Appeal Court halts appointment of new Gorstew director

The Court of Appeal has barred Gorstew Limited’s board from appointing a new director – marking a key legal victory for Sandals Executive Chairman Adam Stewart in his ongoing battle to prevent his removal from the helm of the company.

Gorstew is a cornerstone of the late Gordon ‘Butch’ Stewart’s business empire, which is now at the centre of family and legal disputes following his death in January 2021. Adam Stewart, Butch’s son, currently serves as a director and executive chairman of Gorstew.

In an oral ruling delivered on May 5, Justice Jennifer Straw granted an injunction preserving the board’s current composition, pending Adam Stewart’s appeal against a March 3 Supreme Court ruling that refused to stop Gorstew’s directors from holding board meetings.

While largely upholding the Supreme Court’s judgment, Justice Straw acknowledged that new evidence presented in the appeal, particularly about board conduct, may support Stewart’s claim that he could be unfairly disadvantaged if another director is appointed now. The decision blocks the board’s planned appointment of former Gorstew finance director Paul Soutter, which Stewart argues would shift the board’s balance of power against him.

Straw emphasised that her ruling preserves the status quo to avoid prejudicing Stewart’s position before the appeal is fully heard.

“The justice of the case dictates that the status quo in relation to the board of directors of Gorstew be preserved,” she said, noting that directors can still fulfil their legal responsibilities.

Attorney Conrad George, representing Stewart, said they would appeal the rest of Straw’s decision to the full Court of Appeal.

Broader legal conflict

“We’re appealing this decision ... on the ground that it was technically erroneous, and we hope for it to be heard urgently,” he said. That hearing is scheduled for June 30.

The broader legal conflict stems from a December 16, 2024 lawsuit in which Adam Stewart sought to stop his brother Robert ‘Bobby’ Stewart, Dmitri Singh, Elizabeth Desnoes, and Laurence McDonald from holding a Gorstew board meeting on December 18. Stewart also requested the appointment of three independent directors or a delay in board actions until the court hears a related oppression claim.

In that claim, Stewart argued that any attempt to remove him as executive chairman is oppressive, unfairly prejudicial, or disregards his rights as a director, officer, and majority shareholder.

However, in March, Supreme Court Justice David Batts dismissed Stewart’s application, finding he lacked standing since he holds no shares in Gorstew. Batts also noted that the umbrella company Butch Stewart instructed to be created – under which Gorstew and other entities would fall, with Adam given majority control (52 per cent) – does not yet legally exist.

Justice Straw agreed Batts was not “demonstrably wrong” on that legal point but accepted that the board’s recent conduct, including failing to seek legal advice before indemnifying themselves against Stewart’s lawsuit, could support his claim of oppression.

Stewart had objected to board-approved resolutions passed in February, including indemnifying directors and supporting a red-flag audit of Gorstew and related companies without first obtaining legal guidance. Straw called these actions potentially problematic and “arguable” grounds for concern about unfair disregard of Stewart’s interests.

Straw allowed most items on the board’s agenda to proceed, including discussions on Stewart’s use of the “executive chairman” title, potential curtailment of his executive authority, and formation of an audit committee. She acknowledged the agenda’s tone could be seen as “threatening” but agreed with Batts that these items did not directly infringe on Stewart’s role as a director.

Stewart’s legal team, including King’s Counsel Ian Wilkinson, argued that stripping him of his title would cause irreparable harm. But Justice Straw disagreed, stating there was no imminent action threatening his directorship and that Butch Stewart’s will did not guarantee him the role of chairman at Gorstew.

She added that Stewart’s eventual role in a yet-to-be-formed parent company, as outlined in the will, was not being blocked by current board actions.

Since Butch

Stewart’s passing

The dispute is one of several that have emerged since Butch Stewart’s passing, centring on how his May 2020 will should be implemented. That will envisioned placing his companies – including Gorstew, Appliance Traders Limited the ATL motor vehicle business, AC Marriott Hotel, and the Jamaica Observer, and any other business outside the Sandals & Beaches Group, the Unique and HPI group – under a new umbrella company, referred to as the ‘ATL Group’, with a 52 per cent controlling stake allocated to Adam Stewart.

The remaining 48 per cent was to be split equally between Bobby Stewart and Gordon Stewart, Butch’s son with his American common-law wife, Cheryl Hammersmith-Stewart. She and Adam Stewart are locked in multiple legal disputes, mainly in Jamaica and The Bahamas.

Executors of the estate have claimed difficulties in assessing the full extent of Butch Stewart’s assets – claims that Adam Stewart has publicly disputed. Justice Batts, in his ruling, said the estate’s trustees “have a responsibility to implement his wishes and, in doing so, must identify and call in the assets, ensure they are duly protected, and undertake the process of distribution in accordance with the testator’s (Butch’s) instructions”.

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