I was also surprised about this, but I took this quote directly from the judgement in question. As I think about it, it starts to make more sense - literally, defamation is dis (break into pieces/remove/...) + famo (fame/reputation). The word itself only conveys that someone's reputation was injured, not that it was injured unjustly. IIUC the words for "unjust defamation" are specifically libel and slander, under common law. I think it's similar to how there's "homicide" (the act of one person killing another) which can be legal (e.g. self-defense) or criminal (e.g. murder). At least that's my understanding of it.