A number of stakeholders, including environmentalists and non-profit community interest groups (public interest groups) are increasingly scrutinising whether companies and development projects are complying with the sustainable development principles, coupled with global drive to assess compliance with environmental, social and governance (ESG) principles.
This increased scrutiny has played out in our courts in the form of numerous legal challenges by environmentalists and public interest groups against developments, which in their view have material environmental and/or social impacts, resulting in developments being cancelled in some instances. Although the alleged environmental and social impacts claimed by environmentalists and public interest groups have been averted, the questions remain as to what is or what will be the real social and economic impact for South Africa’s sustainable development when developments do not proceed? What legal certainty is afforded to investors looking to invest in infrastructure development in South Africa when underlying policy invites such investment? To what degree would these legal challenges in-principle be prejudicial to socio-economic and environmental sustainable benefits?
In addition to legal challenges, the public interest groups also use various tactics outside court, such as public criticism, to challenge development projects perceived to be in violation of, amongst other things, ESG principles. In March 2021, we commented on a Western Cape High Court judgment that upheld – for the first time – a novel defence raised by certain environmentalists against a defamation suit brought by Australian mining companies. The environmentalists claimed that the defamation suit initiated by the mining company lacked merit and was merely employed to intimidate and silence them from speaking out against the mining companies. These types of suits have been labelled as Strategic Litigation Against Public Participation (SLAPP). In the High Court, the environmentalists pleaded that the defamation suit was brought for an ulterior motive and was an abuse of process. In response, the mining companies took exception to the pleadings, claiming that they lacked the necessary averments to make out a case for an abuse of process defence. The High Court dismissed the exception, and as noted in our article, the mining companies indicated that they would appeal against the decision. It is important to note that the appeal was against the dismissal by the High Court of the mining companies’ exception.
On 17 February 2022, the Constitutional Court heard the appeal and on 14 November 2022 delivered its judgment on the issue as to whether – under the common law doctrine of abuse of process – a defence was available to the environmentalists. The judgment is comprehensive, but when it is distilled to its essence, the Constitutional Court upheld the mining companies’ appeal and held the following:
- First, the Constitutional Court held that the common law doctrine of abuse of process was sufficiently broad to include a defence to SLAPP suits i.e. those suits where the processes of the courts are used by litigants with no overt evidence of abuse but to achieve an end that may be harmful for other reasons. However, when raising such a defence, the defendant would have to consider in its pleadings both merits and motive. The merits relate to the question of whether the plaintiff has a right to vindicate (i.e. reputational integrity and a good name), whereas the motive relates to the question of what the true objective of the litigation is. In addition, the court would need to consider what effect the suit will have on freedom of expression.
- Second, although a SLAPP suit defence is available under the common law doctrine of abuse of process, the environmentalist pleadings do lack the necessary averments to sustain the defence, because their pleadings were focused on motive alone without addressing the merits. However, the environmentalist must be given an opportunity to amend their pleadings to deal with both the merits and motive.
In summary, although the mining companies were successful in their appeal against the exception, the Constitutional Court definitively decided that there are defences available against SLAPP suits, and further provided the environmentalists with an opportunity to amend their pleadings.
Defamation and damages
Before dealing with the consequences of the judgment, we cannot ignore the other judgment that was delivered by the Constitutional Court in respect of the appeal brought by the environmentalists in the same matter on the issue of whether general damages (i.e. damages not directly related to loss of profit (patrimonial loss)) are available to juristic persons in a defamation suit. The consequences of this second judgment directly impact on the issue of SLAPP suits, as is discussed below.
With respect to the second judgment, we need only note the main findings of the majority of the Constitutional Court on the issue of whether general damages are available to a juristic person in a defamation suit, because it was undisputedly held (by both the majority and minority judgments) that juristic persons are entitled to institute defamation suits to protect their reputation and good name, despite the fact that they suffer no “wounded feelings”.
The purpose of an award of general damages in a defamation claim is to restore the plaintiff’s reputation that has been harmed by the defamatory speech. A claim for defamation is a limitation to one’s freedom of expression, and when a court is called upon to determine a defamation claim it must balance the defendant’s right to freedom of expression on the one hand and the plaintiff’s right to reputation on the other. However, in this instance, the court held that where the nature of the speech/expression is of public importance the scales are tipped in favour of the speaker or one who is expressing himself/herself, because in the first instance, freedom of expression is a fundamental component of our constitutional democracy, but more importantly, where the nature of the expression relates to public participation by activists in respect of compliance or lack thereof by large mining companies, which has a negative effect on the communities surrounding the mines or on the environment, then such expression would warrant a higher standard of protection. Awarding general damages where the expression is of such a nature would have a chilling effect on the ability of activists to engage in such public participation activities – hence general damages would be a severe limitation of the right held by activists. Further, there are less restrictive means available to vindicate the rights of juristic persons harmed by the speech/expression such as an interdict, an apology, a retraction or a declarator.
However, the Constitutional Court did not close the door to general damages completely. Instead, the Constitutional Court said that a court adjudicating a defamation claim will have to distinguish between speech which forms part of the public discourse of public interest and that which does not. Where the defamatory statements are made in the course of such public discourse on issues of legitimate public interest, general damages may not be considered. Conversely, where the defamatory statements do not form part of the public discourse then the court would need to determine the extent of the general damages on a case-by-case basis.
The impact of these Constitutional Court judgments
The judgments clearly extend the protection afforded to freedom of expression and from a constitutional democracy point of view ought to be lauded for doing so.
However, as a developing nation, South Africa is a jurisdiction ripe for increased investment in development projects. These are undoubtedly critical for the long-term economic well-being of South Africa. But they also attract a lot of attention from civil society. Our courts have recognised that the nature of activism and protest is often emotionally fuelled and as such, civil society tends to engage in charged opposition to development projects. This often leads to defamatory statements, publications, placards and so forth being made and delivered against the private parties involved in these development projects on issues such as climate change, environmental degradation and allegations of “green washing”. These types of defamatory statements are becoming particularly prevalent given that (i) any development project must satisfy the environmental and social impact assessment requirements relevant to that project; (ii) the urgency to address climate change and its impacts is in the spotlight; and (iii) corporate entities are under increased scrutiny by civil society in respect of their observance of sustainable development principles, coupled with the global drive to assess compliance with environmental, social and governance principles.
But as the Constitutional Court recognises, these defamatory statements can have a significant impact on the reputation and good name of the private party/corporate entities involved, with reputational harm bearing significant economic damage to a corporation which can present an overall socio-economic risk. As a result, corporate entities may, from time to time, need to institute defamation claims to protect their rights. The effect of the two Constitutional Court judgments on their ability to do so is not insignificant:
- In the first instance, as a juristic person, the corporate entity will not be able to claim general damages as part of its suit, or at least it will need to consider whether the defendant has expressed themselves in a topic that is of public interest before it decides to include relief for general damages.
- In the second instance, the recognition of the SLAPP suit defence – as a sub species under the abuse of process doctrine – can also be raised by defendants against defamation suits where the relief is for “alternative remedies” available such as an apology or an interdict and so forth.
The cumulative effect of the above seems to suggest that corporate entities will be disinclined to institute legal proceedings to vindicate their rights. However, only time will tell whether that is so. And similarly, only time will tell whether the additional protections afforded to freedom of expression have a negative effect on development in South Africa.