New Aim Pty Ltd v Leung (No 4)

Case [2025] FCA 747

FEDERAL COURT OF AUSTRALIA

New Aim Pty Ltd v Leung (No 4) [2025] FCA 747

File number: VID 547 of 2021
Judgment of: NESKOVCIN J
Date of judgment: 8 July 2025
Catchwords:

EQUITY – breach of confidence – use of confidential information subject to claimed equitable obligation – where applicant claimed that the identity and contact details of suppliers was confidential information – whether the confidential information was identified with sufficient specificity – whether the confidential information possessed the necessary quality of confidence – whether the information was received by the respondents in circumstances importing an obligation of confidence – the confidential information did not possess the necessary quality of confidence – no breach of confidence established

CONTRACT – whether use of confidential information was a breach of contract – two employment agreements – where pleaded cause of action was based on the second employment agreement – breach of second employment agreement not established

CORPORATIONS – improper use of information under s 183 of the Corporations Act 2001 (Cth) – whether a claim under s 183 is confined to the contravention of an equitable obligation – no breach of s 183 where no breach of confidence established
Legislation: Corporations Act 2001 (Cth) s 183
Cases cited:

ABC v Lenah Game Meats (2001) 208 CLR 199; [2001] HCA 63

Advanced Fuels Technology Pty Ltd v Blythe & Ors [2018] VSC 286

AG Australian Holdings Ltd v Burton (2002) NSWLR 464; [2002] NSWSC 170

ASIC v Mitchell & Anor (No 2) (2020) 382 ALR 425; [2020] FCA 1098

Australian Securities and Investments Commission v Somerville (2009) 77 NSWLR 110; [2009] NSWSC 934

Avant Group Pty Ltd v Kiddle (2023) 325 IR 292; [2023] FCA 685

Blackmagic Design Pty Ltd v Overliese (2010) 84 IPR 505; [2010] FCA 13

DC Payments Pty Ltd v Next Payments Pty Ltd (2016) 51 VR 151; [2016] VSC 315

Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326; [2007] NSWCA 172

Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167

Farm Transparency International Ltd v New South Wales (2022) 277 CLR 537; [2022] HCA 23

Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979

Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (2009) 81 IPR 1; [2009] FCAFC 2

GDP Group Pty Ltd v Saye [2022] FCA 688

Gold Titan v Lopez [2021] FCA 918

IF Asia Pacific Pty Ltd v Galbally (2003) 59 IPR 43; [2003] VSC 192

Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Links Golf Tasmania Pty Ltd v Sattler (2012) 213 FCR 1; [2012] FCA 634

New Aim Pty Ltd v Leung [2022] FCA 722

New Aim Pty Ltd v Leung (2023) 410 ALR 190; [2023] FCAFC 67

New Aim Pty Ltd v Leung (No 3) [2023] FCA 1295

Optus Networks Pty Ltd v…

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Details
AGLC
New Aim Pty Ltd v Leung (No 4) [2025] FCA 747
Case
[2025] FCA 747
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, New Aim Pty Ltd brought a claim against Mr Leung, as well as against Broers and Sun Yee, for alleged breaches of confidence, contract, and the Corporations Act 2001 (Cth). New Aim alleged that Mr Leung, a former employee, had used confidential information obtained during his employment to assist Broers and Sun Yee in procuring and selling products similar to those sold by New Aim. New Aim contended that the information, including the identity and contact details of suppliers, was confidential and that Mr Leung had misused it in breach of an equitable obligation, his employment contract, and the Corporations Act.

The court had to determine whether the claimed confidential information possessed the necessary quality of confidence, whether it was received by Mr Leung under circumstances that imposed an obligation of confidence, and whether there was actual or threatened misuse of the information. The court also had to consider whether Mr Leung breached his employment contract and contravened s 183 of the Corporations Act.

The court found that the information did not possess the necessary quality of confidence to impose an equitable obligation of confidence. The evidence showed that the information was publicly available or could be easily obtained, and there was no industry practice or internal policy that treated the information as confidential. The court also found that the measures taken by New Aim to protect the information were not sufficient to demonstrate that it was regarded as confidential. As a result, the claims for breach of confidence, breach of contract, and contravention of the Corporations Act were dismissed. The claims against Broers and Sun Yee were also dismissed as they were contingent on the success of the claims against Mr Leung.

The court dismissed New Aim’s claims against Mr Leung, Broers, and Sun Yee, finding that the information in question did not have the necessary quality of confidence to support a claim for breach of confidence. Consequently, the claims for breach of contract and contravention of the Corporations Act were also dismissed. The court ordered that the proceeding be dismissed and set a timeline for the parties to file and exchange written submissions on costs.

Orders

Orders of the court

1. The proceeding against the first, fourth and fifth respondents is dismissed.

2. By 4:00pm on 18 July 2025, the parties are to file and serve written submissions in relation to costs, limited to five pages.

3. By 4:00pm on 21 July 2025, the parties are to exchange written submissions in reply, limited to three pages.

4. The proceeding is listed at 10:00am on 22 July 2025 to consider all consequential issues and orders, including as to costs, arising out of the reasons in New Aim Pty Ltd v Leung (No 4) [2025] FCA 747.

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

BACKGROUND

[15]

The Parties

[15]

New Aim

[15]

Mr Leung

[19]

Sun Yee

[24]

Broers

[26]

Procedural history

[30]

New Aim

[36]

NEW AIM

[40]

Mr Huang

[42]

August 2021 conversation with Mr Leung

[65]

Ms Ho

[68]

Jones v Dunkel inferences

[88]

New Aim

[91]

Phase 1: Searching for and identifying suitable suppliers

[96]

Phase 2: Negotiations with supplier

[99]

Phase 3: Placing an order and reviewing the manufacturing process

[101]

Phase 4: Final inspection and shipping

[102]

Treatment of Mr Schoots’ evidence

[103]

THE RESPONDENTS’ EVIDENCE

[107]

Mr Leung

[109]

WeChat moment

[128]

Confidentiality of supplier information

[130]

August 2021 conversation with Mr Huang, Ms Chiu and Mr Lam

[135]

Mr Leung

[138]

Supplier details provided to Broers

[144]

WeChat contacts

[156]

Mr Leung’s employment agreements

[157]

Mr Chen

[165]

Mr Dai

[173]

Respondents’ expert – Mr Wang

[183]

BREACH OF CONFIDENCE

[196]

Applicable principles

[196]

BREACH OF CONFIDENCE

[207]

1. The information must be identified with specificity

[208]

2. The necessary quality of confidence

[216]

The fact that the employee held a high level of seniority which entitled him to access greater levels of confidential information

[218]

The value of the information to the applicant

[221]

The skill and effort expended to acquire the information

[223]

The steps taken to guard the confidential information

[229]

The extent to which the information was jealously guarded by the employer

[233]

Whether it was made known to the employee that the information was regarded as confidential

[247]

The extent to which the information is known outside the business

[259]

Whether the usages and practices in the industry support the claim of confidentiality

[268]

Conclusion on whether the information had the necessary quality of confidence

[284]

3. Whether the information was received in circumstances importing an obligation of confidence

[292]

4. Whether there was actual or threatened misuse of information without consent

[295]

Conclusion

[296]

BREACH OF CONTRACT

[297]

SECTION 183 OF THE CORPORATIONS ACT

[311]

CONCLUSION

[320]

Background

Background to the litigation

For the reasons set out below, New Aim failed to establish that the New Aim Confidential Information possessed the necessary quality of confidence. As a result, the claims against Mr Leung for breach of confidence, breach of contract and contravention of s 183(1) of the Corporations Act, should be dismissed. As such, the claims against Broers and Sun Yee should also be dismissed.BACKGROUNDThe PartiesNew Aim The New Aim business was established by Mr Fung Lam and Mr Werner Liu in 2005. When it was first established, New Aim’s business involved sourcing products from discount stores and markets in Melbourne to re-sell on eBay. Mr Liu no longer has an interest in the New Aim business, which is wholly owned by Mr Lam. By 2024, New Aim sourced, supplied and sold over 6,000 products across a number of product ranges, including home and office furniture, electrical appliances, tools and garden appliances, children’s products, bedding, sports and fitness, bathroom and kitchen fittings, camping, outdoor products and pet products. The products were sourced predominantly from China and promoted and sold through a range of online retail platforms, including: (a) international platforms, such as eBay and Amazon; (b) local platforms, such as Catch, Kogan and MyDeal; and (c) the platforms of specific retailers, such as Bunnings and Myer. In addition, New Aim operated a dropshipping business, which promoted and sold products to other Australian businesses via its website and it had developed brands for each of its product lines which it sold via on-line stores for each of its brands. New Aim undertook its business activities either directly or via Guangzhou Honglang Commodity Information Consulting Co. Ltd, a Chinese company which was established to provide services exclusively to New Aim. Honglang performed work on the ground in China, including liaising with suppliers in China on behalf of New Aim, visiting trade fairs and supplier factories and preparing images for use in the promotion of New Aim products. In 2022, New Aim employed approximately 400 people in China and Australia and sourced products from approximately 400 suppliers in China.Mr Leung In 2009, Mr Leung commenced employment with New Aim as an Office Assistant. It was his first job after graduating from University. In 2010, Mr Leung was promoted to Buyer. His responsibilities at the time included assisting Mr Liu to identify suppliers and place new orders, placing orders with existing suppliers and liaising with shipping agents and arranging for containers to come from China to Australia. In 2013, Mr Leung was promoted to Category Manager and assumed responsibility for the “Home” product category, which included indoor and outdoor furniture, appliances, pet products and office furniture. In 2015, Mr Leung was promoted to Head of Buying, in which role he was responsible for New Aim’s buying and selling strategies for all of New Aim’s product categories and for New Aim’s Shipping team.

Evidence

Evidence Before The Court

The respondents denied that the New Aim Confidential Information was confidential or commercially sensitive business information of New Aim and contended that the information:(a)was information which could be obtained from publicly available sources and did not have the necessary quality of confidence;(b)was not imparted to Mr Leung in circumstances that gave rise to an equitable obligation of confidence, and it was not received by Sun Yee and/or Broers with the requisite knowledge; and(c)formed part of Mr Leung’s stock of knowledge and know-how that he was free to use after ceasing his employment with New Aim.NEW AIM’S EVIDENCE New Aim called three witnesses:(a)Mr David Huang, the Chief Operating Officer (COO) of New Aim;(b)Ms Stephanie Ho, the General Manager – Channel and Category of New Aim; and(c)Mr David Fixler, solicitor for New Aim, who gave evidence of searches he conducted of products sold online by the respondents and products that he had purchased from Broers or Sun Yee. Mr Fixler’s evidence was uncontroversial and he was not required for cross-examination. New Aim also relied on expert reports of Mr Ian Schoots, the co-founder and Global Sourcing Manager of Australian Importing Company (AIC).Mr Huang Mr Huang joined New Aim in 2014 and was New Aim’s Information Technology (IT) Manager from 2014 to 2020. In that role, he was responsible for the development of New Aim’s IT systems and security. From July 2020 to April 2021, Mr Huang was the Chief Information Officer at New Aim, in which role he continued to be responsible for IT security and system development and he became involved in business decision-making and management discussions, as part of the leadership team within New Aim. In April 2021, Mr Huang was promoted to COO, in which role he manages the day-to-day operations of New Aim’s business and has oversight of product procurement, shipping, warehouse, customer service, quality control (QC), compliance and other operations within New Aim’s business. In addition to his responsibilities as COO, Mr Huang oversaw the Buyer team from June/July 2022 until January 2024. Mr Huang gave evidence about the New Aim business, including its supplier sourcing process and the steps that New Aim had taken to protect supplier information. According to Mr Huang, the teams responsible for different aspects of the New Aim business included:(a)the Category team, which was responsible for identifying trends and products in the marketplace to identify potential new products likely to be successful in the Australian market to recommend to the Buyer team;(b)the Buyer team, which was responsible for sourcing and investigating potential suppliers and products, meeting with potential suppliers, reviewing and developing sample products and managing relationships with existing suppliers;(c)the Compliance team, which was responsible for identifying regulatory and legal standards applicable to New Aim’s products;(d)the QC team, which undertook quality, safety and other testing of New Aim’s products and supplier factories to ensure the products were compliant with New Aim’s quality standards and applicable standards identified by the Compliance team;(e)the Data team, which was responsible for data analysis and assisting other stakeholders in the business;(f)the IT team, which managed New Aim’s IT system development;(g)the Shipping team, which provided logistical support for the transport of goods;(h)the Channel team, which acted as account managers to manage the relationships with the online marketplaces on which New Aim sold its products;(i)the Customer Service team; and(j)the Warehouse team, which managed delivery, storage and general operations of New Aim’s 97,000 sqm warehouse in Melbourne.

Decision

Reasons for decision

Mr Schoots was not prepared to accept that suppliers in China were willing to disclose their customers’ identities. The one example Mr Schoots gave where a supplier did disclose their customer’s details, was a historical supply contract. Furthermore, in cross-examination, Mr Schoots accepted that it was not industry practice to regard the identity of past suppliers as confidential.Conclusion on whether the information had the necessary quality of confidence New Aim contended that the New Aim Confidential Information comprised the identity and contact details of suppliers to New Aim as at January 2021 in circumstances where the suppliers had been identified by New Aim as reliable suppliers of high-quality products that were suitable for the Australian market. New Aim contended that the New Aim Confidential Information included details of all suppliers to New Aim as at January 2021. New Aim did not plead an alternative case, for example, that the New Aim Confidential Information comprised details of active suppliers to New Aim as at January 2021. The Court was not invited to find that, if New Aim failed to establish that confidentiality resided in all suppliers to New Aim as at January 2021, the Court could find that an obligation of confidence existed in respect of, for example, active suppliers (including the 17 Suppliers) or Mr Leung’s WeChat contact list. I am not satisfied that New Aim has established that the New Aim Confidential Information, which included all suppliers to New Aim as at January 2021, had the necessary quality of confidence required to impose an equitable obligation of confidence. Mr Schoots said that it was not industry practice to regard the identity of past suppliers as confidential. Leaving to one side that New Aim’s Policy referred to suppliers of “services”, the Policy suggested that New Aim sought to protect information regarding suppliers with whom employees had had dealings in the previous 12 months. The measures that New Aim took to protect the information on the New Aim Purchasing System applied to a wide variety of information that was stored on the system, including wholesale pricing information and details of potential suppliers who did not become suppliers to New Aim. There was no evidence that details of suppliers were removed or deleted from the New Aim Purchasing System due to product faults or for any other reason. Employees were not provided with mobile phones. New Aim did not seek to restrict how supplier contact details were stored on personal mobile phones. Employees were not required to delete data saved on personal mobile phones at the end of their employment at New Aim. Employees were not required to sign employment agreements under which they agreed to keep confidential and not use contact details for all suppliers to New Aim. New Aim did not explain how employees of New Aim, including Mr Leung, were meant to know that all suppliers to New Aim as at January 2021 were “reliable” suppliers of high quality products, that New Aim regarded as confidential to New Aim that it wanted to protect, in circumstances where such suppliers included suppliers of products with high fault rates and suppliers of products that were not profitable. 3. Whether the information was received in circumstances importing an obligation of confidence

Ratio Decidendi

Legal Principle Established

In the result, New Aim’s claims in the proceeding against Mr Leung were confined to claims of alleged:(a)breach of an equitable obligation not to reveal or use confidential information acquired during the course of his employment with New Aim;(b)breach of the terms of his employment contract with New Aim; and(c)contravention of s 183 of the Corporations Act 2001 (Cth). New Aim alleged that, during the course of his employment with New Aim, Mr Leung had access to confidential information and that he misused the information when, following the termination of his employment with New Aim, he used the confidential information (or parts of it), including to assist Sun Yee and/or Broers to procure, promote and sell certain products. As against Broers and Sun Yee, New Aim alleged that they had received and used New Aim’s confidential information to procure, promote and sell a range of products which were identical, or nearly identical, to products New Aim sold in Australia through e-commerce platforms (New Aim Products). Further, that they were subject to an equitable obligation to refrain from using New Aim’s confidential information because they knew, or ought reasonably to have known, or were wilfully or recklessly blind as to whether, the information was confidential to New Aim. New Aim contended that during his employment with New Aim, Mr Leung had access to all of the relevant confidential information of New Aim. At the cessation of his employment, Mr Leung kept, by way of a WeChat account on his mobile phone, the contact details of a significant number of suppliers that Mr Leung had interacted with during the course of his employment with New Aim. It was not in dispute that Mr Leung disclosed the identity of a number of the suppliers and their WeChat contact details to Broers (either to Mr Huailiang (Mac) Chen or Ms Alice Liu, who worked for Broers), although the respondents denied that the information was confidential. Following a trial in early 2022, the initial trial judge dismissed New Aim’s claims against Mr Leung based on breach of confidence, breach of contract and contravention of s 183 of the Corporations Act: New Aim Pty Ltd v Leung [2022] FCA 722 (New Aim (No 1)) at [234], [246], [251]–[252]. As a consequence of the dismissal of the breach of confidence claim against Mr Leung, the claims against Sun Yee and Broers were also dismissed: New Aim (No 1) at [234]–[252]. New Aim appealed. The Full Court upheld the appeal, concluding that the initial trial judge had erred in approaching the issue of whether the alleged confidential information was confidential by reference to the WeChat contact list which Mr Leung had on his mobile phone: New Aim Pty Ltd v Leung (2023) 410 ALR 190; [2023] FCAFC 67 (New Aim (No 2)) at [52]. The Full Court remitted the matter for retrial: New Aim (No 2) at [133]–[134]. There was a dispute between the parties regarding the Full Court’s order remitting the matter for retrial. On 26 October 2023, O’Callaghan J held that the Full Court had ordered a new trial pursuant to s 28(1)(f) of the Federal Court of Australia Act 1976 (Cth) and his Honour made timetabling orders for the new trial, including for new evidence to be filed in the proceeding: New Aim Pty Ltd v Leung (No 3) [2023] FCA 1295 at [28].