Ideal Betting and its chairman and principal owner Donovan Lewis are facing a possible payout of more than $33 million, following the successful argument of a claim in the Supreme Court.
Lewis appeals court order to hand over some of shares
IDEAL BETTING and its chairman and principal owner Donovan Lewis are facing a possible payout of more than $33 million, following the successful argument of a claim in the Supreme Court that not all shareholders benefited from allotments of new shares in the company on at least two occasions.
The claim was brought by Kingston businessman Canute Sadler, who sought an order to amend the shares register and an injunction restraining Ideal Betting and Lewis
from making changes to the record.
It would result in Lewis giving up 56,000 shares in the company, but he and Ideal have appealed the judgement, according to information from their lawyers.
Sadler was an initial investor in Ideal but purchased the stake in the name of his fiancée at the time.
In the case adjudicated by Justice Brian Sykes between November 2016 and November 2017, the court heard that Ideal Betting Company Limited was formed in December 1970 for various purposes, including bookmaking for horse racing, greyhound racing, and other legal betting activity.
The company’s incorporation followed a November 18, 1969 meeting at which the shareholdings were agreed. A total of 20,000 shares were eventually split among Noel Huie – 1,600; Reginald Wilson, 800; Lloyd Wilson, 4,000; K.R. Abraham – 1,600; Delores Scott – 1,400; and Donovan Lewis – 10,600.
Based on that distribution, Scott-Carlington ended up with a seven per cent stake in Ideal.
The court heard that since 1970, Ideal’s share capital had been increased on five occasions in meetings held between 1972 and 1995, out of which new shares were issued to the shareholders.
Under this arrangement, the court heard that Scott-Carlington’s holdings grew up to the third allotment, without her knowledge, as she was not invited to the meetings. She was also left out of the assignment of new shares agreed at the last two meetings in November 1989 and March 1995, and her holdings were diluted over time.
Court documents indicate that she held 14,000 units in 2004 out of one million allotted shares – which would equate to 1.4 per cent of the company – while Lewis held 982,800 units and Noel Huie 3,200.
Scott-Carlington, who was engaged o Sadler between 1969 and 1972, gave evidence that Sadler told her that he would acquire the Ideal shares in her name because of a dispute between him and another person who was threatening to delay the issue of a licence to Ideal for it to operate.
She also told the court that she did not know Lewis and had never spoken to him.
Sykes ruled last December that Scott-Carlington was the legal owner of the shares and Sadler the beneficial owner because he had put up the money for the purchase.
NOT INFORMED OF RIGHTS
The court also found that Scott-Carlington was not informed of her rights under Article 7 of Ideal’s articles of association, which required existing shareholders to be offered the opportunity to take up new shares allotted in the company.
Further, if that offer was only made orally at meetings, Sykes said it meant Scott-Carlington never received notice of the offer and so was deprived of a fundamental right.
He ordered that shares be issued to Scott-Carlington out of Lewis’ holdings to bring her stake in Ideal back to the seven per cent level, where it sat prior to November 1989.
“This means that the records of the company must be adjusted to reflect this and the corrected records submitted to the Companies’ Office. The specific number of shares to be allotted and issued to Mrs Scott-Carlington from Mr Lewis’ shares is 56,000,” Sykes ruled.
“This is to bring her percentage back up to seven per cent of the one million shares allotted and issued,” he said.
Scott-C arlington, in turn, is to execute a transfer of 56,000 shares to Sadler, which the businessman would then sell back to Lewis or Ideal Betting at a price of $594.44 per share – amounting to $33.29 million – the court ruled.
The court also accepted that Scott-Carlington did not receive dividend payments from distributions made by Ideal in 1987. She is now to be paid that amount with interest of 15 per cent, from 1987 to the date of judgment, December 11, 2017. Those funds are also to be transferred to Sadler after payment to Scott-Carlington.
Lewis and Ideal filed an appeal of the judgement on January 17.
Saddler told the Financial Gleaner that he has lodged a counter appeal, seeking an independent valuation of the company, the conduct of a forensic audit, and the payment of interest on dividends prior to 1987.
Ransford Braham QC, assisted by Nesta Claire Smith Hunter and Marsha Smith, represented Scott-Carlington and Sadler, while Michael Hylton QC, assisted by Jerome Spencer, appeared for t he defendants, Ideal Betting Company and Lewis.