Injurious falsehood arises when a person makes a false representation about another person’s goods or services. For an injurious falsehood claim to succeed, the representation can be written or spoken and the person must encourage other people not use the goods or services of another person, which then causes that provider to suffer damage. Injurious falsehood is different to defamation, which involves damage to a person’s reputation.
Establishing injurious falsehood
To establish a claim for injurious falsehood, four elements must be proven:
- A false statement was made; and
- The statement was published; and
- There was malicious intent; and
- Actual damage was caused.
In determining the extent of the damage, the court may consider:
- the seriousness of the false statement;
- the extent of the publication;
- the likely informal transmission of the false statement ( “grapevine effect”);
- the size of the business affected;
- the effect on the victim’s reputation;
- whether the perpetrator has made any attempt to apologise and repair the damage.
For a false statement to be sufficiently serious, there must be a clear intention to cause damage, and the nature and substance of the statement must show malicious intent.
Extent of the publication
The court considers the type and number of people at whom the false statement was directed. The detriment to the victim is likely to be greater if the statement is directed at those with whom the victim does business than at the general public.
The law recognises that the spreading of false information happens as a function of ordinary human nature. The sharing of such information online, especially via social media, allows injurious falsehoods to be republished, reposted and retweeted quickly and to a global audience. A court takes into account the impact of this “grapevine effect”.
This aspect involves considering factors such as how long the business has been operating and its reputation. If a business has operated for many years and widely regarded as a reputable company, significant damage may be caused.
This is generally covered under defamation law, but it can also be a significant factor in a claim for injurious falsehood. A false statement can have a detrimental effect on a person’s reputation in business, harming their ability to continue operating or establishing another business.
A person can avoid having to pay damages or reduce a damages payout if they make a public apology, acknowledge the statement made as false, and ensure all parties to whom the statement was published are informed. The court will carefully consider the effect of an apology; it may be made too late or not be significant enough to rectify the damage caused by the false statement.
Below are several cases which show how a court determines injurious falsehood by working through the requisite elements.
Palmer Bruyn & Parker Pty Ltd v Parsons 
Surveying business Palmer Bruyn & Parker applied to Newcastle City Council to rezone land on behalf of client McDonald’s. Councillor Parsons opposed the proposal, forging a letter from Palmer Bruyn & Parker, which contained “absurd inducements and threats” and was “calculated to ridicule” the business. Parsons sent the hoax letter to another councillor and it was viewed by few other people. However, a newspaper reported the fact of the hoax, which led to McDonald’s terminating its contract with Palmer Bruyn & Parker. The surveying business subsequently sued Parsons. The High Court upheld an appeal court decision that the loss suffered by the business was caused by the publication of the newspaper article about the hoax, for which Parsons was not legally responsible.
Seafolly Pty Ltd v Madden 
White Sands Swimwear owner Madden falsely claimed on Facebook and by email that Seafolly had copied some of her swimwear designs. In response, Seafolly issued a press release which described Madden’s claims as “completely false and without foundation” and “made maliciously to injure Seafolly”. The injurious falsehood claim was dismissed because Seafolly could not establish the falsehood had cause it actual damage.
Hubbuck & Sons Ltd v Wilkinson, Heywood & Clark Ltd 
Hubbuck & Sons claimed that Wilkinson, Heywood & Clark had made a false statement by advertising an experiment that proved Wilkinson, Heywood & Clark’s paint had an advantage over Hubbuck & Sons’ paint. The British Court of Appeal explained that a statement which merely praises one company’s goods as being better than those of another company is not an injurious falsehood. It therefore found there was no injurious falsehood but pointed out that a statement which includes claims intended to be taken seriously cannot be dismissed as mere “puff”, especially in comparative advertising of products or services.
Orion Pet Products v Royal Society for the Prevention of Cruelty to Animals (2002)
The RSPCA made statements in the media that electronic dog collars had inflicted burns and 3000-volt shocks on dogs, and that those shocks had led to brain damage and death. The organisation stated the products were cruel, illegal and ineffective in dog training. Collar manufacturer Orion Pet Products sued the RSPCA for injurious falsehood. The claim failed because the business could not establish that the RSPCA’s representations were made maliciously and were not the product of genuinely held opinions.
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