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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 36016/2015

Reportable: YES

Of interest to other judges: YES

Revised.

10/3/2017

In the matter between:

National Union of Metal Workers

of South Africa (NUMSA)                                                                                       Applicant

and

Oosthuizen, Johan Frederik                                                                      First Respondent

Machingawuta, Noel Chenjerayi                                                          Second Respondent

Ferguson, Shane Trevor                                                                          Third Respondent

 

Judgment

 

Summary – Application by trade union for certification of a class action after action already instituted, and application by respondents under rule 30 to set aside summons on basis that union not entitled to sue on behalf of individual member plaintiffs.

Held – application for class certification to be brought before institution of class action; even if court had power to permit ex post facto certification, not to be granted in this case.

Held further – union not entitled to sue as plaintiff on behalf of individual member plaintiffs; summons set aside to that extent.

 

Van der Linde, J:

 

Introduction

[1] In this matter the applicant, a trade union, applies for leave to continue, as class representative of all the beneficiaries of the Mogale Alloys Trust, an already pending action as a class action.[1] The action was instituted against the trustees of the trust for their alleged malfeasance.[2] The respondents in the application, and in the pending action, are the three trustees.

[2] In the pending action, the face of the summons describes the plaintiff as being the applicant on behalf of the “further” plaintiffs identified in a list annexed to the claim particulars as “A”. According to the claim particulars, the persons listed on “A” are all members of the applicant. But there are also other plaintiffs, and they are listed in “A1” and “A2”. “A1” is said to list beneficiaries of the trust who are current employees of Mogale Alloys (Pty) Ltd, the employer. Some of these beneficiaries are also listed on “A”, meaning that some, but not all, of the persons on “A1” are also members of the applicant. “A2” is said to list beneficiaries of the trust who were employees as of 7 December 2010, but are no longer employees and thus no longer members of the applicant.

[3] However, during argument counsel for the applicant explained that “A1” actually includes also former employees, and thus represents the aggregate number of beneficiaries of the trust, 249 in all. This was described by the applicant as a closed list,[3] and during the argument it was accordingly accepted by all that those individuals, irrespective of whether some were no longer employees or no longer alive, represented the only beneficiaries of the trust who could potentially benefit from the action. The size of the class sought to be certified is thus circumscribed at 249.

[4] A notice in terms of rule 7 was served before the hearing. In consequence powers of attorney were filed, according to a letter[4] received after the hearing, by 82 persons, 81 of whom are identified on “A1”, and 48 of whom are identified on “A”. Of these 48 persons, one person, Mr Jabulane Nkosi, is not identified on “A1”, and is therefore not a beneficiary of the trust, nor an employee (or ex-employee) of the employer. His only connection with the litigation is that he is a member of the applicant. Therefore 81 of 249 potential class members are already plaintiffs proper in the pending action.

[5] Counsel for the respondents also informed the court from the Bar, and this was accepted by counsel for the applicant, that of the 249 potential class members, 45 were members of the applicant;[5] 61 were members of AMCU, another union; 15 were members of Solidarity, yet another union; and 63 were non-unionised, accounting for 184 in all. Since the beneficiaries aggregate 249, and since they are all either current or past employees of the employer, the difference of 65 remains unexplained as to membership status.[6]

[6] In the claim particulars it is averred that an application would be made to certify the action as a class action insofar as the trust beneficiaries are not members of the applicant.[7] This application vindicates that promise.

[7] Apart from the application for certification, there is an application by the respondents under rule 30 for a declaration of the summons as a nullity, on two bases: first, that the applicant cannot, as a matter of law, represent any of the individual plaintiffs in the action, whether they are members of the applicant or not; and second, that the certification of a class action is required to be obtained before, not after, the institution of an action.

[8] It is proposed to approach the resolution of the two applications along the following topics: a background to class actions in our law; the applicant’s right to act as plaintiff on behalf of its members sans certification; the issue of the timing of the certification application; the requirements for certification; and the conclusion reached on the two applications.

A background to class actions in our law

[9] “A class action is a collective lawsuit in which an individual person or persons are confirmed by the court to bring and resolve the claims of ‘others similarly situated’ in a single proceeding.”[8] Class actions were first introduced in our law with the advent of constitutionalism, now in s.38 of the Constitution. The South African Law Commission’s Project 88, “The Recognition of Class Actions and Public Interest Actions in South African Law”, thereafter reported in August 1998. The SALC conducted wide-ranging international research of class actions, examined the need for a general class action in our law, proposed detailed requirements for class actions locally, and produced a bill, “To make provision for the institution of public interest and class actions; and to provide for matters connected therewith”.

[10]The anticipated legislation did not eventuate. Academics and some leading cases set about whetting lawyers’ collective appetite for an opportunity to persuade a court of appeal jurisdiction to exercise its s.173 inherent power to fashion a generalised class action where the legislature had not. Among the academics the torchbearers included Malan,^[9]De Vos,^[10] Hurter,^[11] and (in his professorial role) Judge Plasket.^[12]

[11]The leading cases in this timeframe included the two judgments, delivered a quo and on appeal, in Permanent Secretary, Department of Welfare, Eastern Cape and another v Ngxuza and others.[13] The case dealt with a class action in the context of the Bill of Rights.

[12]The cases that first extended recognition of class actions to causes of action founded beyond express constitutional provisions, are Children's Resource Centre Trust and Others v Pioneer Food (Pty) Ltd and Others[14]  and Mukaddam v Pioneer Foods (Pty) Ltd and Others.[15] In broad terms, what had happened was that bread producers had been found guilty of cartel conduct prohibited under the Competition Act 89 of 1998. Consumers at two levels alleged prejudice: the distributors, represented by Mr Mukaddam, and the retail consumers, represented by the Trustees of the Children’s Resource Centre.

[13]Their urgent applications to the Western Cape High Court for class certification were dismissed. On appeal to the Supreme Court of Appeal, their appeals were argued together before the same bench. Mr Mukaddam lost but the Children’s Resource Centre won.  Mr Mukaddam appealed to the Constitutional Court, and won there.

[14]It is convenient to begin with Children’s Resource Centre. Wallis, JA for the court arrived at four relevant conclusions. The first was that the class action entitlement under s.38 of the Constitution was not limited to actions based on an infringement of a right in the Bill of Rights; it would be “irrational” if that were so, the learned judge held.

[15]Second, the appellants need not have tried to bring their case under s.27(1)(b)(the right, entrenched in the Bill of Rights, to access to sufficient food and water), not only because their cause of action need not have rested on an infringement of a right protected in the Bill of Rights at all, but also because, in any event, in their case they would have no access to the courts were it not by means of a class action. Therefore the right to access to courts entrenched under s.34 was in any event implicated.

[16]Third, a prospective class representative ought first to apply to court for class certification before s/he would have the right to litigate on behalf of a class. And fourth, the learned judge laid down that, generally, a successful class certification application would have to  show: (1) the existence of a class identifiable by objective criteria;^[16] (2) a cause of action raising a triable issue;^[17] (3) that the right to relief depends on the determination of issues of fact, or  law, or both, common to all members of the class; (4) that the relief sought, or damages claimed, flow from the cause of action and are ascertainable and capable of determination; (5) that where the claim is for damages, there is an appropriate procedure for allocating the damages to the class members; (6) that the proposed representative is suitable to conduct the action and to represent the class;^[18] and (7) that, given the composition of the class and the nature of the proposed action, a class action is the most appropriate means of determining the claims of class members.

[17]When Mr Mukaddam got to the Constitutional Court that court, per Jafta, J stressed that s.173 of the Constitution is constrained by the interests of justice.[19] That being so, class certification too must be constrained and guided by that principle; and so the requirements listed by Children’s Resource Trust are in truth relevant factors, not requirements, and none in itself decisive.

[18]For the rest, the Constitutional Court decided that, despite the scope for interfering in the procedural discretion of a lower court being as narrow as the discretion itself, in this matter the court was obliged to interfere in the Supreme Court of Appeal’s refusal in Mukaddam to certify the bread distributors’ class. Jafta, J held that the Supreme Court of Appeal, “… did not act judicially in exercising its s 173 discretion, or based the exercise of that discretion on wrong principles of law, or a misdirection on the material facts.”[20]  

[19]Since Children’s Resource Centre and Mukaddam a full court of the Gauteng Local Division, presided over by Mojapelo DJP,[21] relying on these principles, has in Nkala and Others v Harmony Gold Mining Co and Others[22] issued a comprehensive certification order in a mammoth class action concerning gold mines’ alleged liability for silicosis and tuberculosis of their employees over a substantial period of time. 

[20]Nkala is a comprehensive judgment;[23] it dealt with most current aspects of class actions and applied them to the facts; and, in addition, developed the common law relating to the transmissibility of general damages for pain and suffering before litis contestatio. Before Nkala, general damages were not transmissible then; after Nkala it now is.[24] Nkala is now on appeal to the Supreme Court of Appeal.

[21]The principle of a general class action has therefore been given a clear jurisprudential footing. It is a procedural device, fashioned by the courts under the power conferred by s.173 of the Constitution, and warranted by the need to realise rights founded both directly in the Constitution (access to courts) and indirectly so, in the common law.

[22]Having established the general class action, the Supreme Court of Appeal and the Constitutional Court also nudged it along its procedural way by leaving it up to the various high courts to decide how best to merge its application with the Uniform Rules of Court and the practice directives of the particular high court division concerned.

[23]Predictably, the seven factors identified in Children’s Resource Centre form the building blocks of the founding affidavit in this matter. Provided the overarching “interests of justice” lodestar remains the vade mecum, these seven factors are justifiably traversed, and they must be applied to the facts of the present case.

[24]Before moving on to do that, it is appropriate first to deal with the question whether it is procedurally objectionable for the applicant to have joined as plaintiff in the pending  action on behalf of those persons listed in “A”, meaning its members.

Could the applicant have joined in the action as plaintiff on behalf of its members?

[25]The applicant submitted that it is not a plaintiff in the action, and that the point was poorly taken against it. But this submission is not borne out by the applicant’s own papers. In the summons the following description of the applicant appears: “THE NATIONAL UNION OF METALWORKERS OF SOUTH AFRICA (“NUMSA”), a trade union duly registered in terms of the Labour Relations Act 66 of 1995 of 153 Bree Street, Cnr Gerard Sekoto Street, Newtown, JOHANNESBURG on behalf of the Further Plaintiffs in Annexure A to the particulars of claim (“the Plaintiffs”)”. (emphasis supplied) The case heading reflects the “Plaintiffs” as being “NATIONAL UNION OF METALWORKERS OF SOUTH AFRICA (“NUMSA”) on behalf of the Further Plaintiffs in Annexure ‘A’”.  (emphasis supplied)

[26]In the claim particulars paragraph 1 reads: “The plaintiffs are the individuals listed on annexures ‘A’, ‘A1’ and ‘A2’ to these particulars of claim.” In paragraph 2.3 it is stated, with reference to the persons listed on “A”: “NUMSA is authorised to bring this action on behalf of these workers and to receive all further process herein on their behalf.”

[27]The claim particulars do not assert that the applicant is itself entitled to any of the relief that is claimed in the prayers; the “plaintiffs” (and this excludes the applicant) are alleged to have suffered damages as beneficiaries of the trust. The alternative averment is that the plaintiffs have been impoverished and the defendants unjustifiedly enriched at their expense.

[28]In the founding affidavit the applicant asserts expressly that it is the plaintiff in the action;[25]and it asserts that it has instituted the action on behalf of its own members:[26]

“In the event that the applicant succeeds in obtaining the relief sought in the notice of motion, it will pursue the claim which it has instituted on behalf of its own members also on behalf of that class of further beneficiaries of the trust in the same action proceedings.”

[29]The applicant has however confused two concepts, that of its capacity as a trade union representing its members, and that of a class representative representing the members of a class:[27]

“In the ultimate end, the members of the class will thereafter be able to enforce their claims for damages/losses suffered against the respondents in their individual capacities and benefit therefrom together with their fellow beneficiaries who are members of the applicant union and who have been able to mandate the union directly to pursue their clams on their behalf.”

[30]The confusion is this: a class representative acts as a party in the suit, and the members of the class do not actually become parties to the litigation. They simply benefit from the upside of the litigation, and are bound by the downside of res judicata. Although in a labour law context a union may in a comparable sense act as a party to a suit without all the individual members actually having joined as parties,[28] in this matter this is not what has occurred, as has been pointed out above.

[31]This confusion is exacerbated by the applicant’s stated intention to apply for the class certification only in respect of those beneficiaries that are not also members of the applicant.[29] On this view of the application, it wants certification of a class consisting only of non-member beneficiaries, to be represented by the applicant as certified class representative, on the basis that its joinder as plaintiff representing its member beneficiaries remains good.

[32]It seems plain then that here the applicant joined as plaintiff in the proceedings, and that it has sought to do so as a representative of its members in their capacity as individual plaintiffs, also joined; so as to act “on behalf of these workers”, as it asserted in the claim particulars. Since the members joined as individual plaintiffs in the action in any event, the applicant must have considered that it had a legitimate procedural role alongside them, not simply acting in its own interest, since it claims no relief for itself.

[33]With reference, amongst others, to Sentrakoop Handelaars Bpk v Lourens and Another,[30] the respondents argued that outside of the class action context our procedural law does not allow a person to sue as plaintiff on behalf of someone else; the holder of the right must herself act as plaintiff. In that matter Marais J heard an application to amend a summons to allege that the plaintiff was in fact suing as agent on behalf of a principal. The learned judge discussed the earlier cases,[31] including Leslie’s Trustee v Leslie,[32] a judgment of the full bench of the then Transvaal Court, headed by Innes CJ, and concluded:

“I am therefore of the view that both on principle and on the authorities it is not proper for an agent to sue as representing his principal by suing in his own (that is the agent's own) name, where the claim being enforced is that of the principal and the principal is the true plaintiff. This does not, of course, apply where the agent has the right to sue in his own name, as is the case where he has contracted on behalf of an undisclosed principal and sues on the relevant contract.”

[34]Sentrakoop was approved and applied by Streicher, J (as he then was) in Standard general Insurance Cop Ltd v Eli Lilly (SA) (Pty) Ltd (FBC Holdings Ltd, Third Party),[33] and was ultimately approved by a full bench of this division in Homes for South Africa (Pty) Ltd v Rand Building Contractors (Pty) Ltd.[34]

[35]In the present matter the principal plaintiffs are of course actually joined, but in my view that leaves even less legitimate scope for the applicant’s role in the litigation. No case of joinder of the applicant as plaintiff for convenience, equity, the saving of costs or the avoidance of multiplicity of actions is asserted.[35] The applicant’s only stated cause is that of representing its members’ interests. It seems to me that in those circumstances the principle referred to above applies although, strictly, this may rather be a case of misjoinder.

[36]In reply, the applicant accepted that the respondents were probably correct in submitting that a union’s power to act on behalf of its members in litigation derives from s.200(1)(b) of the LRA, and so is circumscribed by a labour law context. But it submitted that this court should develop the common law by extending the representation power afforded to a union under the LRA also to matters justiciable at common law.

[37]It was not submitted that this court should be developing the common law so as to promote any aspect of the spirit, purport and objects of the Bill of Rights.[36] The submission was simply that there was no discernible basis for distinguishing between the two jurisdictions in the context of litigation.

[38]Assuming, obviously without deciding, that there is no such basis for distinction, I do not believe it would be appropriate to attempt to develop the common law in the manner suggested, for these reasons. First, the issue was not raised in the founding papers and so it has not been canvassed on the affidavits, nor fully and properly in argument, whether oral or written. It comes before this court by way of a riposte in reply to an argument that the common law does not permit of the form of procedure adopted by the applicant.  Issues such as whether under s.23(4) or s.38(e) of the Constitution such scope existed were not mentioned much less explored. Consequently, this court is not equipped properly to embark on the proposed endeavour.

[39]Second, no parameters were suggested. Would it mean that this court should hold that the common law of representation should be extended only in a workers’ trust context? Why should that be any different, in principle, from claims by mine workers for damages suffered as a result of them contracting silicosis, such as in Nkala?

[40]Third, as already foreshadowed by the previous point, it seems to me that the court would be transgressing onto the constitutional terrain of the Legislature, offending the principle of separation of powers, if it were to accede to the request.

[41]And finally, in this context, development of the common law, if it is to occur, must occur incrementally and cautiously,^[37] and not as an instinctive alternative defence.

[42] It follows that in my view the joinder of the applicant in the current action under case number 36016/15 in this court is, outside of a class certification, procedurally objectionable and it must be set aside. It does not follow that the entire summons falls to the ground; as pointed out above, 81 plaintiff beneficiaries have provided powers of attorney and the action is not objectionable in this sense.

[43]Whether the cause of action pleaded by them in their own right is bad in law does not arise in the present context. Even if their claim particulars do not disclose a triable action, that impacts only on whether certification should be granted. There is no exception now before this court, and the test on exception is different from the test to be applied in deciding whether, for the purposes of a certification application, a triable case has been asserted.

[44]If certification in the extended form referred to in the notice of motion is not granted, a matter to which I return below, it would follow that the summons must be set aside to the extent that persons, including the applicant but excluding those 81 plaintiffs who have filed powers of attorney, are purportedly joined in the action.[38]

The timing of the certification application

[45] In Children’s Resource Centre the court expressly laid it down as a requirement for a class action that the party seeking to represent the class should first apply to court for authority to do so.[39] That requirement was endorsed by the Constitutional Court in Mukaddam.[40]

[46] The applicant challenged the submission that prior application was a requirement. It submitted that Nkala did not interpret Children’s Resource Centre in this way.[41] It contended in its founding papers that the court has a discretion and, since the respondents could not have suffered any prejudice, the court should in the exercise of that discretion “ratify the summons.”[42] And it submitted that, in any event, even if prior certification was a requirement, it has not “calcified” into a hard rule, but that the ultimate criterion for certification was whether the interests of justice justified it.

[47] As I see it, Children’s Resource Centre did not intend to lay down the requirement of prior certification as a substantive component of class certification. The seven requirements referred to in Nkala and quoted in the applicant’s heads of argument,[43] go to the substantive content of the certification application. And it was in regard to the latter, not the timing of the application, that the Constitutional Court in Mukaddam held that they should be considered as factors that assist in determining whether the interests of justice require certification. But on the requirement that the application should precede the summons, in my view the Constitutional Court clearly approved Children’s Resource Centre.[44]

[48] One appreciates an argument that if this requirement (of prior certification) goes only to timing, there cannot be objection in principle to allowing an ex post facto certification if the interests of justice otherwise justify certification. Assuming that such an argument is sound in principle, if only on the basis that the issue of timing is traditionally a matter of formal and not substantive law, I do not see that in this matter an appropriate case has been made out for relaxation of the requirement.

[49]Mukaddam explained that the very raison d’etre for prior certification was that courts should retain control over class actions.[45] The only way in which potential class actions that hinder the interests of justice can be kept out of the justice system, is to preclude them from getting there in the first place.

[50]I venture to suggest also that a court who is confronted with a fait accompli finds itself in an invidious position when having to assess whether the interests of justice require certification.

[51]Take the case here, for example, where right at the death of the submissions the court was told from the Bar that 45 of 184 potential class members belonged to the applicant union, who was being proposed as the appropriate class representative, that 61 potential class members belonged to an opposing union, and yet others to another union. These facts present, on the face of it, challenges to the appropriateness of the applicant as the class representative of the beneficiaries who are not members of the applicant. But this issue has not been properly canvassed on the papers.

[52]There are other examples. There is the feature of the pending action that, in law, the potential success inures for the benefit of all trust beneficiaries in any event, since the upside of a successful action must, at least arguably, be paid to the trust.[46] Success for the plaintiff will also imply new trustees who will be expected then to distribute the upside appropriately to beneficiaries. Why a class action is necessary where the beneficiaries will all in any event benefit from the action even if no class is certified has not been properly canvassed on these papers.

[53]In these circumstances I conclude that prior class certification was required, and that this court cannot now certify an already pending action, ex post facto, as a class action. I conclude too that even if the court had the power to do so, a proper case has not been made out for such certification.

The requirements, or factors, for certification

[54] In view of the conclusion to which I have come on the timing of the application, it is not strictly necessary that these be discussed at any length. The factors have been set out above. In considering them, the overarching “interests of justice” consideration is determinative.

[55]Dealing with these factors one by one then, the first four favour class certification: the potential class is identifiable by objective criteria; they are the beneficiaries of the trust as of 31 March 2009. The cause of action raises a triable issue.[47] The relief depends on the determination of issues of fact and law that are common to all the class members. The damages claimed flow from the asserted cause of action and are capable of determination.

[56]The fifth factor is that there should be an appropriate procedure for allocating the damages to the class. The notice of motion, which contains the relief that the applicant asks, makes no provision for such a procedure. If the action simply proceeds without certification, and assuming success, the trustees will be replaced, and the new trustees will undertake the distribution. They would be obliged to do so as part of their duties under the trust deed. Indeed, in its founding papers the applicant contends that the new trustees will be able adequately to ensure an appropriate distribution of the proceeds.[48] The fifth factor is therefore not of itself an obstacle to certification but, as will appear below, it underscores a feature of this case which militates against certification being the most appropriate way to go.

[57]The sixth factor, that of a suitable class representative, has been raised above. It appears that, on the face of it, the applicant is not the most representative of the three unions present in the work place. I bear in mind that, at least potentially, there might be rivalry between at least two of the unions. Absent full examination of this issue on the papers, it is accordingly not possible to conclude that the applicant would have been the most suitable class representative.  This factor militates against the certification sought.

[58]The last factor is whether a class action is the most appropriate means of determining the claims of the potential class members. The applicant submitted that the action is for payment of damages to the trust for distribution by the new trustees to all the beneficiaries in terms of the trust deed. The certification would, so it submitted, “simply confirm the representative nature of the action, viz that it is for the benefit and has been brought on behalf of all of the beneficiaries of the trust and not only some of them, more particularly those who are union members of NUMSA.”[49] (emphasis supplied)

[59] It seems to me that the slip shows in this submission. The action is one which in any event inures in law for the benefit of all beneficiaries. On the hypothesis of success new trustees will be appointed who will be able fairly and properly to distribute the upside after it will have been received by the trust. That being so, it is difficult to see why a class action should be certified. The present action will continue apace, with the applicant providing logistical support for its member beneficiaries, as it has done before.

[60] The question is whether these factors have directed the interests of justice in a particular direction. In my view they have. The twin features of the already representative nature of the pending action, and the at best doubtful suitability of the applicant as a class representative of beneficiaries who are members of other unions, combine to produce unacceptable doubt as to whether the proposed procedure is more preferable than the already pending one.

Conclusion

[61] It follows, in view of the aforegoing, that in my view the rule 30 application should succeed to the extent indicated below; and that the application for class certification should fail. In the result I make the following order:

(a) The application in terms of rule 30 dated 30 November 2015 succeeds, and it is ordered that the summons issued under case number 36016/2015 in this court is set aside to the extent that persons, including the applicant but excluding those 81 persons who have filed powers of attorney as identified in this judgment, are joined in the action.

(b) The said 81 plaintiffs are granted leave to amend their claim particulars in accordance with this order within 15 days of service of this order on their attorneys.

(c) The applicant is directed to pay the costs of the rule 30 application, including the costs consequent upon the employment of two counsel.

(d) The application for class action certification dated 1 February 2016 is dismissed with costs, including the costs consequent upon the employment of two counsel.

WHG van der Linde

Judge, High Court

Johannesburg

 

For the applicant: Adv. RGL Stelzner, SC

                                Adv. T  Ntsonkota

Instructed by: Werksmans Attorneys

Applicant’s attorneys

Level 1 No 5 Silo Square

V & A Waterfront

Cape Town

012 – 405 5100

Mr M Heyns /MHLA13613.8/#4729585v1

For the respondent: Adv. TW Beckerling, SC

                                    Adv. W Steyn

Instructed by: Martini-Patlansky Attorneys

Respondents’ attorneys

The Borbereki House

32 St John Road

Houghton

011-4871091

Mr Martini/M575

Date argued: 2, 3 February 2017

Date judgment: 10 March 2017

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