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Consumer Affairs
Sunday, August 1, 2010
The gatekeeper

Before you know it the 24th of October will be here and consumers will be able to exercise their rights under the no-fault product liability provisions of the Consumer Protection Act for all goods supplied on or after the 24th April 2010. Consumers will have the choice of the producer, importer, distributor or retailer of goods to sue.

Says Donald Dinnie, director of Deneys Reitz Inc, “The common law hurdle of proving negligence or other fault is removed making product liability claims that much easier. A causal link between the defective goods and the harm suffered still needs to be established on a balance of probabilities and the consumer remains at risk of an adverse costs order if he is unsuccessful in the litigation. Of course, the consumer also has to bear the costs of instructing his own attorney and counsel to prosecute any recovery and inevitably the costs of the appropriate experts.”
He says, as with any litigation, the question of funding may, whatever the merits of the recovery may be, constitute a significant practical hurdle to any recovery. It is in that regard that the provisions of the Act, which essentially allows for class actions and which allows for a role to be played by consumer protection groups, will be significant.
“Class actions allow for economic and efficient litigation by avoiding duplication; allow a large number of claimants whose claims are based on a well defined question of fact or law to have their matters heard in one proceeding; protect defendants from inconsistent obligations that may arise in multiple suits managed individually; and, assist in settling many claims by class members spread over a large geographic area.”
Class actions should be distinguished from an action in the public interest. A class action judgment would bind all members of the class while public interest judgments do not usually bind the people in whose interest that action is brought. Historically our common law has not recognised class actions. The constitution provides for a class action where constitutional rights have been infringed. To date class actions have been used with limited success by such litigants.
Says Dinnie, “The Act now allows, amongst other things, for a person acting as a member of, or in the interest of, a group or class of affected persons or a person acting in the public interest, to approach a court, the tribunal or the National Consumer Commission where a consumer’s rights in terms of the Act have been infringed, impaired or threatened or prohibited conduct has occurred or is occurring.”
The Act allows not only individuals, but relevant consumer watchdogs to provide consumer complaints or reports of product failures, defects, hazards, personal injury, illness or damage to property caused wholly or partially as a result of a product failure, defect or hazard to the Commission. That in turn may trigger a peremptory product recall initiated by the Commission.
“Those provisions appear to contemplate, at least indirectly, the ability of those categories of persons to institute a class action in respect of the product liability provision of the Act. Each claimant will still have to prove their own damages,” he adds.
More than ten years ago the South African Law Commission investigated the recognition of class and public interest actions in South African Law and recommended appropriate procedures. Nothing was done. Hopefully legislation will be promulgated setting out the mechanism for class actions. Until that happens the most useful guidelines are set out in Permanent Secretary, Department of Welfare, Eastern Cape Provincial Government and Another v Ngxuza and others 2001 (10) BCLR 1039 (SCA).
Certainly the courts are provided by the Act with the power to award proved damages, against a supplier for collective injury to all or a class of consumers generally, to be paid on any terms or conditions that the court considers just and equitable and suitable to achieve the purposes of the Act. Those purposes include the promotion and advancement of the social and economical welfare of the consumer in South Africa by providing for an accessible, consistent, harmonised, effective and efficient system of redress for consumers.
“In dealing with any matter brought before the court in terms of the Act it must develop the common law as necessary to improve the realisation and enjoyment of consumer rights generally,” says Dinnie. “That will include our common law in respect of access to the courts and class actions. While the Act provides for resolution of consumer complaints by the Commission, Tribunal, Ombud or Consumer Court none of those appear to be an appropriate forum with the relevant jurisdiction and power to resolve product liability claims under the Act and it is our Civil Courts that will be tasked with this function.”
The Commission may co-operate with, facilitate and otherwise support consumer protection groups who provide consumer advice and education activities, consumer-related publications, promotion of consumer rights and advocacy of consumers’ interests, and represent consumers, either specifically or generally in court.
Accredited consumer protection groups may act to protect the interests of the consumer individually or consumers collectively in any matter in any forum contemplated by the Act or intervene in any such forum as well. Accreditation by the Commission may take place where the particular protection group:
• Functions predominantly to promote or represent the interest of all or a specific category of consumers generally;
• Is committed to achieving the purposes of the Act; and,
• Engages in or makes a realistic proposal to engage in actions to promote and advance the consumer interests of those persons contemplated.

“Reasonable conditions may be imposed for accreditation and standards, procedures and related matters may be prescribed for the Commission to follow in assessing whether an applicant for accreditation meets the requirements. Accredited consumer protection groups may initiate a complaint regarding, or seek to enforce, any rights in terms of the Act,” he says.
Finally, contingency fee arrangements will facilitate product liability litigation. At common law contingency fees are unlawful. But since about 1992, at least in Gauteng, special fee arrangements have been permissible in respect of claims for personal injury by which, if a claim is unsuccessful, the practitioner agrees to refrain from charging a fee — but if successful it may charge a fee in excess of the tariff. The Contingency Fees Act of 1997 provides for a ‘no-win no-pay’ arrangement where the successful practitioner is entitled to double the normal fees with the success fee not exceeding 25% of the total award.
There are relatively onerous provisions regarding the form and content of the agreement, and settlement and review of such agreement by the court. In the field of personal injury claims there are a number of plaintiff’s practitioners who provide an excellent service to clients in personal injury matters. So, product liability claims will be facilitated by removal of the fault requirement from claims, the ability to institute class action in one form or another with the assistance of a consumer protection group, and the ability to enter into contingency fee arrangements.

Copyright © Insurance Times and Investments® Vol:23.8 1st August, 2010
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