The rise of ‘injurious falsehood’ actions since change to uniform defamation laws

msi - falseBy Richard Bradshaw, Johnston Withers, Lawyers, Adelaide.

In recent years there has been growing interest among defamation lawyers in Australia in the common law tort of injurious falsehood (aka malicious falsehood). This is primarily due to the introduction of uniform defamation laws in the Australian states and territories in 2005/6.

Whilst these laws did not directly affect injurious falsehood, more interest seems to have been awakened in that tort by reason of the restrictions imposed in two ways in the potential for instituting defamation proceedings:

1.         actions for defamation by corporations are now limited to non-government organisations which either:

(I)         are “not-for-profits”; or

(ii)        have fewer than 10 employees and are not related to another corporation

2.         there is now a strict limitation period of one year from the date of publication to institute proceedings for defamation, unlike for injurious falsehood.

There are four generally recognized elements in an action for injurious falsehood:

1.         a false statement by a person or corporation B (the defendant) of or concerning person or corporation A’s (the plaintiff) goods or business;

2.         the publication of that statement by B to a third person C;

3.         malice on the part of B;

4.         actual economic loss (which may include a general loss of business) suffered by A as a result of the statement.

There are many circumstances when injurious falsehood overlaps with defamation, but this is by no means always the case. An example of a false and potentially harmful, but non-defamatory, statement (if untrue) would be if B said to C of a business competitor A: “A’s restaurant has closed.” On the other hand, if B had said “A’s restaurant has been closed down by the health inspector,” the statement would also be defamatory of A.

Of the four elements, there is some doubt in relation to the first, as to whether the false statement must relate to the plaintiff’s goods or business. It now seems likely that if what is falsely said of the plaintiff reflects adversely to his or her professional, occupational or commercial standing and interests, that will be enough to satisfy the first element.

However it remains important to keep in mind that, unlike in an action for defamation, there is no presumption of a statement’s falsity, which may be rebutted by the defendant. In an action for injurious falsehood, the onus is on the plaintiff to prove each of the four elements, including falsity.

If you or your business has been harmed by a false statement we recommend you seek advice.

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