Hive Empire Pty Limited v MultiRational Pty Limited

These proceedings arise from a dispute about events which occurred in the Philippines. Four groups are involved.

There are two relevant sets of proceedings. The first are these proceedings (including a cross-claim) between Hive and the defendants. The other proceedings are a claim in the Regional Trial Court, Makati City in the Philippines brought by MultiRational Corp against the Employees, but to which Hive is not a party (the “Philippines Proceedings").

The Court has before it two notices of motion which together raise these questions, which I set out with the Court's answers:

Mr J O'Sullivan of Counsel appeared for Hive, the Employees and the Hive Executives. Mr I Griscti of Counsel appeared for the defendants.

Before setting out the Court’s specific findings of fact (no facts having been in dispute), the general background to the dispute can be briefly stated. Hive operates a website (finder.com.au) which enables consumers to compare different products and services. Hive entered into an agreement with the defendants whereby the defendants were to provide "back office" support for Hive's operations, using staff and premises in the Philippines. In the events which happened, the Employees were those staff.

After this arrangement had been operating for some time, the Employees resigned en masse and went to work for an entity related to Hive in the Philippines. In these proceedings the defendants claim that in breach of the agreement between Hive and the defendants, Hive enticed the Employees to terminate their employment with the defendants. Hive commenced these proceedings in order to determine what, if any, liability it may have to the defendants. The defendants filed a cross-claim for damages and the quantum meruit. In the Philippines Proceedings, MultiRational Corp sues the Employees for damages said to arise from the breach of their employment agreements with MultiRational Corp by resigning to go to work for Hive's Filipino company.

In September 2015, Hive and the defendants entered into what was described as an "International Office Establishment Agreement" (the "Agreement"). In the Agreement Hive was described as the "Client" and the defendants were described as the "Provider". The Agreement included:

Between September 2015 and June 2017, the defendants provided services to Hive under the Agreement.

On 12 May 2017, the Employees tendered their respective resignations to the defendants and went to work for Hive. The defendants allege that Hive repudiated the Agreement on or about 16 May 2017.

Hive commenced these proceedings against the defendants on 15 August 2017.

By its amended statement of claim filed on 22 November 2017, Hive sought:

By cross-claim filed on 25 October 2017, the defendants sued Hive for, among other things, breach of the Agreement based on an allegation that Hive had enticed the Employees to terminate their employment by the defendants. This claim continued to be part of the defendants’ cross-claim, which was ultimately crystallised in an amended statement of cross-claim filed on 12 November 2018. That iteration of the pleading sought:

The claim for breach of contract was pleaded (as it had been in the original cross-claim) as:

In April 2018 (after issue had been joined between Hive and the defendants in these proceedings), MultiRational Corp initiated a process against the Employees in the Philippines' National Labor Relations Commission for a claim that was described as "money claims, compensation for full commercial loss caused by Employees' collusion with our client". The initiating document also specified a claim described as "failure to comply with 30 days’ notice prior to resignation under Article 285 of Labor Code". It included a notice to the Employees "inviting" them to a "conciliation‑mediation conference", and stating that:

Although there was no expert evidence about Filipino law before me, I am satisfied from the terms of the initiating document itself that it invoked some form of compulsory conciliation or mediation. The parties before me assumed, although there was no expert evidence, that such a mediation or conciliation was a prerequisite to the commencement of civil proceedings in the Philippines. There was no evidence as to the outcome of the "conciliation-mediation conference", but to the extent it is necessary I readily infer from the commencement of the Philippines Proceedings that it was unsuccessful, at least in part.

On 30 August 2018, MultiRational Corp also filed a complaint which gave rise to a criminal investigation by the Republic of the Philippines, Department of Justice, National Prosecution Services, against the Hive Executives in connection with the circumstances in which the Employees left the employment of the defendants. I do not need to refer any further to the criminal complaint because the uncontested evidence before me was that MultiRational Corp has withdrawn that complaint.

Although there is no evidence directly on point, I am satisfied that sometime in the first months of 2019 MultiRational Corp commenced the Philippines Proceedings against the Employees. While the initial originating process for the Philippines Proceedings was not in evidence, there were court documents which gave the case number as "R-MKT-19-00905-CV” and which refer to orders dated 4 June 2019 for the filing of what was described as an "Amended Complaint". I infer from those matters (including "19" in the case number) that the Philippines Proceedings were commenced in 2019 on some date before 4 June 2019.

The Amended Complaint in the Philippines Proceedings includes (emphasis in original):

Based upon an acceptance between the parties that Filipino pesos 1 million is approximately A$28,623, the amount of Filipino pesos 3,003,000 claimed in the Philippines Proceedings against the Employees is approximately A$86,000.

On 21 June 2019, Hive's solicitors wrote to the defendants' solicitors enclosing a Notice of Offer of Compromise under the Rules (the "Offer"). Their covering letter included:

The Offer was:

On 16 July 2019 the defendants' solicitor sent this email to Hive's solicitors:

Pausing at this point in the narrative, the Court notes that the parties were in agreement that the Offer complied with the statutory requirements for an offer of compromise under the Rules. Hive also accepts that the defendants validly accepted the Offer by their solicitor's email of 16 July 2019. The present debate has its origins in what happened next.

On 7 August 2019 Hive's solicitors sent this letter to the defendants' solicitors

The enclosed draft deed of settlement (the “Draft Deed”) included:

By email on 12 August 2019 the defendants' solicitors responded to Hive's solicitors:

The marked up version of the Draft Deed referred to in that email deleted all references to the Philippines Proceedings.

Hive did not accept the defendants' position that, among other things, all references to the Philippines Proceedings should be deleted from the Draft Deed. The parties could not agree on terms of the Draft Deed and Hive did not pay the $30,000 referred to in the Offer.

On 11 September 2019 Hive's solicitors wrote to the defendants' solicitors by email:

Five days earlier - on 6 September 2019 - the defendants filed a notice of motion seeking:

On 11 September 2019, Hive filed a notice of motion for relief which sought:

At the commencement of the hearing before me, and over the opposition of the defendants, I gave leave to Hive to amend that notice of motion to add the Employees and the Hive Executives as applicants for that relief, in addition to Hive.

The relevant Rules in relation to offers of compromise are:

I have already noted - see paragraph [23] above - that Hive accepted the Offer had been validly accepted by the defendants in accordance with the Rules. The issue between the parties - being the issue which raised the proper construction of the terms on which the proceedings had settled - was whether the release and covenant not to sue set out in the Offer extended to the Philippines Proceedings.

I should also record at this point that – with respect, correctly – Mr O'Sullivan accepted that the Agreement between the parties was complete with the defendants' solicitor's email of 16 July 2019 (see paragraph [22] above) accepting the Offer (the "Accepted Offer"). In other words, he acknowledged that the debate between the parties about the terms of the Draft Deed said nothing about the contractual position between them, and that this was not a case which required consideration of the familiar principles in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353. Mr O'Sullivan accepted that the central issue at this stage of the inquiry was the proper construction of the terms of the Accepted Offer.

It is convenient at this point also to note a logical tension in the way Mr O'Sullivan put his client's case. His primary submission was that on the proper construction of the Accepted Offer, Hive was entitled to an order in the nature of an anti-suit injunction in relation to the Philippines Proceedings pursuant to Pt 20 r 20.29(2)(a) of the Rules. Alternatively, and assuming the same construction of the Accepted Offer, he submitted that Hive had validly accepted the defendants' repudiation of the Agreement evidenced by the Accepted Offer (the acts of repudiation being their refusal to discontinue the Philippines Proceedings, insisting they had the right to continue those proceedings, and by failing to agree to the Draft Deed which would have required MultiRational Corp to discontinue the Philippines Proceedings), such that the settlement agreement between the parties had come to an end and these proceedings should now be fixed for hearing. In that event, he submitted in the alternative that the Court should still grant an anti-suit injunction, not to enforce a right created by the terms of the Accepted Offer, but on general equitable principles.

Neither party sought to engage with an important issue which it seems to me was raised by Mr O'Sullivan's alternative argument, namely the extent to which common law principles such as termination for repudiation apply to accepted offers of compromise, the legal incidents of which are governed by the Rules. Because of the view I have taken about the proper construction of the Accepted Offer (that it does not extend to the Philippines Proceedings so that the defendants' conduct could not constitute a repudiation if the common law of contract were applicable), it is not necessary for me to address this aspect of Mr O'Sullivan's arguments further.

Insofar as the construction of the Accepted Offer is concerned, it is not being disrespectful to describe Mr Griscti's submissions on the construction question as short and to the point. He submitted that "parties" in clauses 1(e) and (f) of the Offer (see paragraph [21] above) could only mean the parties to these proceedings, being Hive and the four defendants. So much was apparent from the terms of the Offer itself, and the fact that it was expressly made in accordance with the Rules relating to such offers to resolve proceedings before the Court.

The argument continued that, contrary to the position advanced by Mr O'Sullivan, the fact that "the subject matter of the proceedings" referred to in both of those clauses included the conduct of the Employees (because their conduct in resigning was pleaded by the defendant cross-claimants - see paragraph [13] above) did not make the Employees "parties" for the purposes of the Offer. Therefore, the release and covenant not to sue included in the Accepted Offer did not on their proper construction include a release by MultiRational Corp of any rights it may have had against the Employees. The "parties" and the "each other" in those clauses were plainly confined to the five parties to these proceedings.

Finally, Mr Griscti submitted that if any context outside the terms of the Offer itself was required, it was provided by the defendants' solicitors’ covering letter which enclosed the Offer (see paragraph [20] above). That letter made no reference to the Philippines Proceedings and was clearly confined to issues between the parties to these proceedings.

Mr O'Sullivan's submissions, while persuasively amplified in oral address, were concisely set out in his written submissions:

The Court accepts Mr Griscti's submissions. I do not accept Hive's invocation of s 73 of the Act to resolve the "real issues" insofar as it is suggested (quoting from Mr O'Sullivan's submissions) that:

Neither party suggested that anything other than the ordinary principles of contractual construction apply to the construction of the Accepted Offer. These require words to be given their natural and ordinary meaning in the context in which they appear, informed where necessary by surrounding circumstances known to the parties at the time the Agreement was made. In this case the context is provided by the clear identification in the title of the Offer of who the parties are, and the express provision that the Offer is made in accordance with that part of the Rules to enable the settlement of proceedings between the parties to the proceedings, being those described as plaintiffs and defendants. If there could be any doubt who those were, then one need only go to the third page of the Offer where the "parties to the proceedings" are expressly listed by name as Hive and the four defendants.

A further element of context is provided by the chapeau to the Offer, being that "The plaintiff offers to compromise the whole of all claims in the proceedings". "All claims in the proceedings" must be identified by an examination of the pleadings. The Philippines Proceedings are nowhere referred to in those pleadings. While, obviously enough, the Employees are referred to in the defendants' cross‑claim, there is no "claim in the proceedings" by MultiRational Corp or any other party against the Employees. Nor is there any claim by any party in relation to the Philippines Proceedings.

It may also be accepted that the expression "subject matter of the proceedings" is wider than "claims in the proceedings" and is itself prefaced by "in relation to". Those latter words are to be understood as connoting a wide relational connection: see, for example, the decision of the plurality in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [80]. There is also no doubt that "subject matter of the proceedings" includes the conduct of the Employees. However, it would be a case of the interpretative tail wagging the dog to rely on that fact to bring about an interpretation that the Employees are included within the expression "the parties" to the proceedings.

For these reasons, the Court finds that these proceedings have been settled on the terms of the Offer and that, on the proper construction of the Accepted Offer, whatever rights MultiRational Corp has against the Employees remain unaffected by that settlement. The terms of the Accepted Offer therefore do not create a right enforceable by an order in the nature of an anti‑suit injunction against MultiRational Corp in relation to the Philippines Proceedings.

Before dealing with what orders the Court should make to give effect to the settlement, which I have now found occurred, it is logical next to consider Hive's alternative application relying on general equitable principles for an anti-suit injunction in relation to the Philippines Proceedings.

Hive submits that the continuation of the Philippines Proceedings is vexatious or oppressive so as to attract equity’s jurisdiction to restrain the Philippines Proceedings. The principles are now well developed in relation to such applications. It is sufficient for present purposes to refer to the decision of the High Court in CSR Ltd v Cigna Insurance Australia Ltd [1997] HCA 33: (1997) 189 CLR 345 (at 391-394):

Hive’s submissions that the continuation of the Philippines Proceedings is vexatious or oppressive maybe summarised as:

The defendants’ submissions as to why the continued maintenance of the Philippines Proceedings is not vexatious or oppressive maybe summarised as:

In weighing the parties’ submissions, one matter requires specific elucidation. That is the question of what loss is sought in the two sets of proceedings.

The loss claimed by MultiRational in the Philippines Proceedings is A$86,000 for breach of what is described as the “anti-poaching” provision in the Employees’ employment contract with MultiRational Corp. In paragraph 24 of the Amended Complaint (see paragraph [18] above) this is said to be a sum “representing MultiRational Corp’s prospective unrealised income had the abandonment and poaching not transpired”. Unfortunately, the spreadsheet referred to in the Amended Complaint setting out the detail of this calculation was not included in the evidence. I am nevertheless satisfied that the type of loss claimed is sufficiently described in paragraph 24 of the Amended Complaint.

The defendants/cross-claimants in these proceedings (including MultiRational Corp) claim four different heads of damage:

It will be recalled that Hive’s principal claim in these proceedings was to challenge the validity of the Agreement and, in particular, clause 4.3.

Plainly enough, the first three claims in these proceedings are for past services and cannot overlap with the claim for prospective loss in the Philippines Proceedings. Except in the most general sense I do not agree that the remaining claim in these proceedings is for the “same loss” as that claimed in the Philippines Proceedings. They are between different parties under different agreements and calculated on different bases. They are two juridically different methods of converting into money the loss MultiRational Corp says it suffered arising out of the same set of events. Only in that very general way can it be said that they deal with the same loss.

There are five reasons why the Court is not persuaded that the maintenance of the Philippines Proceedings is vexatious or oppressive in the requisite sense.

First, there is no longer any interest in the integrity of these proceedings to protect by an anti-suit injunction. These proceedings have been settled on terms that $30,000 is to be paid to all four defendants (not just to MultiRational Corp) without any release of MultiRational Corp’s rights against the Employees. The Court would readily restrain the Philippines Proceedings if there had been an agreement to the effect of that asserted by Hive in the Accepted Offer. But that is not what occurred. The Employees are not parties to these proceedings. That position is not altered by the fact that the Employees are applicants on the notice of motion. Nor does the fact that six of the seven Employees swore affidavits to be read in these proceedings make any difference.

Second, MultiRational Corp is not the moving party in these proceedings. It is a defendant who had not chosen to engage this jurisdiction, but to the extent it had been sued here, chose to bring a cross-claim against Hive as the plaintiff in these proceedings.

Third, even assuming that there was some degree of overlap in the loss claimed in the two proceedings, that is in and of itself insufficient to make the maintenance of the Philippines Proceedings vexatious or oppressive. A party may be entitled to recover damages from several defendants located in different countries. The settlement of these proceedings does not extend to any claim by MultiRational Corp against the Employees in the Philippines Proceedings. There is no expert evidence to suggest to the extent that it is the same loss whether or not MultiRational Corp would have to give credit in any recovery from the Employees for some or all of the amount it received in the settlement of these proceedings. However, in the absence of expert evidence about Philippines law, the Court is entitled to assume that the law is the same as in Australia. In those circumstances, to the extent it can be demonstrated that there is an overlapping of loss, a credit would have to be given in the Philippines Proceedings for some or all of the amount which MultiRational Corp received in the settlement of these proceedings.

Fourth, I accept Mr Griscti’s submission that there is a genuine juridical advantage for MultiRational Corp as a Filipino company to sue Filipino defendants under Filipino law in the Philippines. For example, complications of service and enforcement of an Australian judgment if the proceedings had been taken in Australia do not arise. In my respectful view, it would be an odd result to grant relief premised on MultiRational Corp (who is not the plaintiff in these proceedings) being expected as a Filipino corporation to cross-claim against Filipino residents (who are not otherwise parties to these proceedings) under Filipino law in Australia.

Fifth, there is no possibility of inconsistent outcomes. These proceedings have settled without a hearing and without the Court making any findings. In any event, the cause of action in the Philippines Proceedings is different to those advanced in these proceedings. The cause of action in the Philippines Proceedings is for breach of the Employees’ contracts with MultiRational Corp. These proceedings turned on breach of the Agreement, or for services purportedly performed pursuant to the Agreement. In my respectful view, there is little or no room for an anti-suit injunction where the local proceedings have been settled or determined unless one of the outcomes of that settlement or determination is to create an enforceable right in one party to restrain the other from maintaining proceedings in another jurisdiction.

The orders of the Court are: