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’.
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  NSWSC 651 at .
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.
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.