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Ames wins case, but money may go to investors

Ames wins case, but money may go to investors

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The parent companies of the Buccament Bay Resort have won judgement in the amount of US$11.6 million in the case they brought against accounting firm Wilkins Kennedy for breaches of contract and/or duty in connection with the development of the resort.

In a judgement handed down yesterday, Mr Justice Coulson of the High Court of Justice of England and Wales awarded damages of US$11,630,970.50 to Dave Ames and his companies Harlequin Property (SVG) Ltd and Harlequin Hotels and Resorts Ltd — a sum far short of the US$60 million they had claimed.

This money, however, will not go to Ames and Harlequin, as in an effort to protect investors, the judge has recommended that the money be paid to an escrow account.{{more}}

Harlequin’s case was that, relying on Wilkins Kennedy’s advice, they had no formal contract with construction firm ICE, and instead came to a very loose arrangement with ICE to complete Phase 1 of the resort, which “ran completely out of control.”

Harlequin say that ICE’s works were delayed and, in many instances, not built at all, leading to the termination of their arrangement with ICE in June 2010. They blame Wilkins Kennedy for the delay and also say that they paid ICE far too much money for the work that they did, for which they also blame Wilkins Kennedy.

The judge said he has concluded that ICE was significantly overpaid and that, as against the $50,524,663 that they were paid, the proper valuation of their work was no more than $24,784,293. 

“I have concluded that Harlequin were prima facie entitled to loss and damage in the sum of $23,261,941… being the amount of the overpayment to ICE, less an allowance for the cost of the valuation process. I have rejected every other claim,” the judge said.

Although the judge agreed that ICE was overpaid, he agreed with Wilkins Kennedy that Ames’ own negligence contributed to this.

Wilkins Kennedy had argued that “Ames’ management failures pervade every aspect of the case and that, in particular, he and/or Harlequin failed to take any or any appropriate steps to protect Harlequin Property SVG by ensuring that it entered into proper and full written contracts with Ridgeview or ICE.”

Wilkins Kennedy had sought a 75 per cent reduction in any damages awarded against them because of Ames “contributory negligence.”

According to the judgement, “the evidence is that Mr Ames received advice about the importance of a valuation process from a number of different sources…. So the failure to ensure that there was a contractually-binding valuation process was, at least in part, his responsibility too.”

Mr Justice Coulson, however, concluded that a 75 per cent reduction was too high and reduced by 50 per cent the sum he would otherwise have awarded “to reflect Harlequin’s contributory negligence.”

Hence the amount recoverable by Harlequin against Wilkins Kennedy is $11,630,970.50. 

The judge also expressed his concern that if he did award any damages to Harlequin, “the sums ordered should be paid to the investors, rather than to the company, much less to Mr and Mrs Ames.” 

“In the light of that, I concluded that the appropriate course might be to order that the $11,630,970.50 should be paid into some form of escrow account, in order that the position as between the investors and Harlequin SVG could be properly resolved. That seemed to me to be the fairest way of ensuring that those who have lost the most in this case, namely the investors, had at least some prospect of recovering some of their money from this judgment. 

“Any doubt that I had about that as the correct course was dispelled by the letter sent to me on 6 October 2016, after the final oral submissions, by the claimants’ solicitors. They informed me that on 3 October 2016, Harlequin Property SVG had filed a Notice of Intention to Make a Proposal under s29(1) of the Bankruptcy and Insolvency Act in SVG. It is no coincidence that Harlequin have taken this step immediately after the conclusion of these proceedings. It makes me even more certain that this court needs to take all legitimate steps it can to ensure the protection of the investors,” the judge said. 

Employees of the Buccament Bay Resort here in St Vincent have been on strike since Friday, December 2, demanding that they be paid the more than two months wages and salaries they are owed. Some employees say that Ames has repeatedly promised that they would be paid when he won his US$60 million claim against Wilkins Kennedy.

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