Injurious falsehood sounds like a complicated statement lawyers use to confuse people. In reality, it is a tort that a party can use where a statement made about an individual or company’s business causes actual damage to their reputation or commercial success. It’s kind of like defamation, but for businesses. Below, we will look at the difference between defamation and injurious falsehood, and the concepts used to establish injurious falsehood.
What is the Difference Between Defamation and Injurious Falsehood?
Defamation refers to a statement (either in writing or real life) that is published or made and is harmful to someone’s reputation. Injurious falsehood refers to statements that may actually cause reputational damage. In alleged cases of injurious falsehood, the focus is on the effect of the statement on the commercial interests of the company, rather than on any personal offence taken, which is considered in cases of defamation.
Many people consider defamation proceedings and injurious falsehood proceedings as going hand in hand. Unfortunately, this generalisation can backfire. In Mahon v Mach 1 Financial Services Pty Ltd (No 2), the Court considered a joint pleading of defamation and injurious falsehood and eventually struck out the entire pleading.
Elements of Injurious Falsehood
In Mahon, Justice McCallum reiterated the four key elements required to succeed in an action for injurious falsehood:
- There must be a false statement of or concerning the plaintiff’s goods or business;
- The defendant must have published that statement to a third person;
- There must be malice on the part of the defendant; and
- The plaintiff must provide that there has been actual damage as a direct result of the statement.
Failure to satisfy these elements will be fatal to a claim and consequently, obtaining a successful result for injurious falsehood is very difficult. We now turn our attention to examining these elements in more detail.
The statement made must have been made with malice. The ordinary definition of ‘malice’ is the ‘desire to harm someone’. What this means is you need to show that the person who made the statement about your goods or business intended to inflict damage on you or the business. Alternatively, it can sometimes be accepted that if the statement was made recklessly without any verification of the truth, it could still be held as an injurious statement. Much will depend on the facts of each case.
Has Actual Loss Been Suffered?
The plaintiff must show that they have suffered actual loss as a result of the statement. It would be helpful in proving this if you could show that people cancelled their current orders or stopped doing business with your company as a direct result of the statement. The Court, however, may consider less precise evidence. Again, it will depend on the individual circumstances of the case.
You should consider injurious falsehood when a false statement has been made and affects your business’s reputation (or your individual reputation but in a commercial context). As set out above, there are essential elements that must be met, without which your claim will not succeed.
Defamation and injurious falsehood are complex areas of law which warrant careful consideration of the particular facts and circumstances of each case. Unfortunately, it isn’t enough to simply show your feelings were hurt by someone’s statement, or to make sweeping statements about the loss suffered by your business without evidence. There are important elements that the Court needs to see before it will make a finding in your favour.
LegalVision’s dispute lawyers can provide you with advice on whether you have a claim of injurious falsehood, or if you have grounds to defend a claim of injurious falsehood. Questions? Get in touch on 1300 544 755.