Nature of an opt-out class action

In Stellenbosch University Law Clinic and Others v Lifestyle Direct Group International (Pty) Ltd and Others [2021] 4 All SA 219 (WCC)benefits and representative nature of class actions, issues that are common to all members of the class and the binding nature thereof, and opting out.

By Merilyn Rowena Kader LLB (Unisa), Legal Editor at LexisNexis South Africa.

Class action- Nature of opt-out class actions: Certification of an opt-out class action was sought by the applicants in Stellenbosch University Law Clinic and Others v Lifestyle Direct Group International (Pty) Ltd and Others [2021] 4 All SA 219 (WCC), who were seeking to end alleged fraudulent conduct by the respondents. The applicants alleged that the respondents targeted consumers needing loans, duped them into concluding unwanted contracts for legal services, and deducted unauthorised amounts from their bank accounts.

Two applications by non-parties to the suit were brought for leave to intervene, and for admission as amicus curiae.

The admission to proceedings of an amicus curiae is governed by r 16A of the Uniform Rules, as well as the court’s inherent jurisdiction to regulate its own process. Ultimately, the discretion to admit an amicus is taken in the interests of justice. The party seeking such admission succeeded in this matter.

The court referred to the benefits and representative nature of class actions. A class action does not require every member of the class to have an identical cause of action or to seek identical relief. It is sufficient that there be some issues of fact, or some issues of law (or a combination thereof) that are common to all members of the class and can appropriately be determined in one action. The court was satisfied that the interests of justice warranted certification in this case.

The type of class action sought was an ‘opt-out’ action. Such a class action automatically binds members of the class to the class action and the outcome of the litigation unless the individual class members take steps to opt out of the class action. The court held that the present matter was suited to an opt-out class action.

The court granted the applicants’ request for the appointment of a ‘special master’ to attend to the administration of the class action, including the verification of claims, the disbursement of payments and the management of any surplus amounts.

Merilyn Rowena Kader
Legal Editor at LexisNexis