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Edward Rogers has won his court case — he has been officially reinstated as chair of Rogers Communications


Edward Rogers has won his court case — he has been officially reinstated as chair of Rogers Communications

Edward Rogers is chair of the Rogers Communications Inc. board again and his opponents fear major changes to the management team could be coming just as the company tries to seal a landmark takeover deal.

The telecom heir has prevailed in a court case he launched to confirm his power to remake the Rogers board of directors using just a written resolution.

On Friday afternoon, Justice Shelley Fitzpatrick of the British Columbia Supreme Court granted the ruling Edward sought and said she would award him legal costs in the case.

That means Edward, who is chair of a family trust that controls 97.5 per cent of the company’s voting shares, does not have to wait until a shareholder meeting to remove and replace five members of the board of directors.

The judge referenced the numerous “family squabbles” among one of Canada’s wealthiest families that have emerged as an “interesting” backdrop to the dispute, saying they “would be more in keeping with a Shakespearean drama” and have added a voyeuristic element to the case.

But Justice Fitzpatrick said those battles — which have included Edward’s mother Loretta Rogers speaking of her regret in having to oppose her son, plus his sister Martha Rogers’s “spirited, if not inflammatory, series of Twitter postings” — have little bearing on the “narrow legal issue raised.”

She also found that evidence of how the late company founder Ted Rogers wanted his beneficiaries to operate the trust that controls the company was of little relevance to the case, which hinged on a provision in B.C. corporate law.

Justice Fitzpatrick concluded that the B.C. legislation, in concert with the corporate articles of Rogers, permit Edward as chair of the trust to replace directors using just a written resolution and without calling a shareholder meeting.

In a statement Friday, Edward’s mother, Loretta, and sisters, Martha Rogers and Melinda Rogers-Hixon, called the decision a “black eye for good governance and shareholder rights (that) sets a dangerous new precedent for Canada’s capital markets by allowing the independent directors of a public company to be removed with the stroke of a pen.”

“The company now faces a very real prospect of management upheaval and a prolonged period of uncertainty, at perhaps the worst possible time,” the three added, referencing the company’s plan to acquire Shaw Communications Inc. for $26 billion (including debt).

Edward Rogers said that the ruling “resolves important governance issues” at the company and “confirms I acted appropriately, in accordance with Rogers’s articles and applicable corporate law.”

But he added, “I take no joy in the decision or the events of past weeks.” He said he hopes his family can resolve their differences privately and that the steps he took, “in the face of constant attacks in the media were difficult for me and my family.”

On the prospect of management change at Rogers, Edward said Joe Natale “remains CEO and a director of Rogers Communications and has the Board’s support. Our focus must be on the business, a return to stability, and closing our transformational merger with Shaw Communications.”

The legal dispute began with Edward’s thwarted attempt in September to oust Natale. When the board pushed back and instead fired the candidate Edward had in mind for the top job, he began a campaign to remove a slate of five independent directors and replace them with his own nominees.

The company’s original board voted to remove Edward as chair, but the new board subsequently re-elected him to the role. He filed a court petition last week, seeking confirmation that he could remove and replace the directors in writing and without going to a shareholder meeting.

(David Peterson, who is one of those independent board members, is also vice-chair of Torstar Corp., which owns the Toronto Star.)

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Justice Fitzpatrick heard arguments from lawyers representing both sides all day Monday and took the week to make her decision. The case has attracted intense media interest and more than two dozen reporters filled an overflow room outside the courtroom itself on Friday.

The ruling gives Edward “total power,” according to governance expert Richard Leblanc, who commented on the various possible outcomes before the ruling.

Leblanc, professor of governance, law and ethics at York University, said the fight has highlighted that Edward Rogers’ role as chair of the family trust “can be used to wilfully set whatever terms he wants.”

“And he’s always wanted the CEO job. I wouldn’t rule out him having the directors appoint him as CEO and if any director doesn’t agree, then he’ll do the same thing again — he’ll just take the 97 per cent and remove directors that don’t agree.”

Rogers is headquartered in Toronto, but it was incorporated in B.C. decades ago, which is why Edward took the case there. The B.C. Supreme Court is the trial-level court and the company, which was the respondent in the case, has an automatic right to appeal to the B.C. Court of Appeal.

The judge denied a request by Stephen Schachter, a lawyer for Rogers Communications, to stay the effect of her own decision until the company could launch an appeal, which Schachter indicated it plans to do next week.

The company did not immediately issue a separate statement of its own Friday evening, but based on comments in court, it appears likely it will ask the Court of Appeal to grant an expedited hearing and stay the matter pending the appeal.

That could be a tough sell, said Irvin Schein, a litigation partner at Minden Gross LLP.

“No one’s life or liberty is at stake here,” he said. “There’s no fire here as far as the court is concerned. This is a private business and yes, it’s a big business, but I don’t see some catastrophe arising potentially during an appeal period that would (justify) a stay.”

Before the ruling, Leblanc and other experts predicted that a court victory for Edward would mean a quick exit for Natale as CEO of the company.

“If Edward wins, what he’ll do immediately is put his team and his directors in place and Joe Natale will be gone,” said Richard Powers, an associate professor at the Rotman School of Management. “If Edward wins, he will move things with lightning speed.”

Other members of Natale’s 11-person executive team, including the head of the all-important wireless division, are also likely to part ways with Rogers.

David Fuller, president of the wireless business, said in an affidavit last week that he had no idea he was part of Edward’s planned new management team and implied he would not have agreed to it.

“The reason I joined Rogers was because of the opportunity to work with Joe Natale,” Fuller said. “My strong preference would be to continue to do so.”

Christine Dobby is a Toronto-based business reporter for the Star. Follow her on Twitter: @christinedobby

Jeremy Nuttall is a Vancouver-based investigative reporter for the Star. Follow him on Twitter: @Nuttallreports

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