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A judge of the Supreme Court has ordered compensation for the late Lloyd Wilson’s estate after determining that some of his shares in Ideal Betting Company Limited were unlawfully transferred to principal owner Donovan Lewis.
The lawsuit was brought by Marcia Bellegarde, executrix for the estate of her father, Lloyd Winston Wilson, who died in November 1994.
“The conclusion arrived at from all of this evidence is that the instrument of transfer purportedly executed by Lloyd Wilson after his death was fraudulently used to transfer 22,000 shares into the name of Donovan Lewis,” Justice Blair wrote in her judgment issued on October 17.
The case is being appealed.
Based on the judgment, the initial 20,000 shares in Ideal betting, a company incorporated in 1970, were split among Donovan Lewis, with 53 per cent or 10,600 shares; Lloyd Wilson, with 20 per cent or 4,000 shares; Noel Huie, with eight per cent or 1,600 shares; K.R. Abrahams, also with eight per cent or 1,600 shares; Delores Scott, with seven per cent or 1,400 shares; and Reginald Wilson, with four per cent or 800 shares.
The shareholdings changed over time, with Lewis’ stake increasing through a series of transactions as outlined in the judgment, which cited the company’s board minutes signed by Lewis, who was determined to be both chairman and secretary:
• The purchase of 1,000 shares held by the estate of K. R. Abrahams in 1984;
• The purchase in 1989 of 400,000 shares in offering of shares newly created on November 17, 1989;
• The purchase of 4,000 shares held by Reginald Wilson in 1994; and
• The purchase in 1994 of 22,000 shares held by Lloyd Wilson, now deceased.
Bellegarde took issue with the allotments under the 1989 offering and the purchase from Reginald Wilson and claimed further that in relation to the 22,000 shares, there was never an agreement for their sale.
In her ruling, Justice Blair declared that the 400,000 allotment to Lewis was valid but agreed with Bellegarde regarding the transfer of Lloyd Wilson’s shares, which was determined to be unlawful.
Justice Blair noted that the annual returns filed at the time “based its efficacy on this fraudulent transfer”, resulting in the watering down of Wilson’s ownership.
“The annual return was designed to misrepresent the true state of affairs at the company and to cause the registration of shares in the name of Donovan Lewis with the effect of diluting the shareholding of Mr Wilson,” Justice Blair concluded.
Blair ordered that the share register of Ideal Betting Company Limited be rectified by inserting the name of Bellegarde in her capacity as executrix and Wilson’s estate as the holder of shares representing 22 per cent of Ideal Betting’s issued share capital.
The authorised share capital of the company was fixed at 100,000 shares with nominal value of $1 each. Justice Blair also ordered that the number of shares held by Lewis be struck out and adjusted to reflect shareholdings of 78 per cent of the company’s issued share capital.
The judge also ordered the striking out of the name of Eulalee Huie as a shareholder. She had been named as a director in 1980 following the death of her husband, who was a shareholder, in 1978.
Bellegarde, in her pleadings, had called for the striking out of the name of Eulalee Huie as ever being a shareholder, and the reduction of Lewis’ shareholdings by a corresponding amount to reverse the purported acquisition of shares from Eulalee Huie.
In granting the request, Justice Blair noted that while Lewis said Huie was appointed as director in January 1979, there was no record of the appointment.
“The transfer from Eulalee Huie which ought to have been allotted to estate Noel Huie on the admission of the defendant is also the subject of a remedy by rectification of the share register,” Blair ruled. As a result, Lewis’ shareholdings were reduced by 12,800 shares.
Lewis and Ideal Betting are to provide the claimant with an account, including dividends and payments made to each shareholder, dating from Ideal’s incorporation in December 1970 to present.
The shares of Lloyd Wilson are to be valued by a valuator agreed by the parties within 30 days of the October 17 judgment, failing which a valuator will be appointed by the court. Ideal Betting and/or Lewis have been ordered to purchase shareholdings held in the name of Estate Lloyd Wilson at the price fixed by the valuation. Additionally, Lewis must pay over the proportionate amount in dividends that are due to Bellegarde.
“Ideal Betting only paid dividends three times in its history. Small dividends were paid in 1987. No dividends were declared for another 26 years even though the company was consistently doing well and maintained $11,000,000 in capital reserves and accumulated profits over the years,” Justice Blair noted.
“In 2013, when Mr Lewis held 97 per cent of the shares, dividends of $5 million were paid, and again in 2014, dividends of $10 million were paid. This conduct qualifies as wrongful and raises the question of unfairness,” the judge commented.
Lewis was given 90 days to file a return of allotment and amended annual returns with the Registrar of Companies, reflecting the rectified shareholdings.
Michael Hylton KC, the lawyer representing Ideal Betting Company Limited and Donovan Lewis, said appeals have been filed.
“Both sides have appealed,” Hylton asserted. “Both say the judgment is wrong,” he told the Financial Gleaner.
Tana’ania Small Davis KC, lead counsel for Bellegarde, said that save for one ruling, the executrix was “generally satisfied with the judgment and accepts all the findings – most notably that Mr Lloyd Wilson did not sell his shares to Mr Donovan Lewis, that the company had been operated in a manner that is oppressive to the interests of Estate Lloyd Wilson ….”
The one exception, she told the Financial Gleaner, relates to the finding that the allotment of 400,000 shares to Lewis in 1989 was validly done.
“She considers that an error had been made in relation to that aspect and in light of the defendants’ appeal has decided to cross-appeal the point,” Small Davis said.
English (US) ·