Cor­po­ra­tions and defamation

Sev­er­al high-pro­file Aus­tralians have become embroiled in defama­tion cas­es in recent months. 

A pub­li­ca­tion about a per­son com­mu­ni­cat­ed to a third par­ty is defam­a­to­ry if an ordi­nary rea­son­able per­son would think it tends to:

• injure that per­son­’s rep­u­ta­tion by dis­parag­ing them;
• cause oth­ers to shun or avoid them;
• sub­ject them to hatred, ridicule or contempt. 

Can a com­pa­ny sue for defamation?

What about com­pa­nies? Can they sue when defam­a­to­ry mate­r­i­al is pub­lished about them?

Yes, how­ev­er only if the com­pa­ny is an ​‘exclud­ed corporation’. 

Sec­tion 9 of the Defama­tion Act 2005 (NSW) (the Defama­tion Act) 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’.

In that respect, an indi­vid­ual, such as a direc­tor or offi­cer of a com­pa­ny, can bring a claim for defama­tion inde­pen­dent­ly of the com­pa­ny in rela­tion to the pub­li­ca­tion of defam­a­to­ry mat­ters about that indi­vid­ual as well as the com­pa­ny they are asso­ci­at­ed with, whether or not that com­pa­ny is an ​‘exclud­ed corporation’. 

Inju­ri­ous falsehood 

Any com­pa­ny that does not fall with­in the def­i­n­i­tion of an exclud­ed cor­po­ra­tion still may have reme­dies avail­able to it if some­one pub­lish­es defam­a­to­ry mat­ters about it. In that regard, com­pa­nies large and small, can bring a claim for inju­ri­ous falsehood.

Inju­ri­ous false­hood is some­times hard­er to prove than defama­tion. For a com­pa­ny to suc­ceed in such a claim, four essen­tial ele­ments must be proved:

• a false state­ment of or con­cern­ing the company’s goods or business;
• pub­li­ca­tion of that state­ment to a third person;
• mal­ice on the part of the per­son pub­lish­ing the state­ment; and
• proof by the com­pa­ny of actu­al dam­age (which may include a gen­er­al loss of busi­ness) suf­fered because of the statement.

Impor­tant­ly, an injunc­tion may be grant­ed to restrain inju­ri­ous false­hoods, where­as an injunc­tion will ordi­nar­i­ly not be avail­able in cas­es involv­ing defama­tion alone due to the over­rid­ing pub­lic inter­est in free­dom of speech: see Neville Mahon v Mach 1 Finan­cial Ser­vices Pty Ltd [2012] NSWSC 651 at [31].

Oth­er reme­dies that may be avail­able to companies 

Com­pa­nies may also be able to take court pro­ceed­ings claim­ing injunc­tive relief and dam­ages under the Aus­tralian Con­sumer Law against those engag­ing in con­duct that mis­leads or deceives or is like­ly to do so, includ­ing those who pub­lish mate­r­i­al about a com­pa­ny or its busi­ness that is mis­lead­ing or deceptive. 

Defences

There are many defences to defama­tion, the tort of inju­ri­ous false­hood and claims for mis­lead­ing or decep­tive conduct. 

How­ev­er, if you believe that your com­pa­ny’s rep­u­ta­tion is at risk as a result of a defam­a­to­ry pub­li­ca­tion and oth­er state­ments made about it, you should seek legal advice as soon as pos­si­ble to under­stand whether there are steps you can take to pre­vent fur­ther rep­u­ta­tion­al risk or obtain appro­pri­ate com­pen­sa­tion if the dam­age has already been done.