How Is Injurious Falsehood Different From Defamation?

Injurious Falsehood Is Sometimes Referred to As Business Defamation or Trade Libel. Injurious Falsehood Involves False Statements About the Business or Property of a Person As a Means of Causing Harm. Injurious Falsehood Is Also Sometimes Called Malicious Falsehood.

Understanding the Tort of Injurious Falsehood Including Relation to Defamation Law

Lawsuit Document Similar to defamation matters, injurious falsehood involves the publication of falsities; however, unlike the element requirements applicable within a defamation case, injurious falsehood involves statements, either written or verbal, about the business or the property of a person rather than a falseity about a person and that such falseities be published in a manner calculated to encourage others to avoid business dealings with the person.

The Law

The specific elements of the tort were articulated by the Court of Appeal in the case of Lysko v. Braley, 2006 CanLII 11846 whereas it was stated:

[133] Brown summarizes the elements of the action for injurious falsehood at 28.1(1) as follows:

Actions for injurious falsehood involve the publication of false statements, either orally or in writing, reflecting adversely on the plaintiff's business or property, or title to property, and so calculated as to induce persons not to deal with the plaintiff.  There must be a showing that the published statements are untrue, that they were made maliciously, that is without just cause or excuse, and that the plaintiff suffered special damages.

[134] Unlike the claim for defamation, the plaintiff "must plead and prove that the words were false, that they were actuated by malice, and that the plaintiff suffered special damages" (Brown, supra, at 28.1(1)).  Section 17 of the Libel and Slander Act, R.S.O.  1990, c.  L.12 provides that in an action for malicious falsehood, it is not necessary to allege special damages "(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form ...".

It is notable that the common law elements state that special damages are required; however, this requirement is statutorily amended by the Libel and Slander Act, R.S.O. 1990, c. L.12, section 17, such that the requirement of suffering special damages is absent when, properly pleaded, and of course adequately proven, the words were published in a written fashion and maliciously calculated to cause financial injury.  Specifically, the Libel and Slander Act states:

17 In an action for slander of title, slander of goods or other malicious falsehood, it is not necessary to allege or prove special damage,

(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form; or

(b) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by the plaintiff at the time of the publication,

and the plaintiff may recover damages without averment or proof of special damage.

Accordingly, a case for injurious falsehood may be successful despite a lack of proof of losses as special damages.

General Damages

Within the case of Procor Ltd. v. United Steel Workers of America, et al, 1990 CanLII 6637 awards of general damages and punitive damages were awarded when the union was found as maliciously alleging customs fraud without a foundation for such accusations and all with the intent of venting hostilities on behalf of unionized employees.  Whereas special damages were unproven yet some measure of harm plainly resulted from, among other things, the expenses arising from, and the loss of other productivity and opportunity for those persons associated in defending the allegations, general damages of $100,000 were awarded as a judicial guesstimate off losses.  Specifically it was stated:

The quantum of damages is difficult to determine in this case since there was no evidence whatsoever with regard to the loss of profits of the plaintiff arising from the business disruption. There was convincing evidence that was not seriously challenged that tens of thousands of dollars were spent on legal fees and that tens of thousands of dollars of salary time was spent on trying to cope with the disruption to the business. There was also evidence of the terrible pressure on the executives of the plaintiff corporation in dealing with the problems arising as a result of the defendants' actions. There was, however, no financial information produced with regard to the effect on the company's earnings. It is understandable that the company did not want to expose its financial history to the world and particularly to the Union. It is difficult to assess whether the net profit at the end of the year was seriously impacted by the disruption to the business. It may well be argued that an adverse inference should be drawn in this regard. Although counsel for the defendants in his opening remarks indicated that he would be arguing at the end that such an inference should be drawn or alternatively that he would take the position that no damages were proven, no such position was taken in closing argument. Neither counsel referred to this matter in their closing argument. No evidence was advanced with regard to loss of profits, although the president and chief executive officer of the plaintiff testified and no questions were asked in cross- examination in that regard.

Accordingly, based on the figures that I have of employees' lost time and the legal fees, I can only estimate a figure for general damages and I fix these damages at $100,000 which is the best estimate that I can make based on the figures available to me.

It may well be that based on previous year's profit, the year 1984 was not any less profitable; on the other hand, I assume that the efforts of the chief executive officer and other employees could have been directed towards more useful, productive and profit-making work. 

Punitive Damages

Also in Procor, at page 30 to page 31, punitives damages were awarded whereas the court was satisfied that:

...  as a result of a deliberate act consciously directed  against the plaintiff's reputation or malicious conduct, or  conscious, contumelious and calculated wrong-doing, or  behaviour that can be characterized as gross, reckless,  outrageous, reprehensible and irresponsible, or high-handed,  insolent, vindictive or consciously contempteous of the plaintiff's rights.

(See Raymond E.  Brown, The Law of Defamation in Canada, Vol.  II at pp.  1061-8.)

Costs Award

As a signficant additional sanction within the Procor decision, legal costs on a solicitor-client basis were awarded against the union for failing to accept offers as well as for continuing the allegations, despite obvious evidence to the contrary, prior to, and during, the trial.

Summary Comment

Injuries falsehood is a form of defamation where false information is uttered or published about a business.  Interestingly, unlike a defamation case, with injuries falsehood the Plaintiff must prove that the information uttered or published is false rather than the Defendant needing to prove that the information was true.

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Injurious Falsehood

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