Laws Affecting Small Business: Justice

Justice for small business is essentially inaccessible, costly and prohibitively time-consuming. There is too much red tape in the magistrates’ and high courts. Litigants may not (or are not encouraged to) forego prolix procedures, pleadings, interlocutory procedures, delays, reviews and appeals. Incorporated small businesses may not sue in small claims courts. Small claims court jurisdiction is still too limited. Professional job reservation means that litigants are forced to use costly lawyers to assist or represent them. The courts, especially small claims courts, are under-funded. Court services are not user-charged, even when used by affluent people.

• Companies (and other juristic or artificial persona) should have access to small claims courts.
• The monetary jurisdiction of the small claims court should be increased from R20,000 to R150,000, or such greater amount as might be agreed by the parties.
• The small claims court monetary jurisdiction should be subject to a mandatory annual review by the Minister.
• Litigants should be free to consent to small claims court jurisdiction beyond the prescribed limit.
• To provide sufficient funds for an expanded role for small claims courts, and to ensure adequate funding for courts in general, the principle of user-charging should be introduced.
• Small claims court jurisdiction should be extended to include—
  • claims based on a cession or assignment of rights;
  • matters in which an interdict is sought;
  • claims for damages for defamation;
  • claims for damages for malicious prosecution;
  • claims for damages for wrongful imprisonment;
  • claims for damages for wrongful arrest.
• Provision for mediation should be introduced with a view to the settling of disputes between litigants in small claims courts.
• The Minister should establish short-process courts, and make rules of procedure and appoint adjudicators for such courts.
• The short-process court option should then be publicised, and lawyers and judicial officers should be encouraged to draw it to the attention of litigants.
• Litigants in any court should have the right to assistance of their choice.
• The requirement of security by close corporations for costs should be scrapped.
• Legislation along the lines of the Regulatory Flexibility Act 1980 combined with the Small Business Regulatory Enforcement Fairness Act 1996 and Small Business Paperwork Relief Act 2002 of the United States should be adopted in South Africa in order to minimise the economic impact of legislation on small business by subjecting
  the law-making process to judicial review.

Such reforms will increase the volume of work in the small claims court substantially. Proceedings before the higher courts (and special courts) might be frustrated by an absence of formalities. Funding for lawyers working as judicial officers in small claims courts will have to be diverted from elsewhere. Less formal procedures may result in injudicious judgments. Vested interests (such as lawyers, officials, and big business) may resist reforms that reduce privilege, income, status, and power. Reform of tried and tested institutions often causes unexpected counter-productive effects.