//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2021] FCA 1329
Federal Court of Australia
2021-10-26
Moshinsky J
Original judgment source is linked above.
THE COURT NOTES THAT: the applicant by its counsel has given the usual undertakings as to damages.
Introduction 1 The applicant, New Aim Pty Ltd (New Aim), carries on a substantial business as an online retailer of products. It sells thousands of products across a number of product ranges. 2 The first, second and third respondents are former employees of New Aim. They left employment with New Aim at different times during 2021. It is alleged that they are now working with the fifth respondent, Broers Group Pty Ltd (Broers), which is competing with New Aim, and that they have used information that is confidential to New Aim in breach of their obligations under s 183 of the Corporations Act 2001 (Cth), alternatively in breach of contractual or equitable obligations. 3 Broers supplies products to the fourth respondent, Sun Yee International Pty Ltd (Sun Yee International), which also competes with New Aim. It is alleged that Sun Yee International is also subject to an equitable obligation to refrain from using the confidential information. 4 In brief outline, New Aim contends that there are thousands of suppliers of products in mainland China producing products in categories corresponding to each of New Aim's product lines; the quality of products and the reliability of suppliers varies significantly; accordingly, New Aim undertakes very careful due diligence before selecting products and appointing suppliers; and New Aim treats the identity of its suppliers as highly valuable and proprietary and, subject to limited exceptions, does not disclose the identity of its suppliers (including to customers). New Aim contends that it takes steps to make its employees aware that information relating to its suppliers is confidential. New Aim contends that, in breach of their obligations, the respondents have used this information. 5 It is also alleged that the respondents have infringed New Aim's copyright in a number of images that it uses to market its products.
The interlocutory application 6 By its amended originating application, New Aim seeks two categories of interlocutory relief: (a) First, New Aim seeks an interlocutory injunction to restrain the respondents, until the hearing and determination of the proceeding, from using the information that is said to be confidential and from reproducing images that are the subject of the copyright infringement claim. (b) Secondly, New Aim seeks orders for discovery of certain documents and disclosure of certain information relevant to the confidential information claims. 7 On 12 October 2021, New Aim provided to the Court and the respondents a revised form of the orders it seeks. Putting to one side confidentiality orders and case management orders, New Aim sought the following interlocutory orders: In this order, New Aim Confidential Information means the identity and contact details of the suppliers of products to New Aim (save for the supplier of the outdoor heating products sold by the Applicant under the Devanti brand in respect of which supplier information was disclosed to comply with the Electrical Equipment Safety Scheme). THE COURT ORDERS THAT: 1. Upon the Applicant giving the usual undertaking as to damages, and until further order, the Respondents, whether by themselves, their officers (in the case of the Fourth and Fifth Respondents), their employees or agents or otherwise howsoever, be restrained from, without the licence or authority of the Applicant: (a) using in any manner whatsoever, reproducing or disclosing to any third party the New Aim Confidential Information or any part of it, including by procuring, promoting or selling products obtained by the use of the New Aim Confidential Information; (b) reproducing, publishing or communicating to the public any of the images identified as "New Aim raw images" in Attachment 1 to these orders (or a substantial part of any of those images), including by reproducing, publishing or communicating to the public any of the promotional images identified as "Sun Yee / Broers product or design work" in Attachment 1, provided that nothing in sub-paragraph (a) shall prevent the Respondents from: (c) disclosing the New Aim Confidential Information or any part of it to their legal advisors for the purpose of defending or seeking advice in relation to this proceeding; (d) reproducing (subject to appropriate confidentiality restrictions) the Confidential Information for the purposes of complying with order 2 below. 2. Within seven days of the date of these orders, the: (a) Respondents each give discovery of all documents (whether in hard copy or electronic form) in their possession, power, custody or control, which contain or refer to the New Aim Confidential Information; (b) First to Third Respondents each file and serve an affidavit identifying any person to whom or which they have disclosed any part of the New Aim Confidential Information since leaving the employment of the Applicant; (c) Fourth and Fifth Respondents file and serve an affidavit (made by a duly authorised company officer): (i) identifying any person to whom or which they have disclosed any part of the New Aim Confidential Information; (ii) setting out details of the products that they have procured by using the New Aim Confidential Information, including the quantities that they have imported and sold to date and the source of each product. 8 The matter was listing for a case management hearing on 12 October 2021, at which time a timetable was set down for the filing and service of further affidavit material and submissions in connection with New Aim's application for interlocutory orders. 9 New Aim relies on the following affidavit material: (a) three affidavits of Mr Fung Lam, the Chief Executive Officer of New Aim, dated 23 September 2021, 6 October 2021 and 20 October 2021; (b) an affidavit of Mr Jian Bin (Richard) Liang, the head of New Aim's Buyer Team, dated 5 October 2021; and (c) an affidavit of Mr David Fixler, a partner of Corrs Chambers Westgarth, the solicitors for New Aim, dated 23 September 2021. 10 The respondents rely on the following affidavits: (a) two affidavits of the first respondent, Mr Man Hung (Jack) Leung (Mr Leung), dated 18 October 2021 and 21 October 2021; (b) an affidavit of the second respondent, Ms Yingxue (Jenny) Li (Ms Li) dated 18 October 2021; and (c) an affidavit of the third respondent, Mr Lei (Ray) Xiao (Mr Xiao), dated 18 October 2021. 11 Due to restrictions in place during the Coronavirus pandemic, the affidavits were not sworn or affirmed at the time they were filed. At the hearing of the interlocutory application on 22 October 2021, both sides gave an undertaking to file sworn or affirmed versions of the affidavits as soon as practicable, and both sides indicated that they were content for me to proceed on the basis of the unsworn/un-affirmed affidavits. 12 There was no cross-examination of any of the deponents at the hearing. 13 The parties filed written outlines of submissions in advance of the hearing.
Applicable principles 14 The principles applicable to the application for an interlocutory injunction are well established. It is sufficient for present purposes to refer to the summary of those principles in Australian Competition and Consumer Commission v Pacific National Pty Ltd [2018] FCA 1221 at [5]-[15] per Beach J.
Outline of New Aim's contentions 15 New Aim contends that, working collaboratively, Broers and Sun Yee International have recently started to compete with New Aim in the online retail market for products such as outdoor furniture, storage products, bedding products, fitness and gym equipment, massage guns, office furniture, outdoor heaters and pet products. 16 New Aim contends that Mr Leung, Ms Li and Mr Xiao, who are former employees of New Aim, are now working with Broers (although Mr Leung does not receive a salary, or have an employment contract). 17 New Aim contends that, in order to commence competing with New Aim, Broers has sourced 108 different product lines from 18 of New Aim's suppliers (putting to one side the supplier of outdoor heating products sold by New Aim under the Devanti brand, as the identity of that supplier is disclosed on the products, pursuant to applicable regulations). The 108 product lines are set out in annexure "FL-20" to the third affidavit of Mr Lam. The list of the 18 suppliers appears in confidential annexure "FL-18" to the third affidavit of Mr Lam. New Aim contends that those products are identical or nearly identical to the equivalent New Aim products. New Aim contends that Broers is promoting and selling those products on its own account, and that it is supplying the products to Sun Yee International, which in turn is selling the products. 18 New Aim contends that it conducts a significant due diligence process to identify products in China which are of a high quality, suitable for the Australian market and produced by reliable suppliers; this has contributed to New Aim's reputation and success in the Australian e-commerce market; accordingly, New Aim treats the identity and details of its suppliers as confidential (including by limiting distribution of that information) and, subject to limited exceptions, does not disclose that information to third parties. 19 New Aim emphasises that it is not merely the fact that the supplier is a supplier to New Aim that gives its identity and details the necessary confidentiality; rather, it is the fact that the supplier is a supplier to New Aim and that it has proven to be a reliable supplier of high quality product that is suitable for the Australian market. 20 New Aim submits that Broers (and, consequently, Sun Yee International) have engaged in the conduct referred to above by obtaining the details of New Aim's suppliers. New Aim points out that Mr Leung admits that he has retained details of New Aim's suppliers on his mobile telephone. New Aim submits that it is to be inferred that he has disclosed supplier details to Broers; the evidence indicates that New Aim's suppliers have been contacted by others within Broers. 21 New Aim submits that, by using New Aim's confidential supplier information, Broers (and, consequently, Sun Yee International) have avoided the time-consuming and expensive process of identifying and reviewing potential suppliers for reliability and quality. 22 Further, New Aim contends that in order to promote the relevant products, Broers and Sun Yee International have used product images in which New Aim owns the copyright. The relevant images are set out in annexure "FL-10" to the first affidavit of Mr Lam. This is arranged in two columns. In the left-hand column are the New Aim images. In the right-hand column are the corresponding images used by Broers or Sun Yee International. Although some of the images look quite different, New Aim contends that close inspection of the detail of the images shows that New Aim's images have been copied. Annexure "FL-10" comprises 71 images. New Aim contends that, by using New Aim's copyright works, Broers and Sun Yee International were able to go to market without incurring the cost and time of developing their own promotional materials. 23 New Aim contends that: the balance of convenience favours the grant of the interlocutory relief sought; if interlocutory relief is not granted, the commercial value of New Aim's confidential information may be permanently lost; and damages are not an adequate remedy - quantifying such an award would be very complex and could never have the effect of restoring the confidentiality of the information in question.
Outline of the respondents' contentions 24 The respondents accept that there is an "arguable case" (which I understand to be intended to be synonymous with a prima facie case) as to the use of supplier contact details and knowledge of Mr Leung in respect of the procuring of products for sale by each of Broers and Sun Yee International. They submit that the only question that the Court need determine on the present interlocutory application is the balance of convenience. 25 The respondents submit that the balance of convenience does not favour the grant of an injunction because: (a) the claim that the use of Mr Leung's knowledge of New Aim's suppliers was in breach of any obligation owed by Mr Leung to New Aim is "thin"; (b) should the Court determine at trial that the sale of products by Broers and Sun Yee International was enabled by breach of Mr Leung of such an obligation, then those sales can be quantified and the Court could determine what (if any) portion of those sales ought to be paid to New Aim, or New Aim could lead evidence as to its loss by reference to continuing sales of such products having declined or not having met existing trends for those sales; (c) there is, accordingly, no reason that damages would not be an adequate remedy to New Aim; (d) on the other hand, the prejudice to Broers and Sun Yee International is unquantifiable - if New Aim obtained an injunction preventing the sale of the relevant products, the respondents would not have had the benefit of the sales, and would have difficulty proving what sales they would have been able to make but for the injunction. 26 In relation to the copyright infringement part of the case, each of the respondents offers an undertaking not to use or enable any other person to use New Aim's images to sell products. An earlier version of the proposed undertaking included the word "knowingly". Counsel for the respondents indicated at the hearing that the respondents were prepared to offer the undertaking without that word. 27 The respondents submit that there is no satisfactory evidence of any ongoing use of New Aim's images, and the respondents have offered the undertaking set out above. In these circumstances, the respondents submit, the balance of convenience does not favour the granting of the injunction sought insofar as it concerns the images. 28 In the respondents' outline of submissions, Broers and Sun Yee International offer an undertaking not to offer for sale the electrical goods that are the subject of Annexure C to the amended statement of claim, without first being registered as a responsible supplier under the Electrical Equipment Safety System (EESS). However, the issue to which this undertaking is directed is not the focus of the application for interlocutory injunctive relief. It seems, therefore, that the offer of this undertaking can be put to one side. 29 New Aim contends that if the Court does not accept its submissions on the balance of convenience, the terms of the injunction sought are too wide and ought to be limited to specific and ascertainable conduct.
Consideration 30 It is convenient to commence with the aspect of the interlocutory application that concerns the reproduction of images in respect of which New Aim claims copyright. In my view, in respect of this part of the case, at least, there is a strong prima facie case of copyright infringement based on the evidence currently before the Court. The evidence relied on by New Aim on the present application strongly suggests that its images have been reproduced by Broers and Sun Yee International. 31 It is true that, when one compares the images in the left-hand and right-hand columns of annexure "FL-10", in some cases, the images look quite different. For example, in item 14, the image on the left is an empty chest with a bare background, while the image on the right is a chest filled with toys and with a garden background. However, according to the current evidence, a close examination of the images establishes that the image of the chest on the right is a reproduction of the image on the left. 32 On the present application, the respondents did not seek to refute the evidence that New Aim's images had been reproduced in Broers and Sun Yee International's marketing material. 33 In my view, the balance of convenience favours the grant of an interlocutory injunction to restrain the further reproduction, publication or communication to the public of the relevant images. I do not consider the undertaking offered by the respondents in this regard to go far enough. It is expressed in general and vague terms. In light of the conduct that has occurred, I consider it appropriate that an injunction be granted. 34 I turn now to consider the aspect of the interlocutory application that concerns the use of information that is said to be confidential. As indicated earlier, the information that is said to be confidential is not just the identity and details of the relevant suppliers; it is the identity and details of the relevant suppliers together with the fact that they have proven to be reliable suppliers of high quality products which are suitable for the Australian market. 35 Mr Lam states in his first affidavit that New Aim "treats the identity of its suppliers as highly valuable and proprietary and does not disclose the identity of its suppliers (including to customers)". Mr Lam explains the reasons for this at paragraphs 27, 36 and 37 of his first affidavit. I refer also to paragraphs 29 to 35 of that affidavit, in which Mr Lam describes the detailed and time-consuming process involved in identifying and vetting suppliers. There is evidence before the Court that New Aim has internal controls to limit access to supplier details within the company. There is also evidence, albeit contested, that New Aim ensures that those employees who do have access to the information are aware of the need to treat it as confidential: see Mr Lam's first affidavit, paragraph 38; but compare Mr Leung's first affidavit at paragraphs 9, 14 and 21 to 23. 36 On the basis of the evidence currently before the Court, I am satisfied that New Aim has a prima facie case that the first three respondents have breached their obligations under s 183 of the Corporations Act and their equitable obligations of confidence. It is unnecessary for present purposes to consider the breach of contract claim. I am also satisfied that New Aim has a prima facie case that Broers and Sun Yee International have breached equitable obligations of confidence. The identities and details of New Aim's suppliers, and their status as reliable suppliers of high quality goods suitable for the Australian market, have the hallmarks of confidential information: see, eg, Thomas Marshall (Exports) Ltd v Guinle [1979] 1 Ch 227 at 246, 248. It is difficult at this stage to assess the strength of the prima facie case, particularly because some of the factual matters are contested. However, I think it is fair to say that the prima facie case is not a weak one. 37 In relation to the balance of convenience, I proceed on the assumption that the grant of an interlocutory injunction is likely to have a significant financial effect on the respondents. It may be assumed that Broers and Sun Yee International have ordered significant quantities of the relevant goods with a view to selling those goods online and that they have employment obligations. However, I note that New Aim has offered to give the usual undertaking as to damages and that it is a very substantial company. There is no reason to think that it would not be able to satisfy any order that it pay compensation pursuant to the undertaking as to damages. 38 To my mind, an important factor that suggests that the balance of convenience favours the grant of an interlocutory injunction is that, if an injunction is not granted and the relevant information is disclosed, the confidential nature of the information (assuming New Aim's contentions are correct) will be lost. The evidence suggests that there has already been some disclosure of the information said to be confidential to (at least) Broers. 39 Another potentially relevant matter is the difficulty of quantifying the loss or damage. The parties made submissions about the difficulties of quantification: (a) in the event that an injunction is granted and New Aim is ultimately unsuccessful; and (b) in the event that an injunction is not granted and New Aim is ultimately successful. While I accept that there would be difficulties in each of these scenarios, to my mind the most telling factor is the difficulty of quantification of damages in the event that there is further disclosure of the confidential information (assuming New Aim's contentions are correct). If the confidential quality of the information were lost, it would be very difficult, if not impossible, to quantify the damage suffered by New Aim. 40 In my view, having regard to the matters discussed above and the circumstances of the case generally, the balance of convenience favours the grant of an interlocutory injunction to restrain the use of the information that is said to be confidential. However, I consider that some adjustments should be made to the form of orders proposed by New Aim. 41 I have set out above the form of orders proposed by New Aim in its revised draft order provided on 12 October 2021. In the course of the hearing, I raised with counsel some possible changes to the wording of the proposed injunction. On further reflection, I do not consider the changes I proposed to be desirable, as I consider that they may introduce a lack of clarity as to the scope of the injunction. 42 Having given the matter further reflection, and subject to any further submissions the parties may wish to make as to the form of the order, I consider that it would be desirable to make the following changes to the draft order proposed by New Aim. 43 First, I propose to change the label for the defined expression to "New Aim Supplier Information". This is a neutral expression which reflects the fact that whether or not the information is confidential is contested. Further, I consider it appropriate to define the suppliers of New Aim by reference to a particular point in time (or times). For example, if New Aim has commenced using a new supplier since the first three respondents left employment with New Aim, that supplier should not be covered. The first three respondents left at different points in time, namely January 2021, March 2021 and July 2021. Accordingly, I consider that the definition should refer to suppliers who were suppliers to New Aim at any of those three times. The definition would therefore read as follows: 1. In this order, New Aim Supplier Information means the identity and/or contact details of persons who were suppliers of products to the applicant (New Aim) (save for the supplier of the outdoor heating products sold by New Aim under the Devanti brand) as at January 2021, March 2021 or July 2021. 44 Secondly, I consider that, for the sake of clarity, there should be a separation between the part of the injunction that refers to reproducing and disclosing (on the one hand) and using (on the other). Also, I consider that the injunction should be limited to New Aim's product range as it stood at the points in time when each of the first three respondents left employment at New Aim. Accordingly, I propose that the relevant part of the injunction read as follows: 2. Subject to further order, until the hearing and determination of the proceeding, the respondents, whether by themselves, their officers (in the case of the fourth and fifth respondents), their employees or agents or otherwise howsoever, be restrained from, without the licence or authority of New Aim: (a) reproducing or disclosing to any third party the New Aim Supplier Information; (b) using in any manner whatsoever the New Aim Supplier Information, including by: (i) procuring from suppliers to New Aim products that are the same (or substantially the same) as products in the New Aim product range as it stood at January 2021, March 2021 or July 2021; or (ii) promoting or selling such products; … 45 In the course of the hearing, counsel for the respondents submitted that the injunction should be limited to the 18 suppliers that had been identified in New Aim's evidence. I do not consider it appropriate for the injunction to be so limited. The evidence suggests a pattern of conduct by the respondents. The logic of granting the injunction extends to other suppliers beyond the 18 suppliers. If Mr Leung is unsure whether a particular supplier (whose details are stored in his mobile telephone) is a supplier to New Aim, this could be clarified by his solicitors asking the solicitors for New Aim. 46 Another matter that was the subject of discussion at the hearing was the use of the words "substantially the same". Counsel for the respondents submitted that those words were unclear. The reason I have used these words is to cover the situation where essentially the same product is procured from a supplier to New Aim, save that the product is branded differently. With this explanation, I consider that the words are sufficiently clear. If there is doubt about the matter, it can be raised with the Court. I will include an order that there be liberty to apply. 47 I will discuss the form of orders that I propose with counsel after concluding these reasons. I will also check whether New Aim is prepared to give the usual undertaking as to damages with respect to an injunction in this form.
Discovery and disclosure orders 48 New Aim submits that the Court has power to grant the relief sought pursuant to ss 23 and 37P(3)(a) of the Federal Court of Australia Act 1976 (Cth) and r 1.32 of the Federal Court Rules 2011. New Aim relies on the decision of the House of Lords in Norwich Pharmacal Co v Commissioners of Customs and Excise [1974] AC 133 (Norwich). New Aim submits that, based on the principle set out in Norwich, orders similar to those sought by New Aim have been granted on many occasions by Australian courts: see, eg, Computershare Ltd v Perpetual Registrars Ltd (2000) 1 VR 626 at [19]. 49 In response to this part of the application, counsel for the respondents accepted that documents and information of the type sought would need to be discovered or disclosed at some stage of the proceeding. He submitted that there was no reason for this to occur now and it was preferable for this to occur following pleadings. 50 In my view, in the circumstances of this case, there is considerable merit in there being early discovery and disclosure of the type of documents and information sought by New Aim. I consider that the quality of the production may be enhanced if it is done sooner. Further, the documents and information sought go to the nub of the dispute between the parties. Therefore, early production may facilitate early resolution of the dispute. 51 However, I propose to make a number of drafting changes to the form of order. I will discuss these with counsel after the conclusion of these reasons.
Case management 52 At the hearing on 22 October 2021 there was discussion of matters relating to the case management of the proceeding, including expedition. Counsel for New Aim submitted that the matter could be ready for trial this calendar year and estimated that the trial would last less than a week. Counsel for the respondents submitted that the time needed to prepare for trial, and the trial duration, depended on the extent to which copyright questions remained in issue. He submitted that the trial could be significantly longer than five days. 53 Based on the material presently before the Court, I consider it appropriate that the hearing of the matter be expedited. I consider it reasonable to expect that the proceeding could be ready for hearing within about three months. I therefore propose to order that, subject to further order, the matter be expedited. I will also make orders for pleadings (on a short timetable) and for the matter to be listed for case management after the defences and any reply have been filed. [Following the delivery of reasons, further discussion took place regarding the form of the orders.] I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moshinsky.
SCHEDULE OF PARTIES VID 547 of 2021 Respondents Fourth Respondent: SUN YEE INTERNATIONAL PTY LTD (ACN 159 318 224) Fifth Respondent: BROERS GROUP PTY LTD (ACN 647 179 271)
New Aim Pty Ltd
Leung
(2000) 1 VR 626