Canview Pty Ltd v Gilmore

LOGAN J: 1 On 22 May 2024, Meagher J as duty judge dealt with an urgent interlocutory application filed on 16 May 2024 by the applicants. That day, for reasons which came to be published on 24 May 2024 (see Canview Pty Ltd v Gilmore [2024] FCA 551), her Honour made the following orders: THE COURT NOTES THAT: 1. In these orders: (a) Vitura Group has the meaning set out in paragraph 10 of the affidavit of Guy Headley sworn on 15 May 2024. (b) Vitura System means the IT system described in paragraph 16 of the affidavit of Guy Headley sworn on 15 May 2024. (c) Services Agreement means the Services Agreement between CanView Pty Ltd and Code4 Cannabis Pty Ltd (C4C) dated 18 August 2022. UPON THE APPLICANTS, THROUGH THEIR COUNSEL, GIVING THE USUAL UNDERTAKING AS TO DAMAGES, THE COURT ORDERS THAT: 1. Subject to these orders, the Respondent will not access the Vitura System or instruct or permit any third party to do so, until further order, other than for the express purpose of carrying out the Services as contemplated by clause 6.3 of the Services Agreement (the Services). 2. Subject to order 3 or to further order, in carrying out the Services on the Vitura System, the Respondent must not access any of the following: (a) documents including but not limited to any emails, email accounts, text messages and communications via any platform or app or messaging system whatsoever; (b) calendars and/or any information within or associated with any scheduling apps and/or platforms whatsoever; (c) documents relating to or containing strategies of any company, entity or business whatsoever; (d) human resources files whatsoever including but not limited to documents relating to the hiring, review, assessment, promotion or termination of employees or consultants within the Vitura Group; (e) documents whatsoever relating to marketing; (f) documents relating to cyber security whatsoever including but not limited to cyber penetration testing; (g) video recordings or sound recordings whatsoever; and (h) any stored data or stored information whatsoever other than data or information generated by the CanView Software in order to carry out the Services (i) on the Vitura System. 3. If the Respondent believes he will need to access anything referred to in paragraph 2(a) to 2(h) above for the purpose of carrying out the Services, he will not do so unless he: (a) makes a written request to the First Applicant setting out in reasonable detail the reason for the request and the date and timeframe on that date that he wishes to access the document(s); and (b) receives from the First Respondent its express consent in writing to the request and the proposed date and timeframe for access to the document which shall not be unreasonably withheld. 4. The Respondent will not make copies of or download any documents from or via the Vitura System whatsoever or instruct or permit any third party to do so. 5. The Respondent will not access, use or disclose any documents (or parts thereof) which have been copied, reproduced or downloaded from or via the Vitura System or any copies thereof (Copied Documents) or instruct or permit any third party to do so, save for the sole purpose of obtaining legal advice in respect of this proceeding and proceeding numbered 5036 of 2024 in the Supreme Court of Queensland, until further order. 6. The Respondent will not access, use or disclose any information from the Copied Documents or any copies thereof (Accessed Information) or instruct or permit any third party to do so, save for the sole purpose of obtaining legal advice in respect of this proceeding and proceeding numbered 5036 of 2024 in the Supreme Court of Queensland, until further order. 7. The Respondent will not delete or destroy the Copied Documents or any copies thereof, or documents containing Accessed Information, in his possession or control or instruct or permit any third party to do so, until further order. 8. The Respondent will within 7 days of the making of this order, file and serve on the Applicants an affidavit which deposes to the following matters subject to any claim made in the affidavit to privilege: (a) specifying the Copied Documents and any copies thereof; (b) specifying the Accessed Information; (c) detailing what the Respondent has done with the Copied Documents and/or the Accessed Information, including providing details of any third parties to whom Copied Documents or any copies thereof and/or Accessed Information have been provided and/or with whom the contents have been shared. 9. The First Applicant will file within 7 days of the provision of the affidavit referred to at 8 above an application in the Supreme Court of Queensland Proceeding BS5036/24 ("Supreme Court Proceeding") relating to the use of the Copied Documents and Accessed Information in that proceeding. 10. The Application is adjourned to a date to be fixed. 11. The parties have liberty to apply on three days' notice. 12. Pursuant to Rule 9.05 of the Federal Court Rules 2011 (Cth), Vitura Health Operations Pty Ltd is joined to the proceeding as the third applicant. 13. The Applicants have leave to amend the Originating Application so that references to the Applicants' Microsoft 365 Account are amended to refer to the Vitura System. 14. The Applicants have leave to file the Outline of Submissions provided to Chambers on 21 May 2024. 15. Costs be reserved. 2 Her Honour also offered, at [6] through to and including [15], a helpful summary of the background to the proceedings in this Court. That summary is as follows: FACTUAL BACKGROUND 6 Vitura Health, the second applicant, is the holding company of the first applicant, Canview and the proposed third applicant, Vitura Operations. All employees are employed by the second applicant and the proposed third applicant. 7 The applicants are in the business of distributing medical cannabis products. 8 The respondent is the director of a company by the name of Code4 Cannabis Pty Ltd (C4C). C4C is to provide software to the first applicant (Canview Software). 9 Mr Headley, the Chief Commercial Officer and Executive Director of the second applicant deposes that the Canview Software is used to sell and distribute cannabis products by facilitating transactions and interactions between doctors, pharmacies and patients. 10 Pursuant to a software licence agreement between the first applicant and C4C (Services Agreement), the first applicant licences the Canview Software from C4C. Clause 6.3 of the Services Agreement provides: The Supplier agrees and acknowledges that the Customer may grant the Supplier access to its systems, records and internal information (including but not limited to computer files, records, statements and documents) and the Supplier warrants that it will only access those documents for the purpose of carrying out the Services. 11 The applicants allege that the respondent has acquired confidential information and infringed the applicants' copyright through two incidents, which are referred to in the applicants' submissions as the 'Hacking Incident' and the 'Unauthorised Access and Download Incident'. The hacking incident occurred on 16 April 2024 and the Unauthorised Access and Download Incident occurred between mid-November 2023 and 13 May 2024. Through those incidents, the applicants allege that the respondent accessed and downloaded many documents and much information without the knowledge or authority of the applicants. Supreme Court Proceedings 12 On 15 April 2024, C4C sent a letter to the applicant stating that it would be terminating the Services Agreement, giving 14 days' notice. The termination was based on alleged breaches of clause 5.2 of the Services Agreement, which in part provides that the first applicant is not to 'decompile, disassemble, reverse engineer or otherwise attempt to derive the source code of the Software'. 13 On 22 April 2024, the first applicant filed proceedings against C4C in the Supreme Court of Queensland (Supreme Court Proceedings) seeking, inter alia, a declaration that the Notice of Termination dated 15 April 2024 issued by C4C was invalid and of no effect. 14 On 17 May 2024, C4C filed a defence denying that the Notice of Termination was invalid and bringing a counterclaim seeking declarations to the effect that it was a valid termination on the basis that the applicant had breached parts of the Services Agreement. 15 In its defence, C4C referred to a number of Microsoft Word documents which were published on the first applicant's Sharepoint. C4C claims that the documents contain information which evidences fundamental breaches of the Services Agreement. C4C also referred to dates and times from 4 December 2023 to 29 March 2024 upon which it claims that employees of the applicant had accessed Developer Tools. Developer Tools are used to access the source code of web applications. 3 Orders 5 and 6 of those made on 22 May 2024 subsequently proved controversial. Thus, on 24 May 2024, an application for leave to appeal against those orders was filed in Court in respect of that application. The applicants applied, pursuant to r 36.08 of the Federal Court Rules 2011 (Cth), for an order that orders 5 and 6 of the orders made on 22 May 2024 be stayed to the extent that they permit use of Copied Documents and Accessed Information (each as defined in the order) to obtain legal advice in proceeding number 5036 of 2024 in the Supreme Court of Queensland. 4 The stay application came on before me today as duty judge. Upon considering that application and the factual background to this proceeding and the issues in this proceeding, as well as in the Supreme Court, I raised with the parties whether, at the heart of the controversy which motivated the leave to appeal application and, indeed, as [56] and [57] of her Honour's reasons for judgment reveal, part of her Honour's motivation for making the orders the subject of the leave to appeal application, lay in an overlap of issues as between the proceeding in this Court and the Supreme Court proceeding. 5 In deciding to make orders 5 and 6, her Honour stated at [56] and [57] the following: 56 In resolving this issue, I considered that it was both artificial, and, more importantly, antithetical to the interests of justice, for the respondent not to be able to obtain legal advice regarding the very documents about which the applicants propose to make an application to the Supreme Court. Furthermore, as contended by counsel for the respondent, in making the orders proposed by the applicants, I may be, in effect, making a determination as to the whether the documents were indeed unlawfully obtained, when such a determination ought be left to the Supreme Court in the application foreshadowed by order 9. Such a determination goes beyond the finding that a prima facie case exists, which is what is to be made by the Court in granting an interlocutory injunction. 57 By allowing the respondent to obtain legal advice in respect of the documents, the respondent is afforded the ability to make full and frank disclosure of the relevant matters to his solicitors as facilitated by legal professional privilege in relation to this proceeding. Such orders maintain that the respondent is restrained from accessing, using or disclosing the documents and information in either proceeding on an interlocutory basis. Further, the orders include that the respondent is not to permit or instruct any third party to access, use or disclose the documents and information for any purpose other than obtaining legal advice. This would capture the use of the documents by C4C in the Supreme Court Proceedings. 6 It seems inherently likely that a copyright issue will arise in the Supreme Court proceeding. Mr Gilmore, the respondent in this Court, is not a party to the Supreme Court proceeding. However, the background to the proceeding in this Court necessarily entails a copyright issue. The overlap between the proceeding in this Court and the Supreme Court proceeding at a factual level was acknowledged by each of the parties to the proceeding in this Court. 7 In turn and upon reflection after an exchange between me and counsel with respect to the contingency of this proceeding being transferred to the Supreme Court pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-Vesting Act), each of the parties came jointly to apply for an order to that effect under that Act. 8 An initial obstacle to the making of a cross-vesting order was apprehended to be the existence of a pending interlocutory leave to appeal application in this Court. That did, indeed, sound a very real cautionary note as to whether it would be appropriate to make an order under the Cross-Vesting Act. Recognising this, the parties came to what is, with respect, an inspired joint position which would, in effect, preserve a form of status quo were a cross-vesting order made and permit a judge in the Supreme Court, seized both with the existing Supreme Court proceeding and this proceeding, to make considered case management value judgements which would minimise the prospect of embarrassment which presently exists as between the prosecution of the Supreme Court proceeding and the one in this Court. 9 The embarrassment particularly relates to the copyright issue, but at a case management level, it also relates to the use which Mr Gilmore might make, either in this proceeding or the Supreme Court proceeding, of particular documents. Mr Gilmore, it must be said, is a director of C4C. Even to record that is to highlight how difficulties might arise in quarantining his obtaining legal advice for the purposes of this proceeding from obtaining legal advice with respect to like documents for the purposes of the Supreme Court proceeding. 10 So it is that the parties have today, in conjunction with their joint cross-vesting application, promoted the making of the following orders: Vitura System means the IT system described in paragraph 16 of the affidavit of Guy Headley sworn on 15 May 2024. Copied Documents means any documents (or parts thereof) which have been copied, reproduced or downloaded from or via the Vitura System or any copies thereof. Accessed Information means any information from the Copied Documents or any copies thereof. Supreme Court Proceeding means Supreme Court of Queensland proceeding number 5036 of 2024. UPON THE RESPONDENT, THROUGH HIS COUNSEL, GIVING AN UNDERTAKING IN THE FOLLOWING TERMS: The Respondent will not access, use or disclose any documents (or parts thereof) which have been copied, reproduced or downloaded from or via the Vitura System or any copies thereof (Copied Documents) or any information from the Copied Documents or any copies thereof (Accessed Information), or instruct or permit any third party to do so, save for the purposes of: (a) obtaining legal advice in respect of this proceeding; and (b) if the Supreme Court makes orders that this proceeding be heard with or consolidated with the Supreme Court Proceeding, responding to an application by the first applicant (to be made pursuant to paragraph 9 of the Orders of Justice Meagher dated 22 May 2023) concerning the Copied Documents and Accessed Information in the Supreme Court Proceeding, until determination of that application in the Supreme Court of Queensland. ("the Undertaking"). THE COURT ORDERS THAT: 1. By consent: (a) paragraphs 5 and 6 of the orders made 22 May 2024 are vacated. (b) the definitions of "Copied Documents" and "Accessed Information" contained in the definition section of these orders are inserted in the definitions section of the orders dated 22 May 2024. 2. Pursuant to section 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), proceeding QUD232 of 2024 is transferred to the Supreme Court of Queensland. 3. The application for a stay and leave to appeal in proceeding QUD269 of 2024 is dismissed with no order as to costs. 4. Save as otherwise provided by this order, costs reserved. 11 Section 5(4) of the Cross-Vesting Act provides: 5(4) Where: (a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) (in this subsection referred to as the first court); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by that Supreme Court; (ii) having regard to: (A) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been incapable of being instituted in that court, apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross - vesting of jurisdiction; and (B) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been capable of being instituted in the Supreme Court of a State or Territory, apart from this Act and any law of a State or Territory relating to cross - vesting of jurisdiction; and (C) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub - subparagraph (B) and not within the jurisdiction of the first court apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross - vesting of jurisdiction; and (D) the interests of justice; it is more appropriate that the relevant proceeding be determined by that Supreme Court; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory; the first court shall transfer the relevant proceeding to that Supreme Court. 12 There is no doubt that the applicants regularly invoked the jurisdiction conferred on this Court by s 131C of the Copyright Act 1968 (Cth) (Copyright Act). Equally, however, it is settled that in considering whether it is in the interests of justice to cross-vest this proceeding to the Supreme Court, it would be a material error to take into account the applicants' choice of this Court as a matter not lightly to be overridden: see BHP Billiton Ltd v Schultz (2004) 221 CLR 400. 13 In truth, there may well be little to choose between this Court and the Supreme Court, as it may well be that the subject of the Supreme Court proceeding may fall within what, however inaccurately or inelegantly, is termed this Court's accrued jurisdiction. What is certain is that the Queensland Supreme Court has, by virtue of s 39(2) of the Judiciary Act 1903 (Cth) and subject to a presently immaterial qualification found in s 131A of the Copyright Act, jurisdiction to entertain the copyright cause of action which is the ground of the present proceeding in this Court. 14 As I have mentioned, it seems to me overwhelmingly appropriate, and also in the interests of justice, that this proceeding be managed in conjunction with the Supreme Court proceeding. It may well be that the two should be heard together. So much was recognised by each of the parties to this proceeding. One cannot, of course, bind a Supreme Court judge in that regard, but it seems inherently likely, from what I was told today, that an application to that end will be made and that it is unlikely that it will be controversial in the Supreme Court. 15 As evident from the orders promoted, the parties see it to their joint advantage that there be no continuance of orders 5 and 6, consequent upon the respondent's undertaking. That, of course, removes the foundation for the leave to appeal application, which, by joint agreement, the parties wish dismissed with no order as to costs. That order, of course, in no way inhibits the ability of the applicants to prosecute relief of the kind grounded in orders 5 and 6 in the Supreme Court. There has been no adjudication on the merits of whether a leave to appeal application would or would not have succeeded any more than there has been any adjudication on the merits as to whether or not a related stay application would have succeeded. 16 So it is, then, that what is essentially a "nuts and bolts" management decision as to which court in the pursuit of the interest of justice is the more appropriate falls to be made: see Bankinvest AG v Seabrook (1988) 14 NSWLR 711, at 714 per Street CJ. 17 For reasons which I have already given, the view I have reached is that this case needs to be case managed in conjunction with the Supreme Court proceeding in the one court. The Supreme Court proceeding is slightly more advanced than the present proceedings. As I have mentioned, that Court does have a Copyright Act jurisdiction. In these circumstances, there is merit in the joint application of the parties. Having formed the view, for the purposes of s 5(4), that it is both appropriate and in the interests of justice, for that matter, that a cross-vesting order be made, it then becomes incumbent upon me pursuant to the Cross-Vesting Act to make such an order. For these reasons, then, there will be orders in terms of those promoted by the parties today. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Logan.