Sunday, 28 April 2013

Zomojo v Hurd & Others - Developments

This blog entry isn't really designed for general consumption but is just here to update those friends interested in hearing of any progression of the sad saga.  That is, this is not very interesting really unless you have a stake or correlated interest.

Two big things happened on Friday 19th April in the continuing battle against the evil Zomojo.

I've no money left so I'm representing myself on a judicial disqualification application (aka recusal) submitted 26 and 27th February 2013.  Yes, the judge was bent on doing me no favours by waiting nearly two months to hear this simple application.  I submitted just prior to the 10AM submission deadline on the Friday 19th as required.  A few hours later, in the early afternoon, Hon Justice Michelle Gordon withdrew from the case and vacated the hearing that was meant to be on Tuesday 23rd April 2013. Wow! This case just keeps getting weirder.  Given the trial was split into two parts with 6 days being heard and 3 still scheduled, I'm struggling to find precedents for judges withdrawing two thirds of the way through a trial.  A few good cases around for death and sometime judges being sick or on leave which have largely resulted in mistrials or at least 100% of the precedents I have found.  The judge stated the withdrawal had nothing to do with bias or apprehended bias for what it's worth. Full discredit due to Gordon J for stuffing up the trial but full credit for appropriately withdrawing. Not much solace to Zeptonics or its investors and terminated staff in knowing the proceedings are a basket case. The injustice is galling. Curious to see what happens next and hard to predict due to the uniqueness of this situation perhaps.

The second big thing is that the solicitor and barrister have managed to do something we couldn't do by self-representation, which is get a hearing granted for the leave to appeal against part of Gordon J's 5 February 2013.  Hopefully the appellate judge or judges will find the appeal as serious and as compelling as I do but we'll have to wait and see what May 17th brings.

You couldn't script these two little wins for the same day in a fictional account as it would seem too set up.  Perhaps there is a book in this little battle.

Thank you for all the support the team (well, ex-team I guess) and I have received during this difficult time.  This whole saga is a poor reflection on doing business in Australia and its legal system.  The idea that the Federal Court of Australia will not allow the hundreds of thousands or  millions of small businesses to self represent is appalling and just opens the door for nasty companies like Zomojo that abuse the court processes for their own goals.

My lay person's submission, complete with grammatical and typographical errors is below, but you'd have to be mad to read it and the supporting affidavit.  Yes, it's a bit one sided by nature.

Kind regards,

Matt.


Prior post:  http://meanderful.blogspot.com.au/2013/04/zomojo-v-hurd-others-another-perspective.html

__________________________________________


Submission from:  Matthew John Hurd
19 April 2013
Submission
1)     This submission concerns the interlocutory application requesting that Gordon J should be disqualified from sitting on VID 1478/2011 based on Apprehended Bias.
2)     The test for determining whether a judge should disqualify himself or herself by reason of apprehended bias is “whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide”: Johnson v Johnson (2000) 201 CLR 488 at [11], affirmed in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; applied in Michael Wilson & Partners Ltd v Nicholls (2011) 282 ALR 685; distinguished in British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; see also Slavin v Owners Corporation Strata Plan 16857 [2006] NSWCA 71 and Barakat v Goritsas (No 2) [2012] NSWCA 36.
3)     Disqualification is a serious matter and not to be taken lightly otherwise litigants may succeed in effectively influencing the choice of judge in their own cause: see Re JRL; Ex p CJL (1986) 161 CLR 342 at 352; Attorney General of New South Wales v Lucy Klewer [2003] NSWCA 295; Ebner v Official Trustee, above, at [19]–[23]; and Raybos Australia Pty Limited v Tectran Corporation Pty Ltd(1986) 6 NSWLR 272.
4)     Disqualification in this matter would be particularly onerous given that the matter is partially heard with a judgment made, and with significant orders entered and acted upon.  It may be impossible for the second split of the trial to take place justly with a second judicial officer.  The continuation of evidence required would be at least one reason.  Disqualification may indeed require that a consequential mistrial is the only just outcome.  The consequences to flow from a disqualification are indeed serious and of significant cost to all concerned.
5)     However, if a disqualification is the appropriate action and this course is not taken, it is not too much to say that the integrity of the justice system and the public confidence in such will be compromised.  After all, the purpose of the Apprehension of Bias principle is to guarantee that not only justice is to be done but that it is seen to be done for reasons including those concerning integrity of the justice system and public policy.
6)     This submission contends that in Zomojo v Hurd, Gordon J demonstrated a lack of procedural fairness, actual bias and apprehended bias.  However the application is only asking that Gordon J be disqualified based on the lesser standard of apprehended bias. A lack of procedural fairness and actual bias, or the possibility of such, simply in their own consideration may lead to an apprehended bias conclusion.
7)     Generally an application should be made as soon as reasonably practicable after the party seeking disqualification becomes aware of the relevant facts. Otherwise the right to do so may be waived: Vakauta v Kelly (1989) 167 CLR 568 and Cassegrain v Commonwealth Development Bank of Australia Ltd [2003] NSWCA 260.  The Respondents became anxious regarding bias after the 5th February 2103 orders were entered.  Internet searches drew troubling associations between Gordon J, her husband Hayne J and the Applicant’s representatives, beneficial owners and family.  In fact, Mr Joshua Rose, the then Zeptonics Principal for Commercialisation, found the associations troubling enough on understanding the linkages that he suggested that the Respondents hire a private investigator to further review the associations between Dr Greg Robinson, Professor Patricia Desmond (Robinson’s wife), Mr John William “Bill” Burdett, Mr Dean Boyle, Mr Ian Heddle and Mr Tim Batho. This could not be financially afforded. The application was lodged expeditiously later that month with a brief supporting affidavit from Matthew Hurd enumerating the associations found via simple internet searches. It should also be noted that it may not always be practical to know before a trial if apprehended bias is likely as the conduct should be considered in the context of the trial as a whole and the possibility of the dissipation of effect or express withdrawal of material taken into account: Jae Kyung Lee v Bob Chae-Sang Cha [2008] NSWCA 13.
8)     The fact that the judge knows a party or witness may be a ground for disqualification, depending upon the degree and the circumstances of the acquaintanceship and association.  Now that UK law has fallen into line with CA, NZ and AUS law with regard to similarity of the apprehension of bias it would not be unreasonable to note that in R (on the application of Gardner) v Harrogate Borough Council and Atkinson [2008] EWHC 2942 (Admin) it was concluded there was appropriate apprehension of bias as there was a real possibility of bias in the decision though there was just an acquaintance, not friendship, in the association and no direct pecuniary interest.  Again, the court concluded justice must be seen to be done.
9)     An association may give rise to a reasonable apprehension of bias without there being a connection between the association and one of the issues in dispute: Murlan Consulting Pty Ltd v Ku-ring-gai Municipal Council[2009] NSWCA 300.
10)  Gordon J’s decision to split the trial into two parts was discussed and approached tentatively as some of the difficulties of this approach were noted.  Those difficulties have materially affected the Respondents affecting their ability to satisfactorily argue their case thus giving rise to disqualification by apprehended bias as perhaps the only reasonable outcome left.  Given Gordon J’s scathing assessment of Matt Hurd’s (paragraph 5 of 19th December 2012 Gordon J judgment) and John Hurd’s credit, and the Respondents’ impecuniousness due to the effect of Gordon J’s orders, the Respondents have little option but to rely on their own representation and witness statements for the second part of the trial.  In this case it is difficult to see how Gordon J could be seen to bring an impartial mind to the further deliberations.  In addition the Hurds’ only option of witness testimony would be to the witnesses for a second time which is also problematic.  In fact, the situation does not seem too different to the interlocutory issues in terms of finality raised in Kwan v Kang [2003] NSWCA 336 regarding evidence in that case which calls for consideration of the apprehension of bias.  Perhaps this could be true for all split trials where interlocutory orders of a final nature are entered between splits indicating a fundamental flaw in such a process.
11)  Evidence need not be debated in an apprehension of bias decision as the judge must interpret the view of the model of a reasonable lay person and it is this mythical prototypical lay person the judge must use to decide the outcome.  Matters of procedural fairness and bias are raised in this submission.  The evidence of such would also be present in the mind of a reasonable lay person and influence their view of the possibility of lack of impartiality from the bench.  It is in this context that these matters are important as this submission argues that a perception of lack of a natural justice or a lack of procedural fairness combined with any perception of actual bias does indeed influence the mind of a reasonable lay person in terms of their perception of a possible lack of impartiality in the judge’s decision making.
12)  This submission relies on the following grounds for disqualification:
a)      Gordon J failed in her duty to uphold procedural fairness in Zomojo v Hurd proceedings and her failure weighs further than the immediate trial and affects Matthew Hurd’s ability to seek review of her decision;
b)     Gordon J was affected by actual bias during Zomojo v Hurd proceedings;
c)      Gordon J was negligent in the handling of some details in Zomojo v Hurd proceedings; and
d)     Gordon J’s conduct fails to meet the standard required by the apprehension of bias rule.
However it relies on not 12(a), 12(b) and 12(c) being found only that they would contribute to 12(d) by way of entering the mind of a reasonable lay person as it upon the apprehension of bias principle we rely on for this application to succeed.
13)  Procedural fairness is the right to an independent and impartial tribunal: Ebner v The Official Trustee in Bankruptcy; Clenae Pty Ltd v ANZ Banking Group Ltd [2000] 205 CLR 337 at [3]. It consists of two broad principles (1) the decision-maker must afford the right to be heard in appropriate circumstances, and (2) the decision-maker should not be biased or seen to be biased. The very first principle of justice requires that, when one party comes into Court and asks for an order, the other side should be heard, and unless it is heard, no one can tell whether the order asked for or made it is just or not: Utick v Utick (1905) 5 CLR 400. This was conclusively determined in Kioa v West (1985) 159 CLR 550 per Mason J at 548.

14)  A judge affected by actual bias would be unable to comply with the Judicial Oath, and would be disqualified from sitting. In such a case, the question for determination is whether there is bias in fact.
15)  Significant errors in the written judgment demonstrate a lack of attention to detail and, whilst not quite the same as falling asleep at the bench during trial as happened in one famous HCA case, significant errors that ought to have not found their way to an entered judgment arguably are of the same character, as falling asleep, in that the lack of attention to detail reflects negligence with the practical result that a judge’s impartial mind is not being relied upon.
Supporting facts
16)  Gordon J allowed the Applicant to enter new pleadings after the trial had been run without allowing further evidence to be heard on the new or altered allegations. Fundamental to procedural fairness is the right to make submissions (written or oral); call evidence and/or cross examine witnesses.  Also fundamental is the right to receive notice of matters to be dealt with.  Neither of these fundamental rights were allowed by Gordon J. The Respondents were tried and “convicted” without being able to answer the allegations as the allegations were significantly amended after the trial had been conducted, without the Respondents being allowed to present evidence, and without the trial running according to the orders in terms of confidential information and the split put to the court before trial. Gibbs CJ in Kioa makes the point that a notice of charges, as the respondent has a right to know the case against them, is part of the “irreducible minimum” of the duty to accord procedural fairness.  If there is a breach of procedural fairness, the decision will be prima facie void (Kioa v West; Ridge v Baldwin).
17)  Gordon J made specific written orders concerning the exacting precision required and argument relating to confidential information in orders prior to the trial.  Gordon J did not enforce those orders despite protestation and allowed a wide and mainly ridiculous set of claims to be put forward. The ridiculousness of the bulk of the confidential claims, despite the pre-trial orders and Chapman affidavit, was not reflected in the judgment nor assigned discredit. Gordon J allowed the Applicant to change their confidential information case to be one where no specific item of the 108 items presented was confidential but an arbitrary combination of any number of them may be deemed to be confidential but which combination could not and did not have to be articulated by the Applicant. One might argue that the weakness of the Applicant’s case made this the only reasonable option for the Applicant as they scrambled to make something out of an indefensible position.  The Applicant was assisted by Gordon J.
18)  Gordon J disallowed the great majority of Matt Hurd’s evidence to be entered into to trial, striking out the majority over a hundred pages of confidential information rebuttal and not allowing over two hundred references to academic papers, USPTO patents, web information and the like to be presented.  Given the short allotment of time for the defence of two and half days this action by Gordon J compromised the ability of the Respondents to properly respond. Both side’s expert witnesses included a reference to the paper Lockwood 2012 which was accepted by Gordon J from both but it was not allowed as a reference when cited by Hurd.  Gordon J’s broad approach to the elimination of the references showed a bias by not considering each piece especially as it is hard to argue that an official patent document from the USPTO with proper referencing is not adequate in terms of provenance.
19)  It may be argued that the narrative approach found in the text of the 19th December 2012 Judgment is unprofessional and unwarranted.  The scathing assessment of Matt Hurd’s credit and psychology in paragraph 5 is clear.  The text at the end of that paragraph, “He showed no remorse, just bitterness” is symptomatic of the mindset of Gordon J in evoking an interpretation beyond what lay in the factual evidence.
20)  Gordon J disallowed the entering of the OptiCast prototype device and parts into evidence and eventually with the device sitting in the centre of the bar table in a kind of silent protest, Gordon J ordered that it be put out of view.  There was a bit of memorable theatre to all of this which was hard to ignore at the time. Gordon J presents a good example of bias in 19th December 2012 judgment (Judgment) [259] and [260] in relation to Opticast.  Gordon J writes in [260], “Chapman and Associate Professor Philip Leong gave evidence about the two devices.  Neither Chapman nor Associate Professor Leong actually examined an OptiCast or a ZeptoLink.  Neither device was in evidence.”  Yes, Opticast was not in evidence because Gordon J refused to allow it to be put into evidence, transcript 2012-10-24 p35, line 20, “MR WOOD: I want to put to the witness the actual machine or device that is Opticast.”  This and other aspects makes a reasonable person wonder if Gordon J herself actually wrote this and other parts of the Judgment and, if not, if Gordon J read and paid proper attention to the editing of the Judgment.  An important part of procedural fairness is that proper and full attention be paid to the proceedings and it seems unlikely that Gordon J would have made such errors herself directly given the mini-drama around the Opticast prototype in the courtroom and thus this indirectly raises the question about negligence by not paying proper attention to the matters at hand.
21)  Discredit was brought to the Applicant or their legal representatives concerning their breach of Hayman v Home Office due to their outrageous repeated disavowing of such during pre-trial correspondence in which escalating and repeated denials and incessant demands lace with threats for withdrawal was false and Hurd’s evidence confirmed to be actually true by Robinson in the witness box regarding the Getco matter.  The documents were accepted and entered into evidence.  No weight was given to the Applicant’s credit in the judgment relating to this abuse of process which may cause a reasonable lay person to doubt the impartiality of the Judgment.
22)  Discredit was brought to the Applicant in their errors in ASIC documentation concerning the share buy-back, which was claimed by Robinson to be typographical, but it is noted that this was subsequently submitted without correction to ASIC.  Again no weight was assigned to this in the Judgment.
23)  Deloitte’s Sincock gave evidence from the witness box that his valuation number would have been higher if the research and development assumptions given to him by the Applicant’s Director, Dr Robinson, were incorrect. Mr Wood, the barrister for the Respondents, elected not to give further submissions regarding the cross-claim at that point in time as this was scheduled for hearing in the second part of the split trial.  Gordon J gave an order in paragraph 3 for the 5 February 2013 orders, “Nunc pro tunc, the hearing of the proceeding be split between liability (including all of the cross claim) and quantum” without the cross-claim being properly heard with the further evidence due to be put to the court disallowed. No hearing. The cross claim was summarily dismissed despite the existing evidence and without an opportunity for a fair hearing. The Applicant summarily gained around $9 million based on the Applicant’s provided share price of over $18 per share. No procedural fairness.
24)  Gordon J gave immediate orders (in particular, paragraph 15 of 5 February 2013 orders) that destroyed the Respondents’ business and resulted in over twenty people being put out of work. As part of procedural fairness the Respondents should have been given time to respond to paragraph 15 of the Orders which were such that the Respondents’ business was immediately destroyed.  The stamped orders were received from the court in the afternoon of 5th February 2013 with the effective time of compliance required being 9AM that morning prior to the Orders being received.
25)  Gordon J “invents” new evidence as part of her “prosecution” in her Judgment.  [61] “Chapman devised…” was incorrect as it was Zomojo’s Matthew Herrmann who devised it. Gordon J twisted the evidence to sound worse than it was, [158], “second-generation Opticast device…”  Gordon J in [291] writes, “I accept that ZeptoNIC was created by Hurd prior to 11 January 2011 and, therefore prior to 12 February 2011” which is preposterous especially as the Applicant’s legal representatives and expert witness did have the full development history of all hardware, including ZeptoNIC, showing the initial start of the gathering of the components to start the design of ZeptoNIC began in the second half of April 2011 by Dr Snowdon and Mr McDaid.  The Applicant’s legal representatives and expert witness were in a position to know this simply fact and should not have mislead the court by arguing a different case, but Gordon J decided to go further than the evidence presented and make up facts on behalf of the Applicant.  If it were not so grave it would be comical in [301] where Gordon J states, “Hurd used Zomojo’s confidential information, including the integration of timestamping, logging and passthrough functionality, in the design and development of the ZeptoNIC in breach of cl 9 of the Service Agreement” as there was a lack of evidence to support such a conclusion. Again it would be pretty hard to find any evidence in support of [319] given that ZeptoNIC never had firmware developed for it capable of, and thus didn’t ever, transmit a network packet, “Even if contrary to the views earlier formed (see [301] above), Hurd had not used Zomojo’s confidential information prior to 12 February 2011, by late 2011 it was evident that he had used his knowledge of Zomojo’s implementation of fast ordering, speculative transmission and transmit fragmentation techniques and the integration of timestamping, logging and passthrough functionality into the firmware of Zomojo’s NICs in designing, developing and marketing the ZeptoNIC after 11 February 2011 in breach of cl 9 of the Service Agreement and in breach of the continuing fiduciary duties owed to Zomojo and in breach of s 183(1) of the Corporations Act.”  Forget the fact that several well third party solutions have such capabilities.  Bias?
26)  There was evidence before Gordon J from Chapman and the Applicant’s expert Assoc Prof Leong that Opticast and ZeptoLink were different types of devices.  Gordon J chose to ignore this and declared that ZeptoLink was an evolution of Opticast which is not a sensible proposition.  Gordon J prides herself in her use of technology in the courtroom.  However her representations of even of the simpler aspects of the technology, e.g. [117] “silicon NICs for use in Opticast” were wrong.  No such “silicon NIC” product would be useful for Opticast and thus the statement makes no technical sense. There are statements in the judgment simply echoing the Applicant’s submission without appropriate weight being given to the Respondents evidence and even sometimes the Applicant’s own witnesses.  For example, in P247, “Even if OptiCast was not an “invention”, it was certainly a discovery or novel design” contrary to evidence given by the Applicant’s expert that regenerative taps were common.  Opticast was designed to be regenerative tap.  Gordon J argues that it was an invention when in fact the device never got past the “experiment” stage as it was a conceptually flawed product that did not work, nor could never work, due to the signal loss being too great for recovery from the optical splitting, so where is the evidence?
27)  Gordon J states in [253], “Assertion, without more, is insufficient” in relation to the Respondent, yet it is the Applicant who should be providing the evidence rather than the Respondent being found guilty before being proving their innocence and this simple statement is a significant example of the bias and prejudice that is entwined in the whole of the proceeding.
28)  Hurd was concerned about bias and injustice in the judgment and orders and discovered with the help of google a number of associations between Gordon J and the proprietors of Zomojo, Dr Greg Robinson and his wife in particular. In the Matt Hurd affidavit, he points out the associations Gordon J has in working at Melbourne University along side her esteemed husband Hayne J as does Robinson’s wife Prof Patricia Desmond.  Dr Greg Robinson previously worked at Melbourne University also but a long time ago. Zomojo’s Robinson and his wife donated at least $200,000.00 over 2007, 2008, 2009, 2010 and 2011 to the University of Melbourne, an employer of Gordon J, whilst Robinson was an employee of Zomojo. Robinson’s wife, besides attending a gala dinner with the CEO of Epworth Healthcare, published a paper for Epworth Healthcare of which Michael Robinson AO is Chairman and Gordon J was a barrister reporting to Michael Robinson when Her Honour first came to Melbourne from Perth.  Michael Robinson and Hayne J, Gordon J’s husband, are known to each other at least via both Melbourne University and Scotch College.
29)  Gordon J has a history that brings into question her ability to judge appropriate associations.  Mr Ben Butler in the Sydney Morning Herald, wrote an article that was published on 18 September 2012 noting that Gordon J thought it may be reasonable to proceed in passing judgment on a person she had previously prosecuted as a barrister on behalf of ASIC showing an interesting interpretation of the apprehension of bias principle.  Whilst it is true that representing someone may not disqualify in future (Re Polites; Ex p Hoyts Corporation Pty Ltd (1991) 173 CLR 78 and Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411) it is hard to imagine that a history of prosecuting a party would not disqualify.
30)  Judgment was handed down by Gordon J in John Andrews & Ors v Australian and New Zealand Banking Group Limited [2011] FCA 1376. This judgment dealt with the declarations sought by the applicants that the arrangements between ANZ and the applicants in relation to ANZ charging an exception fee on the accounts in question are void and unenforceable as they amount to a penalty, and required the determination of Separate Questions which identified certain specific Exception Fees charged by ANZ to account holders in relation to an identified ANZ account. September 2012 was a bad month for Gordon J as in September 2012, 38,000 customers of the ANZ Bank were delivered a victory by the High Court in Andrews v Australia and New Zealand Banking Group Ltd [2012] HCA 30 (Andrews). The court unanimously found that certain fees charged by ANZ to its customers could be characterised as penalties, and were therefore likely to be unenforceable and refundable to the bank’s customers. It was never mentioned that at St Michaels College where Gordon J is a board member that the Chairman of the Board, effectively her boss there, was a senior executive at ANZ Bank. It seems a stretch to refer to this as a pattern of behaviour but it does cause pause when considering the ability of Gordon J to extract herself in thinking from the associations around her with respect to a reasonable lay person considering the possibility of impartiality given such a history.
31)  A significant number of errors are claimed to be have made and the Respondents are attempting to appeal aspects of the judgment and orders. Consideration of these appeal points may lead a reasonable lay person to lend weight to the idea that there might be the possibility of a lack of impartiality based on the view that informed legal representatives are of the view these are worthy of pursuit in the appellate court and point to errors in Gordon J’s judgment:
a)      Her Honour erred in holding that Mr Matthew Hurd’s evidence that work commenced on ZeptoLink in April 2011 could not be accepted without contemporaneous and independent corroboration.
b)     Her Honour erred in holding (if her Honour did hold) that clause 10 of the Services Agreement required Mr Hurd to disclose and assign ZeptoLink.
c)      Her Honour erred in finding that Mr Hurd breached clause 10 of the Services Agreement (as that term is defined in the reasons for judgment in the Court below).in relation to ZeptoLink.
d)     Her Honour erred in finding that ZeptoLink was designed or created in breach of Mr Hurd’s fiduciary duty to Zomojo.
e)      Her Honour erred in failing to take into account the evidence of Associate Professor Leong and Dr Chapman about the differences between OptiCast and ZeptoLink.
f)      Her Honour erred in directing counsel for the respondents not to put the OptiCast device to Associate Professor Leong or Dr Chapman in cross-examination.
g)      Her Honour erred in holding that the respondents held the profits derived from ZeptoLink on constructive trust for Zomojo.
h)     Her Honour erred in granting a mandatory injunction requiring the assignment of ZeptoLink.
i)       Her Honour erred in granting leave to amend the statement of claim after the close of evidence.
j)       Her Honour erred in finding (if her Honour did find) that a combination of facts that were in the public domain constituted confidential information within the meaning of s.183 of the Corporations Act 2001.
k)     Her Honour erred in permitting the applicant to amend its particulars of confidential information during the trial.
l)       Her Honour ought to have held that the applicant’s confidential information claim, as particularised before the trial, was the only allegation the respondents had to meet at trial.
m)    Her Honour erred in holding that Mr Hurd’s fiduciary duty continued after he ceased to be a director of the applicant.
n)     Her Honour erred in finding that the development and marketing of ZeptoLink involved a breach of clause 3.1, 3.3, 3.4 and 3.5 of the Services Agreement.
o)     Her Honour erred in applying the restraint of trade act in circumstances where the restrain that was sought to be enforced was not pleaded.

Conclusion
32)  The proceedings have been badly run. Procedural fairness, bias and the integrity of the court processes are in question and yet there remains a second part of the trial to be run.  It is hard to imagine that Gordon J could be seen by a reasonable lay person to bring an impartial mind to the further proceedings where Matt Hurd and John Hurd have to represent themselves and be their own witnesses.  It is arguable that even without the admission of bias that with hindsight a reasonably minded lay person might perceive that Gordon J may not have been able to bring an impartial mind to the first part of the trial and will be even more so challenged in the second part of the trial.  Gordon J cannot deliver procedural fairness with regard to the quantum hearing set down for 22nd July 2013.

Gordon J should be disqualified from VID 1478/2011.



______________________
Matthew Hurd
19th April 2013
_______________

Supporting affidavit:

I Matthew Hurd of __________ say on oath:
1.               I am the Applicant and thus I am authorised to make this affidavit on the Applicant’s behalf.
2.               I read or download the following information from the internet mainly by using the google search engine whilst sitting at my desk in Sydney yesterday and this data and my interpretation I believe to be a representation of the truth as implied by those documents:
3.               Ebner v Official Trustee in Bankruptcy [2000] HCA 63 with the full court of GLEESON CJ, GAUDRON, McHUGH, GUMMOW, KIRBY, HAYNE AND CALLINAN JJ had the following three pertinent paragraphs:
(a)   [6] Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver (which is not presently relevant) or necessity (which may be relevant to the second appeal), a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide[13]. That principle gives effect to the requirement that justice should both be done and be seen to be done[14], a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
(b)   [7] The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined. There are, however, some other aspects of the apprehension of bias principle which should be recognised. Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.
(c)   [8] The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
4.               I believe the Robinsons are a well-known and regarded family name in Melbourne.  Two of the Robinson greater clan are Michael Robinson AO and Dr Gregory Robinson of Zomojo.
5.               In Victorian Bar New, Spring/Summer 2007, “Welcome: Justice Michelle Gordon”.  “In 1988 her Honour crossed the Nullarbor to start work in the commercial litigation department of Arthur Robinson & Hedderwicks.  Over four years with that firm her Honour proved herself an outstanding practitioner.”
6.               According to the Allens website: Michael Robinson AO joined Arthur Robinson in 1960 and became a partner in 1968.  In 1980 he was appointed Managing Partner.  Shortly after being significantly involved in the merger Hedderwicks Fookes & Alston in 1984 he played a major part in the formation of Allens Arthur Robinson Group and was the Group’s Chairman in 1988. 
7.               At Epworth Healthcare, Michael Robinson took over as Chairman at the end of 2011 when Lindsay Cuming retired. Michael was president of the Epworth HealthCare Board of Management from 1991–1994. (http://www.epworth.org.au/about-us/support-epworth/about-us/pages/board-of-trustees.aspx)
8.               Michael Robinson AO was Gordon J’s Managing Partner and or Chairman in 1988. (Time line from Allens and Vic bar news)
9.               Her Honour married Honourable Justice Ken Hayne (Vic Bar News above)
10.            Michael Robinson AO was a board member and then Chairman of the Board of Scotch College in Melbourne. “My family started here in 1879, it’s part of me – or I’m part of it.  And I won’t be giving Scotch away.”  MR retired in 2006 after 11 years of leadership of the Scotch College Council and 20 years as a Council member. (Scotch College website)
11.            Hayne J is an old boy of Scotch College and appeared on the Cover of Great Scot in December 1997 when Michael Robinson AO was Chairman of the Board (Scotch College website)
12.            Michael Robinson AO has made generous donations to the University of Melbourne and the University of Melbourne Law School (various documents accessed from the University of Melbourne and University of Melbourne Law School website)
13.            Hayne J, as a prominent and respected Australian as a High Court of Australia Justice, is a feted member of the University of Melbourne Alumni Association having one of the most accessed profiles on the Alumni’s wiki page. (ranking on the Melbourne University alumni wiki)
14.            I found that the University of Melbourne Law School Alumni Association featured a number of people enjoying a function including Hayne J enjoying a glass of red (UoM LS web site)
15.            Hayne J works as a Senior Fellow at the University of Melbourne Law School (UoM web)
16.            Gordon J works as a Senior Fellow at the University of Melbourne Law School (UoM web)
17.            Dr Greg Robinson completed his PhD at University of Melbourne in 1978 and worked at the University of Melbourne as a Research Fellow in 1985. (Robinson’s linkedin web page)
18.            Dr Robinson’s wife is Professor Patricia Desmond is knowledge known to me.  From the UoM and associated web sites: Prof Desmond is the current Edgar Rouse Professor and Head of The University of Melbourne Department of Radiology and Director of the Department of Radiology at The Royal Melbourne Hospital. Prof Desmond is one of eight Academic Centre Chairs at the Melbourne Medical School being the Chair of the Royal Melbourne Hospital Academic Centre.
19.            Desmond published with Michael Robinson AO’s firm Epworth Healthcare in 2012 (http://www.epworth.org.au/Search/Pages/Default.aspx?k=desmond).  Desmond attended a gala dinner with the Epworth Healthcare CEO (http://medicine150.mdhs.unimelb.edu.au/gala-dinner-guest-list).
20.            The following donations were attributed to Dr Robinson and his wife by the reports at this University of Melbourne web site (http://alumni.unimelb.edu.au/make-gift/impact-giving):
(a)   I found in the “The University of Melbourne Reports to Donors 2007” it is recorded that Zomojo’s Dr Robinson’s wife Prof Patricia Desmond donated at between $50,000 and $25,000 to The University of Melbourne.
(b)   I found in the “The University of Melbourne Reports to Donors 2008” it is recorded that Prof Patricia Desmond and Zomojo’s Dr Greg Robinson donated at least $50,000 to The University of Melbourne.
(c)   I found in the “The University of Melbourne Reports to Donors 2009” it is recorded that Prof Patricia Desmond and Zomojo’s Dr Greg Robinson donated at least $50,000 to The University of Melbourne.
(d)   I found in the “The University of Melbourne Reports to Donors 2010” it is recorded that Prof Patricia Desmond and Zomojo’s Dr Greg Robinson donated at least $50,000 to The University of Melbourne.
(e)   I found in the “The Impact of Giving – Report on Philanthropy in 2011” it is recorded that Prof Patricia Desmond and Zomojo’s Dr Greg Robinson donated between $50,000 and $25,000 to The University of Melbourne.
(f)     That is, those documents record that Zomojo’s Dr Robinson donated at least $200,000 to The University of Melbourne, one of Gordon J’s employers.
21.            I believe there is nothing wrong to be said about people making charitable contributions to society.
22.            However, I also believe in the text from Ebner above that justice needs not just to be done but to be seen to be done and thus I believe a judge should be disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.
23.            I believe Gordon J, with the absence of any suggestion of bias, may fail this test of the apprehension of bias principle due to HH’s and her husband’s connections with the prominent Robinson clan and with respect, in particular, to the monies paid by Zomojo’s Dr Greg Robinson and his wife directly to her employer The University of Melbourne.
24.            I believe just as Gordon J’s husband Hayne J contributes in Ebner v Official Trustee in Bankruptcy [2000] HCA 63 paragraph [6], “So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined.”

Monday, 8 April 2013

Zomojo v Hurd & Others - another perspective

Zomojo is are not my favourite company.  Exablaze is a subsidiary of Zomojo.

I used to own a little under a quarter of the ordinary shares of Zomojo. Zomojo's owners assigned themselves my shares without my authorisation  There were two million shares in the company. There was slightly over $12.5 million in nett liquid assets on the Zomojo balance sheet in June 2011 as mentioned publicly in court (Deloitte's Sincock). The Zomojo share price was, based on their own internal valuation, also given publicly in open court, a little over $18 per share for the end of 2011, or the beginning of 2012, that makes the equity "transferred" back to themselves without my signature worth around $9 million. My wife, kids and I are now broke. Zomojo took my wife's superannuation from twenty years of high school teaching.

The court ruled this fair, dismissed my cross-claim, and refused to hear the scheduled evidence.

I will be seeking to appeal this decision when I am allowed to in the second half of the year.

Meanwhile, Zomojo is correct. I remain wrong.  The court's decision represents the decision in law.

The main beneficial owners behind Zomojo are:
  - J. William "Bill" Burdett
  - Greg Robinson
  - Ian Heddle
  - Tim Batho

Zomojo Directors are: Dean Boyle, Greg Robinson, Ian Heddle.

Zomojo's CTO, Matt Chapman, claimed over 100 items of confidential information such as pinning tasks to a CPU, Black Scholes for option pricing, spline curves for volatility modelling, Newton's Method (Sir Issac) (first published 1685), hardware time-stamping in a NIC, all discussed in open court (see some of the confidential claims below).

Zomojo claim they are a product company. In nearly eight years of trading history they have not had certified by a regulatory body a hardware product for sale. Since my resignation as Managing Director in Jan 2011 until now, they have not certified a hardware product and thus could not have made a legal sale. Their income has been the result of the high frequency proprietary trading of securities as far as I know. My no-compete was concerned with not trading securities on certain exchanges for a year, which I did not do. My no compete was not concerned with building innovative tech gadgets.

The ZeptoLink product was assigned to Zomojo by the court. The ZeptoLink product was developed from scratch at Zeptonics. It took the hard work of many staff longer than a year to develop.  The sophisticated chips used in ZeptoLinks were not known to me when I left Zomojo. The product was dreamt up by the Zeptonics team over a Vietnamese lunch in North Sydney after a vendor proposed we use their cool chips. The product idea was my loose conception at that lunch, but I'm not a hardware engineer.  As an ex-trader, I could see the usefulness of the idea of remotely rewiring networks with single digit nanosecond latency overhead.  The Zepto team developed and tightened the concept and ran with the ball. The team built a sophisticated and terrific terabit capable product that was way more awesome than I had imagined. The Zepto team are real stars. I had little to do with its actual development.

The court ruled there was no evidence to suggest ZeptoLink was based on any Zomojo confidential information. That is, there was no use of Zomojo's confidential information, no copyright violation, ZeptoLink was all of Zeptonics' work. The version control logs show work started months after Zeptonics started. There was no "stolen IP." Most stories in the press in the Australian Financial Review, Sydney Morning Herald or elsewhere are not accurate. The court assigned ZeptoLink to Zomojo as a penalty. I remain hopeful we will prevail on appeal and ZeptoLink will be returned to us.

Zomojo has started a subsidiary called ExaBlaze and is marketing a close derivative of ZeptoLink, named ExaLink.  If Zeptonics manages to win ZeptoLink back on appeal, if such an appeal is run, this would make the continuing saga sadly difficult for customers.

Here is a Zomojo share price plot from data publicly given at court regarding the share price.  The transfer of my shares is represented by the orange dot.  Prior prices in 2007, 2008, 2009 were by formula.  The independent transaction in 2010 was at arms length by a negotiated price.  The price at the right of the chart represented a price shares were offered to staff for at one stage of the development of a staff share scheme.


Zomojo had errors in the ASIC share buy back form signed off by Dean Boyle and Greg Robinson.  Robinson claimed in the witness box those errors to be typographical errors (see below).  I do not know how the taxable event that benefited shareholders by many millions of dollars was treated by the Australian Taxation Office.

Mr Joshua Rose was our sales guy looking after commercialization at Zeptonics. Josh is now working with Zomojo.  Joshua gave himself a promotion at Zeptonics after he started assisting Zomojo to "Director of Zeptonics."

Perhaps he'll get some shares in Zomojo.


_____________________________________________________________________

Snippets from Matt Chapman's testimony on confidential information:
(note this was a court session open to the public and not closed)
______________________________________________________________________


MR WOOD: And Black-Scholes is straight out of the text book, isn’t it?

CHAPMAN: ---Yes, you will find it in finance textbooks.

MR WOOD: You will find it text books like Haug Complete Guide Option Pricing Formulas,
wouldn’t you?

CHAPMAN: ---Yes.

And it wouldn’t surprise you to find out that it’s page 1 of chapter 1, would it?---It
wouldn’t surprise me.

And it wouldn’t surprise you because the application of Black-Scholes is a pretty
basic tenant of any kind of options trading. That’s right, isn’t it?---Yes, I would agree with that.

And application of the Greeks to the Black-Scholes’ method is a reference to the set
of variables that are commonly referenced to letters of the Greek alphabet; is that
right?---Yes.

And the application of the Greeks to the Black-Scholes formula, it wouldn’t surprise
you if that was chapter 2 of the text book, would it?---It wouldn’t surprise me.

And that’s because you know that application of the Greeks to the Black-Scholes’
formula is a pretty basic tenant of options trading, isn’t it?---Okay. Yes.

So what you have described there in paragraph 94 and 95 is essentially straight out of
the trading textbook, isn’t it?---I don’t know. I mean, you have whole in front of
you. I don’t know whether that - that whole process is – is standard or not.

Well, it is a better phrase. The process that you have described in paragraph 94 is so
common in options trading that it’s the sort of thing that you worth their salt to
know; correct?
_______________________

MR WOOD: I want to ask you a question about paragraph 98 of your MC1 document?---Yes.

HER HONOUR: Sorry, what? I missed that paragraph number. I apologise.

MR WOOD: 98, if your Honour pleases.

HER HONOUR: Thank you.

MR WOOD: Who is the Newton referred to in paragraph 98?

CHAPMAN---I don’t know how that’s relevant. That’s – it’s a well-known method for numerical approximate. It’s not Isaac Newton, no, I don’t think, but it may be. I don’t see how that’s relevant.

MR WOOD: I’m suggesting to you that it was Sir Isaac Newton’s method that was first published
in 1685?

CHAPMAN: ---Okay.

Do you agree with that proposition?---That’s feasible. I don’t know.

It’s basic mathematics, isn’t it?---I would agree with that, yes.

________________________

WOOD: You have said in paragraph 54 that FEP supports multiple protocols?
CHAPMAN: ---Yes.

Is that a fair broad summary of the idea that you have conveyed there?---Yes.

Is it the case that NASDAQ also supports multiple ordering protocols?---I don’t
know.
________________________

The comment about multiple ordering protocols is interesting.  Chapman is the CTO of Zomojo and we traded at Nasdaq when I worked there.  Nasdaq has six ordering protocols for equities plus another two for options.  I hired Matt Chapman, worked with him for some years, and recommended him to be made CTO on my exit.


____________________

Here is a reference to Dean Boyle in Robinson's testimony
_____________________


WOOD: You will see that Mr Boyle responds to your email and he says, “I’m looking
forward to seeing the suggested numbers from Deloitte’s.” Do you see that?

ROBINSON: ---Yes.

And he goes on to say, “I hope there’s a big, fat minus sign there.” Is that reflecting
some discussion you had already had with Mr Boyle about the topic of the Deloitte
review?---I presume so; we’re talking about it.

And tell me if this is right: the discussion between you and Mr Boyle in April 2011
was along the lines of – Deloitte were likely to come back with a significantly lower
number than the amount of money you had already offered to Mr Hurd; is that
right?---I think we had had earlier indications – early indications from them that that
was likely to be the result of their recasting the accounts, yes.

And the fact that Mr Boyle hoped for – that there was a big, fat minus sign there
expressed – the way you understood that was that he was hopeful of Deloitte coming
with a fairly low number; is that right?---I think that’s fair to say, yes.

And did that reflect your view at the time, as well?---To the extent that I – yes, I
preferred a lower number to a higher number.

But this is right, isn’t it: you and Mr Boyle were together trying to do what you
could to get Deloitte to find a fairly low number; that’s right, isn’t it?---You will
have to ask Deloitte that question. I – we gave Deloitte the information and they
gave us the answer.


_____________________

Sincock of Deloitte:
_____________________


WOOD: And so just so that I’m clear, the – if it was the case that the research and
development cost was to be properly characterised as a capitalised item, then the
expenses are not – don’t find their way into the balance sheet at all, is that
right?

SINCOCK---No, it’s got to be – on that assumption, it has got to be described somewhat
differently. If those items were appropriately to be capitalised, then if they had been
previously expensed, then those expenses would be reversed and the capital items
taken up in the balance sheet.

WOOD: And that would have the impact of increasing the net profit figure, would it
not?
SINCOCK: ---That is so, on that assumption.

You, in giving the report that you gave in connection with this analysis made a
number of assumption about the underlying business, didn’t you?---Well,
assumptions based on discussions that I had with the director, yes.

Yes. Now, I’m not being critical of your approach, but you’ve assumed, for
example, that the four projects that were under discussion in the context of research
and development were projects that were still in a research phase, didn’t
you?---Well, yes. Your Honour, I made that determination after discussions with the
director, and determined that they – the projects – none of the projects had net – had
done beyond the research phase, and therefore, were in my opinion more
appropriately expensed rather than capitalised.

______________________

Deloitte's choices; apart from those assumptions given to them by the directors.

Some of the prior research and development in question was being used in revenue generating trading activities.


____________________

Robinson v ASIC
____________________


WOOD: And you proposed to sell shares or allow staff to purchase shares at their fair value;
is that right?
ROBINSON:---We proposed to issue shares under the ESOP which allows for either
issue or sale out of staff holdings.

And so let me see if I’ve got this right. The application of the formula on which you
rely, if it had been applied in respect of the financial year ending 30 June 2011,
would have given rise to a substantially higher price than the application of the
formula as at 30 June 2010?---A higher price, I’m not sure of the quantum of
difference.

And it was that higher price that caused you to be concerned about capital gains tax
implications; is that right?---Well, it just meant it would be silly to take that route in
getting shares into the hands of the employees for tax reasons. We had other options.

Dr Robinson, my question to you was - - -?---Beg your pardon.
- - - was that that higher price caused to be concerned about capital gains issues.
Yes or no?---Yes, of course.

In this document, this notification share buy-back, you were cognisant of the fact that
it was going to be published with ASIC, were you not?---I knew it had to be lodged
with ASIC.

And you were cognisant of the fact that Zomojo needed to tell ASIC the true
story?---Of course.


There’s a letter attached to it which is headed Zomojo - Notice of Extraordinary
General Meeting. Do you see that? It has page 17 at the bottom?---Yes, I do. That’s
correct.

Your name is on the bottom of that document?---That’s correct.

May I take it that you approved the issue of that notice?---Yes, I did.
You will see that at the pages beginning 21 record an explanatory memorandum of
what was being proposed to ASIC in this share buy-back?---Yes.

In fairness to you I should by reference to clause 2.2 say I might have put to you
before that 91 cents was the share price for the purchase of Mr Hurd’s shares but that
should have been a reference to 93 cents. Do you see that in clause 2.2?---Yes, I see.

What was being done here is recorded in clause 2.2 is the buy-back by Zomojo of the
shares purchased by Zomojo Staff Holdings; correct?---That’s correct.
And it was being bought back at the same price that had been paid for Mr Hurd’s
company’s shares; correct?---Correct.

It is recorded in clause 4.2 what was proposed was that when these shares get bought
back the interest, if you like, the value of the shares is taken away, those shares are
cancelled and all other shares increase in value proportionately; is that
right?---That’s simple arithmetic, yes.

In 5.1 there’s a suggestion that the shares that were purchased by Zomojo Staff
Holdings were held on trust. Do you see that?---I see that. Yes.

Who was the beneficiary of the trust?---I don’t know. I’m not – this was – all of this
complicated buy-back and tax ruling was guided by Dr Brash and our tax advisers
and so I’m not over all the details of that.

So without using the term in a pejorative way this was likely tax driven, was
it?---No, because the default – we had the option of doing nothing and incurring no
tax. It was a tidiness thing as much as anything else.
________________________

A tidiness thing... nothing to do with tax... there was a sudden increase in the wealth of the company due to the low price paid for the shares in the transaction.

Further Robinson regarding ASIC:
________________________

WOOD: I see. Mr Hurd gave his notice to you – you received it at your beach house on 11
January 2011?
ROBINSON: ---That’s correct.

So after his one month notice period he ceased employment on 11 February 2011,
didn’t he?---Yes.

In this document at clause 5.2 there’s a reference to an ex-employee having ceased
employment. That’s a reference to Mr Hurd, isn’t it?---I think it’s a reference to the
date the shares were acquired rather than Mr Hurd’s employment finishing.

Is the ex-employee referred to in 5.2 Mr Hurd?---Yes. That’s the only source of
shares in Zomojo Staff Holdings.

And the statement that the ex-employee ceased employment on 19 March 2012 is not
15 right, is it?---Depends on how you read that sentence, I would suggest.

How do you read that sentence?---Well, it says, “The shares are acquired” – blah,
blah, blah – “on 19 March”. You can read it that way.

And what’s the “blah, blah, blah” in the reading that you contend for of that
clause?---

The shares were acquired:
Pursuant to the terms of the Zomojo employee share ownership plant from
parties associated with an ex-employee following cessation of employment on
19 March 2012.

Was that the date that the acquisition of the shares happened? That is to say the
transfer from Zomojo to Zomojo Staff Holdings?---No. I don’t know anything about
19 March being a special date. I suspect it’s a typo for 19 July that appears in the
30 paragraph above – in the clause above.

In any event, it probably should have been a reference to 2011, shouldn’t it?---Not on
my reading, no.
______________________

...
______________________


WOOD: So this share buy-back thing has come late in the day, has it?
ROBINSON:---I don’t know aboutlate in the day. It came up, as I’ve said to you, that when we looked to issue shares either by selling out of Staff Holdings or – well, our intention was to sell shares out
of Staff Holdings to staff. When we looked at the price that the formula would have given post the 2011 financial year end it had tax whiskers on it and so we sought advice on how to manage that situation.

If you go to – before I turn to the next clause of the document, tell me if this is right.
The case that was being put forward to ASIC for why this share buy-back was
appropriate was that the shares would be bought back for less than they were worth
so that shareholder value would be increased. That’s right, isn’t it?---I can’t imagine
you doing anything in the opposite sense, no.

Well, what I’m asking you is that that was the case you were putting to ASIC, wasn’t
it? You were saying, “This is a good share buy-back because we’re buying them
back at the same 93 cents that Zomojo Staff Holdings paid for them”?---I’m not
totally familiar with what we said but I would imagine we would have said
something like, yes, we wouldn’t be proposing doing it if it wasn’t beneficial for the
company.

______________________


ASIC and the ATO have taken no action as far as I know.