As set out by Lord Atkin in Sim v. Stretch  2 All ER 1237, at 1240, a defamatory statement is one which tends to lower a person, "in the estimation of right-thinking members of society." It is not that the statement be made to the person in regard, it must be communicated to another. Tort law protects one's interest in preserving his/her reputation. In Canada, the law of defamation permits actions for Libel and Slander against those who seek to damage the another’s reputation.(10) In Hill v. Church of Scientology 2 S.C.R. 1130, Cory J. reviewed the origins of defamation law:
From the advent of the popular press in the nineteenth century, courts have increasingly grown concerned with protecting reputations from the threat of mass communications, the Internet much like the printing press once was is the next technological peril.
A long recognized distinction for actionable defamation in the Common Law has existed between the written(libel) and the spoken(slander) word. Libel occurs when a defamatory statement is made in such mediums as writings, signs, pictures, statues, films and even conduct with defamatory implications. If the statement is in a transitory form, such as a hand gesture or the spoken word,it does not amount to libel and is; therefore, slander. A defamatory statement that is broadcast on radio or television will be libel, even though it is spoken.(11)
As the Law Society of Upper Canada notes, there has been reason in the past to make the distinction between libel and slander. Today, if one can prove that one has been libelled, and there is no defence for the loss of reputation, the law assumes damages and fixes an amount as compensation. The plaintiff does not have to prove damages for actual financial loss. However, in cases of slander, the plaintiff must prove actual financial loss before damages can be awarded. Slanderous statements are unlike written statements which are permanent and; therefore, do not have as great an impact.(12) In many Canadian Provinces libel and slander have been combined and the distinctions have become moot.
Liability for defamation is pertinent to numerous Internet contexts. The internet user would be found liable for defamatory material they produced directly eg. by posting a web page containing defamatory remarks, or by the actions of its employees or agents. Examples in the Internet context are abundant and liability for defamatory statements contained within a web site for the hosting Internet Service Provider(ISP) will be examined. The ISP allows the computer owner to communicate with a multitude of other computers which form the Internet via the telephone - and recently cable, wireless cable and satellite - lines.
For a finding of liability for the tort of defamation in Canadian realspace and then as applied to Cyberspace, three elements must be proven. First, the plaintiff must demonstrate that the defamatory charge was published; this does not mean that the defamation must have been printed and distributed, rather it is sufficient that the statements have been communicated to a person other than the plaintiff. Second, the plaintiff must establish that the defamation expressly, or by reasonable implication, referred to him/herself. Third, the materials must have been false and, in the eyes of a reasonable person, discrediting to the plaintiff.(13)
As noted by Dietrich, it is not necessary for the plaintiff to prove that the defendant intended to defame. Nor must it be proven that the defendant did lower the plaintiff's reputation in the minds of persons accessing the materials and that the plaintiff actually suffered any damages from the defamatory materials.(14) The onus lies with the defendant. As the threshold for what is defamatory is low, the majority of the courts time is spent assessing whether the defendant has one of the defences available.
In Cyberspace, much like realspace, the courts will assume that the materials were intended to defame the plaintiff and that the plaintiff has suffered damages. However, looking at Canada under the example of the Ontario Libel and Slander Act the requirement to prove damages in slander cases has been removed in certain situations. These include cases which call into question the reputation of a person in relation to their office, profession, calling, trade or business.(15) If it could be proven that B refused to enter into a contract with A as a result of a slanderous statement made by C, under Canadian law, A would be compensated for the loss of contract and reputation. A would; however, have to prove it was C's intention to attack his/her business reputation. Otherwise, damages would be awarded outright. The Ontario Libel and Slander Act does not completely remove the requirement to prove damage, in all slander cases.(16)
Where a person's goods are brought into discredit, rather than suing for defamation, the tort of injurious falsehood or slander of goods would be applied (See Flaman Wholesale v. Firman et al (1982), 17 Sask. R. 305). This tort; however, requires proof of monetary damages. This has become prominent in Cyberspace as disgruntled ex-employees or dissatisfied customers have taken to posting complaints along with defamatory statements on the web. For the plaintiff, this tort is available where: first there was a statement made about the plaintiff’s goods; second that the statement was false; third that the statement was published maliciously (dishonestly with improper motive); and lastly, that the plaintiff suffered special damage.
Dietrich further notes that in Canada, legitimate comparisons between products are generally not actionable. However, the distinction between disparaging comments and truthful comparisons is often a fine one and the test used to identify when a statement constitutes slander of goods involves determining what a reasonable person with knowledge of the facts would conclude. (17) In order to be liable the defendant need not necessarily named the plaintiff or the product(s) directly but rather where an implication will be drawn by the public that the defendant's disparaging comments must necessarily have been referring to the plaintiff's product (for instance when there are only two products in a market).(18)
10. Wright, Linden, Klar, Canadian Tort Law,(Toronto : Butterworths, 1990) at 19-1.
11. Wright, Linden, Klar, supra note 10 at 19-11.
13. Pierre Trudel, Internet Content Liability Study - Civil Liability and the Internet, 12/03/97, available at http://strategis.ic.gc.ca/SSG/it03235e.html
14. Dale A. J. Dietrich, Legal Issues Affecting Canadian Based Electronic Commerce Undertakings, IT Industry Series on Intellectual Property Centre For Property Studies University of New Brunswick (May 7, 1998), available at http://www.SmithLyons.ca/it/ecom.
17. Dietrich, supra note 14. http://www.SmithLyons.ca/it/ecom
18. Klar, L.N. Tort Law 2nd (Toronto : Carswell, 1996) at 589.