Constitutional Court rules on SLAPP suits and corporate defamation

Mineral Sands Resources (Pty) Ltd and Others v Reddell and Others [2022] ZACC 37; and Reddell and Others v Mineral Sands Resources (Pty) Ltd and Others [2022] ZACC 38

Court: Constitutional Court of South Africa

Date of judgment: 14 November 2022

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Background

This brief assesses two related judgments recently handed down by the Constitutional Court. The first is the Mineral Sands Resources judgment (Mineral Sands Resources (Pty) Ltd and Others v Reddell and Others), which deals with the existence of a Strategic Litigation Against Public Participation (SLAPP) defence under South African common law. The second is the Reddell judgment (Reddell and Others v Mineral Sands Resources (Pty) Limited and Others), which relates to general damages arising out of defamation proceedings brought by a trading corporation.

SLAPP suits refer to litigation that is designed to frustrate or undermine the legitimate public participation of critical or dissenting voices in public life. SLAPP suits often target activists, individuals, or less powerful entities who speak out against better-resourced individuals or entities. SLAPP suits are perceived to limit freedom of expression or to discourage participation in public affairs by relying on tactics which seek to intimidate. By involving individuals in protracted and costly legal proceedings (as opposed to proceedings that seek to enforce a legitimate legal right), the goal behind a SLAPP suit is to drain the targeted party’s time or resources, or to discourage any further criticism or activism from them or similar parties. Although the SLAPP defence enjoys recognition in the United States of America and Canada and is becoming increasingly recognised globally, the aforementioned case presented the South African Constitutional Court with its first opportunity to grapple with the defence under South African law.

The matter stems from defamation proceeding in the High Court which were brought by Australian mining companies Mineral Sands Resources (Pty) Ltd and Mineral Commodities Limited and some of their executives (“the mining companies”) against a group of environmental activists and lawyers (“the activists”). The mining companies sought claims of more than R14 million for various critical statements that the activists made on television, social media, radio, and during public lectures against the mining companies. The impugned statements pertained to the alleged unethical and unlawful activities by the mining companies through their Tormin Mineral Sands Project and Xolobeni Mineral Sands Projects.

In response to the institution of proceedings, the environmental activists raised two special pleas against the mining company: the first special plea was that the claim amounted to a SLAPP suit because the mining company acted with the ulterior motive of silencing the activists; the second special plea related to a juristic person’s ability to claim for general damages in relation to defamation without alleging and proving falsity, wilfulness, and patrimonial loss. The mining companies then raised exceptions to the special pleas which were heard together in the High Court before Goalith DJP. Goliath dismissed the exception pertaining to the SLAPP special plea, and the mining companies appealed this decision. Under this appeal, the legal question before the Constitutional Court was whether a SLAPP defence can be accommodated under the abuse of process doctrine. In the event that it cannot, the Court was tasked with considering whether the common law should be developed to include the defence.

The appeal on the SLAPP special plea

One of the submissions made by the mining companies is that, when considering the SLAPP defence, the motive behind the litigation is irrelevant. Rather, the merits of the case should be the deciding factor. Importantly, the Constitutional Court found that both the motive and the merits of the case are relevant when determining whether there has been an abuse of court process amounting to a SLAPP suit. The court distinguished SLAPP suits from frivolous and vexatious proceedings, proceedings wherein illegal conduct plays a central role, and the misuse of court rules, all of which are subsects of abuse of process. Further, the Court recognised ‘abusive litigation’, which is the use of the courts to silence a defendant and burden a defendant with legal costs, as falling within the scope of the common law abuse of process doctrine. A determination as to whether litigation is abusive would require consideration of the merits and motive. SLAPP suits were found by the Court to fall within the abuse of process doctrine under the common law.

Majiedt J, writing unanimously, provided useful guidance on the elements to be considered when assessing a possible SLAPP suit. The party raising the SLAPP defence must show that the litigation:

• Constitutes an abuse of court process;
• Was not brought to vindicate a legitimate right;
• Amounts to the use of court process to achieve an improper end such as financial gain, prejudice, or a strategy to silence dissent; and
• Violates or is likely to violate the right to freedom of expression in section 16 of the Constitution.

Ultimately, the Court found that the environmental activists did not prove the factors listed above. Be that as it may, the Court also found that the SLAPP defence is already accommodated in the common law doctrine of abuse of process. This serves, per Majiedt’s findings, to ensure that courts can guard against the abuse of their processes, and to ensure the law’s primary purpose is “to see that justice is done, and not to be abused for odious, ulterior purposes.”

The appeal on corporate defamation

The activists also applied for leave to appeal with respect to the issue on general damages for defamation claims brought by trading corporations. In the main, the activists alleged that a juristic person such as a trading company cannot sue for general damages which are awarded for injured feelings and solace, because it cannot prove the requirements for an award of general damages – namely that the defamatory statement is false and wilful, and that the juristic person suffered patrimonial loss. Part of the activists’ submissions was that such an award would be unconstitutional as it unjustifiably limits the right to freedom of expression in section 16 of the Constitution in favour of the reputation of a juristic person. The majority judgment found that juristic persons have no right to dignity because section 10 of the Constitution refers to “human dignity” and not the dignity of a juristic person. However, in place of the right to human dignity, the majority recognised that juristic persons have a right to reputation which is their external image, and they can claim damages for such violations.

Upon weighing up the right to freedom of expression and the reputational right of the mining companies, the majority judgment found the right to freedom of expression is the overriding right. Additionally, the Court found there are less restrictive means that could have been employed by the mining companies to vindicate their rights such as obtaining an interdict, or seeking a retraction and apology, or a declaratory order.

Notably, the Court highlighted its discretion to award general damages for defamation against juristic persons where it would be in the public interest to do so. The minority judgment disagreed with this discretion, insofar as it avoids resolving challenging legal questions by allowing for discretionary judgments by the courts.

The minority judgment also took issue with the interpretation of section 10 of the Constitution to exclude juristic persons. The minority further recognised that the common law makes provision for the award of general damages for the reputational harm of a juristic person because defamation may result in a loss of profits. As some of the defamatory statements were shared on social media, Unterhaulter J emphasised the role of social media in contributing to the spread of misinformation although it also enables freedom of expression. He went on to note that freedom of expression is not an unqualified right when weighed up against the reputation of a juristic person. The minority judgment further highlights that social media platforms are unregulated spaces with very little accountability and responsibility and when false information is spread online, it may ruin the reputation of a corporation. This, the minority judgment held, creates a right that is worthy of protection and should not be discounted by virtue of it being weighed against the right to freedom of expression.

Orders of the Constitutional Court

In the appeal related to the use of the SLAPP defence, the Constitutional Court upheld the exception and afforded the activists 30 days from the date of the judgment to amend their SLAPP plea to include the necessary averments. Further, the mining companies were ordered to pay 60% of the activists’ costs including the costs of two counsel.

In the corporate defamation appeal, the Constitutional Court found that trading corporations can claim general damages for defamation, except where the alleged defamatory speech forms part of public discourse on issues of public interest, and only at the discretion of the court.

The Mineral Sands Resources (SLAPP suit) judgment is accessible here.

The Reddell (corporate defamation) judgment is accessible here.

Please note: The information contained in this note is for general guidance on matters of interest, and does not constitute legal advice. For any enquiries, please contact us at [email protected].