Legal claim has day in the sun as hotel group sues its accountancy firm for £50m in damages

The owners of a hotel resort in the Caribbean backed by the one-time Wimbledon singles champion Pat Cash is taking its former accountancy firm, Wilkins Kennedy, to court this week over allegations of professional negligence, seeking damages of 50m.

It is likely to be the most high-profile battle between a small business and a top-tier accountant of recent years, and represents the final chapter of a legal saga spanning a decade. Harlequin, which was founded in 2005, currently runs two resorts, Buccament Bay in St Vincent and Blu in St Lucia, and turns over 10m a year. However, the Buccament project was almost abandoned after its building contractor embezzled money for the construction to fund a lavish lifestyle, purchasing private jets, a race course in St Lucia and a 1m wedding. In 2014, the commercial High Court in Dublin awarded Harlequin $2m ( 1.4m) after finding that Padraig O Halloran, managing director of the construction firm ICE Group, had misappropriated funds1 meant for the construction of Harlequin s Buccament Bay project.

Legal Claim Has Day In The Sun As Hotel Group Sues Its Accountancy Firm For £50m In Damages Buccament Bay Resort

Work was severely delayed but Buccament Bay opened in August 2010 and has since become a popular destination with celebrities such as Coronation Street s Michelle Keegan, TV presenter Mark Wright, Olympiad Sally Gunnell and the former England rugby player Lewis Moody.

The courts will now decide whether to award Harlequin a further pay-out plus interest, which could amount to almost $100m. Harlequin founders David and Carol Ames are aiming to prove Wilkins Kennedy s professional negligence. Over four years, Harlequin paid the accountancy firm $800,000 in fees. Several other developments were pushed behind schedule because of the impact of the fraud, which pushed Harlequin into administration, although the company subsequently re-financed with support from its existing shareholders. Harlequin alleges that Wilkins Kennedy, a top-20 accountancy firm, advised it to give the construction contract to ICE and did not disclose that the builder was also a client.

We trusted their advice and regarded Wilkins Kennedy partner Martin MacDonald as our financial director, Mr Ames says. There was a serious conflict of interest.

Another former Wilkins Kennedy employee, Jeremy Newman, was also connected to ICE, and was best man at O Halloran s wedding.

Legal Claim Has Day In The Sun As Hotel Group Sues Its Accountancy Firm For £50m In Damages Pat Cash

The Irish court was told that $13m of the $50m paid to ICE was misappropriated. The Irish Times later published an affidavit from Trisha Young, a former employee of Mr O Halloran, saying that a key motive behind the siphoning off of funds was to continue to enable his beloved girlfriend Suzanne Floyd to live her lavish lifestyle. In 2013, Harlequin took Newman to court over allegations that he launched a smear campaign against the company and the Ames family, accusing Harlequin of being a Ponzi scheme and creating a dedicated website libelling the company. The matter was settled out of court, a public apology was issued, and the family was awarded a substantial settlement. Wilkins Kennedy director Tom Govan said: We firmly refute any allegation that our professional relationship with Harlequin damaged either the company or the Buccament Bay development.

This is a professional firm of accountants and business advisers and we will robustly defend ourselves in court. He said that the conflict of interest was handled according to English guidelines. This is the first time that the Harlequin founders have spoken out about these events, as they were bound by legal agreements. Ames says: We had to have the first two trials to link Wilkins Kennedy to the builder. We ve waited six years for this.

If Harlequin wins the case, the money will be spent on creating new resorts in the Caribbean, where the company already owns a significant amount of land. Our intention is to put Harlequin back on to a really strong financial footing with the damages won, Ames says. I remain positive that we will get justice.

References

  1. ^ misappropriated funds (www.accountancyage.com)

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