The Globe & Mail (Canada): Shell Canada nearing end to 7-year dispute (ShellNews.net) 11 Nov 04
By PATRICK BRETHOUR
Thursday, November 11, 2004 - Page B4
CALGARY -- Seven years after the post office misplaced a mail bag containing a certificate for $861-million in shares for Shell Canada Ltd., the company is close to ending its long-running dispute with Depository Trust Co. over how to issue a new document.
Shell and DTC, now part of Depository Trust & Clearing Corp., are to appear in Court of Queen's Bench in Calgary to ask a judge to approve their joint submission that will cap seven years of bargaining and legal wrangling. DTCC clears, settles and holds a large portion of U.S. securities transactions.
According to legal documents filed in the case, DTC subsidiary Cede & Co. was sent a share certificate for 11.5 million class A common shares of Shell Canada by registered mail in 1997. But the letter was part of a mailbag headed for New York that went missing, although it is not clear whether Canada Post or the United States Postal Service bears responsibility.
A letter from Canada Post's service department dated Dec. 23, 1997, apologizes for the "unacceptable level of service" involved in the loss of the shares, and promises that both U.S. and Canadian postal services will investigate. The registered letter, and the certificate, were never found.
DTC then asked for a replacement certificate "numerous" times, but Shell Canada did not want to provide a second document while the first was unaccounted for, unless the trust company provided an indemnity bond for the value of the shares so that the energy company would be protected from any losses should the first certificate somehow be deemed valid. DTC contends that Shell only articulated this position in 2003.
By late December, Shell had offered a compromise that would see the bond amount cut to $50-million, or one-12th the original value of the shares. DTC rejected that offer as well, although Shell won a ruling that month that meant the case would be argued in Canada.
Now, Shell has dropped its demand for a bond. Instead, the plaintiff and the respondent will ask the Alberta court to:
Cancel the original share certificate, and bar all claims arising from it.
Order the issuance "forthwith" of a replacement certificate.
Allow Shell Canada to pursue legal remedies in place of DTC if the original share certificate resurfaces.
Force Shell Canada to reimburse DTC and Cede for any damages or expenses that result from such action.
Require that DTC and Cede use "reasonable efforts" to return the share certificate should it come into those firms' possession, but safeguarding it from liability even if its failure to do so results from negligence, fraud or employees or agents acting beyond their authority.