Rascals International Ltd v Taylor - [2025] NZHC 2413

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1041

[2025] NZHC 2413

BETWEEN
RASCALS INTERNATIONAL LIMITED

First Plaintiff

ZURU INC
Second Plaintiff

AND

GRANT BRUCE BYRON TAYLOR

First Defendant (Discontinued)

KEITH ROBERT TAYLOR
Second Defendant (Discontinued)

JJK GROUP LIMITED
Third Defendant

TAONGA IP LIMITED

Fourth Defendant

Hearing: On the papers

Appearances:

C T Walker KC/J W J Graham/S Patel for the Plaintiffs S M Lowery/M Pitt for the Third Defendant

J C Suyker for the Fourth Defendant

Date:

25 August 2025

JUDGMENT OF GARDINER J

[Leave to amend claim]

This judgment was delivered by me on 25 August 2025 at 12.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

RASCALS INTERNATIONAL LTD v TAYLOR [2025] NZHC 2413 [25 August 2025]

Introduction

[1] The plaintiffs seek leave to amend their claim to include a claim that JJK Group Ltd (JJK) knowingly and intentionally procured Grant Taylor’s breach of the restraint of trade provision in the sale and purchase agreement for the Taylors’ interest in Rascal and Friends NZ Limited (Rascals NZ) and Rascals International Ltd. JJK and Taonga IP Ltd oppose the grant of leave.

[2] The plaintiffs signalled this application on Wednesday 20 August 2025, the 11th day of the trial. By then, the defendants had opened their case and called their third witness, James Collie. I heard brief argument on Wednesday, and asked the plaintiffs to file written submissions, with the defendants to file any submissions in reply within a further 24 hours. The plaintiffs filed their submissions at around 2 pm on Thursday and the defendants filed their submissions at around 9.30 am on Friday.

Proposed amendment

[3] The current seventh amended statement of claim has a ninth cause of action against JJK in knowing procurement of breach of duties. The relevant duties relate primarily to Mr Taylor’s corporate duties to Rascals NZ.

[4] The proposed amendments would be to paragraphs 100 and 101 of the ninth cause of action. The amendment to paragraph 100 would be to add reference to paragraph 91 (which sets out the restraint) as a relevant duty owed by Mr Taylor. The amendment to paragraph 101 would be to add reference to paragraph 97 (wherein the plaintiffs allege that Mr Taylor breached the restraint). The plaintiffs have provided a copy of the relevant page of the pleadings setting out those changes.

[5] The plaintiffs say that the proposed amendment arises because of late disclosure of when JJK had direct knowledge of the restraint and the legal advice they then obtained.

[6] The plaintiffs say that, although Mr Taylor referred in his brief of evidence to receiving advice on his restraint from JJK’s lawyers, that had not been referred to in any brief of evidence for JJK. On the contrary:

(a)Mr Collie’s evidence (paragraph 24) says he did not know details of Mr Taylor’s restraint; and

(b)Jarrod Armitage does not mention whether or not he knew the terms of Mr…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2025] NZHC 2413
Decision Date: 25 August 2025

CaseChat Overview and Summary

Rascals International Ltd and Zuru Inc, collectively referred to as the plaintiffs, sought leave to amend their claim against JJK Group Ltd and Taonga IP Ltd to include a claim that JJK knowingly and intentionally procured Grant Taylor's breach of a restraint of trade provision in the sale and purchase agreement for the Taylors' interest in Rascal and Friends NZ Limited and Rascals International Ltd. JJK and Taonga IP opposed the amendment. The proposed amendment aimed to include JJK's knowledge and advice about the restraint of trade as a factor in Mr Taylor's breach.

The court examined the legal principles governing leave to amend pleadings, emphasizing the importance of ensuring the real controversy is determined while considering the potential for delay and prejudice. The court noted that leave to amend may be granted if the proposed amendment has substantial merit and does not cause significant injustice to the defendants. The court then assessed the merits of the proposed amendment, considering the information the plaintiffs already had and whether the amendment introduced new issues.

The court declined to grant leave for several reasons. Firstly, the plaintiffs already had sufficient information to bring a claim against JJK for procuring Mr Taylor to breach his restraint of trade. Secondly, the proposed amendment introduced new issues, including the validity of the restraint and whether Mr Taylor breached it, which would add to the hearing time and likely cause delay. Thirdly, the amendment did not have sufficient merit to warrant the risk of additional delay. The court concluded that the amendment would be a distraction from the real controversy of whether Mr Taylor diverted the Treasures opportunity to JJK in breach of his duties, whether JJK acted unlawfully in accepting information and advice from Mr Taylor, and whether the actions of Mr Taylor and JJK denied the plaintiffs the opportunity to acquire Treasures and earn the profits claimed.

The court declined the plaintiffs' application for leave to amend their claim.

Orders