Nick Mowbray's secret recording revealed in court amid nappy trade lawsuit

NZ Herald

19 hours ago

JJK won the bidding for Treasures with a bid of $300,000, topping Zuru's offer of $200,000. The lawsuit claims tens of millions of dollars in damages and compensation should flow from the outcome of this deal.
In July 2022, a year after proceedings had been filed, Mowbray and Penney spoke by phone - a 43-minute conversation that the court heard had been surreptitiously recorded by the Zuru billionaire.
In the recording, Mowbray claimed vast experience in litigation – 'I've gone through a million lawsuits' and 'I've been through 50 lawsuits in my time' – and said the process would drag on for years and cost Penney and his partners millions.
'I've got new lawyers: Chapman Tripp. I'm going big now. I'm actually focused on it,' Mowbray told Penney on the call.
'We're going to set a precedent. We always do this. It's the same reason we've been in a lawsuit with Lego for five years,' he said. He claimed the Danish toy giant was seeking to end the case as 'we're going to invalidate their trademark'.
In subsequent cross-examination, Mowbray admitted his personal involvement in lawsuits was probably less than claimed: 'That's probably an exaggeration,' he said of the '50 lawsuits' figure, but noted Zuru as a company might have reached that number.
Penney sounded bewildered by the lawsuit and unsure of what Mowbray was seeking, and said it seemed Mowbray's beef was mostly with his ex-friend Grant.
'What's 'winning' here for you? Is it Grant committing suicide? His head on a plate?' Penney asked.
'For me, it's more about principles,' Mowbray replied.
Penney explained his foray into nappy-making was a tentative first step into the world of business after leaving the sport of basketball.
'I'm never going to make the money you've made. All I'm trying to do is: I've got this vocation working business, learning business. It's way better than working for Subway,' he said. 'And I'm just trying to find a way to keep doing it.'
The recording appears to show Mowbray insisted the only way to resolve the lawsuit would be for him to acquire Treasures at the cost JJK had paid in 2020.
Penney said his partners were unwilling to give up a business they believed they had bought 'fair and square'.
The recording was submitted as evidence by Mowbray's lawyers, but Sam Lowery – acting for JJK – noted Mowbray had repeatedly claimed in the transcript of the call, and in a text message prior, that the conversation was 'without prejudice'.
Without prejudice is a legal term indicating communications are agreed to not be used in court, and allow for off-record negotiations and discussions about settlements.
Lowery put it to Mowbray that he had lured Penney into the conversation to pump him for information to fuel his legal case: 'What you did on that phone call: You said 'this is without prejudice', then you taped it intending to use it as evidence.'
'No. Absolutely not. 100% not,' Mowbray said. He said the recording was made to share with his Hong Kong-based brother Mat.
The court heard Penney sold his stake in JJK in August last year to a company called Relentless, directed by Nick Mowbray, for $400,000. He left New Zealand in late 2023 and relocated to the United States to coach the Wisconsin Badgers university basketball team.
Zuru is seeking damages calculated on the basis that Treasures would have been ramped up in a similar fashion to Rascals. The exact sum sought is suppressed as allegedly confidential information, but amounts to tens of millions of dollars.
Grant Taylor (left) and Zuru founder Nick Mowbray were partners in Rascals nappies. Photo / Supplied
Mowbray told Penney on the recording that Grant Taylor was liable for significant damages: 'He's going to have to settle with us or he's going to have to pay millions and millions and millions and millions ... and millions of dollars,' Mowbray said.
The court heard claims against Grant Taylor and his father, Keith, were discontinued after a settlement on the eve of the trial, leaving Zuru targeting just JJK in the expected four-week hearing.
The court heard the terms of these recent settlements.
Grant admitted to some of the claims against him alleging breach of restraint and lapses in fiduciary duties and agreed to pay Zuru $1 million.
Claims against Keith Taylor were dropped with no admission of wrongdoing after he paid just $500 to settle the claims against him.
In 2020 the Taylor family had sold their share of the Rascals partnership - Grant and his sister had founded the company in 2016 - to Zuru for $30m plus dividends.
The court heard that the Zuru interests, who had taken over Penney's shareholding in JJK, served proceedings late last week against Armitage and Collie, alleging oppression of a minority shareholder.
Lowery contended this suit was a pattern of conduct, including the lawsuit presently being heard, intended to drive JJK out of business and allow Mowbray to acquire Treasures.
Mowbray eventually denied the claim and said Zuru chief operating officer Michael Wilding's management of his JJK shareholding was business as usual.
'I never said make life difficult. I said 'get all the documents, and do what we normally do',' Mowbray said.
During a sustained line of questioning where Lowery was attempting to get a firm answer from Mowbray on the motivations for the recent lawsuit, he asked: 'If Wilding gives evidence to the court that he was instructed to use the minority shareholding to make life difficult for them, would he be right or wrong?'
'What do you mean, right or wrong?' Mowbray said.
The trial and Mowbray's testimony, which began early Tuesday, 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.