Brief Summary

Defamation — Exception to particulars of claim — Plaintiff alleging defamation by defendants through publication of false statements regarding his drought relief project — Defendants excepting to particulars on grounds of insufficient allegations against certain parties — Court finding that particulars failed to establish separate liability of holding company for subsidiary's conduct — Exception upheld in part, with plaintiff granted leave to amend.

Comprehensive Summary

Summary of Judgment

Introduction

This matter was an exception brought by the defendants to the plaintiff’s particulars of claim in an action for damages and related relief. The proceedings were interlocutory in nature and required the court to assess, on the pleaded allegations (assumed to be true for purposes of exception), whether the particulars disclosed causes of action and/or were vague and embarrassing.

The plaintiff was Mr Mark Erwin Paulsmeier, who drafted his own particulars of claim and initial written submissions, though attorneys later came on record and he was represented by counsel at the hearing. The defendants (also the excipients) were Media24 (Pty) Ltd, Naspers, Mr Waldimar Pelser, Mr Gerritt van Rooyen, and Ms Antoinette Slabbert. The plaintiff claimed compensatory damages of R30 billion against the defendants jointly and severally, and further claimed R16.1 million described as punitive damages (excluding Naspers) together with non-monetary relief in the form of retraction, cessation undertakings, and a public apology.

Procedurally, the exception was preceded by a Uniform Rule 23(1) notice calling upon the plaintiff to remove causes of complaint. The defendants also delivered notices under Uniform Rule 35(12) and (14), to which the plaintiff replied. The court approached the matter on the basis that the adjudication of the exception depended on the adequacy of what was pleaded in the particulars, rather than on facts asserted in subsequent submissions or on the content of discovery.

The dispute’s general subject-matter was framed by the plaintiff as a “fake news campaign” and “character assassination plot” said to have been conducted through published media articles. The pleaded claims implicated defamation and injury to dignity (the actio iniuriarum), as well as a distinct pleaded monetary claim characterised by the court as an Aquilian delictual claim for pure economic loss, allegedly flowing from a debit of R30 billion by a third party (IBDF) to the plaintiff’s account.

Material Facts

For purposes of the exception, the court accepted as true the facts alleged in the particulars, while emphasising that additional factual material referred to in the plaintiff’s written submissions was irrelevant to the exception because it did not form part of the pleaded case.

The plaintiff alleged that he initiated a drought relief project in South Africa under the brand name GABM, intended to assist drought-stricken farmers. The particulars also referred to an American company, IBDF International LLC (IBDF), and a financial instrument described as the “Investment SNG Global Dollar Bearer Bond” (SNG Bond). The particulars alleged that 250 SNG Bonds, said to be worth more than R1 billion, were donated to the drought project, though the particulars did not explain what an SNG Bond was or clearly set out the relationship between the drought project, IBDF, and these bonds.

The plaintiff alleged that, over the period July 2016 to May 2021, Media24 published defamatory articles about him as part of a coordinated “fake news campaign” and “character assassination plot” directed at him, the drought project, IBDF (and its divisions), and SNG Bonds. Eight articles were identified by publication/platform, author, date, and Afrikaans headline: five in Rapport, two in Beeld, and one on Netwerk24. The plaintiff alleged that Mr Pelser was the editor of Rapport, and that Mr van Rooyen wrote the first Rapport article.

In substance, the plaintiff alleged that the defendants (other than Naspers) published “defamatory innuendo and statements” to the effect that he was a swindler, dishonest, a liar, involved in criminal activities, operated a pyramid scheme via GABM/IBDF, and lacked integrity; and that the drought project itself was portrayed as a scam intended to defraud farmers rather than a genuine philanthropic project. He further alleged that the publications conveyed that IBDF and its corporate divisions were empty shells involved in criminal activity, and that statements about SNG Bonds attacked their credibility and reputation, allegedly to harm another entity, CamRey Associates (CamRey), though the particulars did not explain CamRey’s connection to the bonds.

The plaintiff further alleged that the publications enabled and facilitated a “fraud scheme” resulting in the misappropriation of the 250 SNG Bonds, and that the publications also functioned as a cover-up mechanism by creating confusion and distrust, thereby diverting enquiries. He pleaded that IBDF engaged Callister International’s corporate security division to investigate the scheme, and that a report was issued in December 2020 and provided to Media24 and Naspers. The report was alleged (in the pleading) to state that Media24, Mr Pelser, and Mr van Rooyen were directly involved in the misappropriation and that the media campaign was key to it.

The plaintiff also pleaded that the first to fourth defendants were notified that the articles were false and defamatory, were offered access to IBDF’s records to verify facts, and repeatedly ignored requests to revise or retract. He alleged that Media24 and Naspers were notified that the project was his private initiative and that he would be held financially responsible “in terms of Rule 6 of the IBDF Management Rules and Regulatory Code” if the defendants did not resolve the matter with IBDF.

Finally, he pleaded that the defendants’ conduct caused IBDF to terminate his membership/association/contracts with IBDF and caused wide-ranging financial and reputational harms. He alleged that, as a result, IBDF debited his “personal SNG Global Dollar account” by R30 billion as compensation for IBDF’s losses, and that he therefore suffered damages in the same amount, claimed as compensatory damages from the defendants. In addition, he claimed R16.1 million as “punitive constitutional damages”, alternatively punitive damages under the common law of delict developed in light of the Bill of Rights.

Legal Issues

The court was required to determine whether the particulars of claim, read as a whole and on the assumption that the pleaded facts were true, were excipiable on any of seven grounds advanced by the defendants. The dispute primarily concerned questions of law and the adequacy of pleading, including whether the pleaded facts were sufficient to disclose legally cognisable causes of action and whether the pleading was so lacking in particularity that it was vague and embarrassing.

The central legal questions included whether a cause of action was pleaded against Naspers as a holding company (distinct from Media24), and whether sufficient allegations were made to sustain a case against Mr Pelser. A further central issue was whether the plaintiff had properly pleaded a defamation claim by setting out the impugned words (as distinct from pleading only alleged meanings or effects). The court also had to consider whether particular forms of relief (notably a claim characterised as punitive damages) could appropriately be struck at by exception in the procedural posture of the case.

In relation to the separate R30 billion claim, the court had to decide whether the pleading sufficiently set out the contractual and legal basis—specifically the alleged IBDF Management Rules and Regulatory Code and “Rule 6”—that allegedly entitled IBDF to debit the plaintiff’s account, which in turn underpinned the plaintiff’s attempt to hold the defendants liable for that loss.

Additional issues concerned the extent to which allegations of harm to third parties (IBDF, CamRey, SNG Bonds, SARS, and the economy) were impermissibly relied upon or rendered the pleading defective; whether the pleaded fraud scheme allegations were stated with adequate clarity and particularity; and whether allegations premised on SA Press Council standards were too vague in the absence of identification of the specific prescripts relied upon.

Court’s Reasoning

The court applied orthodox principles governing exceptions. It treated the pleaded allegations as true and assessed whether, on those allegations, the pleading disclosed causes of action and whether the defendants were prejudiced by vagueness and embarrassment. It further emphasised that replies to rule notices and evidentiary assertions in heads of argument could not cure defects in the particulars for purposes of exception.

On the claim against Naspers, the court accepted the legal position that a holding company and subsidiary are separate juristic persons and that a holding company is not, merely by virtue of shareholding control, vicariously liable for a subsidiary’s wrongful conduct. While it is legally possible for a holding company to be liable for its own separate wrongful conduct contributing to the claimant’s harm, that requires specific factual allegations establishing such separate wrongdoing. The court found that the particulars did not allege that Naspers participated in the alleged “fake news campaign” or published any defamatory matter. Allegations that Naspers was notified of the plaintiff’s complaints, offered access to records, and ignored requests to retract were held insufficient, without more, to establish a legal duty to act or a legally cognisable basis for delictual liability. The court also reasoned that, absent further pleaded facts, Naspers had no legal power or obligation to dictate how Media24’s board and employees should conduct Media24’s publishing operations. The exception therefore succeeded as to Naspers.

The court rejected the contention that Naspers’ objection should have been pursued as a misjoinder point. It distinguished misjoinder (in its strict sense) from an exception that a pleading fails to disclose a cause of action. Here, relief of R30 billion was directly sought against Naspers, giving it a direct interest in the litigation, and the complaint was not about improper joinder in one action but about the absence of pleaded facts establishing liability.

As to Mr Pelser, the defendants argued that the particulars did not allege he was editor of Rapport at the time of publication, and that describing him in the citation as editor only proved his status when summons issued. The court held that the particulars could reasonably be read as alleging that he published the defamatory material in his pleaded capacity as editor, and thus the first ground failed in relation to him.

A major defect identified by the court was the failure to plead the impugned defamatory words. The particulars identified the eight articles by reference, but neither attached them nor set out their wording in the body of the particulars. The court held that in defamation the published words are an essential element of the cause of action; pleading only the alleged meaning or effect is insufficient because it amounts to a conclusion without the underlying facts. The court further explained that proper pleading is necessary because it enables a defendant to test (including by exception) whether the words are capable of bearing the defamatory meaning alleged, assessed by the threshold test applicable on exception. The problem was aggravated because the articles were in Afrikaans and the plaintiff’s pleaded “statements” were in English, which could not reasonably be treated as the actual words used. The plaintiff also failed to distinguish between literal meaning and “innuendo”, and, insofar as innuendo (secondary meaning) was relied upon, he failed to plead the special circumstances required to support such a meaning. For these reasons, the exception succeeded on the second ground.

On the claim for R16.1 million described as punitive damages, the court did not decide whether punitive damages against private persons for egregious violations of dignity should be recognised. Instead, it held that an exception was not the appropriate mechanism to determine that controversy in this case. The court reasoned that a well-founded exception seeks to avoid evidence where, even if facts are proved, no cause of action exists; and it considered the established principle that it is not permissible to except only to one of several claims that arise from the same cause of action, because doing so does not avoid the need for evidence to establish the cause of action supporting the remaining relief. Here, the punitive damages claim was one aspect of relief attached to the pleaded actio iniuriarum cause of action, alongside retraction, an undertaking to desist, and a public apology, and the defendants had not excepted to the competence of those other remedies.

The court further reasoned that the punitive damages label might, depending on the trial court’s view, not ultimately prevent an award of ordinary solatium (general damages) within the claimed sum, and that the issue might be better addressed either as a preliminary separated issue under Uniform Rule 33(4) or at the end of trial. It also noted the possibility that the defendants might succeed on the merits at trial, in which case the relief debate would fall away, rendering premature a determination of the punitive damages issue. Accordingly, the third ground of exception failed.

By contrast, the claim for R30 billion was treated as distinct from the dignity-based relief and was characterised by the court as appearing to be an Aquilian delictual claim for pure economic loss. On the pleaded version, the plaintiff would need to establish that IBDF suffered R30 billion in losses and, crucially, that IBDF was contractually entitled—under the “IBDF Management Rules and Regulatory Code”, particularly “Rule 6”—to debit the plaintiff’s account by R30 billion, thereby creating the plaintiff’s loss. The court upheld the defendants’ complaint that the particulars did not identify with adequate specificity the Code and rules relied upon, did not plead when and how the Code became binding, and did not plead the content of Rule 6. Because the contractual entitlement of IBDF to debit the account was an essential element of the plaintiff’s claim, the omission meant the particulars did not disclose that the debit was authorised on the pleaded basis. The fourth ground therefore succeeded.

Regarding allegations of harm to third parties (IBDF, CamRey, SNG Bonds, drought-stricken farmers, SARS, and the South African economy), the court took the view that these allegations, on a reasonable reading, served mainly as narrative background identifying targets and consequences of the alleged campaign, and were not clearly pleaded as independent bases for the plaintiff to recover for others’ harms. It considered that some of these allegations might be relevant to punitive damages if that remedy were later held competent. Even if irrelevant, the court indicated that the appropriate response would be an application to strike out under Uniform Rule 23(2). It therefore rejected the fifth ground.

The sixth ground, concerning the pleaded fraud scheme, was upheld. The court reasoned that it was not an inevitable or natural consequence of publishing defamatory articles that a fraud scheme involving misappropriation of bonds worth more than R1 billion would be enabled, facilitated, or covered up, and that the allegations—particularly insofar as they suggested direct involvement by Media24 and individuals—were serious and required clear and precise pleading. The court invoked the principle that allegations of fraud must be pleaded with specificity, and held that the defendants were entitled to know what the fraud scheme was alleged to have been, how and by whom it was implemented, and how the publications allegedly enabled, facilitated, or concealed it. The lack of particularity was held to be substantial and prejudicial, rendering the allegations vague and embarrassing.

In addressing procedural doctrine, the court engaged with Jowell v Bramwell-Jones and the proposition that vagueness and embarrassment exceptions must go to the “root” of a cause of action and that paragraph-level deficiencies should be attacked via Uniform Rule 30. The court explained that earlier authorities relied on procedural features (notably the availability of further particulars before pleading) that no longer exist in the Uniform Rules. It reasoned that Rule 23(1) does not, by its text, confine vagueness and embarrassment to defects infecting the whole cause of action, and it rejected the notion that a defendant who is genuinely prejudiced must necessarily be confined to Rule 30 for paragraph-level vagueness. On the facts, it held that the fraud allegations were not insubstantial and would prejudice the defendants in pleading, and thus were properly susceptible to exception.

The seventh ground, relating to allegations that the publications did not meet SA Press Council standards, was also upheld. The court reasoned that although no relief was explicitly sought on that basis, the plaintiff had not tendered to delete the allegations and might intend to rely on them (for example in relation to punitive damages). In that event, the defendants were entitled to insist that such allegations not be pleaded in a vague and embarrassing manner. The failure to identify the specific prescripts allegedly breached rendered the allegations vague and embarrassing.

Outcome and Relief

The exception succeeded substantially. It failed only on limited grounds: it failed in relation to Mr Pelser under the first ground, and the third (punitive damages) and fifth (third-party harm) grounds were dismissed. Otherwise, the exception was upheld.

The court ordered that the particulars of claim be set aside, with leave granted to the plaintiff to deliver amended particulars of claim within one month from the date of the order.

On costs, the court held that the defendants had achieved substantial success and were entitled to their costs of the exception. It ordered the plaintiff to pay the defendants’ costs, including the costs of two counsel where employed.

Cases Cited

MIH Ecommerce Holdings (Pty) Ltd v Takealot Online (RF) (Pty) Ltd (LM038May17) [2017] ZACT 53.

Vedanta Resources Plc v Lungowe [2020] AC 1045.

Pepkor Holdings Ltd v AJVH Holdings (Pty) Ltd; Steinhoff International Holdings NV v AJVH Holdings (Pty) Ltd [2020] ZASCA 134; 2021 (5) SA 115 (SCA).

Collin v Toffie 1944 AD 456.

Anderson v Gordik Organisation 1960 (4) SA 244 (N).

Smith v Conelect 1987 (3) SA 689 (W).

McIndoe v Royce Shoes (Pty) Ltd [2000] 3 All SA 19 (W).

National Media Ltd v Bogoshi 1998 (4) SA 1196 (SCA).

International Tobacco Company of SA Ltd v Wollheim 1953 (2) SA 603 (A).

Bell v Cohen 1910 WLD 103.

Foodworld Stores Distribution Centre (Pty) Ltd v Akbar Allie [2002] ZAWCHC 21.

Gwe v De Lange (2020) 41 ILJ 341 (ECP).

Deedat v Muslim Digest 1980 (2) SA 922 (D).

HT Group (PTY) Ltd v Hazelhurst [2003] 2 All SA 262 (C).

Stanford v West 1959 (1) SA 349 (C).

A Neumann CC v Beauty Without Cruelty International 1986 (4) SA 675 (C).

Argus Printing & Publishing Co Ltd v Esselen’s Estate 1994 (2) SA 1 (A).

Le Roux v Dey 2010 (4) SA 210 (SCA).

Van Niekerk v Botha 1913 CPD 41.

Le Roux v Dey [2011] ZACC 4; 2011 (3) SA 274 (CC).

Fose v Minister of Safety and Security [1997] ZACC 6; 1997 (3) SA 786 (CC).

Residents of Industry House, 5 Davies Street, New Doornfontein, Johannesburg v Minister of Police [2021] ZACC 37; 2022 (1) BCLR 46 (CC).

Thubakgale v Ekurhuleni Metropolitan Municipality [2021] ZACC 45.

Stein v Giese 1939 CPD 336.

Dharumpal Transport (Pty) Ltd v Dharumpal 1956 (1) SA 700 (A).

Compagnie Inter Africaine De Tranvaux, South African Branch v Abercom Africa (Pty) Ltd [1985] ZASCA 60 (unreported).

Santos v Standard General Insurance Co Ltd 1971 (3) SA 434 (O).

Dikoko v Mokhatla [2006] ZACC 10; 2006 (6) SA 235 (CC).

Home Talk Developments (Pty) Ltd v Ekurhuleni Metropolitan Municipality [2017] ZASCA 77; 2018 (1) SA 391 (SCA).

Clulee v McArthur Atkins & Co (1907) 28 NLR 487.

Wallingford v Mutual Society (1880) 5 App Cas 685.

Lawrance v Norreys (1890) 15 App Cas 210.

Jowell v Bramwell-Jones 1998 (1) SA 836 (W).

Trope v South African Reserve Bank [1993] ZASCA 54; 1993 (3) SA 264 (A).

Reiter Foods and Services CC v Cattle Baron Steak Franchising (Pty) Ltd [2010] ZAWCHC 642.

Vest Sources 2 (Pty) Ltd v Dennis Moss Planners & Architects (Pty) Ltd t/a Dennis Moss Partnership [2011] ZAWCHC 206.

Steinhoff International Holdings (Pty) Ltd v Jooste [2021] ZAWCHC 222.

Legislation Cited

Constitution of the Republic of South Africa, 1996 (Bill of Rights, including the right to dignity, as referenced in the pleaded claims and the discussion of constitutional damages).

Rules of Court Cited

Uniform Rule 18(4).

Uniform Rule 23(1).

Uniform Rule 23(2).

Uniform Rule 30.

Uniform Rule 33(4).

Uniform Rule 35(12).

Uniform Rule 35(14).

Held

The court held that the particulars were excipiable in material respects and should be set aside. In particular, it held that no cause of action was pleaded against Naspers because the particulars did not allege conduct by Naspers capable of founding delictual liability separate from Media24, and the mere fact of notification and non-intervention did not establish a duty or wrongful conduct by a holding company.

The court held that the plaintiff failed to plead an essential element of the defamation claim by not setting out or attaching the impugned defamatory words, and by not properly distinguishing and pleading any alleged innuendo together with the special circumstances necessary to support a secondary meaning.

It held that the R30 billion claim depended on the alleged contractual framework between the plaintiff and IBDF (the “Rules and Regulatory Code” and “Rule 6”), and that the failure to plead the content and binding force of that instrument meant the particulars did not properly disclose the basis on which IBDF was entitled to debit the plaintiff’s account, which was an essential component of the pleaded loss.

It further held that the pleaded allegations that the publications enabled, facilitated, and covered up a fraud scheme were vague and embarrassing and insufficiently particularised given the seriousness of the allegations and the prejudice to the defendants in pleading.

The court refused, at the exception stage, to determine the legal viability of a claim styled as punitive damages, holding that this was not appropriately determined on exception in the circumstances, particularly where the claim was one aspect of relief arising from the same cause of action as other forms of relief not attacked by exception.

LEGAL PRINCIPLES

A holding company is a separate juristic person from its subsidiary and is not, merely by virtue of the parent–subsidiary relationship, vicariously liable for the subsidiary’s wrongful conduct. If liability is to be imposed on the holding company, the claimant must plead facts establishing the holding company’s own wrongful conduct giving rise to liability, rather than relying on notification of complaints or a failure to intervene without a pleaded legal duty to do so.

In an action for defamation, the published words complained of constitute an essential element of the cause of action and must be pleaded (either by setting them out or by attaching the publication in an appropriate manner). Pleading only the alleged meaning, effect, or conclusions of defamation is insufficient, because it prevents proper legal assessment—by exception or otherwise—of whether the words are capable of bearing the defamatory meaning alleged. Where innuendo (secondary meaning) is relied upon, the pleading must set out the special circumstances giving rise to that meaning.

Where a pleaded claim depends upon a contractual instrument (or rules/code said to be contractually binding), the material terms relied upon and the basis upon which the instrument became binding must be pleaded with sufficient particularity. If such terms are essential to establish an alleged loss or entitlement (such as a debit by a third party said to be contractually authorised), failure to plead them may render the particulars excipiable.

Allegations of fraud must be pleaded clearly and precisely. Where a pleading makes serious allegations linking defendants to a fraud scheme, it must identify what the scheme was, how it was implemented, by whom, and (where relevant) the nature of any conspiracy and the corporate representatives involved. Inadequate generality may render the allegations vague and embarrassing and prejudicial to a defendant required to plead.

In the modern context where further particulars before pleading are not available under the Uniform Rules, the court accepted that Uniform Rule 23(1) can be used to attack vagueness and embarrassment even where the deficiencies relate to significant aspects of a pleading that cause genuine prejudice, and that such challenges are not necessarily confined to defects infecting the entire cause of action. The court nevertheless cautioned against insubstantial or nitpicking objections, emphasising prejudice as a practical touchstone.

Where allegations are potentially irrelevant (such as broad assertions referencing external standards like those of the SA Press Council without seeking direct relief on that basis), they may be addressed by striking out under Uniform Rule 23(2). However, if a party elects to retain such allegations, they must be pleaded with adequate particularity to avoid vagueness and embarrassment.

Paulsmeier v Media 24 (Pty) Ltd and Others (15855/21) [2022] ZAWCHC 85 (20 May 2022)