Richard Graham

Malice in Defamation: Meaning, Role, and Proof in Western Australian Law

1. Introduction

Significance of Malice

The concept of 'malice' occupies a pivotal position within Australian defamation law. While not an element of the cause of action itself, malice becomes critically relevant when a defendant seeks to rely upon certain defences, most notably qualified privilege (both statutory and common law) and honest opinion (or its common law precursor, fair comment). Proof that a defamatory publication was actuated by malice—essentially, made with an improper motive or state of mind—can negate these defences, stripping the defendant of legal protection that might otherwise be available (Roberts v Bass (2002) 212 CLR 1 at [62]-[65] per Gaudron, McHugh and Gummow JJ).

Purpose and Scope

This section provides guidance on the definition, role, proof, and procedural handling of malice in defamation proceedings. It focuses on the application of malice under the Defamation Act 2005 (WA) ('the Act') and the relevant common law principles preserved by the Act. The aim is to offer practical assistance, grounded in established jurisprudence, particularly from the High Court of Australia and relevant appellate courts, with specific reference to Western Australian provisions and case law where feasible.

Structure Overview

This analysis will proceed by:

  • Defining malice as understood in Australian common law, which informs its application under the Act.

  • Explaining the specific role of malice in defeating the statutory defences of qualified privilege (s 30) and honest opinion (s 31) under the WA Act, as well as analogous common law defences.

  • Detailing the requirements for pleading and proving malice, including the burden and standard of proof, and the types of evidence typically relied upon.

  • Illustrating the principles through analysis of key case law examples where malice was successfully or unsuccessfully argued.

  • Providing practical guidance, including considerations for assessing evidence and directing juries on the issue of malice.

Context: Balancing Interests

Defamation law operates at the intersection of competing fundamental values: the right of an individual to protection of their reputation and the right to freedom of expression, particularly concerning matters of public interest (Lange v Australian Broadcasting Corporation (1997) 189 CLR 520 at 568). The defences available in defamation, and the concept of malice which qualifies some of those defences, represent mechanisms by which the law attempts to strike a balance between these competing interests. Malice serves as a threshold, ensuring that defences designed to protect legitimate communication are not abused for improper ends.

2. Defining Malice in Australian Defamation Law

Common Law Foundation

The Defamation Act 2005 (WA), consistent with uniform defamation legislation across Australia, does not provide a statutory definition of 'malice.' Section 6(2) of the Act expressly states that the Act does not affect the operation of the general law in relation to the tort of defamation except to the extent the Act provides otherwise. Consequently, the meaning of malice, particularly where it is relevant to defeating statutory defences like qualified privilege under section 30(4), is derived from established common law principles. The general law continues to apply to determine whether a publication was actuated by malice when such a finding may defeat a defence.

Core Concepts: Improper Purpose

At its core, malice in defamation law signifies the misuse of an occasion or defence for an improper purpose. Where a defence like qualified privilege exists, it is granted by law to serve a particular public or private interest (e.g., the performance of a duty, the protection of a common interest). Malice arises when the defendant uses that occasion not for its intended purpose, but for some ulterior or foreign motive (Roberts v Bass (2002) 212 CLR 1 at [75]-[76] per Gaudron, McHugh and Gummow JJ).

The seminal articulation of this principle comes from Lord Diplock in Horrocks v Lowe [1975] AC 135 at 149, who stated that qualified privilege is lost if the defendant "misused the occasion for some purpose other than that for which the privilege is accorded by the law." The privilege attaches to the occasion, but it can be defeated if the defendant abuses that occasion. Examples of such improper purposes include publishing out of personal spite, ill will, vindictiveness, or a desire to injure the plaintiff that is unconnected to the duty or interest protected by the privilege (Horrocks v Lowe [1975] AC 135 at 149).

The legal definition of malice thus focuses sharply on the defendant's subjective dominant purpose at the time of publication. This makes it distinct from objective assessments of reasonableness or negligence, although such factors can be relevant evidence from which the subjective purpose might be inferred (Roberts v Bass (2002) 212 CLR 1 at [75]-[76]). This subjective focus is critical: proving, for instance, that a defendant's conduct was objectively unreasonable for the purposes of establishing statutory qualified privilege under section 30(1)(c) of the WA Act is a different exercise from proving the subjective improper purpose required for malice under section 30(4).

The 'Dominant Purpose' Test

Crucially, for malice to be established, the plaintiff must prove that the improper purpose was the dominant or actuating motive for the publication (Roberts v Bass (2002) 212 CLR 1 at [76]). As the High Court affirmed, malice requires proof that the improper motive was the substantial or driving reason for the publication. The mere co-existence of some ill will or secondary improper motive alongside a genuine and dominant proper purpose (i.e., fulfilling the duty or protecting the interest relevant to the privilege) is generally insufficient to establish malice (Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 50-51). The improper purpose must be the primary driver.

Knowledge of Falsity and Reckless Indifference

A defendant's state of mind regarding the truth or falsity of the defamatory matter is highly relevant to determining their purpose.

  • Knowledge of Falsity: Publishing defamatory matter knowing it to be false is generally regarded as almost conclusive evidence of malice (Horrocks v Lowe [1975] AC 135 at 150). If a defendant knowingly publishes falsehoods, it is difficult to conceive that they are acting for a purpose protected by the law; such conduct inherently points to an improper motive.

  • Reckless Indifference: Publishing defamatory matter with reckless indifference as to its truth or falsity—that is, publishing without caring whether it is true or false—is treated by the law as equivalent to knowledge of falsity (Horrocks v Lowe [1975] AC 135 at 150). Such recklessness demonstrates a lack of honest belief and is strong evidence from which malice (an improper dominant purpose) can be inferred.

While knowledge of falsity or recklessness are often described as forms of malice, it is perhaps more accurate to understand them as powerful evidence from which the core element of malice—the improper dominant purpose—can be inferred. As discussed in Roberts v Bass (2002) 212 CLR 1 at [78], the absence of a positive, honest belief in the truth of the statement is a significant factor pointing towards potential malice, but it is the underlying improper purpose, often evidenced by such recklessness or knowledge, that constitutes malice itself. This suggests a potential two-stage analysis for the fact-finder: first, assessing the defendant's state of knowledge or belief (e.g., knew it was false, was reckless, honestly believed it true), and second, inferring whether this state of mind, combined with other evidence, reveals a dominant purpose foreign to the privilege.

Distinguishing Malice from Other Conduct

It is essential to distinguish malice from other states of mind or conduct that do not necessarily defeat a defence:

  • Carelessness or Negligence: Malice is not established by mere carelessness, negligence, impulsiveness, irrationality, prejudice, drawing conclusions from insufficient evidence, or failing to verify facts, unless such conduct is so gross as to warrant an inference of reckless indifference to the truth (Horrocks v Lowe [1975] AC 135 at 150). As established in Horrocks v Lowe, honest belief, even if formed carelessly or based on prejudice, can negate malice if the occasion was used for its proper purpose.

  • Strong Language: The use of strong, vehement, or exaggerated language does not, in itself, constitute malice (Horrocks v Lowe [1975] AC 135 at 151). Particularly in contexts such as political debate or a response to an attack, a degree of latitude is allowed. However, language that is utterly disproportionate to the facts or the occasion can be evidence from which an inference of malice might be drawn (Adam v Ward [1917] AC 309 at 339 per Lord Atkinson).

  • Honest Belief: A genuine, positive belief in the truth of the defamatory statement is generally inconsistent with malice, even if that belief is mistaken, prejudiced, or unreasonable, provided the dominant purpose of the publication was proper to the occasion (Horrocks v Lowe [1975] AC 135 at 150). However, the High Court in Roberts v Bass indicated that the absence of an honest belief, while not malice per se, is significant evidence pointing towards it ((2002) 212 CLR 1 at [78]).

  • Political Motive: In the context of political communication, particularly during election campaigns, an intention to cause political damage to an opponent does not, by itself, constitute an improper motive amounting to malice (Roberts v Bass (2002) 212 CLR 1 at [104]-[105]). This principle reflects the constitutional protection afforded to political communication following Lange v Australian Broadcasting Corporation (1997) 189 CLR 520.

3. The Role of Malice in Defeating Defences

General Principle

The rationale for malice defeating defences like qualified privilege and honest opinion lies in the purpose of these defences. They are designed to protect communications made in good faith for legitimate societal or individual purposes (e.g., fulfilling a duty, sharing information on matters of common interest, expressing genuine opinions on public matters). Proof of malice demonstrates that the defendant has abused the protection afforded by the defence, using the occasion or the expression of opinion as a pretext for pursuing an improper objective, such as venting personal spite or knowingly spreading falsehoods (Roberts v Bass (2002) 212 CLR 1 at [62]-[65]).

Statutory Qualified Privilege (s 30 Defamation Act 2005 (WA))

Section 30 of the Act provides a statutory defence of qualified privilege. To establish this defence, the defendant must prove:

  • The recipient had an interest or apparent interest (defined in s 30(2)) in having information on some subject (s 30(1)(a)).

  • The matter was published to the recipient in the course of giving information on that subject (s 30(1)(b)).

  • The conduct of the defendant in publishing the matter was reasonable in the circumstances (s 30(1)(c)). Section 30(3) lists non-exhaustive factors a court may consider in assessing reasonableness, such as the seriousness of the imputation, steps taken to verify, whether the plaintiff's side was sought, and the public interest nature of the matter (Austin v Mirror Newspapers Ltd (1985) 3 NSWLR 354).

However, section 30(4) explicitly states: "For the avoidance of doubt, a defence of qualified privilege under subsection (1) is defeated if the plaintiff proves that the publication of the defamatory matter was actuated by malice."

The requirement of 'reasonable conduct' in s 30(1)(c) and the 'malice' defeater in s 30(4) are distinct concepts. A defendant's conduct might be found unreasonable based on the objective factors in s 30(3) (e.g., failing to verify information adequately) without necessarily rising to the level of subjective malice (Harbour Radio Pty Ltd v Trad (2012) 247 CLR 31 at [33]). Conversely, while less likely, it is theoretically possible for conduct to appear reasonable on its face but still be driven by a dominant improper motive (malice). In practice, however, factors strongly indicating malice, such as knowledge of falsity or reckless indifference, would almost certainly render the publishing conduct unreasonable under s 30(1)(c).

This structure creates a potential two-stage inquiry for statutory qualified privilege. The defendant must first satisfy the court that their conduct was objectively reasonable. Even if they succeed, the plaintiff has a second opportunity to defeat the defence by proving subjective malice. This contrasts with traditional common law qualified privilege, which primarily required the defendant to establish the privileged occasion (duty/interest reciprocity), immediately shifting the onus to the plaintiff to prove malice without a separate 'reasonableness' hurdle for the defendant (Roberts v Bass (2002) 212 CLR 1). Consequently, the statutory defence under section 30 may, in some circumstances, offer less robust protection to publishers than its common law counterpart, a point noted by the High Court in Aktas v Westpac Banking Corporation Ltd (2010) 241 CLR 79.

Honest Opinion (s 31 Defamation Act 2005 (WA))

Section 31 provides a defence for the publication of honest opinion. The core elements require the defendant to prove:

  • The matter was an expression of opinion rather than a statement of fact (s 31(1)(a)).

  • The opinion related to a matter of public interest (s 31(1)(b)).

  • The opinion was based on proper material, meaning material that is substantially true, or published on an occasion of absolute or qualified privilege, or protected by other specified defences (ss 31(5), 31(6)) (Fairfax Media Publications Pty Ltd v Voller (2021) 271 CLR 34).

The defence applies to opinions expressed by the defendant personally (s 31(1)), an employee or agent (s 31(2)), or a third-party commentator whose opinion the defendant publishes (s 31(3)).

The defence under section 31 is defeated if the plaintiff proves the specific state of mind set out in section 31(4). This subsection provides that the defence fails if the plaintiff proves that:

  • (For the defendant's own opinion under s 31(1)): "the opinion was not honestly held by the defendant at the time the defamatory matter was published" (s 31(4)(a)).

  • (For an employee/agent's opinion under s 31(2)): "the defendant did not believe that the opinion was honestly held by the employee or agent at the time the defamatory matter was published" (s 31(4)(b)).

  • (For a commentator's opinion under s 31(3)): "the defendant had reasonable grounds to believe that the opinion was not honestly held by the commentator at the time the defamatory matter was published" (s 31(4)(c)).

While section 31(4) uses the phrase "not honestly held" rather than "actuated by malice," the concepts are functionally very similar in this context (Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245 at [3] per Gleeson CJ). Proving that an opinion was not genuinely held by the person expressing it effectively establishes an improper purpose—the defence is intended to protect genuine expressions of opinion, not statements dishonestly presented as opinion. The focus is squarely on the subjective belief (or lack thereof) of the relevant opinion holder at the time of publication.

The distinct terminology used in the Act—"actuated by malice" for qualified privilege (s 30(4)) versus "opinion was not honestly held" for honest opinion (s 31(4))—is noteworthy. While both require proof of an improper subjective state, this linguistic variation might influence how arguments are framed. For section 30, arguments might encompass a broader range of improper motives potentially extraneous to the truth of the statement itself. For section 31, the argument is more tightly focused on whether the opinion expressed was genuinely believed by the relevant person.

Common Law Defences

Section 24 of the Act preserves defences available under the general law, except to the extent the Act provides otherwise. Malice remains relevant to defeating key common law defences:

  • Common Law Qualified Privilege: This defence arises in situations involving a reciprocity of duty and interest between publisher and recipient, or where a statement is made in reply to an attack (Toogood v Spyring (1834) 1 CM & R 181; 149 ER 1044). It is defeated if the plaintiff proves the publication was actuated by malice, understood as an improper or foreign purpose, applying the principles from Horrocks and Roberts (Bashford v Information Australia (Newsletters) Pty Ltd (2004) 218 CLR 366).

  • Common Law Fair Comment: This defence protects expressions of opinion on matters of public interest based on true facts (Silkin v Beaverbrook Newspapers Ltd [1958] 1 WLR 743). It is defeated by proof of malice, typically established by showing the comment did not represent the defendant's genuine opinion or was motivated by an improper purpose (London Artists Ltd v Littler [1969] 2 QB 375 at 392-393). While largely superseded by the statutory defence in s 31, the common law defence remains available (Manock v Channel Seven Adelaide Pty Ltd [2006] SASC 192).

4. Proving Malice

Burden and Standard of Proof

The legal burden of proving that a publication was actuated by malice rests squarely and solely on the plaintiff (Horrocks v Lowe [1975] AC 135 at 149-150). Once the defendant establishes the factual basis for a defence capable of being defeated by malice (e.g., the existence of a privileged occasion or the elements of honest opinion), the onus shifts to the plaintiff to prove, on the balance of probabilities, that the defendant acted with the requisite malice (Roberts v Bass (2002) 212 CLR 1 at [76]). The evidence adduced by the plaintiff must be "credible, substantial evidence and not a surmise or a minimal amount of evidence" sufficient to support a positive finding of malice (Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 51).

Pleading Requirements

A plaintiff who intends to allege malice to defeat a defence must plead it specifically. It is not sufficient merely to deny the defence in the statement of claim or rely on an implied joinder of issue. Malice must be raised affirmatively in a Reply to the defendant's Defence (Clyne v The New South Wales Bar Association (1960) 104 CLR 186 at 203).

Furthermore, the pleading must contain full particulars of the facts, matters, and circumstances relied upon by the plaintiff to establish the allegation of malice (Bailey v Australian Broadcasting Corporation [1995] Aust Torts Reports ¶81-336). General allegations or boilerplate assertions of malice are insufficient and liable to be struck out. In Western Australia, Order 20, rule 13(1) of the Rules of the Supreme Court 1971 (WA) requires that particulars be given of any pleading alleging a condition of mind, such as malice. Order 20, rule 8 also requires specific pleading of matters which might otherwise take the opposing party by surprise.

The requirement for detailed particulars is not merely procedural; it serves a crucial function in defining the scope of the factual dispute regarding the defendant's state of mind. It compels the plaintiff to articulate the specific basis for the malice allegation at an early stage, enabling the defendant to understand the case they must meet and preventing trial by ambush (Bailey v Australian Broadcasting Corporation [1995] Aust Torts Reports ¶81-336). The plaintiff will generally be confined at trial to proving malice based on the particulars pleaded.

Evidence of Malice

Since malice pertains to the defendant's subjective state of mind or dominant purpose, direct evidence is often unavailable. Consequently, malice must usually be inferred from circumstantial evidence (Roberts v Bass (2002) 212 CLR 1 at [79]). This evidence can be broadly categorised as intrinsic (arising from the publication itself) and extrinsic (arising from circumstances outside the publication).

  • Intrinsic Evidence:

    • Language: The tone and terms of the publication. Language that is excessive, vitriolic, sensationalised, or clearly disproportionate to the facts or the occasion may suggest an improper motive (Horrocks v Lowe [1975] AC 135 at 151). However, caution is required, as strong or prejudiced language alone does not equate to malice, especially in certain contexts (Adam v Ward [1917] AC 309 at 339-340).

    • Mode and Extent of Publication: Publishing the defamatory matter more widely than the privileged occasion warrants can indicate malice (Roberts v Bass (2002) 212 CLR 1 at [104]). For example, broadcasting allegations to the public when the duty/interest relationship only exists with a specific individual.

    • Inclusion of Irrelevant Matter: Including defamatory statements that are clearly irrelevant to the purpose of the privileged occasion may suggest the occasion is being used as a cloak for malice (Adam v Ward [1917] AC 309 at 334).

    • Lack of Factual Basis: A complete absence of any foundation for the defamatory statement within the publication itself might support an inference of recklessness or improper motive (Webb v Bloch (1928) 41 CLR 331 at 363-364).

    • Internal Evidence of Falsity: The publication itself might contain information known to the defendant that contradicts the defamatory imputation (Turner v Metro-Goldwyn-Mayer Pictures Ltd [1950] 1 All ER 449 at 461).

  • Extrinsic Evidence:

    • Defendant's Knowledge or Belief: Evidence that the defendant knew the statement was false, or had no positive belief in its truth, or was recklessly indifferent (Horrocks v Lowe [1975] AC 135 at 150).

    • Defendant's Conduct: Evidence of prior hostility, arguments, disputes, threats, or expressions of ill will between the defendant and the plaintiff can indicate an underlying improper motive (Thomas v Mowbray [1935] 2 KB 113 at 120).

    • Sources and Verification: Evidence that the defendant relied on sources known to be unreliable, deliberately avoided obvious sources of information, or failed to make reasonable inquiries or attempts to verify the defamatory allegations, particularly when serious and easily checkable, can point to reckless indifference (Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 51-52 per Brennan J).

    • Response to Contradiction/Apology: Evidence that the defendant refused to listen to or publish an explanation or contradiction offered by the plaintiff, or unreasonably refused to apologise or retract the statement after its falsity was demonstrated, can be relevant (Wakley v Cooke (1849) 4 Ex 511 at 515-516; 154 ER 1315 at 1317).

    • Repetition: Unjustified repetition of the defamatory statement, especially after its falsity has been pointed out, may indicate malice (Clark v Molyneux (1877) 3 QBD 237 at 247).

    • Evidence of Plan or Conspiracy: Evidence showing the publication was part of a deliberate plan or conspiracy to injure the plaintiff (Angel v H H Bushell & Co Ltd (1968) 1 QB 813 at 831-832).

    • Attempts to Mislead or Conceal: Evidence that the defendant attempted to mislead the court or conceal relevant facts about their state of mind or sources (Gouldsmith v Carruthers (1798) 1 Camp 121; 170 ER 906).

Inferring Malice

The task for the court or jury is to consider the whole of the evidence—both intrinsic and extrinsic—and determine whether, on the balance of probabilities, it supports an inference that the defendant's dominant purpose in publishing the defamatory matter was improper and foreign to the occasion or defence relied upon (Roberts v Bass (2002) 212 CLR 1 at [75]-[79]). The inference drawn must be a reasonable and definite one based on the evidence, not mere speculation or conjecture (Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 51-52).

The inherent difficulty in proving a subjective state of mind means that establishing malice can be challenging for plaintiffs (Horrocks v Lowe [1975] AC 135 at 149-151). The reliance on circumstantial evidence and inference makes the assessment highly fact-sensitive and potentially less predictable than proving objective elements.

5. Case Law Illustrations (Worked Examples)

Examining specific cases helps illustrate how the principles of malice are applied in practice.

Malice Established

  • Roberts v Bass (2002) 212 CLR 1 (Regarding Appellant Roberts):

    • Facts: During a South Australian election campaign, Mr Roberts authorised the publication of three documents targeting the incumbent, Mr Bass. These included a mocking postcard implying a taxpayer-funded holiday, a pamphlet containing a forged Ansett Frequent Flyer statement suggesting misuse of travel entitlements, and a 'how-to-vote' card with various untrue allegations concerning Mr Bass's policies and activities (e.g., junkets, secret hospital deals, gun rights stance).

    • Finding on Malice (Roberts): Although the High Court majority ultimately allowed Roberts' appeal based on the application of Lange privilege principles, the lower courts and dissenting/concurring judgments in the High Court provide insight into evidence supporting malice. The trial judge found Roberts' dominant purpose went beyond mere political damage to intending to lower Bass's reputation generally, and that he published allegations recklessly, without caring if they were true (Roberts v Bass (2002) 212 CLR 1 at [39]-[42] per Gleeson CJ). The use of a forged document was particularly indicative of an improper motive. Gleeson CJ and Hayne J in the High Court found Roberts acted with malice due to recklessness regarding truth or falsity ((2002) 212 CLR 1 at [216]-[219] per Hayne J). Callinan J also found recklessness ((2002) 212 CLR 1 at [248]).

    • Relevance: This case demonstrates how actions like forgery and the dissemination of serious allegations known to be untrue or made with reckless indifference can constitute strong evidence of malice, potentially overcoming the latitude given to political speech. It underscores the fact-intensive nature of the inquiry into the publisher's dominant motive.

  • Smith v Stevens [2022] WASC 116 (Western Australia):

    • Facts: A director (Stevens) of a WA Aboriginal Corporation emailed a document containing defamatory allegations (mismanagement, dishonesty, breach of duty) about two fellow directors (Smith, Camille) to the other board members.

    • Finding of Malice: The WA Supreme Court found that although the communication occurred on an occasion of qualified privilege (directors sharing a common interest in corporate governance), the defence under both common law and s 30 of the Act was defeated because Stevens was actuated by malice (Smith v Stevens [2022] WASC 116 at [328]-[334]). Key evidence supporting this finding included: (1) Stevens' own admission that he prepared the document partly out of a desire to retaliate against perceived attacks from Camille; (2) Stevens' failure to make sufficient inquiries to verify many of the serious allegations, indicating recklessness as to their truth; and (3) Stevens' poor attendance at board meetings, which undermined his claim to be acting solely out of genuine concern for the Corporation's governance.

    • Relevance: This WA authority provides a clear example of how extrinsic evidence (admission of retaliatory motive, poor attendance) combined with intrinsic factors (unverified serious allegations) can establish a dominant improper purpose (malice), thereby defeating qualified privilege even where a legitimate common interest exists between publisher and recipient.

Malice Not Established / Defence Upheld

  • Roberts v Bass (2002) 212 CLR 1 (Regarding Appellant Case):

    • Facts: The second appellant, Mr Case, distributed the 'Orange Pamphlet' (the how-to-vote card containing untrue statements about Bass) at a polling booth for several hours on election day. The pamphlet had been prepared and authorised by Mr Roberts.

    • Finding on Malice (Case): The High Court majority held that malice had not been established against Mr Case (Roberts v Bass (2002) 212 CLR 1 at [80]-[82]). Although the material was defamatory and published on a privileged occasion (political communication), the evidence did not demonstrate that Case himself possessed an improper motive. He was merely distributing material prepared by Roberts, and there was insufficient evidence to show he shared Roberts' recklessness or improper purpose, or that he acted for any dominant purpose other than participating in the election campaign.

    • Relevance: This illustrates the important principle that malice must generally be proven against each individual joint publisher (unless vicarious liability applies) (Egger v Viscount Chelmsford [1965] 1 QB 248 at 263). The malice of the author (Roberts) was not automatically imputed to the distributor (Case). It also reinforces that a motive to participate in political campaigning, even if aimed at damaging an opponent, is not, in itself, malice.

  • Aktas v Westpac Banking Corporation (2010) 241 CLR 79:

    • Facts: A bank mistakenly applied a court order to the wrong account, leading it to dishonour cheques drawn on that account with the notation "Refer to drawer," which was held to be defamatory.

    • Finding on Malice: The court held that the bank's communication ("Refer to drawer") was made on an occasion of qualified privilege (a communication made in the conduct of its affairs where its interest was concerned). Crucially, the court found that the bank's mistake in applying the order did not, by itself, constitute malice or destroy the privilege. The plaintiff needed to prove actual malice—an improper motive beyond the error—on the part of the bank, which was not established on the facts.

    • Relevance: This case reinforces that negligence or error, even if leading to a defamatory publication on a privileged occasion, does not automatically equate to malice. Malice requires proof of a specific, subjective improper state of mind, such as knowledge of falsity, reckless indifference, or an intention to injure, separate from the mere fact of the mistake (Horrocks v Lowe [1975] AC 135 at 149).

Comparing these cases underscores that findings of malice turn heavily on the specific evidence available regarding the defendant's state of mind and dominant motive at the time of publication. General ill will or the publication of defamatory material on a privileged occasion is insufficient; the plaintiff must adduce specific evidence, whether intrinsic or extrinsic, pointing clearly to an improper purpose that actuated that particular defendant's publication.

6. Practical Guidance (WA Focus)

Assessing Evidence of Malice

Judicial officers and practitioners assessing potential malice should consider:

  • Cumulative Effect: Evaluate the combined weight of all evidence suggesting malice. Individual pieces might be weak, but together they may paint a compelling picture of improper motive (Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 51).

  • Context: The context of the publication is crucial. Greater latitude may be afforded to political speech or statements made in reply to attack compared to unsolicited private communications (Roberts v Bass (2002) 212 CLR 1 at [104]-[105]).

  • Failure to Apologise/Retract: While relevant extrinsic evidence, a refusal to apologise or retract should be assessed cautiously, considering the reasons given (if any) and the overall circumstances. It is not determinative of malice (Loveday v Sun Newspapers Ltd (1938) 59 CLR 503 at 515-516).

  • Verification Efforts: Close attention should be paid to the nature of the allegations, the defendant's sources, and the steps taken (or not taken) to verify the information, particularly in relation to the factors listed for reasonableness under s 30(3) of the WA Act. A cavalier approach to truth-checking serious allegations can support an inference of reckless indifference (Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 51-52 per Brennan J).

Pleading and Particulars

Practitioners must ensure malice is pleaded in a Reply with full and precise particulars, complying with Order 20, rules 8 and 13 of the Rules of the Supreme Court 1971 (WA). Failure to do so risks the pleading being struck out or the plaintiff being unable to lead evidence on malice at trial. Defendants should scrutinise the particulars provided and consider seeking further and better particulars if they are inadequate (Bailey v Australian Broadcasting Corporation [1995] Aust Torts Reports ¶81-336).

Guidance on Judicial Directions to Juries on Malice (WA Context)

Given that section 21 of the Defamation Act 2005 (WA) permits parties to elect for trial by jury on liability issues (including malice), clear and accurate judicial directions are paramount in Western Australia. Section 22 outlines the respective roles of the judicial officer and jury.

  • Threshold Question for Judge: The trial judge must first determine if there is any evidence adduced by the plaintiff that is reasonably capable of supporting a finding of malice. If there is no such evidence, the issue of malice should be withdrawn from the jury, and the defence (if otherwise established) will succeed (Adam v Ward [1917] AC 309 at 348 per Lord Sumner).

  • Content of Jury Directions: Where there is sufficient evidence, the judge's directions on malice should cover the following points:

    1. Identify the specific defence(s) raised (e.g., statutory qualified privilege under s 30, honest opinion under s 31) to which malice is relevant.

    2. Explain that if the jury finds the elements of the defence established by the defendant, the defence succeeds unless the plaintiff proves malice (or lack of honest belief for s 31) (Horrocks v Lowe [1975] AC 135 at 149).

    3. Clearly state that the burden of proving malice rests solely on the plaintiff (Horrocks v Lowe [1975] AC 135 at 149).

    4. Explain the standard of proof: the plaintiff must prove malice on the balance of probabilities (Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 170-171).

    5. Define malice: the use of the occasion for a dominant purpose or motive foreign to the purpose for which the law grants the protection (e.g., spite, ill will, intention to injure unrelated to the duty/interest) (Roberts v Bass (2002) 212 CLR 1 at [75]-[76]).

    6. Explain the relevance of the defendant's state of mind regarding truth: publishing knowing the matter is false, or with reckless indifference to its truth or falsity (not caring if it is true or false), is strong evidence from which malice may be inferred (Horrocks v Lowe [1975] AC 135 at 150).

    7. Distinguish malice from conduct that does not constitute malice: mere carelessness, error, negligence, impulsiveness, prejudice, irrationality, or strong language, unless these factors demonstrate reckless indifference or an improper dominant purpose (Horrocks v Lowe [1975] AC 135 at 150-151).

    8. For the s 31 honest opinion defence, direct the jury specifically on the test in s 31(4): whether the plaintiff has proved, on the balance of probabilities, that the opinion was not honestly held by the relevant person (defendant, employee/agent, or commentator, as applicable) (Channel Seven Adelaide Pty Ltd v Manock (2007) 232 CLR 245 at [3] per Gleeson CJ).

    9. Instruct the jury to consider all the relevant evidence, both intrinsic (e.g., language of the publication) and extrinsic (e.g., defendant's conduct, knowledge, inquiries), in deciding whether malice has been proven (Roberts v Bass (2002) 212 CLR 1 at [78]-[79]).

    10. If there are multiple defendants, direct the jury that malice must be considered and proven individually against each defendant against whom it is alleged (unless vicarious liability is applicable) (Egger v Viscount Chelmsford [1965] 1 QB 248 at 263). Reference should be made to the specific WA Act sections (ss 21, 22, 30(4), 31(4)).

The availability of jury trials for liability in WA places a significant onus on judges to ensure these complex concepts are conveyed accurately and understandably to lay jurors (Abram v Channon [1934] WAR 90 at 92-93). The nuances differentiating malice from carelessness, recklessness as evidence versus malice itself, and the specific test for honest opinion require careful formulation.

Furthermore, the principle that malice must be proven individually against joint publishers carries significant practical weight in multi-defendant cases common in media litigation (e.g., involving author, editor, and publishing company) (Egger v Viscount Chelmsford [1965] 1 QB 248 at 263). Pleadings, evidence, and jury directions must meticulously differentiate between defendants, as a finding of malice against one does not automatically defeat the defence for others who lacked the requisite improper state of mind (absent vicarious liability).

Summary Disposal

While malice is typically a question of fact best determined at trial after hearing all the evidence (Barbaro v Amalgamated Television Services Pty Ltd (1985) 1 NSWLR 30 at 51), a defendant faced with a Reply pleading malice may consider a strike out application if the particulars pleaded are manifestly insufficient to support a finding of malice. However, courts are generally cautious about determining issues involving state of mind summarily (Spencer v Commonwealth of Australia (2010) 241 CLR 118).

7. Conclusion

Malice remains a crucial, albeit complex, concept in Western Australian defamation law. Defined by common law principles focusing on the defendant's dominant improper purpose at the time of publication, it serves as a vital control mechanism, ensuring that defences designed to protect freedom of expression and facilitate necessary communications are not abused. Proof of malice, which rests entirely with the plaintiff, can defeat the significant defences of statutory qualified privilege (s 30) and honest opinion (s 31), as well as their common law counterparts.

Establishing malice requires more than demonstrating error, carelessness, or strong language; it necessitates credible, substantial evidence, often circumstantial, pointing to a subjective state of mind involving knowledge of falsity, reckless indifference to the truth, or a dominant motive foreign to the purpose of the defence, such as personal spite or vindictiveness. The case law, including decisions like Horrocks v Lowe, Roberts v Bass, and the WA case Smith v Stevens, provides essential guidance on the types of conduct and evidence from which malice may be inferred.

For judges and practitioners in Western Australia, a thorough understanding of the common law definition of malice, its specific application under sections 30(4) and 31(4) of the Defamation Act 2005 (WA), the strict pleading requirements, the burden and standard of proof, and the nuances of directing juries on this issue is indispensable for the proper conduct and determination of defamation proceedings. Ultimately, the careful application of the principles surrounding malice helps maintain the delicate balance between protecting individual reputation and safeguarding freedom of speech within the state.

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Injurious Falsehood: Proof of Actual Damage

I. Introduction: The Tort of Injurious Falsehood

A. Definition and Essential Elements in Australia

Injurious falsehood, alternatively termed malicious falsehood, is an action established at common law. It serves to protect plaintiffs against provable economic loss resulting from false and malicious statements made by a defendant concerning the plaintiff's business, property, or goods. This focus on economic or commercial interests distinguishes it fundamentally from defamation, which primarily protects personal reputation.

The essential elements of the tort of injurious falsehood in Australia were authoritatively stated by Gummow J in the High Court decision of Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388, drawing upon established common law principles. To succeed, a plaintiff must establish the following four elements:

  1. A false statement of or concerning the plaintiff's goods or business.

  2. Publication of that statement by the defendant to a third person.

  3. Malice on the part of the defendant.

  4. Proof by the plaintiff of actual damage suffered as a direct and natural result of the statement. (Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at [9])

Crucially, the plaintiff bears the onus of proving each of these elements, including the falsity of the statement, the existence of malice, and the occurrence of actual damage. This contrasts sharply with defamation, where damage to reputation is often presumed (subject to applicable statutory thresholds such as 'serious harm'), and the falsity of the defamatory statement is presumed unless the defendant proves otherwise through the defence of justification.

The considerable burden placed on the plaintiff, particularly the requirements to prove malice and actual damage, contributes to injurious falsehood being a less frequently litigated cause of action compared to defamation. Nevertheless, its significance has arguably increased following the introduction of uniform defamation legislation across Australia (see, for example, the Defamation Act 2005 (WA)). Section 9 of this legislation restricts the ability of most corporations, particularly those trading for profit or employing 10 or more persons, to sue for defamation. Consequently, for such corporations seeking redress for malicious falsehoods causing economic harm, injurious falsehood often represents the primary, if not the only, available cause of action.

The tort directly addresses the harm—economic loss stemming from malicious lies about a business or its offerings—that these corporations may suffer. Furthermore, unlike defamation, claims in injurious falsehood are not constrained by the 'single meaning' rule, potentially allowing for greater flexibility in pleading the harmful implications of a statement. Thus, despite the acknowledged difficulties in proof, injurious falsehood occupies a necessary space in the legal landscape, providing a remedy tailored to the protection of commercial interests against specific forms of malicious attack.

B. Distinguishing Injurious Falsehood from Defamation (Focus on Malice and Damage)

While both torts involve harm arising from published statements, the distinctions between injurious falsehood and defamation are critical.

Malice: Malice is an essential ingredient of injurious falsehood. It signifies more than mere negligence or carelessness; it requires proof that the defendant published the falsehood with an improper motive, such as an intent to injure the plaintiff without just cause or excuse. Malice can be established by showing the defendant knew the statement was false, acted with reckless indifference as to its truth or falsity (amounting to willful blindness), or was actuated by some dishonest or improper purpose. An honest belief in the truth of the statement, even if negligently formed, will generally negate malice (Seafolly Pty Ltd v Madden [2012] FCA 1346). In contrast, malice is generally not required to establish liability in defamation, although it may defeat certain defenses (like qualified privilege or honest opinion) and can be relevant to the assessment of aggravated damages.

Damage: This is the central focus of this article. Injurious falsehood is actionable only upon proof of actual damage, meaning quantifiable economic or pecuniary loss. The damage is the "gist of the action" (Ratcliffe v Evans [1892] 2 QB 524). Defamation, historically, is actionable per se (without proof of damage), as harm to reputation is presumed upon publication of defamatory matter. However, this common law position has been modified in jurisdictions that have adopted a 'serious harm' threshold as an element of the cause of action for defamation.

Falsity: In injurious falsehood, the plaintiff must plead and prove that the defendant's statement was false. In defamation, the law presumes the defamatory statement is false; the burden falls on the defendant to prove the truth of the imputation(s) via the defense of justification.

Standing (Corporations): As noted earlier, corporations that are precluded from suing in defamation by statute (typically for-profit corporations or those with 10 or more employees) may still bring an action for injurious falsehood if they can prove the requisite elements, including actual damage.

Limitation Period: The limitation period for injurious falsehood, as an action on the case, is generally six years. This contrasts with the shorter one-year limitation period (subject to potential extension) applicable to defamation actions under the uniform Defamation Acts.

II. The Requirement of Actual Damage

A. Nature of 'Actual Damage': Provable Economic Loss

The cornerstone of a successful claim in injurious falsehood is the proof of "actual damage." This term signifies demonstrable financial or pecuniary loss suffered by the plaintiff as a consequence of the defendant's malicious falsehood. As Bowen LJ stated in the seminal case of Ratcliffe v Evans [1892] 2 QB 524, actual damage is the very "gist of the action."

The loss must be capable of estimation in monetary terms. Unlike defamation, where damages can compensate for intangible harm like hurt feelings or damage to personal standing, injurious falsehood does not provide a remedy for mere injury to feelings or reputation in the absence of consequent economic loss.

Historically, there was some ambiguity regarding the scope of recoverable damage, with references sometimes made to "special damage." "Special damage" in tort law often carries a specific meaning, referring to pecuniary losses that have accrued up to the date of trial and which must be specifically pleaded and proved with particularity. However, the High Court's formulation in Palmer Bruyn, employing the term "actual damage" (Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at [9]), suggests a broader compass consistent with the language in Ratcliffe. It indicates that the tort compensates for the full measure of the economic detriment flowing as a natural and probable consequence of the falsehood, encompassing not only past losses but also provable future economic losses. This aligns the assessment of damages in injurious falsehood more closely with general tort principles, which aim to compensate the plaintiff for all foreseeable consequences of the wrongful act, subject to the specific rules of causation and remoteness applicable to intentional torts. Therefore, plaintiffs are entitled to claim for demonstrable ongoing business detriment or the loss of future commercial opportunities directly caused by the defendant's malicious statement, provided such losses can be adequately proven.

B. Onus and Standard of Proof

The plaintiff carries the legal burden of proving, on the balance of probabilities, both the existence of actual damage and the causal link between that damage and the defendant's malicious publication.

The standard of proof required was articulated in Ratcliffe v Evans [1892] 2 QB 524 at 533: "As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable having regard to the circumstances and to the nature of the acts themselves by which the damage is done." This requires plaintiffs to present the best evidence reasonably available to demonstrate their loss. While absolute mathematical precision may not always be attainable, particularly when proving a general loss of business, a plaintiff must provide sufficient evidence to allow the court to quantify the loss with a reasonable degree of confidence.

This evidentiary requirement represents a significant practical hurdle for plaintiffs. Proving that a specific, quantifiable economic loss was directly caused by the defendant's statement, rather than by other market forces, competitor actions, or internal business factors, can be exceptionally challenging. The difficulty lies in isolating the impact of the falsehood amidst the complexities of commerce. This often necessitates sophisticated analysis, potentially involving forensic accountants or market experts, to dissect financial data, model counterfactual scenarios ('but for' the falsehood), and attribute loss specifically to the defendant's conduct. The failure to adduce "concrete evidence" demonstrating both the fact of damage and its causal connection to the defendant's statement was fatal to the plaintiff's claim in Seafolly Pty Ltd v Madden [2012] FCA 1346, highlighting the critical importance and difficulty of meeting this evidentiary burden. This inherent difficulty is a primary reason why injurious falsehood is considered a challenging and relatively infrequently pursued action.

C. Exception: Injunctive Relief and Probable Damage

An important qualification to the requirement of proving suffered actual damage arises in the context of injunctive relief. Where a plaintiff acts promptly to seek an interlocutory injunction to restrain the publication or further publication of an injurious falsehood, and the injunction is granted, the claim may potentially be maintained even if quantifiable damage has not yet fully accrued.

In Mahon v Mach 1 Financial Services Pty Ltd (No 2) [2013] NSWSC 10, the Supreme Court of New South Wales held that injurious falsehood could be maintained without proof of actual damage where an early interlocutory injunction had prevented the very damage that might otherwise have ensued. In such circumstances, when deciding whether to grant interlocutory relief (and potentially final relief if damage was imminent but averted), the court may focus on whether actual damage is the reasonably probable consequence of the defendant's publication if allowed to continue unrestrained. This provides a crucial mechanism for preventative justice, allowing courts to intervene before the full economic harm materializes, a particularly relevant consideration given the speed and reach with which falsehoods can spread in the digital age.

III. Types of Recoverable Actual Damage

Actual damage in injurious falsehood can manifest in several forms. The key is that the loss must be economic or pecuniary in nature and causally linked to the defendant's statement.

A. Loss of Identifiable Customers or Sales

The most direct and often easiest form of actual damage to prove is the loss of specific, identifiable custom or transactions. This occurs where the plaintiff can point to particular customers who ceased dealing with the plaintiff, or specific contracts or sales that were lost, directly because of the defendant's falsehood.

Evidence to support such a claim typically involves:

  • Testimony from the former customer(s) confirming that they withdrew their custom or cancelled an order due to the defendant's statement.

  • Documentary evidence, such as emails or letters from customers explicitly referencing the falsehood as the reason for terminating a relationship or cancelling a contract.

  • Business records (e.g., order books, client lists) demonstrating the cessation of business from specific sources immediately following the publication of the falsehood.

Worked Example: A defendant maliciously and falsely publishes that a specific batch of the plaintiff baker's bread contained glass shards. The plaintiff can prove actual damage by adducing evidence from a regular wholesale customer (e.g., a local café) who provides testimony and confirms in writing that they cancelled their standing order for that batch and subsequent orders due to safety concerns arising directly from reading the defendant's publication. The value of the cancelled orders constitutes provable actual damage.

B. General Loss of Business or Custom

1. The Principle in Ratcliffe v Evans [1892] 2 QB 524

Not all damage resulting from an injurious falsehood can be traced to specific lost customers. Where the falsehood is of a nature "calculated in the ordinary course of things to produce, and where they do produce, actual damage" in the form of a general decline in business, the law permits recovery for this general loss. The landmark decision in Ratcliffe established that in such circumstances, evidence of a general diminution of business is admissible and sufficient to prove actual damage, without the plaintiff needing to identify and call every customer who was deterred.

This principle applies particularly where the falsehood is likely to deter potential customers generally, rather than specific individuals known to the plaintiff. Examples include falsely stating that a business has ceased trading (as in Ratcliffe itself), disparaging the quality or safety of goods sold widely to the public, or impugning the title to property offered for general sale.

2. Evidentiary Requirements for Proving General Loss

While Ratcliffe provides flexibility, proving a general loss of business still requires rigorous evidence demonstrating both a decline in trade following the publication and a causal connection between the decline and the defendant's falsehood. Simply showing a downturn after the publication is insufficient; the plaintiff must provide evidence supporting the inference that the falsehood was, on the balance of probabilities, a material cause of that downturn.

Evidence commonly adduced includes:

  • Financial Records: Detailed financial statements (profit and loss, balance sheets), sales reports, customer data, budgets, and forecasts, comparing the period after the publication with historical performance, industry benchmarks, or prior projections.

  • Operational Data: Evidence of reduced customer inquiries, website traffic, footfall (for physical businesses), or order volumes.

  • Market Analysis: Evidence comparing the plaintiff's business performance against relevant market trends or competitor performance to demonstrate that the plaintiff's decline is anomalous and likely attributable to the falsehood rather than general market conditions.

  • Expert Evidence: Reports from forensic accountants or economists are often crucial. Experts can analyze complex financial data, perform statistical analyses, model the likely performance of the business 'but for' the falsehood, discount for other contributing factors (e.g., economic climate, competition, internal issues), and provide a quantified estimate of the loss attributable to the falsehood.

  • Evidence of Impact: Surveys, evidence of negative online sentiment, or increased customer complaints referencing the falsehood can help establish the connection.

The plaintiff must satisfy the court that the general loss claimed is a natural and probable consequence of the defendant's statement and not primarily due to other unrelated factors.

The principle established in Ratcliffe remains vital, acknowledging the difficulty of tracing every lost sale when a falsehood has a widespread impact. However, the methods available for proving such loss have evolved significantly since 1892. While Ratcliffe allows proof of general loss, contemporary practice demands that plaintiffs utilize available data and analytical tools to provide the court with the most robust and particular evidence reasonably possible. Modern courts, accustomed to sophisticated financial analysis in commercial litigation, will likely expect more than a simple 'before and after' comparison of turnover, particularly where other factors could plausibly explain a decline. Failure to provide persuasive evidence linking the general decline specifically to the falsehood, potentially through expert analysis ruling out alternative causes, risks the claim failing for lack of proof of damage, as underscored by the outcome in Seafolly. The standard remains one of reasonable particularity, but what is considered 'reasonable' evolves with the available means of proof.

Worked Example: A defendant competitor maliciously publishes false technical specifications suggesting the plaintiff's widely sold electronic component is unreliable under certain conditions. The plaintiff cannot identify every potential customer deterred but provides: (i) Verified sales data showing a significant and sustained drop in sales volume commencing shortly after the publication, contrasting sharply with prior stable sales and the positive performance of competitors selling similar components. (ii) A detailed forensic accounting report analyzing the sales data, market conditions, and the plaintiff's marketing efforts, concluding that, after accounting for other variables, the publication caused a specific percentage drop in sales volume, and quantifying the resulting lost profit. (iii) Evidence from distributors reporting increased customer concerns about reliability following the publication. This collective evidence could satisfy the court of a general loss of business caused by the falsehood, consistent with Ratcliffe.

C. Expenses Reasonably Incurred in Counteracting the Falsehood

A plaintiff may recover as actual damage the reasonable expenses they have incurred in taking steps to counteract the negative effects of the defendant's injurious falsehood. This head of damage recognizes that mitigating the harm caused by a malicious publication often requires proactive expenditure.

Examples of potentially recoverable expenses include:

  • Costs associated with corrective advertising campaigns.

  • Fees paid to public relations consultants to manage the fallout from the falsehood.

  • Costs of communicating directly with customers, suppliers, or distributors to reassure them and correct the false information.

  • Expenses related to obtaining independent verification or reports to refute the falsehood (e.g., safety audits, technical assessments).

To be recoverable, the expenditure must satisfy several criteria:

  1. It must have been actually incurred.

  2. It must have been incurred as a direct consequence of the defendant's falsehood.

  3. It must have been a reasonable and proportionate response to the publication and its likely impact.

Evidence required would typically include invoices, receipts, contracts for services, and potentially expert opinion on the reasonableness and necessity of the expenditure in the circumstances.

Worked Example: Following a defendant's malicious and false publication questioning the structural integrity of the plaintiff developer's new apartment building, the plaintiff commissions an urgent independent engineering report to verify the building's safety. The plaintiff then distributes a summary of the positive report to all potential purchasers and existing contract holders and places advertisements in local media highlighting the findings. The documented costs of the engineering report and the reasonable costs of the targeted communications and advertising aimed at counteracting the specific falsehood are potentially recoverable as actual damage.

IV. Causation: Linking the Falsehood to the Loss

A. Establishing the Causal Nexus

Proof of actual damage alone is insufficient; the plaintiff must also establish a causal link between the damage suffered and the defendant's tortious conduct – specifically, the malicious publication of the falsehood. The court must be satisfied, on the balance of probabilities, that the defendant's statement was a material cause of the plaintiff's loss. A mere temporal correlation – loss occurring after publication – does not automatically equate to causation.

B. The 'Natural and Probable Consequence' Test

The test for remoteness of damage in injurious falsehood requires the plaintiff to show that the actual damage suffered was the "direct and natural result" or the "natural and probable consequence" of the defendant's publication. This principle, affirmed by Gummow J in Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388 at [9], citing Ratcliffe, governs the extent of loss for which the defendant will be held liable. As injurious falsehood is an intentional tort (requiring malice), this test may permit recovery for consequences that might be considered too remote under the 'reasonable foreseeability' test typically applied in negligence actions. The focus is on the consequences naturally flowing from the intentional wrongdoing.

C. Analysis of Causation in Palmer Bruyn & Parker Pty Ltd v Parsons (2001) 208 CLR 388

The High Court's decision in Palmer Bruyn provides critical guidance on causation in injurious falsehood. The appellant (Palmer Bruyn, a surveyor) suffered the loss of a retainer with McDonald's after a newspaper published an article reporting on a "bogus letter." This letter, containing false statements about the appellant, had been created and initially published maliciously by the respondent (Parsons) to a small group, intending ridicule.

The central issue was whether the appellant's loss (the termination of the McDonald's contract) was caused by Parsons' original malicious publication of the forged letter. The High Court (by majority) held that it was not. The Court found that the damage resulted from the publication of the newspaper report, which was a separate act by a third party and differed in its nature and impact from Parsons' initial, limited publication. Parsons was not legally responsible for the newspaper's republication. Therefore, the necessary causal connection between Parsons' actionable publication (the initial limited one) and the damage suffered was broken.

The significance of Palmer Bruyn lies in its emphasis on linking the proven damage directly to the specific publication for which the defendant is legally responsible and which constitutes the tort. The 'natural and probable consequence' test must be applied to that specific tortious act. Subsequent republications or actions by third parties, even if foreseeable in a general sense, may constitute intervening acts (novus actus interveniens) that sever the chain of causation leading back to the defendant's original malicious statement, unless the defendant intended or authorized the republication, or it was the natural and probable result of the original publication in circumstances where the third party was likely to repeat it. This requires careful identification of the precise tortious publication relied upon by the plaintiff and rigorous proof that the claimed loss flowed naturally and probably from that specific publication.

D. Difficulties in Proving Causation: Seafolly Pty Ltd v Madden [2012] FCA 1346

The practical challenge of establishing causation is well illustrated by the Seafolly case. Ms Madden published statements on Facebook and via email falsely alleging that Seafolly, a swimwear company, had copied her designs. Seafolly brought proceedings alleging, among other things, injurious falsehood.

Despite findings that Madden's statements were false and arguably made with reckless indifference amounting to malice, the injurious falsehood claim ultimately failed. The primary reason for the dismissal was Seafolly's inability to adduce sufficient "concrete evidence" to prove, on the balance of probabilities, that Madden's specific statements had actually caused it to suffer quantifiable economic loss.

Seafolly underscores the difficulty plaintiffs face in isolating the impact of specific statements (particularly those made online) within a dynamic commercial environment. Proving that a decline in sales, or loss of specific opportunities, was directly attributable to the defendant's falsehood, rather than myriad other factors like competition, changing trends, pricing, or general market conditions, requires persuasive and specific evidence that was found lacking in that case.

V. Quantification of Damages and Evidentiary Matters

A. Principles of Assessment

Once liability is established (including proof of actual damage caused by the falsehood), the court must quantify the damages award. The fundamental principle is compensatory: damages aim to restore the plaintiff, so far as money can, to the economic position they would have occupied had the tortious publication not occurred. This involves assessing the monetary value of the actual economic loss proven to have been caused by the falsehood.

Unlike general damages in defamation, which are awarded 'at large' to compensate for presumed reputational harm and associated distress, damages in injurious falsehood are tied to the specific or general economic loss demonstrated by the evidence.

Because injurious falsehood requires proof of malice as an element of the tort itself, the defendant's state of mind is already central to liability. While the primary focus of damages is compensation for economic loss, the intentional nature of the tort means that aggravated damages (compensating for additional injury or distress caused by the manner of the defendant's conduct) and exemplary or punitive damages (intended to punish the defendant and deter similar conduct) may potentially be available in appropriate, egregious cases. This contrasts with the position under the uniform defamation legislation, which typically caps damages for non-economic loss and often prohibits or restricts awards of exemplary damages.

B. Methods of Quantification

Several methods may be employed, often with the assistance of expert evidence, to quantify the plaintiff's economic loss:

  • Lost Profits Calculation: This involves estimating the revenue lost due to sales diverted or prevented by the falsehood, and then deducting the expenses that were saved as a result of not making those sales (e.g., variable costs of goods sold, potentially some saved fixed costs if operations were significantly curtailed). Projecting the 'but for' revenue scenario often involves analyzing historical trends, budgets, and market conditions.

  • Market Share Analysis: This method compares the plaintiff's actual market share after the publication with the share it likely would have held 'but for' the falsehood. Expert analysis may be needed to attribute changes in market share specifically to the defendant's conduct, accounting for broader market dynamics.

  • Business Valuation Diminution: In cases where the falsehood has caused long-term damage to the plaintiff's business or goodwill, damages may be assessed based on the reduction in the overall capital value of the business. This typically requires expert valuation evidence comparing the business's value before and after the impact of the falsehood.

  • Specific Costs: Quantifying the actual, reasonable, and necessary expenses incurred in counteracting the falsehood (as discussed in Part III.C) by summing the relevant documented expenditures.

The appropriate method(s) will depend on the nature of the plaintiff's business, the type of loss suffered, and the available evidence.

C. Types of Evidence Required

Robust evidence is essential for both proving the fact of damage and supporting its quantification. Key categories include:

  • Financial Records: Comprehensive and reliable accounting records are fundamental. This includes profit and loss statements, balance sheets, detailed sales data (by product, region, customer, etc.), customer relationship management (CRM) data, budgets, and financial forecasts. These establish baseline performance and demonstrate any post-publication changes.

  • Expert Evidence: Forensic accountants are frequently engaged to analyze financial records, apply quantification methodologies (like lost profits calculations), assess causation by isolating the falsehood's impact, and prepare expert reports for the court. Market analysts or industry experts can provide crucial context regarding market conditions, competition, and the likely impact of the falsehood within the specific industry.

  • Witness Testimony: Evidence from company management regarding business operations, strategy, and the observed impact of the falsehood. Testimony from specific lost customers (if applicable). Evidence from expert witnesses.

  • Supporting Documentation: Copies of lost contracts or orders, correspondence from customers or suppliers referencing the falsehood, invoices and receipts for counteracting expenses, marketing plans, and business records generally.

  • Market Data: Independent industry reports, competitor performance data, market research, and analysis of online sentiment or media coverage related to the falsehood can help contextualize the plaintiff's performance and support causation arguments.

VI. Conclusion

The tort of injurious falsehood serves a distinct and important function in protecting economic and commercial interests from harm caused by malicious, false statements. It requires the plaintiff to discharge a significant evidentiary burden, proving not only the falsity of the statement and the defendant's malice, but also that the statement caused actual, quantifiable economic loss.

Actual damage is the cornerstone of the action, encompassing provable pecuniary detriment, including general loss of business and reasonable counteracting expenses. While the principle from Ratcliffe v Evans allows for proof of general loss without identifying specific lost customers, demonstrating causation and quantifying such loss requires robust evidence, often involving detailed financial analysis and expert testimony. The High Court's decision in Palmer Bruyn & Parker Pty Ltd v Parsons highlights the critical need to establish a direct causal link between the specific publication attributable to the defendant and the loss claimed. The potential availability of injunctive relief based on probable damage offers a crucial preventative remedy.

Despite the challenges inherent in proving malice and actual damage, injurious falsehood remains a vital cause of action, particularly for corporations limited in their ability to sue for defamation. It provides a necessary, albeit demanding, pathway for redress against intentional and damaging falsehoods targeting commercial activities.

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