From Rascal + Friends to Rascals & Ors: The High Court at Auckland this morning heard for the first time from a consortium accused of using confidential information to raid Treasures.
The Zuru nappy trial heard for the first time from the consortium that took over the Treasures nappy brand in a deal Zuru claims was facilitated by the misuse of confidential information.
The JJK Group, comprising James Collie, Jarrod Armitage and ex-Tall Black Kirk Penney, had in mid-2020 bought the ailing Treasures nappy brand – whose owner had announced it was shutting down local production – for $300,000.
The court has heard Zuru had bid only $200,000 for Treasures, with co-founder Nick Mowbray earlier telling the court he had not expected any competing bids.
Zuru argues JJK’s bid for Treasures was only made after receiving confidential information from their former Rascals nappy partner Grant Taylor, and is seeking more than $75 million in compensation and damages from JJK for missed opportunities to develop the brand.
JJK denied the claims and countered with a riposte of their own, alleging Mowbray interfered with Treasures’ launch in Woolworths supermarkets in 2021, causing $1.6m in damages.
Collie took the stand this morning in the High Court at Auckland before Justice Dani Lee Gardiner, describing himself as a businessman and managing director of cosmetics manufacturer Pauling Industries, which he said employed 120 staff.
Campbell Walker, KC, acting for Zuru, brought up several meetings and conversations between Taylor and the JJK principals in June and July 2020 as they were preparing for their ultimately successful bid for Treasures.
The court earlier this week heard from Taylor, who said he found himself with lots of free time after leaving Rascals and the tail-end of the initial Covid lockdowns, and described regularly bumping into the JJK principals at cafes in Coatesville near where they all lived.
“You knew Grant. He’s ‘Mr Rascal?’” Walker asked, referencing Taylor’s prominent role as Rascals’ founding chief executive.
“He’s Mr Nappy Man,” agreed Collie.
Walker also explored several meetings at cafes that Taylor had with the JJK principals. “If you’re starting this new venture and are nappy neophytes …. Grant would be the natural person to talk to about this opportunity?”
Collie said: “Yes, absolutely, that makes sense.” He added that Taylor’s involvement in JJK was limited by a restraint provision from Zuru’s buyout of Rascals earlier in 2020.
“Grant always seemed to be careful about information he did and didn’t share with us. He said from the start he was happy to provide high-level or general advice, but did not want to breach restraint of trade,” Collie said.
He said Taylor was never a director, shareholder, employee, or consultant for JJK.
Walker put it to Collie that without Taylor’s assistance, or information provided by him, JJK would never have had the confidence to bid on Treasures or enter the nappy business.
Collie rejected this and said the idea to buy Treasures first crossed his mind after hearing a Newstalk ZB story on the radio about the brand shutting down and discussing the possibility with Armitage, before his first discussion about the nappy trade with Taylor.
Walker cited a message sent by Collie to other JJK members in August 2020, where he had said: “I think we also need to be really careful that it doesn’t come out that Grant [Taylor] is involved or Zuru will literally go all out war against us.”
Questioned by Walker, Collie said this comment referred to tentative plans to employ Taylor formally as a consultant, and that this was decided against after legal advice because of the risk of legal action.
“The fear of having Zuru find out and to litigate would probably be the driving factor, not the fact we felt that we’d been doing something wrong,” Collie said.
“We find them to be anticompetitive and litigious.”
JJK’s counterclaim against Zuru concerns the cancellation of Treasures’ first orders by Countdown (now Woolworths) in May 2021 after a call to the supermarket giant from Mowbray.
“Countdown cancelled because Nick Mowbray alleged Treasures had stolen his intellectual property and threatened an injunction to remove the products from shelves,” Collie said.
He read out a text message he sent to the other JJK principals when legal action from the Mowbrays began being threatened in early 2021.
“‘He’s [Taylor] has done nothing wrong and neither have we.’ I stand by those statements,” Collie told the court.
Collie said Mowbray offered to buy out Collie and Armitage, leaving himself to run the business alongside Penney.
“Nick [Mowbray] proposed to pay us $500,000 for our shares. Nick said this was our only offer, and if we didn’t take it, Nick would rest at nothing to take us down,” Collie recalled.
After internal discussions, JJK rejected the offer. “We were not about to let Mowbray bully us into giving up our business,” Colie said.
The trial continues.
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.