ON July 25, 2014, Justice David Davies sentenced Jonathan Moylan at the Supreme Court of New South Wales for a breach of section 1041E (1) of the Corporations Act 2001 (Cth). The ruling is a careful and deliberate decision, showing equipoise. Justice Davies has a reputation for being a thoughtful and philosophical adjudicator. The judge convicted and sentenced Moylan to imprisonment for 1 year and 8 months. The judge ordered that Moylan be “immediately released upon giving security by way of recognisance in the sum of $1000 to be of good behaviour for a period of 2 years commencing today”.
On January 7, 2013, Moylan issued a hoax press release on ANZ letterhead saying the bank had withdrawn its $1.2 billion loan facility from Whitehaven’s Maules Creek Coal Project on the grounds that the project would harm the environment, and the climate. Whitehaven’s share price fell before recovering. In an interview, Moylan sought to explain his action:
Well, I certainly didn’t intend any harm to shareholders in Whitehaven and, you know, for the record, I do apologise. Though I won’t apologise for exposing ANZ’s dirty investments in Whitehaven Coal and the process where the local community has been totally … We’re up against, you know, a big company here and change doesn’t happen without people taking risks and I think that, you know, this kind of thing is likely to happen in the future, perhaps not me, but people are going to be taking more and more risks to ensure that our rights and our environmental rights and the rights of landholders are respected and our children and grandchildren have a future.
Moylan was charged under section 1041E of the Corporations Act 2001 (Cth) for making false or misleading statements, and faced up to ten years in prison and a $765,000 fine. After initially contesting the matter, Jonathan Moylan decided to plead guilty to the offence under section 1041E of the Corporations Act 2001 (Cth) in May 2014.
In his ruling, Justice Davies explained the nature of the offence in section 1041E of the Corporations Act 2001 (Cth):
Section 1041E, by its broad terms, captures a wide range of prohibited conduct. Persons ordinarily charged under this section have tended to disseminate false information for the purpose of receiving some gain for themselves or for some company with which they are involved. However, the section extends beyond those types of cases. At various times during the sentencing hearing reference was made to “white collar crime” with the Crown, in particular, drawing attention to analogous cases such as cases involving insider trading, tipping or making false statements for the purpose of personal gain. Those types of cases have some elements in common including the loss of control over the false information, the involvement of and damage to the market, and the difficulties of detection, investigation and proof beyond reasonable doubt.
The judge commented: “Whilst it is true that the present offence did not involve personal financial gain, and that is relevant in the sentencing process, the Memorandum refers in a number of places to the need to increase penalties for ‘market manipulation’ and ‘market misconduct’, which was precisely what happened here.”
Robert Sutherland – the lawyer for Jonathan Moylan – previously argued that the media should have sought to verify the provenance and accuracy of the hoax email. In sentencing, Justice Davies noted that the Newcastle Herald, AAP, the Australian Financial Review and Bloomberg had published the hoax. The judge noted “the Offender’s Senior Counsel went so far as to say that the journalists more than the Offender ought to be held to account for the ultimate effect on the market”. His Honour rejected that argument:
I completely reject that submission. Whatever responsibility the journalists might have had to check the story, it is quite hypocritical of the Offender to point the finger at them when he set up the false media release intending (as he accepted) that at least some of them would accept it as genuine. The whole point of the exercise was that the recipients of the media release should, at least for a period of time, accept the genuineness of what was given to them in order to embarrass and encourage the ANZ to say publicly that it was supporting the project or, what would be far less likely, to say that it would withdraw the funding.
The judge commented: “If the Offender had really expected the journalists not to publish until an official statement from the ASX’s announcement platform, the hoax would not have got off the ground”. Justice Davies observed: “If the Offender knew anything about the announcement platform and how it worked, he must have expected that at least some journalists would not wait for that sort of confirmation or the hoax would have had no effect.”
Sutherland observed that Moylan had intended to carry out a culture-jamming performance like The Chaser: “[Moylan] has found himself in much deeper water than he ever anticipated”. The judge noted that Moylan had been inspired by The Yes Men, amongst others. He cited a conversation between Rob Harrison, an investment broker, and Jonathan Moylan:
Mr Harrison: Do you understand the impact of putting a false and fraudulent media release out to the public has on wealth and shareholdings in stock? Did you consider that before you did this? The Offender: Well we see this as similar to The Yes Men’s announcement about Union Carbide compensating victims of the Dow Chemical spill in India.
Justice Davies observed that Jonathan Moylan had considered the case of The Yes Men before taking action. While recognising that Moylan was not motivated by “personal profit”, Davies observed that his actions did have significant impact in that: “Some investors lost money or their investment in Whitehaven completely”.
The judge considered the question of contrition and Moylan’s guilty plea. Moylan offered an apology to the court, observing:
The fact that the release, which was intended to generate publicity about the ANZ loan, led to trading on the stock exchange came as a complete surprise to me. It was my failure to consider the market-sensitivity of the statements that led to trading that would not have otherwise occurred. Wantonly causing harm or loss to others in no way forms part of my commitment to non-violence. Those who traded on that day have every right to feel deceived and angry about the consequences of my actions. Additionally, I am well aware that many people have their retirement savings managed by a broker and invested in Whitehaven, and such people may have lost money that they have worked hard to earn. Those people in particular deserve an apology and explanation for their unjust and undeserved loss.
The judge observed: “The statements made to Mr Harrison of BBY, Jamie Freed of AFR and Conor Duffy from the ABC seem to me to amount to qualified apologies to those who may have lost money.” In sentencing, the judge read and noted a number of decisions concerning market misconduct offences. His Honour noted that personal profit was the dominating motive in the cases: “In all cases sentences of imprisonment were imposed, although in some cases these were suspended in whole or in part”. He observed: “The lack of such motive in the present case is what distinguishes it from those cases”. Nonetheless, his Honour stressed “this was much more than some sort of public mischief offence where, for example a false report is made of a crime for some private purpose.”
Justice Davies distinguished the case of Jonathan Moylan from the United Kingdom case about protesters against the Iraq war in R v Jones  1 AC 136. In this case, Lord Hoffmann discussed the role of civil disobedience:
Civil disobedience on conscientious grounds has a long and honourable history in this country. People who break the law to affirm their belief in the injustice of a law or government action are sometimes vindicated by history. The suffragettes are an example which comes immediately to mind. It is the mark of a civilised community that it can accommodate protests and demonstrations of this kind. But there are conventions which are generally accepted by the law-breakers on one side and the law-enforcers on the other. The protesters behave with a sense of proportion and do not cause excessive damage or inconvenience. And they vouch the sincerity of their beliefs by accepting the penalties imposed by the law. The police and prosecutors, on the other hand, behave with restraint and the magistrates impose sentences which take the conscientious motives of the protesters into account. The conditional discharges ordered by the magistrates in the cases which came before them exemplifies their sensitivity to these conventions. These appeals and similar cases concerned with controversial activities such as animal experiments, fox hunting, genetically modified crops, nuclear weapons and the like, suggest the emergence of a new phenomenon, namely litigation as the continuation of protest by other means.
In this famous case, Hoffmann called for respect for the tradition of civil disobedience: “If there is an issue as to whether the defendants were justified in doing acts which would otherwise be criminal, the burden is upon the prosecution to negative that defence”.
By contrast, Justice Davies was disinclined to accept the argument that Jonathan Moylan was engaged in civil disobedience. Justice Davies observed: “As far as the Offender’s prospects of rehabilitation are concerned, I am inclined to accept the assessment of Mr Johnston, who assessed the Offender as a low risk of re-offending”. The judge commented: “He is not a criminal in the classic sense of one who needs rehabilitation, although I consider that there is some likelihood that he may continue to engage in what might be regarded as minor breaches of the law as acts of disobedience to further his beliefs and purposes.” In sentencing, Davies J told Jonathan Moylan:
I have considered all the available sentences and I am satisfied that no other sentence than imprisonment is appropriate in all the circumstances. But for the guilty plea, I would have imposed a sentence of 2 years’ imprisonment. With a 15 per cent discount for the plea the appropriate sentence is a period of 1 year and 8 months (rounded down). However, taking into account the guilty plea, the fact that the hoax was readily admitted within a short period of time, the fact that the Offender has not previously been convicted of a serious offence, and the fact that the offence was not committed for the purpose of personal financial gain, nor was any obtained, I consider that the Offender should be immediately released upon giving security of $1000 upon the condition to be of good behaviour for 2 years with such sentence commencing today.
The judge warned Moylan: “If you are not of good behaviour during the 2-year recognisance, which at a minimum means that you do not commit any further offences, or if you fail without reasonable excuse to fulfil or comply with the conditions of your recognisance, your recognisance may be forfeited and you will be brought back before the Court and the orders I have made may be revoked or cancelled.”
The decision of Justice Davies will receive a great deal of attention because it raises larger questions about corporations law, the role of ASIC, culture-jamming, climate change, and civil disobedience.
In the wake of the ruling, Jonathan Moylan published an opinion in The Guardian – ‘My Hoax wasn’t meant to Crash the Market but save the Environment.’ He commented: ‘When our politicians continue to break their election promises and cosy up to coal interests, our eclectic mix of citizens – men and women willing to engage in civil disobedience – are the best hope we have for the future.’ Moylan noted: ‘Hoax press releases are nothing new, and taking the piss with a purpose is part of a long tradition of creative mischief.’ He observed: ‘For the record, I was not trying to crash the market. I was trying to highlight the fact that ANZ are funding the biggest open cut coal mine currently being constructed in Australia.’ Moylan acknowledged: ‘I bear the consequences for my decision to bluff ANZ bank with a fake press release.’ He observed that ‘the day will come when banks will have to choose between coal and their reputations.’ ‘ He hoped that investors ‘should also be fully informed about the environmental impact of their investments in order for the planet to work, because it’s the only home we have.’
Jonathan Moylan has received vocal support from farmers, environmentalists, and climate activists. Rick Laird, a farmer from Maules Creek, travelled to Sydney for the sentencing hearing. He observed: “To most people ANZ is just a bank, but to our community at Maules Creek their loan to Whitehaven Coal threatens to put an end to 150 years of farming in the region”. Laird stressed: “We’ve been fighting this mine for years but what Jono did means the world knows what is happening to Maules Creek farms and the Leard State Forest”. He commented that the community has been showing solidarity with Jonathan Moylan: “Jono stood with us, so we’re here to stand with Jono.”
A number of commentators have lamented the failure of ASIC to pursue other cases involving false information. Paddy Manning – for Crikey News – noted the lack of charges by ASIC for Richard Macphillamy after an investigation into spreading of false rumours to affect share prices surrounding Macquarie Bank during the Global Financial Crisis. Michael West – of the Fairfax newspaper, The Sydney Morning Herald, has referred to the failure of ASIC to pursue action against the Commonwealth Bank. Bernard Keane in Crikey News accused ASIC of double standards: “The corporate regulator is too scared and incompetent to take on large companies, but has come down hard on the man who sent out a fake press release to expose the stupidity of finance journalists.”
The Minerals Council of Australia has wanted to use the case of Jonathan Moylan as a precedent by which to pursue other environmentalists and climate activists. In a piece commissioned by the Minerals Council of Australia, RMIT economist and Institute of Public Affairs fellow, Sinclair Davidson, argued that section 1041E of the Corporations Act 2001 (Cth) should also be applied to fossil fuel divestment activists. He argues: “To the extent that stigmatisation deliberately causes investors to make valuation errors and consequently rebalance their portfolios away from fossil fuel stocks, a violation of the Corporations Act 2001 (Cth) has occurred”. This would appear to be a weak, tendentious, and meritless argument, to anyone with legal training. While the offence is a broad one, it is not so open-ended, as Sinclair Davidson would maintain.
Fossil fuel divestment has been advocated by a wide range of policy-makers, intellectuals and activists – including United States President Barack Obama; climate leader and former Vice President of the United States, Al Gore; Christiana Figueres, the Executive Secretary of the United Nations Framework Convention on Climate Change; United Nations special envoy on climate change, Mary Robinson; religious leader, Desmond Tutu; the Carbon Tracker; and Bill McKibben. It would indeed be absurd and ridiculous to enforce section 1041E of the Corporations Act 2001 (Cth) against those engaged in political communication about environmental protection, climate action, and fossil fuel divestment.
In the future, there is a need to ensure that the Corporations Act 2001 (Cth) is not used as a crude means of quelling dissent in respect of matters of public importance.