Grant Taylor is a pivotal and problematic witness at the Zuru nappy trial. Photo / Supplied
Grant Taylor became the second defence witness to choke back tears at the Zuru nappy trial, recounting how the relationship with his schoolyard friend Nick Mowbray frayed after he became a father for the first time and he faced questions over his ability to continue punishing work hours.
“We were all working long hours, to the point where I was on my phone dealing with urgent Rascals matters when my first daughter was being delivered. My, daughter, my daughter, my daughter Millie...” he said, choking up.
“...was born in November 2019 and there was a shift in the dynamic because I wanted to be at home more. I’m sorry, I...” Taylor said before taking a short break to recompose himself at the High Court at Auckland.
“However, Nick did not like this at all. He seemed to question my commitment, despite the fact he was not really involved in the day to day running of [the] business and was flying all over the place doing what he liked,” Taylor said.
The court heard how Taylor and his family founded Rascals in 2014 and spent two years developing the product and organising a manufacturer in China.
It had only shipped one container of nappies to New Zealand by 2016 when Mowbray took a 40% shareholding and secured supermarket distribution that led to sales skyrocketing.
Taylor had attended the private St Peter’s School, Cambridge, alongside Mowbray, and both have told the court they had considered themselves good friends until the Rascals deal soured.
This souring seems to largely stem from a 2020 buyout, which the Taylors claim was accompanied by commercial threats from the Mowbrays if their offer to take over the business was refused.
Taylor’s evidence at this hearing is both pivotal and problematic as he is no longer on trial.
Zuru allege he was the conduit for confidential information that flowed between Rascals and the JJK group, a trio of businessmen who bought out the Treasures brand in 2021.
Taylor also appears to have been Zuru’s chief target in initial litigation, but he is no longer the subject of proceedings after settling on the eve of trial for $1 million.
Taylor admitted to misusing Rascals information, diverting a corporate opportunity, and breaching confidentiality, restraint terms and fiduciary duties.
JJK group is the sole remaining defendant, with Zuru seeking more than $75m in compensation and damages.
JJK deny and is defending the claims.
Unusually for a witness in the High Court, Taylor has two significantly different sworn affidavits submitted as evidence: One signed in early July when he was contemplating trial and mounting a defence that has been filed by JJK; and another signed at the end of that month provided as a condition of his settlement with Zuru.
The court heard that providing new evidence for his recent opponents in court saw Taylor directly negotiate proposed testimony with Mat Mowbray, the Hong Kong-based Zuru co-chief executive.
Campbell Walker KC, acting for Zuru, summed up the negotiations: “The proposition was: ‘We’ll settle for $4m with no affidavit, or $1m with an affidavit.’ Is that correct?”
“Correct. I couldn’t raise $4m on short notice like that. They [Zuru] needed to go down that path, and I needed to get out. My family were very keen on getting it settled,” Taylor said.
Taylor contested some parts of his new evidence prepared as part of the settlement, and claimed he had been under “settlement duress”.
A key point of contention emerged over how he characterised what Walker called a “deletion session” where Taylor purged some of his electronic records after becoming aware the Mowbrays were going to sue him.
“I impulsively deleted those because I was scared, and I think I hoped that would make things go away. I knew that I had done nothing wrong, but I also knew that the Mowbrays would latch on to anything they could,” Taylor said.
Taylor said further discovery of other parties had recovered “most” of what he believed he had deleted.
Walker queried how a Rascals pitch document referenced in other communications could not be discovered, and put it to Taylor that he had provided it to JJK and then covered his tracks.
“No one amongst the defendants has a record of you providing it to them, and I put it to you that’s because you conspired to delete that document so her honour would not have it?” Walker said.
“I did not conspire to do anything,” Taylor responded.
Walker drew attention to Taylor’s earlier affidavit filed when he was a defendant that said he hadn’t discussed deleting evidence with JJK, and his later evidence which confirmed such a discussion had taken place.
Taylor gave further details of buyout negotiations with the Mowbray brother, including a March 5 meeting at their Coatesville mansion where he said Nick Mowbray outlined what would happen if their buyout offer was refused.
“Nick then told us [if] we went down that path he would look forward to buying Rascals off us for $1, after he and his brother had ruined us and our business. He named a number of other companies that had been brought back for nothing in similar circumstances,” Taylor said.
“We no longer trusted the Mowbrays, and they had threatened to destroy our business if we did not agree to sell. It was toxic and painful.”
He cited communications at the time with colleagues that said: “I was only going through with the deal to get away from the Mowbrays, and it sucked, because I had lost both my business and my mates.”
Taylor’s evidence said a valuation from their accountant valued his family’s share in Rascals as being worth $51m, and a separate assessment by Deloitte at $59.7m.
They agreed to sell to the Mowbrays for $30m, and claimed a restrictive restraint clause was inserted late in negotiations that they felt they had no leverage to contest.
Taylor said he had disengaged from negotiations to sell the business in early 2020 as “I was struggling with the toll these events were taking on my mental health”.
Towards the end of yesterday’s testimony, Walker questioned Taylor on what his family had got out of its dealings with the Mowbrays.
With dividend payments included, Taylor said they had earned more than $40m from Rascals.
Walker asked: “I have the figure of $44m, but whatever the figure was, your family became extremely rich as a result of this?”
Taylor was philosophical: “I’ve learned that money doesn’t buy you happiness, that’s for sure.”
Walker pressed, “I appreciate you might have a different view now, but that would have been a source of pride for you?”
“A source of pride, which I learned afterwards - very much so - was actually from building the business. That’s what I didn’t realise until after I had sold it, that I had cherished the most.”
The trial, and Taylor’s testimony, continued and is scheduled to run until the end of next week.
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.