TORT 147 Defamation and Injurious Falsehood — Law of Torts Notes for Judiciary

Defamation and Injurious Falsehood: An Attack on the Person and an Attack on His Property or Trade

Defamation protects reputation: the estimation in which a person is held by others. Injurious falsehood, also called malicious falsehood, and appearing in its older specific forms as slander of title and slander of goods, protects economic interests: it is a false statement, made maliciously, about a person's property, goods, title or business, which causes him pecuniary loss. The structural difference follows from what each protects. Defamation presumes the statement false and presumes malice, and the defendant must justify. Injurious falsehood requires the plaintiff to prove falsity, malice and special damage, all three, because the interest protected is one the law guards far less jealously than personal reputation.

1. The Comparison

	Defamation	Injurious falsehood
What is protected	Reputation, the estimation of the person	Economic interests in property, goods, title or business
The statement is about	The plaintiff himself	His property, goods, title or business
Falsity	Presumed. The defendant must plead and prove truth	Must be proved by the plaintiff
Malice	Presumed in law; malice in fact arises only to defeat a qualified defence	An essential ingredient, to be proved as a fact
Special damage	Not required for libel, nor for slander in the four classes	Essential, save where a statute dispenses with it
The defendant's honest belief	No defence	A complete answer, since it negatives malice
Who may sue	The person defamed. A company may sue as to its trading reputation	The person whose economic interest is affected
Survival on death	The claim ordinarily dies with the person	Being essentially an economic claim, it stands on a different footing
Typical instance	"He is dishonest", "She is incompetent"	"He has no title to that land", "His goods are adulterated", "He has ceased trading"

2. The Three Ingredients of Injurious Falsehood

A false statement, concerning the plaintiff's property, goods, title or business. The plaintiff bears the burden of proving it false, which is the reverse of the position in defamation.
Malice, meaning an improper or indirect motive, or the absence of any honest belief in the truth of the statement. A defendant who believed what he said, however unreasonably, is not liable.
Special damage, meaning actual pecuniary loss flowing from the statement.
All three must be established, and the failure of any one defeats the claim. That is the reason the action is comparatively rare.

3. Special Damage and How It Is Proved

📖 Ratcliffe v. Evans, [1892] 2 QB 524

Facts The defendant published in a newspaper a false statement that the plaintiff had ceased to carry on his business as an engineer and boiler maker, and that the firm no longer existed. The plaintiff proved a general decline in his business following the publication, but could not identify particular customers who had been lost or particular contracts that had failed.

Held The action lay, and the general loss of business was sufficient proof of special damage.

Ratio Where the falsehood is published in a form and in circumstances calculated to produce a general loss of business, the plaintiff need not prove the loss of particular customers or particular transactions. General loss of business is admissible and sufficient evidence of damage where it is the natural and direct result of the publication, since to require particulars in such a case would be to deny a remedy for a wrong the law recognises.

The rule is a practical accommodation and not an exception. A trader whose custom falls away after a false report cannot ordinarily name the people who stayed away, because he never knew they existed.
Where particular losses can be identified they must be pleaded, with particulars, and the general rule is only displaced where the nature of the publication makes specific proof impossible.

4. What Is Not Actionable: Puffery and Comparison

A trader's praise of his own goods is not actionable, however extravagant, and however untrue.
White v. Mellin, [1895] AC 154 settles the position. The defendant, selling the plaintiff's infant food, attached to each bottle a label recommending his own preparation as far more healthful and nutritious. The House of Lords held the action not maintainable: a mere comparison of one's own goods with another's, or a statement that one's own are better, is not a disparagement of the other's goods in the sense required, and the courts will not be turned into machinery for comparing rival products.
De Beers Abrasive Products Ltd. v. International General Electric Co. of New York Ltd., [1975] 1 WLR 972 draws the line. The test is whether a reasonable person would take the claim being made as a serious statement of fact, or as mere trade puffery. A pretended objective comparison, presented as the result of scientific testing, is not puffery and may be actionable.
The practical distinction is therefore between saying "mine is the best", which is not actionable, and saying "his contains a harmful substance" or "tests show his fails", which may be.

5. The Older Specific Forms

The form	What it covers
Slander of title	A false and malicious statement disparaging the plaintiff's title to property, whereby he loses a sale, a tenant, or the value of his property. The classical instance is an assertion at an auction that the vendor has no right to sell
Slander of goods	A false and malicious statement disparaging the quality of the plaintiff's goods, causing loss
Injurious or malicious falsehood	The general modern category, of which the other two are instances. It covers any false and malicious statement about the plaintiff's property, goods, title or business causing pecuniary loss
Passing off	A separate and distinct tort: a misrepresentation that the defendant's goods or business are those of the plaintiff, protecting goodwill rather than correcting a falsehood

6. Where One Set of Facts Is Both

A statement may defame the trader and disparage his goods at once. "He knowingly sells adulterated food" imputes dishonesty to the man and defects to the goods.
A statement about goods alone is not defamation of the trader, unless it carries an imputation on him. "This machine is poorly designed" says nothing about its maker's character; "this machine is poorly designed because its maker cuts corners" does.
Where both are available the plaintiff pleads defamation first, because falsity and malice are presumed and no special damage need be proved.
The injurious falsehood claim is added for two reasons: it survives a defence of truth as to the defamatory imputation while the falsehood about the goods remains, and it reaches statements that disparage the business without reflecting on any person.
A company should plead both. Its claim in defamation is confined to its trading reputation, and a statement about its products may fall outside that and inside injurious falsehood: TORT 067 and TORT 073.

7. Why the Burdens Are Reversed

Defamation presumes falsity because reputation is presumed to be good. A person is entitled to be thought well of until somebody proves otherwise, and the burden of justification therefore falls on the person who asserts the contrary.
Injurious falsehood presumes nothing, because commerce is adversarial. Traders compete, compare, criticise and disparage as a matter of course, and a rule presuming every commercial statement false would make ordinary trading impossible.
Malice is required for the same reason. The law wishes to protect a trader against deliberate falsehood and not against a competitor's honest but mistaken criticism, so an honest belief is a complete answer.
And special damage is required because the interest is purely economic. Loss without the violation of a protected right is damnum sine injuria, and the law admits a claim only where actual pecuniary harm is shown: TORT 112.
The three requirements together explain the rarity of the action, and why a plaintiff with a choice will always prefer defamation.

⚠ Why the law tolerates so much commercial falsehood

The combined effect of White v. Mellin and the three ingredients is that a great deal of commercial untruth is simply not actionable. A trader may declare his product the finest in the world when it is mediocre; he may compare it favourably with a rival's when the comparison is baseless; and unless the rival can prove that the statement was false, that the trader did not honestly believe it, and that identifiable money was lost, nothing follows. This is not an oversight. The alternative would be a jurisdiction in which every advertisement became justiciable and the courts spent their time deciding which of two washing powders is better, which Lord Herschell said in terms they would not do. The law therefore draws the line not at falsity but at the form of the statement: an assertion that a reasonable person would read as a trader's self praise is outside the tort however untrue, and an assertion that would be read as a serious statement of objective fact, a test result, a chemical analysis, a claim that a rival has gone out of business, is inside it. What has changed since 1895 is not the principle but the volume of the second kind of claim, and the regulatory response has come largely from outside the law of torts, through the consumer legislation, which reaches misleading advertising without requiring a competitor to prove malice or loss at all: TORT 098.

8. The Position Stated Shortly

1. Defamation protects reputation; injurious falsehood protects economic interests in property, goods, title or business.

2. In defamation falsity and malice are presumed; in injurious falsehood the plaintiff must prove falsity, malice and special damage.

3. An honest belief in the truth of the statement is a complete answer to injurious falsehood and no defence to defamation.

4. Ratcliffe v. Evans holds that a general loss of business is sufficient proof of damage where the falsehood was calculated to produce it.

5. White v. Mellin holds that a trader's comparison of his own goods with a rival's is not actionable, the courts not being machinery for comparing rival products.

6. De Beers v. International General Electric draws the line at whether a reasonable person would take the claim as a serious statement of fact or as puffery.

7. Slander of title and slander of goods are the older specific forms of the general tort of injurious falsehood.

8. Passing off is a distinct tort protecting goodwill by a misrepresentation of origin, and not a form of injurious falsehood.

9. A statement about goods alone does not defame the trader unless it carries an imputation on him.

10. The burdens are reversed because reputation is presumed good while commerce is adversarial, and the three requirements together make the action rare.