Zuru allege the JJK Group poached the Treasures nappy brand in 2020 after being furnished with confidential information from Grant Taylor.
The Taylor family had founded Rascals, and for a time were in partnership with Zuru before what the court heard was a contentious $30 million buyout in 2020.
Taylor settled on the eve of trial and admitted some of the causes of actions brought against him in return for paying Zuru $1m and providing a second, plaintiff-helping, affidavit to the court.
A written submission from Walker said: “Were it not for his flagrant, substantial and admitted breaches of duty, for which judgment has been entered against him, Grant Taylor could be a tragic figure.
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“In a vulnerable mental state and seeking new friends, he chose friends who bombarded him for confidential information about the business he had built and left with some bitterness. He yielded to the bombardment.”
Grant Taylor and Nick Mowbray, during a period when both were partners in the Rascals nappy business. The souring of their relationship has been the key nexus in the Zuru nappy trial. Photo / Supplied
Walker said Taylor had provided JJK with knowledge the ailing Treasures brand was an opportunity to sell China-made nappies into Woolworths – given an exclusivity arrangement between Rascals and Foodstuffs had locked the former out of half the grocery market – and the know-how required to get a relaunched nappy brand quickly into production and on to shelves.
Justice Gardiner queried whether Taylor really believed Zuru intended to acquire Treasures, given he asked a Zuru executive in mid-2020 about their interest in the brand after news that Treasures’ owner was shutting it down.
“Nah, didn’t go after it in the end, said thanks but no thanks,” the Zuru executive told Taylor.
Campbell resisted defence claims that this showed the Mowbrays’ interest in the brand was lukewarm and instead suggested Zuru was biding its time to drive the purchase price lower.
“[Taylor] knows the strategy is to wait until they’re ready to sell just the brand alone, and cheaply,” Walker said.
JJK won the bidding for Treasures with an offer of $300,000, pipping Nick Mowbray’s emailed bid of $200,000.
Walker and Justice Gardiner had a 10-minute back-and-forth on whether Mowbray’s low offer – and his own evidence Zuru was aware of not wanting to upset its major retailer Foodstuffs by prematurely launching a new product into rivals Woolworths – was evidence of a lack of genuine interest.
“This suggests that potentially Nick Mowbray was blowing hot and cold on this,” Justice Gardiner put to Walker.
Walker, respectfully, disagreed.
“He’s watched the thing go down from $5m, and now he’s trying to deal at $200,000 which would confirm to him his thesis that this is just a case of getting the best price you can out of a sale. You might call it a fire sale, but you might just call it fair market value,” Walker said.
“Mr Mowbray evidently has a successful history of negotiation, so he’s entitled to take that view.”
Walker also pushed back against claims that four years of litigation – including raising the proceedings with Woolworths, Treasures’ main retailer, and threatening an injunction blocking the sale of their nappies – had amounted to corporate bullying by Zuru against JJK.
“Mr Mowbray’s name has been dragged through the mud in these proceedings. But what has he done wrong?” Walker asked.
“He’s watched his fellow director [Taylor], then ex-director, mislead and conceal things from him. He’s properly brought a claim in this court and he’s entitled to have it heard.”
A key plank of Zuru’s case asks the court to draw adverse inferences from JJK and Taylor’s admissions that some relevant documents and communications were deleted in mid-2021 as this lawsuit loomed.
Taylor has told the court: “I impulsively deleted those because I was scared, and I think I hoped that would make things go away.”
JJK principal Kirk Penney told the court he had also deleted some chat threads between himself and Taylor after being made aware of the latter’s concerns.
“I am sorry I did it, I wish I hadn’t, but it’s just – you know, I heard the panic and ‘delete’ and then ‘Oh, what have I done?’” Penney said in evidence.
Former JJK managing director Kirk Penney during his pre-business career as a professional basketball player. Photo / Photosport
Taylor and Penney claim the deletions were impulsive and limited in scope, and almost all of the material they could recall deleting had been recovered from other parties during the discovery process.
Walker said in his many years of managing High Court proceedings he had never before come across parties actively destroying evidence to prevent it being used against them.
“I think it’s a criminal offence, not that that matters here today,” Walker said.
“The practical consequences of the deletions is that we don’t know about most of the relevant communications. We do have some, and they’re damning, and the court should assume those that were deleted are even more damning.”
Justice Gardiner reserved her decision.
Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.
