Federal Court of Australia

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

ORDERS

THE COURT ORDERS THAT:

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.

REASONS FOR JUDGMENT

NESKOVCIN J:

1    The applicant, New Aim Pty Ltd, conducts an online retail business in Australia. It sources and imports products from a range of suppliers predominantly in China and sells those products in Australia through a range of e-commerce platforms.

2    The first respondent, Mr Man Hung (Jack) Leung, commenced employment with New Aim as an Office Assistant in 2009. He held various positions of increasing seniority over time. In July 2020, Mr Leung was appointed as the Chief Commercial Officer of New Aim, a position which he held until 18 January 2021, when he resigned.

3    The fourth respondent, Sun Yee International Pty Ltd, and the fifth respondent, Broers Group Pty Ltd, also conduct online retail businesses in Australia, and are competitors of New Aim. Like New Aim, Broers sources its products from China. Sun Yee purchases products from Broers.

4    By an amended originating application and statement of claim filed on 6 October 2021, New Aim sought relief against Mr Leung, Sun Yee, Broers and others, in respect of the alleged misuse of confidential information obtained by Mr Leung and others in the course of their employment with New Aim, breach of copyright and misleading and deceptive conduct contrary to the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL). On 19 April 2022, orders were made by consent permanently restraining Mr Leung, Sun Yee and Broers from reproducing, or causing to be reproduced, various works the subject of New Aim’s copyright claim. The claims under the ACL were later abandoned and the claims against other respondents have been resolved.

5    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).

6    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.

7    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.

8    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.

9    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].

10    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].

11    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].

12    The evidence which New Aim relied upon at the new trial superseded the affidavits that it relied upon at the initial trial. New Aim said that, while aspects of its business had changed, New Aim’s affidavits addressed the period of time when Mr Leung worked for New Aim and immediately thereafter. This is mentioned to explain the references in these reasons to the New Aim business as at 2022, although New Aim’s affidavits were filed in 2024.

13    The issues for determination in the new trial were:

(a)    whether the “New Aim Confidential Information” (as defined in New Aim’s pleading) had the necessary quality of confidence;

(b)    whether the New Aim Confidential Information was imparted to Mr Leung in circumstances that gave rise to an equitable obligation of confidence;

(c)    whether equity should intervene to prevent the use of the New Aim Confidential Information as a breach of confidence as against Mr Leung, the primary party, and as against Broers and Sun Yee, as third parties (collectively, the respondents);

(d)    whether Mr Leung breached his contractual duties of confidence; and

(e)    whether Mr Leung breached the duty under s 183(1) of the Corporations Act not to improperly use information obtained in the course of his employment at New Aim.

14    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.

Background

The Parties

New Aim

15    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.

16    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 www.dropshipzone.com.au, and it had developed brands for each of its product lines which it sold via on-line stores for each of its brands.

17    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.

18    In 2022, New Aim employed approximately 400 people in China and Australia and sourced products from approximately 400 suppliers in China.

Mr Leung

19    In 2009, Mr Leung commenced employment with New Aim as an Office Assistant. It was his first job after graduating from University.

20    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.

21    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.

22    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.

23    In July 2020, Mr Leung was promoted to Chief Commercial Officer at New Aim, which role included responsibility for overseeing buying and selling strategies and management of the Shipping team. Mr Leung held that position until he resigned from New Aim on 18 January 2021.

Sun Yee

24    Sun Yee was established by Mr Fei (Eddy) Dai in 2011.

25    Sun Yee is a competitor of New Aim and operates an online retail business via its own website and other online marketplaces, such as eBay. Sun Yee obtained products from Broers and was also a customer of New Aim, through its dropshipping business.

Broers

26    Broers was incorporated by Mr Chen on 15 January 2021.

27    In February 2021, Mr Chen and Mr Dai established the Broers business.

28    Broers is a competitor of New Aim and operates an online retail business via online marketplaces, such as eBay, Kogan, Catch and MyDeal.

29    In late April 2021, Mr Leung commenced working with Broers. In July 2021, Mr Leung was employed by Broers as a Category Manager on a full-time basis.

Procedural history

30    The procedural history to the matter is set out in New Aim (No 1) at [3]–[9].

31    Relevantly for present purposes, shortly after the proceeding was commenced, on 26 October 2021, New Aim obtained urgent interlocutory relief restraining each of the respondents from reproducing, disclosing or using confidential information comprising the identity and/or contact details of persons who were suppliers of products to New Aim as at January or March 2021: New Aim Pty Ltd v Leung [2021] FCA 1329. On 23 June 2022, the initial trial judge made orders dismissing the proceeding against the respondents and, on 27 June 2022, made further orders by consent, setting aside the initial injunction and granting a further injunction to restrain the respondents from publishing or disclosing the identity and contact details of suppliers to New Aim, including the contacts listed in the WeChat contact list referred to in paragraph 34 below. This injunction remained in place during the appeal and the new trial.

32    On 26 October 2021, orders were also made requiring the provision of certain information by the respondents including that:

(a)    Mr Leung file and serve an affidavit identifying any person to whom or which he had disclosed the identity and/or contact details of persons who were suppliers of products to New Aim as at January 2021 (New Aim Supplier Information), since leaving the employment of New Aim (the order had a modification and limited exception which is not relevant for present purposes); and

(b)    Broers file and serve an affidavit identifying any person to whom or which it had disclosed the New Aim Supplier Information, and setting out details of all products that it had procured from suppliers to New Aim from 1 January 2021.

33    In response to those orders, affidavits were filed by Mr Leung and Mr Chen, both dated 5 November 2021. In his affidavit, Mr Leung explained that after he ceased employment at New Aim, he had retained a list of WeChat contacts on his mobile phone. It was not in dispute that WeChat is a Chinese messaging app, similar to Facebook Messenger and WhatsApp, that can be used to store contact information and communicate by instant messaging using the unique WeChat identification or mobile phone number of an individual.

34    A number of the contacts on Mr Leung’s list of WeChat contacts were tagged as “supplier” and some of those people were owners and employees of suppliers that Mr Leung had interacted with during his employment at New Aim. Annexure “ML-8” to Mr Leung’s affidavit of 5 November 2021 was a print-out of his WeChat contacts marked as “supplier” as at the date of the affidavit (the WeChat contact list). Annexure “ML-8” was subsequently reproduced for the new trial as annexure “ML-1” to Mr Leung’s affidavit dated 16 May 2024.

35    Annexure “MC-1” to Mr Chen’s affidavit of 5 November 2021 was a spreadsheet prepared by Mr Leung showing products procured by Broers from suppliers to New Aim. A version of this spreadsheet with some errors corrected was reproduced as annexure “ML-28” to Mr Leung’s affidavit dated 16 May 2024. The spreadsheet showed that there were 17 suppliers of products to Broers that were also suppliers to New Aim as at January 2021 (the 17 Suppliers).

New Aim’s Confidential Information case

36    For the purpose of its claims in the proceeding, New Aim described the “New Aim Confidential Information” in its second further amended statement of claim in the following terms:

[11] During the course of his employment with New Aim, Mr Leung had access to:

(a)    [not used];

(b)    confidential and commercially sensitive business information of New Aim, comprising each of the following categories:

(i)    the identity and contact details of the suppliers to New Aim of products as at January 2021 and March 2021 including each of the New Aim Products (save for the identity of the supplier of the outdoor heating products sold by New Aim under the Devanti brand … in respect of which manufacturing details are required to be disclosed under the Electrical Equipment Safety Scheme (EESS));

(ii)    wholesale product information including wholesale prices for each of the New Aim Products;

(iii)    [not used]

(iv)    [not used]

(together, the New Aim Confidential Information).

37    New Aim’s case (in respect of its breach of confidence, breach of contract and s 183 claims against Mr Leung and its breach of confidence claims against Broers and Sun Yee) was that confidentiality resided in the identity and contact details of its suppliers 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:

(a)    the WeChat contact list, set out in Confidential Annexure ML-1, that Mr Leung retained after he left New Aim’s employment and used to provide supplier contact information to Broers; and

(b)    at least the 17 suppliers, set out in Confidential Annexure ML-28, being the list of New Aim suppliers from whom the respondents admit that Broers sourced products.

38    The WeChat contact list contained 111 contacts that were tagged as “supplier”. New Aim identified approximately 40 of those contacts as suppliers of New Aim. While New Aim maintained that the confidential information related to all suppliers of New Aim as at January 2021 (when Mr Leung left New Aim), it accepted that it could only establish a breach in relation to the 17 Suppliers.

39    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

40    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.

41    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

42    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.

43    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.

44    Mr Huang said that New Aim’s products were sourced from overseas manufacturers, predominantly in China. Mr Huang said the primary teams within New Aim responsible for choosing new products and sourcing products from new or existing suppliers in China were the Buyer, QC and Compliance teams. The Buyer team was also vertically divided into seven product category groups, with each group responsible for products within a particular product category. By March 2022, there were approximately 100 employees in New Aim Buyer and Category teams.

45    Mr Huang explained that, prior to August 2021, the Buyer team was part of a broader team which sat within the Category team and performed the functions of the current Buyer and Category teams. However, from around August 2021 to January 2024, the Buyer and Category teams were separate teams. Ms Ho’s evidence was to a similar effect, save that Ms Ho said that the Buyer and Category teams combined in 2014 to become one team, suggesting that they were previously separate teams. In any event, the Buyer team sat within the Category team for most of the time while Mr Leung was employed by New Aim.

46    Mr Huang said that New Aim invested significant time and resources to identify new products and new suppliers in China who were reliable and produced high quality products that were suitable for the Australian market, at an attractive cost. According to Mr Huang, New Aim’s suppliers and new products were carefully selected under the following multi-step process.

47    First, the Buyer team reviewed and analysed market data from a number of sources to identify new products that were likely to be attractive to Australian consumers.

48    Secondly, the Buyer team identified and short-listed potential suppliers from among the many hundreds or thousands of potential suppliers that typically exist in China for any one product. Potential suppliers were identified from multiple sources, including New Aim’s existing suppliers, the Canton Fair and on online business to business (or B2B) websites.

49    The Canton Fair, also known as the China Import and Export Fair, is a trade fair and exhibition held in China biannually, in April and October of each year. It hosts over 20,000 exhibitors in large exhibition halls in which products are exhibited according to product types and ranges. Mr Huang said that to assist with the identification of suitable suppliers, around three to four members of New Aim’s Buyer team attended the Canton Fair, generally twice a year, and reviewed product lines and met with existing or potential suppliers. Mr Huang said that he also attended the Canton Fair when he oversaw the Buyer team from June/July 2022 to January 2024.

50    Thirdly, the Buyer team prepared a detailed proposal, with a shortlist of potential suppliers, to submit to the Head or Heads of the Buyer team.

51    Fourthly, the Buyer team obtained samples from preferably all short-listed suppliers. The QC team considered the samples, to ensure that they were high quality and met any relevant regulatory standards identified by the Compliance team, and produced a QC report. In addition to its internal sample testing and certification process, New Aim also engaged third party QC providers to complete certification and product testing and members of the Buyer team visited the factories of potential suppliers in China to inspect their manufacturing facilities.

52    Fifthly, once New Aim had decided to commit to a first order with a new supplier, New Aim engaged a third-party QC provider to inspect the supplier’s factory.

53    Sixthly, the Buyer team negotiated the purchase order terms with the preferred supplier.

54    Finally, the supplier’s details were added to New Aim’s internal procurement system, referred to as the “New Aim Purchasing System”, which is discussed in more detail below. On the one hand, Mr Huang said that only suppliers from whom New Aim agreed to purchase products following the above-mentioned process were recorded in the New Aim Purchasing System. However, Mr Huang agreed that QC reports obtained during the sourcing process were stored in the New Aim Purchasing System, which meant that the New Aim Purchasing System also included details of potential suppliers from whom New Aim did not order products.

55    Mr Huang said that after New Aim commenced selling a new product, New Aim would review and analyse sales data and customer feedback, and the QC team would produce a monthly “fault rate” report on any quality issues. Depending on the number of faults and fault types, New Aim might discuss with the supplier how the product could be modified and request changes to the product. If the supplier agreed to make the changes, the supplier would send a sample to the QC team and, if New Aim was content with the changes and the new version of the product, it would place an order for production. Mr Huang said that, in some instances, New Aim would cease ordering a product if the supplier was unwilling to make the requested change(s) to New Aim’s satisfaction. Mr Huang said that he was aware of instances where New Aim stopped sourcing products from a supplier because the product had a high fault rate.

56    Furthermore, the Buyer and Category teams reviewed the sales data and considered whether or not the product was sufficiently profitable enough to continue offering. If it was not, the product was discontinued.

57    Mr Huang said that the process to source and order products from new suppliers involved significant time and resources on the part of New Aim and could often take up to six months. In addition, it could take a further period of up to nine months, from the first order, to review data and fine tune the product, in consultation with the supplier.

58    Mr Huang said that, initially, New Aim recorded potential new product and supplier details (including the supplier’s name, product price, expected margins and market size) in an excel spreadsheet, which was saved to New Aim’s internal share drive. Access to the spreadsheet was restricted to members of the Category team (which at that time included the Buyer team).

59    In 2014, when Mr Huang joined New Aim, New Aim also used an online buying and procurement software system called ‘Vtiger’ to store all of New Aim’s supplier details and wholesale pricing information. Access to Vtiger was via log in and was password protected. According to Mr Huang, access to the supplier information in Vtiger was only granted to employees who required the information to perform their role in the business, namely the Buyer team, the IT team and senior management.

60    In 2017, New Aim decided to migrate its program for storing supplier information from Vtiger to a new program, developed in-house by New Aim, referred to as the New Aim Purchasing System. Mr Huang was responsible for and heavily involved in the creation and deployment of the New Aim Purchasing System, which was launched in 2018. The New Aim Purchasing System was the centralised location where the entire list of New Aim suppliers was stored, including the name of the supplier contact person, telephone number, bank account details, wholesale product information (including the wholesale price) and purchase history, along with other information. In fact, a wide variety of information was stored in the New Aim Purchasing System, including wholesale pricing information and details of potential suppliers (found in QC reports) from whom New Aim did not order products.

61    Mr Huang said that access to the New Aim Purchasing System was restricted, through account access controls and password requirements, so that only individuals who required the information as part of their role at New Aim were granted permission to access it. Mr Huang said that access to the New Aim Purchasing System was generally limited to individuals within the Buyer, IT, Shipping and QC teams and senior management at New Aim. However, the Warehouse team also had access to supplier details through the warehouse database.

62    In addition, Mr Huang said that, since 2021, the Buyer team has used a Microsoft program called Power BI to generate various reports relevant to the Buyer team. Access to those reports, which include supplier names, was restricted to the Buyer team, QC team and senior management. Members of the Buyer Team also used a shared Microsoft Drive to save documents, and access to the share drive was password protected and restricted to members of the Buyer team who required access as part of their role.

63    The respondents submitted that, when evaluating Mr Huang’s evidence, the Court should prefer Mr Leung’s evidence regarding the practices that prevailed in the New Aim Buyer team prior to January 2021 in circumstances where Mr Huang was not involved in the Buyer team and did not have direct involvement with suppliers or identifying products or potential suppliers in the relevant period. Mr Huang said, however, that he was familiar with the Buyer team’s processes due to his roles as COO and CIO, mentioning that in the latter role he had worked closely with Mr Leung, as Head of Buying. Furthermore, Mr Huang said that as a result of his role in overseeing the Buyer team from June/July 2022 to January 2024 while he was COO, he was able to say that the process utilised by the Buyer team was relevantly similar to the process adopted by the team when Mr Leung was responsible for the Buyer team, prior to his departure in January 2021.

64    I accept that Mr Huang had general familiarity with the process for sourcing potential suppliers at New Aim prior to January 2021. Furthermore, the evidence given by Mr Huang, Ms Ho and Mr Leung regarding the process for sourcing potential suppliers was broadly consistent, such that I am not required to choose between the witnesses as to whose evidence to accept in relation to the sourcing process. The material differences between the witnesses relate to the complexity of the sourcing process and the conflicting evidence is dealt with later in these reasons.

August 2021 conversation with Mr Leung

65    It was not in dispute that a telephone call took place between Mr Leung, Mr Lam, and Ms Cecilia Chiu, Mr Lam’s wife, on 21 August 2021. Mr Huang was joined to the call by Ms Chiu after it had started. Several aspects of the telephone call were relevant to the copying of New Aim’s images and breach of copyright claim, which has been resolved.

66    As to the remainder of the telephone call, Mr Huang’s evidence was that Mr Leung had said he had been working with Broers since July 2021 and, prior to that, he had been in a consulting role with Broers. Mr Leung had also said that, in January 2021, he had advised Mr Chen to launch Broers’ eBay account, to prepare the business in anticipation of products arriving in Australia. Mr Leung denied taking any information while he was still employed at New Aim, and said that he felt it was not necessary for him to take any files from New Aim, to assist with the new business, because he already had New Aim’s supplier contacts on his personal mobile phone, in his WeChat app. Mr Leung had said that he had approached suppliers one by one, beginning with the suppliers of products he knew were high quality and could be managed quickly. Mr Leung had also said that he did not feel it was necessary to take information from New Aim relating to product quality or profitability, because he was already aware which products were good. Mr Leung said that the first order made by Broers arrived in Australia in April 2021. Finally, Mr Leung said that he did not feel it was inappropriate for him to use New Aim’s supplier details to procure products for the new business, and he referred to the fact that New Aim imports products similar to products imported by other companies.

67    Although Mr Huang had a detailed recollection of the telephone call, no notes or recording of the call were produced.

Ms Ho

68    Ms Ho commenced working for New Aim in July/August 2009, in a combined digital marketing and communication role. Ms Ho’s key responsibilities at the time included analysing competitor pricing and working with New Aim’s sales partner (at that stage, eBay) to coordinate pricing of New Aim’s products. In August 2013, Ms Ho was promoted to the role of Business Development Manager, where she managed New Aim’s key client relationships and assisted New Aim’s sales partners to develop and implement marketing campaigns on their platforms. Ms Ho also interacted with New Aim’s buyers and marketing specialists to discuss New Aim’s products and pricing.

69    In February 2021, Ms Ho was promoted to the role of Channel Manager, in which role she was responsible for the management of New Aim’s relationships with the majority of its sales channels. In February 2022, she was promoted to the role of Head of Marketplace, although her responsibilities did not change significantly. In January 2023, Ms Ho was promoted to her current role of General Manager – Channel and Category, where she oversees the Category team and New Aim’s process for selecting new products and suppliers and is responsible for New Aim’s product portfolio. The Buying team also came under Ms Ho’s supervision from January 2024, when it became part of the Category team.

70    According to Ms Ho, the Buyer and Marketing teams at New Aim were established in or around 2010–2011. Ms Ho said that, at the time she started at New Aim, the Buyer team was predominantly responsible for identifying new products, product development, identifying and securing suppliers and supplier management. Further, the Marketing team, which included Ms Ho, focused on reviewing the Australian market to assist with pricing strategies and developing New Aim’s product brands. Although the Marketing team was not referred to by Mr Huang, who joined New Aim in 2014, nothing turns on this.

71    Ms Ho said that, from 2011–2019, she participated in regular discussions with Mr Leung and other members of the Buyer team to discuss New Aim’s general procurement strategy and other matters. Ms Ho said that, through this process, she was aware of the general operations across the New Aim business, including with respect to the selection of new products and suppliers.

72    Ms Ho described the process at New Aim for identifying potential suppliers in the following terms, which she said had not changed significantly in her time at New Aim.

73    First, the Category team analysed industry and internal data for the purpose of proposing new products.

74    Secondly, the Buyer team identified a range of suppliers which were potentially suitable for a particular product line. The Buyer team did this by approaching existing New Aim suppliers in the first instance or conducting online searches of hundreds, and potentially thousands, of suppliers on B2B websites, such as www.alibaba.com, a Chinese e-commerce website that allows users to search for products and manufacturers. Ms Ho said that New Aim employees also attended the Canton Fair to locate potential new suppliers.

75    Thirdly, the Buyer team developed a shortlist of suppliers taking into account matters such as the scale of the supplier’s business, the supplier’s pricing and minimum order requirements, product specifications and the location of the supplier’s factory, to the extent that information was publicly available.

76    Fourthly, once a shortlist was created, the Buyer team contacted the potential suppliers to ascertain further information such as unit prices, minimum order requirements and any timing restrictions.

77    Fifthly, the Buyer team prepared a value chain analysis report, containing key financial data for each prospective product and supplier on the shortlist, and a product proposal report, which addressed matters such as the production lead time, pricing, payment terms and whether the supplier could comply with any relevant compliance certificates. During this step, the QC team in China obtained samples from a range of suppliers to compare the quality and safety of the product, and the Compliance team assessed the product to ensure it met New Aim’s standards and any relevant legal or regulatory standards.

78    Sixthly, approval was sought to appoint a New Aim supplier and place a first order. Ms Ho said that approval was sought from the Buyer team lead or from Mr Leung when he was Head of the Buyer team.

79    Seventhly, the Buyer team negotiated the terms of payment with the supplier. Once the payment terms were agreed, a member of the Buyer team created a New Supplier Form, which was stored on the New Aim Purchasing System, which Ms Ho referred to as the “Legacy Purchase System” because New Aim is updating the system.

80    Eighthly, the QC team, or a third-party QC company, reviewed the products in China before they were shipped to Australia.

81    Finally, New Aim made the products available for sale to consumers in Australia on a range of online platforms.

82    Ms Ho said that, once the products were on the market, New Aim monitored their progress and sales and prepared “fault reports” in relation to products that experienced faults. Ms Ho said that, if a fault rate was high, New Aim sought to modify the product or ceased to order the product from the supplier. Ms Ho also said that New Aim would likely discontinue a product if it did not sell well.

83    Ms Ho said that the sourcing process generally took three to nine months, although the length of time varied between products and suppliers.

84    In terms of the steps that New Aim took to ensure its supplier details were not disclosed, Mr Ho’s evidence was largely to the same effect as Mr Huang. The only relevant difference was that Ms Ho said that the Data and Compliance teams also had access to supplier information on the New Aim Purchasing System, in addition to the Buyer, Category, IT and QC teams and senior management as mentioned by Mr Huang.

85    Ms Ho was not required for cross-examination. The respondents said that they did not seek to cross-examine Ms Ho because she was unable to give direct evidence about New Aim’s processes for identifying products or suppliers in the relevant period, given that her roles were largely in sales and marketing. The respondents further submitted that, for those reasons, no real weight could be given to Ms Ho’s evidence on those matters and inconsistencies between Ms Ho’s evidence and Mr Leung’s evidence should be resolved in Mr Leung’s favour.

86    As Ms Ho explained, she had insight into New Aim’s buying process and procurement strategies in her previous roles at New Aim. Furthermore, in her more recent roles, she supervised the Buyer team and had become more familiar with the current and historical procurement process while working with the Buyer team to improve the buying processes. Ms Ho said that, as a result of those matters, she was aware that New Aim’s process to identify and appoint new suppliers in China remains relevantly the same as it was prior to her current role and when Mr Leung was responsible for the Buyer team prior to his departure in January 2021.

87    As a result of Ms Ho’s experience throughout her various roles whilst employed at New Aim, I accept that Ms Ho has acquired an understanding of New Aim’s current and historical practices concerning the selection of new products and suppliers. Her evidence was broadly consistent with the evidence given by Mr Huang and Mr Leung regarding the process for sourcing potential suppliers while Mr Leung was employed at New Aim. The material differences relate to the complexity of the process. The conflicting evidence is dealt with later in these reasons.

Jones v Dunkel inferences

88    The respondents submitted that a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference should be drawn from New Aim’s failure to call Mr Lam and Ms Chiu. More specifically, that the Court should infer from the unexplained failure to call Mr Lam and Ms Chiu that their evidence would not have assisted New Aim. It was submitted that Mr Lam would have been better placed than Mr Huang or Ms Ho to give evidence in relation to New Aim’s buying process and the steps that New Aim took to protect the identity and contact details of suppliers prior to January 2021, and that he could have given evidence about the disputed discussions in 2017 and on 21 August 2021. It was submitted that Ms Chiu could have given relevant evidence in relation to the disputed discussion on 21 August 2021 and about her knowledge that Mr Leung stored and retained supplier contact details on his mobile phone.

89    I am not satisfied that Mr Lam or Ms Chiu are witnesses whom New Aim was expected to call: Payne v Parker [1976] 1 NSWLR 191 at 201–202 (Glass JA). Mr Huang was in a position to give evidence in relation to the matters about which Mr Lam might also have given evidence, including the disputed discussions in 2017 and on 21 August 2021. To the extent that Mr Leung gave evidence about matters on which Mr Lam and Ms Chiu could have given evidence, such as the use of his mobile phone, the failure to call Mr Lam and Ms Chiu meant that Mr Leung’s evidence was uncontested.

90    The respondents also submitted that there was an unexplained failure to call a representative of New Aim’s Buying team. Mr Jian Bin (Richard) Liang was the former Head of Buying and left New Aim in June or July 2023. Mr Kang (Colin) Li was a former Category Manager and left New Aim in June 2022. The respondents submitted that there was no evidence that Mr Liang or Mr Li were unwilling or unavailable to give evidence. I am satisfied that Mr Huang and Ms Ho were in a position to give evidence regarding New Aim’s buying process and the steps that New Aim took to protect the identity and contact details of suppliers prior to January 2021. I am not satisfied that Mr Liang and Mr Li, who are no longer employed by New Aim, are witnesses whom New Aim was expected to call.

New Aim’s expert – Mr Schoots

91    New Aim called Mr Schoots, Global Sourcing Manager of AIC.

92    AIC is a product sourcing business, established by Mr Schoots in 2012, which assists clients to source a wide range of products from manufacturers in China, including household appliances and furniture, fitness products, electronics, office supplies and various other products.

93    Mr Schoots prepared a primary expert report and a further report, which largely responded to matters raised in the expert report of Mr Yangyang (TK) Wang, filed on behalf of the respondents. Although Mr Schoots’ opinions were set out in affidavits, for convenience, they will be referred to as reports.

94    Mr Schoots was asked to provide his opinion on two matters. First, the practices (if any) in the industry (including, in particular, the e-commerce sector) concerning the use and treatment of information pertaining to the identities and details of suppliers in China. Mr Schoots opinion on this matter is set out from paragraph 269 below, in the context of addressing the question as to whether the New Aim Confidential Information had the necessary quality of confidence for the purpose of New Aim’s claims against the respondents.

95    Secondly, Mr Schoots was asked to outline the process involved in identifying reliable suppliers in China suitable for the Australian market, with a particular focus on the e-commerce sector. Mr Schoots’ opinion on this question was provided in terms of the process which AIC follows to identify reliable suppliers in China suitable for the Australian market. Mr Schoots said this involves the following four phases, or parts.

Phase 1: Searching for and identifying suitable suppliers

96    Mr Schoots said that during the first phase of the process to identify reliable suppliers in China, AIC searched for potential suppliers through existing networks in China or B2B marketplaces. AIC then contacted the suppliers to discuss the client’s requirements and exclude any suppliers that were not suitable. AIC then conducted a background check, using online resources to check the supplier’s financial history, export history, export licence and so on, to exclude any suppliers that raised a red flag. AIC then produced a Supplier/Manufacturing Report for the client, containing a shortlist of suppliers for the client to choose from.

97    Mr Schoots said that while sourcing a supplier from existing networks of suppliers in China reduces the amount of work involved in locating a suitable supplier, AIC had rarely taken that approach for two reasons. First, Mr Schoots considers that clients would expect AIC not to use the outcome of services the client has paid for to assist potential competitors in the future, and it was not worth damaging AIC’s relationship with existing clients by doing so. Secondly, a client’s requirements for a particular product will inevitably be different even if the products are similar.

98    Mr Schoots said that the first phase of the process to identify reliable suppliers in China was the most important, but also the most time intensive, part of the process.

Phase 2: Negotiations with supplier

99    Mr Schoots said that once a supplier was selected by the client, AIC worked closely with the supplier to negotiate an order of the product for the client. This usually involved obtaining a sample of the product and, once the client was satisfied with the product, negotiating the quantity, cost and delivery timeframes with the supplier.

100    Mr Schoots said that the second part of the process generally took three to six months after the client’s initial enquiry, and potentially up to 12 months for a customised product.

Phase 3: Placing an order and reviewing the manufacturing process

101    Mr Schoots said that, once the client was ready to place an order, AIC would provide the client’s labelling and packaging requirements to the supplier. AIC would then place the order on the client’s behalf and remain in regular contact during the manufacturing process to ensure the client’s timeframes were met.

Phase 4: Final inspection and shipping

102    Mr Schoots said that, once the order was completed, AIC arranged for a third party company to complete a QC check, to ensure that the product complied with the client’s specifications, and prepare a QC report. If the product did not pass the QC check, AIC would require the supplier to either fix the defects or, on rare occasions, undertake another production run. If the product passed the QC check, AIC arranged for the product to be shipped to Australia.

Treatment of Mr Schoots’ evidence

103    The respondents submitted that Mr Schoots’ evidence should be treated with caution for the following reasons. First, the respondents submitted that Mr Schoots did not personally write his reports, rather, they were drafted by New Aim’s solicitors. The assistance provided by New Aim’s solicitors was clearly set out in Mr Schoots’ reports and was entirely appropriate: New Aim (No 2) at [89], [119]–[120]. Although in cross-examination Mr Schoots said at times that he could not recall whether precise words or phrases were his, or were drafted into the report by New Aim’s solicitors, he said that he was comfortable that the words used in the reports reflected what he had said in conference with the solicitors. Further, Mr Schoots’ reports state that they accurately reflect his views and the opinions expressed are entirely his own.

104    Secondly, the respondents submitted that Mr Schoots’ clients were not involved in the e-commerce sector and Mr Schoots does not provide services to clients comparable in size, scale or operation to New Aim. AIC’s clients were generally start-ups or small to medium enterprises. Mr Schoots agreed that none of AIC’s e-commerce clients are of a size comparable to New Aim or offer anything like the number of products offered by New Aim. Relatedly, the respondents submitted that Mr Schoots had a conflict of interest in portraying the process of sourcing suppliers in China as difficult, time-consuming and fraught with risks.

105    The opinions expressed by the experts in relation to the process to identify reliable suppliers in China suitable for the Australian market were broadly consistent and, as discussed below, the differences between them are not such that they require me to accept the evidence of one over the other.

106    Finally, the respondents submitted that Mr Schoots’ evidence was largely divorced from the question he was asked to address, namely, the practices (if any) in the industry (including, in particular, in the e-commerce sector) concerning the use and treatment of information pertaining to the identities and contact details of suppliers in China. The respondents submitted that Mr Schoots was unable to differentiate between AIC’s practice and the prevailing industry practice. However, Mr Wang approached his report and opinion in the same way. Both experts addressed the question regarding industry practice from their own experience and perspective.

the respondents’ evidence

107    The respondents called:

(a)    Mr Leung;

(b)    Mr Chen, the director and a shareholder of Broers; and

(c)    Mr Dai, the director of Sun Yee and a shareholder of Broers.

108    The respondents also relied on an expert report of Mr Wang, Founder and Supply Chain Manager of Epic Supply Chains Pty Ltd (Epic Sourcing).

Mr Leung

109    As mentioned above, Mr Leung joined New Aim as an Office Assistant in 2009 and worked for New Aim as a Buyer from 2010–2013, Category Manager from 2013–2015, Head of Buying from 2015–2020 and Chief Operating Officer from 2020 until 18 January 2021, when he resigned.

110    When Mr Leung first commenced at New Aim as an Office Assistant in 2009, he did not have a written employment contract. While Mr Leung was employed at New Aim, he had two employment contracts, dated October 2011 and June 2020, which are discussed in paragraphs157–164 below.

111    While Mr Leung was employed at New Aim, he was given a company laptop, corporate credit card and set of office keys. He had a work email address, but he did not have a landline telephone number. He used his personal mobile phone and telephone number for mobile phone calls, ‘DingTalk’ (an internal messaging system) and WeChat messages to communicate with suppliers and New Aim directors and employees. Mr Leung said that, for the most part, he communicated with suppliers through his work email.

112    While Mr Leung was employed at New Aim, the Buyer team sat within the Category team. Mr Leung said that New Aim generally found potential suppliers at the Canton Fair or on alibaba.com. Mr Leung said that, from 2010 onwards, he generally visited China to attend the Canton Fair at least twice per year. Mr Leung said that on these trips, he and Mr Liu (and, later, other buyers), walked around the Canton Fair to find products they thought would sell well. They typically spoke with suppliers and asked them questions, including whether they supplied to businesses in Australia and New Aim’s competitors.

113    Mr Leung said that when he was promoted to Head of Buying, from 2015–2020, he continued to visit China at least twice a year to attend the Canton Fair, to source new products, and visit suppliers’ factories. Mr Leung said that New Aim would generally send around 20–25 Buyers to the Canton Fair, which was higher than the number of Buyers mentioned by Mr Huang.

114    Mr Leung said that, following the Canton Fair, the Buyer team sought quotes for potential new products from suppliers they met at the Fair or from suppliers on alibaba.com. Mr Leung said that, in his experience, most of New Aim’s suppliers and all of the suppliers he met at the Canton Fair advertised on alibaba.com. The Buyer team compared the quotes to retail prices on websites such as eBay, and then picked the cheapest quotes.

115    Mr Leung’s evidence regarding the process at New Aim for sourcing potential suppliers was broadly consistent with the evidence of Mr Huang and Ms Ho, except for the following relevant aspects.

116    First, Mr Huang said that the first step that he described in the sourcing process was undertaken by the Buyer team, whereas that step matched Mr Leung’s description of the functions of the Category team. Nothing turns on this because Mr Leung said that the Buyer team was part of, and sat within, the Category team.

117    Secondly, Mr Leung did not dispute that New Aim had processes for obtaining samples and quality testing, but he said that New Aim started obtaining samples from suppliers in around 2015, when he introduced the process after studying a course in supply chain management. Mr Leung said that during his time at New Aim there were multiple quality issues and defects with products, including after New Aim implemented sample checks and quality control measures.

118    Thirdly, Mr Leung said he disagreed with Mr Huang’s and Ms Ho’s evidence that the process at New Aim for locating new suppliers was difficult and time-consuming. Mr Leung said that the process at New Aim was not a particularly sophisticated process. Furthermore, in his experience, while there may be a large number of potential suppliers in China, there may be only a limited number of manufacturers for a particular product.

119    Fourthly, Mr Leung disagreed with Ms Ho’s evidence as to how the Buyer team used alibaba.com to search for products and the difficulty in locating a potential supplier on alibaba.com. Mr Leung said that the functionality of alibaba.com allowed users to search for products and manufacturers by key words, categories and images and, for each product, the website generally displayed information that included the name of the supplier, how long the supplier had been on alibaba.com and a description of the supplier. Mr Leung said that the search functionality of alibaba.com allowed the searcher to filter for particular products and images, and it was then simple to scroll through the pages on the website to identify suppliers of products that New Aim was looking to acquire.

120    Fifthly, Mr Leung said that he disagreed with Mr Huang’s and Ms Ho’s evidence to the effect that the process was essentially the same as when Mr Leung departed New Aim in January 2021. However, the differences identified by Mr Leung related to the level of sophistication or formalisation of the process, rather than the steps in the process itself. For example, Ms Ho mentioned a value chain analysis report and product proposal report, which Mr Leung said did not exist when he was at New Aim. However, he did not say that a similar step in the sourcing process did not exist when he was at New Aim.

121    Finally, while Mr Huang estimated that it could take up to six months, and Ms Ho estimated that it could take at least three months and up to nine months, to source products from new suppliers, Mr Leung said that the entire process generally took four months on average.

122    Mr Leung’s evidence regarding New Aim’s systems for storing supplier information, and the restrictions on access, was broadly consistent with Mr Huang’s evidence. However, Mr Leung added that the New Aim Purchasing System did not contain the supplier details that he had saved on his WeChat app on his phone, and it did not have a field to store WeChat contact details.

123    Mr Leung said that he used WeChat to communicate with people he had met during his time at New Aim, including at the Canton Fair. Mr Leung said that some suppliers he met at the Canton Fair invited him to exchange WeChat details, or later added him as a friend on WeChat. Mr Leung said that while at New Aim, his mobile phone number was listed on his email signature and business cards issued by New Aim which he exchanged with potential suppliers at the Canton Fair.

124    Mr Leung said his general practice was to retain the contact details of potential suppliers he met at the Canton Fair, regardless of whether New Aim ultimately purchased products from those suppliers, in his personal mobile phone or on a business card stored in a Canton Fair catalogue.

125    Mr Leung said that his usual practice, during and after his time at New Aim, was to add a ‘Remark’ to a WeChat contact after he first met them (that is, a short description for a WeChat contact to remind Mr Leung how he met them and the product(s) they were associated with). Mr Leung said that he also added a tag ‘supplier’ to categorise his WeChat contacts, but the ‘supplier’ tag did not mean that they actually supplied products to New Aim. Rather, he used the tags to remind himself how he met the person and often he did not record that information anywhere else or provide it to the Buyer team. Mr Leung said he usually saved the person’s name rather than the name or details of the company where the person worked and he did not update the person’s information if they left their employer.

126    On 18 January 2021, Mr Leung ceased working at New Aim. Upon resigning, Mr Leung handed back his laptop computer and office keys to New Aim. Mr Liu, who was in the office at the time, did not ask Mr Leung to delete his mobile phone contacts, even though he was aware that Mr Leung used his mobile phone to communicate with suppliers. Furthermore, Mr Leung was not asked to delete any data from his personal mobile phone or to delete any DingTalk records on his mobile phone, despite the fact that he was asked to register for DingTalk using his personal mobile phone.

127    Mr Leung said that Mr Liu was aware that Mr Leung used his personal mobile phone to communicate with suppliers, because Mr Liu regularly saw him use his phone to add suppliers’ WeChat accounts when they travelled in China for the Canton Fair and to visit suppliers. Mr Leung also said that Ms Chiu was aware that he had New Aim’s supplier details on his WeChat app because, in or around 2020, she requested that he send her the WeChat details of a bar stool supplier that he had on his phone.

WeChat moment

128    Shortly after Mr Leung left New Aim in January 2021, Mr Leung posted a “moment” on WeChat, which stated: “I am determined to do better and work harder than before, and totally destroy what I built in the past 12 years.”

129    New Aim relied on the WeChat moment as demonstrating Mr Leung’s attitude towards New Aim and his motivation to advance his own interests (and those of Broers and Sun Yee) to the detriment of New Aim, and without regard to his ongoing obligations to New Aim.

Confidentiality of supplier information

130    Mr Leung said that, during his time at New Aim, he did not tell suppliers that they should not disclose that they were suppliers to New Aim and he was never instructed to do so.

131    Mr Leung said that when he and other Buyers at New Aim spoke to suppliers at the Canton Fair, it was their usual practice to ask whether they supplied to businesses in Australia, including whether they supplied to particular competitors, and the suppliers would generally tell them. Mr Leung said he could not recall any instances when a supplier refused to provide the names of their Australian customers on request. Indeed, he said, it was common.

132    Mr Leung said that through the process of identifying potential suppliers from the Canton Fair or online marketplaces, he or New Aim would be told or were able to discover if the potential supplier also supplied the potential product to others in the industry. Mr Leung said that he was aware from discussions during factory visits and with suppliers at the Canton Fair that suppliers were supplying the same or similar products to New Aim’s competitors.

133    Mr Leung said that exhibitors at the Canton Fair displayed the names of products and the names of the retailers that they supplied to, such as Kmart, Freedom Furniture, Aldi or Walmart. Mr Leung said that since departing New Aim, he had identified numerous examples at the Canton Fair where a supplier advertised New Aim’s brand on their display stand or identified New Aim as one of their customers, when asked whether they supply to Australian e-commerce businesses. More recently, when he attended the Canton Fair in October 2023, Mr Leung said he asked two suppliers whether they supplied products to New Aim and they confirmed that they worked with New Aim.

134    Mr Leung said that, during his time at New Aim, it was common for New Aim to conduct online searches of its competitors’ products to determine which products were selling well and for New Aim to copy its competitors’ products. Mr Leung said that eBay was a helpful platform for this purpose because it displayed sales figures for products sold on the platform. Mr Leung estimated that the majority of new products that New Aim sold were copied from other eBay sellers and, in many cases, the products New Aim sold were identical to the original seller. Mr Leung gave a number of examples of products that New Aim copied from other eBay sellers and where New Aim’s Buyer team was able to identify a supplier of an identical product, or had identified suppliers of other products sold by New Aim’s competitors, or was able to identify, and used, the same supplier of a product sold by New Aim’s competitors.

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

135    Mr Leung had a limited recollection of the telephone call with Mr Huang, Ms Chiu, and Mr Lam in August 2021. Mr Leung said he had telephoned Ms Chiu because he had noticed that New Aim had lodged applications to register certain trademarks that were already registered by Broers.

136    Mr Leung said that Ms Chiu and Mr Lam accused him of working with Broers and Sun Yee prior to leaving New Aim, which Mr Leung denied. Mr Leung said he told them that he became involved with Broers around April or May 2021. Mr Leung said he was accused of taking various items while he was at New Aim, including QC reports and raw data of product photographs, which he denied, and he further denied taking any information while he was an employee of New Aim. Mr Leung denied saying he had approached suppliers, beginning with suppliers of products he knew were high quality and could be manufactured quickly. Mr Leung also denied saying that he had told Ms Chiu and Mr Huang that he would receive shares in the Broers’ business or that there was an agreement to that effect.

137    During cross-examination, Mr Leung further denied saying that he was going to deliver results first and then receive shares in Broers or something else afterwards. However, he agreed that he had said that if he did a good job, he might get a financial interest in the future. He also agreed to referring to WeChat to contact suppliers.

Mr Leung’s interactions with Mr Chen and Mr Dai

138    Mr Leung met Mr Chen at a social occasion in December 2020. At the time, Mr Chen mentioned to Mr Leung that he was considering setting up an e-commerce business. Mr Leung said that Mr Chen asked him about the e-commerce business and direction of the industry generally.

139    In around January 2021, Mr Leung introduced Mr Chen to Mr Dai, whom Mr Leung had known since about 2015. Mr Dai was a New Aim dropshipping customer and, over time, Mr Leung and Mr Dai had become friends.

140    Mr Leung said that, between early 2021 and April 2021, he had a number of discussions with Mr Chen about an e-commerce business which Mr Chen was setting up. Mr Leung said he provided some informal advice to Mr Chen about setting up his business, including how to source products in China. Mr Leung said that, on a few occasions, Mr Chen asked Mr Leung if he knew someone who could supply certain types of products, and Mr Leung passed on some details, although he did not pass on any information about whether the person was a supplier of New Aim.

141    At the time Mr Leung met Mr Chen, Mr Leung was considering leaving New Aim. Mr Leung said he had discussions with Mr Chen about joining Broers, but he told Mr Chen that he wanted to have a break and that he would think about it.

142    Mr Leung said he commenced “working with” Broers in around April 2021, providing what he described as ad-hoc advice about the viability of particular categories of products and sales strategies for the products. In addition, he very occasionally provided assistance to Broers when Mr Chen contacted him and asked if he knew a supplier for a particular product.

143    In July 2021, Mr Leung commenced full-time employment with Broers as a Category Manager.

Supplier details provided to Broers

144    The parties agreed the following facts in relation to the information Mr Leung provided to Broers, which are relevant to the third-party claims against Broers and Sun Yee.

145    In late January 2021, Mr Leung provided Mr Chen’s contact details to a New Aim supplier of bedframes in China. Broers purchased bed frames from that supplier. The supplier was a supplier to New Aim at the time Mr Leung provided those contact details to Mr Chen.

146    In April 2021, Mr Leung provided Mr Chen with the contact details of New Aim suppliers of quilt products, fitness station products, massage gun products, bedding products, office chair products and treadmill products in China. Broers purchased products from each of those suppliers. The suppliers were suppliers to New Aim at the time Mr Leung provided those contact details.

147    In April to May 2021, Mr Leung provided Ms Liu, a then employee of Broers, with the contact details of a New Aim supplier of outdoor products and storage products in China. Broers purchased products from each of those suppliers. The suppliers were suppliers to New Aim at the time Mr Leung provided those contact details.

148    At an unknown time, Mr Leung also provided Ms Liu with the contact details of a New Aim supplier of standing desk products in China. Broers purchased products from the supplier. The supplier was a supplier to New Aim at the time Mr Leung provided those contact details.

149    In May 2021, Mr Leung provided Mr Chen with the contact details of a New Aim supplier of outdoor products and storage products in China. Broers purchased products from that supplier. The supplier was a supplier to New Aim at the time Mr Leung provided those contact details.

150    In June 2021, Mr Leung provided Ms Liu with the contact details of a New Aim supplier of bar stool and dining chair products in China. Broers purchased products from that supplier. The supplier was a supplier to New Aim at the time Mr Leung provided those contact details.

151    Further, in June 2021, Mr Leung contacted New Aim suppliers of table legs and trampoline products to place orders for Broers. Broers purchased products from each of those suppliers. The suppliers were suppliers to New Aim at the time.

152    In July 2021, Mr Leung provided Ms Liu with the contact details of New Aim suppliers of cat tree products and furniture products in China. Broers purchased products from those suppliers. The suppliers were suppliers to New Aim at the time Mr Leung provided those contact details.

153    Between January–November 2021, Broers purchased products from 17 Suppliers which also supplied products to New Aim, being the suppliers referred to in paragraphs 145–152 above. Broers sold those products to members of the public and Sun Yee, who also sold these products to members of the public.

154    In addition, between approximately July–October 2021, Broers and Sun Yee used New Aim’s images of its products obtained from New Aim’s website dropshipzone.com.au.

155    Furthermore, between May–October 2023, Broers purchased storage boxes from the New Aim supplier referred to in paragraph 147. Broers sold those products to members of the public and Sun Yee, who also sold these products to members of the public.

WeChat contacts

156    In relation to the supplier contact details which Mr Leung provided to Mr Chen or Ms Liu, Mr Leung said he shared the contact details of the suppliers from his WeChat account. Mr Leung said that the details were passed on to Ms Liu or Mr Chen as a “friend” of Mr Leung’s. Mr Leung said that he did not pass on any information about whether the person was a supplier or worked for a supplier of New Aim nor did he tell Mr Chen or Ms Liu that the details were confidential, because he did not think the contact details were confidential.

Mr Leung’s employment agreements

157    Mr Leung had two written employment agreements during his time at New Aim.

158    The first employment agreement was dated 13 October 2011, for the position of “Importing Purchaser (Permanent Full-Time)”.

159    Clause 20 of the agreement dealt with “Confidential Information”, which was defined to include “information relating to clients, customers, arrangements with third parties, intellectual property, business and marketing plans, and financial information”. Clause 20 provided that, following termination of the employment, the Employee agreed not to disclose the Confidential Information, and not use any of the Confidential Information in any way which could be harmful to the best interests of the Employer.

160    Clause 30 contained a restraint of trade clause, which applied to soliciting the business of customers, suppliers or clients of New Aim during the 12 months prior to the employee’s termination.

161    The second employment agreement was dated 16 June 2020 for the position of “Category Manager”, by which time Mr Leung had left that role. Mr Leung agreed that he was employed as Chief Commercial Officer under the second employment agreement.

162    Clause 23 required the Employee to comply with all New Aim Policies, Procedures and Manuals implemented by New Aim. Mr Leung also signed a document that confirmed that he had received a copy of “New Aim’s Policies, Procedures and Manuals”, although these were not defined.

163    Clause 33 provided that the Employee agreed to maintain the confidentiality of “confidential information relating to the business and affairs of New Aim”, and not disclose it unless authorised to do so by the directors of New Aim. Further, the Employee agreed that they would not, during or after their employment with New Aim, use any of the confidential information of New Aim and its subsidiaries for personal gain, in order to disadvantage the company or for any purpose other than for the benefit of New Aim.

164    Clause 34 was a restraint of trade clause, which applied to soliciting the business of customers and clients of New Aim with whom the Employee had had any dealings during the previous 12 months of their employment at New Aim. Unlike the first agreement, the restraint of trade clause in the second employment agreement did not extend to suppliers.

Mr Chen

165    Mr Chen said he first met Mr Leung at a social occasion in December 2020. Mr Chen said that, around that time, he was considering setting up an e-commerce business.

166    Mr Chen said that, at their first meeting, Mr Chen and Mr Leung had a general conversation about what they each did. Mr Chen said that he told Mr Leung that he was interested in starting an e-commerce business and Mr Leung shared some general views about the e-commerce industry.

167    In late January 2021, Mr Leung introduced Mr Chen to Mr Dai, whom Mr Chen was told operated an e-commerce business.

168    In February 2021, Mr Chen and Mr Dai decided to set up an e-commerce business, Broers.

169    Mr Chen said that, when Broers was first established, it was operated by Mr Dai and Mr Chen, with help from contacts in China. Mr Chen was involved in the process of sourcing products and, if he identified a product that he and Mr Dai were interested in, he would ask his contacts in China to identify suppliers.

170    Mr Chen said that from April 2021, from time to time, he asked Mr Leung if he knew of any potential suppliers in China that sold particular categories of products and, if he did, he asked Mr Leung to share their contact details with Ms Liu. He then left it to Ms Liu to speak to the suppliers that Mr Leung recommended. Mr Chen said that when Mr Leung mentioned or referred a contact to Mr Chen, he described them as “friends” and he did not say that he had obtained their details through his work for New Aim. Mr Chen said that, during these discussions, he did not ask for, and Mr Leung did not provide, any pricing or sales information about the products, and he did not recall Mr Leung ever telling him that a supplier’s name was confidential or that a supplier was also a New Aim supplier.

171    Mr Chen said that some months after Broers was established, he decided he did not want to be closely involved in the day-to-day management of Broers. As a result, in July 2021, Mr Leung was employed as a Category Manager for Broers.

172    Mr Chen said that when he first met Mr Leung in December 2020, he knew that New Aim had been operating in the e-commerce market for about 10 years. Mr Chen also knew that Mr Leung worked for New Aim as a senior manager, although he could not recall his exact position title. Mr Chen was aware that part of Mr Leung’s job at New Aim was to identify suppliers in China that were suitable for the Australian market.

Mr Dai

173    Mr Dai established Sun Yee in 2011. At that time, Sun Yee operated an online retail business selling four-wheel drive vehicle accessories, outdoor camping equipment and LED lighting products for vehicles on various online marketplaces, such as eBay.

174    Mr Dai and Mr Leung met in about 2016 and developed a friendship over time.

175    By 2017, Sun Yee was a customer of New Aim’s dropshipping business and began listing its products on New Aim’s dropshipzone website.

176    In January 2021, Mr Leung introduced Mr Dai to Mr Chen. Mr Dai said that, when they first met, he and Mr Chen had a very general discussion about e-commerce and their respective businesses, and Mr Chen told Mr Dai that he wanted to start an e-commerce business.

177    After further discussions, in February 2021, Mr Chen and Mr Dai agreed to set up an e-commerce business together, being Broers.

178    Mr Dai said that when Broers was established, it was agreed that Sun Yee would also sell the products that Broers was selling, because Sun Yee had an established track record of buyers’ ratings and Broers did not. However, Sun Yee sold the products at a slightly higher price so that Broers had a better chance of procuring sales through more competitive pricing.

179    Mr Dai said that Mr Chen was responsible for identifying potential products and potential suppliers. Once a potential product was identified, Mr Dai’s role was to assess likely saleability and profit margins. Mr Dai also agreed to provide Broers with access to Sun Yee’s resources to assist with Broers’ operations. Mr Dai said he did not talk to or deal with suppliers, nor did he turn his mind to who the suppliers were or how they were selected.

180    Like Mr Chen, Mr Dai scaled back his involvement in the Broers business after Mr Leung commenced working full-time with Broers in July 2021.

181    Mr Dai was aware that New Aim’s business was to procure consumer products from China which were sold on various e-commerce platforms and that Mr Leung was Head of Buying at New Aim, which role involved dealing with New Aim’s suppliers in China.

182    Mr Dai said that prior to the commencement of the proceeding, he did not know that any of the New Aim Products, which Sun Yee purchased from Broers, had been purchased from suppliers to New Aim. Mr Dai said that Mr Leung did not disclose any information to him about New Aim’s suppliers or processes. Further, in 2021, when he and Mr Leung discussed products, Mr Leung never said to Mr Dai that he would look to source products from a supplier that he had identified while working at New Aim, or that had been supplying to New Aim.

Respondents’ expert – Mr Wang

183    As mentioned above, Mr Wang is the founder and Supply Chain Manager of Epic Sourcing.

184    Mr Wang majored in international economics and trade at Zhejiang University of Science and Technology in Hangzhou, China. After graduating, Mr Wang established and operated a business in Hangzhou. In 2015, Mr Wang began providing professional sourcing and related services to e-commerce businesses in Australia and New Zealand that wanted to source products from suppliers in China.

185    Epic Sourcing is a supplier sourcing business, established by Mr Wang in 2019, which connects small and medium-sized businesses with suitable suppliers in China. Epic Sourcing works with clients across various product ranges, including textiles, electronics, home, outdoor and event furniture, gym equipment, outdoor products, modular houses, and medical products.

186    Mr Wang’s opinion in relation to the practices (if any) within the industry (and particularly in the e-commerce sector), concerning the use, treatment and confidentiality of information pertaining to the identities and details of suppliers in China, is addressed in paragraphs 272–277 in the context of the question as to whether the New Aim Confidential Information has the necessary quality of confidence.

187    Similarly to Mr Schoots, Mr Wang provided an overview of the process used by Epic Sourcing to identify reliable suppliers of products in China suitable for the Australian market, particularly in the e-commerce sector. Mr Wang described the process in the following terms.

188    First, Epic Sourcing had access to information from the following sources which it used to identify potential suppliers in China:

(a)    information from public sources and government data about companies in China;

(b)    information from local publications from regions within China known for producing particular types of products;

(c)    information obtained by undertaking keyword searches on third party B2B platforms, such as alibaba.com, 1668.com and globalsources.com, to identify product information or supplier names;

(d)    information obtained from attending local industry exhibitions, such as the Canton Fair;

(e)    Epic Sourcing’s internal supplier database, which it had accumulated over the years; and

(f)    personal connections with suppliers through family and friends.

189    Using information from the above data sources, Epic Sourcing generated a list of potential suppliers which it then narrowed down, for example, to identify businesses that had been active for at least five years, had at least 10 or more staff, held certain certifications or export licenses and so on.

190    Secondly, Epic Sourcing conducted a supplier verification process. Mr Wang explained that there were three potential levels of supplier verification. The first involved conducting background checks on company profiles and websites. The second involved a more in-depth verification process and preparation of a verification report. The third involved in-person factory visits.

191    Thirdly, Epic Sourcing produced a short-list of potential suppliers to present to the client.

192    Fourthly, Epic Sourcing assisted the client to obtain product samples.

193    Fifthly, once the client was satisfied with the product sample, Epic Sourcing negotiated the order with the supplier. This involved discussions with the supplier in relation to manufacturing quantities, unit cost, lead time and other matters. Once the client decided to place the order, Epic Sourcing assisted the client to draft a purchase agreement, using a template agreement, and place the order.

194    Finally, after the product was manufactured, Epic Sourcing conducted a QC check, using its in-house or contracted specialists, who would travel to the supplier’s site, complete the standard checking procedures and generate a QC report that either accepted or rejected the product. Once the product was accepted, the product was exported and shipped to Australia.

195    Mr Wang said that the entire sourcing process usually took three to six months, depending on the product, or 12–16 months for customised products.

breach of confidence

Applicable principles

196    The basis for the equitable jurisdiction to grant relief against an actual or threatened misuse of confidential information is the notion of an obligation of conscience arising from circumstances in or through which the information was communicated or imparted. In Moorgate Tobacco Co. Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414; [1984] HCA 73, Deane J (with whom Gibbs CJ, Mason, Wilson and Dawson JJ agreed), at 437–438, said as follows:

It is unnecessary, for the purposes of the present appeal, to attempt to define the precise scope of the equitable jurisdiction to grant relief against an actual or threatened abuse of confidential information not involving any tort or any breach of some express or implied contractual provision, some wider fiduciary duty or some copyright or trademark right. A general equitable jurisdiction to grant such relief has long been asserted and should, in my view, now be accepted (see The Commonwealth v. John Fairfax & Sons Ltd (1980) 147 CLR 39, at pp 51-52). Like most heads of exclusive equitable jurisdiction, its rational basis does not lie in proprietary right. It lies in the notion of an obligation of conscience arising from the circumstances in or through which the information was communicated or obtained. Relief under the jurisdiction is not available, however, unless it appears that the information in question has "the necessary quality of confidence about it" (per Lord Greene M.R., Saltman, at p 215) and that it is significant, not necessarily in the sense of commercially valuable (see Argyle v. Argyle (1967) Ch 302, at p 329) but in the sense that the preservation of its confidentiality or secrecy is of substantial concern to the plaintiff. That being so, the starting point of the alternative argument must be the identification of the relevant confidential information.

197    Before an equitable obligation of confidence with respect to information arises, an applicant must establish the following four elements:

(a)    the information in question must be identified with specificity;

(b)    it must have the necessary quality of confidence;

(c)    it must have been received in circumstances importing an obligation of confidence; and

(d)    there must be an actual or threatened misuse of the information without consent: Optus Networks Pty Ltd v Telstra Corp Ltd (2010) 265 ALR 281; [2010] FCAFC 21 at [39] (Finn, Sundberg and Jacobson JJ) citing Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73 at 87 (Gummow J).

198    In relation to the requirement that the information in question must have the necessary quality of confidence, in Wright v Gasweld (1991) NSWLR 317 at 334, Kirby P (as his Honour then was) said:

Determining what is confidential involves a decision on a question of fact in each case where that quality is asserted. Considerations which courts have found to be relevant, in particular cases, in determining this question include:

(a)    The fact that skill and effort was expended to acquire the information: see Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 2 NSWLR 104 at 117; Wheatley v Bell [1982] 2 NSWLR 544 at 546; cf International Scientific Communications Inc v Pattison [1979] FSR 429 at 434;

(b)    The fact that the information is jealously guarded by the employer, is not readily made available to employees and could not, without considerable effort and/or risk, be acquired by others: see Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 at 50; E Worsley & Co Ltd v Cooper [1939] 1 All ER 290 at 307; cf Stephenson Jordan & Harrison Ltd v McDonald & Evans (1952) 69 RPC 10 at 16;

(c)    The fact that it was plainly made known to the employee that the material was regarded by the employer as confidential: see Printers and Finishers, Ltd v Holloway (Confidential Information) [1965] RPC 239 at 256 and Faccenda (at 137);

(d)    The fact that the usages and practices of the industry support the assertion of confidentiality: see, eg, Thomas Marshall (Exports) v Guinle [1979] Ch 227 at 248; and

(e)    The fact that the employee in question has been permitted to share the information only by reason of his or her seniority or high responsibility within the employer's organisation: see Faccenda (loc cit).

199    The factors listed by Kirby P have been expanded upon by R Dean, The Law of Trade Secrets and Personal Secrets (2002) 2 Ed, at p. 190, to include:

1     The fact that the employee has been permitted to share the information only by reason of his or her seniority or high responsibility.

2     That the owner believes these things to be true and that belief is reasonable.

3     The greater the extent to which the “confidential” material is habitually handled by an employee, the greater the obligation of the confidentiality imposed.

4    That the information can be readily identified.

200    This expanded list was endorsed by Hodgson JA in Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326; [2007] NSWCA 172 at [40].

201    In relation to the third element in Optus Networks, the test for whether the information was imparted in circumstances importing an obligation of confidence is an objective one. The question is whether the information was imparted in circumstances where a reasonable person must have realised, on reasonable grounds, that they were not free to deal with the information as their own, or must have realised that they could deal with information only with certain limitations: Del Casale at [133] (Campbell JA).

202    Whether at the time the information was imparted an obligation of confidence existed is discussed in G E Dal Pont, Law of Confidentiality (2nd ed, LexisNexis Australia, 2020) at [8.12] as follows:

At the time the (confidential) information is imparted, its recipient may have lacked actual or constructive knowledge of any confidentiality or confidential circumstances. Hence, at that stage there could be no obligation in equity to preserve its confidentiality or be otherwise restrained in its use. But once the facts reveal to a reasonable person in the recipient’s position that the information was indeed confidential, it is from that moment that his or her conscience is affected in a way cognisable by equity [Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 4 All ER 781; [2013] UKSC 31 at [25] per Lord Neuberger]. The same notion informs the liability of third parties who receive confidential information innocently, but later discover its provenance. If, however, the information is, at the time the requisite knowledge of confidentiality accrues, already in the public domain, it is difficult to speak of triggering any ongoing obligation of confidence.

203    In Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 4 All ER 781, Lord Neuberger (with whom Lord Clarke, Lord Sumption, Lord Reed and Lord Carnwath agreed) said, at [25]:

… depending on the other facts of the case, a defendant who learns of a trade secret in circumstances where she reasonably does not appreciate that it is confidential, may nonetheless be liable to respect its confidentiality from the moment she is told, or otherwise appreciates, that it is in fact confidential. From that moment, it can be said that her conscience is affected in a way which should be recognised by equity.

204    In relation to the fourth element, the respondents conceded that if the first three elements in Optus Networks were established, there was an actual misuse of the information constituted by Mr Leung’s use or disclosure to Mr Chen and/or Ms Liu of the contact details of the 17 Suppliers that Broers sourced products from.

205    Customer lists have been held to constitute confidential information: see, e.g., DC Payments Pty Ltd v Next Payments Pty Ltd (2016) 51 VR 151; [2016] VSC 315 (Vickery J); Gold Titan v Lopez [2021] FCA 918 (Abraham J). Not all customer lists have been found to be confidential: see, e.g., Advanced Fuels Technology Pty Ltd v Blythe & Ors [2018] VSC 286 at [178]–[179] (Macauley J); IF Asia Pacific Pty Ltd v Galbally (2003) 59 IPR 43; [2003] VSC 192 (Dodds-Streeton J); Weldon & Co Services v Harbinson [2000] NSWSC 272 at [67]–[72] (Bryson J); Robb v Green [1895] 2 QB 315 (Hawkins J). Supplier lists may also be confidential: Orica Investments Pty Ltd v William McCartney [2007] NSWSC 645 at [254] (White J). An employee is not entitled to remove lists which are the employer’s property, or to make copies or commit lists to memory: Weldon & Co at [72] (Bryson J).

206    With respect to third party recipients, as Edelman J observed in Farm Transparency International Ltd v New South Wales (2022) 277 CLR 537; [2022] HCA 23 at [238], the extent to which an obligation is imposed upon persons who are not primarily liable is unsettled. Third parties who obtain confidential information may be restrained from using the information if they have actual or constructive knowledge that the information was obtained in breach of confidence: Farm Transparency at [162] (Gordon J); [238] (Edelman J); ABC v Lenah Game Meats (2001) 208 CLR 199; [2001] HCA 63 at 225 [39], 224 [34]–[35] (Gleeson CJ). Further, a third person who comes by information innocently may be restrained from making use of it once they learn that it was obtained in circumstances involving a breach of confidence: Farm Transparency at [162] (Gordon J); Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56 at 460 (Gaudron J); Vestergaard Frandsen at [25]–[26], [39] (Lord Neuberger).

breach of confidence claim

207    The four elements in Optus Networks, that must be established before an equitable obligation of confidence with respect to information arises, are addressed in turn below.

1. The information must be identified with specificity

208    The need for specificity in the identification of the confidential information, in respect of which relief is sought, comes from the fact that the Court must make an assessment of the quality of that information, that is, whether it is in truth of a confidential nature: Streetscape Projects (Australia) Pty Ltd v City of Sydney (2013) 295 ALR 760; [2013] NSWCA 2 at [159] (Barrett JA, with whom Meagher and Ward JJA agreed).

209    The term “New Aim Confidential Information” was defined in New Aim’s pleading to mean, in effect, the identity and contact details of suppliers to New Aim of products as at January 2021, including each of the New Aim Products (see paragraph 36 above). New Aim’s confidential information case extended to wholesale product information including wholesale prices for each of the New Aim Products, but only insofar as it related to the identification of the New Aim suppliers and the use of the supplier details.

210    In its opening, New Aim said the “New Aim Confidential Information” was the identity and contact details of the suppliers to New Aim of products as at January 2021, including each of the New Aim Products, in circumstances where New Aim identified them as reliable suppliers of high quality products that were suitable for the Australian market. New Aim’s case was that the New Aim Confidential Information included at least the 17 Suppliers, being the suppliers of New Aim from whom the respondents admit that Broers sourced products, both before and (in some instances) after the interlocutory injunction was in force, and the WeChat contact list that Mr Leung retained after he left New Aim’s employment, and used to provide supplier contact information to Broers.

211    The respondents objected to New Aim’s case as opened on two bases: first, the respondents submitted that there was ambiguity as to whether New Aim’s case applied to active suppliers, or any and all suppliers, of New Aim as at January 2021. Secondly, the respondents submitted that “reliable” was not part of the pleaded case.

212    New Aim rejected both contentions. New Aim submitted that there was no ambiguity in its case, stating that, while it described the New Aim suppliers as at January 2021 as “current” suppliers, it meant “current” in the sense of having been suppliers of New Aim as at January 2021, as distinct from being confined to “active” suppliers to New Aim as at that date. Senior Counsel for New Aim acknowledged in opening that while the pleading does not use the word “current”, “current” was a shorthand for suppliers who have supplied goods to New Aim prior to January 2021. It appears that the initial trial was conducted on the basis that current suppliers of New Aim as at January 2021 meant active suppliers: New Aim (No 1) at [140]–[141]; [144]; [148]; [151]–[153]; [226]; [229] and [231]; New Aim (No 2) at [29(f)], [30], [36] and [45].

213    New Aim further submitted that it had not departed from its pleaded case because, as stated by Senior Counsel for New Aim in opening, the question of whether a supplier to New Aim was “reliable” was relevant to whether the information had the necessary quality of confidence, which was a factual dispute raised in this case. New Aim said that its case was that each of those suppliers were “reliable” because they had, through New Aim’s processes, been identified as a reliable supplier of high-quality products that were suitable for the Australian market.

214    New Aim further noted that in New Aim (No 2), the Full Court stated, at [34]:

New Aim’s case was that confidentiality resided in the identity and contact details of its suppliers (in particular, the WeChat contact details of the representatives of the 17 Suppliers) 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.

[emphasis in original]

215    I am satisfied that, having regard to the way in which the case was opened and conducted, the New Aim Confidential Information has been identified with the necessary specificity to mean, the identity and contact details of the suppliers to New Aim of products as at January 2021 in circumstances where New Aim identified them as reliable suppliers of high-quality products that were suitable for the Australian market. On New Aim’s case, the New Aim Confidential Information included, but was not limited to, the WeChat contact list that Mr Leung retained after he left New Aim’s employment and the 17 Suppliers from whom Broers sourced products.

2. The necessary quality of confidence

216    As to the second element in Optus Networks, New Aim was required to establish that the New Aim Confidential Information had the necessary quality of confidence: Wright v Gasweld at 334 (Kirby P).

217    The list of factors identified by Kirby P in Wright v Gasweld, as expanded upon and endorsed by Hodgson JA in Del Casale, is helpful in deciding whether the information in question had the necessary quality of confidence. As stated by Hodgson JA “the stronger these factors are in a particular case, the more likely it is that the particular information will be treated as a trade secret that the ex-employee is not entitled to use or divulge”: Del Casale at [41]. The list of factors is not, however, to be regarded as a rigid checklist and it is not a substitute for the legal test by which the existence of an equitable obligation of confidence must be determined: Del Casale at [138] (Campbell JA); Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 193 (Fullagar J). Furthermore, the relevant factors may vary from case to case and, in the present case, New Aim did not seek to address each factor seriatim. The factors discussed below represent the key factors that were addressed by both parties.

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

218    New Aim relied on Des Casale, at [32], where Hodgson JA stated that, generally, more senior employees, having access to more confidential information, will be subject to greater restraint than more junior employees.

219    New Aim submitted that Mr Leung held a high level of seniority at New Aim, which entitled him to access greater levels of confidential information than the rest of the New Aim business. In July 2020, Mr Leung was promoted to Chief Commercial Officer, in which capacity he was responsible for overseeing New Aim’s buying and selling strategies and had access to New Aim’s commercial records and information, including the identity of New Aim suppliers, wholesale prices and other sales and marketing data.

220    The respondents accepted that Mr Leung held a high level of seniority at New Aim, entitling him to greater access to confidential information than others in the business.

The value of the information to the applicant

221    It was not in contention that the identity and contact details of suppliers who had established themselves as reliable suppliers to New Aim was commercially valuable information to New Aim. Mr Huang gave unchallenged evidence to that effect, on behalf of New Aim.

222    Mr Dai agreed, in cross-examination, that it was important for an Australian e-commerce business to provide products suitable for the Australian market and to have reliable suppliers, which was something he regarded as commercially valuable. Mr Chen also accepted that reliable suppliers were a necessity for a successful e-commerce business. The respondents submitted, however, that the value attributed to the information does not, of itself, make the information confidential and the required analysis is multifactorial.

The skill and effort expended to acquire the information

223    New Aim relied on evidence from Mr Huang and Ms Ho regarding the time and effort New Aim expended to identify and secure new suppliers in China. The respondents accepted that New Aim expended effort and money to develop relationships with suppliers in China. They submitted, however, that the effort and skill required was not as time consuming, and the process was not as difficult, as New Aim suggested.

224    The process to source suppliers in China of products suitable for the Australian market involved identifying suitable suppliers from existing contacts, suppliers at the Canton Fair or searches of B2B websites, undertaking background checks, obtaining product samples, undergoing QC and compliance checks, negotiating supply terms and ordering the products.

225    Mr Huang said that the process to source products often took up to six months and up to nine months to refine the order. Ms Ho said the sourcing process could take between three to nine months.

226    Mr Schoots said that, in his experience, searching for and identifying suitable suppliers in China was the most important and the most time intensive part of the sourcing process, although he did not put a timeframe on it. For context, however, he said that the second phase of the process (negotiations with the supplier) generally took around three to six months, or 12 months for customised products. As a result, Mr Schoots’ evidence suggested that, in his experience, the first phase of the sourcing process took at least three to six months.

227    On the other hand, on behalf of the respondents, Mr Leung said the New Aim buying process was not a particularly sophisticated process and the sourcing process generally took around four months on average. Mr Wang said that the sourcing process usually took three to six months, or longer for customised products.

228    It was common ground, and I find, that the process for identifying suppliers in China of products suitable for the Australian market requires effort and the process can take several months. In my assessment, it is not a complicated process, although experience is an advantage. While the entire process can take several months, there was no evidence to suggest that it required continual effort over that length of time.

The steps taken to guard the confidential information

229    The New Aim Confidential Information was stored on the New Aim Purchasing System.

230    According to Mr Huang, there were access restrictions on the New Aim Purchasing System and only individuals who required supplier information as part of their role at New Aim were granted permission to access it. Mr Huang said the employees who required access to supplier information as part of their role at New Aim included the Buyer, Category, IT and QC teams and senior management. According to Ms Ho, however, the Data and Compliance teams also had access to supplier information on the New Aim Purchasing System. In addition, Mr Huang said that the Warehouse team also had access to supplier details on the Warehouse database. In the result, the only teams at New Aim that did not have access to supplier information were the Customer Service and Channel teams.

231    In around 2022, New Aim’s Buyer team comprised approximately 100 employees, out of a total of 400 employees. Access to supplier information on the New Aim Purchasing System was not restricted to the product lines for which the Buyer team member was responsible, and the Buyer team had access to supplier information across all product lines. It was not until April 2024 that New Aim restricted access levels so that the Buyer team member only had access to the names and contact details of the suppliers of the products for which they were responsible.

232    In April 2023, New Aim started using a more sophisticated purchasing system called Netsuite. Netsuite allowed New Aim to limit the access that each member of the Buyer team had to data in Netsuite, however, when it was introduced, all members of the Buyer team could access supplier information stored in Netsuite and the New Aim Purchasing System had not been decommissioned.

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

233    New Aim pointed to the following steps that it had taken to protect supplier information and ensure that it was treated as confidential.

234    First, New Aim ensured that supplier details were not included on product packaging and labels (a practice known as ‘white labelling’) or on product certificates and instruction manuals, subject to some limited exceptions where it was mandatory to disclose manufacturing details.

235    Secondly, New Aim adopted a general practice of not permitting its channel partners to collect shipping containers directly from loading ports in China, where supplier details might be revealed, for example, on customs clearance forms.

236    Thirdly, New Aim allocated its own SKUs (stock keeping units or product codes) to its products, rather than retaining the codes allocated by the supplier.

237    Fourthly, as mentioned above, New Aim limited access to supplier information stored on the New Aim Purchasing System to only those employees that required such information to perform their role at New Aim, with such limitations implemented by way of account access controls and password requirements. However, the only teams at New Aim that did not have access to supplier information were the Customer Service and Channel teams.

238    Fifthly, in 2017, New Aim conducted IT training sessions for employees in the Buyer and Shipping teams to learn how to use the New Aim Purchasing System. During the training sessions, New Aim explained that there were access restrictions to the New Aim Purchasing System.

239    Sixthly, New Aim controlled and limited the way the Buyer team communicated with suppliers by strongly encouraging employees to communicate via their work email address or, in the case of employees in China, via the instant messaging application ‘Enterprise QQ’. New Aim controlled the Enterprise QQ application, which enabled it to delete an account if an employee resigned. If a supplier contact did not or could not use Enterprise QQ, or had a strong preference against emails, only then did New Aim permit employees to communicate with the supplier via WeChat. The Enterprise QQ application was not available to the Buyer team, including Mr Leung, in Australia.

240    Seventhly, from September 2020, New Aim had a Confidentiality / Intellectual Property Policy, which was available for employees to access on New Aim’s intranet system. The Policy was shared with employees upon their commencement with New Aim and formed part of each employee’s employment contract with New Aim. Furthermore, in January 2021, the Human Resources team sent a company-wide message to alert all employees to the Policy and an email to New Aim’s managers to advise them to distribute the Policy to their team members. A subsequent Policy was also introduced in February 2021.

241    Eighthly, in August 2022, New Aim updated the terms of its employment contracts regarding the use, disclosure and obligation to maintain confidentiality of confidential information, which expressly included supplier names. Employee obligations were further expanded upon in New Aim’s employment contracts from September 2023, where the definition of “Confidential Information” was expanded to include “Supplier Lists” (which was defined to include “all information relating to the Supplier including but not limited to supplier name, supplier contact and/or liaison, contact details (address, email, phone, WhatsApp, social media contact details and the like), contractual information, commercial knowledge, and all other information relating to the Supplier”).

242    Finally, around the end of 2022, New Aim updated its template procurement agreement for new and existing suppliers to include a confidentiality clause.

243    As the respondents pointed out, some of the measures taken to protect New Aim’s supplier information were implemented after Mr Leung left New Aim. The respondents submitted that these changes highlight the shortcomings of the systems that New Aim had in place at the relevant time, which were not adequate to convey that the information was, and ought to be regarded as, confidential.

244    The respondents also raised the following matters, as relevant to the deficiencies in New Aim’s systems at the relevant time:

(a)    New Aim did not issue mobile phones to employees prior to January 2021, and did not restrict the use of employee’s mobile phones in any way;

(b)    New Aim employees were not required to sign employment contracts with confidentiality clauses that extended to supplier information or that obliged them to delete data from their personal mobile phones when they left New Aim; and

(c)    In the Policy, “confidential information” included “customer lists”, “contracts with suppliers” and “any other information which (by its nature or by the circumstances of its disclosure) is or could reasonably be expected to be regarded as confidential”, but did not include supplier lists or supplier identities. Further, “supplier” was defined to mean “any person who supplies services to the Company with whom in the course of the last 12 months of your employment both the Company and you have dealings.”

245    The improvements that New Aim implemented after January 2021 may be said to emphasise the value which New Aim placed on its supplier information. However, they are not measures that can be taken into account in assessing the steps that New Aim had taken to protect supplier information, to ensure that it was treated as confidential, prior to January 2021.

246    While New Aim’s systems may have been lacking in some respects, white-labelling New Aim’s product and allocating its own SKUs meant that supplier details were not disclosed to New Aim’s competitors, purchasers or any other persons inspecting New Aim’s products. These were strong indicators that New Aim guarded the identity and details of its suppliers and regarded them as confidential information. New Aim’s Buyer team would have been aware of those practices.

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

247    Mr Leung had two employment agreements while he was employed at New Aim: the first employment agreement dated 13 October 2011 and the second employment agreement dated 16 June 2020. The definitions of “Confidential Information” in the employment agreements did not specifically include supplier lists, identities or contact details. However, the obligations under the second employment agreement applied to “confidential information relating to the business and affairs of New Aim”.

248    As mentioned above, the practices of white-labelling and allocating its own SKUs to products ought to have conveyed to Mr Leung that the identity and contact details of New Aim’s suppliers were regarded as confidential information that New Aim wanted to protect. Mr Leung ought to have known that white labelling New Aim’s products would make it difficult for New Aim’s competitors to copy New Aim’s products, in circumstances where he also knew that New Aim’s suppliers did not sign exclusive supply agreements and could produce similar products for competitors.

249    While Mr Leung was employed at New Aim, Mr Leung used his personal mobile phone for calls and WeChat messages with suppliers. New Aim did not provide Mr Leung with a landline or mobile phone. According to Mr Leung, Mr Liu regularly saw Mr Leung use his mobile phone to add suppliers’ details to his WeChat account when they travelled in China to attend the Canton Fair and to visit suppliers, and Mr Liu was aware that Mr Leung used his personal mobile phone to communicate with suppliers. Mr Leung said that Ms Chiu was also aware that he had New Aim’s supplier details on his WeChat account. Mr Leung said that he did not recall any discussion during his time at New Aim to the effect that his WeChat contacts, including those who worked at suppliers of New Aim, were confidential to New Aim.

250    When Mr Leung resigned and returned his laptop computer to the office, Mr Liu, who was in the office, did not ask Mr Leung to delete his WeChat contact details or any other data on his mobile phone.

251    Mr Leung was aware that there were password controls that restricted access to the New Aim Purchasing System. Mr Leung said that the supplier contact details in his WeChat account were not stored on the New Aim Purchasing System and that system did not have fields to store WeChat details.

252    Mr Huang said that in 2017, he, Mr Leung and Mr Lam participated in meetings to discuss the various functionalities of the New Aim Purchasing System, which was in the process of being developed prior to its launch in 2018. Mr Huang said he could recall a discussion concerning the sensitivity of New Aim’s supplier information and the desirability of restricting access to relevant members of the Buyer team, rather than allowing access to the entire Buyer team, as had been the case with the Vtiger system. Mr Huang said that, during the discussion, Mr Leung said that he supported stringent access controls and that he was concerned that, if an employee resigned from New Aim, they could take commercially sensitive information, such as supplier details, to a competitor. Mr Huang said that Mr Leung agreed that access to supplier information in the New Aim Purchasing System, including supplier names, contact details and other purchasing information such as pricing, should be further restricted so that employees could only see information concerning products and suppliers relevant to their role. Mr Huang identified an email that assisted him to recall the details of the meeting.

253    Mr Leung said he did not recall the discussion with Mr Huang. However, Mr Leung did not deny that the discussion took place. After being shown the email that Mr Huang used to assist his memory of the meeting, Mr Leung agreed that one of the purposes of introducing the New Aim Purchasing System was to allow greater control over who could access the system and resolve problems with user permission management.

254    I accept Mr Huang’s evidence regarding the discussion with Mr Leung. However, as Mr Huang said in his evidence, Mr Leung said he was concerned about the risk of a New Aim employee using commercially sensitive information to assist a competitor and Mr Leung had agreed that access to supplier information and pricing should be limited so that employees could only see information concerning products and suppliers relevant to their role. The discussion was about pricing, as well as supplier, information. Separately, Mr Leung had said that he regarded the wholesale (or cost) price as the most important factor when identifying suppliers at New Aim.

255    Mr Leung said he did not recall seeing or being provided with a copy of the Policy that existed in September 2020, nor did he recall any discussion of the Policy while he was employed by New Aim. In any event, the Policy did not cover supplier lists or supplier identities. To the extent that it covered “contracts with suppliers”, “supplier” was defined to mean “any person who supplies services to the Company with whom in the course of the last 12 months of your employment both the Company and you have dealings” (emphasis added). Leaving to one side the reference to “services”, the Policy would suggest that New Aim wanted to protect information in relation to suppliers with whom employees had had dealings in the last 12 months of their employment.

256    The Policy that was introduced in February 2021 is not relevant because Mr Leung had resigned from New Aim in January 2021. In any event, it contained the same definition of “Supplier” as the Policy that existed in September 2020.

257    The New Aim Purchasing System contained a variety of different information, including supplier information and wholesale prices. It included details of potential suppliers, from whom New Aim had not ordered products, and details of suppliers from whom New Aim had ceased to order products because the products had a high fault rate or they were unprofitable. It also included details of suppliers with whom New Aim had not had any dealings in over five years. New Aim identified that of approximately 191 suppliers that it had in 2014, it had placed an order with only 47 of those suppliers between 2020–2022. In other words, between 2020 and 2022, New Aim had not placed repeat orders with approximately 75% of its active suppliers in 2014.

258    It was not put to Mr Leung that he understood that historical suppliers, including suppliers of products from whom New Aim ceased to order products because of a high fault rate or because they were not profitable, were “reliable” suppliers of New Aim or that New Aim guarded that information and regarded it as confidential.

The extent to which the information is known outside the business

259    Both experts agreed that it was common within the e-commerce industry for businesses to treat supplier information as confidential and to not disclose that information to competitors. However, the experts disagreed as to whether the identity of a supplier in China was ascertainable, and whether suppliers were willing to disclose their customers’ details.

260    Mr Schoots said that, in his experience, identifying a reliable supplier of products suitable for the Australian market involved a not insignificant investment of time and money. As a result, in Mr Schoots’ experience, businesses which sourced products from China treated the identity of its suppliers as confidential and would not disclose the identity of its suppliers to competitors.

261    Mr Schoots said that, in his experience, attempting to find the exact supplier of a particular product manufactured in China was like “looking for a needle in a haystack”. Mr Schoots explained that attempting to identify the source of a particular product involved searching online marketplaces for visually similar products, in circumstances where it was standard practice for a product and packaging to not include the supplier’s name. Mr Schoots said it was not unusual for a typical product to produce more than 1,000 results, of which there may be very little difference in the images. Whilst Mr Schoots accepted, in cross examination, that it was possible to ascertain the supplier of a particular product, he said that it was unlikely.

262    It was not suggested by the respondents that the New Aim Confidential Information was generally known or available. The respondents submitted, however, that supplier information was ascertainable from publicly available sources. Furthermore, experienced e-commerce businesses were able to identify competitors’ suppliers, and suppliers were willing to disclose their customers. The respondents submitted that, for those reasons, the New Aim Confidential Information did not have the necessary quality of confidence.

263    Similarly to Mr Schoots, Mr Wang said that importers generally kept their supplier’s information confidential and would not disclose those details to other business, especially competitors. Nevertheless, Mr Wang said that an importer with experience in the e-commerce industry would likely be able to work out the identity of a competitor’s supplier, or the importer could use “Reverse Sourcing” software.

264    Mr Wang explained that Reverse Sourcing, which is a service Epic Sourcing has provided since 2021, involves using software programs and publicly available information to identify pre-existing relationships and links between businesses, or existing brands on the market, and their suppliers. By way of example, Mr Wang mentioned the ImportKey software, which contains shipping and customs data (although not for Australia), and matchory.com, which contains data on products, suppliers and buyers. Mr Wang said that these technology assisted processes enabled Epic Sourcing to analyse the data contained in the software and produce a profile for a supplier, including the supplier’s name, the type of products it manufactures and the businesses to whom it exports.

265    In addition, Mr Wang said that Epic Sourcing used product images to conduct searches of online platforms such as alibaba.com, 1688.com or Pandabuy.com, to identify potential suppliers of certain types of products or similar products. Mr Wang agreed that a search may generate thousands of results for particular categories of products. However, he said that many of the results would not be relevant and by using search functionality and filtering methods, it was possible to generate better results.

266    Mr Wang said that most of the time he was able to successfully use Reverse Sourcing to identify the supplier of a business, but this was not guaranteed. New Aim submitted that the Court should reject Mr Wang’s evidence to that effect, and relied strongly on the fact that Mr Wang was not asked to use Reverse Sourcing to find any of New Aim’s suppliers.

267    Mr Leung said that during his time at New Aim, it was common for New Aim to conduct online searches and copy competitors’ products that were also sold online. Mr Leung estimated that the majority of New Aim’s new products were copied from other eBay sellers and, in many cases, the products New Aim sold were identical to the original seller’s products. New Aim submitted that the fact that New Aim copied its competitor’s products did not mean the suppliers were the same. While Mr Leung said that through the process of identifying potential suppliers, he or New Aim were told or were able to discover if the potential supplier also supplied the potential product to others in the industry, in my assessment, the evidence does not suggest that this was a regular outcome.

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

268    Both experts were asked about the practices (if any) in the industry, particularly the e-commerce sector, concerning the use and treatment of information pertaining to the identities and details of suppliers in China.

269    First, Mr Schoots said that, in his experience, businesses refrain from including the name of the supplier on the product or its packaging to keep their suppliers’ identity confidential. Mr Wang agreed that importers generally would not include the supplier’s information on the labelling, although there were some exceptions such as where it was mandatory to do so or for customised products.

270    Secondly, Mr Schoots said that businesses can take their own photographs to advertise the products. Mr Schoots explained that businesses that use the supplier’s image risked the possibility that a competitor could search online marketplaces to see which supplier used the same image and attempt to identify the supplier that way. Mr Wang did not comment on this matter.

271    Thirdly, Mr Schoots said that businesses can enter into confidentiality agreements or non-disclosure agreements (NDAs) with suppliers. Mr Schoots accepted in cross-examination, however, that it was uncommon for Australian importers to enter into confidentiality agreements or NDAs with suppliers in China. Mr Schoots put this down to two reasons. First, the products were generally off-the-shelf products, where it was not necessary to protect the design of the product. Secondly, it would be very difficult for a competitor to identify the relevant supplier. Mr Schoots also added that, in his experience, it was uncommon for clients to enter into exclusive supply agreements with suppliers in China.

272    Mr Wang’s evidence was to a similar effect. Mr Wang said that, in his experience, NDAs were not usually signed, unless clients were using their own intellectual property. Furthermore, it was rare for exclusive supply agreements to be executed with suppliers in China.

273    Thus, Mr Schoots and Mr Wang were broadly in agreement that the practice in the industry was for businesses to treat supplier information as confidential and to not disclose that information to competitors. Further, that businesses in the e-commerce industry that imported products from China take steps to keep supplier information confidential, such as ‘white labelling’ products. However, businesses do not require suppliers to enter into confidentiality agreements, NDAs or exclusivity agreements for off-the-shelf products of the kind New Aim supplied.

274    There was no evidence that, in the relevant period, New Aim ever asked a supplier to sign a confidentiality agreement or agree to provide products on an exclusive basis. New Aim submitted that the absence of confidentiality agreements with suppliers was unsurprising given the nature of the products sold. There is a tension between that submission and the contention that the information was confidential. In any event, the experts agreed that suppliers in China, of off-the-shelf products of the kind New Aim supplied, generally would not be contractually restricted or prohibited from disclosing the identity of its customers and could supply the same or similar goods to multiple, competing business in Australia.

275    The issue of whether suppliers were willing to disclose their customer’s details was addressed by way of evidence of interactions with suppliers at the Canton Fair and factory visits.

276    Mr Wang said that, in his experience, suppliers at the Canton Fair actively present the brands they are working with, to increase their reputation and show their capabilities. Mr Wang also said that, in his experience, unless the supplier had signed an NDA, the supplier would openly tell him who they have business relationships with, as means of convincing him or his clients to work with them.

277    Mr Wang added that, in his experience, it was possible to verify a supplier’s clients because suppliers usually displayed their current products or production line, which proved who their clients were. Further, Mr Wang said that information of that kind could also be verified by a factory visit, or by asking the supplier to show images of their product on an Australian e-commerce website or an image of the packaged goods with the importer’s brand, which he said suppliers were willing to disclose. Mr Wang also said that when visiting suppliers’ factories, he observed the brands the supplier manufactured.

278    Mr Leung said that, when he attended the Canton Fair whilst he was employed at New Aim, he would usually ask prospective suppliers whether they supplied to particular competitors, and it was common for suppliers to volunteer the names of their customers. Mr Leung said that between 2010–2019, when he generally attended the Canton Fair twice a year, he, Mr Liu and other Buyers asked suppliers which businesses they supplied products to, including whether they supplied products to New Aim’s competitors. Mr Leung said he could not recall any instance where a supplier refused to provide names of an Australian customer on request. Mr Leung said he was also aware from factory visits to New Aim’s suppliers that some of New Aim’s products were also produced for New Aim’s competitors and some suppliers told him that they did so.

279    Mr Leung gave evidence that, since departing New Aim, he had identified examples where a Chinese supplier advertised New Aim’s brand as part of their display stand at the Canton Fair or identified New Aim as one of its customers when asked whether they supplied to Australian e-commerce businesses. Mr Leung gave an example of a supplier advertising a New Aim brand in October 2023. The examples identified by Mr Leung included current suppliers of New Aim who had entered into the updated procurement contract and had disclosed that they were current suppliers of New Aim, when asked. New Aim submitted that Mr Leung knew who the suppliers were, and therefore knew to ask whether New Aim was a customer of the supplier. The respondents submitted that that is precisely the point – the suppliers’ identities and contact details were not confidential or treated as confidential. Further, suppliers were prepared to disclose that information despite New Aim’s current procurement contract.

280    Mr Schoots said that, in his experience, it was rare for suppliers to disclose the names of their customers or for suppliers at the Canton Fair to advertise the businesses to whom they supplied. Mr Schoots explained that suppliers which disclosed that information risked jeopardising their relationship with existing clients and, in his experience, they would not do so. Mr Schoots added that, if a supplier did disclose the name of its customers, it was for large, well-known businesses such as Bunnings or Walmart, but he said that, even then, he would not take it at face value and it would be difficult to verify.

281    In cross-examination, Mr Schoots explained that the reason for his scepticism about the veracity of information provided by suppliers was based on one example, which occurred many years ago. In that case, a supplier had stated that they supplied a large client in Australia, however, upon investigation, Mr Schoots discovered that it was a historical contract. As a result, it would seem that the information that had been provided to Mr Schoots was accurate and disclosed a willingness on the part of the supplier to disclose a historical customer.

282    Ms Ho agreed that, in some instances, a supplier may provide names of customers if pressed, but she added that New Aim would not know whether the information was accurate. Mr Huang’s evidence was to a similar effect, adding that the customers were generally large companies and the suppliers tended to overstate the relationship.

283    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

284    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.

285    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.

286    Mr Schoots said that it was not industry practice to regard the identity of past suppliers as confidential.

287    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.

288    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.

289    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.

290    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.

291    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

292    As mentioned above, the practices of white-labelling and allocating its own SKUs to products ought to have conveyed to Mr Leung that the identity and contact details of New Aim’s suppliers were regarded as confidential information that New Aim wanted to protect. However, Mr Leung was an employee of New Aim for over ten years and, in that time, he dealt with a large number of suppliers, including suppliers with whom New Aim had ceased to have any dealings for one reason or another.

293    Mr Leung was not required to sign an employment agreement agreeing not to use or disclose information relating to the identity and contact details of all suppliers to New Aim. He was permitted to use his personal mobile phone to communicate with suppliers and he was not restricted in the way he stored supplier contact details on his phone.

294    I am not satisfied that New Aim has established that the New Aim Confidential Information was imparted to Mr Leung in circumstances where he ought to have known that information relating to the identity and contact details of all suppliers of New Aim, including historical suppliers and suppliers from whom New Aim ceased to obtain products because of faults or lack of profitability, was confidential information to New Aim which it sought to protect.

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

295    Although it is unnecessary to consider the fourth element in Optus Networks, as mentioned above, the respondents conceded that if the first three elements in Optus Networks were established, there was an actual misuse of the information constituted by Mr Leung’s use or disclosure to Mr Chen and/or Ms Liu of the contact details of the 17 Suppliers from whom Broers sourced products.

Conclusion

296    For the foregoing reasons, I am not satisfied that New Aim has established an equitable obligation of confidence with respect to the New Aim Confidential Information. As a result, the breach of confidence claim against Mr Leung fails and it is unnecessary to address the consequential third-party claims against Broers and Sun Yee.

BREACH OF CONTRACT

297    New Aim submitted that Mr Leung breached his contractual duties of confidence, based on the broad definition of “confidential information” in his employment agreements. However, the breach of contract claim pleaded by New Aim was based on the second employment agreement. The respondents submitted that, as a matter of fairness, New Aim should not be permitted to rely on a case that was not pleaded. The respondents also relied on the entire agreement clause in the second employment agreement, which it submitted precluded reliance on the first employment agreement. I accept that the breach of contract claim against Mr Leung should be confined to New Aim’s pleaded case and will proceed on the basis.

298    In its second further amended statement of claim, New Aim alleged that Mr Leung breached clauses 20.1, 33.1, 33.2 and 33.3 of the second employment agreement by reason that:

(a)    since at least January 2021, Mr Leung had been working for Sun Yee and/or Broers to assist it to procure, promote and sell the New Aim Products;

(b)    in the course of his work with Sun Yee and/or Broers, Mr Leung used the New Aim Confidential Information (or parts of it) including to assist Sun Yee and/or Broers to procure, promote and sell the New Aim Products; and

(c)    Sun Yee and/or Broers had received and used the New Aim Confidential Information to procure, promote and sell the New Aim Products.

299    In the second employment agreement, clause 20.1 provided:

20.    Employee Obligations on Termination

20.1    Upon termination of the Agreement, the Employee must deliver to New Aim all property of New Aim that is in the possession or control of the Employee including, but not limited to, client lists, correspondence, documentation, diaries, papers, records, computer equipment, keys, mobile phone, laptop, uniforms and credit cards.

300    Clause 33 of the second employment agreement provided:

33.    Confidentiality

33.1    During the course of your employment with New Aim, you may become acquainted with or obtain access to confidential information relating to the business and affairs of New Aim, its subsidiaries and their clients.

33.2    Confidential information may or may not be expressly designated as such. You will be obligated during, and also after termination of your employment to maintain the confidentiality of such information and to disclose it only when you receive prior written authorisation from the Directors of New Aim. You acknowledge that any such disclosure could cause considerable loss and damage to New Aim. If you have any concerns as to whether disclosure in any circumstance would be authorised, you should ask a Director of New Aim beforehand.

33.3    You shall not, during or after your employment with New Aim, use any of the confidential information of New Aim and its subsidiaries for personal gain, in order to disadvantage the company or for any purpose other than for the benefit of New Aim.

301    New Aim’s pleaded case was that the obligations under clause 33 of the second employment agreement applied to the New Aim Confidential Information. Further, that Mr Leung breached the terms of the second employment agreement with New Aim by using the New Aim Confidential Information, or parts of it, to assist Sun Yee and Broers to procure, promote and sell the New Aim Products. New Aim sought relief restraining Mr Leung from using or disclosing the New Aim Confidential Information or any part of it.

302    The second employment agreement does not define “confidential information”. New Aim submitted that the New Aim Confidential Information fell within the broad scope of “confidential information” in the second employment agreement because it had the necessary quality of confidence and was received by Mr Leung in circumstances importing an obligation of confidence.

303    New Aim failed to establish that the New Aim Confidential Information had the necessary quality of confidence. New Aim did not plead an alternative case that part or parts of the New Aim Confidential Information had the necessary quality of confidence that fell within the scope of “confidential information” in clause 33 of the second employment agreement. Nor did New Aim submit that, if the Court was not satisfied that the New Aim Confidential Information had the necessary quality of confidence, the Court should find that part or parts of the New Aim Confidential Information had the necessary quality of confidence, or identify the basis on which the Court should make such a finding. As a result of the finding that the New Aim Confidential Information lacked the necessary quality of confidence, having regard to the pleaded breach of contract claim against Mr Leung, it is unnecessary to consider whether Mr Leung breached clause 33 of the second employment agreement by using part or parts of the New Aim Confidential Information.

304    New Aim’s case in relation to the obligations under and breach of clause 20.1 of the second agreement was poorly pleaded. New Aim did not clearly identify the “property” of New Aim which was in the possession or control of Mr Leung which he failed to deliver upon termination of his employment agreement. New Aim merely submitted that, at the cessation of his employment, Mr Leung kept, by way of his WeChat account, the contact details of a significant number of suppliers with whom Mr Leung had interacted during the course of his employment with New Aim.

305    The respondents took the point that New Aim had not identified the “property” that fell within clause 20.1, which Mr Leung failed to deliver at the end of his employment, noting the respondents conceded that Mr Leung’s mobile phone was his personal phone. It may be accepted that property includes information, however, the respondents submitted that information in the form of knowledge per se is not property, relying on Smith Kline & French Laboratories at 121–122 (Gummow J). The respondents submitted that the contact details Mr Leung used formed part of his ‘know-how’, which he was entitled to use. In my assessment, the information which Mr Leung used was not accumulated knowledge or information that he remembered. Mr Leung used and disclosed information to Broers by sharing the supplier contact details on his WeChat app with Mr Chen and/or Ms Liu.

306    As mentioned above, the parties agreed that between January–November 2021, Mr Leung provided Broers with the contact details of New Aim suppliers. Mr Leung said that he shared with Mr Chen and/or Ms Liu the WeChat contact details for New Aim suppliers from the WeChat app on his mobile phone. Mr Leung did not disclose to Broers that the suppliers were suppliers to New Aim.

307    Mr Leung said that the contact details on the WeChat contact list on his mobile phone represented a random subset of the owners and employees of suppliers with whom he had interacted during his time at New Aim. Mr Leung said the contacts on the WeChat contact list included people he met at the Canton Fair, suppliers who had added him as a friend to their WeChat account and people he had met while he was employed at New Aim, with whom he had developed professional as well as personal relationships. Mr Leung had approximately 411 contacts in his WeChat app and 111 contacts whom he had tagged as “suppliers”. New Aim identified approximately 40, out of the 111 contacts on the WeChat contact list whom Mr Leung had tagged as “suppliers”, as suppliers to New Aim.

308    Mr Leung used his personal mobile phone to send messages and make telephone calls while he was at New Aim. New Aim, through Mr Liu, was aware that Mr Leung used his WeChat app to store contact details for suppliers he met at the Canton Fair. The contact details in Mr Leung’s WeChat app were not stored on the New Aim Purchasing System and that system did not have fields to store WeChat details.

309    Clause 20.1 of the second employment agreement provided that “upon termination of the Agreement, the Employee must deliver to New Aim all property of New Aim that is in the passion or control of the Employee …”. I am not satisfied that New Aim has established that the contact details on Mr Leung’s WeChat app on his personal mobile phone was property of New Aim which he was obliged to deliver to New Aim at the termination of his employment with New Aim.

310    Accordingly, I am not satisfied that New Aim has established that Mr Leung breached the duties of confidence and obligations under clauses 20.1, 33.1, 33.2 and 33.3 of his second employment agreement.

Section 183 of the corporations act

311    Section 183(1) of the Corporations Act provides:

Use of information—directors, other officers and employees

(1) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a) gain an advantage for themselves or someone else; or

(b) cause detriment to the corporation.

Note 1:  This duty continues after the person stops being an officer or employee of the corporation.

312    New Aim submitted that following matters must be established for a contravention of s 183 of the Corporations Act:

(a)    Mr Leung was, at the relevant time, an employee of New Aim;

(b)    Mr Leung acquired information by virtue of his position as an employee of New Aim;

(c)    Mr Leung made improper use of the information;

(d)    Mr Leung made that improper use for the purpose of gaining an advantage or, alternatively, causing detriment to New Aim; and

(e)    that such advantage was either for himself or for someone else, which includes another company: Australian Securities and Investments Commission v Somerville (2009) 77 NSWLR 110; [2009] NSWSC 934 at [38] (Windeyer AJ).

313    New Aim submitted that improper use of information, for the purpose of s 183 of the Corporations Act, is not confined to the contravention of an equitable obligation: AG Australian Holdings Ltd v Burton (2002) NSWLR 464; [2002] NSWSC 170 at [125] (Campbell J); Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598 at [526]–[528], [546] (Hallen J); ASIC v Mitchell & Anor (No 2) (2020) 382 ALR 425; [2020] FCA 1098 at [1516] (Beach J).

314    New Aim submitted that impropriety may be established according to the formulation of impropriety in R v Byrnes (1995) 183 CLR 501; [1995] HCA 1 at [25] (Brennan, Deane, Toohey and Gaudron JJ) (in relation to the predecessor of s 182(1)):

Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case.

315    New Aim also relied on Mitchell, at [1517]–[1521], where Beach J stated:

[1517] … In a practical sense, the inquiry is whether the defendant’s behaviour breached the norms of conduct thought necessary for the proper conduct of commercial life.

[1518] Now the statutory provision(s) does not impose a universal standard. Impropriety needs to be assessed focusing upon the particular duties and responsibilities of the officer concerned. Further, the test of impropriety looks at the character of the conduct of the director in question.

[1519] In Grove v Flavel (1986) 43 SASR 410 at 416–17; 11 ACLR 161 at 166 (Grove v Flavel), Jacobs J considered that “improper”:

…cannot be determined by reference to some common, uniform, or inflexible standard which applies equally to every person who is an officer, but rather must be determined by reference to the particular duties and responsibilities of the particular officer whose conduct is impugned.

[1520] This passage was approved of in Byrnes …

[1521] Further, as Jacobs J said in Grove v Flavel (at SASR 420; ACLR 169):

The word “improper” is not a term of art. It is to be understood in its commercial context to refer to conduct which is inconsistent with the “proper” discharge of the duties, obligations and responsibilities of the officer concerned.

316    In Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (2009) 81 IPR 1; [2009] FCAFC 2 (Tamberlin, Finn and Sundberg JJ), at [44]–[46], the Full Court stated that the obligation in respect of confidential information under s 183(1) of the Corporations Act aligns with the equitable obligation and there can be no improper use of information, within the meaning of s 183, if there has been no improper use of information under the general rules of equity. The Full Court cited the reasoning of Young J in Rosetex Company Pty Ltd v Licata (1994) 12 ACSR 779 at 784 and Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979 at [22]–[29].

317    The position adopted by the Full Court has been accepted in Del Casale at [59]–[60] (Hodgson JA, with whom McColl JA agreed); Avant Group Pty Ltd v Kiddle (2023) 325 IR 292; [2023] FCA 685 at [124] (Wheelahan J); GDP Group Pty Ltd v Saye [2022] FCA 688 at [73] at [22]–[29] (Downes J), citing Forkserve; Links Golf Tasmania Pty Ltd v Sattler (2012) 213 FCR 1; [2012] FCA 634 at [700] (Jessup J); Blackmagic Design Pty Ltd v Overliese (2010) 84 IPR 505; [2010] FCA 13 at [86] (Jessup J).

318    In New Aim (No 2), at [59], the Full Court (convened as a coram of five judges) found it unnecessary to decide whether Futuretronics was wrongly decided and, in those circumstances, considered it preferable not to determine the issue.

319    I am bound by the reasoning of the Full Court in Futuretronics. To the extent that the claim against Mr Leung for breach of s 183 of the Corporation Act is coterminous with the equitable obligation of confidence, the claim fails for the reasons set out above.

conclusion

320    For the foregoing reasons, New Aim’s claims against the respondents should be dismissed.

Associate:

Dated:    8 July 2025

SCHEDULE OF PARTIES