Battle over Butch Stewart’s empire deepens

The family feud over the multibillion-dollar estate of late hotel mogul Gordon ‘Butch’ Stewart has escalated, with executors now seeking Jamaican Supreme Court authorisation to carry out an audit of the Adam Stewart-led ATL Group.

But Adam and two of his siblings, Jaime Stewart McConnell and Brian Jardim – all children of Butch, have punched back by asking the court to remove two of the executors – Butch’s personal lawyer Trevor Patterson and his common-law widow Cheryl Hamersmith-Stewart.

The development comes amid the efforts by the other two executors to be released from their duties to the estate.

Since Butch’s passing in January 2021, disputes over his will and control of the prized Sandals hotel empire – held in a Bahamian trust – have raged in courts.

The conflict pits the Jamaican family of Adam, Jaime, and Brian against the US-based Hamersmith-Stewart and her three children with Butch. Robert ‘Bobby’ Stewart, another of Butch’s Jamaican children, has sided with the US family.

Executors Patterson, Hamersmith-Stewart and Elizabeth ‘Betty-Joe’ Desnoes and Martin Veira want an order to conduct an “urgent ‘red flag’ audit” of Gorstew Limited and Appliance Traders Limited (ATL), and their subsidiaries. A red-flag audit is done to identify risks, irregularities, or warning signs, which themselves indicate weaknesses or other serious concerns such as fraud.

Executors or trustees are persons named in a deceased person’s will who are legally responsible for managing and distributing the deceased’s assets according to the instructions outlined in the will.

“The directions and order sought in this claim are necessary for the applicants to duly administer the estate in accordance with the terms of the founder’s will,” the executors said in their fixed-date claim form, which was filed on November 14 by their attorneys at the firm Hylton Powell. King’s Counsel Michael Hylton and Kevin Powell are leading the case.

Butch owned Gorstew and ATL and the executors said they have “serious concerns” about the operations of the companies since his death.

‘ASSUMED’ TITLE

The executors alleged that Adam “assumed” the title of executive chairman of Gorstew without proper authority and formed a new board of directors, excluding the appointed members. The document did not name the appointed members.

They allege that in or about 2022, there was a “marked increase”, by over 50 per cent, in management and employee costs in ATL, noting that this has happened where Butch is no longer on the companies’ payroll.

Additionally, they also claim that the companies’ resources have been used “to fund and/or pay persons affiliated with [Adam] Stewart’s personal business ventures” and that there are “allegations” that Adam has been taking loans from the ATL Group Pension Fund.

Alleged discrepancies in Gorstew’s finances and unexplained mass resignations by employees in that entity’s accounts department were also raised.

“The applicants’ attorneys-at-law have written multiple letters to [Adam] Stewart’s attorneys-at-law to raise these issues and to seek explanations and/or clarifications in relation to their concerns. To date, the applicants have not received a satisfactory response,” reads one of the filings from the executors.

They say they are “unable” to prepare statements required by law on the companies, noting that the management and Adam, in particular, “have refused to cooperate” in conducting an audit or getting requested information.

Adam, Jaime, and Brian have rejected these claims, accusing some executors of misconduct and hostility.

“It has been nearly four years since Butch Stewart passed away, in which time there has been little progress and virtually no transparency from the executors of his estate regarding its administration,” alleged senior attorney Conrad George, a partner at Hart Muirhead Fatta, the law firm representing the trio.

He continued: “During that time, Jaime, Brian and Adam have become increasingly concerned about aggressive and hostile actions taken by some of the executors against them, as well as evidence of serious misconduct, which they have now drawn to the attention of the court.”

George said the three siblings “are deeply saddened that legal proceedings have become necessary” and that their focus “remains on seeing their father’s wishes carried out and on finally drawing a line under these unfortunate matters”.

Some of the allegations of misconduct are contained in a separate lawsuit that Adam, Brian and Jaime brought against the four executors on November 20.

In that lawsuit, however, their first request is for the Supreme Court to rule on whether the suit would violate the no-contest clause in their father’s will. This clause allows executors to remove beneficiaries who challenge the will in court.

The siblings said “if, but only if” the court determines that the no-contest clause is not engaged, they want an order compelling executors to distribute the assets of the estate based on the terms of the will “as soon as practicable”.

They also want the court to remove Patterson and Hamersmith-Stewart as executors and to appoint chartered accountants Elizabeth Ann Jones and R. Tarun Handa as “independent personal representatives of the estate”.

COURT SETTLING PROPOSED

There’s also a proposal for the court to take over the settling of the estate.

In a separate court application, Veira and Desnoes, longtime friends of Butch, have asked the court to release them as executors.

And Adam, in his affidavit, said the siblings are seeking the court’s intervention because if Veira and Desnoes get released, Patterson and Hamersmith-Stewart would be the only executors left.

“The prospect of Patterson and Cheryl being left in control of the administration of the estate, without clear directions from the court, is a matter of very serious concern to me, Jaime and Brian,” he said.

Adam argued that Patterson and Hamersmith-Stewart face “extremely serious conflicts of interest, which disable them from acting fairly and independently”.

He said the conflict of interest with Hamersmith-Stewart is based on the “hostile litigation” she is pursuing in The Bahamas involving two trusts in which he, Jaime and Brian have an interest.

Adam said the conflicts of interest with Patterson are “even more serious and wide-ranging” and are built on numerous advisory roles Patterson held for different parties, including those with interest in the estate.

According to Adam, there is also “overwhelming evidence to suggest that Patterson forged a document for the purpose of deceiving” the trustee of a trust (distinct from the Bahamian Trusts) that his father set up for him and Jaime, according to the court documents. He said Hamersmith-Stewart was added as a beneficiary of that trust.

Adam said that on August 16, Patterson acknowledged receiving a letter from Adam’s lawyers with the allegations. Patterson allegedly said he intended to respond by affidavit.

Adam said up to November 15, he was not aware of a response.

The Jamaican Supreme Court granted probate, a legal document authorising the executors to manage and distribute Butch’s will according to his wishes, on October 31, 2023.

Butch left mainly two sets of instructions for his assets. One set related to how two Bahamian trusts, which control most of his wealth and the Sandals hotel business, are to be handled.

The Bahamian dispute focuses on the distribution of assets in the trusts, with Hamersmith-Stewart claiming a stake that could strip Adam of a significant say in Sandals, and grant the US-based family, as a unit, the largest share. That wish, which Patterson said was done according to Butch’s wishes, is being contested by Adam, Jaime and Brian.

Butch’s will, dated May 15, 2020, contains the other set of instructions that relates to various assets in Jamaica. Among the biggest are Gorstew Limited and Appliance Traders Limited, together forming the ATL Group.

The group includes Appliance Traders Limited, the Jamaica Observer newspaper and all the other media interests, the luxury motor vehicle businesses through ATL Motors Limited; ATL Automotive Holdings Limited; and the ATL Autobahn Limited; the AC Marriott hotel in St Andrew; a warehouse; a property in Montego Bay; and any other business falling outside the Sandals & Beaches Group, the Unique Group, and the HPI Group.

ADAM GETS MAJORITY STAKE IN ATL GROUP

Butch gave control of the ATL Group to Adam (52 per cent), with Bobby getting 24 per cent and Gordon Stewart (24 per cent; member of US family). He said Adam is to be chairman.

“The allocation of the interest in the ATL Group recognises Adam’s important role in expanding and developing the ATL Motors subgroup,” Butch said in the will, before outlining how the company is to be operated.

He said Adam, Bobby and Gordon, if they desire, “shall” have seats as board directors.

Butch also said Adam may establish a management company or team to deal with the group’s business, and pay the associated management fees on a ”strict arm’s length basis as determined and approved by his trustees ... “.

There is a specific provision for the Jamaica Observer, which he said should not be closed or sold although it was a loss-making entity “at the moment”. He said if it becomes a financial burden, the three sons must be unanimous in agreeing to sell or close it.

The executors’ push for the audit of the ATL Group comes months after Sandals Resorts International delayed the payout of over $6 billion to nine beneficiaries named in Butch’s will.

Sandals invoked a clause in a payout agreement to defer payment, citing economic pressures on the hotel group. It said the final instalment would be made by April 2025. The total amount was US$95 million (J$13.7 billion) but about 50 per cent has already been paid.

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.

editorial@gleanerjm.com