TOP 50 FIRM Wilkins Kennedy has dismissed claims of impropriety over its role and those of a partner and former employee in the construction of a luxury resort in the Caribbean by a client.
Harlequin Property and Harlequin Hotels & Resorts is seeking damages of $68m (£40.4m) for losses arising out of an 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.
Wilkins Kennedy denies all the allegations against it. It argues in its defence submission to the High Court – seen by Accountancy Age – 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.
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”.
Its role, the firm counters, was to provide “professional services in relation to financial matters including advising on taxation and seeking external finance”. To Harlequin’s knowledge, Wilkins Kennedy said, 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”.
The suggestion that Wilkins Kennedy carried out any construction-related services on the Buccament Bay project is “entirely unmeritorious”, it said in its defence.
“Further… the contention that Harlequin Property can have relied on the defendant to provide such services is, likewise, ill-founded and is denied,” it added.
‘No code of conduct breach’
No engagement letter was drawn up for the work, something Harlequin suggested breaches the ICAEW’s Code of Conduct. Wilkins Kennedy, however, denies 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”.
Wilkins Kennedy also denies the $68m claim due to value of the work completed, and as such Harlequin Property has not suffered any loss.
Harlequin has found itself at the heart of several legal battles in recent years, including a Serious Fraud Office investigation, which is still ongoing. This 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.
Harlequin’s claim states the relationship “was inappropriate and a breach of fiduciary duty and Wilkins Kennedy did not tell the claimants”.
The case continues.
Richard Kateley of Legal & General discusses the advantages of close cooperation between accountants and financial advisers
The Practitioner becomes frustrated with HMRC's approach to a client's VAT investigation
The firm has made key appointments to its executive team, including a new chief financial officer, and a sales and marketing director
Partners at the insolvency firm Craig Povey and Kevin Murphy were appointed liquidators on 2 February