The Daily Mail has apologised and agreed to pay £125,000 in libel damages to a TV psychic it falsely accused of using a hidden earpiece to scam a theatre audience.
Sally Morgan, who has appeared on TV and on stage under the name "Psychic Sally", complained that the article in September 2011 meant she had "deliberately and dishonestly" tricked her audience in Dublin.
The article, by the magician Paul Zenon, claimed that Morgan had used a hidden earpiece during her performance in order to receive instructions and relay them on stage as if they were messages from the spiritual world.
In a statement at the high court on Thursday, the solicitor for Morgan, Graham Atkins of the law firm Atkins Thomson, said the article had "caused enormous distress" to the psychic.
"The allegation contained in the article that Mrs Morgan cheated the audience in Dublin is completely false and defamatory of her," he told Mr Justice Tugendhat.
"It also caused enormous distress to Mrs Morgan, who decided, given the newspaper's initial defence of the article, that she had no choice but to commence legal proceedings against the publisher of the Daily Mail."
The solicitor Brid Jordan appeared on behalf of the Daily Mail publisher, Associated Newspapers, and apologised unreservedly for the hidden earpiece claim "which it accepts is untrue".
Atkins told the court that the article appeared in the Daily Mail "in the context of a general attack on psychics as being charlatans".
The claim about the hidden earpiece arose during a phone-in programme on Irish radio when two women who attended the Dublin show said they thought they had heard two crew members saying something which Morgan then repeated on stage.
Following the claim, Morgan issued a statement debunking the claim as "nonsense" and the theatre separately denied there had been any scam.
It later emerged that the crew members who were said to be part of the setup were subcontracted by the theatre and not members of Morgan's team.
Morgan, who claims on her website to "see and hear dead people", first appeared on TV with the ITV2 series Sally Morgan: Star Psychic in 2007. She went on to front a number of shows, including Sky Living's documentary Psychic Sally Big Fat Operation and series Psychic Sally on the Road.
Legal experts said the £125,000 damages payout was "very substantial" but that the false claim could have been highly damaging to Morgan's career. "The settlement reflects the fact that Morgan's reputation is valuable as her livelihood was at stake," said Richard Green, a partner at the law firm Hill Dickinson.
Green compared the libel payout to that awarded to the comedian Frankie Boyle, who received £54,650 in damages last October over a Daily Mirror article that described him as "racist". He said: "On the face of it this award looks significantly less than Ms Morgan's but I would suggest this is because the defamatory comment did not go to the heart of his career or profession in the same way.
"It could also be argued that Mr Boyle has a reputation for pushing boundaries in his comedy routines and so this may have been reflect in the level of damages awarded."
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