/ 17 February 2024

Mail & Guardian defends application for a gag order

South Gauteng High Court Temporarily Closes After A Covid 19 Case
Day in court: The Johannesburg high court reserved judgment in the urgent interdict brought by RE Capital Holdings and Newman George Leech against the Mail & Guardian. Photo: Sharon Seretlo/Gallo Images

Last week, the Mail & Guardian found itself in court to oppose an urgent application for a prior restraint of publication order.

It argued, as other media have done in the recent past, that such gagging orders raise a constitutional red flag because they serve to deter the press from reporting freely and in the public interest.

The application was filed by RE Capital Holdings, which is incorporated in the United Kingdom, and director Newman George Leech, following an article published on 10 January which noted apparent links between them and Global & Local Financial Advisors, one of the companies that allegedly encouraged South Africans to invest in the BHI Trust suspected Ponzi scheme.

Global & Local representative Michael Haldane was a director of RE Capital Holdings until 30 October last year, when the trust collapsed. 

Leech is listed as a director of a Swiss-based company, Geneva Management Group, which is linked to Global & Local, as evidenced in a share certificate the M&G filed in court.

RE Capital Holdings and Leech have asked the Johannesburg high court to grant an order declaring the article to be false and defamatory, and directing the M&G to remove it from all its platforms and to publish an apology. 

It also wants the court to interdict the newspaper from publishing “any future articles with substantially similar allegations regarding the applicants as the M&G article”.

The matter was heard last Thursday, with lawyers for the publication and amici curiae arguing that orders of this nature were invidious because they infringed both on media freedom and the public’s right to receive information.

If media gagging orders are therefore rarely granted by the courts, Media Monitoring Africa submitted in papers filed as a friend of the court, there seems to be a sudden tendency to seek this remedy as part of a legal strategy of intimidating the media.

The M&G’s acting editor-in-chief, Luke Feltham, said in the court papers that since the applicants were asking for the order as final relief, the net effect would be to bar the publication from writing about an ongoing investigation by the Financial Sector Conduct Authority into a scheme in which potentially thousands of people lost their investments. 

“This renders the constitutional rights to press freedom and to impart information — which we enjoy, and which apply not only to us but to the public at large — unjustifiably limited,” he argued, adding that coverage of the investigation as it unfolds was plainly in the public interest.

The scheme collapsed in October last year and co-trustee Craig Warriner handed himself over to the police in mid-October. He told the Palm Ridge commercial crimes court that he would plead guilty to fraud charges because he had managed the fund “irresponsibly”.

Leech, who holds South African and Swiss citizenship, and RE Capital Holdings declined to go on record for the article, and did not accept another invitation, after publication, to exercise their right of reply. Nor did they approach the press ombud before taking legal action, 11 days after the article appeared.

In the applicants’ founding affidavit, Leech however denied links with BHI Trust and any knowledge of the Ponzi scheme.

“The applicants have no link with the wrongdoing, misappropriation of the funds of investors, or the alleged Ponzi scheme allegedly carried on by Mr Warriner. They did not facilitate it, they took no part in it, and they were not aware of it. The applicants also do not have any relevant links with BHI Trust or G&L.”

His lawyers filed a notice with the court indicating that the matter should not be referred for mediation. They argued that it would not avert ongoing harm to the applicants, namely reputational damage and the risk of “catastrophic consequences” for their business ventures, as the newspapers had refused to retract the article.

RE Capital, the lawyers said, was “on the verge of closing a significant number of new investments totalling €50m (R1.02  billion) in Europe in the next three months” and faced the real risk of these contracts being cancelled because of the article in question.

“A referral to mediation in the circumstances will serve to increase costs unnecessarily and delay the final determination of the matter.”

They accuse the M&G of not raising a factual defence to wrongful defamation, and argue that their clients therefore have a clear right to vindicate. It then follows, they continued, that in the absence of alternative relief, a final interdict must be granted. 

The newspaper countered that it had raised a complete defence to defamation by showing that the material statements in the article are both true and in the public interest.

Feltham said in court papers that the article made no higher claim than BHI had extensive international links, and through these are connected to the applicants. It did not purport to expose wrongdoing by the applicants.

“These global or international links exist; they are true, and there is a connection.

“When read as a whole, the sting of the article is simply what is written in the blurb: ‘There appears to be a connection between the Second Applicant [Leech] and Global & Local, which apparently marketed the Ponzi scheme’.

“These material statements in the article show that the links and connections between the applicants, Mr Haldane, Global & Local and the BHI Trust exist and extend over multiple years, with evidence of business relationships in at least 2010, 2016, and 2023. We simply enabled public access to information through our article.”

Apart from being a disproportionate remedy in a case of alleged defamation, a gag order would not per se cure the harm the applicants claim to have suffered because it would not remove the information from the public domain. 

Hence the motive was punitive, and this leg of the approach to the court an abuse of process.

“What the applicants actually seek through this application is to punish us for doing so, and to urgently muzzle and gag us for an indefinite period. This court should not permit this. The applicants’ ulterior purpose is clear.”

This lent the case two of the hallmarks of a strategic lawsuit against public participation, namely the aim of punishment and deterrence, the newspaper argued.

RE Holdings and Leech conceded that prior restraint of publication orders interfere with the right to freedom of speech enshrined in section 16 of the Constitution but added “that  this concern has no, or little, force in this application” because the interdict would only bar the newspaper from publishing similar allegations to those in the article.

The applicants did not publish a rule 16A notice, which allows interested parties to apply to be joined as amici curiae in cases with constitutional ramifications. The M&G’s attorneys filed notice on 2 February, and both Media Monitoring Africa (MMA) and the Campaign for Free Expression applied to be joined as amici curiae.

MMA director William Bird rejected the suggestion that in this instance the order would not undermine the media’s ability to report in the public interest.

“Moreover, there are important questions about the defence of qualified privilege in relation to issues that may be in the process of being investigated by entities like the FSCA [Financial Sector Conduct Authority] — or where there are not presently such investigations but should be. 

“In particular, the public has a right to know about allegations or concerns about companies with which they do business — not merely after a final determination by an entity such as the FSCA.”

Bird said punitive intent was also evident in that RE Holdings and Leech had initially sought personal cost orders against the editor and the author of the article, Lyse Comins, before abandoning this on the day of the hearing. 

“Damages or costs orders should not merely be sought — as a rule — jointly and severally against the media publications for which the journalists work and the journalists themselves,” he said, particularly when, as in this instance, journalists acted purely within the scope of their work for the newspaper.

“On this score, various practices [that] are used as attempts to intimidate journalists, particularly investigative journalists, into silence has been a  growing, and worrying, trend in recent years.”

The Moti Group’s attempt to muzzle the AmaBhungane Centre for Investigative Journalism with a prior restraint order and former president Jacob Zuma’s bid to bring criminal charges in a private prosecution against News24 reporter Karyn Maughan for publishing information that was part of the public court record, referred. Both were ultimately rejected by the courts.

“Ultimately, this court will need to consider whether the current application is in the same trend as those cases,” Bird said.

Judge Motsamai Makume reserved judgment.