By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An ex-husband has been “saddled” with the family business’s entire $100,000 debt, and ordered by the Court of Appeal, to pay his former wife a combined $221,406, for “mismanaging” its financial affairs.

Appeal Justice Gregory Smith, in a unanimous verdict, upheld the Supreme Court’s original ruling that Ernest Williams must pay his now-former wife, Ingrid, $77,0062 representing 50 percent of the funds taken out of their business, Sunshine Deli, to pay his personal expenses.

The eatery business closed in early 2021 after it was unable to overcome the hardship inflicted by the COVID-19 pandemic. And Mr Williams was also ordered to pay his ex-partner a further $141,344, which represented one-third of the monies taken out of Sunshine Deli by himself that were “not accounted for by him”.

The only variation made by the Court of Appeal was to lower the latter sum by $50,000 from the original $191,344, as it found that the latter figure contained “an element of double compensation” - namely the former wife’s 50 percent share of the company’s total $100,000 debt - which the Supreme Court had already ordered Mr Williams to assume full liability for repaying.

The Court of Appeal, in its verdict, said the Supreme Court felt “compelled to depart from the yardstick of equal sharing” - namely that assets and liabilities built-up in a long marriage be split equally 50/50 between spouses - “because of the husband’s deliberate mismanagement of business funds and his egregious failure to disclose proper financial records with respect to the business”.

Former Supreme Court justice, Diane Stewart, had ordered the couple to each conduct their own 90-day accounting to determine how the profits and losses of Sunshine Deli were to be allocated. She issued subsequent orders, in October 2022 and November 2022, for the husband to fully disclose all financial information on the business and provide his accountant’s report by November 21, 2022.

“Specifically, with respect to Sunshine Deli, the wife alleged that the husband ‘collected all the money, paid staff, bills and made purchases and deposits to the account for the business’,” the Court of Appeal recalled. “The trial judge recognised that the husband alleged that he took out several loans to start up and to run the business.

“However, due to the COVID pandemic, ‘the business suffered greatly’ and eventually was closed down. The equipment for the business was sold and the proceeds used to pay some staff and suppliers. However, at the closing of the business, there remained a debt of about $100,000 owed to several persons, businesses and public authorities.

“Nevertheless, the husband acknowledged that the business was jointly owned and that ‘he mainly dealt with suppliers, maintenance, bank deposits and withdrawals’.” However, the report from the accountant hired by his wife “noted the difficulties... encountered as a result of the deficient record keeping in the business.

“Specifically, she noted that certain crucial documents like ‘POS sales reports, cheque books or deposit receipts were not available, that such records were kept by...’ the husband,” the Court of Appeal noted.

The wife’s accountant found that $48,847 and $224,789 worth of cheques, respectively, were negotiated with “blank images” provided by the bank or no images provided. Mrs Williams identified $172,843 worth of cheque withdrawals by her husband that were allegedly unrelated to Sunshine Cafe, while transfers totalling $504,698 had “no transferee information” and $574,034 had no transferee name.

Mr Forbes, the accountant hired by Mr Williams, “detailed serious shortcomings” in the documents he received including missing bank statements and cheque book details. Disbursements for which no information was provided were “assigned as a ‘personal’ amount to Mr Williams”.

“The total expenditure that was arrived at based on the cheque books and bank statements provided was $591,305, of which $455,900 was captured as business expenses and $135,405 as personal expenses. Of note is that a cheque book in the numerical series was not found in 2014, and some check details were missing in 2019 and 2020,” Mr Williams’ accountant reported.

“The query of $600,654 worth of transfers being made from the account of Sunshine Deli, with either no payee name ($574,033) or indicated account number ($504,689) was also not able to be further clarified, as we had no details on the total amount provided.

“There were a number of transfers that we were able to identify as having been transferred to various credit cards of Dave Williams that were utilised for both personal and business use. However many of the statements were not available for review,” the husband’s accountant reported.

“We also made note of at least three major expenses (Bahamas Food Services, BPL and BAF Financial) charged to at least four of the credit cards in the name of D. Williams, totaling some $371,307 from the available statements for the periods under review.”

As for the alleged use of Sunshine Deli money to pay Mr Williams’ personal expenses, the latter’s accountant reported: “The query of the amount of $172,843 not being legitimate withdrawals of the Deli, Mr Williams indicated that over $113,000 of those funds (65 percent) were repayments of informal loans received over the years to assist with business operations, of which his wife should be aware.

“The remaining represents payments to charitable organisations and an investment payment. Mr Williams contends that personal funds from his retirement from BPL of some $170,603, of which 7 percent went directly to the Deli’s account, the remainder to his credit card, indicates his personal commitment to the success of the Deli’s overall operations.”

However, the report then added: “We were not able to acquire sufficient documentation for the loan repayments. It was indicated that most of the loans were informal and acquired from friends and acquaintances.”

Ex-justice Stewart, in her Supreme Court ruling, found that Mr Williams spent $135,405 of Sunshine Deli’s funds to cover his personal expenses. Some $274,636 worth of cheques lacked payee names and information, while of $600,654 in transfers made from the business, $504,598 had no payee account and $574,033 had no payee name. Mrs Williams did not authorise payment of $172,843 to third parties.

The judge also noted that Sunshine Deli received loans worth $50,000 from Bank of The Bahamas; a further $20,000 from the Government’s COVID-19 business continuity loan scheme, and a $80,000 loan from Fidelity Bank (Bahamas).

“The business finances were not properly managed. Documentation was not properly kept. The petitioner did not authorise many of the business transactions. The daily sales records were not kept,” the Supreme Court found, ordering Mr Williams to assume full responsibility for Sunshine Deli’s remaining $100,000 debt and reimburse his wife the sums ordered.

Mr Williams mounted a “disparate attack” on the Supreme Court verdict which was almost rejected in its entirety by the Court of Appeal. The latter wrote: “The evidence revealed that it was the husband who was responsible for the mismanagement of the funds of the business, especially so, his spending of business funds for his personal use.

“Further, the husband was guilty of deliberate non-disclosure by failing to give his attorney and his accountant relevant documents of his financial management of the business that may have assisted the court to come to different conclusions of fact. Given this deliberate non-disclosure, the trial judge could not be faulted for drawing robust and adverse findings and inferences of fact against the husband.”

Describing Mr Williams’ non-disclosure as “deliberate and egregious”, the Court of Appeal added that “it was well within the trial judge’s remit to saddle the husband with the debt of his own making”. And it added: “The trial judge was mindful of the principle of equality but, on the special facts of this case, felt compelled to depart from the yardstick of equal sharing with respect to the outstanding debt of Sunshine Deli.

“These facts were that the husband was responsible for the management of the finances of the business and had mismanaged these finances, and had actually used business funds for his personal use. On the other hand, there was no evidence that the wife used business funds for personal expenses.

“Given the mismanagement of the funds by the husband, added to his deliberate and egregious non-disclosure as stated before, the trial judge was well within her remit to depart from an equal sharing of the business debt and to saddle the husband with the debt of his own making,” the Court of Appeal continued.

“There was no unreasonableness in having the husband reimburse the wife for a significant portion of the funds that he secreted away from the business, and which he flagrantly refused to account for to his attorney, his accountant, and indeed to the court.”