Top 20 Accountancy firm Wilkins Kennedy lost a High Court battle this week and were ordered to pay a former client damages of £ 9.14 million for professional negligence. The claim by the Harlequin property development group initially started at £ 40 million in damages.
The firm were appointed by Harlequin to provide financial and business advice on a new development, Buccament Bay in the West Indies. However, Wilkins Kennedy were also acting for ICE, a building company in which Harlequin was involved in a very bitter dispute over the Buccament Bay Resort. Wilkins Kennedy had not informed Harlequin that it had taken instructions from ICE.
The case Judge, Mr Justice Coulson said that the internal documents emanating from Wilkins Kennedy revealed an attempt by Wilkins Kennedy to protect ICE at all costs and to ensure that Harlequin paid ICE as much as possible (whether it was justified or not) before the inevitable parting of the ways.
The judge referred to an “unusually close relationship” between Padraig O’Halloran (the chief operator at ICE) and Martin MacDonald of Wilkins Kennedy, who was referred to as Harlequin’s chief financial officer.
The High Court found that MacDonald and another Wilkins Kennedy senior representative, then sided with O’Halloran, who misappropriated £ millions from Harlequin’s investors’ money in the Caribbean to buy planes, yachts, and live an extravagant lifestyle in Barbados.
Wilkins Kennedy commented on the judgement “Although disappointed that the court did not dismiss the entire case, we are pleased that it has rejected the vast majority of Harlequin’s claim. The judge has rejected all allegations brought against us, apart from one.
“This related to the contractual relationship between the builder and the developer, where the judge viewed both parties to have contributed equally to losses arising from deemed overpayments to the builder.”
Wilkins Kennedy said they were taking legal advice with a view to appealing this aspect of the judgement.
Mark Bracher of Professional Indemnity Insurance Brokers commented; ‘This case clearly demonstrates why professional firms must be aware of their conflicts of interest. Where an accountancy firm is working for two businesses which contract together, they must take appropriate action, even if that means no longer acting. The Harlequin case is an example of how it can lead to a serious professional indemnity claim if this doesn’t happen.’