Malicious Falsehood in Tort

Author : Bhoomi Gupta

Introduction

Right to free speech and expression is an integral legal right, but this right is not absolute. Therefore, this right is subjected to reasonable restrictions. Any person that makes false or untruth statement regarding any other person or a corporate entity then such a person has the right to commence a legal action that could lead to a claim for damage against the wrongdoer. Whenever somebody makes a dishonest or incorrect statement against anyone then such statements are either defamatory or malicious falsehood. Even though both malicious falsehood and defamation claims seem to be similar as they dealt with the publication of false statement but unlike defamation in malicious falsehood claimant is not prerequisite to prove the alleged statement is defamatory and any damage to reputation.

What is malicious falsehood?

Malicious falsehood is a tort or a civil wrong. Malicious falsehood referred to an act of maliciously publishing dishonest or false statement concerning the claimant, his business, property or other economic interests, and that lead third person to act in a manner causing the claimant pecuniary loss or damage. Malicious falsehood is also commonly called as an injurious falsehood. Injury to reputation is not a necessary element to this tort. The objective of the law of malicious falsehood is to protect the commercial or economic interest of the claimant. This law makes it possible to bring a cause of action against a defendant where statement themselves are not defamatory and defamation suit is not appropriate but words made are false and causes damage to the claimant. Thus, malicious falsehood is an alternative for a defamation suit.

Illustrations

• When a person makes a dishonest statement to the third party that the chatter accountant has retired from his practice. As a result, he faces pecuniary loss. Although the statement is not defamatory as it does not suggest any degradable remarks about the chatter accountant but the statement is false.

• When a company makes false allegation regarding its competitor’s product as a consequence financial loss occurs. Therefore, the cause of action in malicious falsehood arises against the company.

• When a person makes a false statement to third parties that the house of the claimant is not available for the tenancy barring them to occupy the house and causing damage to the claimant.

Essential elements of malicious falsehood

There are four prerequisites to prima facie establish a case of malicious falsehood (Palmer Bruyn & Parker Pty Ltd v Parsons (2001)):

1. False statement: There shall be a dishonest statement concerning the claimant or his business or profession or his property

• Publication to the third party: The defendant has published a false statement to a third party 

• Malice by the defendant: The statement was maliciously published with the intention of causing harm to the claimant. Malice would be proved when the defendant knew that the statements were false and the claimant will naturally face loss.

• Special damage: That the claimant suffered special damage and such damage has followed as direct and natural consequences of the defendant’s publication. In legal term, special damages refer to actual economic damages.

Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals [2002] FCA 860; (2002) 120 FCR 191

Facts: Orion Pet Products Pty Ltd manufactured and sold electronic dog collars for training dogs, in Australia. The products bear the brand names “No-Bark Collar”, “Smart Dog Containment System”, “Home Free Containment System” and “Smart Dog Remote Trainer”. In this case, the representatives of the RSPCA made several statements in the media that electronic dog collars of Orion inflict burn upon dogs, administered a 3,000-volt shock upon dogs, and damage brain of the dogs and caused death in some cases.

Held: The court observed that the statements made were factually incorrect and would be likely to damage the business of the plaintiff, which was a major supplier of these collars. However, the court was satisfied that the statement made was false but not with malicious intent. The representatives of the RSPCA genuinely believed that the words stated by them were true. The claim was unsuccessful.

While there might have been some carelessness involved in not properly checking the facts, this was not tantamount to the knowledge of falsity or recklessness.

Hubbuck & Sons Ltd v Wilkinson, Heywood & Clark Ltd [1899] 1 Q.B. 86

Facts: The plaintiff alleged that the defendant had falsely advertised an experiment which has proved the defendant’s paint has an advantage over the plaintiff’s product. The defendant’s paint has an advantage over the plaintiff’s product which was more expensive. However, for the practical purpose, both the products are equivalent.

Held: It was observed that a statement merely praising the product of defendant being better than those of the plaintiff is not injurious falsehood. A statement which includes claims intended to be taken seriously cannot be dismissed as a mere ‘puff’. This is particularly relevant to comparative advertising of products or services.

Seafolly Pty Ltd v Madden [2012] FCA 1346

Facts: The applicant, Seafolly Pty Ltd alleged that the respondent, Ms. Leah Madden, made several false allegations against it, relating to the design of ladies’ swimwear marketed by Seafolly specifically. Ms. Leah Madden publically made dishonest statements on Facebook and through email that the Seafolly had copied some of her swimwear designs. Seafolly’s claim that Ms. Madden’s statements about it having copied her garments being made maliciously to injure Seafolly were true and were not apt to mislead. 

Held: The court held that Ms. Leah Madden should have made some enquiry to verify the accuracy of the claims made such as checking with retailers to determine when the plaintiff’s garments were put on the market. Madden failed to follow these steps and it is not mere carelessness. Madden did honestly believe what she was saying, albeit she had reached that conclusion recklessly. Eventually, the injurious falsehood claim was dismissed as Seafolly could not establish that the allegation had caused it actual damage.

DSG Retail Limited v Comet Group plc [2002] All ER (D) 112 

Facts: The Comet Group plc released a series of promotional advertisements. Comet maliciously made the false claim that their prices were comparatively lower than those of Currys. It was established that contrary to fact. 

Held: The Court held that the statements were aimed at the Claimant, were untrue and had been deliberately designed to deflect trade away from the Claimant. An injunction was granted accordingly.

CONCLUSION

Whenever the defendant makes a false comment regarding any person, his business, his occupation or property and comments themselves not defamatory then the person can bring civil litigation for malicious falsehood. To recognize the claim for a malicious falsehood the claimant requires proving that the defendant had maliciously made some dishonest reference either directly or indirectly regarding claimant, his business or other economic interest and the claimant suffered special damage.

References

Competition and Consumer law , Nexis Lexis,  https://www.marquelawyers.com.au/assets/competition-consumer-law-news-2011-vol-26-nos-10.pdf  Malicious falsehood- a weapon worth remembering in the social media, https://www.memerycrystal.com/articles/malicious-falsehood-a-weapon-worth-remembering-in-the-social-media-world/  Elements of Injurious falsehood, https://s3.studentvip.com.au/notes/17643-sample.pdf Seafolly Pty Ltd v Madden [2012] FCA 1346 Hunt v. Carey Canada Inc. [1990] 2 SCR 959Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals [2002] FCA 860 Hubbuck & Sons Ltd v Wilkinson, Heywood & Clark Ltd [1899] 1 Q.B. 86DSG Retail Limited v Comet Group plc [2002] All ER (D) 112