The Tribune

• Fight centres on trusts in ‘Butch’ Stewart’s estate

• Supreme Court judge declines to ‘seal’ details

• Draws in many top Nassau commercial QCs

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The family of Gordon ‘Butch’ Stewart, the late Sandals resort chain founder, have become embroiled in an escalating Bahamian legal dispute over the multi-million dollar estate he has left behind.

Senior Justice Indra Charles, in a May 30, 2022, verdict redacted - or blanked out - most of the details surrounding a battle that centres on two Bahamas-based trusts created by the Jamaican-born entrepreneur who established a business empire that stretches across this nation and the Caribbean.

The courtroom fight is pitting Cheryl Hammersmith-Stewart, his common-law widow, and who was his third wife, against Cromwell Trust Company, the Bahamian private trust company that is responsible for managing the two trusts and their assets in its role as trustee.

Cromwell Trust Company has been joined as defendants by Mr Stewart’s adult children from his earlier marriages, including his son, Adam, who succeeded his father as Sandals Resorts International’s executive chairman and is named as the “enforcer” and an advisory Board member for both trusts.

Adam Stewart’s sister, Jaime McConnell, also an advisory Board member, is named as another defendant as is Brian Jardim, another of Gordon ‘Butch’ Stewart’s adult children. Mr Jardim, like Adam Stewart, is a successful businessman and entrepreneur in his own right, holding the post of chief executive at Rainforest Caribbean (formerly Rainforest Seafoods), the Jamaica-headquartered business that describes itself as the “Caribbean’s largest” seafood processor and supplier.

The final three defendants are Sabrina Stewart, and the twins Kelly and Gordon Stewart, who are Mrs Hammersmith-Stewart’s three children with the late Mr Stewart. They have likely only been added to the legal action because they are also beneficiaries of the two trusts.

The Sandals name, and that of Gordon ‘Butch’ Stewart, was carefully omitted by Justice Charles in her ruling but a simple Internet search confirms the identities of both Mrs Hammersmith-Stewart, as plaintiff, and all the named defendants and their family links to the resort chain founder.

There is nothing in the verdict, though, to suggest that the dispute over the late Mr Stewart’s estate will impact Sandals or other business interests he has left to his family. The wealth he amassed will almost certainly have been kept separate from the finances of the resort chain and other businesses.

In The Bahamas, these assets include Sandals Royal Bahamian in Nassau and Sandals Emerald Bay in Exuma, plus Fowl Cay. Further afield, they include the Appliance Traders Ltd (ATL) Group in the late Mr Stewart’s home country and the Jamaica Observer newspaper.

While the dispute could prove a distraction, especially if it drags out over a long period of time, Adam Stewart has given no indication that it will as his most recent social media posts via Twitter deal with the opening of Sandals’ latest resort, the Royal Curacao.

Some sources, though, yesterday said there were early similarities between this dispute and those which embroiled the estates of the two late Grand Bahama Port Authority (GBPA) co-chairs, Edward St George and Sir Jack Hayward.

Justice Charles’ ruling dealt with Cromwell Trust Company’s bid to “seal” all documents related to the dispute that have been, or will be, filed with the Supreme Court. This would have ensured that all details, especially those that are financial-related and give specifics on the family’s wealth, as well as future court hearings are kept private and not disclosed publicly.

The legal battle has also created work for some of Nassau’s top commercial lawyers, including two former attorney generals. John Wilson QC, senior partner and head of litigation at McKinney, Bancroft & Hughes, is representing Mrs Hammersmith-Stewart while Brian Simms QC, the Lennox Paton partner and head of its litigation practice, is acting for Cromwell Trust Company.

Sean McWeeney QC, the ex-attorney general now at Graham, Thompson & Company, has partnered with a London-based QC to represent Adam Stewart, Mr Jardim and Mrs McConnell, while John Delaney QC, another former attorney general now heading his own Delaney Partners law firm, acts for the children of Adam Stewart and Mrs McConnell. Terry North, of Alexiou, Knowles & Company, acts for Mrs Hammersmith-Stewart’s children.

Justice Charles’ ruling states that Adam Stewart, Mr Jardim and Mrs McConnell backed the trustee’s sealing application, which was opposed by Mrs Hammersmith-Stewart and her children on the basis “that the circumstances of this case do not warrant the grant of a sealing or privacy order”.

The heavily blacked-out verdict does not provide the cause of the dispute, instead describing the late Gordon ‘Butch’ Stewart as “a wealthy and well-known entrepreneur” who founded two Bahamas-domiciled trusts. “The deceased died leaving two surviving branches of his family. The first branch is the ‘first family’, comprising his adult children (and their respective families). The second branch is the ‘second family’,” Justice Charles wrote.

“Most of the deceased’s wealth was settled into three trusts, two of which are Bahamian and the subject of these proceedings. The trustee is a Bahamian private trust company that is the trustee of both trusts. The deceased left very detailed instructions expressing his wishes as to how the trusts are/ought to be administered after his death.

“In summary, he expressed that he wanted the trusts to be brought to an end promptly following his death and that the shares in the business holding companies.... be decanted into five new trusts.” Neither Cromwell Trust Company nor the “first family” - Adam Stewart, Jaime McConnell and Mr Jardim - have yet to file defences to Mrs Hammersmith-Stewart’s claim although they were granted “very generous” extensions of time in which to do so.

Mr Simms, acting for Cromwell Trust Company, argued that the case “falls within the exceptions to the rule” that all filed legal documents and court proceedings should be subject to “open justice” - meaning they are accessible to the public.

He based his arguments on the grounds that the dispute “involves confidential matters and this [The Bahamas] is an offshore financial centre”. Mr Simms called on Justice Charles to seal proceedings using section 77 of the Banks and Trust Companies Regulation Act 2020, which allows for a person’s confidential financial information to remain private.

“By the enactment of the 2011 Trustee Amendment Act, which provides a means of resolving disputes through arbitration, Mr Simms argued that Parliament has reinforced the public policy of protecting trust matters from prying eyes and ensuring confidentiality,” Justice Charles noted.

“He emphasized that section 77(3) makes no distinction between administration and hostile trust matters. Further, he stated that the provision gives the court a far greater discretion than statutes in other jurisdictions to specifically hear matters in camera and to seal files. Mr Simms submitted that The Bahamas is a jurisdiction where trust disputes can be arbitrated in private by virtue of the 2011 Trustee Amendment Act.”

However, Justice Charles rejected this. She ruled: “In my judgment, the effects on the trusts asserted by the trustee are no more than inconveniences. If the risk was sufficiently compelling to justify derogation from open justice, many parties to litigation would be entitled to sealing orders, which would undermine the effectiveness of the principle of open justice itself.”

She added that the counter-arguments advanced by Mr Wilson and Mr North, on behalf of Mrs Hammersmith-Stewart and her children respectively, were “attractive”. They both said the disclosure of private information was the inevitable consequence of legal proceedings that “could always have detrimental effects” on the parties involved, but the mere fact trusts were involved in this case was not sufficient justification to seal the court file.

“The first family have failed to explain how the publicity of the proceedings would negatively affect the trusts,” Justice Charles found, adding that “notwithstanding public policy, however, in the circumstances it is not sufficient to justify the derogation from open justice......

“It is therefore difficult to see how the publicity of the litigation will have any material/substantial additional effect. The fact that the litigation may be inconvenient.. does not warrant the displacement of the open justice principle. The trustee and the first family have not demonstrated that the sealing order is necessary in the interests of justice. Rather, they have merely proved that it is more convenient.”

Justice Charles ordered that Cromwell Trust Company file its defence by June 12, 2022, having had the benefit of a four-month extension, while Mr Stewart’s adult children have been given until June 27, 2022.