Class actions: who pays the legal bill?

By Angelique Arde Time of article published Aug 10, 2014

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Consumers caught in the “R699-a-month car” Satinsky scheme will have to wait another week before they know if they have succeeded in their application to be certified as a class – the prerequisite to instituting a class action, which they hope to bring against the company that sold them the cars and the banks that financed the deals.

Meanwhile, Transnet pensioners last week got the go-ahead to proceed as a class against the state-owned freight and logistics group and two retirement funds that it sponsored.

A class action can broadly be described as one involving an abusive practice on a large scale, and is about hundreds of Davids taking on a Goliath, who pulls off small rip-offs on a large scale, advocate Chris Shone says.

Shone was part of the team of advocates who argued the bread distribution price-fixing case in the Constitutional Court last year, representing the bread distributors. It was the first class action to be fought successfully in South Africa.

Shone says before you join a class, you need to know that there is the risk of a cost order against the class if it loses.

Cost orders are at the discretion of the court, and are based on the general principle that the successful party is entitled to be paid its legal costs.

“But if you can show that there is a public interest issue, or constitutional right, then a court may not award costs against a class that loses,” Shone says. And even in the event of a class losing its case and having legal costs awarded against it, the costs are spread among all the members of the class.

Pensioners receiving a pension from the Transnet Second Defined Benefit Fund and the Transport Pension Fund will automatically be included in the class action against Transnet and the funds to reclaim about R80 billion allegedly owed to the fund unless they opt not to be part of it.

Gauteng North High Court Judge Ephraim Makgoba instructed Transnet pensioners Johan Kruger and Johan Pretorius to inform members of the two funds that they plan to institute the class action on behalf of all the pensioners.

He ordered that, after Kruger and Pretorius publish their intention in various newspapers, the pensioners have 60 days to opt out of the class should they wish to do so.

The funds were ordered to give Kruger and Pretorius’s lawyers the names of the members of the funds.

The administrator of the funds, Metropolitan, was ordered to assist in giving the pensioners notice.

Wynanda Coetzee, from law firm Geyser & Coetzee who represented Kruger and Pretorius, says her firm took the case on a contingency – or no-win, no-fee – basis.

Costs in the application for leave to file the class action were awarded against Transnet and the two pension funds.

Coetzee says it is highly improbable that pensioners who participate in the class action will face a costs award if they lose the case, as they are merely asserting their right to social security.

Duncan Heuer, the attorney representing consumers in the R699-a-month car scheme, has taken on that case on a pro bono basis. If the application is dismissed, the banks – Absa, Nedbank and Standard Bank – have asked for a cost order against his firm, Pieterse Cary Finlaison. They these costs could put his firm out of business.

The car class action application is also on an “opt-out” basis, meaning that all affected consumers will be included unless they specifically ask to be excluded.

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