Slater and Gordon seek $1bn for Quindell ‘fraud’

Troubled legal firm Slater & Gordon last night launched a $1.1 billion claim against London-listed Watchstone Group.

Andrew Grech, managing director of Slater & Gordon. Picture: Britta Campion

Troubled legal firm Slater & Gordon last night launched a £600 million ($1.1 billion) claim for fraud against London-listed Watchstone Group, following the acquisition of the British business’s Quindell arm in 2015.

The disastrous $1.3bn ­purchase of Quindell’s professional services division threw Slater & Gordon into disarray and drew the aggressive roll-up ­strategy of chief executive ­Andrew Grech into the spotlight. It triggered the near implosion of the business, which has forced the Australian company into talks with its lenders, and drew a shareholder class action being run by rival labour law firm Maurice Blackburn.

According to a letter received by Watchstone from Slater & Gordon’s lawyers, “it intends to issue proceedings by the end of this month”.

“Its letter states that (Slater & Gordon) intends to make a claim for a total amount of approximately £600m on the basis that but for fraudulent misrepresentation it would not have entered into the transaction at all.

“A groundless claim for fraudulent misrepresentation was dismissed by the independent barrister in respect of the warranty escrow process relating to the sale of the Professional Services Division in November 2016,” Watchstone said in a statement last night.

“Watchstone denies any misrepresentation in the strongest terms and remains satisfied that neither the warranty claim nor a misrepresentation claim have merit and will defend such claims robustly if proceedings are brought.”

In March, Slater & Gordon secured a debt restructuring, where debt was sold at 20c in the dollar. The 80 per cent haircut for former debt holders Westpac, NAB, Barclays and Royal Bank of Scotland left a group of local and international hedge funds with control of the $730m debt pile.

Dow Jones Newswires