The tort of injurious falsehood

Injurious falsehood is a tort which arises when a person makes false representations about the goods and services of a person or company.  The representations can be either written or spoken, and must encourage others not to deal with the person or business, in turn resulting in damage.   Notably, injurious falsehood offers a remedy when a cause of action for defamation is not available under the Defamation Act 2005 (Cth)(Act).

Distinguishing between defamation and injurious falsehood

In the case of Ballina Shire Council v Ringland (1994) 33 NSWLR 680 the Court distinguished between defamation and injurious falsehood, in that:

“… defamation protects reputation, and it does so in a manner that involves a balancing of various considerations including the right of free speech.”

In comparison the Court said that:

“…injurious falsehood protects against provable economic loss resulting from false and malicious statements.”

Further, there are limitations to defamation.  Under section 9 of the Act only corporations that:

• do not seek to obtain profit or financial gain; and
• employs fewer than ten (10) people,

may seek a remedy for defamation.  Therefore, companies with ten (10) or more employees usually rely on the tort of injurious falsehood.

What are the elements of the tort?

In the case of Mahon v Mach 1 Financial Services Pty Ltd (No 2) [2013] NSWSC 10 (Mahon) the Court said that to establish injurious falsehood, the following elements must be established by the plaintiff:

• a statement concerning the plaintiff’s goods or business which is false;
• that the statements have been published and concern the plaintiff;
• that they were published with malice by the defendant; and
• actual loss and damage.^[1]

This was affirmed in the more recent case of Jones v Aussie Networks Pty Ltd [2018] QSC 219.  The remainder of this article will discuss the two (2) elements which are most commonly subject to contention – malice and actual loss.

What is malice?

In simple terms, a statement published for the purpose of hurting or injuring someone will likely be viewed as malicious.  It may also be possible to establish malice by demonstrating that the publisher knew that as a result of the publication, the plaintiff was likely to suffer a loss to its finances or business activities.

It is up to the Court to decide whether a publication is malicious, as it depends upon the circumstances in which the publication was made.

Has actual loss been suffered?

Actual loss must be distinguished from potential or future damage.  It is helpful to show a loss of business or sales as a direct result of the statements made.

A victim of injurious falsehood may wish to seek injunctive relief to restrain publication of further defamatory statements.  In Mahon, the Court held that a claim for injurious falsehood may be maintained without proof of actual damage where an interlocutory injunction had been granted preventing the very damage which might have otherwise ensued.  Therefore, in deciding whether to award an injunction, the Court may consider whether damage is reasonably probable instead of considering whether the plaintiff has suffered actual damage.  Again, this will ultimately depend upon the individual circumstances of the case.

Links and further references

Legislation

Defamation Act 2005 (Cth)

Cases

Ballina Shire Council v Ringland (1994) 33 NSWLR 680

Hatfield v TCN Channel Nine Pty Ltd [2010] NSWCA 69

Jones v Aussie Networks Pty Ltd [2018] QSC 219

Kaplan v Go Daddy Group and 2 Ors [2005] NSWSC 636

Mahon v Mach 1 Financial Services Pty Ltd (No 2) [2013] NSWSC 10

Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69

Ratcliffe v Evans [1892] 2 QB 524

Schindler Lifts Australia Pty Ltd v Debelak [1989] 89 ALR 275

Wilson v Bauer Media Pty Ltd [2017] VSC 521

Further information about the tort of injurious falsehood

If you need advice on protecting your company’s reputation contact us for a confidential and obligation free and discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1] Ratcliffe v Evans [1892] 2 QB 524 at 527 to 528; Ballina Shire Council v Ringland (1994) 33 NSWLR 680 at 692 to 694; Palmer Bruyn & Parker Pty Ltd v Parsons [2001] HCA 69; (2001) 208 CLR 388 at paras 1, 52, 57, 114, 154 and 192.)

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