Shift2Neutral Pty Limited v Fairfax Media Publications Pty Limited

Supreme Court of NSW|2013-12-10|Before: Nicholas AJ

Judgment 1The plaintiffs sue the defendants for damages for defamation arising from the publication on 8 April 2011 of an article in the newspaper "The Sydney Morning Herald" under the heading "Revealed: wild claims of carbon credit firm" (Annexure A to these reasons), and also arising from the publication on 14 April 2011 of an article in the same newspaper under the heading "School deceived by carbon neutral scheme" (Annexure B to these reasons). The first defendant, was the publisher of the newspaper which circulates in New South Wales and the other States and Territories of Australia. The second defendant was a journalist employed by the first defendant, and the author of the articles. 2By consent the trial proceeded before me without a jury. 3The first plaintiff (Shift) is a corporation which, on 5 December 2013, I found to be an excluded corporation within the meaning of section 9(2)(b) of the Defamation Act 2005 (the Act). The second plaintiff (Mr Goldsworthy) is a director, and the controller, of Shift. Shift claims compensatory damages. Mr Goldsworthy claims compensatory and aggravated damages. No claim for economic loss is made. Mr Goldsworthy and his father, also a director of Shift, gave evidence. No witness was called for the defendants. 4Shift was incorporated in July 2007. Its business activities include the provision of energy audits, renewable energy strategies, corporate environmental policies and carbon credit certification. It claimed its team would assist businesses in achieving a carbon neutral workplace. 5With respect to the first article, the plaintiffs pleaded in paragraph 6 of the Amended Statement of Claim that, in its natural and ordinary meaning, it conveyed the followed defamatory imputations: (a) The First Plaintiff is a fake company which shifts paper certificates instead of saving forests and cutting greenhouse emissions. (b) The First Plaintiff falsely pretended to engage in deals to generate more than $1 billion of carbon credits because the deals did not exist. (c) The First Plaintiff lied when it said that every carbon offset certificate issued has value and represents a real reduction in greenhouse emissions. (d) The First Plaintiff made wild and false claims about carbon credits in order to persuade investors to buy them. (e) The First Plaintiff has deceived investors by falsely informing them that its certificate for carbon offsets had value and represented a real reduction in greenhouse emissions. (i) The Second Plaintiff controlled a fake company which shifts paper certificates instead of saving forests and cutting greenhouse emissions. (j) The Second Plaintiff controlled a company which falsely pretended to engage in deals to generate more than $1 billion of carbon credits because the deals did not exist. (k) The Second Plaintiff controlled a company which lied when it said that every certificate for carbon offsets issued has a value and represents a real reduction in greenhouse emissions. (l) The Second Plaintiff is a liar about the value of carbon credits issued by his company. (m) The Second Plaintiff controlled a company which made wild and false claims about carbon credits in order to persuade investors to buy them. (n) The Second Plaintiff controlled a company which deceived investors by falsely informing them that its certificates for carbon offsets had value and represented a real reduction in greenhouse emissions. 6With respect to the second article, in paragraph 8 of the Statement of Claim the plaintiffs pleaded that, in its natural and ordinary meaning, it conveyed the following defamatory imputations: (a) The First Plaintiff deceived Oakhill College by providing it with worthless carbon offsets. (b) The First Plaintiff is dishonest about its carbon offset claims. (d) The Second Plaintiff makes false claims about carbon offset deals valued at more than $1 billion. (e) The Second Plaintiff made false statements to "The Herald" to the effect that carbon offsets had been generated by a partnership with two companies. (f) The Second Plaintiff controlled a company which deceived Oakhill College by providing it with worthless carbon offsets. (g) The Second Plaintiff controlled a company which is dishonest about its carbon offsets claims. 7In support of a claim for aggravated damages Mr Goldsworthy asserted the imputations were false. 8The defendants did not accept that the imputations were either conveyed or defamatory. The defence of justification under section 25 of the Act was pleaded to all imputations.

The imputations 9The issues in respect of each imputation are whether it, or one not substantially different, was conveyed to the ordinary reasonable reader about the relevant plaintiff, and, if so, whether it was defamatory of it or him.

The article of 8 April 2011 10Although they did not concede that the first article conveyed the imputations pleaded in paragraph 6 of the Amended Statement of Claim, the defendants declined to submit to the contrary as to imputations (a), (b), (c), (i), (j) and (k). These imputations, in substance, are allegations of deceptive, false and misleading conduct on the part of the plaintiffs in different respects. The thrust and tenor of the article, taken as a whole, in blunt and clear language provides examples of such conduct. Accordingly I find that each of these imputations arise from the article. 11The defendants denied the article supported the imputations (d), (e), (m) and (n). 12Imputation (d) is: The First Plaintiff made wild and false claims about carbon credits in order to persuade investors to buy them. 13It was put that the words "in order to persuade investors" allege the purpose for which the claims were made, which was an allegation without support. I disagree. In my opinion, in addition to the headlines "Revealed: wild claims of carbon credit firm" and "Revealed: scandal of carbon credit firm" and the first paragraph, the passages commencing "Mr Goldsworthy insists" and ending "he was unable to provide even one.", and "I realised there was something strange" and ending with the words "over a shopping centre in a suburb of Sydney." convey the clear impression that the investors were persuaded to obtain carbon offsets from the plaintiffs in response to claims about them being the underlying purpose for which the claims were made. Accordingly, I find that imputations (d) and (m) were conveyed. 14Imputation (e) is: The First Plaintiff has deceived investors by falsely informing them that its certificates for carbon offsets had value and represented a real reduction in greenhouse emissions. 15The defendants' submissions, as I understood them, were to the effect that there was no support for the allegation that investors to whom Shift sold carbon credits had been deceived. It was put that the only conclusion to which the ordinary reasonable reader would come was 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. I reject the submission. 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. 16Accordingly, I find that imputations (e) and (n) were conveyed. 17In conclusion I find imputations in para 6(a), (b), (c), (d), (e), (i), (j), (k), (l), (m) and (n) were conveyed. It is self-evident that each is defamatory, and I so find.

The article of 14 April 2011 18The defendants do not concede that the second article conveyed the imputations pleaded in paragraph 8 of the Amended Statement of Claim, but declined to submit to the contrary. Their stance fortifies me in finding that the article, taken as a whole, provides ample support for each of them. The headline "School deceived by carbon neutral scheme" and the succeeding 5 paragraphs alleged deception by the plaintiffs and the making of baseless claims about their carbon offsets scheme to achieve a carbon neutral status. The allegation that Mr Goldsworthy is unable to provide evidence "that his certificates have contained anything but hot air" (paragraph 6) is one which is to be reasonably understood as descriptive of the claims attributed to him in the article. 19Accordingly I find that the imputations in paragraph 8 (a), (b), (d), (e), (f) and (g) were conveyed. I also find that each is defamatory.

Background 20The business of Shift included the conduct of environmental audits and the issuing and certification of carbon credits. The essential issues in the case concern the validity and substance of carbon credits purportedly certified by the plaintiffs, and the claims and representations made about them. 21The following information was included in an agreed statement provided to the Court to enable an understanding of the underlying purpose and function of carbon credits: 1. Responding to the perceived threat of climate change, many individuals, organisations and governments seek to reduce or influence the reduction of greenhouse gas emissions. One approach is for individuals and organisations who emit greenhouse gases to make voluntary payments to those emitters of greenhouse gases who have been able to reduce their own emissions. A market forms when those who emit (Entity B) pay money to those who reduce their emissions (Entity A). The generic term for the unit of trade is a "carbon credit". In the simple example depicted below, the result of such a transfer is that Entity A's actual emission reduction is used by Entity B to offset its own emissions, through the purchase of a "carbon credit" from Entity A. So long as the price is high enough, Entity A has an incentive to reduce its emissions. 2. A carbon credit is a unit which equates to the removal of one tonne of carbon dioxide (or equivalent greenhouse gas emissions) from the atmosphere, or the prevention of one tonne of future greenhouse gas emissions from entering the atmosphere. That carbon credit can then be made available to other parties who wish to offset their own emissions. ... 3. A carbon credit certificate is a representation by the issuer of the certificate that an emission reduction in the terms described in the certificate has occurred. A carbon credit certificate assists the recipient of the certificate in tracing the source of the carbon credit so that the carbon credit can be confirmed to be genuine. A carbon credit certificate purports to represent a cut in greenhouse gas emissions. ... 8. ...The term "additionality" is used to describe the achievement of a reduction in emissions which would not have occurred had the relevant entity continued to operate in accordance with its existing practices. 22Mr 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. 23A carbon credit was a commodity which could be traded by Swift 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. 24Under the defence of justification a major issue concerned the validity of carbon credit certificates provided by Shift purportedly for carbon credits allocated in respect of the Borneo Highlands Resort (Old Rainforest) (BHR) and Giant Star Co Pty Ltd (GS). It is raised by the Defence in respect of the substantial truth of imputations 6(a), (c), (d), (e), (i), (k), (l), (m), (n) and 8(a), (b), (f) and (g). I now turn to the evidence of the transactions in which the certificates were provided.

Mr Goldsworthy 25Although Mr Goldsworthy appeared to be a person of extensive commercial experience, I formed an unfavourable view of him as a truthful witness, and found that his evidence should not be accepted unless corroborated by credible documentation. He was generally unwilling to assist the Court on matters about which he was the repository and controller of relevant information. On many occasions he feigned difficulty in understanding or responding to direct questions, and was ready to tailor his evidence in accordance with what he perceived would best advance his case. Examples include his volte face in respect of Ex 12, his implausible claim as to the existence of Shift's certified carbon registry, and the claims that contra deals with the Sydney Turf Club (STC) and the Professional Golf Association of Australia (PGA) were gifts. In addition, the answers given to questions as to the content of the certificate issued to STC against BHR carbon credits (T pp109, 110) and of the certificates against GS (T pp157-165) undermined the credibility of his evidence generally.

The Borneo Certificates 26Shift issued a number of certificates in respect of carbon credits referable to BHR in Sarawak, Malaysia. The certificates were in a common form similar to that issued to PGA a copy of which is Annexure C to these reasons. Details of the certificates are as follows: (1)23-11-2009 to PGA for 2,632 credits: "Reg. Numbers BHRF_2006_(00...)117612 through to BHRF_2006_(00...)120244". (2)23-11-2009 to GRG International Pty Limited (GRG) for 1,060 credits: "Reg. Numbers BHRF_2006_(00...)120244 through to BHRF_2006_(00...)121304". (3)12-01-2010 to Oakhill College (Oakhill) for 2,000 credits: "Reg. Numbers BHRF_2006_(00...)121305 through to BHRF_2006_(00...)123304". (4)03-02-2010 to The Sydney Turf Club for 5,000 credits: "Reg. Numbers BHRF_2005_(00...)120245 through to BHRF_2005_(00...)125244". (5)01-03-2011 to K&D Plumbing Pty Ltd (K&D) for 527 credits: "Reg. Numbers BHRF_2007_(00...)120240 through to BHRF_2007_(00...)120767". 27On 4 August 2009 Shift entered into an agreement with Tan Sri Lee Kim Yew (Mr Yew) the owner of Borneo Highlands Resort and Mines Golf City whereby Shift was appointed their exclusive carbon credits and environmental partner. The properties were held by Mr Yew under a long term lease from the Malaysian government commencing September 1994. 28Under the agreement each of Borneo Highlands Resort and Mines Golf City authorised Shift to certify its property forest area and land for carbon credits. It included the following: Shift2Neutral will sell each certified carbon credit on behalf of Borneo Highlands Resort and Mines Golf City and will pay Borneo Highlands Resort and Mines Golf City a value of USD$7.50 for each carbon credit. 29By letter of 16 October 2009 to Mr Yew, Mr Goldsworthy advised of the number of carbon credits certified for the properties, relevantly, as follows: I would like to advise you on the final carbon credit certification amount of the properties we have been engaged to certify. Please find the numbers on a per annum basis below ... Borneo Highlands Resorts Old Growth Forest - 3500 acres or 1417 hectares. Carbon Credits allocated on a per annum basis - 117,611 carbon credits. 30By letter of 18 October 2009 to Mr Yew, Mr Goldsworthy advised again, inter alia, that the final carbon credit certification for Borneo Highlands Resort - Old Rainforest was for the allocation of 117,611 carbon credits. The letter included: The current and retrospective carbon credits certificates will soon be presented to your organization. As per of our contracts, (sic) Shift2Neutral has also 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. 31On about 5 November 2009, Mr Goldsworthy created a document headed "Shift2Neutral Carbon Credit Certification Standard" beneath which were the words "Certificate of Authenticity". Borneo Highlands Resort - Old Rainforest was named as the client. The document purported to list the registration numbers of the 117,611 carbon credits issued to the client for each of the years 1990 to 2009 inclusive. 32When first questioned about the document, Mr Goldsworthy said it went to the client, and accepted that it purported to record the registration numbers for credits which could be issued in the future. He said (T p89 lines 45-50): Q. And this is a register maintained by you - regardless of the source of information - this is a register maintained by you of a number of available registration numbers of carbon credits that could, at some stage, be issued by your company; is that right? A. This is a document that was produced for the client of the potential and how they would be looked upon, yes. and (T p90 lines 19-23): Q. Could you answer my question: Did this purport to represent, regardless of who produced it, the available carbon credits that might, at some stage in the future, be issued? A. It was a document produced based on the fact that we believed that this was a number of carbon credits that could have been allocated, yes. 33He said that it recorded that 117,611 carbon credits would be issued per annum and that according to the standard relied upon it allowed the claim for credits to be backdated to 1990 although the audit and certification process had taken place in 2009. 34Mr 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. He said: (T p111, lines 22-29): Q. What is the true position? A. The position is it was a draft document to show our auditors how it would look as far as a document would look from the 1990 year. We got the 117 figure from 2009 and all I had to go on was to go to 2009 and I indicated it had the same thing. It was a document to show the auditors what it would look like. I didn't put in accurate numbers or figures, it was purely and simply to show what it would look like. 35I 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. 36Furthermore, in the last mentioned letter it was said that "The current and retrospective carbon credits certificates will soon be presented to your organization". The document for BHR was included in Ex 12, which consisted of certificates for each of the properties referred to in the letter. The whole of the evidence amply supports the finding, which I make, that the documents in Ex 12 were "The current and retrospective carbon credits certificates" of the final amounts allocated in respect of each property which were prepared for presentation to the client, Mr Yew. Mr Goldsworthy's denial that, in fact, it had been sent to the client was inconsistent with this earlier evidence. I am satisfied on the probabilities that at the time it was created on 5 November 2009 it was sent to Mr Yew as proposed. 37On 23 November 2009, Shift provided to PGA a certificate for 2,632 credits against BHR said to have registered numbers "2006...117612 ... to ... 120244". On the same date it provided to GRG a certificate for 1,060 credits against BHR said to have registered numbers "2006...120244 ... to ...121304". 38On 27 November 2009 the certificate for BHR (part of Ex 12) was modified by Mr Goldsworthy by the inclusion for 2006 of additional carbon credits numbered "...117612 to ... 120244". He accepted that these corresponded with those allocated to PGA on 23 November 2009. 39On 12 January 2010 Shift provided to Oakhill a certificate for 2,000 credits against BHR said to have registered numbers "2006...121305 ... to ... 123304". 40On 3 February 2010 Shift provided to STC a certificate for 5,000 credits against BHR said to have registered numbers "2005...120245 ... to ... 125244". 41On 1 March 2011 Shift provided to K&D a certificate for 527 credits against BHR said to have registered numbers "2007...120240 ... to ... 120767". 42Although self evident, Mr Goldsworthy said that the numbers on the certificates were generated to represent the registered serial numbers of carbon credits for a particular year which had been allocated to the recipient. 43At this point some observations may be made. Under the agreement, Shift, exclusively, was authorised to certify the properties for carbon credits. Shift agreed to sell each certified carbon credit and to pay US$7.50 for each to the owner. As a matter of construction, the carbon credits to be sold by Shift were confined to those which it certified, which in respect of BHR, was the amount of 117,611. Shift had no authority to sell carbon credits which it had not certified. 44In 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. 45Mr Goldsworthy accepted that the certificate represented that there was a certified carbon registry operated and owned by Shift, which he said was true. When pressed to identify the registry he referred to a collection of discovered documents which consisted only of copies of the certificates provided to recipients. This he described as the "registry of issued certificates". In my opinion his evidence on this issue was simply fanciful, and incapable of establishing the truth of the representation conveyed in the certificate. It supports the inference that there existed no registry of the kind suggested, and, hence, it was false to pretend otherwise. This conclusion is reinforced by the enumeration of the carbon credits shown in the certificates provided on 23 November 2009 to PGA and GRG. Those allocated to PGA ended with the number (0...)120244 whilst those allocated to GRG commenced with the number (0...)120244. Mr Goldsworthy agreed that had there been a properly maintained register it was unlikely that such a mistake would appear. It follows that identification of the allocated carbon credits by reference to registered numbers was a baseless concoction. 46I now turn to the evidence of transactions for which the certificates were provided.

Oakhill 47Oakhill is a college located at Castle Hill, NSW. Shift carried out an environmental audit for Oakhill between January and June 2010, the purpose of which was to assist it to achieve a carbon neutral status. The report (Ex 1) concluded that the net amount of Oakhill's carbon emissions was 1,656 tonnes. On 12 January 2010 Shift provided a certificate to Oakhill for 2,000 carbon credits to enable it to claim it was carbon neutral. Mr Goldsworthy told Oakhill the credits were worth about $20 each, and could be used to offset any carbon emissions. He said the credits were not sold to Oakhill, but provided as a gift. 48Mr 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. 49On 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. 50Necessarily, 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. 51In 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.

STC 52On 18 November 2009, Shift submitted to STC a proposal for an environmental audit (Ex 6). It included: Shift2Neutral will provide a compliance level via a star rating 1, 3, and 5 Gold Stars, as well as an amount of CO2 emissions required for offsetting. These emissions will be offset, by either existing carbon credits owned by the Sydney Turf Club or our offer to sponsor a further AUD$100,000 in carbon credits ... I sincerely thank you for your time and the action you have taken in looking to neutralise the events (sic) greenhouse gas emissions. 53The proposal included statements that carbon neutrality may be achieved by purchasing enough carbon credits to neutralise greenhouse gas emissions. 54In December 2009, STC entered into a sponsorship agreement with Shift. I reject Mr Goldsworthy's denial that the document in evidence, Ex 7, was a copy of the agreement signed by him on the basis that although he signed in the space provided, he did not sign the other pages. In my opinion, the denial was implausible as being inconsistent with his earlier reliance on the sponsorship agreement with STC dated 1 January 2009, which was in similar terms and signed only in the space provided. I am also satisfied that he sought to distance himself from the agreement because of the difficulty he perceived in justifying his agreement to provide $100,000 worth of World Bank Certified Carbon Credits under Schedule 2, clause 2.1. 55The agreement concerned sponsorship of a race day to be held at Rosehill Gardens on 6 February 2010 to be called "Green Day at the Gardens". In exchange for a sponsorship fee of $100,000 worth of "World Bank Certified Carbon Credits" STC agreed to provide Shift with a number of benefits as set out in the Schedule in the nature of advertising and hospitality. 56On 3 February 2010, Shift provided a certificate to STC for 5,000 credits. 57As with Oakhill, Mr Goldsworthy accepted that the numbers certified were outside the range of available credits for BHR as recorded in the certificate of 5 November 2009. 58For reasons similar to those for my findings on the Oakhill transaction, I find that this certificate was a valueless document, and Mr Goldsworthy's claims to the contrary were untrue. The inevitable conclusion is that STC was thereby duped into providing the benefits to Shift under the agreement. 59For reasons similar to those for my findings on the other transactions, I also find that this certificate was a valueless document.

PGA 60On 23 November 2009 Shift provided a certificate to PGA for 2,632 credits numbered "2006_(0...)117612 ... to ... 2006_(0...)120244" in return for advertising benefits on golf carts. Mr Goldsworthy accepted that the number specified was beyond the number certified available for BHR. 61I have earlier noted (para 38) that on 27 November 2009 Mr Goldsworthy had modified the certificate for BHR by the inclusion for 2006 of additional carbon credits numbered "(0...)117612 ... to ... (0...)120244" which corresponded with those allocated to PGA. A curious feature of the modification is that it is inconsistent with the other evidence of the amount of carbon credits said to have been available for BHR per annum. The basis upon which it represented that the amount of carbon credits available for 2006, but not for the other years, was (0...)120244 was left unexplained, doubtless because there could be no plausible explanation. The circumstances lead to the findings that both the modification and the certificate are works of fiction. 62With respect to GRG, on 23 November 2009, the certificate provided to it enumerated carbon credits beyond the number certified available for BHR. For reasons similar to those for the other transactions, I also find that this was a valueless document.

K&D 63K&D had been referred to Shift by STC. On 16 January 2011 Shift invoiced K&D in the amount of $5,500 (including GST) for environmental services described as follows: Environmental Audit Review and analysis of existing carbon footprint and emission levels. Provide carbon credits and marketing and implementation strategies. 64On 1 March 2011 Shift provided to K&D a certificate for 527 credits, enumerated outside the range certified for BHR. Mr Goldsworthy denied the fee included an amount for the sale of carbon credits as he asserted a distinction between provision and sale. However, he accepted that the provision of the carbon credits to the client was to assist it in becoming carbon neutral. 65In respect of this certificate I make findings similar to those for the other transactions. The invoice is also evidence that Shift represented to K&D that the carbon credits provided as part of the transaction were of value, which, as has been shown, was untrue.

The Giant Star Certificate 66Shift issued a number of certificates in respect of carbon credits referable to GS. These were in a common form similar to that issued to PGA, a copy of which is Annexure D. Details of the certificates are as follows:

4-12-2008 to PGA for 5,264 credits: Reg. Numbers SKGS_2000_(00...)1 through to SKGS_2000_03000 Reg. Numbers SKGS_2001_(00...)1 through to SKGS_2001_02264.
12-12-2008 to Asia Golf and Resort Management Pte Ltd (Asia Resort) for 5,264 credits: Reg. Numbers SKGS_2000_03001 through to SKGS_2000_06000 Reg. Numbers SKGS_2001_02265 through to SKGS_2001_04527.
31-01-2009 to STC for 3,600 credits: Reg. Numbers SKGS_2000_06001 through to SKGS_2000_09000 Reg. Numbers SKGS_2001_04528 through to SKGS_2001_05128. 67GS operated a waste pyrolysis plant in South Korea. According to Mr Goldsworthy, pyrolysis is a process whereby waste is converted into an inert state so that greenhouse gases are not emitted. This activity is an available source of carbon credits. He said that the pyrolysis plant was operating in a non-commercial way from 2001 onwards, and full production started in 2004. 68On 10 December 2007, Shift submitted an environmental audit proposal to GS to audit its facilities to generate "VER offset carbon credits". There was no evidence that any audit or certification was conducted by Shift. 69Analysis 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. 70Consideration of the evidence overall supports findings in relation to the GS certificates similar to those made in relation to the Borneo certificates. Furthermore, there was no evidence of the existence of certified carbon credits available to GS as the source from which the purported allocations to the recipients were taken; it was false to pretend otherwise. 71I have not overlooked the evidence that the certificate provided to STC was pursuant to an offset audit program of January 2009 made in anticipation of STC's fixture "Green Day at the Gardens Race Day, 13 January 2009" which included the following: The purpose of the carbon emissions audit is to ensure that the inaugural Green Day at the Gardens Race Day is carbon neutral. As part of this report, both the Sydney Turf Club and Environmental Business Solutions acknowledged that Shift2Neutral will be supplying the equivalent of AUD$100,000 in carbon credits to ensure the day is truly carbon neutral ... ... Calculations Shift2Neutral offers 3,600 carbon credits to the Sydney Turf Club to assist with the offsetting of carbon emissions for Green Day at the Gardens. These carbon credits clearly offset the emissions on the day. 72The related sponsorship agreement of January 2009 provided for a sponsorship fee of $100,000 worth of certified carbon credits to be paid by Shift to STC in exchange for advertising and hospitality benefits. As with the transaction involving the credits for BHR, STC provided these benefits in exchange for carbon credits the existence and value of which had been misrepresented.

Determination 73The principles applicable to the defence of truth were referred to by me in Ange v Fairfax Media Publications Pty Ltd [2011] NSWSC 204 at [55] and [56]. In order to establish an imputation is substantially true a defendant needs to establish that every material part of it is true. Inaccuracy in some detail is immaterial provided it does not alter or aggravate the character of the imputation and so long as the real "sting" of the imputation is shown to be true. 74I have found the representations conveyed in the BHR and GS certificates provided by the plaintiffs, and Mr Goldsworthy's claims that the credits therein described were genuine, valuable, and available to offset carbon emissions, were false. I have found the certificates to be valueless documents. The evidence in support of the findings establish the substantial truth of the imputations as to the conduct of Shift and Mr Goldsworthy concerning the certificates and the claims they made about them. These include the imputations of deception of Oakhill. 75Accordingly I hold that each of the imputations pleaded in paragraph 6(a), (c), (d), (e), (i), (k), (l), (m), (n) and paragraph 8(a), (b), (f) and (g) is substantially true.

Mindanao 76The evidence relating to Shift and the Tribal Coalition of Mindanao Inc (the Coalition) is relevant to imputations 6(b), (j) and 8(d). Imputation 6(b) is: The first plaintiff falsely pretended to engage in deals to generate more than $1 billion of carbon credits because the deals did not exist. 77On 14 May 2009 Shift entered into an agreement with the Coalition to supply carbon credit certification services for its land on Mindanao, an island of the Philippines. It was agreed that the benefits would be shared equally. Mr Goldsworthy said the project had not been completed, and certification had not taken place as the identity of the owners was, and remains, uncertain, although in his mind the owners are the tribes identified in the agreement. 78In emails of 5 and 6 October 2010 to Mr Victoriano Vidal, a representative of the Coalition and a signatory to the agreement, Mr Goldsworthy questioned whether he wished to stop the tribes from receiving their share of $500 million. In an email to Mr Vidal said to have been sent in November 2010 (Ex 30) Mr Goldsworthy stated: The NGO in charge of the tribes - TRICOM have advised tonight they do not want the US$500,000,000 funds held in trust by our carbon credit broker. I believe they have trouble confirming the ownership of the ancestral land we have certified and sold the credits for (sic). Therefore may I request a phone conversation so I may forward the funds to the Climate Change Commission and ask that you and the Senator may choose to do what is appropriate with the funds for Climate Change and the Tribes. ... As far as SHift2Neutral is concerned we wish to just give the funds to the rightful owners but Tricom chose to cause issues with the process of certification and had made threats of kidnappings in Manila. 79He agreed the email stated in explicit terms that there were half a billion dollars held in trust by a carbon credit broker. However, he denied that he intended to convey that carbon credits had been sold and the money banked. Mr Goldsworthy proceeded to say that the funds were "...held by the broker, by an investor, who was looking at purchasing our carbon credits for this particular project" (T p217 lines 17-18) and adhered to his evidence that there were $500 million in a trust account although no carbon credits had been issued. His counsel said supporting documentation would be produced, but none was. 80In my opinion, the email of November 2010 is to be reasonably understood to represent that Shift had certified and sold carbon credits, and that $500 million was held in trust as funds payable to the Coalition as its share of the proceeds of the sale. As the agreement provided that the sale proceeds were to be shared equally, as Mr Vidal would be likely to know, the effect of the representation was that Shift had sold the carbon credits for the total amount of $1 billion. This was consistent with the message conveyed in the emails of 5 and 6 October 2010. 81Mr Goldsworthy's evidence demonstrated the falsity of the representation. Certification had not been completed, and no carbon credits had been issued. There was no evidence which supported the existence of the transaction to which the email referred, and such evidence as there was negated it. 82Accordingly, I hold that each of the imputations pleaded in paragraphs 6(b), (j) and 8(d) is substantially true.

Statements to Mr Cubby 83The evidence relating to Mr Goldsworthy's correspondence with Mr Cubby, the second defendant, is relevant to imputation 8(e) which is: The Second Plaintiff made false statements to "The Herald" to the effect that carbon offsets had been generated by a partnership with two companies. 84By email of 6 April 2011 to Mr Goldsworthy, Mr Cubby asked for information about projects which have generated carbon credits to be used to offset carbon emissions. Mr Goldsworthy replied by email of 8 April 2011 which, relevantly, included: 3. What overseas offset projects have proceeded? Philippines REDD Project and there (sic) others, which must be kept confidential ... 5. What Australian-based offset projects have proceeded? Forest Enterprises Australia (through a broker) We have partners, who approached us to work with them on their programs to generate carbon offsets. 85Mr Cubby replied by email of 8 April 2011 as follows: Thanks for replying. Do you have contact details or names for anyone you have worked with at these companies, or a rough idea of dates when emissions abatement activities took place? If you have the certificate numbers for the certificates you issued that would help greatly in tracking them down. ... Who is the person at Forests Enterprises Australia who you have been dealing with to gain certificates for shift2neutral, so I can contact them and verify that they did indeed generate the offsets? 86By email of 11 April 2011 Mr Cubby pressed for a reply to his email of 8 April 2011. It included: And the Forest Enterprises Australia offset generation you referred to also remains a mystery to me - got any details? 87Mr Goldsworthy replied by email on 12 April 2011 which, relevantly, included: And the Forest Enterprises Australia offset generation you referred to also remains a mystery to me - got any details? Forest Enterprises Australia 233B Charles Street, Launceston 7250 My company made an (sic) financial investment into Forest Enterprises Australia. 88With reference to the second article, Mr Goldsworthy said he was complaining that it said he "...performed carbon credit offsets with a logging company and I never did" (T p184 lines 6-7). He said he had been approached by partners to work on a project to generate carbon offsets involving Forest. The evidence proceeded (T p190, lines 7-19): Q. ...and you didn't say: When I told you that one of the Australian based offset projects that has proceeded was Forest Enterprises Australia, I was mistaken; you didn't say that, did you? A. I never said that it would proceed. Q. Well, when you were asked what Australian based offset projects have proceeded, the very next words you used in answer to it were "Forest Enterprises Australia"? A. Mr Sibtain, I believe I have answered that question already to you. I believe I have answered it to you on the basis that I was upset when I wrote it. I was upset that - and I replied in the manner that I believed was appropriate, and on 12th I wrote again on the basis of information after discussion with my legal counsel. 89In my opinion, analysis of the language of Mr Cubby's emails makes plain that his questions requested information on projects which had actually proceeded to generate carbon credits for Shift to provide to businesses to offset emissions. Mr Goldsworthy's unambiguous answer to question 5 in the email of 8 April 2011 identified Forest as an offset project which had proceeded, and effectively stated that Shift also had partners working on programs to generate offsets. In his email of 8 April 2011, Mr Cubby's request concerning Forest is also couched in terms which make plain his understanding from Mr Goldsworthy's answer that the Forest project had proceeded and had actually generated offsets. In my opinion, this understanding was made clear to Mr Goldsworthy in Mr Cubby's email of 11 April 2011 in which he asked for details of "...the Forest ... offset generation you referred to ...". Mr Goldsworthy's response was to provide Forest's address and advise of Shift's financial investment in it. 90In my opinion, the reasonable conclusion from the correspondence is that Mr Goldsworthy represented that a project or projects involving Shift, Forest, and other partners to generate offsets had, in fact, proceeded. The evidence demonstrates that statements to that effect were untrue. Mr Goldsworthy's explanation that he was upset when he answered question 5 as he did strongly suggested that he accepted the answer was incorrect. 91Accordingly, I hold that the imputation pleaded in paragraph 8(e) is substantially true.

Conclusion 92The defendants also submitted that further support for their case was evidence of the lack of a foundation for the carbon credits certified for the BHR in that there had been no risk of logging in the old rainforest between 1996 and 2009, and thus no "additionality", and no basis for issuing credits for the years 1990 to 1995 prior to the commencement of the lease. However, in light of the findings made on the other grounds I consider it is unnecessary to determine this issue. 93The defendants have succeeded in proving the substantial truth of all the imputations relied upon by the plaintiffs. I therefore direct that there be a verdict for the defendants and judgment accordingly, the judgment to be entered forthwith. 94The question of costs remains outstanding. My prima facie view is that the plaintiffs should be ordered to pay the defendants' costs. However, failing agreement, the parties may address in relation to costs on 25 February 2014.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 February 2014

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