(Negative Online Reviews) When Will An Action For Injurious Falsehood Arise?

Has your company or business been the victim of negative reviews on online review sites? If your company or business has suffered damage as a result of a false publication, it may have a common law action for the tort of injurious falsehood. This article will briefly address the elements that must be proved to bring this type of action.

For conduct that is misleading or likely to mislead, an action under section 18 of the Australian Consumer Law may be preferable, as this negates the requirement to prove malice and actual damage. Otherwise, if the statement is defamatory, rather than merely false, and concerns an individual or small business, an action in defamation may be more appropriate.

What is the tort of injurious falsehood?

The tort of injurious falsehood is comprised of the following elements, namely a false statement, either oral or in writing, made to a third person which:

1. is maliciously made or made with knowledge of its falsity;

2. is calculated to injure the plaintiff in respect of the plaintiff’s property, products or business;[1]

3. is likely to cause damage to the plaintiff; and

1. causes actual financial loss to the plaintiff.[2]

Malice

Proof of malice must be made out to bring this type of action. This element requires the plaintiff to establish that the defendant was aware that the statement was false.[3]

Calculated to cause damage

The false publication must have been made with the effect of dissuading people from dealing with the plaintiff. This test was applied in the case of Schindler Lifts Australia Pty Ltd v Debelak,[4] which held that where a trader is denigrating a rival’s goods, the test is whether the claim being made would likely cause a reasonable person who is seriously interested to change their view.

Damage

To support an action for injurious falsehood, you must show that actual damage occurred. Proof of general loss of business since the publication is sufficient to satisfy this requirement. However any loss must be either direct, or the natural and probable consequence of the false publication.[5]

Ramsden Lawyers & injurious falsehood

Our litigation lawyers are experienced in prosecuting and defending disputes of this nature. If you believe your company or business may have an action for injurious falsehood, or if you have been defamed, please contact us and one of our experienced litigation lawyers will be able to assist.

[1] Sungravure Pty Ltd v Middle East Airlines Airliban SAL (1975) 134 CLR 1.
[2] Ratcliffe v Evans [1892] 2 QB 524; Hall-Gibbs Mercantile Agency Ltd v Dun (1910) 12 CLR 84.
[3] Joyce v Motor Surveys Limited [1948] Ch 252.
[4] Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275.
[5] Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388.