Can a Charity Sue for Defamation Under NSW Law in Australia

Introduction

Defamation law in NSW plays a significant role in protecting the reputation of not-for-profit (NFP) organisations, including charities, when false or damaging statements are made against them. While most corporations are restricted from bringing a defamation claim, the law in Australia specifically allows charities and other NFPs to sue for defamation to safeguard their standing in the community.

Given the technical nature of defamation law and the unique requirements for NFPs under the Defamation Act 2005 (NSW), seeking advice on NFP governance and ACNC compliance is essential. 

A Charity’s Right to Sue for Defamation in NSW

The General Rule for Corporations & Defamation Law

In NSW, the ability of a corporation to sue for defamation is significantly restricted. Under Section 9(1) of the Defamation Act 2005 (NSW), most corporations are barred from bringing a defamation claim.

This general prohibition reflects a deliberate policy to:

• protect public debate
• prevent large, powerful entities from using defamation law to stifle criticism

As a result, for-profit companies generally do not have a cause of action for defamation, regardless of the damage to their commercial reputation.

The law in Australia is designed to protect personal reputation, and this principle is extended only to certain types of corporations under specific exceptions.

The NFP Exception Under the Defamation Act

While most corporations cannot sue for defamation, the Defamation Act 2005 (NSW) provides a crucial exception for NFP organisations. These entities are classified as “excluded corporations,” which grants them the legal standing to bring a defamation action to protect their reputation.

Section 9(2)(a) of the Defamation Act 2005 (NSW) specifies that a corporation can sue if its objectives do not include obtaining financial gain for its members. This carve-out directly applies to:

• charities
• other NFP bodies

This exception acknowledges that the reputation of charities and NFPs is vital to their ability to operate, attract funding, and serve the community. It ensures that organisations dedicated to public good have a legal avenue to defend themselves against defamatory attacks.

Qualifying to Sue: NSW Defamation Act Tests for Charities & NFPs

Proving Your NFP is an Excluded Corporation

Under Section 9(2) of the Defamation Act 2005 (NSW), a NFP organisation must qualify as an “excluded corporation” to have the legal capacity to sue for defamation. This is a critical threshold that must be met before a defamation claim can proceed.

There are two distinct pathways for a corporation to be recognised as an excluded corporation in NSW law. The organisation only needs to satisfy one of these tests to be able to bring a defamation action. The two pathways are based on:

• The objects for which the corporation is formed
• The number of employees it has and whether it is an associated entity of another corporation

The Financial Gain Test for Charities & CLGs

The first test allows a corporation to sue for defamation if its objectives do not include obtaining financial gain for its members or corporators. This provision, found in Section 9(2)(a) of the Defamation Act 2005 (NSW), is specifically designed to protect the reputations of organisations that exist for purposes other than generating profit for individuals.

This category typically includes:

• Charities
• Community groups
• Companies limited by guarantee (CLGs)

Because the primary purpose of these entities is not to create financial returns for their members, the law in Australia grants them the right to defend their reputation through a defamation claim.

The Employee & Associated Entity Tests for Incorporated Associations

The second test provides a pathway for smaller organisations to sue for defamation, even if their objects might involve financial gain. To qualify under Section 9(2)(b) of the Defamation Act 2005 (NSW), a corporation must satisfy two conditions simultaneously.

First, the organisation must employ fewer than 10 people. The definition of an “employee” is broad and includes:

• Traditional employees
• Independent contractors engaged in the day-to-day operations who are subject to the corporation’s control and direction

Part-time employees are counted as a fraction of a full-time equivalent.

Second, the corporation must not be an “associated entity” of another corporation, as defined in the Corporations Act 2001 (Cth). This prevents larger corporate groups from using smaller subsidiaries to bring a defamation claim. Indicators of an associated entity can include:

• Shared financial resources, such as a single credit card for multiple companies
• Significant loans between the entities
• Shared use of physical assets like vehicles and equipment
• Financial interdependency and joint income generation

Determining whether your organisation meets these technical tests can be complex, highlighting the importance of consulting a NFP lawyer for specialised advice.

Establishing Your NFP’s Defamation Claim

Proving Publication, Identification & Defamatory Meaning

To succeed in a defamation claim in NSW, your NFP must prove several key elements.

The first is that the defamatory material was published to at least one person other than your organisation. Publication is defined broadly and can cover many forms of communication.

Examples of what constitutes publication include:

• Spoken words, such as in a radio broadcast
• Written materials, including emails, social media posts and websites
• Online reviews shared on third-party platforms
• Drawings and cartoons circulated publicly

Next, your organisation must show identification—it was recognisable from the published material. This does not require the NFP to be named explicitly. Identification is established when an ordinary, reasonable person can tell the material is about your organisation.

Finally, the plaintiff must prove the material conveyed a defamatory meaning (an “imputation”). A statement is defamatory if it would cause an ordinary person to think less of your organisation, lower its reputation or expose it to ridicule or contempt.

The Serious Harm Threshold & Financial Loss for an NFP

A critical component of any defamation action is the serious harm element introduced by legal reforms.

Your NFP must prove the publication has caused, or is likely to cause, serious harm to its reputation. This requirement serves as a threshold so only substantial claims reach the court.

For a corporation—which includes an NFP—the law specifies what amounts to serious harm. To satisfy the test, your organisation must show it has suffered, or is likely to suffer, serious financial loss directly from the defamatory publication, a key aspect of the Defamation Act 2005 (NSW).

Evidence of serious financial loss can include:

• A decline in donations from regular supporters
• The loss of grants previously secured
• Significant damage to trading reputation that curtails income-generating activities

Proving this link can be complex and may require detailed financial analysis, highlighting the importance of strategic financial oversight in NFPs, so consulting a lawyer experienced in Australian defamation law is often essential for building a strong case.

Taking Action Urgent Injunctions & Concerns Notices

The Mandatory Concerns Notice Procedure

Before a NFP can sue for defamation in NSW, it must follow a compulsory first step. The law in Australia requires the aggrieved organisation to serve a valid “concerns notice” on the publisher of the defamatory material before starting any court proceedings. This notice is a critical preliminary step designed to resolve disputes without litigation.

A compliant concerns notice must be in writing and contain specific information to be valid. It needs to:

• Specify where the defamatory material can be accessed, such as a website URL, and provide a copy of the matter where practical.
• Detail the specific defamatory meanings, or imputations, that your organisation is concerned about.
• Inform the publisher of the serious harm that has been caused to your NFP’s reputation.

Once the publisher receives the concerns notice, they have 28 days to make an “offer to make amends.” This is a formal offer to resolve the defamation claim, which must include an offer to publish a reasonable correction and to pay for the expenses your organisation has incurred.

The offer may also include an apology or an offer of compensation. If your NFP fails to issue a compliant concerns notice, any subsequent court action for defamation is likely to be dismissed.

Given these technical requirements, consulting a NFP lawyer is essential to ensure the notice is correctly drafted and served.

Seeking an Urgent Injunction to Stop Publication

In some situations, waiting for the concerns notice process to conclude may not be enough to prevent ongoing reputational damage. An organisation can apply to the court for an urgent interlocutory injunction, which is a temporary order to stop the defendant from continuing to publish the defamatory material until the case is finalised.

However, courts in NSW approach applications for injunctions in defamation cases with considerable caution. They must balance the protection of reputation against the principle of freedom of speech.

An injunction is more likely to be granted in exceptional circumstances, such as where a defendant is engaged in a campaign of extortion and is using the publications to demand money.

A court may also grant leave for proceedings to begin before the 28-day period for an offer to make amends has expired if the circumstances are urgent. This allows an NFP to seek immediate protection from a continuous and damaging attack.

Due to the complexity and high stakes of seeking an injunction, it is vital to obtain specialised legal advice to assess the strength of your defamation claim and the likelihood of success.

Board Decision-Making & Reputational Risk Management

Implementing Policies & Training for Staff & Volunteers

Proactive risk management is crucial for NFP organisations to minimise the chances of publishing defamatory material. A key part of this strategy involves establishing clear policies and ensuring all employees and volunteers are properly trained on defamation law in Australia.

Regular updates to these policies are necessary to reflect any changes in the law. An effective defamation risk management strategy should include:

• Developing and implementing appropriate policies that guide all external communications, from social media posts to official publications.
• Training staff and volunteers to understand the risks of defamation. This training should teach them to consider a communication piece as a whole, including headlines and images, and to express statements as opinions rather than facts where appropriate.
• Encouraging the avoidance of highly emotive or speculative language, which can increase the risk of a statement being considered defamatory.
• Conducting publication reviews before any information is released to the public, especially for content that could be considered controversial.

If your organisation plans to publish a statement it knows to be true, it is still vital to have sufficient evidence to substantiate the claim. For any publications that carry a higher risk of a defamation claim, consulting a NFP lawyer for a review is a prudent step.

Assessing the Impact & Deciding on a Legal Response

When a NFP organisation believes it has been defamed, the board plays a critical role in evaluating the reputational damage and deciding on a course of action, which is a key part of understanding the risks and responsibilities of a director. The harm can be significant; for example, in one NSW case, a charity was shunned by influential community members and consular staff due to defamatory allegations.

If your organisation is the target of potentially defamatory material, the board should consider several immediate steps. It is important to act quickly, as strict timeframes apply to making a claim for defamation.

Key actions include:

• Saving copies of the defamatory material, such as screenshots of social media posts, ensuring publication dates are clearly marked.
• Considering whether the publication meets all the necessary elements for a defamation claim and whether the publisher might have a valid defence.
• Seeking legal advice from a lawyer specialising in NFP and defamation law to understand your options and the strength of a potential claim.

Making an informed decision about whether to pursue legal action requires weighing the potential costs against the likely outcomes. A NFP lawyer can provide essential guidance on the complexities of defamation law in NSW and help the board determine the most strategic response.

Why Your NFP Should Consult a NFP Lawyer

Understanding the Technical Complexities of Defamation Law

Defamation is a highly technical area of law in Australia, and notable differences exist between states and territories. These complexities make it essential for a NFP organisation to seek specialised legal advice before taking any action.

Engaging an experienced NFP lawyer can deliver several advantages:

• They provide crucial guidance on the specific requirements of defamation law in NSW.
• Early expert advice enables your organisation to make an informed decision and increase the likelihood of a successful outcome in any potential defamation claim.

Strategic Advice on Claims Against Former Staff or Volunteers

A NFP lawyer can offer tailored advice for the unique challenges that arise during NFP disputes and investigations, especially when a defamation claim is brought against an insider, such as a former employee, volunteer, or member. Anyone involved in publishing defamatory material can be sued, yet the legal specifics are often intricate.

Key legal risks insiders can pose include:

• Your organisation may be vicariously liable for defamatory content published by an employee acting within the scope of their employment.
• Volunteers can be personally liable because Part 9 of the Civil Liability Act 2002 (NSW) does not extend its protections to defamation claims.

Conclusion

Under NSW law, NFP organisations and charities have the right to sue for defamation to protect their reputation, provided they meet the specific requirements of an “excluded corporation” under the Defamation Act 2005 (NSW). Successfully establishing a defamation claim involves proving serious financial loss and adhering to mandatory procedures, such as issuing a valid concerns notice.

Given the technical complexities of defamation law in Australia, obtaining specialised legal advice is crucial for managing reputational risks and making informed decisions. For expert guidance tailored to your organisation’s unique circumstances, contact the not-for-profit lawyers at LawBridge to discuss your defamation claim and protect your standing in the community.

Frequently Asked Questions