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

On 15th October 2021, the APA was concluded.

The First Closing Date was 25th October 2021, which required the transfer of the First Closing Assets to the Claimants.

On the First Closing Date, the Claimants paid a portion of the purchase price less certain deductions in satisfaction of the First Closing Amount (A$27,042,000), and therefore acquired certain assets (excluding assets relating to the Franchisees and JV Entities), and assumed the employment of a number of transferring EASI employees and engaged a number of transferring contractors.

The Second Closing Date was originally 30th November 2021, but this was deferred to 14th December 2021. The Second Closing Assets included certain Critical Assets (identified by Mr Kelu Liu in his first witness statement, at para. 26):

On 13th December 2021, the day before the Second Closing Date, the Claimants’ Legal Counsel in Australia had circulated a revised list of items that the Defendants had to provide on or before the Second Closing Date.

At this point, Mr Peter Liu on behalf of the Defendants began to express apparent concerns about transferring these critical assets before the Claimants had made payment of the Second Closing Amount. During a conversation on 13th December 2021 between Mr Peter Liu and Ms Tina Sun, the Claimants’ HR Manager in Australia, Mr Peter Liu proposed to deliver the assets, including “the signed IP Assignment Deed and transfer IT Systems upon receipt of second closing payment”.

On the Second Closing Date, the Claimants paid a further A$18,164,216.91 in satisfaction of the Second Closing Amount, and acquired legal and beneficial title to the remaining assets of the EASI Business, including the critical back-end IT Systems which controlled the EASI platform, and the businesses and assets of the Franchisees and JV Entities acquired by the Defendants’ Group between First and Second Closing Dates on terms satisfactory to the Claimants.

A number of the Defendants’ Assets were not transferred and delivered to the Claimants by the Second Closing Date (“the Withheld Assets”) (indeed, some of the Withheld Assets should have been delivered at the First Closing Date).

After receipt of payment of the Second Closing Amount, the Claimants chased for the transfer and delivery of the Withheld Assets and were assured by the Defendants that they would be transferred imminently. On 17th and 21st December 2021, Mr Peter Liu assured Mr Kelu Liu of the Claimants on a telephone call that the IT Systems would be transferred imminently.

As explained in Mr Kelu Liu’s evidence (his first witness statement at para. 87-92), the Defendants still failed to deliver the Withheld Assets over the Christmas and New Year Period. During a telephone call on 10th or 11th January 2022, Mr Peter Liu informed Mr Kelu Liu of the Claimants that he wanted the Claimants to agree to make a number of additional concessions. The Claimants submit that Mr Peter Liu was using the Withheld Assets, that had not been transferred, as leverage. Mr Kelu Liu indicated that he would be willing to consider these concessions, provided that the IT Systems were transferred as they should have been pursuant to the APA without further delay. In response, Mr Peter Liu assured Mr Kelu Liu again that the IT Systems would be transferred immediately.

However, the Defendants continued in their failure to transfer the Withheld Assets.

On 10th January 2022, the Claimants made a public announcement of the acquisition of the EASI Business.

On 11th January 2022, EASI Australia issued the following press release:

“In view of the numerous expressions of doubt and concern that we have recently received from EASI franchisees, merchants, delivery personnel, and users regarding the strategic merger between EASI and HungryPanda, EASI hereby gives the following special statement:

So far, the strategic merger between EASI and HungryPanda has not been completed. As a result, EASI is still operating independently in an orderly manner according to the principle of providing quality services to users, merchants, and delivery personnel.

We would like to thank all EASI franchisees, merchants, delivery personnel, and users for your longstanding support. As always, EASI will do its best to serve you. Let us join hands to overcome the current crisis against the pandemic!”

On the same day, 11th January 2022, the Defendants’ legal representatives, Neo Legal, wrote to White & Case LLP, the Claimants’ solicitors, alleging that the Claimants may be in breach of the APA by reason of the premature announcement of the partnership between EASI and HungryPanda. Neo Legal concluded their letter by stating that:

“In light of this, and while our clients have not yet come to a decision, they are presently considering exercising their option to terminate the APA, or alternatively opening further negotiations to find mutually agreeable terms for a revised arrangement which benefits both parties.”

During this time, the Fantuan group (“Fantuan”) was establishing a presence in Australia. Fantuan is the Claimants’ largest global competitor in the Asian food-delivery market.

On 14th January 2022, Fantuan Australia Pty Ltd (“Fantuan Australia”) was incorporated and, on 22nd January 2022, Fantuan Australia was registered for GST (the Australian equivalent of VAT). This much was known to the Claimants, but in January 2022, it was not known to the Claimants that the Defendants (other than the Second Defendant) and others had worked with Fantuan since November 2021 (after the APA was concluded) to establish Fantuan’s Australian business using key assets sold under the APA, including in particular the Defendants’ intellectual property.

The Claimants have since obtained from the Defendants, by reason of the Consent Order dated 22nd February 2022 (referred to below), a number of documents on which they rely in support of their case that the Defendants intended to transfer the EASI Business to Fantuan despite the fact that they had agreed to sell the EASI Business to the Claimants, in particular three documents dated 10th January 2022 (“the JV Documents”), which are pleaded in their Particulars of Claim. The JV Documents are as follows:

On 15th January 2022, there were further exchanges between Mr Peter Liu and Mr Kelu Liu, during which, according to Mr Kelu Liu’s evidence, Mr Peter Liu proposed to “keep” certain assets, namely, the accounts, passwords and authentications in relation to the back-end IT Systems which, together, enabled him to continue to control the EASI platform “in order to better implement” the matters discussed on 11th January 2022. Mr Kelu Liu’s evidence is that he understood this to mean that by retaining control of the IT Systems, Mr Peter Liu could unilaterally enforce the terms of the concessions he wanted from the Claimants. Mr Kelu Liu immediately demanded a meeting which took place an hour later, and at which Mr Kelu Liu reiterated that, provided that the IT Systems were delivered immediately, the Claimants remained prepared to discuss and agree the additional concessions Mr Peter Liu had demanded. At this point, Mr Peter Liu expressly refused to hand over the back-end IT systems controlling the EASI platform unless the Claimants first met his demands to renegotiate the APA. Mr Kelu Liu stated that “Of course, in circumstances where Peter had refused to deliver the IT Systems having already received payments in excess of AU$ 45 million, there would have been no certainty that he would transfer these irrespective of whether we met any of his further demands” (Mr Kelu Liu’s first witness statement, para. 108).

On 4th February 2022, White & Case LLP on behalf of the Claimants issued a letter before action to EASI Australia.

On 16th February 2022, the Claimants commenced the present proceedings and applied for urgent interim injunctive relief, including an order requiring the Defendants to transfer the “Critical Withheld Assets”, being the more important of the Withheld Assets. The Defendants served no evidence in response to that application.

The Claimants’ injunction application was resolved by a Consent Order dated 22nd February 2022 made by Butcher, J, by which the Defendants undertook to transfer to the Claimants the Critical Withheld Assets (listed in the table scheduled to the Order) by 4.00 pm GMT on 23rd February 2022, and gave undertakings as to their conduct.

Following that Consent Order, the Critical Withheld Assets (but not all of the Withheld Assets) were transferred to the Claimants. That enabled the Claimants to take control of the EASI platform, two months after they were contractually entitled to have received all the Second Closing Assets.

Once the Claimants obtained control, it became apparent that very large volumes of material had been deleted, including about 81% of the data in EASI’s Microsoft Exchange system (Mr McGlade’s first witness statement, para. 13). Data recovery work then brought to light the fact that the Defendants had been working to establish the competing Fantuan business in Australia since November 2021 (Mr McGlade’s first witness statement, para. 14).

According to the Claimants’ skeleton argument for trial,

“… The obvious conclusion is that this deletion of data represented an attempt to conceal what had been done in relation to Fantuan and/or further hinder the Claimants’ ability to control and operate the EASI Business.

In short, what the Claimants obtained was very different from what they were entitled to have received under the APA. Instead of the Claimants buying out the main competitor of HungryPanda in the Australian market, so leaving them able to combine the two businesses and obtain the benefit of the economies of scale without a major competitor, they found themselves first not in possession of the business they had bought and then, once they were in possession (albeit, even now, not in possession of all they were entitled to under the APA) found themselves facing a major new competitor in the Australian market which had “springboarded” its position using the EASI Business’ intellectual property sold under the APA.”

On 1st March 2022, following a test launch on 26th February 2022, Fantuan Australia launched. The Claimants have inferred that Fantuan Australia was then using EASI Business intellectual property and databases, which were not in the public domain, and individuals formerly employed in the EASI Business, because the databases included delivery driver and customer information and Fantuan Australia’s network of delivery drivers included those who were in the EASI Delivery Driver database and many customers on the EASI platform reported receiving targeted personal advertisements directly from Fantuan Australia on Chinese-language social media platforms (Mr McGlade’s first witness statement, para. 18-25).

Under the APA, the Retention Amount fell due for payment in June 2022 under clause 5.5(c) of the APA, unless the Claimants were entitled to make deductions in accordance with clause 6. As explained below, I understand that the Retention Amount was not paid and that the Defendants have not alleged that such payment was otherwise due.