Defamation and Injurious Falsehood

Reputation is everything for both business and employees. Unfortunately, parties may rashly call your reputation into disrepute when a business or workplace conflict occurs. In that event, it is crucial to know and enforce your rights to protect your reputation. There are generally two legal solutions one can take to protect their reputation, actions for defamation or injurious falsehood.

Defamation

Defamation law protects important values, specifically protecting the reputation of you or your business, while also protecting an individual’s freedom of expression. There are two types of defamation:  libel, which is defamation through written words, and slander, which is defamation through spoken words. In the age of the internet, defamation has become more common, as individuals have broad means to disseminate their opinions.

Defamation is a written or spoken statement made by a third party that is false and damaging to a person, company, or organization’s reputation, finances, or well-being. To prove defamation, the plaintiff must first demonstrate:

• That the communication lowered the plaintiff’s reputation;
• That the communication referred to the plaintiff; and
• That the communication was communicated to at least one other person.

The foregoing test is generally not difficult to establish. However, the defendant has the following defence available to them:

• Truth: if the person who made the statement proves that it was true, the defamation claim will fail;
• Fair comment: if the person who made the statement demonstrates that the statement was of public interest and is based on known and provable facts, the defamation claim will fail;
• Privilege: if the person who made the statement can prove the statement was privileged, the defamation claim will fail.

Injurious Falsehood

An action for injurious falsehood is when false statements, either in writing or spoken, are communicated, that adversely impact the plaintiff’s business or property. The statement must be intended to persuade individuals to not deal with the plaintiff.

To establish the tort of injurious falsehood, the plaintiff must demonstrate:

• The published statements about the plaintiff’s business or property must be untrue;
• They must be malicious, meaning without just cause or excuse; and
• The plaintiff must prove actual damages as a result of the statement.

Reputation is everything to you and your business. We are here to assist you protect your business.  Contact Hum Law Firm today for advice if you are dealing with individuals making harmful defamatory or slanderous statements about you or your business.

Business Torts

Business torts are civil wrongs that cause damages to a business’ economic interests. Common business torts include civil fraud, conspiracy, inducing breach of contract, and intimidation.

Civil Fraud

The tort of civil fraud consists of four elements:

1. A false representation made by the defendant;
2. Some level of knowledge of the falsehood of the representation on the part of the defendant;
3. The false representation caused the plaintiff to act;
4. The plaintiff’s actions resulted in a loss.

Conspiracy

Parties can be found liable for the tort of conspiracy when they work together in an effort to harm another business. There are two types of conspiracy.

First, there is predominant purpose conspiracy, also known as conspiracy to injure. To prove this tort a plaintiff must demonstrate:

1. An agreement between two or more parties;
2. That the parties used either lawful or unlawful means with the predominant objective of injuring the plaintiff; and
3. That the parties caused actual damage to the plaintiff.

Second, there is unlawful conduct conspiracy. To prove this tort a plaintiff must demonstrate:

1. Two or more parties acted together by agreement or a common design or intention;
2. The co-conspirators engaged in conduct that was unlawful, such as misrepresentation or fraud;
3. The conduct was directed towards the plaintiff;
4. The parties should have known their actions would cause injury to the plaintiff; and
5. Injury or harm to the plaintiff was caused by the defendants’ actions.

Inducing breach of contract

The tort of inducing breach of contract occurs when a party causes another party to breach a contract with your business. To prove this tort, the plaintiff must demonstrate:

1. The existence of an enforceable contract;
2. Knowledge on the part of the defendant of the existence of the plaintiff’s contract;
3. An intention on the part of the defendant to cause a breach of that contract;
4. Wrongful interference on the part of the defendant; and
5. Resulting damage.

Intimidation

The tort of intimidation can occur in two scenarios, two-party intimidation or three-party intimidation.

To prove two-party intimidation, the plaintiff must demonstrate:

1. Party A must deliver an unlawful threat to Party B;
2. Intent to cause harm to Party B;
3. Party A’s threat must cause Party B’s subsequent conduct; and
4. Result in harm to Party B.

To prove three-party intimidation, the plaintiff must demonstrate:

Three-Party Intimidation 

1. Party A must deliver an unlawful threat to Party B;
2. Intent to cause harm to Party C;
3. Party A’s threat must cause Party B’s subsequent conduct; and
4. Result in harm to Party C.

Hum Law Firm has experience dealing with Business Torts.

We are here to assist you protect your business. Contact Hum Law for guidance.

Business Partnership Disputes

Disputes among business partners are almost inevitable, and can significantly impact the well-being, growth, and success of the business. If a company is not incorporated and there is a relationship between persons carrying on a business with a common view to profit, a partnership likely exists. If so, the Partnerships Act will govern that relationship.

Disputes within a partnership must be dealt with quickly and quietly to preserve the business reputation and relationship among partners. These disputes can arise for many reasons, such as:

• Breach of fiduciary duties by a partner;
• Breach of Partnership Agreement;
• Partnership mismanagement;
• Dissolution of Partnership;
• Expulsion of a partner; or
• Termination of Partnership Agreement.

In some circumstances, the best approach to managing a partnership dispute is to seek a negotiated resolution. Alternatively, other situations, such as a serious breach of fiduciary duty by a partner, may require litigation. Depending on the seriousness of the dispute, it may be appropriate to take measures such as buying out the other party or dissolving the partnership.

Dissolving the partnership is, of course, an important decision that should be thought through. In the event dissolving the partnership is necessary, partners must remember:

• It must be done in a fair and responsible manner;
• Rights and obligations of partners may continue following the dissolution of the partnership, for example, confidentiality and fiduciary obligations;
• Generally, unless agreed otherwise, assets of the partnership such as equipment, client lists, and other partnership property should be divided fairly among the partners.

Business partnership disputes are difficult to manage and require experienced guidance. We are here to assist you to protect your business.

Contact Hum Law Firm today for guidance.

Breach of Confidence

Businesses have sensitive and confidential information such as client lists, trade secrets, and business practices. A party may breach their obligation to keep this information confidential, leaving your business in a difficult position. If this occurs, you can pursue an action for breach of confidence.

A successful breach of confidence claim requires three elements:

1. The information must have the necessary quality of confidence (meaning, the information is not otherwise publicly available);
2. The information must have been disclosed in circumstances where there is an obligation of confidence (meaning, there was a direct promise to keep the “information” confidential, or the circumstances that make it clear that the information was intended to be confidential and not meant to be circulated widely without express consent); and
3. There must have been an unauthorized use of that information to the detriment of the party whose confidentiality is breached by the unauthorized use (the “detriment” can be in the form of economic losses or psychological and emotional harm).

Breach of confidence often occurs in the employment context. Throughout the course of employment, many of your employees will learn sensitive and confidential information. To protect your interests, you should ensure all contracts, whether employment or commercial contracts, contain restrictive covenants stating that confidential information cannot be shared without consent.

Hum Law Firm has experience dealing with breach of confidence actions, both in the employment and business context. We are here to assist protect your business.

Contact Hum Law Firm today for guidance.

Breach of Fiduciary Duty

A fiduciary duty is when an employee has an obligation to act and make decisions honestly, in good faith with a view to the best interest of the employer, not in their own personal interest.

Some employees, such as executives and other high-level management, owe a fiduciary duty to their employer. However, whether an employee owes their employer a fiduciary duty will largely depend on the specific nature of their employment.

Whether a fiduciary duty exists will depend on:

1. An employee’s position at the company. For example, management that are responsible for running the company are more likely to have a fiduciary duty;
2. How much authority and power an employee has; and
3. If the employer places trust and reliance in the employee and is vulnerable to the employee.

An employee with a fiduciary duty has special obligations to their employer, such as avoiding conflict of interest.

If an employee breaches their fiduciary duty, they not only risk termination for cause, but also disgorgement of profits made through that breach. Common examples of breaches of fiduciary duty include: soliciting or stealing clients from an employer, working with or for the competition, or misappropriating funds. Generally, an employee risks breaching their fiduciary duty if they act in their own self-interest to the detriment of their employer.

Employers can take steps to protect themselves from fiduciary breaches by including non-compete and non-solicitation clauses in their employment agreements. Non-compete clauses prevent an employee from being employed by a competitor for a set amount of time after their employment is terminated.

It is important to note that non-compete clauses between employers and their employees are banned in Ontario, with only two exceptions: chief executives and business owners. Even when a non-compete clause is allowed, they must be carefully drafted because, if not, they may be unenforceable.

In Ontario,  if you have not revised these clauses since December 2, 2021, when the Working for Workers ACT 2021 became law, you are at risk. We are here to assist in assessing your risk.  Contact us today.

Non-solicitation clauses are more likely to be found enforceable. They serve to prevent an employee from soliciting an employer’s clients to take their business away from the employer or solicit other employees to leave the employer.

Hum Law Firm has experience dealing with breeches of fiduciary duty, both in the employment and business context. We are here to assist you protect your business.