In the last Sunday Gleaner, Jamaica’s oldest newspaper, a substantial story about the legal battle between the American and Jamaican families of Gordon “Butch” Stewart, the Jamaican businessman who built a successful all-inclusive hotel empire in the Caribbean, was published. Stewart died in January 2021. We reproduce that story today.
A disputed last “wish” made by late hotelier Gordon ‘Butch’ Stewart would strip his son and executive chairman, Adam Stewart, of significant say in the Sandals hotel chain.
According to Butch’s common-law widow, American Cheryl Hammersmith-Stewart, the wishes give the late mogul’s United States-based family, as a unit, the largest stake in the company, court documents seen by The Sunday Gleaner reveal.
Adam has raised serious doubts about what he called the “alleged wishes” of his dad.
The 42-year-old Sandals Resorts International is the leading all-inclusive hotel group in the Caribbean and is key to tourism-dependent economies in the region. In Jamaica, it is one of the largest private employers and foreign exchange earners.
According to court documents, Butch reportedly gave instructions just before his death that the shares of asset-holding companies in two Bahamian trusts be transferred into five newly established trusts for his family.
That means one trust for his US family (Cheryl and their three adult children – Gordon, Kelly and Sabrina); and one each for the Jamaican family members – Adam, his sister Jaime Stewart-McConnell and brothers Brian Jardim and Robert (Bobby) Stewart.
The claim is that the shares should be transferred on a proportional basis – the US family getting 42 per cent and his Jamaican children getting 58 per cent with Adam 16.67 per cent; Bobby 16.67 per cent; Jaime 16.66 per cent; and Brian eight per cent.
Along with that distribution, it was also disclosed that Butch allegedly wished for the US family to receive veto shares equal in the parent companies of the business and that the parent companies be the subject of a shareholders’ agreement which would give the US and Jamaican families “balanced representation on the boards”.
The arrangement would impact control of Sandals, the principal asset in the Coral Ridge Trust, one of the two Bahamian trusts. The other is the Hightree Trust. Most of the non-hotel businesses are dealt with in his will.
Butch Stewart established private company Cromwell Trust as trustee of the two trusts.
A trust is a legal entity through which a person gives another party, a trustee, rights to administer assets for a beneficiary.
Cromwell’s role in the hotel company is limited, as Butch gave all powers over Sandals to an advisory board, which is made up of Adam and Jaime. Adam also succeeded his father as enforcer of the trust, which means he has the power to appoint and remove directors.
The details surrounding Sandals’ potential ownership change have become public after The Bahamas Court of Appeal recently published a judgment it handed down in May 2023.
In September 2021, Cheryl filed a lawsuit for the removal of Cromwell Trust Company, on allegations that it was involved in conflicts of interest and may not implement Butch’s wishes.
The trustee applied to the Bahamian Supreme Court for an order that Cheryl’s claim be dealt with in private and the documents sealed, citing the publication of “sensitive information”. Cheryl withdrew initial support for the order.
In ruling against the privacy request in May 2022, the Supreme Court said the arguments were “extremely unconvincing”, adding that the constitutionally protected open justice principle “cannot be displaced merely to avoid publicising some information that they would prefer not to be publicised in the interest of their business”.
Adam, Jaime and Brian appealed to the Court of Appeal, which also ruled against them. They then went to the Privy Council, Bahamas’ final court, which dismissed an application to appeal last November. That cleared the way for the publication of the court documents.
The Court of Appeal’s judgment contains specific details as to the nature of the family dispute over the estate of Butch, who died on January 4, 2021. Previous Supreme Court rulings in the case were published on the court’s website on February 1.
Before proceeding with her substantive claim against the trust, which is still to be decided, Cheryl asked the court for a declaration that her claim did not engage a ‘no contest’ clause that Butch included in his trusts and will.
The ‘no contest’ provision gives the trustee the power to remove any beneficiary who challenges Butch’s wishes in court.
Adam argued that Cheryl’s claim did invoke the ‘no contest’ clause and is an “attack” on the structure of the trusts.
The court ruled that Cheryl’s lawsuit against Cromwell was not a claim that fell within the remit of the clause and which could disqualify her from being a beneficiary. It also said that the role of the advisory board in managing Sandals would not be affected.
According to The Bahamas Supreme Court judgment, Butch left “very detailed instructions” for how the trusts should be administered after his death, particularly that they were to be brought to an end “promptly” following his death.
The Court of Appeal said the judge’s reference to “detailed instructions” was “unfortunate” because the trusts are “fully discretionary”.
The original beneficiaries of the trusts, when they were established in 2001, were Butch Stewart, Adam, Jaime and Bobby, and their future children. Bobby was removed in 2003.
In August 2018, Bobby was reinstated and Cheryl and her three children with Butch added. Brian was added in July 2021.
Cheryl, the court said, is relying on a memorandum that Butch signed on January 3, 2021, a day before his death, in relation to how the assets under the trusts are to be distributed. The document was prepared by Butch’s personal attorney Trevor Patterson.
But Adam is disputing the assertions about his father’s “alleged wishes”, including the memorandum which he noted was “prepared (with the plaintiff’s [Cheryl’s] involvement) just one day before my father passed away”.
In the months before his death, Butch was dealing with a series of issues, including being “in and out of lucidity” during his battle with cancer, Adam said.
He contended that with his father’s passing, the plan shared by Patterson “cannot be implemented fully and if it were to be implemented, would, I believe, seriously harm the business and the value of Sandals”.
