The Taylor family had founded Rascals, but were bought out in what the court has heard was a contentious transaction.
Proceedings against Taylor, and his father, were settled on the eve of trial.
Lowery said Zuru’s claims that this business opportunity was effectively stolen by JJK relied on having a “plan” to buy Treasures, but they had only provided evidence of an internal “debate”.
AdvertisementAdvertise with NZME.Nick Mowbray arriving at the Auckland High Court to give evidence. Zuru filed proceedings in 2021, just a year after buying out the Taylor family of the Rascals nappy business. Photo / Jason Dorday
He drew the court’s attention to a message exchange between Grant Taylor and a Zuru executive in June 2020 – just prior to JJK’s bid on Treasures – that showed a lack of interest in the ailing brand.
“Did you end up buying Treasures? See they are closing down the factory,” Taylor asked.
“Na didn’t go after it in the end, said thanks but no thanks,” was the reply.
“This is probably the most important document in the case,” Lowery said.
Lowery said Zuru’s claims relied on a lack of good faith, which had not been proven.
“There’s nothing technical about good faith. That goes to the heart of it,” he said.
Former Tall Black Kirk Penney. Photo / Photosport
Lowery said JJK were alive to Grant Taylor’s restraint, had initially relied on his assurances he was allowed to provide high-level advice, and then distanced themselves from him – including scotching plans to engage him formally as a consultant – following legal advice which raised a slim possibility of risk from Zuru.
“If, as the plaintiffs suggest, JJK was aware it was up to no good and deliberately trying to conceal their interactions with Grant Taylor, does the conduct we know about make sense? It doesn’t. They’re meeting Grant Taylor in a public cafe, that Nick Mowbray frequents,” Lowery said.
A critical meeting with the Taylors at the Mowbray mansion in early March 2020 to discuss Zuru’s buyout of Rascals had set in chain much of what underlay this trial, Lowery said.
Both Grant and Keith Taylor said this meeting saw the Mowbrays offer to buy out the Taylors for $30 million, stating they would be free to compete against Zuru as they “love competition”, but a refusal of this offer would see Zuru form a competing brand that would crush Rascals and see the Mowbrays buy their destroyed company for $1.
Lowery noted Nick Mowbray claimed restraint provisions were then demanded, and denied this $1 threat had been uttered, but that Keith Taylor had taken a contemporaneous file note recording his version of events and two witnesses said it occurred.
Mat Mowbray, the other Zuru co-CEO based in Hong Kong, who was also at this mansion meeting, elected not to give evidence.
“The only evidence is that bare denial [from Nick Mowbray] that contradicts the compelling evidence from Keith and Grant Taylor that it happened,” Lowery said.
Grant and Keith Taylor both gave evidence in court that this sale price was lower than other valuations for Rascal, and late in negotiations a punishing five-year restraint clause was added by Zuru favouring Foodstuffs that prohibited the Taylors dealing in nappies with Woolworths.
Lowery also dismissed Zuru’s surprise witness, former advertising executive Michael Wilson, who gave evidence alleging Armitage had confessed to having been provided with sensitive financial information from Taylor.
“In terms of reliability he is awful, frankly,” Lowery said, expecting that he “never thought in a million years” the plaintiffs would have persisted with his evidence after a testing cross-examination.
Lowery recounted Wilson’s court appearances for impersonating a police officer and his strange and repeated boast of losing his largest client by telling the Ebos group CEO to “go f**k himself”.
“He is simply a fantasist,” Lowery said.
He said Wilson was motivated by a grudge over a claimed four weeks of unpaid work – despite having met the JJK principals for the first time only a week earlier – and had marched to their offices and threatened to share his concerns about Treasures’ marketing concept – based around a white rabbit – was code for paedophilia.
Lowery’s submissions said JJK manager John Vickers wrote a file note after Wilson’s visit to the office that recorded that Wilson “threatened to pass Treasures file to Mowbray” and “tell Mowbray about the origin of the bunny”.
In evidence earlier in the week, Vickers described Wilson’s white rabbit claims as a “QAnon paedophile conspiracy theory”.
Lowery also summed up JJK’s counterclaim against Zuru, referring to previous evidence which saw Nick Mowbray communicating with a Woolworths executive about his lawsuit and claiming Treasures was utilising stolen IP and their soon-to-launch nappies would be injuncted from sale.
The court heard Woolworths shifted warehousing costs back on to JJK, unwilling to risk an injunction that never came, causing them to hold stock they might be unable to sell if injuncted.
JJK are seeking $1.9m in damages from Zuru to compensate for this interference in their business.
In his conclusion, Lowery cited a section of Penney’s nearly two days of testimony where the former basketball player reflected on the effect of running a startup brand sued by billionaires before it even sold its first nappy.
“Zuru, you have done a fantastic job,” Penney had told the court.
“When you’re in litigation and your business is getting drained, and your commercial terms have shifted and you’re losing money fast, you know the chances of us going to them and saying ‘Please take our company and stop the litigation’ becomes quite high. I mean, the fact that it’s got to trial is a minor miracle.”
Lowery agreed with Penney: “One of the weaknesses of our justice system is cost. It makes it inviting for a well-funded litigator to burn off a litigant before it gets to trial.”
Grant Taylor. Photo / Supplied
He cited Zuru settling with Grant Taylor’s father, for just a peppercorn sum, on the eve of trial: “We know the plaintiffs … have no problem at all in bringing claims that are baseless. The claim against Keith Taylor never had any legs, any. Best proof of that is the 500 bucks plaintiffs took for it to go away.”
He said settlement negotiations with Grant Taylor saw Mat Mowbray directly negotiating with Taylor about wording of an alternative affidavit – which Taylor later pushed back on when giving evidence – the signing of which reduced settlement payments from $4m to $1m.
“I’m sure my learned friend will argue that there’s absolutely nothing strange about a billionaire negotiating granular details of an affidavit and leaving $3m on the table. If we heard another 100 years of cases in this court, I would suggest we’d never see anything like this again. This is extraordinary.”
Lowery said Zuru’s damages claims – for more than $75m in lost profits and compensation for losing the bid for Treasures – would be better accounted for in the event of any findings against his clients by reference to Zuru’s own, unsuccessful, offer for Treasures of $200k, or Nick Mowbray’s offers to buy out JJK during settlement negotiations for a maximum of $750k.
Lowery’s submissions said rather than projecting anticipated profits based on Rascals’ growth over time, more traditional court calculation on interest over time should be applied.
He said this case had dragged on for four years, and the wider campaign threatened to continue for many more after Zuru – days before the trial started – filed fresh claims targeting Armitage and Collie personally.
Those proceedings, Lowery told the court, had seen JJK urged to file claims against Grant Taylor despite Zuru’s earlier settlement with him.
“It’s garbage, and that is Zuru’s style,” Lowery said.
“Through all of that JJK has remained standing, because they knew if they get to the starting point and got into court the great strength of our justice system shines through, because in court the evidence speaks.”
Campbell Walker KC, acting for Zuru, closes proceedings for the plaintiff today in the final act of this four-week trial.
Justice Dani Gardiner is expected to reserve 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.