Australian firm Slater and Gordon is seeking £600m in damages from the listed business formerly known as Quindell.
In a statement to the London stock exchange today, Watchstone PLC says it has received a letter from the law firm stating it intends to issue proceedings by the end of this month.
The letter states that the claim is worth £600m on the basis that ‘but for fraudulent misrepresentation’ it would not have entered a deal to buy Quindell’s professional services division.
The acquisition, reported as being worth £637m, was completed in 2015 but since then Slater and Gordon’s fortunes have nosedived and it has written off hundreds of millions of pounds in worthless cases.
Watchstone said it will fight the claim and denies any misrepresentation ‘in the strongest terms’. The statement says the company remains satisfied the claim has no merit and is prepared to defend the action ‘robustly’ if proceedings are brought. Watchstone has already said it will defend a £53m claim from Slater and Gordon on the basis of a warranty attached to the sale.
The company said the ‘groundless’ claim for fraudulent misrepresentation was dismissed following a review by an independent barrister in November. This opinion was on the basis of evidence provided by both Slater and Gordon and Watchstone, and stated that a misrepresentation claim had less than a 50% prospect of success.
Watchstone says that despite multiple requests, Slater and Gordon has declined to disclose key evidence in its possession which would be relevant to the merits and quantum of its purported claims.
The company added: ‘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 share value fell by 10% following the announcement. Slater and Gordon has yet to comment.