Shift2Neutral Pty Ltd v Fairfax Media Publications Pty Ltd

[2015] NSWCA 274

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:	Shift2Neutral Pty Ltd v Fairfax Media Publications Pty Ltd [2015] NSWCA 274
Hearing dates:	4 May 2015
Decision date:	10 September 2015
Before:	McColl JA at [1]; Basten JA at [2]; Simpson J at [62]
Decision:	(1)   Appeal dismissed.  (2)   Appellants to pay the respondents’ costs of the appeal.
Catchwords:	DEFAMATION – justification – defence to defamatory imputations – defendants pleaded substantial truth of each imputation – trial judge found the imputations were defamatory, but accepted defence – whether trial judge reversed onus of proof in relation to defence - whether trial judge erred in upholding the defence – Defamation Act 2005 (NSW), s 25
Legislation Cited:	Defamation Act 2005 (NSW), ss 9, 25
Category:	Principal judgment
Parties:	Shift 2 Neutral Pty Ltd (First Appellant) Brett Goldsworthy (Second Appellant) Fairfax Media Publications Pty Ltd (First Respondent) Ben Cubby (Second Respondent)
Representation:	Counsel: Mr R G McHugh SC/Ms N D Oreb (Appellants) Mr D R Sibtain/Ms L Barnett (Respondents)    Solicitors: Kalantzis Lawyers (Appellants) Banki Haddock Fiora (Respondents)
File Number(s):	2014/66879
Decision under appeal	Court or tribunal: Supreme Court Jurisdiction: Common Law Division Citation: Shift2Neutral Pty Ltd v Fairfax Media Publications Pty Ltd [2014] NSWSC 86 Date of Decision: 18 February 2014 Before: Nicholas AJ File Number(s): 2011/128622

HEADNOTE

[This headnote is not to be read as part of the judgment]

In July 2007 Mr Goldsworthy incorporated Shift2Neutral Pty Ltd (Shift) for the purpose of conducting environmental audits and offering certificates representing credits under a carbon offset scheme to entities wishing to reduce their carbon footprint or render their operations carbon neutral. On 8 and 14 April 2011 The Sydney Morning Herald, published by Fairfax Media Publications Pty Ltd, published two articles by Mr Ben Cubby in which Shift was described as appearing to “be fake, shifting paper certificates instead of saving forests and cutting greenhouse emissions” thus deceiving its customers and investors. The second article alleged that Oakhill College, a Sydney school, which held Shift’s certificates, was deceived into believing that it was the first “carbon neutral” school in the world. The articles specifically referred to the carbon credits issued with respect to a Borneo rainforest and a pyrolysis waste management operation in Korea. Mr Goldsworthy and Shift brought defamation proceedings against the publishers pleading a number of defamatory imputations said to have arisen from the articles. The publishers pleaded justification under s 25 of the Defamation Act 2005 (NSW) asserting that each of the imputations was substantially true. The trial judge, Nicholas AJ, found that the pleaded imputations were defamatory, but upheld the defence.

Mr Goldsworthy and Shift appealed, alleging that trial judge erred in: (i) finding that the certificates were valueless on the basis of inferences drawn from the way Shift documented and registered the certificates and in doing so reversed the onus of proof; and (ii) finding that all the imputations were substantially true, but specifically those alleging that the appellants deceived investors and recipients of the certificates.

The Court (Basten JA; McColl JA and Simpson J agreeing) held dismissing the appeal.

In relation to (i)

1. In the unregulated market of carbon credits trading the value of certificates offered by Shift could be ascertained only from their registration in Shift’s “Certified Carbon registry”. The trial judge found that certificates related to Borneo rainforest, which were offered to number of recipients, fell outside of the range of credits specified in the registry; this he concluded rendered them valueless. In these circumstances accepting Shift’s registry for what it purported to be did not amount to error or reversal of onus of proof: [21], [22], [33], [36].

2. Similarly, in the circumstances where Shift held no register of carbon credits related to the pyrolysis waste management operation, the trial judge’s conclusion that these certificates were false and valueless was inevitable: [40].

In relation to (ii)

3. The fact that Shift had genuine carbon certificates which could be sold did not obviate the finding that what it purported to “shift” was valueless, hence the trial judge’s finding directly addressed the truth of the imputations: [43], [44].

4. The appellants’ submission that the trial judge’s finding (that Shift deceived investors offering them valueless certificates) was unsupported because none of the investors gave evidence to that effect should be rejected. On the contrary, in the absence of evidence, it would have been inappropriate to find that the recipients, who paid valuable consideration in order to obtain the benefit of the certificates, did not care whether they were genuine or not: [53], [54], [55].

5. Oakhill College was deceived even though it received the certificates by way of donation, as it was made to believe these certificates would render it carbon neutral: [56], [57], [58].

Judgment

1. McCOLL JA: I agree with Basten JA's reasons and the orders his Honour proposes.

2. BASTEN JA: In July 2007 the second appellant, Mr Brett Goldsworthy, incorporated the first appellant, Shift2Neutral Pty Ltd (“Shift”). The appropriate characterisation of the company’s business was a matter of dispute in the proceedings the subject of this appeal. Relevantly, it claimed to conduct “environmental audits”, and to “issue certificates representing credits under a carbon offset scheme”.

3. On 8 April 2011 The Sydney Morning Herald, published by the first respondent, Fairfax Media Publications Pty Ltd, published an article prepared by Mr Ben Cubby, the second respondent, which commenced with the following paragraph:

“A Sydney carbon credits company thought to have been running some of the world’s biggest offsets deals appears to be a fake, shifting paper certificates instead of saving forests and cutting greenhouse emissions.”

4. On 14 April 2011 the newspaper published a second article, by the same author, which commenced:

“A Sydney school thought to have become the first in the world to go ‘carbon neutral’ by saving a Malaysian rainforest from logging appears to have been deceived by carbon offset company shift2Neutral.”

5. The appellants brought proceedings for defamation against the respondents. With respect to the first article, the company alleged the following defamatory imputations, namely that it: [1]

   1.    Amended Statement of Claim, par 6.

1. was a fake company which shifts paper certificates instead of saving forests and cutting greenhouse emissions;

2. falsely pretended to engage in deals to generate more than $1 billion of carbon credits because the deals did not exist;

3. lied when it said that every carbon offset certificate issued has value and represents a real reduction in greenhouse emissions;

4. made wild and false claims about carbon credits in order to persuade investors to buy them, and

5. has deceived investors by falsely informing them that its certificates for carbon offsets had value and represented a real reduction in greenhouse emissions.

6. The imputations pleaded by Mr Goldsworthy were that he controlled a company which had conducted itself in the manner pleaded above. [2] (There was one additional imputation specific to Mr Goldsworthy, namely that he was “a liar about the value of carbon credits issued by his company”. [3] )

   2.    Statement of Claim, par 6(i)-(n).

   3.    Statement of Claim, par 6(l).

7. The imputations pleaded with respect to the second article were, on the part of the company, that it: [4]

1. deceived Oakhill College by providing it with worthless carbon offsets, and

2. is dishonest about its carbon offset claims.

   4.    Statement of Claim, par 8.

8. In addition to pleading imputations to the effect that he controlled a company which acted in the manner alleged by it, [5] Mr Goldsworthy also pleaded a number of further imputations, namely that he: [6]

(d)   makes false claims about carbon offset deals valued at more than $1 billion, and

(e)   made false statements to “The Herald” to the effect that carbon offsets had been generated by a partnership with two companies.

5.    Statement of Claim, par 8(f)-(g).

6.    Statement of Claim, par 8(d)-(e).

9. It is sufficient to outline the imputations in the abbreviated form set out above [7] because the trial judge, Nicholas AJ, found that each imputation referred to was conveyed and that each was defamatory. [8] Those findings (as opposed to the reasoning supporting one specific finding) were not challenged on the appeal.

   7.    Each imputation contained references to the paragraphs in the relevant article said to support it.

   8. Shift2Neutral Pty Ltd v Fairfax Media Publications Pty Ltd [2014] NSWSC 86 (“Shift”) at [17] and [19].

10. Rather, the focus of the appeal was the defence of justification, pursuant to s 25 of the Defamation Act 2005 (NSW). The respondents thereby pleaded that each of the imputations was substantially true. That defence was upheld with respect to all the imputations relied on by the appellants, with the result that judgment was given for the respondents. [9]

    9. Shift at [93].

11. The notice of appeal contained four grounds. Grounds 3 and 4 stated, in formulaic terms, that the judge erred in finding that each of the imputations was substantially true and that he ought to have found that none of the imputations was substantially true. Grounds 1 and 2 were a little more revealing, but not much:

“(1)   His Honour erred in finding that the certificates issued by the appellants were not valuable, genuine and available to offset carbon emissions.

(2)   His Honour ought to found that it had not been established that the certificates issued by the appellants were not valuable or genuine or available to offset carbon emissions.”

12. The focus of the appeal lay in ground 2, which involved an implicit assertion that the judge had reversed the onus of proof with respect to the defence. The ground required a detailed factual assessment by the trial judge of the evidence relating to a significant number of carbon credit certificates; determination of the appeal requires consideration of the manner in which the judge dealt with that evidence. The appellants’ “fundamental complaint” as outlined in their written submissions and identified as a reversal of the onus of proof, was explained in the following terms:

“The central issue at the trial became whether the certificates issued by Shift2Neutral had value, were genuine and were available to offset carbon emissions. The onus lay upon the Respondents to prove that they were valueless not the plaintiff to prove that they had value. The error into which his Honour fell was that since he did not believe Mr Goldsworthy’s assertions that the certificates had value they therefore did not have value. … His Honour was led into error because the Respondents’ case was that since there was no evidence that the certificates had value the certificates were therefore valueless…. It was incumbent upon the Respondents to call evidence that demonstrated that the Certificates had no value, which they did not.”

13. The submissions then alleged that the “incorrect process of reasoning” was exemplified in 18 specified paragraphs in the judgment below, without much elaboration as to how the passages supported the allegation. In fact, only one of the paragraphs, on consideration, could be said to provide any support for the complaint. The written submissions did not condescend to the level of particularity required to make good the appellants’ case.

14. A somewhat more sophisticated argument was developed in oral submissions, the detail of which must now be addressed.

Nature of business

15. The appellants’ business involved the assessment of projects (both activities and inactivity) which reduced the release of carbon dioxide into the atmosphere. An assessment involved the calculation of a “carbon credit”, each unit of which equated to the removal of one tonne of carbon dioxide or other greenhouse gas from the atmosphere. The reduction in carbon emissions thus calculated could be notionally offset against the release of greenhouse gasses by other activities, either of the same business, or by selling “carbon credits” to another business. [10]

    10. Shift at [21].

16. As to the concept of a “carbon credit”, the trial judge summarised Mr Goldsworthy’s evidence in terms which were not the subject of challenge:

“[22]   Mr Goldsworthy's evidence was that a carbon credit certificate was issued to a recipient to certify as to the absorption of one tonne of carbon emissions, for use as a credit to be offset against the emissions generated by the recipient's operations. These certificates allowed the recipient to claim that its operations were carbon neutral or were becoming so.

[23]   A carbon credit was a commodity which could be traded by Shift on the open market for valuable consideration as agreed. The actual value in a particular case appears to have been the product of negotiation. Mr Goldsworthy said that certificates were valued on market assessment ‘...based on the particular project and on what the market will bear’ (T p21). The price of a carbon credit ranged from one cent to $40. He said that, once used, the credits must be retired and could never be used again. The certificates referred to the credits by numbers similar to serial numbers.”

17. The respondents tendered in support of the defence of justification certificates issued by the company in respect of two projects, documentation which provided some background to the creation of the certificates, together with evidence of the use to which the certificates had been put. The evidence focused on two particular projects.

(a)   Borneo Highlands Resort – Old Rainforest

18. By an agreement dated 4 August 2009, Shift was appointed an “exclusive carbon credits and environmental partner” by an entity known as “Borneo Highlands Resort and Mines Golf City” (although the company seal bore neither of those names). The Malaysian entity was referred to by the initials BHRF, presumably standing for Borneo Highlands Resort Forest (or perhaps Borneo Highlands Rainforest). Shift was also authorised to “certify” the resort and land “for carbon credits.” It was authorised to sell each certified carbon credit on behalf of BHRF for the sum of $US7.50.

19. On 16 October 2009 Mr Goldsworthy advised the owner of “Country Heights Holdings Group” (not a body identified in the agreement) that various aspects of the properties had been certified. Relevantly for present purposes, the Borneo Highlands Resort old growth forest (covering 1,417 hectares) was allocated 117,611 carbon credits “on a per annum basis”. On 18 October 2009 Mr Goldsworthy wrote again to the same officer of the BHRF, identifying the “final carbon credit certification amount” and stating that Shift had “successfully placed for sale all your carbon credits, and we are glad to inform a buyers [sic] receipt of funds transfer is expect [sic] this coming week.”

20. On 28 October 2009 the owner of the Resort provided a document addressed merely “to whom it may concern” in the following terms:

“Borneo Highlands Resort

With reference to the certification of carbon credits for Borneo Highlands Resort, we wish to confirm that we will maintain the original Master Plan of Borneo Highlands Resort and associated areas, and ensure the protection of the remaining native rainforest for the next 20 years as a minimum.

It is the goal of the Company to maintain the integrity of the rainforest and preserve nature and protect the global environment.”

21. A document bearing the name and address of Shift and headed “Shift2Neutral Carbon Credit Certification Standard – Certificate of Authenticity” gave as the name of the client “Borneo Highlands Resort – Old Rainforest”. It then listed “Reg. Numbers”, each commencing with the letters BHRF and the year, and containing numbers running from 1 to 117,611. The document included such numbers for each of 20 years, from 1990 to 2009, though not into the future.

22. Also tendered were three documents bearing the Shift logo and signed by Mr Goldsworthy, each certifying that a particular organisation was the legal owner of a specified number of carbon credits “in accordance with Shift2Neutral’s Certified Carbon registry.” There followed a reference to the total number of credits for Borneo Highlands Rainforest and “Reg Numbers BHRF”, which were then specified. However, each certificate specified numbers which fell outside the range 1-117,611. Certificates in that form were issued to PGA of Australia, [11] GRG International Pty Ltd, the Sydney Turf Club, K&D Plumbing Pty Ltd and Oakhill College.

    11.    “PGA” referred to the Professional Golfers Association.

23. The findings of the trial judge in respect of this material was set out at [44], in the following terms:

“In providing a certificate to the recipient the plaintiffs' conduct involved the making of the representations which the certificate conveyed to the recipient. In my opinion, the language employed in the instrument would lead the ordinary reasonable reader to conclude that the recipient had become the legal owner of the nominated parcel of credits allocated from those certified to be available for BHR. It also represents that Shift maintains a registry in which the available carbon credits are recorded and identified. For example, the words ‘Reg. Numbers BHRF...’ indicate that the credits are identified by a number in the registry. The description of the instrument as a ‘Certificate of Authenticity’ was calculated to assure the recipient of the genuine existence of the carbon credits therein described and allocated in accordance with the registry, and to provide the basis for certainty that a carbon credit of which it had become the legal owner was a valuable commodity. In short, Shift's Certificate of Authenticity represented to the recipient that it had good title to a commodity of substance, namely genuine carbon credits.”

24. The judge then referred severally to each of the transactions by which the certificates were issued. With respect to Oakhill College, he reached the following conclusions:

“[48]   Mr Goldsworthy accepted that if the carbon credits provided were not genuine, or did not have value, they could not have been used to render Oakhill carbon neutral. He also accepted that it was critical that carbon credits have both value and a proper foundation.

[49]   On 2 August 2010 Shift published a press release (Ex 3) which claimed that Oakhill had become the world's first carbon neutral school. It included the following statement:

To ensure the College can claim to be 100% carbon neutral, Oakhill College offset its emissions by the acquisition of carbon credits.

[50]   Necessarily, Mr Goldsworthy accepted that the numbers specified were outside the range recorded in the certificate of available credits certified for BHR as prepared on 5 November 2009. It is apparent that the certificate provided to Oakhill represented that the 2,000 as enumerated were credits available in accordance with the certification of BHR. As the final amount certified was 117,611, it follows that the representation was false.

[51]   In my opinion, the truth is that the credits described in the certificates issued to Oakhill were non-existent and the numbers were bogus. I find that the certificate was valueless and provided no support for the claim that Oakhill had become carbon neutral by the acquisition of carbon credits. It was a fake. Mr Goldsworthy's claims that the credits described were valuable and genuine were, in my opinion, false and deceptive.”

25. Similar findings were made with respect to each of the other transactions.

(b)   Giant Star– Pyrolysis Waste Management

26. The subject-matter of the second group of certificates, although purportedly the subject of certification and allocation of carbon credits, was more obscure. “Certificates of Authenticity” were issued to PGA of Australia, the Sydney Turf Club and Asia Golf and Resort Management Pte Ltd in respect of an activity known as “Pyrolysis Waste Management South Korea”. The numbers of the certificates bore the initials SKGS. The certificate of authenticity bore the statement “Certification of Giant Star Co Ltd – Pyrolysis Waste Management company”, and gave an address in Seoul, South Korea. By implication “SKGS” stood for “South Korea Giant Star”. Each of the certificates commenced with a number being either “2000” or “2001”. Given the form of the Borneo Highlands Resort certificates, which were in the same form, it might properly be inferred that the first numbers related to a year.

27. Apart from the certificates themselves, there was no identified “register” held by Shift, nor was there evidence of certification, nor of an agreement allowing Shift to sell such carbon credit certificates. The only document relating to this project was one apparently produced by Giant Star Co Ltd, a Japanese company, which stated in the introduction:

“Since GS system co, ltd was established in 2001, it has tried to research and develop better equipment for different kinds of waste treatment.

Initially, the GS system has focused on developing food waste recycling equipment, which was successfully launched for the food waste recycling system for 2 regional governments in Korea in 2001 and 2002 respectively.

In the meantime, the GS system has developed and patented a fuel development system under the name of the GS system in 2004.

The patent system is the equipment that heats plastic waste in the absence of oxygen and pyrolyze the waste into gaseous fuel. In this manner, the emission of air pollution such as fumes, dust and dioxide could be dramatically reduced.

…

In 2004, GS system has been installed in-house (waste treatment: 20 tons a day, fuel development: 10-12 tons) and in addition to this the GS system is contracted to supply 4 lines … of this fuel development equipment to Kijeon Industry co, Ltd in 2005, Korea.”

28. On the basis of this material, the appropriate inference to be drawn was that the pyrolysis waste management system was not commercially operational before its date of patent in 2004 and that, accordingly, certificates which related to activities in 2000 and 2001 were false. A further inference from this material was that Shift had no entitlement to sell certificates with respect to any aspect of this process in any event.

29. Mr Goldsworthy gave evidence about the Giant Star plant in the course of cross-examination. It was put to him that the patent having been granted in about 2004 the process of pyrolysis commenced thereafter. Mr Goldsworthy asserted that it started before that date. [12]

    12.    Tcpt,03/12/13, p 145.

30. He agreed that in December 2007 he had made a proposal to “Giant Star Waste Management Co” to carry out an environmental audit of its processes, with the intention of identifying possible generation of carbon credits from the waste management plants. It appears that did not occur, although the cross-examiner established that by February 2007 a company in which Mr Goldsworthy was involved had obtained the assets of the Giant Star Co. The cross-examination then returned to the date when the pyrolysis plant commenced operating. Mr Goldsworthy agreed that, according to the statement set out above, it commenced in 2004. [13] He said, however, that although it was written in the document, that was not the case. He was asked if it was a brochure produced by the Giant Star Co and responded:

“In full production, the Pyrolysis plant started in 2004. The Pyrolysis plant was operating from 2001 onwards in a process of the same Pyrolysis but it was doing it in a non commercial way.”

13.    Tcpt, p 156.

31. He was then cross-examined about the carbon credit certificates: [14]

    14.    Tcpt, p 157.

“Q. … When Shift2Neutral issued carbon credit certificates in respect of the carbon credits generated from the Giant Star plant, did you maintain a register of the credits that were available?

A. No.

Q. In terms of any registration numbers that you might append to a carbon credit certificate there was no primary resource [sic] from which you could check the accuracy of the numbers being recorded; is that right?

A. No.

Q. Are you suggesting that there was a primary source …?

A. Yes.

Q. And checked?

A. Yes.

Q. What was that document?

A. A document owned by Giant Star.

Q. Do you have a copy of that document?

A. No.

Q. In 2009 and 2008 did you have a copy of that document?

A. No.”

32. The significance of the years 2008 and 2009 was that they were the times when the carbon credit certificates bearing the letters SKGS were issued. The trial judge identified them as certificates which had been issued with respect to the Giant Star pyrolysis plant, noting that there was “no evidence that any audit or certification was conducted by Shift.” The reasoning continued at [69]:

“Analysis of the contents of the certificates establishes that they conveyed representations similar to the Borneo certificates. In cross-examination, Mr Goldsworthy initially said he did not maintain or own a registry of available carbon credits generated from the GS plant, but later claimed there was a registry being the collection of issued documents referred to earlier. He was unable to explain the enumeration of the credits. He said they were not Shift's numbers but were issued to Shift by GS. He said he did not know what ‘SKGS’ represented, and did not accept that ‘2000’ and ‘2001’ related to years, or that it was represented that Shift had certified carbon credits for those years. If, in truth, he did not know to what the serial numbers referred, and kept no registry of certified credits, it may be readily found that the certification of authenticity was baseless. His attempts to explain the information in the certificates are recorded in the transcript (T p157-165). It is unnecessary to recite them. Suffice it is to conclude that, in my opinion, this evidence should be given no credence whatsoever.”

Appellants’ challenge to findings

(a)   reversal of onus – BHRF

33. The first argument presented by the appellants, supposedly in support of the proposition that the primary judge had reversed the onus of proof with respect to the defence, had a somewhat different focus, in respect of the primary proposition, namely that the Borneo Highlands Resort certificates were valueless. The argument commenced with the proposition that there were, in accordance with what purported to be the register, 117,611 credits available for each of 20 years. That the certificates issued did not fall within the numerical ranges given in the only document which could be identified as a register did not mean that they were valueless. That inference would depend upon demonstration, so it was submitted, that all the available carbon credits had been disposed of. There was no evidence to support that proposition.

34. That submission cannot be accepted. In respect of a market wholly unregulated except by such general laws as prohibit fraud and misleading and deceptive conduct, the existence of a valuable product required a method of identifying and recording that which is the subject of a commercial transaction. That was the basis upon which the transactions were documented and the trial conducted. Thus the trial judge noted that Mr Goldsworthy had originally accepted that the document which purported to record the registration numbers for credits which could be issued in the future was what it appeared to be. [15] The judge then stated at [34]:

“Mr Goldsworthy later resiled from that evidence saying it was mistaken, and gave a markedly different explanation of the document. He said it was not intended for the client, but was an internal document for training purposes to show how the carbon credits issued would look on the register.”

15.    Shift at [32]-[33].

35. Mr Goldsworthy also said it was a “draft document” prepared for the company’s auditors.

36. The judge did not accept that evidence, stating at [35]:

“I am entirely satisfied that Mr Goldsworthy's claim that his earlier evidence was mistaken was deliberately false and implausible, and I reject it. I find that he proffered the different explanation because he perceived the danger to his case if he accepted the document as a list of available credits certified by Shift, which, on its face, it plainly is, and also as a list consistent with the final amounts certified by Shift as advised in the letters of 16 October and 18 October 2009.”

37. There was no challenge to the findings based on the credibility of Mr Goldsworthy. However, nor could it be said that the reasoning set out above involved a reversal of the onus of proof. Rather, as the trial judge stated expressly, the documents spoke for themselves. The scheme required a registry of available carbon credits: Shift was authorised to sell identified carbon credits in accordance with its own assessment as recorded by it; it had no authority to sell carbon credits which did not fall within the terms of its assessment and records. The availability of carbon credits which it might have sold, but did not, provided no answer to the proposition that what it purported to sell was valueless.

(b)   reversal of onus – SKGS

38. With respect to the certificates bearing the notation SKGS, a more limited challenge was raised. It was submitted that the absence of evidence of any audit or certification conducted by Shift and the absence of evidence of certified carbon credits available to Giant Star was insufficient to support an inference that the carbon credits certified were valueless.

39. This submission cannot stand in the context of a scheme with the structure already outlined. What was sought to be conveyed was a “carbon credit certificate of authenticity”, which identified the purchaser as the legal owner of carbon credits, “in accordance with Shift2Neutral’s Certified Carbon registry.” There was no challenge to the proposition that that which was purported to be transferred by a legally effective process should have value. If there were no register operated by Shift in respect of the specific carbon credits the subject of the certificate, nothing of value was transferred. The suggestion that the credits were identifiable by reference to particular “Reg Numbers”, which in the context could only indicate numbers contained on a register, was also a false statement. Mr Goldsworthy’s suggestion that the register was kept by Giant Star was rejected by the trial judge and there was no challenge to that finding of fact. However, regardless of Mr Goldsworthy’s evidence, the documentation was sufficient to demonstrate that Shift did not keep a register.

40. In these circumstances, the letters and numerals used on the registered number are of little consequence. However, the obvious inference that the first four numbers related to a year in which the carbon credits were generated must itself have been false, at least with respect to the first year, as the evidence demonstrated that the pyrolysis process was not in existence in 2000. Even Mr Goldsworthy did not suggest that it was. Accepting Mr Goldsworthy’s evidence that the process was operating on a non-commercial basis in 2001 (the second apparent date of the certificates) his evidence did not suggest that Shift had purported to undertake an environmental audit of the value of any operation conducted in that year.

41. Absent Mr Goldsworthy’s evidence, the inevitable conclusion would have been that the certificates were false and valueless. The judge was obliged to consider whether some different inference would be drawn, based on his evidence: his conclusion that it should be given no credence was not only unchallenged but readily explicable from a reading of the transcript.

42. Although the appellants submitted that the allegations were tantamount to allegations of fraud, which would not readily be accepted absent clear and convincing evidence, the material before the trial judge nevertheless warranted a conclusion at that level of satisfaction.

(c)   specific imputations

43. The third basis of challenge alleged that the judge “leapt from the finding that the particular impugned certificates were ‘valueless’ to the conclusion that all the elements of all the imputations were justified.” This challenge was directed to three pairs of imputations (in each case, one involving the company and one involve Mr Goldsworthy).

44. The first was imputation 6(a), asserting that the company was “a fake company which shifts paper certificates instead of saving forests and cutting greenhouse emissions”. [16] That imputation, it was submitted, had not been shown to be false because Shift had genuine carbon credits available to it, being those assessed with respect to the Borneo Highlands Resort forest, namely 117,611 credits for each of 20 years.

    16.    The accompanying imputation with respect to Mr Goldsworthy was 6(i).

45. The nature of this challenge was selective. The language of the imputation was itself colloquial: the appellants did not suggest, understandably, that the term “fake company” implied that the company did not exist or that it had no business. The phrase is to be read in the context of the whole of the imputation which referred to the creation and transfer of valueless certificates, which were valueless because they did not reflect environmental consequences which they purported to reflect. However, once it is accepted that the imputation was not that the company or its business was non-existent, the fact that it may have had something to sell was no answer to the proposition that what it did purport to “shift” was valueless. Accordingly, the findings made by the judge directly addressed the truth of the imputations.

46. The second pair of imputations said not to have been justified was that the company (and Mr Goldsworthy through the company) “deceived investors by falsely informing them that its certificates for carbon offsets had value and represented a real reduction in greenhouse emissions”. [17] This challenge was based upon the proposition that the publication distinguished between “investors” (in Shift itself) and recipients of certificates. One investor, it was noted, who had been referred to in the article, was not called, nor did any other investor give evidence that he or she was deceived.

    17.    Being imputation 6(e) and 6(n).

47. It is true that the publication referred to one person who had invested in Shift, although it did not say how; it also stated that the publisher had “spoken to many former investors and businesses that have dealt with shift2neutral.” However, the article also contained the following passage:

“Mr Goldsworthy insists every certificate for carbon offsets he issues has value and represents a real reduction in greenhouse emissions somewhere in the world. That is what he has told puzzled investors and companies that have unwittingly sought to reduce their carbon footprint.”

48. Furthermore, the imputation immediately preceding that the subject of the present challenge was that the company and Mr Goldsworthy “made wild and false claims about carbon credits in order to persuade investors to buy them.”

49. In their appeal submissions of 21 November 2014, the appellants referred to both imputations generically, stating that “there was no evidence that Oakhill or any investor was deceived by the appellants.” Oakhill was, as noted above, the recipient of certificates, rather than a person who had in some other way invested in Shift and its business. Indeed, it was quite unclear on the evidence who might have been considered an investor who was not the recipient of a certificate. Evidence was called to establish that Shift was an excluded corporation within the terms of s 9 of the Defamation Act. The evidence demonstrated that the shares in Shift were all held by a company, Goldsworthy Nominees Pty Ltd, which was a trustee company for the Goldsworthy Family Trust.

50. This issue was not raised as a distinct point until senior counsel for the appellants handed up a document at the commencement of the hearing of the appeal suggesting that the reference to investors was distinct from a reference to the recipients of the certificates.

51. It is clear that this issue was not raised below, and for a good reason. The first task undertaken by the trial judge was to determine in respect of each imputation if it were conveyed and if conveyed, whether defamatory. With respect to imputation 6(d), the judge accepted (inevitably) that the reference to “investors” was to those who were persuaded to buy carbon credits. [18] When he turned to imputation 6(e), he noted the submission by the publishers that “the only investor the victim of deception was Mr Hicks, but he was not described as an investor in the carbon credits which Shift sells or provides.” The judge rejected that submission, stating:

“It overlooks the width of the meaning of the term ‘investor’ as used in the context of the whole of the article, which, in my opinion, is to be understood to include the entities to which carbon offsets were said to have been provided by the plaintiffs.”[19]

18.    At [4] above.

19. Shift at [15].

52. When this point was identified in the course of oral argument on the appeal, senior counsel for the appellants said that he sought to challenge that reasoning with respect to the scope of the imputation.

53. The challenge to the approach adopted by the trial judge with respect to the imputation must raise a fresh question as to whether the imputation should be allowed to stand on some more limited basis. The judgment of Nicholas AJ was delivered on 18 February 2014, the trial having been conducted in December 2013. Although, at the heel of the argument on the appeal, on 4 May 2015, senior counsel foreshadowed an application to amend the notice of appeal to challenge the finding in question, no formal document (beyond a further submission filed on 18 May 2015) was proffered. The further submission, and a reply by the respondents to the oral submissions, resulted in conflicting statements to the effect that the imputation would or would not have been sustained absent the broader construction given it by the trial judge. In these circumstances, the appellants should not be permitted to raise what is an entirely fresh argument so long after the time for filing the notice of appeal and the submissions had passed without any hint that such a challenge was on foot.

54. The appellants also submitted that, in any event, the appeal should succeed with respect to the imputation regarding investors on the ground that there was no evidence that the recipients of the certificates had been misled or deceived because none had been called to give evidence to that effect.

55. That submission should not be accepted. With the possible exception of Oakhill College, which Mr Goldsworthy stated received its certificates by way of donation, each of the recipients of certificates provided valuable consideration. It is a reasonable inference that each was deceived into believing that it had received something of value. In the absence of evidence, it would be quite inappropriate to infer that the recipients were willing to obtain the benefit of the certificates, not caring whether they were genuine or not.

56. When asked why the certificates were given to Oakhill College, Mr Goldsworthy responded that he wished to help the College because he felt it was of benefit to the College. [20] It was a significant part of his claims in chief as to distress and embarrassment caused by the publications that he had been accused of “ripping-off a school”. [21]

    20.    Tcpt, p 29(30).

    21.    Tcpt, p 46(20).

57. In cross-examination he had given evidence of assessing the carbon footprint of Oakhill College and providing offset carbon credits to render the College “carbon neutral”. [22] Although not at first willing to accept the conclusion, he eventually agreed that “[i]f the carbon credits that have been provided were not genuine, or didn’t have value, then they couldn’t have been used by Oakhill to render Oakhill College carbon neutral”. [23]

    22.    Tcpt, p 59(10).

    23.    Tcpt, pp 59-60.

52. The proper inference is that if Mr Goldsworthy held that view, Oakhill College would also have held that view. A finding that the certificates were not genuine and were valueless therefore demonstrated that Oakhill College had been deceived.

53. It follows that the imputation was properly found to have been justified.

54. The remaining pair of imputations challenged were to precisely the same effect, addressing specifically the question of deceiving Oakhill College, being the imputation derived from the second article. [24] The foregoing conclusion with respect to the second pair of imputations, which dealt with deception generally, also applies with respect to Oakhill College specifically. Accordingly, the final challenge should be rejected.

    24.    Imputations 8(a) and 8(f).

Conclusion

61. For these reasons, the appellants have failed to demonstrate error on the part of the trial judge in upholding the respondents’ defence of justification. The appeal should be dismissed: the appellants must pay the respondents’ costs in this Court.

62. SIMPSON J: I agree with Basten JA.

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Endnotes