Slater and Gordon (S&G)’s UK subsidiary has served a £637m claim form on Watchstone Group in London’s High Court, for fraudulently misrepresenting the company on its 2015 buyout.
The Australian law firm told the Australian Stock Exchange (ASX) on 14 June that it had served the claim, after confirming its intention to do so last month.
The claim relates to S&G’s purchase of Watchstone’s professional services arm. S&G alleges the technology services company misrepresented itself and breached its warranties, maintaining that the purchase would not have taken place had the company, then known as Quindell, properly represented its position.
S&G UK is represented by CMS Cameron McKenna Nabarro Olswang LLP.
UK-headquartered Watchstone confirmed receipt of the £637m claim and said that it would defend the action ‘robustly.’ Watchstone expects to file its defence in a month’s time, Legal Business understands.
Describing S&G’s claims as ‘groundless and without merit’ a Watchstone spokesperson said in a statement that S&G has ‘continuously refused to disclose key relevant evidence in its possession’ and that it would ‘intend to seek its disclosure at the earliest possible opportunity,’ following the claim’s service.
In May, Watchstone also dismissed the merit of S&G’s claim, citing the findings of an independent barrister who estimated that the claim lacked 50 per cent prospects of success.
S&G purchased the professional services division of Quindell after it generated revenues of nearly £180m in just the first half of 2014. The alternative business structure (ABS) covers legal services mostly relating to personal injury but also included marketing and motor services.
The firm, which made 80% of its UK revenue from personal injury claims, lost half its stock value in November 2015 after the UK government unexpectedly announced plans to limit the number of personal injury claims.
In 2016, S&G told ASX that £50m of the purchase price for the acquisition would be held in escrow against warranty claims that might arise under the share purchase agreement. In January 2016, S&G’s lenders it appointed investigative accountants for an internal review.
S&G is in a difficult financial position. In February S&G posted a 34% fall in total revenues, the figure falling from A$487.5m to A$322.7m.