Cape Town - A Cape Town bread distributor has won an appeal in the Constitutional Court in a bid to lodge a class action lawsuit against major bread producers.
In a judgment handed down on Thursday, the court set aside earlier judgments by the Western Cape High Court and the Supreme Court of Appeal (SCA) that refused Imraahn Mukkadam the certification necessary to lodge a class action lawsuit.
Mukkadam wants to institute a class action claim for damages allegedly suffered as a result of anti-competitive conduct by the three bread producers – Pioneer Foods, Tiger Consumer Brands and Premier Foods – that are the respondents in the case.
The Competition Commission launched an investigation into the bread producers in 2006 after Mukkadam blew the whistle about price-fixing.
Subsequently, Tiger Brands was fined almost R99 million and Pioneer Foods about R196m, while Premier Foods was granted leniency for co-operating in the investigation. Mukkadam then took his fight to the high court.
He sought certification that would give him permission to lodge a class action claim for damages, contending that he and about 100 other distributors in the Western Cape suffered financial losses because of the bread producers’ conduct, but the high court refused him certification.
Mukkadam’s appeal also failed, with the SCA finding that his claims were not “legally tenable”.
He then approached the Constitutional Court. In yesterday’s majority judgment, Justice Chris Jafta found the SCA had erred in not finding that Mukkadam’s claim was “potentially plausible”, as it had found in a separate application by several NGOs, consumers and institutions.
The court had committed a further error in finding that in an opt-in class action – where claimants would join the class as a matter of individual choice – certification could be granted only if the applicant (in this case Mukkadam) showed exceptional circumstances why this should be.
Justice Jafta also noted that the absence of one or another requirement “must not oblige a court to refuse certification where the interests of justice demand otherwise”. His order in effect enables Mukkadam to return to the high court to pursue certification.
In the other application, NGOs, consumers and institutions also sought class action certification relating to the bread price-fixing saga.
It was denied in the high court and the consumers went to the SCA, which set out guidelines for the launching of a class action lawsuit. The case was sent back to the high court where the group could apply for such a certificate, using the new guidelines.
The guidelines included that the class had to have identifiable members, that it had to have a cause of action that raised a “triable” issue, that there were common issues that could appropriately be dealt with in the interests of all members of the class, and that a representative in whose name the class action would be brought had to be identified.
If the court was satisfied that it could issue a class certificate, then and only then could the action be instituted.
Cape Times