DISPUTES arising from the ill-starred construction of Harlequin Group’s Buccament Bay resort in St Vincent and the Grenadines already warrant the descriptions ‘long-running’ and ‘bitter’ – something powerfully evidenced by the multitude of court cases it’s produced so far, the latest of which has seen a legal claim filed against Top 50 firm Wilkins Kennedy.
In the latest development, property investment company Harlequin has issued High Court proceedings against Wilkins Kennedy and one of its partners and a former employee for their role in carrying out professional services on behalf of the company.
According to the particulars of the claim, seen by Accountancy Age, Harlequin is seeking damages of $68m (£40.4m) for losses arising out of alleged breach of fiduciary duties and breach of contract or alternatively breach of common law duties of care in failing to perform its duties with reasonable skill and care.
In a statement, the firm told Accountancy Age it “vigorously” contests Harlequin’s claim.
Harlequin has found itself at the heart of several legal battles in recent years, including a Serious Fraud Office investigation, which is still ongoing. The latest 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.
A previous defamation case saw former Wilkins Kennedy tax manager Newman settle with the property business out of court on undisclosed terms over an anonymous website he set up called ‘Harlecon’, which contained “more than 1,300 pages of defamatory material” suggesting the company was a fraudulent scheme.
The latest claim alleges that an “improper relationship” developed between MacDonald, Newman and O’Halloran, allowing the latter to misappropriate the funds and states that MacDonald “cultivated a personal friendship with O’Halloran”, something it added “was inappropriate and a breach of fiduciary duty and Wilkins Kennedy did not tell the claimants”. Newman, Harlequin alleges, was “so close [with O’Halloran], he would often stay at Gurland House [a mansion he rented]”.
It is also alleged Newman acted for both Harlequin and O’Halloran’s company, ICE Group, something Harlequin believes was a conflict of interest that should have been addressed by the accountancy firm.
“Wilkins Kennedy failed to identify or to take any steps to heed potential conflicts that existed by reason of it accepting a retainer with the ICE Group, whilst at the same time continuing with the retainer with Harlequin Property, which was a breach of… the ICAEW’s Code of Ethics”, the claim reads.
Further, Harlequin said MacDonald’s role was “akin to that of a chief financial officer” and was in essence owner Dave Ames’ right-hand man, while Newman advised on “tax planning for the Harlequin business in the Caribbean” and the “structure of companies”.
Wilkins Kennedy, the claim adds, “failed to advise on appropriate measures to be put in place for the Buccament Bay project to take reasonable care to ensure there was a written contract, which should have been prepared for a construction project of this size and complexity”.
Instead, MacDonald “advised that an oral contract would provide greater flexibility”.
Similarly, it is claimed Wilkins Kennedy failed to put in place a “process of recording the details of any approved or pending variation orders or change notices which amended the scope of the Buccament Bay project”, while a “process of assessing the projection of costs” was also allegedly lacking.
Wilkins Kennedy has confirmed receipt of the claim, but has yet to file a defence with the High Court.
Richard White, Nicola Westbrooke and Richard Ross all join from KPMG, where they oversaw the real estate tax practice
Sheryl Davis joins the firm's High Wycombe office from Barnes Roffe
The appointments have been made across the VAT, audit and international tax teams
The firm has made six partner appointments, including five promotions, to the audit, corporate finance and private client tax practices