Case Summary and Outcome

The Constitutional Court in South Africa ruled that a court can refuse to grant a trading corporation damages for non-patrimonial loss for defamation in cases involving matters of public interest. After two Australian mining companies brought defamation suits against environmental lawyers and activities, the environmentalists argued that trading corporations do not have a claim for general damages for defamation. The Court found that as a trading corporation does not have the protection of the right to dignity, balancing its right to reputation and the right to freedom of expression likely favors the right to freedom of expression. The Court held that the chilling effect caused by general damages when the defendant does not have the right to have its loss of dignity compensation is an unjustifiable limitation of the right to freedom of expression.

---

Facts

In 2014 and 2015, John Clarke, an environmental community activist in South Africa, published two e-books detailing the mining activities of Mineral Commodities Limited and Mineral Sands Resources (Pty) Ltd in the Wild Coast, South Africa. Clarke also participated in radio and online interviews, posted videos on YouTube, wrote online journalism pieces and wrote to the Minister of Mineral Resources. On April 2016, Mzamo Dlamini, another activist, and Cormac Cullinan, an environmental attorney, participated in a radio panel debate, of which a representative of Mineral Commodities was also a part, in which Dlamini and Cullinan criticized the mining activities.

On July 18, 2016, Mineral Commodities served summons on Clarke for defamation, seeking damages of R10 million (approximately US$670,000 in February 2021), and on August 18, 2016, on Dlamini and Cullinan seeking damages of R3 million (approximately US$200,400 in February 2021).

On January 25, 2017, Christine Reddell, Tracey Davies (both environmental attorneys) and Davine Cloete (an activist), delivered a lecture series at the University of Cape Town in which they criticized the Mineral Sands Resources mining activities. On May 2, 2017, Mineral Sands issued summons, seeking damages of R1 250 000 (approximately US$83,500 in February 2021) for defamation.

In total, the damages sought in the three suits amounted to R14,25 million (approximately US$950,000 in February 2021). In the alternative, the mining companies sought a public apology.

The environmentalists raised two special pleas: the first that the defamation suits were SLAPP suits; and the second that the mining companies’ claims were “bad in law because a for-profit company has no claim for general damages in relation to defamation without alleging and proving falsity, wilfulness and patrimonial loss” [para. 7]. The distinction between patrimonial and general damages is in their purpose: damages for patrimonial loss “restores quantifiable patrimonial loss, whereas [general damages] assuages dignity and hurt feelings or other protectable, non-patrimonial reputational interests that an entity may have” [para. 117].

The related judgment on whether there is a SLAPP suit defence in South African law is here: Mineral Sands Resources (Pty) Ltd v. Reddell; Mineral Commodities Limited v. Dlamini; Mineral Commodities Limited v. Clarke.

---

Decision Overview

Judge Majiedt delivered the majority judgment of the Court and was joined by Judges Madlanga, Mathopo, Mhlantla, Mlambo, Theron and Tshiqi. Acting Judge Unterhalter delivered a minority judgment, in which he was joined by Judge Kollapen. The central issue for the Court’s determination was whether a trading corporation was entitled to receive general damages for defamation, and if so, under which conditions.

The environmentalists argued that general damages for a trading corporation’s defamation was unconstitutional as it significantly restricted the right to freedom of expression. They submitted that there was a distinction between natural persons and juristic persons being awarded general damages as a natural person has the constitutional right to human dignity: a trading corporation “has no feelings that can be injured” [para. 16]. The environmentalists submitted that the common law needed to be developed to bring it in line with the Constitution.

The mining companies argued that if the environmentalists were successful it would “inhibit business enterprise and discourage foreign and local investment in this country” [para. 19]. They submitted that at a time of increased “fake news” limiting the rights of companies to sue for defamation would “harm our democracy and undermine an important object of the protection of freedom of expression, which is the pursuit of truth” [para. 20]. The mining companies disagreed with the environmentalists that trading corporations did not enjoy the right to dignity, arguing that the environmentalists interpreted dignity too narrowly by only looking at dignitas (“the sense of self-worth”) without considering the right to reputation as part of the broader concept of dignity [para. 22]. The mining companies also submitted that damage to a trading corporation’s reputation cannot always be quantifiable, and so restricting the ability to claim for damages only when a corporation can demonstrate financial loss would remove their access to a remedy.

The Court confirmed that the matter was of public importance because although its case of Khumalo v. Holomisa had “settled the position as regards the intersection between the law of defamation and the constitutional right to freedom of speech insofar as it relates to plaintiffs that are natural persons” the Supreme Court of Appeal case of Media 24 Ltd v. SA Taxi Securitisation (Pty) Ltd 2011 (5) SA 329 (SCA) demonstrated that the matter had not been settled in respect of trading corporations [para. 31].

The Court described the common law of defamation as being the wrongful and intentional publication of a defamatory statement concerning the plaintiff. It added that the defences are that the publication was true and in the public benefit, it was fair comment, that it was privileged, and – following National Media Ltd v. Bogoshi and only for the media – that it was a reasonable publication. The Court acknowledged that a trading corporation “enjoys a reputation among many stakeholders that has a value that is not reducible to reputation as a profit-making asset” and that the common law of defamation distinguished between reputation and self-worth [para. 48].

The Court then examined the jurisprudence on dignity, noting the importance of the right. The question was whether juristic persons enjoy the right, and the Court acknowledged that facets of the right simply cannot apply to corporations as “the purpose of the right to dignity is, by its very nature, ‘human-centric’” [para. 60]. It added that the right in the Constitution is titled “human dignity” and found that although companies enjoy the protection of other rights – including to equality – the constitutional right to dignity does not extend to companies. The Court stressed that just because a juristic person has a right to a reputation does not mean it has a right to dignity and stated that “[i]t is quite legitimate to argue that a human being’s reputational interests are in need of a more demanding form of protection than a company’s … [and that] it is fair to reason that a company’s reputational interest is sufficiently protected by the common law and therefore does not enjoy the protection of a constitutional guarantee” [para. 63].

The Court conducted a thorough analysis of the judgments in SA Taxi. It dismissed that majority’s finding that “[t]hough freedom of expression is fundamental to our democratic society, it is not of paramount value … Nor does it enjoy superior status in our law” as “untenable” [para. 86]. The Court held that its disagreement with SA Taxi did not mean that companies have no defamation claim based on constitutional rights, only that the constitutional right they rely on cannot be dignity.

In examining whether a company can be awarded general damages for defamation, the Court acknowledged that it is legally established that damages are to vindicate reputation and so are compensatory. The Court confirmed that “a juristic person such as a trading corporation has a legitimate interest in the protection of its reputation” [para. 93]. The Court confirmed that a trading corporation does have a right under common law and the Constitution to claim for non-patrimonial damage to its reputation, but that this case concerned whether “a claim for general damages for defamation by a trading corporation passes constitutional muster” [para. 97].

The Court held that general damages for a trading corporation’s reputational harm did infringe the right to freedom of speech – “specifically in relation to speech which is of public importance or which requires public debate and participation” – and that it therefore had to determine whether the limitation was justifiable in terms of the general limitations test under section 36 of the Constitution [para. 100]. It clarified that the specific circumstances it was considering was the limitation to freedom of expression on matters of public importance by an award of general damages.

In conducting the section 36 analysis, the Court referred to Qwelane v. Human Rights Commission and Democratic Alliance v. African National Congress in noting the right’s particular importance in South Africa’s constitutional democracy. It then acknowledged the importance of the limitation being to restore reputation and dignity following defamatory statements. However, the Court noted that the importance of the right diminishes when the matter at hand is of public importance and when the “plaintiff is a trading corporation whose reputation rights are not sourced in the Constitution and are, at best, only enjoyed objectively” [para. 104]. The importance of the limitation increases when “the plaintiff is a natural person whose dignity and reputation rights are sourced in section 10 of the Constitution and/or where the speech concerned is not part of a debate of public importance” [par. 104].

In examining the nature and extent of the limitation, the Court acknowledged that “awards of general damages of defamation, particularly in substantial amounts, tend to have a chilling effect on speech” [para. 106]. With reference to its decision in Dikoko v. Mokhatla it added that general as opposed to patrimonial damages are a “severe limitation on the right to freedom of expression” [para. 106]. It added that if the defendant was a large corporation the amount of damages for potential future loss of profits would be considerably more than the general damages for a natural person.

In respect of the rational connection between the limitation and its purpose the Court stated that the law is settled that general damages are justified as a way to respect a plaintiff’s dignity. However, it held that as a trading corporation’s damage is not to their constitutionally-protected right to dignity, their common law right to reputation is not “compelling justification” for the limitation of the right to freedom of expression [para. 108].

The Court held that there were less restrictive means by which a trading corporation could vindicate its right to a reputation when the case concerns matters of public importance, such as interdicts, declarators, retractions or apologies. The Court set out the balance of the two rights at issue: “the [plaintiff’s] common law right to reputation and good name, protected by the Constitution’s equality provisions, and the [defendant’s] constitutional right to freedom of expression” [para. 111].

As a result, the Court stressed that just because “an unqualified award of general damages to a trading corporation for a defamation is unconstitutional does not mean that such awards will never pass constitutional muster” [para. 111]. The Court found that the context of the alleged defamation is crucial: here, debate about alleged environmental harm is of public concern and the Court stated that public debate on matters of public concern must be encouraged.

Accordingly, the Court held that “some relief by way of general damages must be available as recompense for non-patrimonial harm to juristic persons caused by defamatory statements” [para. 113]. The Court stated that this requires a court to identify speech that contributes to a public debate on a matter of public concern and distinguish that from other speech, and that general damages can only be awarded in the latter situation.

The Court looked at international and comparative law. In discussing the history of English law on libel of trading companies, it referred to the 1894 British case of South Hetton Coal Company Limited v. North-Eastern News Association Limited which had first held that a trading company could sue for libel “calculated to injure its reputation in the way of its business, without proof of special damages” [para. 132]. The Court concluded that in England, New Zealand, Australia, Germany, Canada and the US trading corporations can sue for general damages.

In conclusion the Court held that “an unqualified award of general damages to a trading corporation in respect of harm to its reputation limits the right to freedom of speech” because it has “no hurt ‘human’ feelings to assuage” and does not have protection of the constitutional right to dignity [para. 150]. A trading corporation has a right to claim for general damages because of its “common law right to its good name and reputation, protected by the Constitution’s equality provisions” [para. 150]. However, the Court held that a court will retain discretion to refuse to award general damages when the matter involves “public discourse in public interest debates”. Accordingly, the Court held that without the public interest qualification “a claim for general damages for defamation poses an unjustifiable limitation on freedom of expression” [para. 150].

Judge Unterhalter disagreed with the majority judgment and would have found that a trading corporation did have a constitutional right to dignity. The minority judgment stated that the right to dignity includes the right to reputation, and then asked the question of “who can enjoy that right? [para. 157]. He also questioned why general damage’s compensation for hurt feelings would not apply to a trading corporation whose reputation had been harmed. The minority maintained that a corporation’s reputation had value which meant that the “harm is real” and so deserving of general damages [para. 169].

The minority disagreed with the majority’s finding that the imposition of general damages in cases where there was public discourse in the public interest created a chilling effect and questioned why the remedy of general damages was seen to be a risk to freedom of expression in a way that other possible remedies were not – including remedies for patrimonial loss. The minority judgment maintained that it is the threat of litigation and not a high award of general damages that deters individuals from making a defamatory statement, and stated that the “ultimate remedy of a declarator or interdict, as opposed to an award of general damages, makes very little practical difference to the calculation of a person as to whether to publish or not” [para. 181].

The minority discussed the importance of the right to freedom of expression but stated that “[f]alse speech (and sometimes also hateful speech) that harms another’s reputation will often have little or no value” and that “[s]uch speech counts for little in the recognition that is due to freedom of expression”. [para. 194]. On this point, the minority commented that “[i]t is sometimes not protected speech to which a person may claim an unqualified right to freedom of expression” [para. 194].

In placing the discussion in context, the minority emphasized the impact of social media and “fake news” and stated that the social media platforms – used by millions of people – “assume little responsibility for the content that is posted” [para. 195]. It then discussed the impact of false, defamatory speech and stated that it “can be extremely harmful to the reputation of persons, and it is difficult in these circumstances to understand what freedom is being justifiably exercised in publishing such speech” and that “it is not the case that the publication of defamatory speech is invariably a legitimate exercise of freedom of speech” [para. 197]. The minority stated that, on the other hand, “the right of persons to protect their reputation matters” [para. 198]. It added that there was no clear guarantee that speech on a matter of public importance was true and not “reputationally ruinous” [para. 202]. The minority reiterated its concern about the protection given to false speech, stating that “the right to freedom of speech must take account of what speech is used, how it is used, and with what consequences. The right does not have abstract primacy over reputational rights simply because it is a constitutional right, and the right to reputation of a trading corporation is, according to the first judgment, a mere common law right” [para. 205]. It emphasized that “[i]f the unlawful defamation is a blatant falsehood that does great reputational harm, the right to freedom of speech has no primacy” [para. 205].

The minority would have held that the award of general damages was constitutional, and that under the limitation analysis the limitation would have been justified.

The minority ended with a discussion on issues it felt would need to be resolved in future. It mentioned the defence of reasonable publication introduced in Bogoshi but stated that “Bogoshi could not have anticipated the revolution that ubiquitous social media has wrought upon the world” and noted that who should enjoy the Bogoshi defence may have to be reconsidered [para. 209].

---