The Australian firm, which bought Quindell’s legal services division in 2015 for £637 million, is seeking £53 million from Watchstone Group under a warranty attached to the sale. Since buying the division, Slater and Gordon has had a torrid time in the UK, with its share price tumbling as it was mooted that a large bulk of noise induced hearing loss cases that it purchased from Quindell were not profitable. In February, the firm revealed that it had made a £494 million loss. Shareholders have since begun pursuing legal action over the share price collapse.
Slater and Gordon told the Australian stock exchange that it has obtained a barrister’s opinion that the warranty claim ‘has, on balance, a prospect of success’.
However, Watchstone Group is adamant that the claim will not succeed.
“Watchstone remains satisfied that the warranty claim has no merit and will defend it robustly if proceedings are brought,” it said in a statement.
“During the process leading to the Opinion [from Slater and Gordon’s barrister], Watchstone had no right to require disclosure of key evidence in the possession of SGH which would be relevant to the merits and quantum of the warranty claim. Watchstone believes this evidence will be available to it in the event that SGH issues proceedings and it intends to seek disclosure of such information at the earliest possible opportunity.”
Watchstone Group has said that it has put aside £50 million in a warranty escrow account until the warranty claim is resolved.