THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No: 49/12
Reportable

In the matter between:

IMRAAHN ISMAIL MUKADDAM
1st Appellant
W E M DISTRIBUTORS CC
2nd Appellant
ABDUL KARIEM EBRAHIM
3rd Appellant

and

PIONEER FOOD (PTY) LTD
(Registration Number: 1988/004036/07)
1st Respondent
TIGER CONSUMER BRANDS LTD
2nd Respondent
(Registration Number: 1972/006590/06)
PREMIER FOODS LTD
(Registration Number: 1968/002379/06)
3rd Respondent

Neutral citation: Mukaddam v Pioneer Food (49/12) [2012] ZASCA 183 (29
November 2012)
Coram:
NUGENT, PONNAN, MALAN, TSHIQI and WALLIS JJA

Heard:
6 NOVEMBER 2012

Delivered:
29 NOVEMBER 2012

Summary:
Class action – whether ‘opt in’ action allowed – whether
‘legally tenable’ cause of action shown.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from Western Cape High Court, Cape Town (Van Zyl AJ sitting as
court of first instance):

The appeal is dismissed.

______________________________________________________________

JUDGMENT
______________________________________________________________

NUGENT
JA
(PONNAN,
MALAN,
TSHIQI
and
WALLIS
JJA
CONCURRING)

[1] Mr Mukkadam, the appellant, is a purveyor of bread. So is Mr Williams,
who trades through the medium of W.E.M. Distributors CC, and Mr Ebrahim,
who were applicants together with Mr Mukkadam in the court below, but who
are not parties to this appeal. They all conduct business in the Western Cape.
They purchase their bread from one or other of the respondents, who are major
producers, add their margins, and distribute mainly to informal traders, through
whom it reaches consumers.

[2] For some time in the Western Cape the respondents engaged in practices
prohibited by the Competition Act 89 of 1998. Essentially, they engaged in co-
ordinated fixing of prices, fixing of discounts that were given to distributors
such as the appellants, and agreed not to deal with one another‟s distributors.
The nature of their anti-competitive conduct, its effect, and the consequences

for each of them when subjected to investigation by the competition authorities,
is dealt with fully by Wallis JA in the related appeal of Trustees for the time
being of the Childrens’ Resource Centre Trust and others v Tiger Consumer
Brands Ltd and others,1 and I need not repeat what was said in that judgment.

[3] The appellants allege that they and about 100 other distributors in the
Western Cape suffered financial loss as a result of the prohibited conduct,
particularly the fixing of discounts they would receive, and the appellants wish
to pursue claims for damages in a class action. They applied to the Western
Cape High Court to certify the institution of a class action on behalf of
themselves and other affected distributors for recovery of their losses. The
application was dismissed by Van Zyl AJ and they now appeal with the leave of
this court.

[4] I have already joined with Wallis JA in the appeal in the Trustees’ case in
recognising class actions as a permitted procedural device for pursuing claims,
where the case calls for it, so as to permit those who are wronged to have access
to a court. I need not repeat what will need to be shown for such a class action
to be certified. I need say only that included amongst them the applicants for
certification will need to satisfy a court, where a novel cause of action is sought
to be established, that the claim is at least legally tenable, albeit that the court is
not called upon to make a final determination as to the merits of the claim, and
that a class action is the most appropriate means for the claims to be pursued.
Failing that, the certification of a class action holds the potential only to be
oppressive to the proposed defendants.

1Trustees for the time being of the Childrens’ Resource Centre Trust and others v Tiger Consumer Brands Ltd
and others Appeal Case No. 050/2012 (ZASCA182).

[5] The claims that the appellants wish to advance are claims for recovery of
damages. Although not fully expressed in the founding affidavit the damages
they claim are explained as follows in the appellant‟s heads of argument:
„All bread distributors would have directly suffered a reduction in gross profit margin as a
result of the respondents‟ unlawful conduct and to this extent suffered a common fate in the
reduction of gross profit. It is further submitted that damages in price fixing cases of this
nature fall to be calculated as being the difference between the actual price and the “but for”
price, that is, the price that would have been charged “but for” the unlawful price fixing
conspiracy …‟.

[6] Before us their counsel found himself confined, in view of the form in
which the case was presented in the founding affidavit, to advancing the claim
as one founded upon breach of s 22 of the Bill of Rights, though that was sought
to be linked to rights that are said to flow from the Competition Act. For present
purposes, in favour of the appellants, I will not confine myself in the same way,
and I approach the matter on the basis that they need show a legally tenable
claim founded either upon s 22 of the Constitution, read together with the
Competition Act, or under the common law. In my view any such claims are
indeed untenable and I need deal with the issue only briefly. At the outset I
should observe that there is no evidence that prices to distributors would indeed
have been lower but for the unlawful conduct but I will assume that that would
indeed have been so.

[7] Section 22 of the Bill of Rights guarantees to all citizens the right to
freely choose his or her trade, profession or occupation. While on its face the
right is expressed to be one to enter a trade, profession or occupation, it was
submitted that once the trade, profession or occupation has been entered the
section extends to protecting the practise of that trade, profession or occupation.

[8] I do not find it necessary in this case to examine in any detail the contents
of that right. It is sufficient to say that there are considerable hurdles to be
overcome in establishing a claim on that basis. The first is that the right is
guaranteed only to citizens and it is by no means clear that the individuals on
behalf of whom the class action is to be advanced are indeed citizens. The
second is that, on the face of it, the right is accorded to individuals and it seems
that some, if not most, of the proposed claimants will be juristic persons. But if
those hurdles are indeed overcome I think there is a further hurdle that
altogether blocks the way. For once having entered the trade, profession or
occupation, I find no basis for finding that s 22 also guarantees the outcome of
having done so. Indeed, that would be inconsistent with competition, which
necessarily entails that enterprises might be unprofitable and fail. Far from
supporting the appellants‟ constitutional claims, the Competition Act, which the
appellants find themselves linking to their constitutional claim, altogether
undermines it.

[9] The Competition Act does not purport to protect the profits that an
enterprise will make. On the contrary, at least so far as the distribution of bread
is concerned, it is designed to protect consumers against excessive prices
emanating from anti-competitive behaviour. The effect of the appellants‟ claims
is to assert that it was they, instead of the producers, who were entitled to reap
the rewards of the prohibited conduct. They assert a right to transfer to
themselves the profits that the producers made, which in my view is simply
untenable.

[10] Reliance upon delictual claims takes the matter no further. It can be taken
now to be well established that the recognition of claims for pure economic loss

is heavily policy laden.2 Nothing was advanced on behalf of the appellants to
suggest that public policy calls for recognition of a claim to maximise profits
from the sale of bread, least of all to reap the rewards of price fixing. The fact
alone that the fixing of prices for bread is prohibited is sufficient to dispose of
any suggestion that policy requires a claim to be recognised for the recovery of
profits from the practice. Indeed, the corollary of our finding in the Trustees’
case that a claim by consumers is potentially plausible is destructive of the
distributors‟ case.

[11] But there is a further ground upon which the claim for certification by the
distributors must in any event fail. The justification for recognising class actions
is that without that procedural device claimants will be denied access to the
courts. The class action the appellants wish to commence in this case is one that
is sometimes called an „opt-in‟ action. By that is meant that the class to be
represented in the action is confined to claimants who come forward and
identify themselves as claimants – in this case by written notification to the
appellants‟ attorney.

[12] Once the class is confined to claimants who choose positively to advance
their claims, and are required to come forward for that purpose, I can see no
reason why they are not capable of doing so in their own names, and they need
no representative to do so on their behalf. Rule 10 of the Uniform Rules
expressly allows multiple plaintiffs to join in one action if
„the right to relief of the persons proposing to join as plaintiffs depends upon the
determination of substantially the same question of law or fact which, if separate actions were
to be instituted, would arise on such action‟.

2Minister of Safety and Security v Van Duivenboden 2002 (6) SA 431 (SCA) para 22; Telematrix (Pty) Ltd t/a
Matrix Vehicle Tracking v Advertising Standards Authority SA 2006 (1) SA 461 (SCA) para 3; Trustees, Two
Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd 2006 (3) SA 138 (SCA) paras 10 and 11.

[13] Claims that have sufficient commonality to qualify for a class action will
necessarily qualify for a joint action under that rule, and the converse also
applies. That the plaintiffs might be numerous – in this case it is said that there
might be 100, although there is no reason to think that all will join – is in itself
no reason to preclude a joint action.3 Perhaps there will be more paper – though
even that is not necessarily true – but that is no more than administrative
inconvenience. In both a class and a joint action the plaintiffs will necessarily be
represented by the same legal representatives and are in no worse position than
they would be in a class action. I might add that even administrative
inconvenience of a joint action under Rule 10 might be overcome if the claims
were all ceded to a single plaintiff, which is a further reason why a class action
is not called for to advance their claims.

[14] The only advantage that was advanced on the appellants‟ behalf for
proceeding by way of a class action in such cases, instead of a joint action or
one that is brought in reliance upon a cession of claims, was that an action
brought through representation would immunise them against personal liability
for costs. That does not seem to me to be a good reason for allowing a class
action. On the contrary, the potential for personal liability for costs will often
serve as a salutary restraint upon frivolous actions that are brought oppressively
for the purpose of inducing defendants into financial settlements, which is one
of the dangers to be avoided in certifying class actions. Indeed, the court that
becomes seized of the case has a wide discretion to determine where the costs
should fall, taking account the merit of the claim and the conduct of the
litigation, and is better placed to do so than a certifying court. Although I do not
close the door to an „opt in‟ class action in my view the circumstances would

3 In the United States a class action is not competent if all the claimants can be joined. Rule 23(a) of the Federal
Rules of Civil Procedure require a party seeking certification to demonstrate, amongst other things, that „the
class is so numerous that joinder of all members is impracticable‟.

need to be exceptional before one would be allowed, and nothing exceptional
has been shown in this case.

[15] On both grounds the claim to certification in this case must fail and the
appeal must be dismissed. In view of the novelty of the claim, and its close
association with the Trustee’s case in which the main points were in any event
argued on behalf of the respondents, I think it would be just if each party were
to pay its own costs.

[16] The appeal is dismissed.

__________________
R W NUGENT
JUDGE OF APPEAL

APPEARANCES:

For appellant:
R P Hoffman SC

C D Shone

Instructed by:

Knowles Husain Lindsay Inc, Bellville

Honey Attorneys, Bloemfontein

For 1strespondents:
S Burger SC

P McNally SC

J Cassette

Instructed by:

Cliffe Dekker Hofmeyr Inc, Sandton

Symington & De Kok, Bloemfontein

For 2ndrespondents:
J Dickerson SC

M O'Sullivan

R Garland

Instructed by:

Edward Nathan Sonnenbergs, Cape Town

Matsepes Inc, Bloemfontein

For 3rdrespondents:
D Unterhalter SC

M du Plessis

I Goodman

Instructed by:

Nortons Inc, Sandton

McIntyre & Van der Post, Bloemfontein