UNDERSTANDING EXCLUDED CORPORATIONS

Introduction

Can a business sue for defamation in Australia? Yes — but only under certain legal conditions. Defamation law in Australia is designed to protect reputations from false and damaging statements, whether made in print, online, or verbally. While individuals often bring defamation claims, some corporations may also sue if they meet the criteria outlined under the Defamation Act 2005. This guide will explain which businesses qualify, the steps involved, and how legal professionals can help.

As we have already touched upon in our article, What is Defamation, The concept of reputation, and its protection in accordance with law, has existed since time immemorial.

Reputation is a personal, human concept attached to all individuals.

For better or for worse, humanity has invented other things in addition to the concept of reputation, and they are, what is referred to in law as corporeal bodies. In other words, and in modern day English, this includes, but is not limited to, entities such as companies (or corporations).

A company is an intangible entity that exists as a creature of statute, pursuant to the Corporations Act 2001 (Cth).¹

A common question we are asked is: can a business sue for defamation in Australia.

The answer to that question is, yes, a company can sue for defamation, but only if it is an excluded corporation.

Excluded corporations – what are they?

Section 9 of the Defamation Act 2005 (Vic)², which is set out below, defines what an excluded corporation is:

9 Certain corporations do not have cause of action for defamation

(1) A corporation has no cause of action for defamation in relation to the publication of defamatory matter unless it was an excluded corporation at the time of publication.

(2) A corporation is an excluded corporation if –
    (a) the objects for which it is formed does not include obtaining financial gain for its members or corporators; or

    (b) it has fewer than 10 employees and is not an associated entity of another corporation.

1. Corporations formed without financial gain objectives

The first type of corporation which is classed as an excluded corporation and therefore able to sue for defamation, is a corporation which does not carry on business for the purposes of generating profit.

Examples commonly include religious organisations and charities registered with the Australian Charities and Not-For-Profit Commission.

If a corporation satisfies this requirement, but employs more than 10 persons, it will not be prevented from suing for defamation, unlike standard for-profit corporations.

2. Corporations with fewer than 10 employees

The second category of corporations which are able to sue for defamation are those that have fewer than 10 employees.

The Courts interpreted ’employees’ broadly – for example contractors work exclusively for the corporation may be counted as an employee for the purposes of determining standing to sue.

Additionally, employee counts are based on a ‘full-time equivalent’ (FTE) basis.

For example, a company may have more than 10 casual employees, but when calculated on an FTE basis, it may have fewer than 10 — and thus retain the right to sue for defamation.

Why Businesses Need to Act Quickly

Under Australian law, a claim must generally be filed within 12 months from the date of publication. Waiting too long could weaken your case.

If you’re wondering “Can a business sue for defamation in Australia?”, early action ensures evidence is preserved and your legal options remain open.

How Melbourne Defamation Lawyers Can Help Businesses Facing Defamation in Australia

At Melbourne Defamation Lawyers, we specialise in protecting business reputations. We can:

• Assess if your business meets the legal definition for suing.
• Gather evidence and issue a Concerns Notice.
• Represent you in negotiations or court proceedings.

Contact us today to discuss your case and safeguard your company’s good name.

Final comments for Businesses Facing Defamation in Australia

Determining whether a corporation qualifies as an excluded corporation is not always straightforward.

It often requires comprehensive legal advice from experienced defamation lawyers, including document review and detailed database searches.

Importantly, large corporations typically do not have standing to sue for defamation under the Defamation Act 2005 (Vic).

If your company has been defamed, such as online, like a google review, and it has caused your business to lose money, get in touch with Melbourne Defamation Lawyers today, by email at lee@cpl.allenlaw.au or 0429 070 261, to see how we can help recover your losses, and rebuild your company’s reputation.

¹ Its interesting to note that the Commonwealth Constitution does not give the Commonwealth power to legislate with respect to corporations. Rather, that was part of the plenary power of the States until all the States decided in the 1990’s to empower the Commonwealth with the necessary power to legislate with respect to corporations pursuant to section 51(xxxvii) of the Commonwealth Constitution. Accordingly from federation in 1901 until 2001, each State had its own laws with respect to the creation, registration, and management of corporations.

² All States and Territories in Australia have an equivalent provision in that jurisdiction’s defamation legislation.