Maintaining a strong business reputation: Defamation of business
Stephens Lawyers & Consultants Legal Update: July 2013
The rise of online shopping and e-commerce has increased the importance of businesses having a strong online reputation and presence. The increased reliance on the internet by businesses has also meant that there are significantly more platforms for users to publish and disseminate material that is false and defamatory about a business. Social media entries, blog comments and photo, video or audio uploads are all capable of containing material that could damage your business.
Businesses can pursue damages for false and defamatory representations or publications made on the internet or elsewhere through a claim in Defamation, Injurious Falsehood or under the Australia Consumer Law. Below Stephens Lawyers & Consultants provides a brief over view of these areas of law.
Defamation of a business
Defamation is a common law tort that is now governed by Uniform Defamation Legislation enacted across Australian States and Territories in 2005 and 2006. Under the Uniform Defamation Legislation a publication will be defamatory if the published material has consequences of:
1. Exposing the person to ridicule; or
2. Lowering the person’s reputation in the eyes of members of the community; or
3. Causes people to shun or avoid the person; or
4. Injures the person’s professional reputation.
Defamatory material will be considered to have been ‘published’ where it was communicated to someone other than the aggrieved person. The means of communication may be oral, written or through conduct.
The Uniform Defamation Legislation states that a corporation has no cause of action for defamation unless at the time of the publication of defamatory material, the corporation was either a non-profit organisation or had fewer than 10 employees and was not a public body.1
Significantly, under the Uniform Defamation Legislation the amount of damages that can be awarded for non-economic loss under a claim of defamation is now capped at $355,500.00. Aggravated damages can be awarded above the cap, however aggravated damages will only be awarded in extreme cases where the conduct of the defendant is found to be lacking bona fides or improper and unjustifiable.2
It is also important to note that a claim in defamation has to be commenced within one (1) year of the allegedly defamatory communication being made, otherwise the action will be time barred by the statute of Limitation of Actions Act.3
Where business is excluded from bringing a claim for defamation under the Uniform Defamation Legislation, then the defamed business may be able take action for injurious falsehood, also called malicious falsehood or trade libel.
A business will be successful in bringing a claim of injurious falsehood if it can be established that a malicious and false publication has injured its business or goods and has caused it to suffer financial loss. Whether the malicious and false statements disparage the business’s reputation is not critical to the success of the claim, the main issue is whether a financial loss can be established which was caused by the publication of the malicious and false statements.4 Unlike defamation, damages for a claim in injurious falsehood are not capped and court proceedings must be commenced within six (6) years of the publication of the defamatory material.
Australian Consumer Law
Businesses or persons can also take court proceedings claiming injunctive relief, an apology and correction and damages under the Australian Consumer Law against those involved in publication or dissemination of misleading material or false representations about another business or the supply, marketing and promotion of goods or services.5 Under the Australian Consumer Law a business or person cannot in trade or commerce engage in conduct that is misleading or deceptive or likely to mislead or deceive.6 Businesses or persons are also prohibited from making false or misleading representations about goods or services.7
Businesses or persons involved in on-line commerce are also at risk of legal action being taken against them by other parties including the ACCC and the State Fair Trading Offices, (which regulate the Australian Consumer Law), if they are involved in making false or misleading claims about their own goods or services or the goods or services of their competitors. To minimize risks associated with contravention of the Australian Consumer Law businesses need to have training and compliance programs for their staff, review procedures for material before publication and systems for monitoring their on-line trading environment.
A strong online presence is an essential element of modern business. The internet provides businesses with opportunities to grow into new areas and to consolidate their market share. However, the internet can also present a significant risk to the reputation of your business through publication of defamatory material online. The areas outlined above can help a business protect itself from these risks and ensure that it is able to operate confidently online.
Katarina Klaric | Principal
STEPHENS Lawyers & Consultants | Suite 205, 546 Collins Street, Melbourne VIC 3000 Australia
T + 61 3 8636 9100 | F + 61 3 8636 9199 | E firstname.lastname@example.org
PO Box 16010 Collins Street West VIC 8007 Australia
Stephens-Klaric Legal Pty Ltd (ACN 117 672 376) trading as Stephens Lawyers & Consultants
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© Stephens Lawyers & Consultant. March 2013. Authored by Katarina Klaric and Matthew Churkovich.
 s 9 of the Defamation Act in
Vic, NSW, SA, WA, TAS, Qld,. Civil Law (Wrongs) Act 2002 (ACT): s 121;
Defamation Act 2006 (NT): s 8.
v Yahoo! 7 Pty Ltd
 VSC 88 .
s 23B Limitation of Action Act (Vic) 1958.
Joyce v Sengupta &
Anor  1 All ER 897.
Schedule 2, Competition and Consumer Act
Section 18 Australian Consumer Law, Schedule 2, Competition and Consumer Act 2010.
Section 29 Australian Consumer Law, Schedule 2, Competition and Consumer Act 2010.