Crimson Consulting founder Jamie Beaton is determined to keep court action against the company secret. Photo / file
Crimson Consulting founder Jamie Beaton is determined to keep court action against the company secret. Photo / file
Education start-up Crimson Consulting is once again battling through the court system to keep details of legal action against it a secret.
The $400 million tutoring company, founded by wunderkind Jamie Beaton and which now counts former Prime Minister John Key among its board members, is being sued for $10mby fellow education business Eurekly.
Eurekly is also suing its former employee Natalia Rozova for breach of confidence, breach of fiduciary duty and inducing breach of contract,
The action was filed in the High Court at Auckland this time last year, after a proposed joint venture between the two firms failed.
According to a court summary of Eurekly's claim, Crimson allegedly declined to enter the joint venture but then took steps to acquire the core of Eurekly's business "via an alternate route".
Additionally, during or after her engagement with Eurekly, Rozova engaged in a side venture potentially in competition with it and disclosed confidential information to Crimson Consulting.
Rozova went to work for Crimson - which claims to help get students into top overseas universities - last November, less than a week after the joint venture proposal fell through.
The court summary said those allegations were likely to be denied by Crimson.
However, documents in the case are yet to be made public both because of significant delays by Crimson in filing its defence; and its ongoing bid to keep the case secret.
It is the second time Crimson has employed the court to prevent "damaging" information made public about the way it acts when acquiring smaller competitors - which it has done on a regular basis since 2013.
In the first case, Crimson went all the way to the Court of Appeal to stop media getting access to allegations made against it by another takeover target, UniTutor.
When eventually released - though heavily redacted - the documents showed UniTutor's owner Samantha Berry alleged Crimson broke its agreement with her by failing to issue her shares or pay her share of revenue.
Berry also claimed Crimson failed to commit any resources to the development of UniTutor, and undercut UniTutor by offering its tutors more money to work for Crimson's other businesses instead. The matter was eventually settled and no hearing was held.
In the Eurekly case, statements were due in January 2019, but Crimson and Rozova instead chose to protest the jurisdiction of the High Court to hear the matter, and instead applied for it to be transferred to the Employment Relations Authority.
They also tried to get the case struck out, or stopped temporarily.
A judgement on that application was made in October, but remains suppressed so it is unknown which court will hear the case.
Jamie Beaton with his mother Paula Beaton and grandfather John Beaton in 2016. Beaton has been hailed as a darling of the start-up world. Photo / File
In the meantime, media applications to see the court file were delayed because defence statements were not filed. A judgment by Justice Matthew Palmer made in May said as soon as the statements were filed they should be released.
Crimson filed its defence on November 20, but not before it received a public scolding from Justice Ailsa Duffing for failing to file on time.
"I cannot understand why your case is in such a mess and why you haven't complied with timetable issues," Duffy said, according to a report in the NBR.
On November 27, The New Zealand Herald and other media requested access to the court file. Crimson objected and was given until December 1 to file papers in response.
On December 2 Crimson applied for a recall of Justice Palmer's judgment saying the documents should be public. A decision is yet to be made on that application.
Jamie Beaton was just a teenager when he founded Crimson. Photo / File
Both Crimson and Beaton have received significant attention and adulation from the business world since the company's founding.
It has raised millions from heavyweight backers including US billionaires Julian Robertson and Chase Coleman, and Sir Stephen Tindall's K1W1 fund, with its latest fundraising round bringing in $31.5m of new capital.
It recently announced it would start an online Academy, targeting several hundred students studying towards Cambridge exams, NZ Scholarships or entry tests for American universities.
The Academy will be headed by former Auckland Grammar headmaster John Morris.
However, it has also faced criticism, including from a story this week in USA TODAY, which found it may have overstated its success rate, and while it listed global offices in New York, San Francisco, Los Angeles and London, there was no one at those offices and no sign anyone from Crimson had been there.
