Father sues daughter to reclaim company

Published: Friday | December 13, 2013 Comments 0
Supreme Court in Kingston.
Supreme Court in Kingston.

McPherse Thompson, Assistant Editor - Business

The company and assets of an elderly man taken over by his daughter during his illness have been returned to him by the courts in a case involving transactions that the judge pronounced fishy and reprehensible.

Lelieth Watts had transferred to herself a majority shareholding in her 88-year-old father's company, Watts Investments Limited, after he suffered a stroke.

She also took control of an apartment complex, whose rental income was Leslie Augustus Watts's main livelihood in retirement.

Supreme Court judge Ingrid Mangatal, in handing down judgment in favour of Leslie Watts, declared the transactions irregular and fictitious and ordered that the register of members of Watts Investments be amended by striking out all shares purportedly held by Lelieth Watts.

The judge also ordered that an injunction be issued restraining Lilieth from disposing of or doing any transactions with the shares of the company.

The elderly Watts sued his daughter through his guardian and next friend, Dr Lloyd Barnett, who had power of attorney to conduct his personal and business affairs. A 'next friend' acts in a legal capacity on behalf of another who does not have the faculties to handle their affairs. He was represented in the case by attorney Hugh Small, QC.

As laid out in the judgment, in the 1970s Mr Watts acquired the apartment complex at Shortwood Close from which he earns rental income - his chief livelihood. Watts Investments was the operating vehicle for the apartments.

Suffered brain damage

In March 2010, Watts was hospitalised for a stroke from which he suffered brain damage. He was discharged the following month.

But while he was in hospital and up to about May or June 2010, although he recognised persons, his cognitive functions were impaired.

Watts recovered some functionality around June 2010. Lelieth produced two power of attorney purportedly executed by her father on September 10, 2010 and January 17, 2011 in her favour.

Watts, in his lawsuit, said Lilieth transferred the majority shareholding of the company to herself, as well as Watts's 2002 Toyota Corona motor car, and called and participated in an annual general meeting of the company at which she was purportedly made a director.

Between 2010 and 2011 documents were also filed with the Companies Office of Jamaica on behalf of Watts Investments indicating a resolution was passed to increase the company's share capital, in addition to appointment and change of directors and company secretary, and allotment of a majority of shares to Miss Watts.

Farida Sanguinetti, a director and company secretary, whose shares were transferred after she allegedly signed a document to that effect, gave evidence that no meetings were held with directors and shareholders to give effect to those transactions and that she did not sign the transfer document.

Barnett told the court that he was appointed by the court on March 1, 2012 to manage Mr Watts affairs. But he later told Mr Watts there was little he could do as 51 per cent of the shares in Watts Investments had been transferred to Lilieth.

Lilieth, who says she lives at Shortwood Close but temporarily resides in the United States, told the court that she arrived in Jamaica in March 2010, shortly after her father got the stroke and that everything she did was done in accordance with his will and own volition.

Father Watts denied her claim.

Justice Mangatal said in her ruling that there was "something extremely fishy" about the documents used by Lilieth and accountant clerk Errol Mills, who said he was the accountant for Watts Investments, in a series of transactions to assume control of the business.

The relevant company documents relating to the alteration of the share capital were all filed after Leslie Watts's stroke, the judge noted.

"The resolution purportedly increasing the share capital was filed on 14th February 2011 at the Companies Office of Jamaica, but was signed by Lelieth Watts as a director, and is dated 7th November, 2006, a date when Miss Watts admittedly and incontestably had nothing to do with the company," the judge said.

"The document is clearly falsified."

Noting that the accounting clerk's role was critical, Justice Mangatal said she "did not form a favourable impression of Mr Mills. He appeared evasive, furtive and under cross-examination appeared to be looking for a spot to scurry into," she said.

"... Miss Watts and Mr Mills have, quite frankly, in tandem and separately, behaved in a morally reprehensible manner," the judge said.

Mills said he has worked for Watts Investments for more than 20 years.

"I found it quite troubling that Mr Mills did not disclose that he is neither a chartered accountant nor registered public accountant, had no professional status, and was only an accountant clerk, until he was cross-examined about it," Mangatal said.

Justice Mangatal also agreed with Small "that the explanations given for the increase of share capital and the transfer of shares are spurious, and given the power of attorney that Miss Watts had, were not necessary for the purposes of ensuring the continued management of the company."

mcpherse.thompson@gleanerjm.com

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