Inside Crimson’s secret settlement with tutoring firm

Online tutoring firm Eurekly was having trouble funding hearing fees for its $10 million court case against Crimson Education, ahead of its lastminute settlement.

While both parties were keeping their lips sealed, court documents obtained by BusinessDesk show what happened leading up to the settlement, including that Eurekly was struggling to fund it.

Eurekly had claimed $10m in damages against Crimson, which it accused of stealing its head of product, Natalia Rozova. It was alleged she took company secrets with her to the education company.

The trial was slated for the first week of May, and Crimson’s chief executive Jamie Beaton and Eurekly’s founder Austen Clarke were expected to give evidence.

The pair had also joined a civil assault case, in which Beaton alleged Clarke was physically intimidating towards him, to the main suit.

According to a minute of Justice Ian Gault dated March 16, Eurekly’s lawyer Will Potter told the court “funding the proceeding remains a challenge for Eurekly” and requested Crimson pay part of the hearing fee.

While the party bringing the case normally pays court hearing fees, Eurekly said that because Beaton had brought the assault claim, he should pay one-third of the fees.

This was because “the Beaton [assault] proceeding will naturally occupy a significant part of the allocated two-week fixture”, an estimated two to three days.

Beaton’s lawyer said the assault claim would take one of the 10 days allocated, and Beaton would pay onetenth of the hearing fee.

The judge said Eurekly should pay 80 per cent, and Beaton the rest.

According to the high court fees schedule, it costs $640 for half a day, meaning the total hearing fee would have been $12,800.

It is not clear whether Eurekly paid this sum.

Crimson had previously sought security for costs from Eurekly, a move made when a defendant believes a plaintiff won’t be able to pay costs if they lose.

Clarke’s evidence before the court in October last year said he didn’t have enough money to pay security for costs. He said he’d already incurred $300,000 in legal bills.

Associate Judge Dani Gardiner said the case should go to trial.

Justice Gault’s March minute also mentions that Derek Handley’s evidence was in dispute. However, he declined to make a ruling ahead of trial.

Former government chief technology officer candidate Handley told BusinessDesk his evidence was “expert stuff related to startups and venture capital; nothing to do with Crimson itself”.

It is not clear which party the tech entrepreneur was expected to give evidence for.

A later minute dated April 6 recorded that lawyers for the parties were still disagreeing about the admissibility of evidence, with the lawyers for Crimson wanting the expert-witness brief of Lorinda Kelly thrown out.

The parties were also considering “hot tubbing” the witnesses, which was when all the experts gave evidence concurrently, the minute of Justice Timothy Brewer noted.

However, by April 26 another court minute was issued, with Justice Simon Moore recording that a settlement had been reached.

BusinessDesk has previously reported on Crimson’s other legal suits, with another being filed last year by social entrepreneur Anne Gaze.

Crimson is made up of several divisions: its core college admissions consultancy, its tutoring offering obtained through the 2016 acquisition of NumberWorks and Words, and its online school, Crimson Global Academy.

It is backed by wealthy investors including Julian Robertson and Hong Kong investor CTF Education group. In order to obtain funding, the firm has signed clauses to publicly list or sell the business by 2023.