13 November 2020

Not so happy camper: reputational damage to brands online

This article was written by John Swinson, Priscilla Lal, Kai Nash and Morgan Lynch.

Many businesses find themselves the subject of unfounded claims online particularly via social media, false reviews and complaints websites. Claims for this nature  can cause significant financial and reputational harm to a business.  That is not to say online reviews are unfair.  Rather, malicious or untruthful reviews can taint consumer trust and reduce the reliability of online communities. Businesses who suffer from malicious attacks online may have a right of action against the creator of the content under various areas of law. 

In Leigh v Bruder Expedition Pty Ltd [2020] QCA 246 (‘Bruder Case’) the Queensland Court of Appeal allowed an appeal in relation to an individual who allegedly used a Facebook group to air her grievances and dissatisfaction with a caravan manufacturer.  The main basis for the appeal was that the trial judge had not properly instructed the jury how to decide whether ‘malice’ had been proven to the requisite standard.

In this article, we unpack the Bruder Case and the types of claims businesses may have against customers who publish disparaging content online.

Background

Bruder Expedition Pty Ltd (Bruder), manufactures and sells off-road expedition caravans. In April 2018, Mr Coles bought a caravan from Bruder.  He became dissatisfied with the caravan and so, with the help of Lisa Desmond, he established a website alleging the Bruder’s caravans were defective, unsafe, overpriced and of poor quality. The Court of Appeal noted that it was not clear that Mr Coles’ dissatisfaction was actually due to any failure on the part of Bruder.

Ms Tracy Leigh is the administrator of a Facebook group entitled ‘Lemon Caravans & RVs in Australia’ (‘Lemon Facebook Group’).  The group has nearly 50,000 members.  In May 2019, Ms Leigh allowed Mr Coles to post a hyperlink to his website on the Lemon Facebook Group. Through this, users of the Facebook group could easily be referred to Mr Coles’ website.  In June and July 2019 Ms Leigh published three statements of her own on the Lemon Facebook Group that were critical of Bruder.

Bruder brought defamation proceedings in the District Court of Queensland, alleging that Ms Leigh’s statements were false and that she had published them maliciously and with the intention of causing financial harm to Bruder.  Bruder claimed to suffer a loss of profits as a result.  Ms Leigh, on the other hand, claimed she had published the statements believing them to be true and to warn people of these kinds of defects.

The case was originally heard before a jury.  Bruder alleged, in relation to the issue of malice, that the Judge should follow the comments of the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336 (‘Briginshaw’) when directing the jury.  In Briginshaw, Justice Dixon said that in civil cases, determining whether the plaintiff had met the standard of proof, was not a mathematical or mechanical comparison of probabilities,  rather, the ‘standard of persuasion’ will vary depending in the nature of the case.

However, in this instance, the Judge had directed the jury to decide whether each element in the cause of action was satisfied by ‘weighing the case of a set of scales’.  Her Honour told the jury they only needed to consider whether it was ‘more probable than not’ that the element had been proven.

The jury found in favour of Bruder regarding two of the four statements published on the website.  The District Court awarded Bruder $357,000, and issued an injunction restraining the appellant from publishing similar statements in the future.

On appeal

Ms Leigh appealed. The Full Court held that the trial judge erred in the way she instructed the jury.  She should have aligned her instructions with Justice Dixon’s remarks in Briginshaw

At trial, Bruder had seemingly proven Ms Leigh was prone to act aggressively and use immoderate and unjustified language when she disapproved of the actions of others.  This meant it would have been easy for the jury to leap from a finding of unreasonable and extreme behaviour to conclude that the behaviour was intended to cause financial harm.  The trial judge erred in not instructing the jury in terms of Briginshaw.

Timely Reminder

The Bruder Case was decided on a technical legal point.  The decision emphasises the need for judges to correctly instruct the jury as to the standard of proof required to support an action for defamation.  That said, the facts of the Bruder Case are not too dissimilar to another case involving complaint websites and disgruntled customers.   In the Federal Court matter of Titan Enterprises (Qld) Pty Ltd v Cross [2016] FCA 1241 which also dealt with the important issue of legal professional privilege claims by trade mark attorneys, Titan Garages took action against the owners of a “complaints style” website called “Beware of Titan Garages” which it alleged made various false complaints against the shed manufacturer.[1] 

In situations, where a business has been threatened in this way, the business has a number of potential rights of action against the creator of such online content.  These include:

  1. Defamation: In circumstances where these websites are used to disseminate misinformation, the instinctive form of action is a defamation claim. Under the Australian laws, a successful defamation claim requires the satisfaction of three limbs: publication of the materials by a third party, identification of the victim and defamation of the victim in its content.  Defamation claims can be complex to argue and win. Certain companies may also be excluded from taking legal action for defamation (i.e. a company with more than 10 full time employees).
  1. Injurious falsehood: An alternative tort of injurious falsehood may also be available. To be successful in an injurious falsehood action, the plaintiff must prove that the publications were false, there was actual damage done as a result of the publication and that the publication was made by the defendant as an act of malice.
  1. Intellectual property infringement: In some circumstances, websites may infringe the intellectual property rights of business(e.g. by using their registered trade mark or copyright). Intellectual property owners may pursue an action against the website creator for trade mark infringement or infringement of other IP rights in certain online content. 
  1. Australian Consumer Laws: Making false statements about someone else’s products or business may also amount to a contravention of sections 18 and 29 of the Australian Consumer Law (ACL) under the Competition and Consumer Act 2010 (Cth).
  1. Domain name dispute: WIPO’s Uniform Domain Name Dispute Resolution (UDRP) Policy governs certain disputes regarding ownership and use of some types of domains. A person can initiate an administrative proceeding by submitting a complaint to WIPO.   For a complaint to be successful, the complainant must make out the following elements:
      • the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and
      • the domain name holder has no rights or legitimate interests in respect of the domain name; and
      • the domain name has been registered and is being used in bad faith.
  1. Social media complaint: With the rise in “fake news”, many of the social media websites are now working to stop misinformation and false news. Digital platforms are developing new products and ways of helping users to make more informed decisions online. Some platforms also have avenues to make complaints about the content hosted on their website.

 

[1] According to the court file, that case was discontinued by consent.

Data Central

Have you checked out our new Data Hub? Data Central contains a range of resources to help our clients minimise the legal, regulatory and commercial risks this data-driven environment presents and ensure that its full value is being realised.

Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    On 8 September 2021, the High Court handed down its highly anticipated judgment in the case of Fairfax Media Publications Pty Ltd v Voller; Nationwide News Pty Limited v Voller; Australian News...

    14 September 2021

    .au Domain Administration Limited (auDA), the entity responsible for developing and administering rules for .au domain names, has announced that from 24 March 2022, entities will be able to register ...

    06 September 2021

    Each of these publications confirm a widely predicted change in ASIC’s strategic direction away from the hard-line enforcement approach which emerged following the Financial Services Royal Commission.

    03 September 2021

    On 25 June 2021 the Australian Taxation Office released its draft ruling Income tax: royalties – character of receipts in respect of software (TR 2021/D4).

    16 July 2021

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.