July 2011 will go down in history as a month the media in the UK will never forget. The telephone hacking scandal claimed the scalps of the Metropolitan police commissioner, the assistant commissioner and various senior managers of News International; resulted in 11 arrests; and led to the closure of the famous News of the World tabloid.

In contrast, July 2011 was a good month for the media in South Africa. As MPs continued their debate on the Protection of Information Bill – against a background of significant concessions in favour of openness from ANC representatives – the courts handed down two defamation judgments with important consequences for media freedom.

First, in SA Taxi v Media 24 Ltd ([2011] ZASCA 117) the Supreme Court of Appeal clarified the requirements that must be established before monetary losses can be claimed for defamatory publications. Then the High Court in Johannesburg refused an application to stop City Press publishing an exposé concerning a trust belonging to the president of the ANC Youth League, Julius Malema.

In the SA Taxi case, City Press published an article that criticised the manner in which the plaintiff corporation, which finances the purchase and lease of taxis, conducted its business. The corporation sued for R250000 in reputational damages, and R20-million in lost profits as a result of the publication. The court did not examine the merits of SA Taxi’s claim, but considered two legal issues: first, can a corporation sue at all for reputational damages for defamation? Second, what must be proved to obtain lost profits, or special damages, flowing from a defamatory publication?

Judge Fritz Brand, for the majority of the court, upheld the right of a corporation to sue for reputational damage. He concluded that, despite the logic of the argument that awarding reputational damages to a corporation is inappropriate, no other remedy was available in the circumstances. Judge Robert Nugent departed from the majority of the court in this context, arguing forcefully that awarding reputational damages to corporations effectively amounted to awarding punitive damages. As he put it, “juristic persons do not experience feeling because they exist but they are not alive”. Judge Nugent said that only non-monetary remedies, such as declarations of falsity, and apologies or retractions, may be awarded to corporations.

Judge Nugent’s appraisal is correct: it is a far better constitutional balance to limit the remedies available to corporations, who have “no soul to be damned and no body to be kicked”, than to award them a windfall of damages that they need not prove they have suffered.

But where the appeal court clearly got it right was in its ruling on special damages. Such claims have exploded in recent years: to name a few, Gold Reef City is suingCarte Blanche for R47-million, and the property developer Wraypex (unsuccessfully) sued community activists recently for R170-million. It stands to reason that, faced with potentially ruinous claims, journalists and citizen critics will engage in self-censorship rather than take the risks of publishing information of public interest.

And that is why the court’s decision is so important. Judge Brand held that a plaintiff suing for special damages bears the onus of showing that the publication is false. This shifts the usual burden from the publisher to the person suing: it means that if a court is in doubt as to whether the publication is true or false, it must find for the publisher – a clear advantage to the media in any litigation against the media.

The court then hinted that yet a further requirement must be established to get special damages: knowledge of falsity. Although the court did not have to decide the issue definitively in the case, Judge Brand commented that this “limitation will serve to curb the excesses of claims for loss of profits by major corporations which intimidate newspapers by their sheer magnitude”. If this principle is ultimately accepted in later cases, then special damages will only be awarded if the plaintiff also proves that the publisher knew it was publishing a false statement, or at least was reckless as to this consequence.

All this is good news for publishers who fear that massive special damages claims by either corporations or prominent individuals might follow an article on a matter of public interest. Of course they must still act reasonably to get the facts right, but they need not be chilled in their investigation for fear of being sued for millions.

The media will also welcome the decision of Judge Colin Lamont in the High Court in Johannesburg, rejecting the urgent application by Malema to interdict City Press from publishing its article “Malema’s secret fund”, two weeks ago. The article alleged that Malema had a secret family trust which is used as a vehicle to fund his lifestyle, and which is also alleged to be used for corrupt payments.

Now, Malema may or may not have a legitimate gripe as to the content of the article; that can only be decided in a full trial process. What is objectionable in principle is pre-publication censorship of articles on matters of public interest.

As Judge Lamont reportedly held, “the question of Mr Malema’s income is topical and relevant. The public is entitled to a full disclosure by persons who stand in public positions“. This restates a principle established as long as 15 years ago, where the High Court in Johannesburg held that “in general no politician should be permitted to silence his critics“.

”It is a matter of the most fundamental importance that such criticism should be free, open, robust and even unrestrained. This is so because of the inordinate power and influence which is wielded by politicians.“

The lesson for public figures who are approached by the media to respond to serious allegations is clear – engage with the media, and if necessary, pursue court action after publication if the media get it wrong. But censoring publication, in all but the most egregious of cases, is fundamentally wrong in a constitutional democracy

This article originally appeared in the “Sunday Times” in South Africa and is reproduced with permission and thanks.

Dario Milo, is a partner at Webber Wentzel attorneys in Johannesburg, where he specialises in media law.  He is the author of Defamation and Freedom of Speech, published in 2008 by Oxford University Press