Stephens Lawyers & Consultants – Information Sheet (March 2020)
A strong business reputation, is crucial in today’s online and social media environment. Maintaining a good on-line business reputation assists a business in:
- Maintaining and attracting new customers and business opportunities,
- Retaining staff and attracting new staff,
- Increasing market share and growing the business network,
- Maintaining existing relationships with suppliers and other stakeholders,
- Being recognised by the public for delivery of quality and reliable goods and services,
- Being recognised as a good trustworthy corporate citizen.
All of these affect the bottom line of the business.
Digital platforms like Google, Bing, Yahoo, Facebook, Twitter and Instagram have allowed businesses to extend their marketing reach, building brand awareness with targeted consumers. However, these platforms also provide a forum for users to publish and disseminate reviews, comments and other content that may be false and defamatory of businesses and individuals causing devastating harm both to business and personal reputation and business losses.
Sometimes the false and defamatory material is posted by competitors, disgruntled customers or staff, consumer advocates and even randoms making anonymous posts and using fake names. Some content is of such an extreme nature that it has been described by the court as being “generally without any basis and not driven by mere malice but some internet “road rage”. [1]
Businesses and their staff who are subjected to false and defamatory on-line reviews and posts may be able to take legal proceedings for:
- Defamation under the uniform defamation laws in Australia[2]
- Injurious falsehood at common law
- Contravention of s19 and s29 of the Australian Consumer Law.
Remedies that can be sought from the court include an injunction for the immediate removal of the false and defamatory content from the on-line platform and to prevent further publication and damages for reputational damage and economic loss suffered. Where the identity of the person posting the false and defamatory content is not known an injunction can be sought against the owner of the on-line platform publishing the content to take down the offending material.
DEFAMATION
Certain companies excluded from taking legal action for defamation.
Businesses which are companies employing more than 10 full time employees do not have a cause of action for defamation in relation to defamatory matter published about the company under the uniform defamation laws. This exclusion does not affect, the legal rights of any individuals associated with the company to take action for defamation in respect of any defamatory content published about them under the uniform defamation laws.[3]
Compensatory damages for defamation
A defamed business and any persons associated with the business can claim compensation for non-economic loss (general damages) and also for any economic loss (special damages) suffered by reason of the publication of the defamatory content. In the case of non-economic loss there is a statutory cap on the amount of damages that can be awarded for each individual defamation proceeding which currently is $407,500.00 in Victoria.[4] This cap does not apply if the court is satisfied that the circumstances of the publication of the defamatory matter to which the proceedings relate warrant an award of aggravated damages.[5] There is no statutory limitation on the amount of economic loss that can be awarded by the courts.
Recent award of damages for on-line defamation serves a warning to all using on-line digital platforms that care must be undertaken to ensure that that there is a factual basis for what is published and that the material is not false and defamatory.
Cheng v Lok [2020] SASC 14 SASC 14 [South Australian Supreme Court – 6 February 2020]
Mr Cheng, a South Australian based lawyer was awarded damages for reputational damage and economic loss and loss of goodwill in the sum of $ 750,000 for highly defamatory reviews published by the Defendant on “Google My Business” which resulted in significant reputational damage and economic loss with about 80% of his clients leaving his legal practice. Mr Cheng had never met or had any dealings with the individual who published the defamatory review on “Google My Business“.
Time limit to commence defamation proceedings
Court proceedings alleging defamation under the uniform defamation law have to be commenced within one (1) year of the alleged defamatory communication being published, otherwise the action will be time barred by the statute of Limitation of Actions Act. However, a party may make an application to the Court to request an extension of time in which to commence action for defamation.[6] The maximum extension that can be granted by a Court is three (3) years from the date of publication. A Court may grant a time extension if it is satisfied that it was not reasonable in the circumstances for the plaintiff to have commenced an action within one year from the date of publication.[7]
INJURIOUS FALSEHOOD
Where a business is excluded from bringing a claim for defamation under the uniform defamation laws because it is a company employing more than 10 full time employees, the company may be able to take action for injurious falsehood, also called malicious falsehood or trade libel.
For a company or individual to succeed in a claim for injurious falsehood of false on-line publications it must establish that:
- the defendant has made a false statement concerning the company or individual’s property or business or goods
- the false statement was published maliciously
- the false publication has injured the company’s or individuals business or goods and has caused them to suffer “actual damage”.[8]
Unlike defamation claims, damages for a claim in injurious falsehood are not capped and court proceedings for injunctive relief and/or damages must be commenced within six (6) years of the publication of the false statements.
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.[9] 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.[10] Businesses or persons are also prohibited from making false or misleading representations about goods or services.[11]
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.
Strategies for risk management and damage control.
No one is immune from the publication of false and defamatory content that can have a significant impact on personal and business reputation. Be prepared to deal with the risks and have strategies to minimise the damage to your business reputation:
- Ensure that your business risk management plan includes risks associated with publication of false and defamatory content,
- Review your insurance policies to ensure that they include the costs of dealing with defamation, injurious falsehood and/or contravention of the Australian Consumer Law and protecting your brand and reputation,
- Have training and compliance programs for your staff, review procedures for material before publication and systems for monitoring your on-line trading environment,
- Continually monitor on-line content for false and defamatory reviews and content about your business, executive team and staff,
- Act promptly to have false and defamatory content removed from on-line digital platforms, social media and websites,
- Seek legal advice and if necessary take court action for the removal of the content and damages.
Authored by Katarina Klaric
© Stephens Lawyers & Consultants. 9 March 2020.
This article is not intended to be a substitute for obtaining legal advice.
For further information contact:
Katarina Klaric
Principal
Stephens Lawyers & Consultants
Suite 205, 546 Collins Street
Melbourne VIC 3000
Phone: (03) 8636 9100
Fax: (03) 8636 9199
Email: [email protected]
Website: www.stephens.com.au
All Correspondence to:
PO Box 16010
Collins Street West
Melbourne VIC 8007
[1] Rothe v Scott (No4) [2016] NSWDC 160, Gibson DCJ at para. 140.
[2] Defamation Act 2005 (Vic); Defamation Act 2005 (NSW); Defamation Act 2005 (SA); Defamation Act 2005 (WA); Defamation Act 2005 (Tas); Defamation Act 2005 (Qld); Defamation Act 2006 (NT); Civil Law (Wrongs) Act 2002.
[3] Section 9 Defamation Act 2005(Vic) and the corresponding provisions in the other State and Territory Acts.
[4] Section 35(1) Defamation Act (Vic) 2005. Victorian Government Gazette No. G24, 13 June 2019, p. 1092. The statutory cap in the other States and Territories can be found in the corresponding Government Gazettes.
[5] Section 35(2) Defamation Act (Vic) 2005.
[6] Section 23B Limitation of Actions Act 1958 (Vic).
[7] Section 23B(2) Limitation of Actions Act 1958 (Vic).
[8] Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388; DHR International Inc v Challis [2015] NSWSC 1567 at [31] – [33].
[9] Sections 18, 232 and 236 Competition and Consumer Act 2010 (Cth) Schedule 2
[10] Section 18 Competition and Consumer Act 2010 (Cth) Schedule 2.
[11] Sections 29 Competition and Consumer Act 2010 (Cth) Schedule 2.