FEDERAL COURT OF AUSTRALIA
Hurd v Zomojo Pty Ltd [2015] FCAFC 147
Citation: Hurd v Zomojo Pty Ltd [2015] FCAFC 147 Appeal from: Application for extension of time and leave to appeal:
Zomojo Pty Ltd v Hurd (No 2) [2012] FCA 1458
Zomojo Pty Ltd v Hurd (No 3) [2013] FCA 54
Zomojo Pty Ltd v Hurd (No 4) [2014] FCA 441Parties: MATTHEW JOHN HURD v ZOMOJO PTY LTD (ACN 114 604 269) File number: VID 336 of 2014 Judges: BESANKO, GILMOUR AND BEACH JJ Date of judgment: 21 October 2015 Catchwords: CORPORATIONS – directors – fiduciary and statutory director’s duties – breach of duty – service agreement – breach of service agreement – application for extension of time to appeal – application for Constitutional writs – asserted apprehension of bias – asserted errors of fact – asserted lack of procedural fairness – lack of standing – application for extension of time granted – appeal dismissed – application for Constitutional writs dismissed Legislation: Federal Court of Australia Act 1976 (Cth) ss 20(1A), 27 Cases cited: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Isbester v Knox City Council (2015) 320 ALR 432
Meagher v Stephenson (1993) 30 NSWLR 736Date of hearing: 3 and 4 March 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 120 Counsel for the Applicant/Appellant: The Applicant/Appellant appeared in person Counsel for the Respondent: Mr B Carew Solicitor for the Respondent: Corrs Chambers Westgarth
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 336 of 2014
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: MATTHEW JOHN HURD
Applicant/AppellantAND: ZOMOJO PTY LTD (ACN 114 604 269)
Respondent
JUDGES:
BESANKO, GILMOUR AND BEACH JJ
DATE OF ORDER:
21 OCTOBER 2015
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The applicant be granted an extension of time within which to appeal and that his appeal be heard and determined instanter.
2.The appeal be dismissed.
3.The application for an order seeking that a writ of certiorari be issued be dismissed.
4.The appellant pay the respondent’s costs of and incidental to the appellant’s applications and the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 336 of 2014
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: MATTHEW JOHN HURD
Applicant/AppellantAND: ZOMOJO PTY LTD (ACN 114 604 269)
RespondentJUDGES:
BESANKO, GILMOUR AND BEACH JJ
DATE:
21 OCTOBER 2015
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
THE COURT:
Matthew Hurd (Hurd) has applied for an extension of time within which to appeal the judgment of Gordon J, the subject of orders made on 5 February 2013 on the question of liability, and the judgment of Jessup J, the subject of orders made on 6 May, 9 May and 5 June 2014 on the question of quantum and other relief. Hurd, together with other entities, was a respondent to the proceeding below.…
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Details
- Case
- [2015] FCAFC 147
- Decision Date
CaseChat Overview and Summary
Hurd sought to appeal against a decision made by Gordon J and affirmed by Jessup J in relation to his claims against Zomojo and Hurd. Zomojo and Hurd applied to dismiss the appeal and for the appellant to pay their costs. Hurd applied for an extension of time to appeal and also sought an order that a writ of certiorari be issued to quash the judgments and orders made by Gordon J and affirmed by Jessup J. The court was required to decide whether Hurd's appeal should be dismissed and whether his application for a writ of certiorari should be granted. The court found that Hurd's appeal was without substance and dismissed it. The court also found that Hurd's application for a writ of certiorari should be dismissed. Hurd was ordered to pay the respondents' costs of and incidental to the appellant's applications and the appeal.
The court found that Hurd's appeal was without substance. The court found that Hurd's allegations of breaches of fiduciary and statutory director's duties were not made out on the evidence. The court found that Hurd's claims that he was denied the opportunity to adduce evidence were also without substance. The court found that Hurd's general asserted errors had no substance and that his appeal was merely an attempt to retry the merits. The court found that Hurd's challenge to Jessup J's decision was also without substance. The court found that Jessup J had proceeded in an orthodox fashion and that his decision did not substantively turn on credibility issues. The court found that Hurd's application for a writ of certiorari should be dismissed because it was an attempt to retry the merits on appeal. The court found that Hurd's appeal was without substance and dismissed it. Hurd was ordered to pay the respondents' costs of and incidental to the appellant's applications and the appeal.
The court found that Hurd's appeal was without substance. The court found that Hurd's allegations of breaches of fiduciary and statutory director's duties were not made out on the evidence. The court found that Hurd's claims that he was denied the opportunity to adduce evidence were also without substance. The court found that Hurd's general asserted errors had no substance and that his appeal was merely an attempt to retry the merits. The court found that Hurd's challenge to Jessup J's decision was also without substance. The court found that Jessup J had proceeded in an orthodox fashion and that his decision did not substantively turn on credibility issues. The court found that Hurd's application for a writ of certiorari should be dismissed because it was an attempt to retry the merits on appeal. The court found that Hurd's appeal was without substance and dismissed it. Hurd was ordered to pay the respondents' costs of and incidental to the appellant's applications and the appeal.
Orders
Orders of the court
1. The applicant be granted an extension of time within which to appeal and that his appeal be heard and determined instanter.
2. The appeal be dismissed.
3. The application for an order seeking that a writ of certiorari be issued be dismissed.
4. The appellant pay the respondent’s costs of and incidental to the appellant’s applications and the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Hurd has also applied for an order that a writ of certiorari be issued quashing such judgments and orders. We will explain later the context for that application. Given that such an application is required to be dealt with in the Court’s original jurisdiction, the Chief Justice has given a direction under s 20(1A) of the Federal Court of Australia Act 1976 (Cth) that we exercise the Court’s original jurisdiction to deal with that application. We have exercised that jurisdiction and would dismiss that application for reasons that we will later explain.BACKGROUND It is convenient to first set out the nature of the proceedings below and the evolution of those proceedings through to the present applications.(a) The proceedings before Gordon J — Principal claims Zomojo was involved in high frequency trading (HFT) primarily on the Korean Stock Exchange (KRX) using proprietary technology it developed in house. As her Honour explained, HFT is a broad term encompassing various quantitatively derived, computer driven and high volume trading strategies where equities and derivatives are traded based on small perceived mis-pricings over short, intra-day periods of time. Zomojo’s involvement in HFT had various dimensions. It engaged in:(a)developing, marketing and supplying low latency market gateway products and services for use by professional traders in equity and like markets (Zomojo’s Gateways), principally for use on the KRX; the concept of “latency” in the context of electronic systems refers to a systemic time delay in terms of data communication or receipt and its actioning;(b)trading in equity and like markets by using and exploiting the low latency of Zomojo’s Gateways and proprietary trading engine (Zomojo’s Trading), again principally on the KRX;(c)developing proprietary low latency hardware and software products, including its own firmware for third party network interface cards (NICs), and later its own NICs, called the Z1 and Z10 (Zomojo’s NICs), and a communication and scheduling framework called the Ion framework (Ion); and(d)developing, marketing and supplying an alternative trading system (ATS) for equity and like markets that utilised software and hardware to achieve minimum latency (Zomojo’s ATS). Hurd, the first respondent in the proceeding below, was a director, an employee, the company secretary and a shareholder of Zomojo from its incorporation on 3 June 2005 until early 2011. Under a service agreement Hurd signed with Zomojo on 2 December 2005 (the service agreement), Hurd was appointed as a co-managing director of Zomojo and was required to diligently perform specified duties, to devote the whole of his time and attention during normal business hours to the performance of those duties, at all times to use his best endeavours to promote Zomojo’s interests and to avoid any involvement or interest in any other business or occupation which materially interfered with the performance of those duties or competed in any respect with the business of Zomojo. Hurd was also Zomojo’s key decision maker with respect to the technological direction of Zomojo. Under the service agreement, he was required to make prompt and full disclosure to Zomojo of the evolution and discovery of any invention.
Evidence
Evidence Before The Court
There is no substance to any of those allegations. First, apart from the matters that we have specifically addressed in discussing other grounds of appeal, such alleged breaches have not been identified with any precision other than broad sweeping statements about asserted “lies”, “false testimony”, “intimidation of witnesses”, “corruption of a witness”, “conspiracy to bring false accusation”, “conspiracy to defeat justice”, “attempt to pervert justice” and so on (see Hurd’s written submissions in chief at [32] to [42]). Second, they are not made out on any of the evidence pointed to (if at all) by Hurd. Third, it is not demonstrated how such matters are linked to any specific finding made by Gordon J or Jessup J.(f) Denial of opportunity to adduce evidence Hurd asserts that there was a denial by her Honour of the opportunity to put in evidence of various models and pictures including the machine or device that is Opticast. There is no substance to this assertion. On 24 October 2012 debate occurred between her Honour and counsel for the respondents below. Counsel sought to deploy such material during the cross-examination of Dr Leong. But that material had not been properly put into evidence in the usual way. Her Honour indicated at T 259 that:·“If you wish to rely upon material in your case, then you’re required to produce it and give notice as a matter of fairness”;·“If, as a matter of fairness, you wish to now rely upon it, then you can make application and consequences will follow”. Counsel for the respondents below then chose not to persist with the use of that material (T 260). There is no substance to Hurd’s complaint. Moreover, given that such material had not properly been put into evidence by the respondents below, her Honour’s finding at [260] was correct. Hurd also asserted that her Honour had not admitted into evidence various aspects of his witness statement and the references he cited. It has not been established to our satisfaction that material has been wrongly excluded or that if it had been admitted it would have made a difference. It would appear that at trial, Hurd sought to advance himself as a software expert and to put forward his own opinion evidence. As part of that material, Hurd sought to advance some 195 reference sources including academic papers and the like. Her Honour quite understandably appears to have limited his evidence accordingly given the strictures of s 79 of the Evidence Act 1995 (Cth) and his lack of independence. In any event, some of the material such as the Lockwood paper was put in through other witnesses.(g) General asserted errors (Grounds 5 to 8) Hurd has variously asserted that her Honour erred:·in rejecting all of Hurd’s evidence without individual assessment;·in failing to consider all of the evidence;·in failing to consider all of the submissions;·in failing to consider the contemporaneous evidence of others in combination with Hurd. These omnibus and nebulous asserted errors have no substance. It is apparent from her Honour’s meticulous and lengthy reasons that her Honour appropriately considered all the evidence. These grounds merely manifest the disappointment of a losing litigant the subject of adverse credit findings who has endeavoured to retry the merits on appeal. But they have no substance as so expressed.
Decision
Reasons for decision
Ground 17 asserts that her Honour “failed to consider role (of) a patent on a product has in limiting the concept of a product being an evolution or the role of such patent work in requiring that equity be done”. Hurd has asserted that “(i)t stands to reason that the innovation required in a patent is such that the device cannot be an evolution by definition otherwise the patent could not be awarded”. This is misconceived. In any event, on the limited evidence that we have been provided with, at the time of her Honour’s decision the patent for Zeptolink had not been granted. Her Honour’s analysis at [253] to [261] has not been shown to be in error.(k) Grounds 19 to 21 — Challenge to Jessup J’s decision In addition to what we have discussed in section (c) earlier, Hurd has raised three additional grounds of appeal concerning the decision of Jessup J. However he has now abandoned ground 21 (see his written submissions in reply at p 14). It is convenient to deal with ground 20 first. It is said that his Honour erred in relying upon “an evaluation of [Hurd’s] credit without his Honour being present in Court during the witness testimony in October 2012 hearing”. In elaboration on this assertion, it is said that “the assessment of a witness credit needs to be experiential for the judge with regard to witness testimony”. This ground is misconceived at a number of levels. As we have set out earlier, Jessup J was dealing with the assessment of quantum and other relief. The foundation for that exercise was the legal and factual findings made by her Honour together with any additional evidence adduced by the parties; his reasons indicate as much (see for example at [17] to [25]). As is apparent from Jessup J’s reasons, in relation to her Honour’s findings dealing with Hurd, his Honour utilised the same and was careful to work within them. He was bound to take that approach; that also applies to his Honour’s statement at [39] commencing “In my view, it comes ill from the mouth …” which was his Honour’s opinion based on her Honour’s factual findings. In addition to her Honour’s findings, there was evidence given by Hurd before his Honour. But in relation to that further evidence, his Honour separately evaluated it for himself (see at [24]). Moreover, in assessing it, he rejected Hurd’s guess as lacking foundation rather than making credibility findings of the type made by her Honour. More generally, and in any event, a review of Jessup J’s reasons indicates that his decision did not in substance turn on credibility issues involving Hurd. In summary, Jessup J proceeded in an orthodox fashion. He used the foundation of her Honour’s factual findings. Second, for any witness called before him, he independently assessed their credibility. Third, his decision did not substantively turn on credibility issues. Fourth, his finding concerning Hurd’s evidence was merely to reject Hurd’s guess. This ground of appeal has no substance.
Ratio Decidendi
Legal Principle Established
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