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Online loan company’s bid to appeal dealt blow by court

A local loan-application operation has been dealt yet another blow by the Western Cape High Court when it turned down its application for leave to appeal against the certification of Stellenbosch University’s Law Clinic class action case against it.

A local loan-application operation has been dealt yet another blow by the Western Cape High Court when it turned down its application for leave to appeal against the certification of Stellenbosch University’s Law Clinic class action case against it.

Published Nov 4, 2021

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CAPE TOWN - A local loan-application operation has been dealt yet another blow by the Western Cape High Court when it turned down its application for leave to appeal against the certification of Stellenbosch University’s Law Clinic class action case against it.

Judge Patrick Gamble this week found that the Lifestyle Direct Group failed to show that they have reasonable prospects on appeal of persuading another court to set aside the certification of the Law Clinic’s class action, and dismissed the application for leave to appeal with costs.

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In July, Judge Gamble gave a legal thumbs-up to the clinic’s bid in which it and eight clients sought permission to institute a class action on behalf of thousands of allegedly defrauded consumers from around the country.

It is only the 10th South African class action that has been successfully certified, and it is the first consumer law class action in which the court was required to deliver a certification judgment.

The Law Clinic filed the certification application in September 2019, after it was alerted to complaints from consumers concerning 12 websites related to the Lifestyle Direct Group, with offices in Century City and Bellville.

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The clinic argued that these websites apply dark pattern marketing methods to mislead by appearing to offer loans and/or free loan finding services.

Consumers who frequent these websites were induced to conclude ‘agreements’ for unwanted services and were shocked when they realised amounts were being deducted from their bank accounts.

In their application for leave to appeal, the Lifestyle Direct Group focused on the consideration of commonality in the certification of class actions.

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They argued that the applicants’ claims were founded on material misrepresentations in the various websites operated by the respondents.

“The principle misrepresentation is that persons clicking on the appropriate banner on the website in question would be misled into believing that they were applying for a loan (or a so-called ‘loan-finding service’). In addition to the banner, each website contained a “click box” where the participants certified that they had read the terms and conditions contained in the fine print on the website.

“That fine print contained confirmation that the participants had read the terms and conditions on the website, which incorporated a statement that the participants were aware of the fact that they were subscribing to legal services allegedly to be provided by the company,” court documents read.

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The Lifestyle Direct Group submitted there may well be cases where participants had read the fine print and actually intended to subscribe to the alleged legal services.

They also submitted that the case would require an individual assessment of the nature and extent to which each applicant was misled.

“(Lifestyle Direct Group) did not point to any misdirection by the court in the exercising of the discretion to certify the class action nor did he demonstrate that this court failed to exercise its discretion judicially. Rather, he fairly submitted that there were divergences in approach upon which two lawyers might reasonably differ. A court on appeal will require something more than just such a reasonable difference, given the fact that this court exercised a strict discretion where there is limited room for interference on appeal.”

“If I am wrong in my assessment of the claims and causation is indeed material, I consider that the advantages of a class action far outweigh any potential prejudice to the respondents. If there are consumers who genuinely signed up for legal services and were supplied same, the respondents should have little difficulty adducing such evidence from their records. On the other hand, the trial court can be asked to consider the bulk of the evidence presented on behalf of the applicants and to draw reasonable inferences there from.”

“I do not believe that the interests-of-justice consideration... has been undermined by this court’s certification. On the contrary, the refusal of the application would have severely impacted on the ability of persons with relatively limited means, scattered around the country, to achieve some measure of success against the alleged fraud of the respondents,” Judge Gamble found.

Cape Times

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