The High Court has granted permission to Watchstone Group plc, formerly known as Quindell, to pursue its own £63m action against national firm Slater and Gordon.
At a one-day hearing this week in the Commercial Court, Mr Justice Bryan allowed Watchstone’s amended defence and counterclaim to Slater and Gordon’s £637m claim against Watchstone over the ill-fated purchase of Quindell’s legal services division.
Watchstone alleges that Slater and Gordon secured a cheaper acquisition price based on information obtained through secret meetings between the parties’ advisers.
In a statement to the London Stock Exchange, Watchstone said the judge rejected a request from Slater and Gordon to stay the counterclaim pending the determination of a trial starting on 21 October.
The amended defence and counterclaim was served and filed yesterday.
Watchstone said its counterclaim is for £63m damages, plus exemplary damages, interest and costs for alleged breach of confidence, inducing breach of contract and unlawful means conspiracy.
Watchstone states that its action arises from a recent discovery through third party disclosure of an ‘illicit back channel’ that advisers to Slater and Gordon procured during the former period of due diligence and negotiation between the parties.
Watchstone claims that at Slater and Gordon’s behest and/or with its knowledge, its agent established the ‘back channel’ with Watchstone’s adviser. It is alleged that at secret meetings between representatives of both, confidential information was unlawfully obtained about Watchstone’s wider group. Slater and Gordon, it is alleged, then factored this information into its tactics and strategy for acquisition negotiations, gaining an unfair advantage to bring the price down. The firm has said it is not commenting on the allegations.
In its own claim, Slater and Gordon is seeking to recoup the cost of acquiring the Quindell professional services division in 2015. The firm issued a claim in June 2017 for breach of warranty and/or fraudulent misrepresentation for the whole amount paid.
Watchstone says Slater and Gordon’s allegations of deceit and the associated breach of warranty claim are ‘wholly without merit and should never have been advanced’.
At the time of the acquisition, the firm was owned by its Australian parent, which had grown the business quickly through a series of acquisitions across England and Wales. Slater and Gordon UK is now owned by New York hedge fund Anchorage Capital Group after cutting ties with its parent company.