Woolies faces $3m legal bill over failed Masters deal

Masters could face $3 million in litigation costs linked to the bitter battle with a property developer.

The Masters store at Rouse Hill in Sydney.

Woolworths’ hardware chain Masters could face at least $3 million in litigation costs linked to a battle with a property developer over a failed deal to build one of the first Masters stores in Bendigo.

Accounts lodged by Hydrox Holdings, the vehicle that ­houses the Masters business, also has warned that the cost of pulling out or remedying faulty electrical cables sold by Woolworths’ Masters, Home Timber & Hardware and Thriftylink stores between 2010 and 2013 was not estimable. The faulty cables, also sold by other hardware retailers, are believed to have been fitted into about 40,000 homes and businesses, and experts predict a clean-up bill of as much as $60m.

Last year, Merrill Lynch estimated the total cost of the cable issue could be as high as $600m, or $15,000 a household. But Woolworths and the Australian Competition & Consumer Commission, which stepped in to order a recall of the cables, have said this figure is too high.

The twin contingent liabilities, listed in Masters’ latest ­accounts, come as property developer and Maxi Foods founder Brendan Blake squares off with Woolworths in the Supreme Court in Melbourne this week over a deal forged six years ago to build a Masters store in Bendigo.

Mr Blake is claiming $14.5m less a discount to reflect the risks of that property development opportunity not having been realised for one reason or another. Mr Blake’s legal team is expected to seek a 25 per cent discount, bringing the damages figure down to about $10.8m.