The appellants (consisting of three NGOs working with children, the poor and disadvantaged, COSATU, and five individual consumers with limited means) sought certification of a class action against three bread producers (Pioneer, Tiger and Premier). The Competition Commission investigated anti-competitive conduct in the bread industry, initially in the Western Cape and later in four other provinces (Gauteng, Free State, North West and Mpumalanga). The Competition Tribunal found that the respondents had engaged in price fixing and market division in contravention of sections 4(1)(b)(i) and (ii) of the Competition Act 89 of 1998. In the Western Cape, on 6 December 2006, the respondents met and agreed on price increases, implementation dates, restrictions on discounts to distributors, and not to deal with one another's distributors. The national complaint involved various sporadic anti-competitive activities including bakery sales, meetings where bread prices were discussed or agreed, and agreements not to poach customers. The appellants applied to the Western Cape High Court for certification of a class action on behalf of bread consumers who were prejudicially affected by the respondents' conduct. The application was dismissed and leave to appeal was refused by the high court but granted by this Court on petition.
1. The appeal against the refusal to certify a class action in respect of the national complaint and Class 2 claimants was dismissed. 2. The appeal against the refusal to certify a class action in respect of the Western Cape complaint and Class 1 claimants was upheld and the application was remitted to the high court for determination in accordance with the principles in the judgment. 3. The order of the high court was set aside and replaced with an order: (a) granting the applicants leave to supplement their papers within two months by delivering supplementary affidavits with a draft set of particulars of claim and further evidence; (b) allowing respondents to deliver further answering affidavits within four weeks; (c) affording applicants two weeks to deliver replying affidavits; and (d) reserving costs of the application. 4. Each party was ordered to pay its own costs of the appeal.
The binding legal principles established are: (1) Class actions are permissible in South Africa not only where Bill of Rights violations are alleged under s 38(c) of the Constitution, but also where failure to permit a class action would infringe the s 34 right of access to courts, and in other appropriate circumstances where the procedural requirements can be satisfied. (2) Certification by a court is a mandatory prerequisite before a class action may be instituted. The party seeking to represent the class must first apply to court for authority to do so. (3) The requirements for certification are: (a) the existence of a class identifiable by objective criteria; (b) a cause of action raising a triable issue (not legally untenable and showing a prima facie case on the evidence); (c) the right to relief depends on determination of issues of fact or law, or both, common to all members of the class; (d) the relief sought and damages claimed flow from the cause of action and are ascertainable and capable of determination; (e) where the claim is for damages, there is an appropriate procedure for allocating damages to class members; (f) the proposed representative is suitable to conduct the action and represent the class (including having no conflict of interest, capacity to conduct litigation, financial means or funding arrangements, and access to competent legal representation); and (g) given the composition of the class and nature of the proposed action, a class action is the most appropriate means of determining the claims of class members. (4) Applications for certification should be accompanied by a draft set of particulars of claim setting out the cause of action, the class definition and the relief sought, together with affidavits setting out the evidence available and anticipated to support the claim. (5) The class must be defined with sufficient precision that a particular individual's membership can be objectively determined. The class must not be over-inclusive or defined by subjective criteria, particularly criteria dependent on the outcome of the litigation. (6) There must be issues of fact or law, or both, that are common to all members of the class and can appropriately be determined in one action. The common issue must be of such a nature that its resolution will resolve an issue central to the validity of each claim. (7) In assessing whether a cause of action raises a triable issue, the standards are: (a) the claim must not be legally untenable (applying the test on exception - whether on all possible readings of the facts no cause of action is made out); and (b) there must be a prima facie case on the evidence (evidence which if accepted will establish a cause of action, applying a standard similar to that in attachment and summary judgment proceedings, but having regard to undisputed or indisputable evidence). (8) Where individual damages in a class action are too small to distribute practically to class members, damages may be computed on an aggregate statistical basis and distributed through methods that will directly or indirectly compensate class members for their loss (such as targeted price reductions for a period). What is impermissible is a cy-près type remedy where class members are not compensated either directly or indirectly for the loss they suffered, such as payment to trusts that will use funds for general social purposes unconnected to compensating the class members.
The court made several non-binding observations: (1) For purposes of prescription, service of an application for certification may constitute service of process claiming payment of the debt under s 15(1) of the Prescription Act 68 of 1969, as it is a necessary preliminary proceeding. (2) The court deliberately avoided deciding complex and novel questions about whether consumers have a delictual claim arising from breach of the Competition Act and whether s 65 of that Act provides an exclusive remedy, as these issues were raised for the first time on appeal on incomplete papers. The court noted these issues required determination on a complete record after full argument. (3) The court noted that the grant of certification does not foreclose the defendant's right to take an exception to the particulars of claim or answer the question of the claim's legal merit in the affirmative. (4) The court suggested that where necessary, class actions may be certified in respect of limited issues (e.g., liability only, leaving quantum to be dealt with separately) or in respect of defined sub-classes for particular issues. (5) The court noted that in jurisdictions where litigation may be funded on a contingency fee basis, courts must ensure funding arrangements do not give rise to conflicts between lawyers and class members, and that litigation is not being pursued at the instance of lawyers for their own gain. Court approval of settlements may be required in such cases. (6) The court acknowledged that fundamental policy issues may arise in determining the structure of class actions and their consequences, and that resolution of such issues involves difficult policy choices. The court emphasized it should not make policy choices that may impinge upon or remove existing rights, as this would trespass upon the domain of the legislature contrary to the separation of powers doctrine. (7) The court noted it was laying down only the broad parameters and procedural requirements for class actions, recognizing that ad hoc solutions to procedural complexities may be required on a case by case basis in the absence of legislation.
This is the leading South African case establishing the framework for class actions. It is significant because: (1) It confirms that class actions are available not only for Bill of Rights violations under s 38(c) of the Constitution, but also in other contexts where denial would infringe the right of access to courts under s 34. (2) It establishes that certification is a mandatory prerequisite for class actions in South Africa. (3) It comprehensively sets out the requirements for certification of class actions, drawing on international jurisprudence but adapting it to South African law. (4) It clarifies the standard for demonstrating a cause of action at the certification stage (not legally hopeless and showing a prima facie case). (5) It addresses the proper definition of classes and the requirement of commonality. (6) It provides guidance on appropriate relief in class actions, particularly regarding aggregate damages and methods of distribution. (7) It rejects purely cy-près distributions that do not compensate class members, but permits alternative distribution methods that directly or indirectly benefit class members where individual distribution is impractical. (8) It leaves open important questions about the relationship between Competition Act remedies and common law delictual claims. (9) It demonstrates judicial willingness to develop the common law to give effect to constitutional rights, while recognizing limits imposed by the separation of powers. This judgment has become the foundational authority for class action procedure in South Africa and is regularly cited in subsequent class action applications.