Caribbean resort developer Harlequin Property has been awarded $11.6m in damages in its claim against accountancy firm Wilkins Kennedy (WK). However, with a Serious Fraud Office investigation ongoing, the sum may ultimately go to out-of-pocket investors.
The company had sought up to $60m (£47m) in a claim in which it alleged that WK was responsible for delays and overruns to the project, a development called Buccament Bay on the island of St Vincent and the Grenadines.
Now Coulson J has found in favour of Harlequin on one aspect of its claim, ruling that WK is liable for a failure to advise the developer to enter into a contract with contactor ICE Group (SVG), which built part of the resort. That, the judge said, would have ensured that ICE were only paid a reasonable amount for the work that they did in accordance with their own rates.
He found that, in the absence of such a contract, ICE was “significantly overpaid” – more than $50m in respect of work worth less than $25m.
He said that it was Harlequin’s case that, “relying on WK’s advice, they had no formal contract with ICE, and instead came to a very loose arrangement with ICE to complete Phase 1 of the resort, which ran completely out of control”.
The judge ruled that the sum should not be paid direct to Harlequin Property SVG, adding: “My proposal is to have it paid into some sort of escrow account whilst the competing interests of the company, the liquidators (if they have been appointed) and, in particular, the investors are resolved.”
Giving the background to the action, he said: “This case does not lack startling features. The following will suffice as examples. There is an ongoing Serious Fraud Office investigation into Harlequin, and putting the words ‘Harlequin Property’ into any search engine or social media immediately brings down a shower of invective and complaint by their erstwhile investors.”
He added that there have been “significant findings of fraud and dishonesty” made by the High Court in Dublin against ICE’s owner, Padraig O’Halloran, in connection with the construction of the resort, as well as defamation proceedings, resolved by an apology and a payment of money to Harlequin director David Ames, as a result of a website which published lies about and threats against Harlequin, and which was discovered to be the work of Jeremy Newman, a senior employee of WK, who provided services to Harlequin at the same time as being ICE’s chief financial advisor.
Nicholas Davidson QC and Hefin Rees QC (instructed by ELS Legal LLP) for the claimants
Justin Fenwick QC, George Spalton and Peter Morcos (instructed by Kennedys Law LLP) for the defendant
