Federal Court of Australia

Grow MF Pty Ltd v Parthy [2023] FCA 442

ORDERS

THE COURT NOTES THAT:

A.    The Applicant gives the usual undertaking as to damages in the form set out in the Usual Undertaking as to Damages Practice Note (GPN-UNDR).

B.    Until further order of the Court, the Applicant undertakes not to:

(a)    Transfer any of its intellectual property rights in any of the existing content of the Grow Metrics GitHub Account, the Growmetrics Figma Account or the Growmetrics Production Environment (referred to by the Respondent as the Growmetrics QA Environment); nor

(b)    Delete, destroy or modify any of the existing content of the Grow Metrics GitHub Account, the Growmetrics Figma Account, the Growmetrics Production Environment (referred to by the Respondent as the Growmetrics QA Environment) or Grow MF’s account with Fireflies, other than as part of its usual business (noting that GitHub retains a record of changes to the source code).

THE COURT ORDERS THAT:

1.    Within 2 days of this Order, the Respondent:

(a)    Restore Mr Sohan Karunaratne’s GitHub account “@sohank88” as an “owner” of the Grow Metrics GitHub Account and notify the Applicant’s lawyers; and

(b)    Provide Mr Sohan Karunaratne with access as an administrator to the Growmetrics Figma Account and notify the Applicant’s lawyer; and

(c)    Provide the Applicant’s lawyers with a copy of all material held on the Growmetrics Production Environment (referred to by the Respondent as the Growmetrics QA Environment).

2.    Until the hearing and determination of this proceeding or until further order, the Respondent (whether by himself, his employees or agents or otherwise howsoever) be restrained from, without the licence or authority of the Applicant or order from the Court:

(a)    accessing using in any manner whatsoever;

(b)    reproducing (other than for the purposes of this proceeding);

(c)    deleting, destroying, concealing or modifying, or taking any step which is likely to impede the recovery of;

(d)    disclosing to any third party (other than legal advisors for the purposes of this proceeding),

the material held in the Grow Metrics GitHub Account, the Growmetrics Figma Account, the Growmetrics Production Environment (referred to by the Respondent as the Growmetrics QA Environment) and / or the Growmetrics Slack Development Account.

3.    Costs of the Applicant’s application for interlocutory relief be reserved.

4.    The parties have liberty to apply.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011..

REASONS FOR JUDGMENT

ROFE J:

1    On 4 May 2023 I, amongst other things, ordered the respondent to restore access to Grow MF Pty Ltd of certain of its technological accounts. In light of my ruling, orders were made, including as to costs (which were reserved). These are my reasons for allowing the application.

Introduction

2    The applicant, Grow MF Pty Ltd, operates a marketing technology SaaS (Service as a Subscription) business providing clients with an automatic marketing application known as the “GrowMetrics application”.

3    Mr Parthy is a software engineer. For the purposes of this interlocutory application, it is sufficient to note that Mr Parthy was engaged in a part-time contractor role with Grow MF in June 2022 and signed an employment contract in the role of Chief Technology Officer on 30 November 2022. Mr Parthy resigned from this role on 24 April 2023. Mr Parthy then attempted to rescind his resignation on 29 April 2023. The applicant refused to accept his withdrawal and on 29 April 2023 terminated his employment on the basis of Mr Parthy’s gross misconduct.

4    The applicant alleges Mr Parthy, following his resignation, removed access for certain Grow MF staff to technological accounts critical to the operation of the Grow MF business.

5    By its interlocutory application, the applicant seeks orders restoring their access to those technological accounts. The applicant also seeks to restrain Mr Parthy from otherwise dealing with any of the materials in those technological accounts.

The interlocutory hearing

6    The matter was heard by me in my capacity as duty judge on Thursday, 4 May 2023.

7    The applicant relies on the following affidavit material:

(a)    one affidavit of Mr Simon Sorockyj dated 1 May 2023, a solicitor acting for Grow MF;

(b)    two affidavits of Mr Sohan Karunaratne dated 2 May 2023 and 4 May 2023. Mr Karunaratne is Grow MF’s executive director.

8    The applicant also filed written submissions in support of its interlocutory application.

9    The respondent relies on a document entitled “Initial conjectures” emailed to chambers on 3 May 2023, a genuine steps statement dated 4 May 2023 and an affidavit of Mr Parthy dated 4 May 2023.

10    While considering the respondent’s opposition to the injunction sought, I remain cognisant of his status as a self-represented litigant. However, Mr Parthy has not provided any basis for restraining Grow MF’s access to those technological accounts.

Background

11    The applicant operates the Grow MF business by offering services contained on the GrowMetrics application to clients. The current version is called GrowMOFO 2.5 (which Mr Parthy refers to as GrowMOFO 2.0 Stable). Grow MF is developing a new version of the application, referred to as GrowMetrics 3.0.

12    To develop and maintain the GrowMetrics application, Grow MF has accounts on various technological applications. On my understanding, the technological applications can be explained as follows.

13    The GrowMetrics application is operated by underlying source code. That source code is created, maintained, developed and stored on GitHub, a third party source code repository. Prior to 28 April 2023, the applicant contends Mr Parthy and Mr Karunaratne were both “owners” of the GitHub account.

14    When that code is ready to be deployed, it is “pushed” from GitHub to what the applicant refers to as the “GrowMetrics production environment”. The respondent refers to the production environment as the “GrowMetrics QA environment”. Mr Parthy submits this account was set up in his personal account on Google domains and Netlify. He does not appear to dispute that it was set up in his role as Grow MF’s Chief Technology Officer.

15    Prior to 28 April 2023, three people had access to the GrowMetrics production environment (or QA environment): Mr Karunaratne, Mr Parthy and Adrian Sabic (a product manager at Grow MF). This account was accessed through an organisation username and password (meaning one single username and password).

16    For further development and testing of “high fidelity” prototypes, Grow MF uses Figma.

17    The parties are agreed that GrowMetric’s Figma account was set up by Mr Parthy in his role as Chief Technology Officer and as such he became an “administrator”. Mr Karunaratne understood that he was also an administrator prior to 28 April 2023. Administrators have permissions to give or revoke access to Grow MF staff.

18    Whether Grow MF had reimbursed Mr Parthy for the costs associated with Grow MF’s Figma account was a matter in issue between the parties.

19    It is these three technological accounts that the applicant alleges Mr Parthy has locked the applicant out of access. The applicant characterises Mr Parthy’s conduct, which occurred after Mr Parthy resigned on 24 April 2023 but while he was still working for Grow MF, as follows:

•    Removed Mr Karunaratne as “owner” of the GrowMetrics GitHub Account and Mr Karunaratne’s access altogether;

•    Removed access for all Grow MF staff (other than potentially Ms Melanie Lim) to critical parts of the GrowMetrics GitHub Account including the parts housing the source code for GrowMOFO 2.5 and Growmetrics 3.0 and otherwise limit their ability to perform certain functions;

•    Removed Mr Karunaratne as “administrator” of the GrowMetrics Figma Account and his access altogether;

•    Removed access for all Grow MF staff (other than potentially Ms Melanie Lim) to the GrowMetrics Figma Account;

•    Changed the password for the GrowMetrics Development Environment and not disclose the new password to Grow MF; and

•    Mr Parthy may have also moved the GrowMetrics Development Environment from Grow MF’s Amazon Web Services.

20    Grow MF contends the GrowMetrics accounts are essential for Grow MF to operate its business and full access is required to efficiently and effectively:

(a)    fix any bugs in the current live version GrowMOFO 2.5;

(b)    test any changes to the source code;

(c)    develop or test the new version GrowMetrics 3.0; and

(d)    demonstrate the current or new version to clients.

21    Mr Karunaratne deposes to the harm suffered by Grow MF caused by the inability to access its accounts on GitHub, the production environment (QA environment) and Figma. This harm includes an inability to service customers, reputational harm, payment of overheads and staff salaries (approximately $3,000 per day) to developers unable to perform meaningful work and loss of potential revenue from new clients, including a proposed new service agreement worth between $500,000 to $750,000 in revenue.

Employment dispute

22    The parties are in dispute as to whether there was any transfer of intellectual property from Mr Parthy to Grow MF when he commenced employment, and whether the rights to intellectual property generated whilst he was employed are dealt with solely pursuant to Mr Parthy’s employment contract.

23    Relevantly, Mr Parthy’s employment contract provides that he exercise the powers, authorities and discretions appropriate to the role (cl 1.4(d)(i)), faithfully serve Grow MF and use his best endeavours to promote the interests and reputation of the company (cl 1.4(d)(iii)) and comply with any and all of his legal obligations to Grow MF (cl 1.4(d)(vii)).

24    The employment agreement at cl 13(a) also provides:

Any Intellectual Property which is used, exploited, developed, conceived, created, discovered, produced or otherwise generated by you, either individually or otherwise during the period of your employment, which relates in any way to Confidential Information or other information or property of the Company or any other members of the Group or your engagement as an employee of the Company or the Company's business is the sole and exclusive property of the Company or any members of the Group (as the case may be) and the Company members of the Group (as the case may be) own any right, title and interest to that Intellectual Property.

25    Grow MF also relied on ss 182 and 183 of the Corporations Act 2001 (Cth). It submitted that Mr Parthy was an “employee” for the purposes of Part 2D.1 of the Act and therefore had obligations to, among other things, not improperly use his position to cause detriment to Grow MF (s 182), and use information obtained because he was an employee of Grow MF to cause detriment to Grow MF (s 183).

26    Grow MF also submits that Mr Parthy owed fiduciary obligations to Grow MF due to the employment relationship, his senior role at Grow MF including his managerial responsibilities and the nature of information provided to him that role. These obligations included an obligation to act with fidelity towards Grow MF and to act in good faith and in the best interests of Grow MF.

27    At the interlocutory hearing, Mr Parthy agreed he had entered into an employment agreement with Grow MF, although contesting the substance of what was agreed. He alleged that in return for the transfer of his intellectual property, he would be remunerated by way of his base salary and a 5% equity share in Grow MF. Mr Parthy alleged the substance of the meetings with Mr Karunaratne and verbal agreements amending his employment agreement to which he referred are contained within Grow MF’s Fireflies system, to which he did not currently have access.

28    I accept that Mr Parthy may have a potential cross-claim in the circumstances, however, as I discuss below, this does not give rise to any right to restrain Grow MF from accessing certain technological accounts created for the purposes of the business, and without access to which, causes Grow MF damage.

Consideration

29    The principles applicable to the application for an interlocutory injunction are well established: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57, at [19] (per Gleeson CJ and Crennan J) and at [65]-[72] (per Gummow and Hayne JJ); Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238, at [44]-[74] (per Dowsett, Foster and Yates JJ).

30    The applicant must show that they have a prima facie case, and that the balance of convenience favours the injunction being granted: O’Neill at [19]. I have determined the applicant satisfies these requirements.

31    The applicant submits it has a strong prima facie case against Mr Parthy, at least on the breaches of his employment agreement and in breach of his statutory and equitable duties.

32    Mr Parthy submitted the intellectual property rights to the Figma account are his alone. Conversely, the applicant contended a number of other Grow MF staff also contribute to Figma, as well as each of the other systems.

33    At a provisional level, I am satisfied the evidence shows that Mr Parthy owed certain duties to Grow MF under the Corporations Act 2001 (Cth), pursuant to his employment agreement and in equity, and has, in breach of those duties, removed Grow MF’s access to the GrowMetrics accounts and has refused to restore that access.

34    I am also satisfied that the balance of convenience weighs against the respondent.

35    Mr Parthy is no longer employed at Grow MF yet has unauthorised control over the copyright works and confidential information of Grow MF.

36    The applicant submits the evidence demonstrates that the removal of access to the GrowMetrics account is preventing Grow MF from conducting its business, including servicing clients’ needs, finalising the development of a new and approved application, and promoting the product to new customers.

37    I am satisfied Grow MF’s commercial interests, including its continued business operations, are at serious risk if Mr Parthy continues to prevent Grow MF from accessing the GrowMetrics accounts.

38    Further, Grow MF is spending resources on staff and overheads that are not able to be properly utilised. I accept that it will be difficult to identify the impact on Grow MF’s business, for example in relation to client retention, in order to remedy this harm completely.

39    Mr Parthy has been on notice of Grow MF’s complaint since Friday 28 April 2023, and despite repeated requests has refused to restore access. Grow MF has acted promptly in bringing this application before the Court.

40    Although appreciating Mr Parthy may have a potential claim as to his alleged intellectual property rights in GrowMOFO 3.0 and his potential equity share in Grow MF, his affidavit does not identify any prejudice to him or any legitimate reason he has to restrain access to the GrowMetrics accounts.

41    In order to preserve the GrowMetrics accounts, and in particular given Mr Parthy’s claims as to his alleged intellectual property rights contained within the GrowMetrics accounts, I sought an undertaking on behalf of the applicant that it will not delete, destroy, modify, take any step which is likely to damage any of the material held in the GrowMetrics’ GitHub, production development environment (QA environment), Figma, Slack development account or Fireflies account.

42    For those reasons, the application for interlocutory injunctive relief contained within the originating application of 2 May 2023 was allowed.

Associate:

Dated:    9 May 2023