Defamation and businesses

Corporations, and other body corporates have a restriction on standing to sue for defamation, in that, they cannot have more than 10 full time equivalent employees. Likewise, sometimes, establishing serious harm to the requisite threshold can be difficult.

For many decades, before the introduction of the uniform defamation law throughout Australia, most jurisdictions did not have limitations on corporations or other body corporates’ standing to bring a claim for defamation, and it was for this reason that the tort of injurious falsehood was considered a ‘dead tort’ – a type of claim that was rarely brought in Court.

However, after the passage of the uniform defamation law in 2005, the tort was somewhat resurrected and became more commonly relied upon as an alternative to defamation because there is no restriction on how many employees a corporation or other business can have.

But what exactly is Injurious falsehood? We examine this below.

Injurious Falsehood vs Defamation

Injurious falsehood is a tort, just like defamation. A tort can be understood as a ‘civil wrong’, usually recognised exclusively by and in accordance with, the common law. Although, from time to time, statute amends a tort by placing restrictions upon them, insert additional elements, or requiring the plaintiff to take certain steps before the right to pursue a defendant arises (including placing caps on damages).

Injurious falsehood is based entirely upon the common law, and as such, has not been altered by statute, unlike defamation. However, both torts have somewhat of a common theme between the two of them – they are both based upon the publication of matter to third persons, and that matter having caused the specified type and nature of harm associated with the tort.

In the case of defamation, that is, in most jurisdictions, serious harm to reputation or financial harm, and in the case of injurious falsehood, actual harm, usually in a quantifiable amount, and usually in the form of special damages i.e., loss of revenue, profit and income which can be directly attributed to the tort.

The easiest way to understand the distinction between the two (2) torts is this:

Defamation is concerned with reputational harm; and

Injurious falsehood is concerned with commercial harm

Examples of the distinction

For example, a person may say “that person is an unprofessional dentist” which is likely defamatory of the dentist in question. However, if they said “the dentist is unhygienic and his tooth extraction caused a serious infection” that can be both defamatory and injurious falsehood, as there is a statement about a service i.e., the tooth extraction.

Key elements of a claim for injurious falsehood

Injurious falsehood requires the plaintiff to establish the following:

1. That the defendant published a false statement to a third person;
2. That the statement was of and concerning the plaintiff’s goods or services;
3. That the publication was actuated by malice (that is, an intention to cause harm); and
4. That it did actually cause harm (a likelihood of harm will not suffice – there must be real, provable, quantifiable loss and damage).

The test, containing the elements set out above, was approved by the High Court of Australia in Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69.

Publication of a false statement

Publication of a false statement to a third person is usually the easiest aspect of the tort for a plaintiff to establish. All that the plaintiff needs to prove is that:

• The statement was published to a third person; and
• That the statement was false.

If the statement is true, then the liability will not arise.

Statement is about goods and services

The statement must be about the goods or services of a person or business. If the statement is about something else (for example, the character of a person, such as that a particular person is racist), then the tort of injurious falsehood is not appropriate, and defamation may be more applicable in those circumstances.

Malice

Malice is not easy to define within the context of tort law National Roads and Motorists’ Association Limited v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 1491 [191]. However, it is an essentially element of the tort, and more often than not, the most difficult aspect of any tort to establish.

In essence, what the plaintiff is required to establish is that the defendant’s intention in publishing the false statement was to cause harm, loss and damage to the plaintiff. It is essentially a mental element, and in most jurisdictions, this requires compliance with strict pleading rules.

Generally, malice is established inferentially, that is, via a set of circumstances, rather than direct evidence of the defendant or another person who says “I intended to cause harm” or “he told me he wanted to destroy that person’s business”.

Ordinarily, knowledge that the statement was false will be a part of any particular of a plea of malice, as the law presumes that a person who knows a statement to be false published that statement with the requisite intent. However, reckless indifference, if it meets the requisite threshold (which is high), will also assist in establishing malice. That threshold is tantamount to a blatant disregard for the truth or falsity of the statement, not necessarily a lack of reasonable care or inquiry prior to publication.

Actual, provable harm

Even if the plaintiff can readily establish, on the balance of probabilities, the elements of the tort discussed above, the tort will not be made out unless the plaintiff can satisfy the court that those actions actually caused harm. This is because the tort does not compensate a plaintiff for general damages, such as for damage to reputation as in a claim for defamation.

Rather, injurious falsehood only enables the plaintiff to recover damages which directly related to a loss attributable to the maliciously published false statement.

Accordingly, there must usually be some form of measurable loss (such as a loss of revenue, profit or income), and it is only that which is proved which the plaintiff can recovery in the form of an award for damages.

Additional differences between injurious falsehood and defamation

Defamation does not require proof of actual harm, only serious harm or a likelihood of serious harm (in most jurisdiction), unlike injurious falsehood, which does. Further, exemplary damages, which are statutorily prohibited in defamation claims, can be awarded in a claim for injurious falsehood. Exemplary damages are a form of punitive damages, which are awarded so as to punish the defendant for the defendant’s actions and to reinforce societal values that those actions should be dissuaded.

Summary of injurious falsehood

Injurious falsehood is closely related to the tort of defamation, even though it is an entirely different tort, aspects are similar, and the pleading requirements of the tort, in most courts, are strict and require a high degree of skill, knowledge and care to be correctly pleaded.

Furthermore, both torts require careful consideration and advice before they are pursued.

If you or your business has been defamed, or have had a false statement or liar published or made by a person about goods or services, contact Allen Law today to see how we can assist.

Phone:             (03) 7020 6563
Email:               enquiries@allenlawyers.com.au
Website:         www.allenlawyers.com.au

Disclaimer: This article is general in nature and does not constitute legal advice. Please contact Allen Law for advice tailored to your particular situation.