Desperate loan-seekers get class action go-ahead
The Stellenbosch University Law Clinic has been given judicial go-head to launch a class action against Lifestyle Direct Group International and its affiliated websites, in an attempt to claw back money it took from thousands of desperate loan seekers.
GroundUp reports that in a judgment handed down in the Western Cape High Court on Wednesday, Judge Patrick Gamble also gave authority for the class action to be on an ‘opt out’ basis, meaning that those who were allegedly duped will automatically become part of the litigation unless they specify otherwise.
In its application, the law clinic contended that the respondents were not registered credit providers but they nevertheless lured unsuspecting consumers with promises of loans and loan-finding services, and purported to charge consumers for legal advice.
The law clinic contended that this was an ‘unlawful scam’; that the respondents were ‘wily confidence tricksters’ who exploited the informality of the Internet and the financial difficulties of poor consumers ‘to perpetrate an array of frauds against innocent and vulnerable people on a daily basis’.
Gamble, in his judgment, said consumers were duped into believing they were applying for cash loans, while in fact they received no money and ended up paying a monthly instalment for ‘legal services’, which they never sought nor received.
In considering the development of class action law in SA, Gamble said there were already guidelines and several matters had already been considered by courts, including the silicosis case, in which mine workers affected by lung disease sought to recover compensation for occupational injuries.
‘At the heart of class action litigation lies access to justice for ordinary working people who cannot otherwise afford the exorbitant costs of litigation,’ he said.
The judge noted the clinic’s senior attorney Stephanus van der Merwe had said there were ‘literally thousands’ of complaints from irate consumers.
Gamble said most of the respondents comprised a web of small companies, each with physical offices located across greater Cape Town, notes the GroundUp report.
They were all associated with the first respondent, the ‘Lifestyle Direct Group’. Another respondent was Capital Lifestyle Solutions, which traded as ‘Lifestyle Legal’ and functioned as an in-house debt collection agency for the Lifestyle Group, which was used to ‘harass’ consumers.
The faces behind the entities were Damian Malander and Nandie Piach.
Lawyers for the companies had accepted that the law clinic had made out a prima facie case, based on the pleadings, and that the law clinic was a suitable party to act as the ‘class representative’.
The only contentious issue were the questions of ‘commonality and appropriateness’.
Gamble said a class action did not require every member to have an identical cause of action or seek identical relief, and in this matter ‘the scheme appears to neatly fit into the commonality criteria’.
‘If a class action is denied, similar, if not identical evidence will have to be led in separate courts by each of the thousands of members of the class. … It would be an inefficient and unnecessary waste of resources for both parties,’ Gamble said.
Regarding the issue of appropriateness, Gamble said this was confirmed by the fact that the class was large with relatively small claims, some so small that they might be conceivably recovered in the Small Claims Court, with the risk of multiple findings at variance with each other.
Gamble sanctioned the appointment of a ‘special master’ to attend to the ‘nuts and bolts’ of the class action.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.