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Articles and legal news from the Atkinson Vinden Team.

Defamation issues for companies and their public reputations

Disputes

In this modern age of social networking, websites, and other methods of instant communication, many companies regrettably put the importance of a good reputation to the back of their minds while they attend to day-to-day operations.  The reputation of a company is essential to its survival in that it increases corporate worth and provides sustained competitive advantage.  For that reason, it is imperative that companies move swiftly to diffuse anything that may have an adverse impact on their public reputation, including the publication of defamatory material about it.

Defamation

Defamation occurs where one person communicates, by words, photographs, video, internet, illustrations or other means, material which has the effect or tendency of lowering the reputation of another (such as a company) in the eyes of the public at large; for example a damaging Google review.  Within a defamation case the plaintiff must prove that:

  1. the communication has been published by the defendant;
  2. the communication has been published to a third person;
  3. the communication identifies or is about the plaintiff; and
  4. the communication is defamatory (i.e. it has the effect or tendency of damaging the reputation of the plaintiff).

When can a company sue for defamation?

Section 9 of Defamation Act 2005 (NSW) contains a general rule that corporations cannot sue in defamation, unless they can bring themselves within the definition of an “excluded corporation”; an “excluded corporation” includes corporations not related to other corporations and which have fewer than 10 full time employees, as well as not for profit corporations.

It is important to note that the Defamation Act makes it clear that section 9 does “not affect any cause of action for defamation that an individual associated with a corporation has in relation to the publication of defamatory matter about the individual even if the publication of the same matter also defames the corporation, and in our experience it is not uncommon for larger companies to pursue claims for defamation in the names of their directors or employees in particular if they are known as the public face of the company.

Can I obtain an interim injunction in a defamation case?

To restrain further publication of defamatory material necessarily restrains free speech to an extent. As such it is generally difficult to obtain an injunction when claiming defamation alone as Courts tend to place substantial weight to the overriding public interest in freedom of speech.

Injurious falsehood

A possible way to overcome the Court’s reluctance to grant injunctions in defamation cases is to claim injurious falsehood in addition to or instead of defamation.  Any company that does not fall within the definition of an “excluded corporation” contained in the Defamation Act may want to consider whether it is able to bring a claim for injurious falsehood instead of, or together with, a defamation claim.

Injurious falsehood is harder to prove than defamation and in order to succeed four essential elements must be proved:

  1. a false statement of or concerning the plaintiff’s goods or business;
  2. publication of that statement by the defendant to a third person;
  3. malice on the part of the defendant; and
  4. proof by the plaintiff of actual damage (which may include a general loss of business) suffered as a result of the statement.

Other remedies that may be available to companies who find that their reputations are under attack

If a company has been the subject of defamatory material by an online provider(s), it ought to consider lodging a detailed written complaint with the online provider(s), as this can put Google and other online platforms (such as Facebook and Twitter) ‘on notice’ that material which appears on their site is potentially defamatory.

If the online platform fails to remove the material from their site, it may be possible to commence defamation proceedings against it on the basis that it has published the material by continuing to display the material online notwithstanding the complaint.

Companies may be able to take court proceedings claiming injunctive relief and damages under the Australian Consumer Law against those involved in publication or dissemination of misleading material or false representations about their business.

Contact us

If you are concerned that your company’s reputation is being defamed online or otherwise, you should talk to our Disputes Team who will be able to look at the facts of your case, advise you of the applicable law and, if necessary, commence proceedings on your company’s behalf in a timely fashion.