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Lawyer Ken McEwan, back left, who is representing former Rogers Communications chairman Edward Rogers, walks back to B.C. Supreme Court after a lunch break, in Vancouver on November 1, 2021. THE CANADIAN PRESS/Darryl Dyck
VANCOUVER - The head of the Rogers family trust says a British Columbia judge's ruling in his favour resolves important governance issues at Rogers Communications Inc. after a court battle that pitted three of his family members against him.
"I take no joy in the decision or the events of past weeks," Edward Rogers said in a written statement Friday, reacting to the court's ruling over the legitimacy of the company's board after he replaced five independent directors.
"The judgment confirms I acted appropriately, in accordance with (Rogers Communications Inc.'s) articles and applicable corporate law."
Justice Shelley Fitzpatrick's ruling validated the changes made by Rogers in opposition to the wishes of his mother and two sisters, who are also members of the board and the respondents in the case, which led to a power struggle over control of the board.
Lawyer Stephen Schachter, who represents family matriarch Loretta Rogers and her daughters Melinda Rogers-Hixon and Martha Rogers, told the court they will appeal the ruling.
Edward Rogers said in his statement that the company's focus must be on the business, a return to stability and closing negotiations on the purchase of Shaw Communications Inc. Rogers announced its plan to buy Shaw in a $26-billion deal earlier this year, which is still subject to regulatory approval.
“Our family has disagreements like every other family. I am hopeful we will resolve those differences privately, as any family would," he said. "I know every member of our family wants the brightest future for Rogers Communications."
Fitzpatrick said in her written ruling that the fact that Rogers Control Trust had 97.5 per cent of the votes meant that a consent resolution to reconstitute the board with nominees picked by Edward Rogers "easily passed" by a special majority of Class A shareholders.
A lawyer for Rogers Communications had argued all shareholders should have been provided a notice of a meeting where they could vote on changes to the board, including the 70 per cent who hold Class B shares.
However, Fitzpatrick said Edward Rogers acted in accordance with clear provisions in the company's governance articles and the British Columbia Corporations Act — the province where the company is incorporated — and was not required to provide notice of a meeting to all shareholders.
"If (Rogers Communications Inc.) wished to invoke a more rigorous process for notice to shareholders in the circumstances of this case, it could have done so. It did not and it must be taken to have done so deliberately."
Fitzpatrick also said there's no evidence that any Class A shareholder responded to the consent resolution, either consenting or objecting, except for Loretta Rogers, who wrote of her objection in an affidavit.
Schachter argued in court Monday that his clients questioned Edward Rogers' leadership because his arbitrary ousting of independent directors violated the company's governance practices.
Ken McEwan, a lawyer for Edward Rogers, told the court his client's actions are the "default mode" of resolution offered by the law in B.C.
Loretta Rogers said in her affidavit filed last week that her son "secretly" planned to remove the majority of independent directors with his own nominees and failed to abide by her late husband's 2006 "memorandum of wishes," complete with checks and balances aimed at preventing such problems by the chair of the family trust. Ted Rogers died in 2008.
"Nothing worried him more than a needless public spectacle," she said.
Carol Liao, associate professor at the University of British Columbia’s Allard school of law and director of its Centre for Business Law, said Fitzpatrick's ruling was not surprising because corporate law provides room for companies to design their own governance mechanisms.
"We have many corporate statutes that provide default provisions, with a choice for businesses to vary things in their governance documents, in their bylaws," Liao said. "Here's where you see these black and white laws permitting companies to design mechanisms that may butt up against what are deemed as good governance practices."
As for the Ted Rogers' memorandum, Liao said a publicly traded company can't be controlled from the grave.
McEwan also told the court earlier that the family patriarch's document had been treated as confidential up until the hearing, that it wouldn't meet a legal test and wasn't known to all shareholders.
However, Loretta Rogers maintained in her affidavit that her son had waged an "unconscionable" campaign to oust board members, which was inconsistent with his duties and limited authority as chair of the family trust.
She also said her son planned to fire CEO Joe Natale without the board's input and misled her about Natale's job performance as a reason to replace him with chief financial officer Tony Staffieri.
Natale was terminated before ultimately being reinstated and Staffieri was fired, further rocking the executive team at the telecommunications empire.
Rogers Communications Inc. said in a statement Friday that Natale is on the board of directors, and Edward Rogers is its chair.
This report by The Canadian Press was first published Nov. 5, 2021.
Companies in this story: (TSX: RCI)