CL-2022-000069 - [2025] EWHC 1512 (Comm)

Under the APA, the Claimants agreed to purchase, and the Defendants agreed to sell, the EASI Business, as a going concern, and the Assets of the Defendants.

The EASI Business was managed by an electronic platform, namely a “front end” accessed by customers, delivery drivers and restaurants and a “back end” of administration, management, and finance systems; the EASI Business held valuable information in database form consisting of information about merchants (restaurants, etc), delivery drivers, and customers (Mr McGlade’s first witness statement, para. 11).

According to Mr McGlade, the Claimants’ purchase of the EASI Business was undertaken with a view to enable the Claimants’ growth in the Australian market by combining two existing businesses. Prior to the APA, HungryPanda and EASI collectively serviced substantially all of the overseas Chinese food delivery market in Australia (Mr McGlade’s first witness statement, para. 26). The Claimants sought to acquire the EASI Business at the time of the Covid-19 pandemic, as the EASI Business competed with the Claimants’ own HungryPanda business in the Australian market (Mr McGlade’s first witness statement, para. 26-28).

The APA defined the “Business” to mean:

“(a)

all business activities carried on by the Sellers and any other member of the Sellers’ Group on the date of this Agreement in Australia;

(b)

the online take-away food ordering service business carried on by the JV Entities and the Franchisees on the date of this Agreement in Australia; and

(c)

the online take-away food ordering service business carried on by the Sellers, any other member of the Sellers’ Group, the JV Entities and the Franchisees on the date of this Agreement in the Target Countries other than Australia”

According to Mr Kelu Liu in his first with statement, at para. 21, a large part of the EASI Business was conducted through franchisees and joint venture entities, operated by third-party stakeholders, which were provided with access to sections of the back-end of the EASI online platform, compartmentalised by region. Through such access, the franchisees and joint venture entities exercised operational control over the EASI Business in their exclusive territories, subject to the Defendants’ overarching control as administrators of the back-end systems. The “JV Entities and the Franchises” were identified with their individual agreed values in Schedule 4 to the APA.

By clauses 2.1, 2.2, 9.2 and 10.2 of the APA, the Defendants agreed to transfer the legal and beneficial title to the Assets in two phases:

The IT Systems and the IT Business IP and all Related Rights which were to be transferred on the Second Closing Date were critical to the operation of the EASI Business and without them, the Claimants could not carry on that business. The “IT Systems” were defined to mean “the Hardware, Software, networks, peripherals and other information technology equipment which in each case are used exclusively or predominantly in the operation of the Business, including the Merchant Hardware”.

Clause 4.1 of the APA provided that:

“The Sellers undertake to the Purchasers that between the date of this Agreement and the Second Closing Date they will use their best endeavours to procure that:

(a)

one or more member of the Sellers’ Group acquires full legal and beneficial title to the entire Franchise Business of each Franchisee prior to the Second Closing Date on an unconditional basis and on terms satisfactory to the Purchaser’s Representative at its sole discretion; and

(b)

one or more member of the Sellers’ Group acquires the full legal and beneficial interests in each JV Entity that are not already owned by a member of the Sellers’ Group (the “JV Equity Interests”) prior to the Second Closing Date on an unconditional basis and on terms satisfactory to the Purchasers’ Representative at its sole discretion.”

Clause 17 of the APA provided for the transfer of specified employees and contractors of the Defendants to the Claimants.

Clause 18 of the APA contained warranties made by the Defendants which were set out in Schedule 5 to the APA, including warranties that “The Sellers, the JV Entities and the Franchisees are, collectively, the legal and beneficial owner of each of the Assets with good and full title and all rights attaching to them”, that “Each of the Assets has been and is being used exclusively or predominantly for the purpose of the Business”, and that “The Assets comprise all the assets that are necessary for the full and effective continuation of the Business both as it is currently conducted and as it has been conducted in the twelve (12) months prior to the date of this Agreement”.

Clause 23 of the APA, being a series of (time-limited) non-competition provisions, prohibited the Defendants from competing with the EASI Business and from soliciting the custom of its customers and soliciting former employees. The central provision is clause 23.1:

“Each of the Sellers severally undertakes that it shall not and shall procure that each other member of the Sellers’ Group (and in the case of (d) below, JV Entity or Franchisee) shall not, directly or indirectly, either alone or jointly with or as agent for any other person or in any capacity whatsoever …

(a)

neither pending nor within two (2) years following the Second Closing Date, carry on or be engaged or otherwise interested in, in each case directly or indirectly, any business which competes with the Business or any part of the Business … in the Target Countries, the Republic of South Korea, Singapore, France or Italy.”

(b)

neither pending nor within three (3) years following the Second Closing Date, solicit the custom of any person who is or at any time during the two (2) years immediately preceding the Second Closing Date has been a customer or client of any member of the Sellers’ Group, JV Entity or Franchisee in relation to the Business;

(c)

neither pending nor within three (3) years following the Second Closing Date solicit or entice away any Assumed Employee or any person who was employed by any member of the Sellers’ Group in the Business at any time during the twelve (12) months immediately preceding the Second Closing Date or employ any such person …”

(d)

at any time after the First Closing Date (other than as permitted by Clause 23.4):

(i)

use:

(A)

the EASI Name Rights;

(B)

any other trade, business or domain name or trade mark, logo or design that has previously been used in the Business; or

(C)

any trade, business or domain name or trade mark, logo or design which is, in the opinion of the Purchasers, capable of being confused with any of the foregoing described in (A) or (B); or

(ii)

challenge the validity or enforceability of any of the EASI Name Rights; or

(e)

assist or incite any other person to do any of the above.”

The “Target Countries” referred to in clause 23.1(a) were defined in the APA to mean “Australia, New Zealand, Japan, the United Kingdom, the United States of America and Canada”.

In the event, the First Closing Date was 25th October 2021 and the Second Closing Date was 14th December 2021.

Pursuant to clause 5 of the APA, by 15th December 2021 (the day after the Second Closing Date), the Claimants had paid to the Defendants approximately A$45.2 million in consideration for the purchase of the Defendants’ Business and Assets under the APA. Under clause 5 of the APA, 90% of the Purchase Price was to be paid by the Second Closing Date. A further 10% - the Retention Amount - was to be paid by 14th June 2022, subject to any sums owing by the Defendants to the Claimants having been deducted in accordance with clause 6.

By clause 1.13 of the APA, the Defendants’ obligations under the APA were joint and several. Clause 1.13 provided that “Unless expressly provided otherwise, the provisions of this Agreement which relate to the Sellers (including the Warranties) are given and entered into by them jointly and severally”. However, clause 23 - which imposes the non-competition obligations - begins with the words “Each of the Sellers severally undertakes …”. I interpret this to mean that any breach of the duties in clause 23 by the any of the Defendants are not to be automatically attributed to another Defendant, at least where that other Defendant is not liable for a breach of duty under clause 23. I understand that the Claimants accepted that interpretation.