Slater & Gordon (S&G) has settled its claim against what was Quindell Group on the eve of trial – for just £11m, or 1.7% of the £637m claim.
The nine-week trial of the claim in deceit and breach of warranty against Watchstone Group, arising from its purchase of the Quindell’s professional services division, was due to start this morning.
In August, the High Court allowed Watchstone to bring a counterclaim for damages of at least £63m plus exemplary damages for breach of confidence, inducing breach of contract, and unlawful means conspiracy.
In a statement today, Watchstone said: “Under the settlement, which is made without admission of liability by either party, all of S&G’s claims or potential claims for alleged breaches of warranty, deceit and fraudulent misrepresentation against Watchstone its present and former directors officers and agents relating to the historic sale of the group’s professional services division in May 2015 have been unconditionally withdrawn.
“Watchstone has also agreed not to pursue its counterclaim against S&G.
“The settlement provides for £11m of the £50m currently held in escrow to be released to S&G with the balance of £39m and accrued interest being released to Watchstone. No application for costs will be made by either party.
“Watchstone does not accept that there was a proper basis for the S&G Claims and S&G does not accept that there was a proper basis for the counterclaim.”
The £50m has been in escrow since the acquisition to cover the potential proceeds of noise-induced hearing loss claims that S&G bought as part of the deal.
Richard Rose, non-executive chairman of Watchstone, said: “We are pleased with the resolution of this matter. Whilst Watchstone remains firmly of the view that the legal action commenced by the other side was without merit, the board believes that a settlement at this level is in shareholders’ interests as it brings certainty.
“It also releases a significant cash sum that has been locked in escrow and unavailable to us for some considerable time. The decision was made with consideration of the costs of pursuing the company’s defence and counterclaim at trial and to the inherent uncertainty of the outcome of any legal process.”
S&G chief executive David Whitmore said: “We are pleased this matter has drawn to a conclusion. As a business, we have not been distracted by this case – we have new management, new expectations, new processes to support our staff, partners and customers and new technology to make our work more efficient and effective. We look forward to the opportunities that lie ahead.”
Meanwhile, last week Watchstone announced last week that it has also settlement a claim brought by Quindell founder Rob Terry.
The proceedings arose out of the share purchase agreement entered into by Watchstone with Mr Terry and others in 2011, and also in respect of claims arising from an indemnity that the High Court found was granted orally to Mr Terry and other substantial shareholders in Watchstone in 2011.
Stephen Hofmeyr QC, sitting as a deputy High Court judge, ruled that Watchstone should pay a £1m tax bill Mr Terry incurred when it reversed into another business to become listed.
The settlement saw Mr Terry and other partially repay funds paid by Watchstone pursuant to tht decision, and all existing proceedings settled on confidential terms.