From Rascal + Friends to Rascals & Ors: The nappy brand is at the heart of a $75m lawsuit being heard in the High Court.
A surprise witness in the High Court at Auckland’s Zuru diaper dispute case has claimed a defendant admitted getting an “inside scoop” on the nappy trade.
Michael Wilson of marketing business Smart Media took the stand today for the plaintiffs after reading a Herald article last week and realising a business dispute he had in 2023 was with the defendant in the high-profile case.
Zuru filed proceedings in 2021 against the Taylor family, their former partners in the Rascals nappy business, and the JJK Group – comprised of businessmen Jarrod Armitage, Jason Collie and former Tall Black Kirk Penney – who had acquired ailing nappy brand Treasures in late 2020.
Zuru alleges Grant Taylor breached restraint of trade provisions when selling his family’s share of Rascals to Zuru in 2020 for $30 million, and provided JJK with confidential information that enabled it to scoop up the competing Treasures nappy brand.
Zuru settled with Grant and his father, Keith Taylor, on the eve of trial, who paid Zuru $1m, leaving JJK as the sole remaining defendant.
JJK is defending the claims and has launched a counterclaim alleging Zuru interference in its commercial relationship with Woolworths.
The court heard today that Zuru was seeking in excess of $75m in compensation and damages over being outbid – Zuru’s offer of $200,000 was topped by JJK’s $300,000 – for Treasures.
Wilson told the court he had sought to work with JJK in 2023 to rebrand Treasures after connecting with Armitage through Pastor Andrew Robertson of Harvest World Church.
He said that during a walk-and-talk with Armitage, the budding nappy manufacturer had told him he had been given an “inside scoop” on the nappy trade from a man he said he later heard was called “Grant”.
Wilson said Armitage told him this information included profit and loss statements, revenue sheets and information about which markets Rascals – a commercial rival – was involved in.
“He said because of this information he had received, he knew Treasures was a good business opportunity,” Wilson said.
In cross-examination, JJK lawyer Sam Lowery walked Wilson through his pitch for business with JJK, including an email where he claimed drug use was rife in the marketing industry.
“Most of those guys at Colenso are still huge coke heads, hence why our creatives all left Colenso and work with us,” an email from Wilson read.
Emails also showed Wilson had boasted of his responsibility for Smart Media losing its major client.
“The only reason we have gone seeking a new client is that I told the global CEO of the Ebos Group to quote ‘Go f**k himself’,” he said in pitch emails to JJK.
Asked if he’d actually said that to the Ebos chief executive, Wilson told the court – with a laugh – that: “I did.”
That pitch document also showed he was aware of the dispute between the Mowbrays and JJK.
“If you want to be Nick Mowbray’s bitch and the next Kodak of the nappy world – then fine, go and find someone else” – and insisted he and Smart Media were all business: “We are not here to f**k spiders”.
The court heard the relationship between JJK and Smart Media descended from the first meeting into acrimony in just a matter of weeks, with the latter issuing a $33,200 invoice for work completed that was ultimately not paid.
Lowery conducted a sustained interrogation into Wilson’s credibility, including highlighting his prosecution for impersonating a police officer in a dispute with a neighbour to an investment property in Queenstown who was disrupting open homes.
“In an ill-advised moment, I was at Queenstown airport. There was another open home the next day, and I rung up, stupidly, and said, ‘It’s Graham Dodds from the police’,” Wilson said.
Wilson said the conviction was ultimately appealed and he was granted a discharge without conviction. The court heard he had a clean criminal record.
Lowery drew attention to the fact that Wilson had just last week again used a false name when he called a private investigator working for JJK who was looking into his background.
That five-minute call, played in full to the court, included Wilson calling himself “Michael Adley” and using the third person to claim Wilson “always had a good reputation in the industry”.
Lowery repeatedly put it to Wilson he had only contacted Zuru and offered evidence to “get favour with a big business and a very wealthy family” and to “get a moment in the spotlight”.
Wilson denied this motivation.
“No. If you want it honestly: I thought it would be the right thing to do. But after this [cross-examination] I’m regretting it,” he told the court.
Justice Dani Gardiner suppressed part of Wilson’s evidence after Lowery complained it was false and defamatory.
Courtroom eight at the High Court has seen an unusual amount of attention since the hearing started last week, with University of Auckland law students and internationally based Zuru executives regular fixtures in the public gallery.
Zuru billionaire Nick Mowbray spent most of three days on the stand giving evidence last week, and stayed in the courtroom after he finished to observe proceedings.
He was supported in court during much of his testimony by his fiancee, Jaimee Lupton.
The Hong Kong-based Mat Mowbray, brother of Nick and the other co-CEO of Zuru, has also been observing proceedings using the remote audiovisual link.
Earlier today, the court heard from the Zuru-called economist James Mellsop, who gave evidence on how he quantified the tens of millions of dollars in damages and compensation sought in the case.
Mellsop told the court Zuru’s inability to secure Treasures in 2020 meant it missed an opportunity to replicate its performance with Rascals across Woolworths supermarkets.
Zuru’s exclusivity agreements with Foodstuffs prevented the sale of Rascals nappies through rival supermarkets, and Nick Mowbray last week gave evidence that he saw Treasures as a key beachhead to Woolworths that would enable him to dominate diapers across both sides of the grocery duopoly.
Mellsop said he calculated profits lost over the past four years amounted to about $60m, and the potential value of a Zuru-managed Treasures brand at around $15m.
Zuru is seeking this sum from JJK, which the court has earlier heard claims its Treasures venture was loss-making.
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.