By: Kirsty Johnson
A raft of “potentially damaging allegations” against high-profile education start-up Crimson Consulting will be kept secret as it fights a messy court battle against a former employee.
Crimson, founded by 22-year-old millionaire Jamie Beaton, today lost its bid to keep the case out of the media, but succeeded in keeping much of the evidence against it being made public.
The company had sought court orders suppressing all details of the case, which centres on claims and counter-claims about the purchase of another tutoring company, UniTutor.
It began when Crimson filed a suit last October against UniTutor’s founder Samantha Berry for a breach of her contract. Berry then filed a counter-claim saying that Crimson still owed her money after buying her out in 2015.
She has also filed a separate suit against Crimson in the High Court, alleging a repudiation of sale.
Her affidavits contain an extensive history of what she alleges were the events leading up to the sale of her shares to Crimson, and of the events that occurred when she was its employee.
Today’s Employment Court judgment details how Crimson became very concerned about the contents of the affidavit and the evidence Berry provided with it.
They say that it contained significant irrelevant, commercially sensitive, confidential and disparaging information, and therefore appealed to both the Employment Relations Authority and then the Employment Court to have it kept secret.
Initially, Crimson wanted not only Berry’s allegations suppressed, but also previous news articles about the case to be taken down, the judgment removed from the court’s website, and hearings to be closed to the public.
The company, valued at more that $200 million, said it wished to ensure any published stories reflected positively on Crimson, as its reputation was important.
It argued that therefore the publication of commercially sensitive information and “unfair criticisms” should be prohibited. Not to do so would significantly tarnish relationships with investors and clients, it said.
At a court hearing in June, Crimson scaled back its demands slightly, after challenges from the New Zealand Herald and the National Business Review about the take-down orders.
However Crimson’s senior academic adviser Benjamin Thomas appeared to argue that the information in the affidavits was commercially sensitive and could harm Crimson’s business interests.
He was concerned that competitors would be able to learn about the company’s strategic plans and finances and gain an advantage in the market.
Thomas said the affidavit also included “potentially damaging allegations” about matters that were not relevant, which would require consideration at a substantive hearing.
Berry’s lawyers argued that the commercially-sensitive information should be protected only if publication would cause obvious commercial harm, but that the evidence did not cross that threshold in the present case.
Embarrassment was not enough, they said.
In his ruling released today, Judge Bruce Corkill said it was “futile” to suppress Crimson’s name because it had already been made public both in media and on the court’s own website.
In any case, he said, the issues could be dealt with by suppressing specific information only.
“It would go too far to make orders as broad as those which are sought,” the judge said.
“In my view, the scope of the application which has been made amounts to an attempt to protect reputation. The evidence does not establish that it is reasonably necessary to do so.”
He said it was also the case that the driving force of Crimson was Jamie Beaton, who had a prominent public profile, which was relevant to his business interests.
“In my view, there is a legitimate public interest in knowing that he is involved in this litigation since it pertains to those interests.”
The judge therefore dismissed the application to suppress names, but allowed an interim order suppressing the details of the commercially sensitive evidence until the substantive hearing.
The issue of whether or not the hearing would be closed would be dealt with on the day, he said.
The judge awarded costs to Berry and to the New Zealand Herald for its part in arguing against the orders.
The start-up worth $220 million
Crimson Consulting was founded by a teenaged Jamie Beaton, now 21, and his girlfriend Sharndre Kushor in 2014.
Its core business is tutoring for high school students with a view to winning scholarships at highly competitive Ivy League universities.
Samantha Berry founded undergraduate tutoring service UniTutors 2011, focused on Otago University.
In late 2015 Crimson acquired UniTutor, and a press release at the time said the business would expand nationally with Berry as chief executive and a vice-president at Crimson.
But, according to Companies Office filings, Berry resigned as director of UniTutor in April last year.
Meanwhile, off the back of a series of capital-raisings, including soliciting funds from three billionaires, Crimson has engaged in a steady march of local acquisitions.
Following the raising of $41m from Tiger in September, the company was valued at $220m and Beaton’s personal stake at $73m.
The company has enjoyed a high profile, in part due to its hiring of Max Key as a consultant, and Beaton has talked up its chances of breaking into the lucrative Chinese education market.
– additional reporting by Matt Nippert
Source: NZ Herald