International property developer Harlequin Property should renegotiate insurance arrangements if it wants to continue with a multi-million dollar law suit against a firm of UK accountants, a London judge said today.
Harlequin is suing UK accounting firm Wilkins Kennedy for more than $60m over a resort development on a Caribbean island.
Harlequin alleges that UK accountancy firm Wilkins Kennedy is responsible for delays and overruns to the project, a development called Buccament Bay on the island of St Vincent and the Grenadines. They are also alleging a conflict of interest.
Construction works on the development, funded mostly by UK investors, has been significantly delayed and the UK’s Serious Fraud Office is investigating the scheme.
When litigation takes place in England and Wales the loser is liable for the winner’s legal costs. Harlequin has already been asked to provide a security of £2.75m to pay Wilkins Kennedy’s legal bill if it loses the case, Mr Justice Coulson said today in a preliminary judgment relating to the case.
Harlequin also has an “after the event” insurance policy in place that protects it from the cost of litigation.
Lawyers for Wilkins Kennedy argued at a hearing earlier this week that the policy might not be effective because, if Harlequin is made the subject of insolvency proceedings, the insurer might be forced to pay out the policy to an insolvency practitioner, not Wilkins Kennedy.
The judge agreed. However, he said his ruling was not “a nuclear option whereby only the payment of a sum into court or the provision of a bank guarantee would be sufficient”.
“It seems to me that this could be dealt with by either the provision of a direct indemnity, or an endorsement which provided that any costs ordered to be paid to the defendant would be paid directly, without set off,” he said in his ruling.
(1) Harlequin Property (SVG) Limited (2) Harlequin Hotels & Resorts Limited v Wilkins Kennedy (a firm), Technology and Construction Court, (Coulson J), 29 April 2015
Nicholas Davidson QC and Hefin Rees QC (instructed by ELS Legal LLP) for the claimants/respondents.
Justin Fenwick QC and George Spalton (instructed by Kennedys Law LLP) for the defendant/applicant
