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High Court considers duty of professionals to disclose to one client confidential information relating to another...

Case: Harlequin Property (SVG) Ltd and another v Wilkins Kennedy (a firm) [2016] 3188 EWHC (TCC), 13 December 2016, Coulson J, (Bailii).

Submitted by:  First Warden, David Johnson

A firm of property developers claimed substantial damages against the defendant firm of accountants and business advisors for breaches of contract and/or duty arising in connection with the development of a luxury resort in the Caribbean. The dispute was almost entirely on the facts, but one issue on which the judge was required to examine the law involved an alleged obligation to disclose confidential information. The developers argued that, as their business advisors, the accountants should have passed on to them information that was confidential to the building contractors, for whom the accountants were also acting. In particular, it was said that the accountants were in possession of information that the owner of the building contractors was misappropriating development funds. The developers said that, by a certain date, the accountants should have alerted them to this information. The accountants maintained that, in the circumstances, there could be no such obligation. 

After an examination of the authorities, in particular Prince Jefri Bolkiah v KPMG [1998] UKHL 52, the judge concluded that the position of auditors and accountants on this issue is very different from that of solicitors. There was no authority for the proposition that an accountant in the position of the defendant had a duty to disclose information confidential to one client to another client. A solicitor acts in a different professional, regulatory and ethical context to an accountant. This was clear from the references in argument to the professional guidance for accountants, and Lord Millet's speech in Prince Jefri Bolkiah. In addition, Kelly v Cooper [1993] AC 206 is authority for the proposition that a professional is not required to relay confidential information relating to one principal to another, so there could be no liability for their failure so to do. There was also no authority for the proposition that an accountant who finds themselves with a conflict of interest, has a duty to disclose to client A (who engaged them first) information confidential to client B (who engaged them subsequently). Such a principle offended against common sense. 

The conclusion would be the same even if the confidential information suggested fraud on the part of the building contractors. In that case, the accountants should have resigned their retainer from the contractors, and reported the case to the Serious Fraud Office. But they owed no duty to pass on the confidential information to the developers. 






David Johnson, First Warden