] and clarified by the Constitutional Court in Mukaddam v Pioneer Foods (Pty) Ltd and Others [2013].

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An application to court to certify an action as a class action is a prerequisite and the court may grant the certification application if it is in the interests of justice to do so.

The certification application must be brought on notice of motion supported by an affidavit in which the applicant must establish:

• Interests of justice: An overarching catch-all that it is in the interests of justice to certify the action as a class action.
  
• Identifiable class: The class must be defined by clear, objective criteria.
  
• Triable cause of action: There must be a valid legal issue to be tried.
  
• Common issues: The relief sought must depend on the determination of issues of fact or law common to all class members.
  
• Relief and damages: The relief or damages must be determinable and linked to the cause of action.
  
• Allocation of damages: If damages are claimed, there must be a workable method for distributing them.
  
• Appropriateness: A class action must be the most suitable way to resolve the claims.
  
• Representative suitability: The applicant must be capable of fairly and effectively representing the class.

In setting out the factors that establish whether the applicant is suitable to conduct the action and represent the class, the applicant must demonstrate:

• its ability to adequately represent the best interests of the members of the class;
  
• whether there is likely to be any conflict or potential conflict of interest between the applicant and the members of the class; and
  
• the applicant’s ability to make satisfactory arrangements with regard to the funding of the class action and its ability to conduct and manage the class action.

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The certification application must also state whether the class will be opt-in, opt-out or hybrid, and include a draft Particulars of Claim setting out the grounds upon which the class action will be based.

If the court presiding over the certification application is inclined to grant the application, it may also give directions on the form and manner in which notice of the action is to be given, taking into account several factors such as prejudice, size of the class, level of education and geographical dispersion of class members.

Finally, the amendment specifically provides that an application for leave to appeal against an order made in certification proceedings of an action as a class action must be made in accordance with the provisions of Rule 49.

Why this matters

With class action litigation on the rise in South Africa, this is a welcome amendment to the Rules of Court, which clarifies and formalises what has become a well-established practice in class action litigation in South Africa.

While ensuring access to justice for large groups of claimants, the amendments also serve to protect the courts and defendants from the significant financial and procedural burden of poorly conceived or unmeritorious class action litigation.