Wilkins Kennedy defence 'misplaced', claims Harlequin in $68m dispute

A KEY PLANK of Wilkins Kennedy’s defence in a $68m claim against the firm has been dismissed by the litigants as “misplaced”, in the latest and final filing to the court prior to a hearing.

Harlequin Property and Harlequin Hotels & Resorts are seeking damages of $68m (£40.4m) for losses arising out of claims of impropriety over Wilkins Kennedy’s role, and those of a partner and former employee, in the construction of a luxury resort in the Caribbean.

Wilkins Kennedy’s former client claims its allegations amount to a breach of fiduciary duties and breach of contract, or alternatively breach of common law duties of care, in the firm and its staff failing to perform its duties with reasonable skill and care.

The firm has denied all the allegations against it. It had previously argued in its defence submission to the High Court that to Harlequin’s knowledge, it was not capable of carrying out quantity surveying or any other work which could be characterised as construction management “given that it is a firm of chartered accountants, auditors and tax advisers”.

In its response to Wilkins Kennedy’s defence – seen by Accountancy Age – Harlequin claims it never alleged the top 20 firm was expected to perform quantity surveying work, noting “it is not alleged that the defendant performed quantity surveying work, and in the circumstances…in which the defendant denies that the defendant performed such work – is misplaced”.

In its original claim, Harlequin held Wilkins Kennedy was engaged to, among other functions, hold detailed discussions with regard to Harlequin Property’s plans and requirements for the Buccament Bay project, and visit the Caribbean area to hold various discussions with the local government, professionals and staff at Harlequin Property.

The claim follows a case heard in Ireland in August 2013 concerning the misappropriation funds, which saw Harlequin win more than $2m in damages from Padraig O’Halloran, a former ICE Group contractor for its Buccament Bay resort.

Those funds were supposed to be used for the construction of the resort, but instead O’Halloran was found guilty in the Irish High Court of using funds intended for the procurement of materials and construction of the complex for lavish personal ends, including a wedding, a private jet and a racecourse.

During that hearing, the court heard then-Wilkins Kennedy employee Jeremy Newman and current partner Martin MacDonald had allegedly aided and abetted O’Halloran in his deception of Harlequin.

Harlequin’s claim states the relationship “was inappropriate and a breach of fiduciary duty and Wilkins Kennedy did not tell the claimants”.

Wilkins Kennedy held in its defence, was to provide “professional services in relation to financial matters including advising on taxation and seeking external finance”. The firm added that no duty was owed “not to act for a third party where there was a potential or actual conflict of interest”, nor to inform Harlequin Property of information gained from a different client, in particular because of the obligation to respect the duty of confidentiality to each client.

But in its response, Harlequin said it only became aware that Wilkins Kennedy was acting for the Buccament Bay contractor ICE Group after a member of its staff happened to travel to Barbados on the same flight as Wilkins Kennedy staff, and realised they were not doing so in Harlequin business.

No engagement letter was drawn up for the work, something Harlequin suggested breaches the ICAEW’s Code of Conduct. Wilkins Kennedy, however, denied in its defence it “owed an absolute obligation to Harlequin property to provide an engagement letter… and in any event it is denied that a failure to provide a letter of retainer is a breach of any obligation to Harlequin Property”.

The case was brought by two claimants: Harlequin Property and Harlequin Hotels & Resorts, which is the overarching company. Wilkins Kennedy claims it was only engaged by the former, and as such contests Harlequin Hotels & Resorts “should be struck out”.

For its part, Harlequin said in its response that the “wide nature” of the Wilkin Kennedy’s retainer was to “advise not only Harlequin Property, but all of the companies with the Harlequin Group, which included the second claimant”.

“At no point was a distinction made between the different companies within the Harlequin Group,” it added. “In effect, [Wilkins Kennedy partner Martin] McDonald’s role was the chief financial officer of the Harlequin Group.”

A hearing is expected in the New Year.