[Source: Business Day Live by Monique Pansegrouw.]
The scope and magnitude of the proposed class actions envisaged in Nkala v Harmony Gold (with the Treatment Action Campaign and Sonke Gender Justice as friends of the court) is unprecedented in SA; it will traverse novel and complex issues of fact and law, and help the development of class action law in SA.
Class actions, which represent a paradigm shift in South African law, are processes that permit one or more plaintiffs to file and prosecute a lawsuit on behalf of a larger group or “class” against one or more defendants.
Class action processes in SA are part of the equity-developed law designed to cover situations where the parties, particularly plaintiffs, are so numerous that it would be almost impossible to bring them all before the court in one hearing, and where it would not be in the interest of justice for them to come before the court individually.
They are also designed to protect the plaintiffs and the defendants from facing a multiplicity of actions, resulting in the defendants having to recast their case against each individual plaintiff.
A class action process moves the litigation forward, is in the interest of justice, and enhances judicial economy by protecting courts from having to consider the same issues and evidence in multiple proceedings, which carries with it the possibility of different decisions by a different court on the same issue.
It allows for a single finding on the issues, which binds all the plaintiffs and defendants.
The High Court in Johannesburg handed down a judgment on the Nkala matter in May, after 69 applicants sought to bring a class action against 32 companies operating in the gold-mining industry to claim compensation on behalf of current and former underground mineworkers who contracted silicosis or pulmonary tuberculosis (TB), and on behalf of the dependants of mineworkers who died of silicosis or TB contracted while employed in gold mines.
They sought an order for the certification of one consolidated class action comprising two classes — a silicosis class and a TB class — against the respondents. They proposed a bifurcated process, through which the single class action would proceed in two stages, one during which issues common to both classes will be determined, and another during which individual issues will be determined, with the court sanctioning the adoption of a bifurcated process.
The potential class members may range from 17,000-500,000, the bulk of which belong to the silicosis class.
The court followed the judgment of the Supreme Court of Appeal in Children’s Resource Centre Trust and Others v Pioneer Food and Others where that court provided a list of seven requirements of overlapping nature, which should guide a court in making a certification decision.
There should be the existence of a class identifiable by objective criteria, a cause of action raising a tryable issue and that the right to relief depends upon the determination of issues, of fact, or law, or both, common to all members of the class.
The Supreme Court of Appeal also held that the relief sought, or damages claimed, flow from the cause of action and are ascertainable and capable of determination; and that where the claim is for damages there is an appropriate procedure for allocating the damages to the members of the class.
It said that the proposed representative should be suitable to conduct the action and represent the class; and it should be determined whether a class action is the most appropriate means of determining the claims of class members.
The court held that the criteria used to identify members of the two classes must be objective and, in defining the class, it is unnecessary to identify all the putative class members, but the class must be defined with sufficient precision to allow for an individual’s membership to be objectively determined.
The court expressed a view that there was no need for the entire class membership to be determined before the common issues of fact or law could be determined or before evidence common to all class members that advances their cases was entertained.
The court held that a class action is the only realistic option through which justice can prevail and most mineworkers can assert their claims effectively against the mining companies, and the only avenue to realise the right of access to courts, guaranteed for the mineworkers by the Constitution.
It stated that once the determination on whether there were sufficient common issues to warrant a class action were made, the question of the most appropriate way to proceed would almost certainly fall away, and it concluded that the proposed class action was the most appropriate way for this matter to proceed.
On the transmissibility of general damages, the majority of the court held that the common law had to be developed to allow for a claim for general damages to be transmissible, without being restricted only to class action suits, to the estate or executor of a deceased mineworker, even though the stage of close of pleadings before trial procedures commence had not been reached at the time of the mineworker’s death.
The court rejected the submissions of the mining companies that the class action is untenable and unmanageable. The liability of each mining company will be determined at the second stage of the proceedings, when all the mineworkers and all the dependants of deceased mineworkers have staked their claims.
In June, the high court refused an application for leave to appeal brought by some of the mining companies against the certification of silicosis and TB classes in the class action. It granted the mining companies leave to appeal against a finding amending the common law in respect of the transmissibility of general damages.
Some of the mining companies have petitioned the Supreme Court of Appeal for leave to appeal the class action certification judgment. They are of the view that, due to this being an unprecedented area of law and that the court failed to address a number of important aspects in its judgment, the principles have to be considered by a higher court.
The mining companies have also indicated that they are conscious of the concerns that the appeal process will delay the finalisation of the matters, and have indicated that should the leave to appeal be granted, they will request the appeal to be dealt with on an expedited basis.
The operation and execution of the high court’s judgment on the transmissibility of general damages is suspended pending the outcome of the appeal, unless the court, in exceptional circumstances and upon application by the mineworkers, allows its judgment to be carried into effect pending the decision of the appeal.
But the operation and execution of the high court’s judgment on the certification of the class action is not suspended pending the outcome of the petition to the Supreme Court of Appeal for an application for leave to appeal the certification; and the processes envisaged dealing with the preparation of the class action proceedings can proceed pending the outcome.
The Occupational Lung Disease Working Group, consisting of some of the respondents who have petitioned the Supreme Court of Appeal for leave to appeal against the certification judgment, said achieving a mutually acceptable comprehensive settlement that was fair to past, present, and future employees, and sustainable for the mining sector, was preferable to protracted litigation and there were efforts to achieve common ground with relevant stakeholders.
Despite the development of class action law through case law and the enactment of constitution-like provisions in the companies and the consumer protection legislation, there is still a need for legislative reform of class actions to bring it in line with the South African Law Commission’s report.
As Nkala will undoubtedly lead to further class actions being launched in SA, the need to have a comprehensive legislative framework within which to govern class actions is now more prevalent than before.
The case law to date has greatly assisted with the development and refinement of the certification process of South African class actions, but the regulatory framework for the procedure and conduct of class actions is yet to be developed, especially from a case management perspective.
When considering the potential of 500,000 or more class members who could be part of Nkala — which sets it among the ranks of the largest class action cases yet certified in the world — it is clear that, save for it being in a country with no formal legislative framework governing class actions, there is also a dire need for clear guidance to be provided from a case management perspective on the procedures and conduct in a case of such unparalleled proportions to ensure its timeous, proactive, cost-effective, efficient, and pragmatic adjudication to the benefit of all concerned. Although legislative reform of class actions by the government is necessary, the judges in Nkala should be commended for their active judicial approach in the development of the legal position of class actions in SA.
Monique Pansegrouw is a director at Werksmans Attorneys.
57 700 000 (mid 2018 estimate)
4.9% y/y in September 2018 (CPI) & +6.2 y/y in September 2018 (PPI)
-0.7% q/q (2nd quarter of 2018)
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