Zuru’s $20.5 million dollar legal action against JJK Group was a claim to take ownership of potential profits in a business purchased by JJK that Zuru had already decided it had no interest in and would not buy, the High Court stated.
Zuru’s damages claim failed; a claim criticised by upstart competitor JJK as simply a ploy to gain market dominance in retail sales of disposable nappies.
Zuru sells nappies under the Rascal brand.
The nearly month-long court hearing centred on allegations that former Zuru director Grant Taylor disclosed confidential Zuru information to a consortium of Auckland businessman allowing them to snatch competing Treasures nappy product from under Zuru’s nose.
Zuru alleged JJK Group benefitted from supposed wrongdoing by a Zuru director and must hand over that benefit to Zuru.
Justice Gardiner ruled most of the information Mr Taylor provided to his acquaintance Jarrod Armitage prior to his purchase of Treasures was no more than generic market and product information.
In August 2020, JJK Group Ltd was incorporated, pooling the funds and expertise of Mr Armitage, businessman James Collie and professional basketball player Kirk Penney, to purchase then then Treasures Kawarau business owned by Asaleo Care.
The High Court was told Mr Taylor and Mr Armitage were near neighbours in the Auckland suburb of Coatesville when Mr Armitage began talking about buying Treasure’s nappy business during their joint covid-19 lockdown walks.
Mr Armitage thought he was simply getting general industry advice from a friend.
There was no evidence of Mr Armitage being aware that Mr Taylor at this point was still ‘on the books’ as a Zuru director, while his involvement with Zuru was slowly wound down.
Mr Taylor had done well from his involvement with the Rascal nappy brand, selling his part interest in the business to fellow shareholders, the Mowbray family, for $30 million.
Both he and Mr Armitage were aware Treasure’s New Zealand operation was up for sale; manufacturer Asaleo Care unable to compete with cheaper imports.
The High Court was told Zuru made an indicative offer for the business in February 2020 at two million dollars, later going no further than offering $200,000 to buy Treasure’s trade-marked brand only.
Asaleo did not respond, instead selling its business in August 2020 for $300,000 to JJK Group Ltd.
With continued input from Mr Taylor, JJK Group established manufacturing operations in China.
Zuru sued after learning of JJK Group’s first New Zealand sale of Treasure nappies, alleging JJK Group took advantage of confidential Zuru information provided by Mr Taylor to snatch the Treasure product line from it.
The High Court was told Countdown, now trading as Woolworths, placed its first order for JJK Group’s China-manufactured Treasure product mid-May 2021. Three days later, Nick Mowbray leaned on Countdown to cancel the order, threatening legal action.
Mr Taylor settled out of court Zuru’s claim that he disclosed confidential Zuru information.
Following Zuru’s subsequent claim against JJK Group, Justice Gardiner ruled most of the information Mr Taylor provided to JJK about re-invigorating the Treasure nappy brand was general industry information about sourcing product and appropriate business structures when manufacturing off-shore; all information in the public domain.
Much of the information he provided about Rascal’s business success was a matter of public record, publicised by the Mowbray family itself in media interviews and public presentations.
There is no legal liability on a former director’s disclosure of trivial, widely-known, industry information. Potential liability does follow disclosure of corporate inside non-public information.
Mr Taylor did not discuss Zuru’s pricing or margins with JJK Group, the court was told.
There is no evidence that he provided JJK Group with technical specifications for Rascal’s current product, Justice Gardiner said.
JJK Group could not be held liable for Mr Taylor’s indiscretion in disclosing some information that was confidential to Zuru, Justice Gardiner ruled.
Mr Taylor personally did not benefit financially from any information he provided to JJK, be it confidential or not. He was not paid for his advice to JJK. He did not have any financial interest in JJK Group.
Since Mr Taylor made no profit from his involvement with JJK Group, JJK could not be held liable for damages as ‘dishonestly assisting’ any failure by him to keep information about Zuru’s Rascal product line confidential, Justice Gardiner ruled.
Rascals International Ltd v. JJK Group Ltd – High Court (5.08.26)
26.220