TGR Helicorp Limited (in rec) v Rogers HC Auckland CIV 2008-404-4109
[2010] NZHC 2269
•15 December 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2008-404-004109
BETWEEN TGR HELICORP LIMITED (IN RECEIVERSHIP)
First Plaintiff
ANDBASTIA INVESTMENTS LIMITED, GEORGE PETER GLAISTER & SONIA LEE GLAISTER AND PETER MARSDEN BARRY, ANDREA CAROL BARRY & DAVID BARSEN BARRY Second Plaintiffs
ANDGLENDA FRANCES ROGERS AND TREVOR VICEMAR ROGERS Defendants
Hearing: 3, 4, 5 February and 29 March 2010
Appearances: D Salmon, M Heard and K Simcock for the Plaintiffs
P Webb and A J Kingston for the Defendants
Judgment: 15 December 2010 at 5:00 p.m.
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 15 December 2010 at 5:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr D Salmon, Barrister, Auckland
Mr M Heard, LeeSalmonLong, Solicitors, AucklandMr P Webb, Barrister, Manukau
Mr B Webb, Webb Morice, Solicitors, Pukekohe
TGR HELICORP LIMITED (IN RECEIVERSHIP) AND ANOR V ROGERS AND ROGERS HC AK CIV
2008-404-004109 15 December 2010
TABLE OF CONTENTS
Introduction [1] Facts [9] TGR a “world leader” [10]
The second plaintiffs : April 2007 funding [23] The sudden closure of TGR : January-March 2008 [25] The second plaintiffs’ GSA proceeding [30]
TGR receivership : Mr Rogers’ statements to the receivers :
proceedings issued [32]
The first search orders [36]
Mr and Mrs Rogers’ application to set aside the first search orders :
their January 2009 memorandum : bankruptcy [38]
The second search orders [41] The Search at Pokeno [49] The search at Bombay [52] The content of the Rogers’ computers [56]
Assets that have not been recovered [59] The e-mails [61] The alleged destruction of the “IP” [86] Discussion
The evidence of past lies or other deception by Mr and Mrs Rogers [93] Purported TGR minutes : Mr French’s affidavit [100] The explanations for the e-mails [106]
Conclusion [127] Penalty [131] Formal orders [135] Annexure A
Annexure B
Introduction
[1] The first plaintiff (TGR) is in receivership. It has sought orders that Mr and Mrs Rogers be committed to prison for continuing contempt of Court orders requiring them to disclose the whereabouts of assets of TGR. Further orders are sought, including an order that Mr and Mrs Rogers be debarred from defending the substantive claim.
[2] The present application arises from Mr and Mrs Rogers’ responses to two search orders granted in favour of TGR after it went into receivership in April 2008. Mr and Mrs Rogers are directors of TGR and, through a trust, majority shareholders. Mr Rogers told one of the receivers that all of TGR’s tangible assets, apart from two inconsequential items, had been disposed of by sale or destruction in February 2008 when TGR’s factory in Auckland was suddenly shut down. The receivers were sceptical of this advice and this proceeding was commenced in July 2008. The search orders were issued in August 2008 and May 2009. Steps taken by TGR pursuant to the Court orders progressively uncovered TGR assets in the possession or control of Mr and Mrs Rogers. None had been disclosed voluntarily by Mr and Mrs Rogers.
[3] Some important assets have not been located. These include a complete set of the current technical drawings, specifications and related documents for prototype helicopters developed by TGR. The initials “IP” were used at the hearing to describe such documents and for convenience I will do the same.
[4] A central question of fact on the application for committal is whether it has been established, beyond reasonable doubt, that Mr and Mrs Rogers have, or one of them has, possession or control of, or knowledge of the whereabouts of, IP and other assets of TGR which have not yet been located. Mr and Mrs Rogers strenuously deny possession, control or knowledge of the whereabouts of any IP or other missing assets of TGR.
[5] The defendants have admitted misleading the Court and others, and in some cases deliberately lying to the Court, and to others, in stating on earlier occasions that they had disposed of other assets. These other assets were found when search orders were executed. Once found, or at least at the hearing on the contempt application, the defendants admitted their earlier lies or other deceptions.
[6] On the most recent execution of search orders by TGR its agents found, amongst other things, e-mails indicating that over an extended period, after as well as before execution of the first search orders, the defendants were actively attempting to sell the IP and other assets. Some of the e-mails also record express statements by Mr Rogers to the addressees overseas that he had the IP.
[7] This raises a stark issue. In the present proceeding Mr and Mrs Rogers, having admitted that they had earlier lied to the Court and others, but said that they were now being truthful in their evidence that they do not have possession or control of the IP and other assets, notwithstanding what is recorded in the e-mails. Mr Rogers, supported by Mrs Rogers, said that in the e-mails he was lying to, or at the least misleading, his correspondents – prospective purchasers, sales agents, his business adviser, friends and others. The central issue, reduced to its essence, is whether Mr and Mrs Rogers have continued to lie to the Court or whether the statements that were made in numerous e-mails were fabrications.
[8] I have come to the conclusion that Mr and Mrs Rogers have continued to defy the Court orders, that they have continued to lie to the Court, and that they do have possession or control of the IP and other assets of TGR. I have come to that conclusion beyond reasonable doubt, being the standard of proof I am required to apply. To explain my conclusion, and because of the nature of it, it is necessary to set out the facts in some detail, including the facts relating to the ways in which Mr and Mrs Rogers have already acted in contempt of Court orders. Outlining the facts relating to earlier contempts, most of which have been admitted, is not done to provide a foundation for punishing Mr and Mrs Rogers in respect of the earlier contempts. That is not something which can be done in this proceeding. It is relevant in order to explain why I have concluded that there is continuing contempt of extant orders.
Facts
[9] The direct evidence-in-chief of witnesses was, in large measure, provided by affidavit, with cross-examination of some of the deponents including, in particular, Mr and Mrs Rogers. There is also a substantial body of documentary evidence.
TGR a “world leader”
[10] The first plaintiff company, TGR, was incorporated on 31 July 2000. Mr and Mrs Rogers have at all times controlled the company. The majority shareholder is a trust of which Mr and Mrs Rogers, and Mr T K Rogers, are the trustees. Mr and Mrs Rogers have been directors at all material times.
[11] TGR was established to develop helicopters. Mr Rogers had particular expertise in that regard as an engineer and a manager. Mrs Rogers worked closely with her husband as a director of TGR and as an administrator. TGR was mainly involved in the development of prototype unmanned helicopters. One is called the “Snark”. It was hoped that the Snark would have military uses, amongst others. The other is known as the “Alpine Wasp”, intended for use at high altitude, including for mountain rescue.
[12] Mr Rogers said that, by late 2007, TGR was a world leader in its field in the design and manufacture of unmanned helicopters. Mr Rogers said that TGR possibly had a 10 year lead on any other company starting from scratch to develop similar helicopters. There is a substantial body of evidence which establishes that the helicopter developments of TGR were of high quality and that there were good prospects for sale of the Snark and the Alpine Wasp. Mr Rogers said that the Snark “had potential to make millions and millions of dollars”.
[13] Mr Rogers’ evidence, supported by evidence from former employees of TGR, establishes that a key marketing point for TGR was the international aviation engineering standards it designed to and which, it was said, no competitor was meeting. Its ability to keep meeting those standards was also key. Those standards
required regular audit of processes, manuals, and technical material, including drawings and design registers, by aviation regulators.
[14] The evidence also establishes that TGR’s IP was a very valuable asset and by far and away the most valuable asset of TGR. As might be expected, and as the evidence establishes, great care was taken to protect the IP and rigorously to keep it up to date. Mr Rogers kept a clean and tight workshop. He was fussy about keeping the TGR design register in good order and about ensuring that all of TGR’s intellectual property was clearly recorded and available for inspection. One reason Mr Rogers was so meticulous was that the availability of comprehensive and clear designs was important to being able to tool up and manufacture the Snark, and so to sell it.
[15] Every drawing of Snark and Alpine Wasp parts that were ready for manufacture was carefully kept in hard copy as well as electronic form. It is most of these drawings and associated technical data which constitute the missing IP.
[16] TGR kept two laminated A3 hard copies of all of the drawings just referred to. One copy was held in a cabinet as the master set. The second set was used on the factory floor for manufacturing. Mr Rogers estimated that there were around 1,500 to 2,000 drawings of this sort. There was also a register of every finished part with a unique identification number.
[17] Mr Rogers acknowledged that there was a complete laminated and certified set of drawings for the Snark when TGR closed. In addition, in about November or December 2007, Mr Rogers instructed an employee, Mr Sean Williams, to rename and re-laminate all master copies of the Alpine Wasp drawings. The initials “TGR” were removed and the words “Everest Rescue Trust” were recorded as the apparent owner of the drawings.
[18] The change of name from TGR to Everest Rescue Trust occurred against the background of a dispute with the second plaintiffs. The second plaintiffs were minority shareholders and were opposed to funds being spent on the Alpine Wasp rather than the Snark. The Everest Rescue Trust is an entity which Mr and Mrs
Rogers contended was independent of TGR and which, together with Mr and Mrs Rogers’ personal financial resources, had paid for the development of the Alpine Wasp. At an earlier hearing in this proceeding before me, on an application by Mr and Mrs Rogers to set aside the first search orders, there was a question whether the Everest Rescue Trust had funded the development of the Alpine Wasp. I recorded in
my judgment[1] that no documents had been produced to support Mr and Mrs Rogers’
contentions that development of the Alpine Wasp had been funded by the Everest Rescue Trust, or otherwise from money independent of TGR. Following that judgment, in December 2008, no further evidence has been produced that persuades me that the Alpine Wasp was not a TGR project.
[1] TGR Helicorp Ltd (In Receivership) v Rogers and Rogers HC Auckland, CIV 2008-404-004109, 19
December 2008 at [30]-[31].
[19] Evidence relating to TGR’s electronic copies of the up to date IP was given by Mr Robert Lye, amongst others. Mr Lye was employed by TGR from May 2006 to October 2007 as a project engineer. He has formal qualifications in electronics and production engineering. His evidence establishes that electronic copies of IP were kept, as would be expected. In an affidavit he said that TGR had a central server that was backed up each night and that Mr Rogers told him that he took back- up tapes home once a week for safe keeping. Mr Rogers said that this was a system that had been replaced in 2006. In a further affidavit, and in cross-examination, Mr Lye said he strongly disagreed with Mr Rogers’ statement. He said he witnessed Mr Rogers regularly backing up TGR servers to tapes and Mr and Mrs Rogers taking those tapes home. He said he witnessed this practice up until his departure in October 2007. I accept Mr Lye’s evidence and I also find that this practice continued up to the closure of the TGR factory in January 2008. Mr Lye also gave evidence that, just before the TGR factory was closed in January 2008, Mr Rogers told him that he had retained a copy of the back-up tapes and he was going to have a copy “taken offshore”. This evidence is discussed more fully at [89]-[92].
[20] Mr Lye also gave evidence, which was uncontested and which I accept, that without the IP, the Snark and Alpine Wasp would be unsaleable. Associated with this is evidence which clearly establishes that if the IP was lost it would take years to reproduce. There were variations in the estimates as to how long it would take,
depending to an extent on who would be doing the work and the resources available. Mr Rogers said that a very well funded team with a lot of specialist engineers and draughtsmen would take at least a year to reproduce the IP. Mr Rikihana Higgott was employed as an electronics engineer by TGR from around September 2006 to around December 2007. He said it would take years to reproduce the electronics works alone using a similar number of staff as had been employed at TGR. Mr Sean Williams was employed as the mechanical design engineer for TGR for around 2 ½ years down to the closure of TGR’s Auckland factory in January 2008. He said it would take years to restart the Snark or the Alpine Wasp projects without all of the drawings, particularly if the intention was to utilise the existing prototypes. Evidence of this nature also confirmed the evidence, which I accept, that the Snark and Alpine Wasp prototypes would be unsaleable without the IP.
[21] The market for the Snark and the Alpine Wasp was and is outside New Zealand. Through to the end of 2007 Mr Rogers had been actively marketing both helicopters overseas. Mr Rogers said:
Towards the end of 2007 we were only a couple of months away [from flight testing of the Snark] and that was to build rotor blades, and we had already sent out the invitations to aviation authorities and the military all over the world for flight testing in New Zealand down near Taupo.
The flight testing date was April 2008.
[22] As part of TGR’s overseas marketing efforts, applications had been made to the New Zealand Ministry of Foreign Affairs and Trade to export the Snark and the Alpine Wasp. The applications were declined, or at least put on hold, by the Ministry. There are e-mails from Mr Rogers, commencing in early 2008, indicating that the Ministry officials had concerns relating to military applications, or possible military applications, of the helicopters. Numbers of the e-mails also contain statements by Mr Rogers expressing great frustration at the response of the Ministry and recording that this was a reason for the decision he and Mrs Rogers had made to re-establish their business outside New Zealand. I will come to the detail of these e- mails.
The second plaintiffs : April 2007 funding
[23] Part of the funding for the helicopter developments came from the second plaintiffs. By April 2007 the second plaintiffs had invested in, or lent to, TGR a total of around $1.57 million. They had become minority shareholders.
[24] Sometime before 24 April 2007 Mr Rogers approached the second plaintiffs seeking further investment by them in TGR. The second plaintiffs agreed. A written agreement was entered into on 24 April 2007. This provides, amongst other things, that Mr and Mrs Rogers would procure TGR to execute a first ranking general security agreement (GSA) “in consideration for the additional funding by the [second plaintiffs] in accordance with the requests of TGR, in relation to the ‘Snark Mk 3’ project”. The security was recorded as “including all intellectual property rights of any kind including all concept and development rights in the ‘Snark Mk 3’ helicopter and project”.
The sudden closure of TGR : January-March 2008
[25] At the end of 2007, TGR was coming close to the culmination of many years work in developing its unmanned helicopters. Large amounts of money had been invested, together with thousands of hours of effort, which included much effort by Mr and Mrs Rogers. For Mr and Mrs Rogers a dream was coming close to fruition, with the prospect of financial success. And this was occurring as they were coming close to retirement.
[26] At the same time there were difficulties for TGR. There was pressure from the minority shareholders seeking execution of their GSA. The minority shareholders were resistant to TGR money being applied to the Alpine Wasp. There were the difficulties with the Ministry of Foreign Affairs and Trade. And there was increasing financial pressure for TGR, which got to the point of difficulty in paying the rent for TGR’s Auckland factory.
[27] TGR reopened after the 2007 Christmas break on 11 January 2008. On or about 25 January 2008 Mr Rogers told the TGR employees that the company was
closing down. It appears that no advice was given to the minority shareholders. The immediate catalyst for closing was, according to Mr Rogers, TGR’s inability to pay the rent beyond the end of February. This came with the range of other difficulties just referred to. Importantly, however, it is reasonably clear from the evidence that Mr and Mrs Rogers had for some time been planning to move overseas in due course. These matters hastened their plans.
[28] Around the beginning of February 2008 Mr and Mrs Rogers began clearing out the TGR factory. This was completed by around 2-3 March 2008. As was discovered in the course of these proceedings, following a series of denials by Mr and Mrs Rogers, they arranged to have a large number of important helicopter components surreptitiously moved to other locations in Auckland. They sold other assets of TGR, but initially denied doing so. In the course of the hearing on the present application, they said that hard copies of all the IP had been shredded, that the electronic copies of IP had been wiped, and that the other tangible assets that have not been found had been destroyed.
[29] Mr and Mrs Rogers’ evidence about shredding and destroying the IP will require consideration in due course. One related matter conveniently recorded here is that Mr and Mrs Rogers acknowledged that efforts to sell the Snark overseas continued to the day the factory was closed. These efforts continued notwithstanding the difficulties Mr and Mrs Rogers said they had, and the pressure that was on them, in clearing out the factory. There was the following in cross- examination of Mr Rogers:
A.I had three containers we loaded up, I mean it was a mad-house. We had so many days to do this – one of them referred to taking a month. I think we did it in, oh some phenomenal time, we worked
90 – ridiculous hours. And we were conscious of the fact that we could save $200,000 in fees so – to the landlord.
Q.And while you were dealing with that pandemonium which I understand, you were also on either side of it dealing with potential buyers in the outside world, is that fair to say?
A. Yeah, right up until the day we closed.
And again:
Q.And she [Mrs Rogers] shared your hope of continuing to market the project abroad, correct?
A. Well it’s the only thing that would keep the company going. I mean if I pulled out then there was nothing.
Q. But is that a yes, she shared your intention? A. I think so, yes.
Q.And so when you were clearing it out you both had a common intention to market the Snark abroad?
A.Well I had the intention to market the Snark, I think you’d have to ask her what her intention was, but she supported me I think.
Q. And you talked about it, right? A. Mhm.
Q. And so she shared the intention? A. Yes.
The second plaintiffs’ GSA proceeding
[30] On 15 February 2008 the second plaintiffs, apparently unaware of what was going on at the factory, made an application to the High Court for an order that their security interest be maintained and that Mr and Mrs Rogers (and their co-trustee, Mr T K Rogers) take all necessary steps to procure the execution by TGR of the GSA, as they had agreed to do. Further orders were sought, including an order that any property acquired by TGR using funds invested by the second plaintiffs following execution of the agreement on 27 April 2007 be secured in the possession of TGR and not be dealt with in any way. The application and supporting affidavit, and other relevant documents, were served on Mr and Mrs Rogers, Mr T K Rogers (the co- trustee majority shareholder) and TGR on 16 February 2008.
[31] On 18 February 2008 an interim order was made that the registration of the second plaintiffs’ security on the Personal Property Securities Registrar be maintained. This expressly referred to all present and after acquired personal property of TGR. This order was made with the consent of Mr and Mrs Rogers at the very time they were removing all of TGR’s assets from the factory and hiding, selling or dumping them.
TGR receivership : Mr Rogers’ statements to the receivers : proceedings issued
[32] On 2 April 2008 the second plaintiffs appointed receivers to TGR. One of the receivers is Mr Henry Levin. On 2 and 3 April Mr Levin had telephone conversations with Mr Rogers. Mr Rogers told Mr Levin that:
(a)TGR had experienced cashflow problems resulting in a lease on its premises at 17 Arwen Place, East Tamaki, Auckland being terminated. As a result of not having a premises to trade from, TGR ceased to trade prior to the receiver’s appointment.
(b) All of TGR’s employees had been made redundant.
(c)The majority of TGR’s assets had been destroyed, sold or given away by the Defendants prior to receivership. In particular:
(i)All the tools of TGR had been sold by the Defendants prior to the Receivership;
(ii) The prototype helicopter developed by the First Defendant called The Snark was disposed of in the following way:
•The engine was sent back to “the States” to satisfy a debt that had been personally guaranteed by the Defendants;
•The metal parts of the body of The Snark were stripped and sold for cash;
•The body, molds [sic] and plugs, and anything else non-metallic were cut up and thrown into the Greenmount landfill where they were crushed.
(iii) All designs and plans for the prototype helicopters and similar aircraft and accessories were destroyed by the Defendants. Mr Rogers also advised that he believes that the intellectual property and designs were never the property of TGR but belonged to him personally.
(iv) A 2005 Hartford CNC Machine and Rotary Table and a
2005 Global Lathe were repossessed by Marac Finance
Limited under their security.
(v) All but one of the computers (the accountant’s computer seized by the Receivers) had their hard drives wiped and were sold or given away by the Defendants.
[33] On 3 April 2008 the receivers gave notice to Mr and Mrs Rogers requiring them, as directors of TGR, pursuant to s 12 of the Receiverships Act 1993, to make available all company records, amongst other things. Very few company documents
were provided and these were random. However, the receivers managed to obtain a copy of draft financial statements for TGR for the year ended 31 March 2007 and, from a cloned computer hard drive, figures and workings for the period ended 31
March 2008. The 31 March 2007 statements recorded total term assets at a book value of, in round figures, $5.357 million, including $2.3 million for “plugs and moulds”, which relate to helicopters, and $2 million for “prototype helicopters”. The figures at 31 March 2008 recorded total term assets at book value of approximately
$5.3 million. The computer was one used by TGR’s accountant. The receivers, through their computer expert, discovered that the main processing of financial information was stored on a network drive or a different computer from the one that had been provided to them.
[34] The only assets delivered to the receivers were a van of no great value and the computer used by TGR’s accountant. The receivers were unable to find evidence of proceeds of sale of any assets of TGR being paid into a bank account of TGR, or otherwise remitted to TGR. The receivers were sceptical of the claims of Mr and Mrs Rogers that they had disposed of all of the assets of TGR, apart from the van and computer. On 3 July 2008 they issued the present proceedings.
[35] On 6 August 2008 Mr and Mrs Rogers filed a statement of defence. In it they repeated what Mr Rogers told Mr Levin on 2 and 3 April, with a lot more detail as to which items were either destroyed or sold or given away, and with explanations for these actions. It is, in fact, a narrative document, much of which has since been demonstrated to be false. The essence of their contention was that TGR “was completely closed down on the 29th February and had only two assets left when the GSA was signed and the receiver was appointed … the company van and the computer”.
The first search orders
[36] On 14 and 18 August 2008 TGR obtained search orders. On execution of these orders a large number of helicopter components, workshop equipment, office equipment, and other items, were located in a shipping container and storage shed at a storage facility in New Lynn, Auckland, and at the premises of another company in
Greenlane, Auckland. Approximately 145 items were located. There are still some issues as to ownership of some of these items, but none which has a material bearing on the issues I am now dealing with. Some of the components are large helicopter parts. They include moulds and equipment for the Alpine Wasp and parts of a Snark. Further details are contained in my earlier judgment dated 19 December 2008
on the application by Mr and Mrs Rogers to discharge the search orders.[2]
[2] TGR Helicorp Ltd (In Receivership) v Rogers and Rogers HC Auckland, CIV 2008-404-004109, 19
December 2008.
[37] Mr Rogers was present during the search at the New Lynn storage facility. He made two false statements to the independent lawyer appointed by the Court. One was that the container and its contents belonged to Mr Keith Baker and that none of the contents of the container were assets owned by TGR. The other was that he, Mr Rogers, did not know of any other container that had any of the items listed in the order.
Mr and Mrs Rogers’ application to set aside the first search orders : their January
2009 memorandum : bankruptcy
[38] Soon after the first search order was executed, Mr and Mrs Rogers filed the application to set aside the search orders which led to my judgment of 19 December
2008. The procedural history in respect of that application is recorded at [1]-[5] of the earlier judgment. In the course of the application Mr and Mrs Rogers filed two affidavits containing statements about TGR assets which, in some respects, were knowingly and deliberately false (or as they have now admitted, at the least, misleading), and which were in breach of the first search order requiring disclosure of TGR assets.
[39] The application was dismissed. In January 2009 Mr and Mrs Rogers filed a memorandum described as “memorandum of defendants in response to judgment of Woodhouse J dated 19th December 2008”. Annexed to it was an affidavit of Mr Arthur French, a director of TGR. The memorandum contains false or misleading statements. Mr French’s affidavit, which was sworn on 25 September 2008 but not filed until January 2009, has purported TGR minutes annexed to it. TGR has
established that statements made by Mr and Mrs Rogers in respect of these minutes are inaccurate and that Mr and Mrs Rogers must have known the statements were inaccurate. I discuss this further below.
[40] On 27 January 2009 Mr and Mrs Rogers were adjudicated bankrupt on an application by Bank of New Zealand Ltd.
The second search orders
[41] Important assets of TGR which at January 2009 had not been recovered pursuant to the first search orders, and which Mr and Mrs Rogers continued to assert had been destroyed, or otherwise disposed of, included: (1) A prototype of the Snark. (2) The command centre for the Snark. This was a 20 foot container containing flat screen televisions and other facilities. The container was also designed to store the Snark prototype in a disassembled form. (3) All the current plans, drawings and technical information for the Snark and the Alpine Wasp; that is to say, the Snark and the Alpine Wasp IP.
[42] On 9 January 2009 an article was published in an overseas aviation newsletter. The article is entitled “Snark seeking a new home”. The article, which includes purported statements by Mr Rogers, records that the board of TGR had voted to wind up its New Zealand operations in January 2008 with the intention of relocating overseas. The general thrust of the article is that Mr Rogers, apparently speaking as at January 2009, intended to resume the Snark development programme overseas. The article also refers to TGR’s Alpine Wasp.
[43] Sometime after the article was published it came to the attention of TGR’s solicitors. In March 2009 the solicitors contacted Mr Mark Rijkse. Mr Rijske was a director of a private investment company in London. Mr Rijkse’s evidence was not challenged. He said that he was asked to approach Mr Rogers to “seek to establish whether he had the Snark in his possession and to arrange an inspection of the Snark itself if possible”. Mr Rijkse contacted Mr Rogers by e-mail, having got the contact details from the journalist who wrote the article. Mr Rijkse expressed interest in the Snark project.
[44] On 25 March 2009 Mr Rogers said in an e-mail that he was interested in discussing matters with Mr Rijkse, but a non-disclosure agreement would first have to be signed. A draft non-disclosure document was sent to Mr Rijkse by Mrs Rogers. In the course of e-mail correspondence which followed, Mr Rogers advised Mr Rijkse that Mr Rijkse’s enquiries would be handled by Mr Gareth Morgan. Mr Rogers said that Mr Morgan was “a personal friend, who can be more objective and has my confidence to deal with matters in the first instance, should you or your client be interested in proceeding including a possible sale etc”. Mr Rogers provided contact details for Mr Morgan as a “Global Client Services Partner with Ernst & Young in Dubai”. Evidence from Mr Rogers indicated that Mr Morgan is an international expert in handling sales of this nature.
[45] Following some further e-mail exchanges, Mr Morgan contacted Mr Rijkse by telephone on 16 April 2009. During the conversation Mr Morgan told him:
(a)Mr Rogers had been stymied by the New Zealand Government in his attempts to manufacture helicopters in New Zealand, and was planning to relocate his business to Switzerland.
(b)In 2008 Mr Rogers had been in discussions with third party investors interested in the Snark programme and those discussions had placed an enterprise value of the business intellectual property and assets at USD 50m.
(c) Mr Rogers had captured all the intellectual property for the Snark project by securing all the drawings and other information by which one could restart the development and construction of the Snark.
(d)Mr Rogers has the Snark prototype sealed in a container with the intellectual property and its command centre, along with special tooling.
(e) Mr Rogers is preparing to transfer all of the business assets to Switzerland, where the Swiss government was very interested in him setting up full development and manufacturing facilities.
Mr Rijkse says they spoke for around an hour, which of itself suggests they were talking about a matter of consequence.
[46] On 16 April 2009 Mr Rijkse signed a non-disclosure agreement. The parties to this agreement are Mr Rijkse’s company and Ultra Helicopters (NZ) Inc. Ultra Helicopters is a company that had been incorporated by Mr Rogers many years
before, which had gone into receivership in September 2000 and into liquidation in March 2009. In addition to the fact that Ultra Helicopters was in liquidation when Mr and Mrs Rogers used the company name for the purposes of the non-disclosure agreement, Ultra Helicopters had had nothing to do with the Snark project.
[47] Mr Rijkse said that he would arrange for an agent in New Zealand to inspect the Snark prototype and drawings. Mr Robert Law was presented as the agent. Mr Law contacted Mr Rogers and arranged to visit Mr Rogers on 7 May 2009, at Mr Rogers’ home in Bombay, South Auckland, to inspect the plans and the documents he had relating to the Snark. Mr Law said that Mr Rogers told him that the prototype could be inspected later, although not necessarily on that day. In the event, Mr Law inspected some documents at Mr Rogers’ home and was then taken by Mr Rogers to
3 Great South Road, Pokeno to inspect the Snark prototype.
[48] The information obtained by Mr Rijkse, and by Mr Law in his telephone discussion, led to the granting of a second search order on 6 May 2009. It was executed on 7 May 2009 contemporaneously at 3 Great South Road, Pokeno, and at Mr and Mrs Rogers’ home at Bombay, South Auckland. Two independent lawyers were appointed, one to supervise at each property.
The Search at Pokeno
[49] The independent lawyer supervising the search at Pokeno, Mr DCS Morris, produced his report in an affidavit. His evidence was not challenged. Mr Morris said that a container was found behind an uninhabited and boarded up house. The container was secured with four padlocks and access to the property was also secured with a padlock. While Mr Morris and those accompanying him were on the property a man arrived. He was initially aggressive and then calmed down when the order was produced. He said he was the owner of the property and identified himself as Leo. The evidence establishes that Leo (his surname was not provided) was working at that time as a gardener for Mr and Mrs Rogers at their Bombay home. Mr Morris’ report and other evidence also establishes that Leo had agreed that Mr and Mrs Rogers could put this container on the property for $25 a week.
[50] Leo told Mr Morris that he had been at Mr and Mrs Rogers’ home in Bombay when the search order was being executed there. He was at the back of the house when Mrs Rogers came out to him and told him to go to 3 Great South Road to get the container removed. She gave him her cellphone and told him to phone a man named Tony who could shift the container. Leo told Mr Morris that Mrs Rogers had said to him that she and Mr Rogers were “in the shit”. He also advised Mr Morris that Mr Rogers had been down to the container the day before and opened it to ensure it was in order for a visit the following day. All of this evidence was admitted without challenge and I accept it.
[51] A full inventory of what was in the container was made by Mr Watt (TGR’s mechanical workshop foreman until the factory was closed in early 2008). Mr Watt was involved in the development of the Snark. The items found were listed in various categories as follows: (1) Snark Mk 2 parts; (2) control gear fixed/intended to be fixed in the container; (3) DeltaHawk engine parts; (4) workshop equipment; (5) miscellaneous. There is a large number of individual items in each category. Appendix A to this judgment is a reproduction of Mr Watt’s complete inventory. Mr Watt described the Snark Mk2 project as “a live development project when the production staff were made redundant” in January 2008. He said that “the Snark was developed almost to the stage of tethered flight testing”. The container at Pokeno was the modified container used as the “command centre” for operating the Snark.
The search at Bombay
[52] The independent lawyer supervising the search at Mr and Mrs Rogers’ home was Ms M Peters. As with Mr Morris, Ms Peters produced her report in an affidavit. Her evidence was unchallenged and I accept it. Mr and Mrs Rogers were at home. Ms Peters explained the relevant provisions of the orders to Mr and Mrs Rogers. The orders authorised search for and removal of any “Assets” or “Containers”. These two expressions were defined in broad terms in the orders as follows:
Assets means any of the assets described in schedule A to these orders, any document, computer equipment or video which in the reasonable opinion of the First Plaintiff’s solicitors and the Independent Lawyer contains any plan, design, specifications or other intellectual property relating to unmanned
helicopters, similar aircraft and accessories and any prototype helicopters, similar aircraft, moulds, or parts of prototype helicopters or similar aircraft.
Containers includes any shipping container appearing to be under the direct or indirect control of either or both of the Defendants or any company beneficially owned by them.
[53] At what appears to have been a reasonably early stage of the search, when Ms Peters was talking alone to Mr and Mrs Rogers, Mrs Rogers got up from the table where they were seated, took something from the kitchen bench and went outside and spoke to a man Ms Peters understood to be a gardener. Ms Peters saw Mrs Rogers hand something to the man. As was established by other evidence, and already indicated, it was at this point that Mrs Rogers, having just had the terms of the Court order explained to her, was giving instructions to Leo to go to his home in Pokeno to arrange to have the container removed. Mr and Mrs Rogers were presumably unaware of the fact that the orders were also being executed at the same time at the Pokeno property.
[54] Mr and Mrs Rogers had a number of computers in their home. Mr Rogers said he would not allow any computers to be removed. Ms Peters said that Mr Rogers became “extremely angry and aggressive” and that “his manner was threatening”. One of the plaintiff’s solicitors attending, in terms of the order, was Mr Heard. Ms Peters’ report includes the following:
Mr Heard asked the Defendants whether the computers contained any plans, designs, drawings, specifications or intellectual property of a type covered by the orders. The Defendants said that nothing falling within that description was on any of the computers.
Mr Heard informed the Defendants that he knew that a person had viewed such material in hard copy and on one of the computers at the property that morning and that, accordingly, he believed the Defendants had not told the truth on that matter.
The reference to “a person” viewing the material was a reference to Mr Law.
[55] Two laptops, three personal computers and three loose hard drives were removed from Mr and Mrs Rogers’ home. Ms Peters also asked Mr Rogers for the hard copy documents which had been shown that morning to Mr Law. Mr Rogers then gave Ms Peters a file of pictures and plans of a helicopter and these were
removed. In addition a number of files were found with TGR documents such as business records and bank statements.
The content of the Rogers’ computers
[56] TGR’s solicitors, with the assistance of an independent computer expert, extracted a large number of files from Mr and Mrs Rogers’ computers and loose hard drives. Hard copies of some of these files were printed and produced in evidence.
[57] The hard copies were produced as an annexure to an affidavit of Ms Sarah Yallop, a legal assistant employed by TGR’s solicitors. There are 1,456 pages of documents. Ms Yallop has divided them into six groups as follows:
a) 472 pages of e-mails. There are some duplications. Ms Yallop noted that she had been advised (and I infer based on advice from the computer expert) that there are in excess of 10,000 e-mails retrieved from Mr and Mrs Rogers’ computers. Most of the e-mails that have been produced are from or to Mr Rogers, and occasionally Mrs Rogers. A great deal of the content relates to TGR’s business and assets, including IP. The e-mails commence around November 2007 and continue until the dealings between Mr Rijkse, Mr Rogers and Mr Morgan from March to May 2009. The e-mails from Mr Rogers, with a few from Mrs Rogers, are to a wide range of correspondents: sales agents in a number of countries, possible purchasers, Mr Morgan (Mr Rogers’ adviser for sales), friends, a government official in Switzerland, a Swiss lawyer and others. There are many statements in these e-mails by Mr Rogers of the plans he and Mrs Rogers had to move TGR’s assets and business out of New Zealand and set up a manufacturing plant overseas, with particular focus on Switzerland. There are express statements that the IP in electronic form was safely secured in European banks. The e-mails cover negotiations with a number of parties to demonstrate the capabilities of the Snark in particular, and to sell the Snark and the Alpine Wasp, including the IP for both. I discuss these e-mails in detail below.
b)There is a PowerPoint file named “Snark February 08b Final.ppt”. In hard copy this is 19 pages of photographs and text. There are photographs of the Snark Mk 1, Mk 2 and Mk 3 and various components for the Snark including the shipping container converted into a base station. The text is of a promotional nature.
c) The third category of documents is three pages of a Word document named “Possible sites for UAS Teknik.doc”. UAS Teknik is the company incorporated, or to be incorporated, in Switzerland by Mr and Mrs Rogers for the re-establishment of the TGR business overseas. This Word document lists six possible sites in or near Basel, Switzerland, for establishment of the business. It appears from the detail that the premises referred to are industrial premises.
d)There is a 25 page list of all the files in a programme called “Solid Works”. Solid Works is a programme used for producing technical drawings. Ms Yallop produced a list of files which had the name TGR Helicorp or UAS Teknik. There are around 750 files.
e) Ms Yallop printed copies of drawings from the Solid Works files.
There are 504 pages of engineering drawings. Almost every drawing has the name TGR Helicorp on it. Many of the drawings record on them that they are parts of a Snark. The drawings which record Mr Rogers’ approval of them are dated from February 2003 until October
2007. There is at least one unapproved drawing dated 30 January
2008 (Ms Yallop’s affidavit, p 717).
f) The final category of documents is copies of what Ms Yallop describes as “Word and other documents”. These run to 433 pages. I describe some of the documents in the next paragraph.
[58] A brief description of some only of the documents referred to in the preceding paragraph at f) is as follows:
a) A technical report of 21 pages for the Snark main rotor shaft.
b) A 45 page flight manual for “TGR ‘Snark’ UCAV-VTOL Unmanned
Aerospace Vehicle”.
c) A PowerPoint display dated December 2007 promoting TGR in general and the “Snark UCAV” in particular and including the purpose built base station, amongst other things. At the end there is a summary which includes the following:
Until now, TGR has gone it alone. We know our subject and our helicopter’s strengths. Snark easily exceeds existing platforms by a considerable margin, as it is a new wholly designed aircraft not a modified existing aircraft. We are a professional company, with substantial abilities and recognise our company cannot do everything. TGR has a collaborative mindset to join with other expert aviation organisations who are specialists in their fields.
d)A draft of a letter from Mr Rogers to the director of the New Zealand Security Intelligence Service. It is dated 6 May 2009, the day before the second search orders were executed. Relevant content of this letter is recorded below in the section dealing with the e-mails: see [85].
e) There is a document headed “PRIVATE and CONFIDENTIAL – Subject: Situation as at February 2008”. This document lists what may in broad terms be described as sales prospects or, in some cases, what are expressly described as “contract under negotiation”. The countries referred to are Pakistan, India, France, Germany, Italy, Vietnam, Georgia, Azerbaijan, Jordan, Singapore, the USA and South Korea.
f) A draft sale and purchase agreement between UAS TEKNIK Ag of Basel, Switzerland as vendor and Innosuisse as purchaser in respect of “the Intellectual Property owned by the Vendor, as more defined in Appendix A”. Appendix A lists 34 tabulated “drawings of parts and assemblies, relating to the various categories of the aircraft”.
g) An undated document headed “Snark seeking a new home – Peter La
Franchi / Sydney” including the following:
The New Zealand team behind the Snark unmanned helicopter family say the programme is far from becoming history and development work is planned to resume in the future.
Development programme head Trevor Rogers says the Snark diesel powered, low observable, long endurance helicopter remains fully achievable, but all future work will occur in a new host nation not New Zealand.
h)An undated seven page document headed “The Company, UAS Teknik AG”. The document commences: “The company was based in New Zealand until February 2008. Our new company UAS Teknik AG soon to be manufacturing in Europe, is also a privately owned corporation, specialising in the helicopter manufacturing business.” This document describes, amongst other things, the high quality manufacturing facilities for the company’s unmanned helicopter and the wide range of high quality componentry available. There is reference to the Mk 1 Snark and the base station.
i) There are lengthy technical reports.
Assets that have not been recovered
[59] There is evidence I accept, from former employees of TGR, that the assets recovered in the first and second searches, including the material stored on the computers and hard drives found at Mr and Mrs Rogers’ home, does not represent all of the assets of TGR that were in existence. The former employees are: Mr Watt, the mechanical workshop foreman; Mr Higgott, the electronics engineer; Mr Williams, the mechanical designer; and Mr Lye, the project engineer. There was also evidence from the computer expert, Mr Pearse, that some computer programmes that Mr Williams and Mr Higgott said were used by TGR were not on the computers recovered from Mr and Mrs Rogers’ home.
[60] TGR’s solicitors prepared a list, based on this evidence, of the known items that have not been found. The list was put to Mr and Mrs Rogers in cross- examination. Appendix B to this judgment reproduces the list with the addition of a summary of Mr Rogers’ responses in evidence as to what had happened to each of the items. There are two salient points about Mr Rogers’ responses. The first is that he agreed that all of the assets that are listed had been in existence. The second is that Mr Rogers’ evidence about each item of itself makes clear that these items have not been recovered. This is because, as annexure B records, Mr Rogers said in respect of most of the items that they had either been destroyed, dumped, sold, or, in the case of computer files or programmes, wiped; apart from five items (21, 22, 24,
26 and 29) out of the total of 31, there was no contention by Mr Rogers that these missing assets were amongst those recovered pursuant to the search orders.
The e-mails
[61] In this section there are summaries, and to an extent reproductions, of the contents of some only of the e-mails found on Mr and Mrs Rogers’ computers. In a few cases the date recorded on an e-mail as printed is obviously not the date the e- mail was created or sent. The problematic date, in most cases, is 3 August 2008. If there is a degree of uncertainty about a date this is shown by “?”. A number of correspondents are referred to as a “sales agent”. This may not be an entirely accurate description, and it was not always clear whether the person was an agent for Mr Rogers or for a possible purchaser, or both, but the description “sales agent” is sufficient. In this section, as a matter of convenience and intending no discourtesy, I will generally use surnames only unless a designation is required for clarity. Because of the large number of e-mails and the length of this judgment overall, in this section I have also used abbreviated expression. The page number recorded at the beginning of the description of each e-mail is a reference to the page in the annexure to Ms Yallop’s affidavit.
[62] Page 1 : 3 August 2008 ? – Rogers to Sailer : sales agent, USA – “I have now registered our new company in Switzerland UAS Teknik GmbH … two options for manufacturing, Lugarno and Zurich”. Rogers says: not considering setting up in
France, Germany or Italy because “intellectual property control in these countries becomes a problem as they tend to claim IP ownership for the country”. In Switzerland “we already have approval to export the Alpine Wasp to Nepal and our Military helicopters are exportable under War materials and approved. (We couldn’t get the Ministry of Foreign Affairs and Trade … in New Zealand to give us export approvals for the last two years which is why we are leaving New Zealand and will liquidate TGR Helicorp name very shortly.)”
[63] Pages 6-10 : April 2008 : Rogers and Fiennes. (1) Fiennes to Rogers – “Please could you contact me urgently in the UK in connection with my husband’s summit attempt on Everest next month. We are working with ITN and it may be possible to get you some publicity with them and you could test your product on my husband (Sir Ranulph Fiennes).” (2) Rogers to Fiennes – “Unfortunately we will not be able to help … for some rather frustrating reasons. TGR Helicorp Limited is moving its entire operations and manufacturing out of New Zealand and closed the company in New Zealand at the end of March.” This is followed by an explanation of the high quality of the unmanned military helicopter and the Alpine Wasp and an explanation as to why they are leaving New Zealand. (3) There was a telephone discussion and a further e-mail from Fiennes. (4) Rogers to Fiennes “as explained the helicopters are in containers in bits in New Zealand awaiting a home country to go to.” Further statements about shipping helicopter parts out of New Zealand and reassembling etc to begin manufacturing.
[64] Pages 11-14 : February 2008 : Rogers and Maillotte : sales agent, France. Rogers to Maillotte explaining why there were delays, apparently in response to frustration expressed by Maillotte. Rogers: “Three minor shareholders tried to stage a minority shareholder takeover …”. References to difficulties in getting export approval from New Zealand. Refers to “our Humanitarian helicopter the ‘Alpine Wasp’”. On the Snark: “If we assemble and fly the Snark in New Zealand we then cannot disassemble it and ship it anywhere, so TGR will have to write-off the entire New Zealand programme.” There are statements about the factory closing down and good reasons to leave New Zealand and then:
So this is what we have done.
We have a 40,000 sq ft facility to pack and store which is impossible so we are dumping truckloads of moulds etc in the dump because storage would be too costly. With no staff now, Glenda and I and a few friends have loaded 5 x 40 ft sea containers and 6 storage sheds with equipment parts etc. We have packed up all Snark material moulds, engine and mechanical parts into several 40 ft containers and temporarily stored them. [No more than three shipping containers, inclusive of the Snark base station, and one storage shed with equipment, have been found.]
We proposed to export the helicopter as carbon fibre parts and moulds, not as helicopters and so far this looks like it will work. We can honestly say they are only Carbon and Kevlar bits and have never been aircraft and therefore are not restricted for export.
We have packed up all intellectual property, drawings and electronic data, and can ship these out of New Zealand at any time. These are the real value of the intellectual property.
We are throwing away millions of dollars of development work over the last
11 years but have containered Wasp and Moulds, Snark and all parts and
Moulds.
We just need somewhere to send these containers to, that will be suitable to manufacture again. Our options are Singapore (who really want us) Georgia (who are also offering big financial support) or France as yet an unknown situation. …
I have a finished helicopter (except for the rotor blades two weeks to make the blades from the finished moulds) …
[65] Pages 15-22 : March 2008 : Rogers and Chikvashvili : sales agent, Georgia. Statements by Rogers include: (1) Moving offshore. Talking about military capabilities of the Snark. Says “we manufacture the front undernose Gimble cameras and would ship them as electronic parts”. (2) “Moving my company out of New Zealand has been a major traumatic decision, but unfortunately [sic] the right decision.” (3) And in a later e-mail:
On the advice of our international accountants ‘Ernst & young’ [sic] we decided it was time to leave New Zealand.
The helicopter was in a stripped down condition in mid February about to be painted and assembled for flight testing demonstrations in New Zealand and landing demonstrations on a New Zealand Frigate.
It was then pointed out by Ernst Young that if we painted and assembled the Snark Mk 3, certified it for flight testing, and then flew the test series we would be flying a military helicopter and as such would not be able to export it under the current New Zealand MFAT (Ministry of Foreign Affairs and Trade) export requirements. TGR could not afford to have a helicopter stuck in New Zealand and so we cancelled the assembly, painting and test demonstration program due to start 12th April for overseas customers.
It was better to pack the helicopter in parts into a sea container for shipment including its moulds etc as simply Carbon fibre parts and moulds not an aircraft. So this is what we have done over the last 29 days.
TGR’s facility (40 thousand Sq ft is closed and sold) TGr [sic] is now in several 40 ft sea containers and storage facilities whilst we decide where we will manufacture I the world.
Rogers expressed interest in possible manufacturing facilities in Georgia.
[66] Pages 24-25 : June 2008 : Rogers and Anderson : long-standing friend, USA. The subject of the e-mail is “Paris/Garage”. Anderson asks: “When is your meeting in Paris?”. He refers to advice he had obviously got from Rogers about cleaning out the TGR factory and how hard it must have been. “The best justice will be you selling your IP to Saudi Arabia for a LOT of money and the shareholders who caused this mess getting nothing.” Rogers’ reply refers to a presentation for people from “Saudi” and Jordan on 16-20 June at Eurosatory [Paris]. Reference to discussions he will be having with the Indian High Commission in Melbourne on Friday about the Snark. Travels to other places.
[67] Pages 26-28 : June 2008 : Rogers to Yariv : sales agent, Vietnam. Responding to an e-mail from Yariv relating to the Snark:
There are several factors you need to be aware of in regard to New Zealand. These have resulted in TGR Helicorp Ltd closing down its New Zealand Facility at the end of February 2008 and we are presently establishing a manufacturing facility in Switzerland “UAS TEKNIK GmbH”. TGR Helicorp Ltd now a shell company only, and the TGR name will be discontinued by the end of this month, for the following reasons:
[Refers to “an impossible situation” for the last two years because of the NZ Ministry of Foreign Affairs and Trade refusal of export licence.]
…
TGR’s Board made the decision to close down in February and we have since that decision been in talks to reposition our facility in Singapore, or Switzerland. We believe Singapore would permit export of Snark to the Vietnam Navy but this would need confirmation.
…
We have contracts available in several Asian countries but have hesitated to commit to Singapore at present because of their intention to take up membership of MTCR in January 2009. This is the reason we have decided
on Switzerland and we hope to be operational in ten months time either in
Zurich or Lugarno (German and Italian Canton’s respectively).
…
It is signed “Trevor Rogers, President, TGR Helicorp Limited soon to be UAS TEKNIK GmbH”. A further e-mail from Rogers says “our only competitor is the American Firescout FTOL, which is light years different in performance, endurance, stealth and payload”.
[68] Pages 30-35 : June 2008 : Rogers and Boehler : Head of Division, State
Secretariat for Economic Affairs, Switzerland. Boehler refers to a meeting on 30
April 2008 and says “we are now able to communicate the classification of the discussed unmanned helicopters developed by your company” then refers to the “Snark UAV” and the “Alpine Wasp (civil UAV)” classification according to Swiss law. Rogers 4 June 2008 reply includes: (1) “We are looking favourably at manufacturing the Snark in Switzerland.” (2) Refers to the Alpine Wasp and distinguishes it – no military application. “We are happy to have to provide detailed specifications to the Swiss SECO [State Secretariat for Economic Affairs] as part of any application for export of this UAV rescue helicopter.” (3) “We are excited about the thoughtful response from the Swiss Authorities. We are a responsible manufacturer and would like to be very much a part of Switzerland’s manufacturing aviation industry, happily meeting all requirements for export of our products.” (4) “We note that France requires all Intellectual Property (IP) of the company to become French. Since we will be manufacturing in several parts of the world including Switzerland we cannot meet such a requirement and the IP will remain the property of the company internationally. Is this a problem?” (5) “Our present thinking is we will have at least 3 manufacturing plants, with HQ in Switzerland at this stage. We will be re-naming the company to probably ‘UAS Teknik GmbH’.” Rogers copied his e-mail to Gareth Morgan.
[69] Pages 40-44 : Mr Rogers to Mrs Rogers. This has the problematic date 3
August 2008 ?. However, it appears to have been produced in July 2008. The subject is “July Update doc 2008.doc”. The document from its content is plainly intended for distribution to people overseas to accompany a PowerPoint display and to explain the background of TGR through to why they are setting up in Switzerland.
We have been working on setting up the new Company UAS TEKNIK GmbH in Switzerland and at this time we are now finalising registering in BASEL and we are currently looking for suitable manufacturing premises in the BASEL area.
[120] Mr Rogers’ explanations for why he lied to Mr Maillotte and how he thought he could cover up the lie did not apply to other sales agents. The circumstances relating to Mr Chikvashvili, the agent in Georgia, and Mr Durrani, the agent in Pakistan, were different from the circumstances applying to Mr Maillotte. They, or their prospective purchasers, unlike Mr Maillotte’s purchaser clients, had not seen any IP. As a result, when pushed in cross-examination, the explanations from Mr Rogers were different.
[121] When Mr Rogers was asked why he might have lied to Mr Chikvashvili, he gave an explanation that did not make sense in the context of his other evidence. He admitted that as an experienced businessman he took care to communicate accurately with potential purchasers, and said that he probably would not lie to a potential negotiating partner with military connections and would not defraud them. His earlier evidence was that he required significant foreign investment in order to continue to develop the Snark. He said that he was approaching Mr Chikvashvili in order to get the funding injection he needed. But he also admitted that Mr Chikvashvili would need to see the drawings prior to parting with any money. Mr Rogers has given no credible explanation for lying to Mr Chikvashvili. His general explanation is equally lacking in credibility: he said he could not do drawings without money from a contract, that he lied about having the drawings to get the
contract, yet he admitted that any commercial partner would want to see drawings before paying any money.
[122] In his e-mail to Mr Durrani on 27 July 2008 Mr Rogers said:
All the server hard drives are in two different European countries in bank security and out of New Zealand at this time. The IP will be part of the technical documentation passed on to a company purchaser.
Mr Rogers accepted that the explanation he gave for lying to Mr Maillotte – the possible purchaser in France had already seen the IP – did not apply to Mr Durrani. Mr Rogers advanced a further untenable proposition in response to the suggestion that the purchaser in Pakistan would want to see the IP before making payment; he said, in effect, the aviation industry did not work like that. That is untenable standing alone. It is also contradicted by the careful arrangements made by Mr Morgan, Mr Rogers’ own business adviser, to enable Mr Sailer’s buyers to inspect the IP: see [79] above.
[123] I am satisfied that Mr Rogers recognised that he was giving implausibly inconsistent evidence when confronted with the different circumstances relating to different e-mail correspondents. I am also satisfied that Mr Rogers’ recognition of this got to the point where he prevaricated in his answers until he had determined whether or not he should say that a statement in an e-mail was true or untrue.
[124] Mr Rogers’ adviser, Mr Morgan of Ernst and Young, was in a different position again from sales agents, friends, and unexpected correspondents such as Lady Fiennes. Mr Rogers, in the end, acknowledged that there was “not really” any reason to lie to Mr Morgan. In addition, with Mr Morgan, there is Mr Morgan’s own certification to Mr Sailer that Mr Morgan had got a “high calibre aeronautical engineer … to review the working drawings suite” so that Mr Morgan could independently satisfy himself as “Ernst and Young, that the engineering IP was world class”.
[125] There was no plausible explanation for lying to Mr Anderson, Mr Rogers’
friend.
[126] Inconsistent explanations continued as the cross-examination continued on the e-mails, which effectively culminated with the e-mails arising from the contact Mr Rijkse made with Mr Rogers and then Mr Morgan in March 2009.
Conclusion
[127] What TGR seeks is a sanction to be imposed on Mr and Mrs Rogers to coerce them into complying with current Court orders which, TGR alleges, have not been obeyed and are capable of being obeyed. The essential elements required to be established by TGR are that:
a) There are current orders binding on Mr and Mrs Rogers that are unambiguous in their terms.
b)Both Mr and Mrs Rogers had knowledge of the terms of the orders at all times relevant to the current application.
c) Mr and Mrs Rogers remain in breach of the orders. d) The continuing breach is deliberate.
Mr and Mrs Rogers do not dispute a) and b). They deny c) and d).
[128] Where the plaintiffs seek sanctions of a fine, sequestration or imprisonment, these elements must be proved beyond reasonable doubt.
[129] The legal principles relating to proof of contempt of Court orders and to penalties are well established and do not require discussion.7
7 See, for example, the recent discussions of these principles, and further principles relating to the penalties to be imposed, with reference to earlier authorities, in: Ferrier Hodgson v Siemer (HC Auckland, CIV-2005-404-1808, 9 July 2007 and further judgment 13 July 2007, Potter J); Solicitor- General v Siemer (HC Auckland, CIV-2008-404-472, 8 July 2008, Chisholm and Gendall JJ); Siemer v Stiassny [2008] 1 NZLR 150 (CA); Siemer v Stiassny [2008] 3 NZLR 22 (CA); Siemer v Solicitor- General [2009] 2 NZLR 556 (CA); Siemer v Solicitor-General [2010] 3 NZLR 767 (SC).
[130] I am satisfied that the four elements required to be established have been established beyond reasonable doubt in respect of Mr Rogers and, separately, Mrs Rogers. More specifically, I am satisfied beyond reasonable doubt that Mr and Mrs Rogers have continued to lie to the Court and that they have knowingly and deliberately continued to defy the Court orders to disclose the whereabouts of the missing IP and other assets of TGR. My reasons for these conclusions are in large measure recorded in the preceding discussion about the e-mails, with that discussion set against all of the background facts earlier recorded. Relevant considerations include the following:
a) Fundamentally, the relevant statements in the e-mails are true. Given that they are true, the missing IP and other assets remain in the possession or control of Mr and Mrs Rogers and they have deliberately lied to the Court about this.
b)Mr and Mrs Rogers never expected the receivers of TGR, or others who might oppose their interests, to see the e-mails.
c) This is part of a consistent pattern. There has been dishonesty of a serious kind for a long time by Mr and Mrs Rogers, all of which has been directed to seeking to preserve assets for the personal benefit of Mr and Mrs Rogers.
d)The Snark prototype was retained, and hidden away from the assets that were discovered in the first search. The plain intention was to sell this prototype, or use it for further development. It was not saleable without the IP and other assets not so far discovered.
e) The evidence of Mr and Mrs Rogers that the IP was destroyed is not credible. Amongst other things, I do not believe that the most valuable asset of the company and the asset that was most easily retained and hidden would have been destroyed when large items were carefully hidden.
f) The conflicting evidence of Mr and Mrs Rogers relating to the destruction of the hard copies of the IP supports the conclusion that it was not destroyed.
g) It is not credible that the IP would be destroyed at the very time serious efforts were being made to sell the helicopters with the IP overseas.
h)Sending the IP and other assets overseas was consistent with plans that had been in train for some time. It was also consistent with what has been proved beyond any doubt in relation to the hiding of other assets.
Penalty
[131] TGR has sought orders that both Mr and Mrs Rogers be committed to prison for three months unless they comply with the existing orders within a specified period. The first question to be determined is whether it is appropriate in the circumstances of this case to commit Mr and Mrs Rogers to prison at all, with this issue in respect of each of them to be considered separately.
[132] Given the nature of my findings of continuing contempt, the gravity of the contempt committed by both Mr and Mrs Rogers, and the repeated defiance of Court orders in the past, I am in no doubt that a serious sanction is required to seek to coerce them to comply. The plaintiffs have have sought an order that Mr and Mrs Rogers be debarred from defending the proceeding in addition to committal to prison. I am satisfied that, in the circumstances of this case, debarring them would almost certainly have no effect. There are no sanctions likely to be effective other than imprisonment, principally because Mr and Mrs Rogers are bankrupt. The absence of effective sanctions other than imprisonment does not of itself justify an order for committal to prison, but it means that it is the only realistic order that can be considered. Even where there has been continuing contempt of Court orders of the gravity of the continuing contempt in this case, with both defendants continuing openly to defy the Court orders, the Court will nevertheless reflect with care on the
question whether there should be imprisonment. Having done so I am satisfied that committal to prison is required unless there is compliance within a stipulated period of time.
[133] TGR originally sought orders that Mr and Mrs Rogers be committed to prison unless both of them complied with the existing orders within 24 hours. In some cases orders have been made with immediate effect. I do not consider that this is such a case. I note, in addition, that Mr Salmon responsibly accepted that the time limit initially sought for TGR was unrealistic.
[134] In all the circumstances I intend to allow Mr Rogers until the High Court resumes sitting in February 2011 to purge his contempt, otherwise imprisonment will follow. Except to the extent recorded below, I will adjourn the application so far as it affects Mrs Rogers leaving open the question of any further penalty to be imposed on her. The formal orders follow.
Formal orders
[135] A writ of arrest is to issue to bring Mr Rogers before the High Court at Auckland at 11:00 am on Wednesday, 2 February 2011. There is an order that Mrs Rogers attend on the same date.
[136] The writ of arrest is not to be executed before 2 February 2011.
[137] No later than 4:00 pm on 21 January 2011 Mr and Mrs Rogers are to do the following:
a) Deliver to the receivers of the first plaintiff, at such address as may be stipulated by the receivers or their solicitors, LeeSalmonLong, all “the assets of the first plaintiff” (being a term defined in paragraph [137]c) below) which are in the possession or control of either or both of Mr and Mrs Rogers and which assets of the first plaintiff are capable of being delivered. The address for delivery is to be notified in writing
by 24 December 2010 by the receivers or LeeSalmonLong to the defendants’ solicitors Webb Morice.
b)Swear a joint affidavit, or separate affidavits, and deliver it or them to the solicitors of the first plaintiff, LeeSalmonLong, which affidavit is to provide:
i)Full particulars of the whereabouts of every asset of the first plaintiff.
ii)In respect of any asset of the first plaintiff which Mr and Mrs Rogers claim not to know the whereabouts, or claim no longer to have possession custody or control, full particulars of the circumstances in which such assets left the possession or control of the defendants or either of them.
iii)All information that will be necessary to enable the first plaintiff to obtain possession or control of assets of the first plaintiff which are not delivered to the receivers of the first plaintiff, together with any written authority that may be required to direct a third party to release possession or control to the receivers of the first plaintiff.
c) “The assets of the first plaintiff” referred to in the preceding sub- paragraphs a) and b) means all physical and intangible property, including all physical or electronic copies of any intellectual property, and all electronic or physical documents:
i) Owned by the first plaintiff; or
ii) Relating in any way to the business of the first plaintiff; or
iii)Relating to the development by or involving the fist plaintiff of manned or unmanned helicopters in any way involving the first plaintiff; or
iv)Without limiting the generality of the foregoing, every item listed in the left hand column of Annexure B to this judgment, which annexure is to form part of these orders; and
v) The proceeds of sale of any such assets.
[138] Whether there has been compliance with the orders set out in the preceding paragraph [137] will be determined by the Court on 2 February 2011.
[139] If there is failure to comply with the preceding orders to the satisfaction of the Court the defendant Mr T V Rogers will on 2 February 2011 be committed to prison for one month.
[140] The application for an order committing Mrs Rogers to prison is adjourned to
2 February 2010.
[141] Both defendants are debarred from defending the substantive claims of the plaintiffs.
[142] Leave is reserved to the first plaintiff to apply for any further directions.
[143] Any question of costs is reserved.
Peter Woodhouse J
ANNEXURE A
TGR HELICORP – INVENTORY OF MATERIAL STORED IN MODIFIED
20FT CONTAINER
Control gear fixed / intended to be fixed in container
o Custom build control station
o Flight control chair
o Custom build workbench and cabinets
o Custom crane arms
o Custom stepladders mounted on container doors
o Rooftop lugs for mounting crane arms
o Custom lifting bracket for engine mounting
o Rails and carriage running the length of container with body mount
oVarious internal brackets for mounting launcher pods, landing bows, and other parts
o Custom fuel filler for generator, built into container wall
o Electric winch for crane
o Hydraulic motor and reservoir for pre-flight testing of hydraulic control gear
(part numbers DCE 32433 / DCE 31253)
Snark Mark 2 parts
o Prototype body and various composite body panels
o Prototype tail complete with tail rotor driveshaft and gearbox
o One set of landing bows
o Main driveshaft
o Body driveshaft
o Tank for engine and gearbox oil
o Hydraulic oil pump, plate, and coupling
o 3 boxes of assorted aircraft grade hydraulic valves, hoses, and fittings
o Wiring harness
o Tail rotor gearbox housing
o Various gearbox parts
o Box with 3 bladed rotor head parts including swash plate and rotor hub
o Box containing spreg clutch
o Oil pump body
DeltaHawk engine parts
o Custom exhaust built by TGR
o Custom intercooler, radiator and intercooler hoses
o Oil tank for use in engine testing frame
Workshop equipment
o Two sets of parallel gauges (both marked with part number PRL 100494)
o DTI gauge with magnetic base
o Two angle plates for CNC machine (one marked A7180)
o Adjustable angle plate for CNC machine
o CNC tool holder (marked EETIF40)
o Two CNC tailstocks
o Four-jaw CNC chuck
o Three-jaw CNC chuck
o Axial preset gauge (marked ZOV-50)
o Two CNC clamping sets
o Various CNC fitting and mounting parts o Reverse mounting jaws for CNC chuck Miscellaneous
o Helicopter topdressing pump and tank, with spray arms
oLaminated drawing for Snark air intake cover, and manufacturing job sheet for the same
o One box of containers containing coolant for Snark
ANNEXURE B
Number and description (evidence that is missing) Mr Rogers’ explanation
(NOE 375-379)
Preliminary: did the assets all exist? Yes. 1. Full set of TGR IP as sent to “two offshore locations”, including Switzerland (Yallop 56, 1176) Destroyed. 2. Full hard copy master set of engineering drawings (fourth Watt, Williams) Destroyed. 3. Full drawing register (Williams) Destroyed. 4. Drawings produced after 29 October 2007 (Yallop 903) Destroyed. 5. Electronic flight and controllers (red boxes) (Fourth and Fifth Watt) Destroyed (scrapped). 6. Gimballed cameras (Watt, Higgott) Dumped. 7. Three gimballed cameras and the microprocessor for controlling them (Higgott) Dumped. 8. Autopilot unit (Higgott) Sold. 9. Any electrical schematics (Higgott program list for electronics, Pearse exhibit of program listings on all computers recovered, Yallop commercials 3
& 4 include no electrical drawings)
Destroyed. 10. Electronics and gear design software (Higgott, Williams, Pearse program listing) Destroyed. 11. Electronic PCB design files (Higgott, Pearse program listing) Dumped (by Mr Rogers, on a truck). 12. Electronic program files for PCBs (Ibid) Wiped. 13. Actual PCBs (Higgott) Dumped. 14. Two base station computers and one high spec design computer (Higgott) Wiped / sold. 15. Bosch electronic diesel injectors for DeltaHawk engine (Higgott) Doesn’t know, presumes dumped. 16. Oscilloscope (Higgott, Fourth / Fifth Watt) Sold on Trade Me. 17. Equipment from base station including (Fifth
Watt):
(a) Diesel generator
(b) Flat screen monitors(a) Didn’t exist. (b) Sold.
18. The Snark Mk 1 body mock-up (Fourth Watt) Dumped by Mr Rogers.
19. Missiles mounted on the Snark (Fifth Watt) Returned to agent. 20. Various aircraft grade bolts and fixings for the
Snark (Fourth Watt)
Metalworks (scrapped). 21. Snark gearboxes and rotor head control unit (at least three) (Williams, Fifth Watt) Were only two [contested by plaintiffs]. One is in storage at New Lynn. The other was dumped. 22. Snark landing bows (Fifth Watt) In base station container
[contested by Plaintiffs].
23. All plugs and moulds for the Snark (if Mr Rogers’ is correct that all recovered moulds are for the Alpine Wasp) Dumped. 24. Two Alpine Wasp gearbox housings (Fourth / Fifth Watt) In the New Lynn storage shed. 25. Three sets of manufactured gears for Alpine
Wasp (Williams)
In the material recovered, or has been scrapped. 26. Custom made machine mountings (Fourth
Watt)
Believes some are at New
Lynn, others scrapped.
27. Custom tool holders (Fifth Watt) Repossessed. 28. Air compressor and air tools (Fourth Watt) Were two. Left for landlord. 29. Engine hoist for DeltaHawk engine (Fifth Watt) Snark base station [contested by Plaintiffs]. 30. The TGR server (Williams) Wiped and sold. 31. Back-up tapes (Lye) Did not exist.
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