New Aim proceedings against ex-employees and e-comm competitors dismissed by Federal Court

After successfully receiving injunctive orders against former employees from using and sharing confidential supplier information with competing companies last year, e-commerce giant New Aim has hit a setback, seeing its entire case dismissed by the Federal Court.

The judge overseeing this case failed to be persuaded by New Aim's assertions that details about its Chinese suppliers could be classed as confidential information.

In a judgment released last Thursday, Justice McElwaine detailed the reasons why each of New Aim’s claims failed, and dismissed proceedings against the remaining applicants Man Hung 'Jack' Leung, Lei 'Ray' Xiao, Sun Yee International and Broers Group.

The case against a third ex-employee, 'Jenny' Li Yingxue, had already been dismissed by the court in April.

New Aim initially took action against the three former employees and the two competitors in September of 2021, alleging the first respondent, Leung, shared confidential company information pertaining to the identity and contact details of the Melbourne-based company’s Chinese suppliers to competitors when he left New Aim in January.

It was also alleged that other ex-New Aim workers, Lei and Li, engaged in similar behaviour.

Founded by two-time Australian Young Entrepreneur of the Year Fung Lam, New Aim is an e-commerce player that distributes goods all over the country. Lam also runs dropshipping platform Dropshipzone and in-house Shopify app Sofortig.

In October, urgent interlocutory relief was granted in the Melbourne-based company’s favour, restraining each of the respondents from reproducing or disclosing the confidential information of New Aim.

At the time, Justice Moshinsky sided with New Aim, agreeing the information allegedly given to the competitors by Leung had the “hallmarks of confidential information”.

On 11 February 2022, New Aim then abandoned some claims pursuant to Australian Consumer Law. Two months later, copyright infringement claims Leung, Sun Yee and Broers were dismissed. 

Now however, the claims put forward by New Aim have “failed” according to Justice McElwaine.

The decision means Leung, who works for Broers, can begin selling around $1 million worth of stock that was subject to the court’s injunction. Until now, it has been sitting idle in a warehouse for around a year.

New Aim brought multiple claims against the respondents, the first of which was a breach of confidence claim, alleging Leung, during the course of his employment, “had access to” confidential information which he then misused following the termination of his employment on 18 January 2021.

It was alleged that Leung shared this confidential information - that being a list of contacts contained within messaging app WeChat - with e-commerce competitors Broers and Sun Yee in his capacity as an employee, consultant “or otherwise”.

“I reject the applicant’s expansion of the definition of the confidential information the subject of this claim as it evolved during the course of the proceeding as comprising the details of the suppliers to New Aim and the fact that those suppliers had been identified by it as reliable suppliers of high-quality products suitable for the Australian market,” said McElwaine in his judgment.

“I do not accept the submission of the applicant that “the evidence establishes that the New Aim information is not known outside of New Aim.” That fact has not been made out on the evidence. I infer that competitors of New Aim prior to January 2021 had various means available in order to determine the identity of all or some of the suppliers of products to New Aim and I further find that it is likely that at least some competitors would have ascertained that information in consequence.

“In any event, it is not a matter of inference: the applicant has simply failed to persuade me upon the totality of the evidence that I should find the fact that it asserts.”

In conclusion, McElwaine said he was not satisfied that the WeChat information had the necessary quality of confidence, and dismissed the entire breach of confidence claim as a result against not just Leung, but Xiao, Sun Yee and Broers too.

It followed that the second claim failed too, as New Aim’s claim of breach of contract was tied to whether the WeChat information was determined to be confidential.

Speaking to Business News Australia, Leung expressed his relief that this chapter of the legal drama has now concluded, noting that New Aim still has the right to appeal McElwaine’s decision generally and that part of the injunction restraining him from sharing the WeChat information remains in place while the applicant decides whether or not to appeal.

“I’m really happy with the judgment,” Leung said.

“We can now sell the product worth more than $1 million which has been sitting there for a year.

“After working for New Aim for 12 years, from an assistant to the COO, and I worked with Fung Lam and Werner [Liu] for a really long time, I know they will definitely appeal.”

Business News Australia contacted New Aim for comment but did not receive a response.