HungryPanda Au Pty Ltd v QINN International Group Pty Ltd

THE COURT NOTES THAT THE RESPONDENTS, BY THEIR COUNSEL, UNDERTAKE without any admission of the respondents' liability, not to use any information in their possession, custody, or control, comprising the applicant's merchant lists, or any information derived from such merchant lists. THE COURT ORDERS THAT:

1. The matter is transferred to the Supreme Court of Victoria pursuant to s 5(4) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth).
2. The costs of the application are costs in the proceeding transferred to the Supreme Court of Victoria. THE COURT DIRECTS THAT:
3. The respondents' solicitors provide to each of the respondents a copy of these orders endorsed to the effect that the relevant person will be liable to sequestration of property or punishment for contempt if he or she acts contrary to the undertaking provided. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

(Delivered ex tempore, revised from the transcript)

LEE J: 1 This matter has come to me in my capacity as the Commercial and Corporations Duty Judge. The applicant seeks orders that the respondents deliver up to the Court, by 30 March 2022, various documents said to have been obtained by the respondents in the course of, or incidental to, their employment or contractual relationship with the applicant, together with a suite of additional orders. More particularly, a further application is made for an injunction restraining various respondents from performing work for what are said to be competing businesses until determination of the substantive matter. 2 It is unnecessary to canvass the issues in the case in any detail. It suffices to note that the applicant operates a food delivery "app service" called "HungryPanda", which operates in a niche market focusing on Asian restaurants. The first respondent, QINN International Group Pty Ltd (QINN), provided staff to HungryPanda and is said to have been otherwise integrated into HungryPanda's systems. A services contract between QINN and HungryPanda dated 1 December 2022 is said to provide as follows: (a) at cl 6.1, an obligation to ensure that any information, including client/consumer data, be kept confidential by QINN and not disclosed to any third party; (b) at cl 6.2, a warranty that QINN would ensure that the workers it supplied would not disclose any such confidential information to a third party without written approval; (c) at cl 6.3, an obligation to take effective steps as fast as possible to "prevent data proliferation"; and (d) at cl 6.7, that these obligations would survive termination. 3 HungryPanda had earlier purchased its business from a company known as "EASI", and as part of that acquisition, many of EASI's staff "transferred" to HungryPanda's operation (as either employees or contractors). This included the second to eleventh respondents, of which the second to sixth respondents were engaged as contractors, and the seventh to eleventh respondents were employed. It is alleged that each of the employees and contractors had access to, and worked closely with, important confidential information owned by HungryPanda, being its data on merchants (including contract details, commission structures, menus and price points), much of which is said to be not publicly available. The second to eleventh respondents are said to have signed identical non-disclosure agreements that provided relevantly as follows: (a) at cl 2, a definition of "Confidential Information" which encompassed information relating to "the business, customers, clients or suppliers", "product information" and information derived from the "Confidential Information"; (b) at cl 3, obligations to treat such "Confidential Information" as confidential and not disclose it without the consent of HungryPanda; and (c) at cl 4, obligations to retain the "Confidential Information" securely. 4 Further, the employment contracts of the seventh to eleventh respondents are said to include additional confidentiality obligations (cl 12); an obligation to return confidential information on the cessation of employment (cl 13); and a restraint of trade clause preventing the employee from working for competitor businesses, including those engaged in "online food ordering and delivery services" (cl 11). 5 In the originating application, the applications seek relief permanently restraining the respondents from using, disclosing, or divulging any confidential information pursuant to the relevant agreements, orders enforcing the restraint of trade clauses in the respective employment contracts, and declaratory relief, pecuniary penalties, and compensation under Schedule 2 of the Competition and Consumer Act 2010 (Cth). 6 Proceedings are ongoing between HungryPanda and EASI in the High Court of Justice in England. More relevantly for present purposes, HungryPanda has commenced proceedings in the Supreme Court of Victoria against Fantuan Australia Pty Ltd (Fantuan). 7 The evidence deals with what are said to be controversial circumstances surrounding Fantuan's emergence as a competitor in the Australian market. In short, it is alleged that the operations of Fantuan involved a deliberate misuse of confidential information and resources properly owned by HungryPanda. Evidence sought to be adduced on this application was directed to the proposition that the sixth to eleventh respondents in particular, were directly and heavily involved in both the establishment of Fantuan and the recruitment of existing HungryPanda staff to its operations. It is unnecessary, for present purposes, for me to form a view about the strength of these allegations. 8 When the matter was called on, it appeared from the material before me that there was, at the very least, a considerable overlap between the allegations which would need to be determined in this proceeding, and those currently before the Supreme Court of Victoria. Curiously, HungryPanda has instructed different solicitors and barristers in respect of each of the proceedings. The applicants state, and the evidence discloses, that solicitors acting for HungryPanda commenced urgent injunctive proceedings against Fantuan. A summons dated 28 February 2022 provides that the relief sought in those proceedings include orders that Fantuan be restrained from supplying food delivery and related services in Australia, including through the Fantuan Delivery "mobile app". It appears that on or about 3 March 2022, Riordan J, in the Supreme Court of Victoria, made the following orders (see affidavit of Jinwan Sun affirmed 8 March 2022 (at [39])): On or around 3 March 2022, I was informed by Mr O'Neil that Justice Riordan of the Victorian Supreme Court made orders in respect of the Victorian Proceedings that: a. Fantuan provide an undertaking to the Court to prevent Fantuan from making use of any HungryPanda merchant lists they may have in their possession (including any information derived from those lists); b. Fantuan give discovery of documents evidencing communications between Fantuan and EASI or recording any sort of agreement or understanding between Fantuan and EASI from the date of the APA onwards; c. Fantuan give an affidavit of disclosure, requiring them to swear on oath that they have produced all that the order requires (with penalties of perjury), due on 9 March 2022.; [sic] d. HungryPanda provide that additional evidence by 16 March 2022; e. Fantuan give unrestricted access to their financials to an independent Big Four accountant nominated by HungryPanda; and f. a mediation occur before an associate justice of the Supreme Court of Victoria on 17 March 2022. If a resolution can't be reached at the mediation, the matter will be listed for trial in early April 2022. 9 I am informed that since the date of those orders, following an unsuccessful mediation, the Victorian proceedings were set down for final hearing in June 2022. 10 In these circumstances, I raised with both parties why it would not be appropriate for this proceeding to be transferred to the Supreme Court of Victoria. It seemed to me that although the actors in both proceedings are not identical and the issues, if represented by a Venn diagram, may not entirely overlap, the factual substratum that exists in relation to each of the proceedings is substantially similar. Indeed, it might be thought that both proceedings, although in different courts, form part of the one "matter" (to use that word in its Constitutional sense). 11 This Court, obviously enough, has power to transfer a proceeding to the Supreme Court of Victoria, pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) (Cross-Vesting Act). Relevantly, the Court may transfer a proceeding under s 5(4) on an application made by either party or on its own motion: s 5(7). Either way, the question to be determined is whether it appears that the circumstances enliven s 5(4) of the Cross-Vesting Act such that an order for transfer should be made. 12 The question raised by the transfer application calls for what has been described as a "nuts and bolts" management decision as to which court, in the pursuit of the interests of justice, is more appropriate to hear and determine the substantive dispute: see Bankinvest AG v Seabrook [1998] 14 NSWLR 711 (at 714 per Street CJ). It is both necessary and sufficient for the making of a transfer order that, in the interests of justice, the transferee court is more appropriate: see BHP Billiton Limited v Schultz [2004] HCA 61; (2004) 221 CLR 400 at 14. 13 I consider it is overwhelmingly the case that it is in the interests of justice for this proceeding to be transferred to the Supreme Court of Victoria. The transfer will likely avoid unnecessary costs and delay, and result in at least the possibility for the issues currently framed in this proceeding to be heard at a much earlier date than otherwise would be the case. 14 Of course, it will be entirely a matter for the Supreme Court as to how it case manages any proceeding transferred and I should not, in any way, pre-empt the course a judge of that Court considers appropriate, but it seems there is at least a prospect that this proceeding could be heard together with the proceeding currently fixed in June. It suffices for me to note that, given the evidence that has been filed in support of this interlocutory application, there does not seem to be any reason why this proceeding could not be prepared in time to allow it to be heard with the related proceeding. Again, of course, I stress that this is a view I form for the purposes of the transfer application and I do not presume to give any indication of how the Supreme Court ought to, or will, manage the transferred proceeding. 15 Two further issues arise. The first is the interlocutory relief that is sought. Given my view that it is appropriate to transfer the proceeding to the Supreme Court, I consider I should take an approach substantially similar to that taken by Riordan J in dealing with the related proceeding. After adjourning for a short period, senior counsel for the respondents was able to proffer an undertaking in a form substantially similar to that which was proffered on behalf of Fantuan to the Supreme Court on 3 March 2022. That undertaking, calibrated to reflect the circumstances of the present proceeding, is in the following form: [T]he respondents, by their counsel, undertake without any admission of the respondents' liability, not to use any information in their possession, custody, or control, comprising the applicant's merchant lists, or any information derived from such merchant lists. 16 I consider that this order sufficiently preserves the status quo for present purposes. I will, however, note that nothing about the acceptance of this undertaking should be seen, at least on my part, as fettering the ability of HungryPanda to obtain any further or other relief from a judge case managing this case in the Supreme Court if they should be so advised. Whether such relief should be granted will, of course, be entirely a matter for that Court. If orders are made in the proceedings in the Supreme Court putting in place an interlocutory regime pending the final hearing, then it will be open for the respondents to approach my chambers to seek a discharge of their undertaking to the Federal Court of Australia. 17 Undertakings of this type are solemn matters. In all the circumstances, I consider that it is appropriate that I direct the solicitors for the respondents to provide a copy of the undertaking to each of the respondents and advise them of the contents of the undertaking after it has been entered in the records of the Court. 18 The second issue I mention is that, although there are no pleadings in the materials before me, I have had the benefit of submissions on the interlocutory application. Although not expressed in such terms, it seems to me that there is at least a possibility that the respondents may seek some relief which includes orders pursuant to the Independent Contractors Act 2006 (Cth) (ICA Act). The ICA Act allows a "Court" to make an order setting aside or varying a "services contract" in relation to which an application has been made under s 12(1). Section 4 defines "Court" to mean "the Federal Court of Australia or the Federal Circuit and Family Court of Australia (Division 2)". 19 Although I have not been assisted with submissions on the point, the view I take is that this should not provide a difficulty in cross-vesting the proceedings. Apart from the fact that the ICI Act may not be relied upon, s 4(1) of the Cross-Vesting Act provides as follows: 4 Additional jurisdiction of certain courts (1) Where: (a) the Federal Court or the Federal Circuit and Family Court of Australia (Division 1) has jurisdiction with respect to a civil matter, whether that jurisdiction was or is conferred before or after the commencement of this Act; and (b) the Supreme Court of a State or Territory would not, apart from this section, have jurisdiction with respect to that matter; then: (c) in the case of the Supreme Court of a State (other than the Supreme Court of the Australian Capital Territory and the Supreme Court of the Northern Territory) - that court is invested with federal jurisdiction with respect to that matter; or (d) in the case of the Supreme Court of a Territory (including the Australian Capital Territory and the Northern Territory) - jurisdiction is conferred on that court with respect to that matter. 20 Section 4 of the Cross-Vesting Act does not apply to any matter arising under various Acts or provisions of Acts that are specifically identified in s 4(4); however, the ICA Act is not one of them. 21 Of course, it is trite that the High Court held in Re Wakim; Ex parte McNally [1999] HCA 27; (1999) 198 CLR 511 that the Cross-Vesting Act attempted to confer on the Federal Court of Australia jurisdiction not found in ss 75 and 76 of the Constitution and was, to the extent it purported to do so, invalid. However, the High Court did not find, nor could it be sensibly suggested, that the Cross-Vesting Act was invalid, insofar as it sought to confer federal jurisdiction on State courts. As has been explained by Brereton J in Young v Lalic [2006] NSWSC 18; (2006) 197 FLR 27 (at 38-39 [43]-[47]) and Nicholas J in Menzies v Paccar Financial Propriety Limited [2016] FCA 400 at (41), the reasoning in Re Wakim is unique to the conferral of State jurisdiction on federal courts and does not extend to the conferral of federal jurisdiction on State courts. 22 Hence by virtue of s 4(1) of the Cross-Vesting Act, it seems to me the Supreme Court of Victoria would be vested with sufficient jurisdiction in respect of matters arising under the ICA Act. In any event, if that is a matter of contest, it may be raised before the Supreme Court, but, at least as I presently understand the situation, any questions as to jurisdiction should not militate against my view that the interests of justice strongly favour transfer. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.

SCHEDULE OF PARTIES NSD 148 of 2022 Respondents Fourth Respondent: MS JIALANG HE Fifth Respondent: MS RONG YANG Sixth Respondent: MR KHONGKAR SENG Seventh Respondent: MS AIJUAN SHI Eighth Respondent: MS YAHONG HAN Ninth Respondent: MS XIAOJUN ZHU Tenth Respondent: MR KAIDI ZHU Eleventh Respondent: MS XIAOYUN WANG