Injurious Falsehood as Opposed to Defamation

General Overview of the Applicable Law

Defamation is the “catch all” phrase for remarks spoken or written (libel, slander) that hurt someone’s (personal) reputation. The term injurious falsehood is a sub category of defamation, written or oral and is generally used when sizable [commercial or economic interest] are involved. Generally speaking a corporate entity cannot be defamed as it can suffer no “hurt feelings”.

At  common  law,  the  action in a case  for  injurious  falsehood  exists  quite separately from the tort of defamation. The essence of the action is the publication of a false  statement  made maliciously and  resulting in  actual  damage  to  the plaintiff. It is an actionable wrong to maliciously make a false statement with regard to any person with the result that other persons are induced to act in a manner which causes loss to him (that “any person”).

The necessary elements of the cause of action for injurious falsehood, compared with that for libel or slander, are:

(a)     the plaintiff must prove that the published matter was false whereas in defamation falsity is presumed at common law;

(b)    the plaintiff must prove that the matter was published maliciously whereas in defamation proof of malice is limited to defeating certain defences and to the issue of damages; and

(c)     the plaintiff must prove actual damage, whereas in defamation damage to reputation is presumed once the publication of defamatory matter has been proved.

In the main it is more challenging bringing an injurious falsehood claim than a defamation action.  The onus of proof is greater ( that of falsity and malice) and it is necessary to substantiate loss.

The statement made by a defendant must be false.  It must be made with “malice.” Malice is a technical term which is the subject of significant commentary. Suffice to say it means a wrongful act done  intentionally  without  just  cause  or  excuse.    Malice  is  not  confined  to personal spite and ill-will but includes every unjustifiable intention to inflict injury on the person defamed.   The question often asked is whether in the communication the communicator acted bona fide (in good faith).  The most common variants of malice is knowledge that the statement is untrue, recklessness as to its truth, actuation  by  some  improper  motive  or  an  intention  to  injure  the  plaintiff’s business.   The onus of proof rests with the plaintiff to establish malice.  The absence  of  any  “just  cause  or  excuse”  does  not  necessarily  mean  that  the defendant acted maliciously:

A plaintiff must prove that the false statement caused actual loss.  If the natural and probable consequence of the false statement is a loss of money because a customer cancelled an order or did not continue to purchase goods or services that would be a form of actual damage.The fact that a plaintiff cannot establish loss with certainty does not mean that he cannot prove actual damage.  Proof of a general loss of business may be sufficient to satisfy the requirement of proof of actual damage in an action on the case.  In Chaplin v Hicks ([1911] 2 KB 786) Vaughan Williams LJ said, at 792:

”   In the case of a breach of a contract from the delivery of goods the damages are usually supplied by the fact of there being a market in which similar goods can be immediately bought and the difference between the contract price and the price given for the substituted goods in the open market is the measure of damages; that rule has always been recognised. Sometimes, however, there is no market for the particular class of goods;

However no one has ever suggested that, because there is no market, there are no damages. In such a case the jury must do the best they can and it may be that the amount of their verdict will really be a matter of guesswork. But the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages for his breach of contract.

For further information please contact Trevor Rosenthal on telephone (03) 8680 5555 or email trosenthal@bshb.com.au.

Please note that the advice in this communication is general advice only and you should not rely on this advice unless you obtain legal advice specific to your own requirements.