Disclosing your company’s information? Careful! You could land yourself in hot water…

In New Aim Pty Ltd v Leung [2026] FCAFC 49 (New Aim), the Full Court of the Federal Court of Australia found that a senior employee contravened s 183(1) of the Corporations Act 2001 (Cth) (the Act) by improperly disclosing company information.

The case is an important reminder to directors, officers and employees not to use valuable and sensitive company information to gain a personal benefit, or to benefit third parties. Misusing information in this way may contravene s 183(1) of the Act, which can attract civil and pecuniary penalties.

Facts

In New Aim:

• Mr Leung worked for New Aim Pty Ltd (the Company) as a member of its Buyer Team from 2015 to July 2020, where he was involved with sourcing products from Chinese suppliers. He was then promoted to the Company’s Chief Commercial Officer (COO) which he held from July 2020 until his resignation from the Company in January 2021.
• Between January and July 2021, Mr Leung disclosed to Broers – a competitor of the Company – the names and contact details of individuals associated with 17 suppliers of the Company.
• Mr Leung became an employee of Broers at some time between April and July 2021. However, even earlier than this, individuals associated with Broers had promised Mr Leung a potential future financial interest in Broers if he achieved results for Broers.
• The Company brought proceedings against Mr Leung (and others) in the Federal Court of Australia for breach of confidence, breach of contract and contravention of s 183(1) of the Act.
• At first instance, the primary judge dismissed the Company’s claims. The Company subsequently appealed the decision to the Full Court of the Federal Court of Australia.

Decision

The Full Court of the Federal Court of Australia (the Court) allowed the appeal, deciding in favour of the Company.

Central to the judgment was the interpretation of s 183(1) of the Act. Section 183(1) provides as follows:

The Court found that Mr Leung contravened s 183(1) for the following reasons:

• the names and contact details of the Company’s suppliers constituted information which Mr Leung had come to obtain because of his position as an employee of the Company;
• the circumstances surrounding Mr Leung’s decision to disclose such information to the Company’s competitor constituted an ‘improper use’ of the information;
• Mr Leung improperly used the information to benefit Broers. He knew that disclosing such information would likely enable Broers to source the relevant products much faster than it would have otherwise been able to;
• Mr Leung improperly used the information to gain a personal advantage. He knew that disclosing the information to Broers might serve his own interests in relation to his prospective future employment with Broers; and
• Mr Leung improperly used the information to cause detriment to the Company. He knew that providing such information to the Company’s competitors would likely divert future sales from the Company, which had invested time and energy in sourcing those suppliers.

Confidentiality

The Court held that confidentiality was “centrally important” to assessing whether s 183(1) had been contravened, noting that the more confidential the information, the easier it will generally be to establish improper use of the information under that section.

The Court considered that the names and contact details of the Company’s suppliers were commercially sensitive and confidential for various reasons, including:

• the information was commercially valuable to the Company, giving it a competitive edge over its competitors;
• the Company invested considerable time and labour into procuring those suppliers;
• the Company guarded the identity and details of its suppliers, and regarded them as confidential information. It did so by white-labelling products supplied by those suppliers, and by allocating its own stock keeping units to those products;
• industry practice was for businesses to treat supplier information as confidential; and
• Mr Leung’s employment contract contained a confidentiality clause. Although ‘confidential information’ itself was not defined in the contract, it was plainly evident that the parties intended for commercially sensitive information disclosed to Mr Leung in the course of his employment to be treated as confidential.

Although confidentiality is important, the Court emphasised that it is not determinative. Section 183(1) is not confined to information that is ‘confidential’ in the strictest equitable sense (discussed below). A person will therefore not avoid liability under s 183(1) simply because the information itself was not strictly ‘confidential’, or because only a portion of the information was confidential in nature.

The Court also emphasised the importance of considering how the director, officer or employee came to obtain the information. To succeed in a s 183(1) claim, it is necessary to demonstrate that the individual acquired the information because of their position in the company. In New Aim, it was clear that Mr Leung acquired information regarding the Company’s suppliers as a consequence of his employment with the Company.

Improper use of information

In the context of s 183(1), a director, officer or employee will be found to have improperly used that information if a reasonable person in the same position would have regarded such behaviour to breach the standard of conduct reasonably expected of someone in that position.

In New Aim, the Court determined that a reasonable person in Mr Leung’s position, with his employment history and experience, would have regarded the identity and contact details of key suppliers of the Company as confidential information and commercially valuable.

In the circumstances, given the sensitivity of the supplier information and having regard to Mr Leung’s knowledge, experience and seniority within the Company, the Court concluded that Mr Leung behaved improperly by disclosing such information to the Company’s competitor, in contravention of s 183(1).

Section 183(1) does not enact a cause of action for breach of confidence

At trial, the primary judge held that s 183(1) aligned with the equitable obligation of confidentiality, finding that there could be no ‘improper use’ of information under s 183(1) unless that conduct also amounted to a breach of confidence in equity.

The Court rejected that decision.

The Court emphasised that the two are not equivalent doctrines. Unlike an equitable breach of confidence claim, s 183(1) does not require the information to possess the strict “necessary quality of confidence” or to have been communicated in confidential circumstances. Rather, the focus is the abuse and misuse of corporate power – that is, directors, officers and employees improperly benefitting (or helping others to benefit) from valuable information at the expense of the company.

To put it simply, s 183(1) is broader than the equitable breach of confidence. Accordingly, a s 183(1) claim can still succeed in circumstances where a breach of confidence claim, fails.

Key Takeaways

• Confidentiality is important to an assessment of whether s 183(1) has been contravened, however it is not determinative.
• Information is more likely to be considered confidential and sensitive in nature if the company takes steps to prevent that information from leaking to competitors and third parties, or if the company implements prohibitions and/or restrictions on disclosure to certain employees within its own organisation.
• It must be shown that the director, officer or employee obtained the information because of their position in, or role with, the company.
• Courts will apply the ‘reasonable person’ test when assessing whether a director, officer or employee’s conduct constituted an ‘improper use’ of company information. The question is whether a reasonable person in the same position as the alleged offender – together with the same authority, powers and duties – would consider the alleged offender’s behaviour to breach the norms of conduct generally expected of persons in such circumstances.
• Section 183(1) is not a statutory enactment of a breach of confidence in equity and may be established even where a claim in equity, fails.

Queries

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Disclaimer

This information is general in nature. It is intended to express the state of affairs as of the date of publication. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.