New Aim Pty Ltd v Leung

O'CALLAGHAN J 1 For the second time in a week, the issue of the proper construction of an ambiguous "remittal" order made by a Full Court has arisen. (The other matter was Australian Securities and Investments Commission v M101 Nominees Pty Ltd (in liq) (No 6) [2023] FCA 1276). 2 On 26 October 2021, the court granted interlocutory injunctions restraining the respondents from using information claimed by New Aim Pty Ltd (New Aim) to be confidential (being the identities and contact details of suppliers). See New Aim Pty Ltd v Leung [2021] FCA 1329. 3 On 23 June 2022, after a five day hearing, the primary judge dismissed New Aim's claims. See New Aim Pty Ltd v Leung [2022] FCA 722. On 27 June 2022, his Honour discharged the interlocutory injunctions and put in place a modified form of injunction. That order was subsequently replaced by an order of Hespe J dated 3 August 2022. 4 On 10 May 2023, the Full Court allowed New Aim's appeal against the orders of the primary judge, and set aside the orders he made insofar as they related to New Aim's claims against the first, fourth and fifth respondents (the respondents). See New Aim Pty Ltd v Leung [2023] FCAFC 67; (2023) 410 ALR 190. 5 The Full Court also made this "remittal" order: (4) The matter be remitted for retrial in relation to: (a) the applicant's claims against the first respondent at first instance based on breach of confidence, breach of contract and contravention of s 183 of the Corporations Act 2001 (Cth); and (b) the applicant's claims against the fourth and fifth respondents at first instance based on breach of confidence. (New Aim's case against the second and third respondents has been resolved). 6 The proceeding was subsequently reallocated to my docket. 7 New Aim says that, properly construed, that order provides for a new trial, as contemplated by s 28(1)(f) of the Federal Court of Australia Act 1976 (Cth). 8 The respondents say that, properly construed, the order provides that the proceeding is to be remitted for further hearing and determination, as contemplated by s 28(1)(c) of the Federal Court Act. 9 Sub-sections 28(1) and (2) of the Federal Court Act provide: 28 Form of judgment on appeal (1) Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction: (a) affirm, reverse or vary the judgment appealed from; (b) give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order; (c) set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought for further hearing and determination, subject to such directions as the Court thinks fit; (d) set aside a verdict or finding of a jury, and enter judgment notwithstanding any such verdict or finding; (f) grant a new trial in any case in which there has been a trial, either with or without a jury, on any ground upon which it is appropriate to grant a new trial; or (g) award execution from the Court or, in the case of an appeal from another court, award execution from the Court or remit the cause to that other court, or to a court from which a previous appeal was brought, for the execution of the judgment of the Court. (2) It is the duty of a court to which a cause is remitted in accordance with paragraph (g) of subsection (1) to execute the judgment of the Court in the same manner as if it were its own judgment. (Emphasis added). 10 Section 30 of the Federal Court Act further provides: 30 New trials (1) In an appeal in which the Court grants a new trial, the Court may impose such conditions on a party, and may direct such admissions to be made by a party, for the purpose of the new trial as are just. (2) Where the Court grants a new trial in a suit, the Court: (a) may grant it, either generally or on particular issues only, as it thinks just; and (b) may order that testimony of a witness examined at the former trial may be used in the new trial in the manner provided in the order. 11 A number of things can be said about the remittal order in issue here. First, s 28 of the Federal Court Act does not refer to a "matter". It is a "proceeding" that is remitted in the case of s 28(1)(c), or a "cause" in the case of s 28(1)(g). Secondly, ss 28 does not refer to a "retrial". Instead, s 28(1)(f) refers to a "new trial", which is the term used in the cases from the early 19th century onwards (see below at paragraph [15]). Likewise, s 30 also refers to a new trial, not a retrial. Thirdly, s 28(1)(f) does not use the expression "remit" - the Court may "grant" a new trial. And fourthly, as in Australian Securities and Investments Commission v M101 Nominees Pty Ltd (in liq) (No 6), the Full Court did not say whether it sought to invoke ss 28(1)(c) or (f). 12 The difference matters. If a new trial is granted pursuant to s 28(1)(f), the trial starts again de novo, so that existing issues can be abandoned and new ones raised; the parties are not bound by how they conducted the original trial; and they may improve their case by leading new evidence or by making new arguments. And where the same issues arise in both trials, the judge at the second trial is not hampered by any decision at the original one. 13 But if a proceeding is remitted for further hearing and determination pursuant to s 28(1)(c), that hearing will be conducted on the basis that it is a continuation of the first trial, with all the limitations that such a course entails. 14 In this proceeding, the argument about the scope of that which the Full Court intended is to be "retried" has been brought to a head because New Aim seeks further discovery. That application, brought by interlocutory application filed on 18 September 2023, prompted the respondents to contend that such discovery is not permitted because, they contend, the "remitted" proceeding "is to be conducted on the evidentiary record as it stands". 15 As Finkelstein J explained in Community and Public Sector Union v Telstra Corporation Ltd (No 2) (2001) 112 FCR 324 at 326-29 [9]-[17]: At common law there were two classes of case where it was possible to obtain a new trial of a jury action. Every issue of law was determined by the judge, and he directed the jury as to the law. If there was an error of law, such as a misdirection, or an erroneous reception or rejection of evidence, there could be a new trial. This type of error also founded a writ of error. The second class was where a jury returned a verdict that was clearly wrong. Here a writ of error did not lie, and all that could be done to rectify the position was to order a new trial. See generally Holford v The Melbourne Tramway and Omnibus Co Ltd [1909] VLR 497 at 525-526; Australian Iron and Steel Ltd v Greenwood (1962) 107 CLR 308 at 315-319. As to the procedure for obtaining a new trial, see South Eastern Railway Co v Smitherman (1883) 47 JP 773 at 774. The manner in which the court exercised its jurisdiction to grant a new trial differed, depending upon the nature of the error. In the first class of case (error of law) there would be a new trial of all issues, as of right: Bernasconi v Farebrother (1832) 3 B & Ad 372; 110 ER 140. In the second class (error of fact) the court could limit the new trial to the particular issue in respect of which error was found: Hutchinson v Piper (1812) 4 Taunt 555; 128 ER 447; Earl of Macclesfield v Bradley (1841) 7 M&W 570; 151 ER 893. A new trial is a rehearing "as if [the case] had never been heard before": Blackstone's Commentaries on the Laws of England (1768) Vol 3 at 391 … Thus, for the purpose of a new trial, any finding in the first trial has been got rid of: Roe v Naylor (1918) 87 LJKB 958 at 963. The parties are not bound by the manner in which they conducted the original trial. On the rehearing, the parties may improve their case by leading evidence that had not been led at the first trial or by putting forward new arguments: Horton v Horton [1960] 1 WLR 987 at 988; 1 All ER 503 at 503-504. See also Venn v Tedesco [1926] 2 KB 227, where counsel, who waived a right to rely on a defence at the first trial, was not precluded from raising the point in the new trial. That is because a new trial is a trial that starts again de novo. In Bobolas v Economist Newspaper Ltd [1987] 1 WLR 1101 at 1104; 3 All ER 121 at 123-124, Lloyd LJ explained that: "[A] new trial 'means what it says'. Existing issues can be abandoned and fresh issues can be raised. Where the same issues arise in both trials, the judge at the second trial should not be hampered by any decision at the first trial." Appellate courts, which must be created by statute (Attorney-General v Sillem (1864) 10 HLC 704; 11 ER 1200), are given power to set aside the judgment or verdict appealed against, and order a new trial … Not only is the appellate court able to grant a new trial, it is usually given power to order a new trial either generally or on some particular point … If there is to be a new trial ordinarily it will be of the whole case, unless that will cause injustice: Pateman v Higgin (1957) 97 CLR 521 at 527-529. But there are well-known exceptions. For example, where the issues of liability and damages are completely separate, it is common to order a new trial on one issue: Quinn v Rockla Concrete Pipes Ltd (1986) 6 NSWLR 586 at 602. The difficulty that presents itself on this application is this. The powers of the Full Court are found in s 28(1) of the Federal Court of Australia Act 1976 (Cth). Those powers relevantly permit the Full Court to "(a) affirm, reverse or vary the judgment appealed from; (c) set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought for further hearing and determination, subject to such directions as to the Court thinks fit; or (f) grant a new trial in any case in which there has been a trial, either with or without a jury, on any ground upon which it is appropriate to grant a new trial". Looking at the words of its order, the Full Court seems to have proceeded under s 28(1)(c). So much is accepted by the parties. The question then is: What is the nature of the "further hearing" that is to be undertaken? Is it a "new trial", with all the attendant consequences? Or does an order under s 28(1)(c) require the remitted case to be conducted as if the first trial had not come to an end? I have not found it easy to resolve these issues. On the one hand, it is open to conclude that an order under s 28(1)(c) results in a new trial. There are two factors that suggest that possibility. The first is that s 28 does not expressly confer power on the Full Court to grant a new trial on a particular point and, as a matter of commonsense, such a power must exist. Section 28(1)(c) does provide for the retrial of part of a case. If there is no other basis for ordering a new trial of part of a case, the power may have to be found in s 28(1)(c). The second factor that suggests that an order under s 28(1)(c) results in a new trial is that unless the case goes back to the original trial judge, it is difficult to describe the remitted case as a continuation of the first trial. And there will be many cases where the trial judge can no longer preside over the remitted case. However, there are powerful factors that tend against the conclusion that an order under s28(1)(c) produces a new trial. First, such a result ignores the difference in language between s 28(1)(c) ("further hearing") and s 28(1)(f) ("new trial"). Second, it would render unnecessary either s 28(1)(f), or the words "in whole or" in the expression "in whole or in part" in s 28(1)(c) because of the existence of s 28(1)(f). On the other hand, the power to grant a new trial for part of a case may be found in s 28(1)(f); that is, the power to grant a new trial may implicitly carry with it the power to grant a new trial on a particular point. In that event, it is not necessary to read s 28(1)(c) as providing for a new trial. Under this approach, the Full Court could order either a new trial, including a new trial of a particular issue under s 28(1)(f), or a more limited form of rehearing, if appropriate under s 28(1)(c). In this way, a "further hearing" would be just that, namely a continuation of a trial that has already begun, though interrupted by a final order which has been set aside. … The better view appears to me to be that an order under s 28(1)(c) does not result in a new trial. Accordingly, the "further hearing" will be conducted on the basis that it is a continuation of the first trial, where the parties can only mend their hand or change course in accordance with well known rules. 16 The proposition contained in the last paragraph of that quote from the reasons of Finkelstein J was approved in Fernando v Commonwealth (2014) 231 FCR 251 at 262-63 [52]-[53] (Besanko and Robertson JJ, with whom Barker J agreed) and in Harvard Nominees Pty Ltd v Tiller (No 4) [2022] FCA 105; (2022) 403 ALR 498 at 514 [43] (Jackson J). 17 Because the order of the Full Court is ambiguous, regard may be had to surrounding circumstances in construing it. As Jackson J said in Harvard Nominees at 515 [50]: It is within the authority of this Court on remitter to determine the controversy between the parties as to what was and was not decided by the Full Court… And the parties here accept the elementary proposition that it is to be determined as a matter of objective construction of the orders made and the reasons expressed in the Appeal Judgment, in all the relevant context. The parties also accept that relevant context includes at least the grounds of appeal, the submissions on appeal, and the primary judgment. 18 As to the grounds of appeal, unhelpfully, the "Orders sought" relevantly provided: "The proceeding be remitted for determination in accordance with the reasons of the Full Court". New Aim submitted, however, that the fact that the Full Court did not decide various grounds of appeal (grounds 4, 5, 6, 8, 10 and 11) could not possibly have the effect that it was precluded from running those points at a new trial. That must be right, with respect, and indicates that the Full Court envisaged that the new hearing would be broader, not narrower. 19 The appellant's written submissions dated 22 September 2022 merely said that it "seeks to be heard on the basis of any remitter if its appeal is upheld". And a brief exchange between counsel and the presiding judge at the hearing of the appeal (transcript page 88, lines 26-39) is equally unilluminating. 20 What then of the Full Court's reasons? 21 New Aim submitted that the Full Court's reasons support the proposition that the remitter is for the conduct of a new trial within the meaning of s 28(1)(f) because: (1) the order itself says that all of the extant causes of action against Mr Leung (the first respondent), Sun Yee International Pty Ltd (the fourth respondent) and Broers Group Pty Ltd (the fifth respondent) are "remitted for retrial"; (2) the Full Court's reasons are to the effect that the trial substantially miscarried, both because of the primary judge's mischaracterisation of New Aim's case and because of the exclusion of New Aim's expert evidence, citing in particular [41]; [43]; [45]; [48]; [50]-[52]; and [125]-[126]; (3) the Full Court has remitted the matter to a different judge (see [135]), so as a practical matter, it would be very difficult for him to conduct the remitter as a continuation of the first trial, where the order requires reconsideration of the extant claims; and (4) issues of credit "loom large", because New Aim's claim raises significant issues in relation to the credit of both Mr Leung and Huailiang Chen (director of the fourth respondent). 22 The respondents submitted, to the contrary, as follows: While the Full Court's judgment was not explicit as to the s 28(1) power being exercised, it is clear the order that "the matter be remitted for retrial" was made pursuant to s 28(1)(c), not s 28(1)(f). The language of the order supports this interpretation: it is expressed as a remitter, not a new trial. The interpretation is further supported when the order is read in the context of the Full Court's judgment as a whole. The Full Court concluded that the primary judge erred in his approach to the issue of whether the alleged confidential information was confidential. The Full Court's judgment is clear and specific about the error in approach. It was that the primary judge focused on the location of the information and the way it was stored - ie, drawing a distinction between the WeChat application information and the New Aim Purchasing System Information - rather than the nature and content of the information alleged to be confidential, namely the identity and contact details of suppliers to New Aim. The Full Court concluded that the drawing of this distinction and focus on the location and storing of information meant that the primary judge unduly confined his analysis and failed to address New Aim's case. The Full Court did not conclude that this error of approach was infected by an error in the assessment of conflicting evidence in a Fox v Percy sense. While the Court did uphold the ground of appeal concerning the exclusion of Ms Chen's expert evidence, this was on the basis that the primary judge erred in concluding that Ms Chen lacked independence and the conduct engaged in preparing and delivering her expert report was misleading. The decisive point in the Full Court's reasoning on this ground was that the issues identified by the primary judge ought to have gone to what, if any, weight to attach to the evidence rather than its admissibility. Plainly, the Full Court's findings in relation to Ms Chen's evidence do not warrant a new trial. In circumstances where s 28(1)(f) refers to the grant of a new trial "on any ground upon which it is appropriate to grant a new trial", the relevant ground should be apparent from the judgment. No ground is specified in the Full Court's judgment, nor is there anything in the judgment to support the Applicant's submission that the Full Court found the first trial to have "substantially miscarried". Similarly, the Full Court did not find that the judge erred in preferring the evidence of one witness over another, or that witness credibility was relevant. 23 In oral submissions this morning, counsel on both sides conceded that the remittal order is ambiguous. 24 In my view, however, the construction of the Full Court's order contended for by New Aim is to be preferred. 25 First, the concept of a "retrial", although not found in s 28 of the Federal Court Act, seems to me more closely to resemble a "new trial" than a trial which is intended to be a continuation of the first one. 26 Secondly, the errors made by the learned primary judge were, with respect, errors that went to the heart of the claims, so it seems to me improbable that the judge to whom the proceeding was "remitted" would have been intended to be circumscribed in the way that s 28(1)(c) provides (including the way that Finkelstein J explained in Community and Public Sector Union v Telstra Corporation Ltd (No 2) (2001) 112 FCR 324 at 329 [17]). 27 Thirdly, despite what the respondents' counsel submitted this morning, it seems to me that the Full Court must have been mindful of issues of credit arising in a new trial, because the reasons of the learned primary judge record that a challenge was made by New Aim to the credit not only of Ms Chen, but also of Mr Leung. See New Aim Pty Ltd v Leung [2022] FCA 722 at [28] and [193]. That, it seems to me, again makes the notion that the trial that I will conduct is a "continuation" of the first trial an improbable one. 28 Accordingly, in my view, on its proper construction, order 4 of the orders made by the Full Court on 10 May 2023 is an order pursuant to s 28(1)(f) of the Federal Court Act granting a new trial. 29 It is now necessary to deal with New Aim's interlocutory application seeking additional discovery. 30 The respondents contended that a proviso contained in the order made by Hespe J on 3 August 2022 meant that they were not obliged to give discovery of the type sought. 31 The relevant order of Hespe J was in these terms: 1. Subject to further order, the First, Second and Third Respondents, whether by themselves, their officers (in the case of the Second and Third Respondents), their employees or agents, be restrained from, without the licence or authority of the Appellant, publishing or disclosing to any third party: (a) the identity and/or contact details of the suppliers listed in Annexure MC-25 to the affidavit of Man Hung (Jack) Leung dated 22 April 2022 and filed in proceeding VID 547 of 2021 (First Instance Proceeding), as suppliers of goods to the Australian market; and (b) to the extent that they are aware, the fact any of the contacts listed in the WeChat List set out in Annexure ML-1 to the affidavit of Mr Man Hung (Jack) Leung dated 11 April 2022 and filed in the First Instance Proceeding are suppliers to New Aim of products as at January 2021 (collectively, New Aim Information), provided that nothing in this paragraph shall prevent the First, Second and Third Respondents from disclosing the New Aim Information or any part of it: (a) to persons for the purposes of the business of the Second or Third Respondents or the employment of the First Respondent; and (b) to their legal advisors for the purpose of defending or seeking advice in relation to the First Instance Proceeding or this Appeal. 32 In my view, the proviso does not operate in the manner contended for by the respondents. The intention of the order is clear - that is, that the named respondents were permitted to make the sorts of disclosures provided for in the proviso. As counsel for New Aim put it, the making of the order did not immunise the respondents from any liability that they may have, should the provision of the information ultimately be found to be unlawful. 33 Counsel for the respondents accepted at the hearing this morning that if I were of the view that the order of the Full Court provides for a new trial, and that the proviso does not act in the manner for which the respondents contended, then there was no other reason that the discovery order was sought by New Aim should not be made. 34 Accordingly, I will make such an order. 35 It seems to me that the respondents should pay New Aim's costs of the hearing today because New Aim has succeeded in its contentions that the Full Court's order provided for a new trial and that the respondents should provide the discovery it sought. 36 At the hearing this morning, counsel for New Aim indicated that a new trial on issues of liability is likely to occupy three or four sitting days. He also indicated, and I took counsel for the respondents to agree, that there is room for the parties to agree on certain matters that were established at the trial and are not in controversy. In light of that indication, it seems to me that the estimate of three to four days for a new trial is realistic and hopefully the hearing of that trial can occur within the first quarter of next year. 37 I will fix a case management hearing on a date to be fixed. I envisage that that hearing will occur within the next month or so, subject to counsel's availability. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Callaghan.