(Alliance News) - Watchstone Group PLC on Thursday said its former executive chair, when it was known as Quindell, is seeking to propose a GBP14.7 million counterclaim against the company.
Shares in technology firm Watchstone closed down 4.0% at 73.00 pence in London.
Watchstone has already been involved in a High Court battle against former chair Robert Terry in which the company claims Terry, and others, breached a share purchase agreement.
Now, Watchstone has received an application by Terry and the other defendants who are looking to bring a counterclaim against Watchstone for around GBP14.7 million.
"The company has obtained legal advice on the proposed counterclaim, and considers it to be without merit and lacking in credibility," said Watchstone.
According to Watchstone, the "counterclaim is materially lacking in detail" but "appears to be a claim in negligent misrepresentation arising out of a tax indemnity that Terry says the company's subsidiary [Watchstone Ltd] granted to him orally".
The claim suggests Watchstone Ltd, which was a then-subsidiary of Quindell orally granted Terry a tax indemnity in 2011.
Terry founded insurance software firm Quindell in 2003 and departed in November 2014.
Two years later, when Terry was paid approximately GBP3.1 million by Watchstone in respect of his personal tax liabilities arising from the disposal of Watchstone shares, the company "made false representations that it would not challenge the validity of the oral indemnity and would not seek to recover any amount paid under the oral indemnity."
Terry now claims that because he had received these alleged representations, he did not seek to sell his 22.59% Quindell shareholding between January and March 2013, which he said would have yielded around GBP20 million, thereby suffered a loss of GBP14.7 million relative to the price for which he eventually sold his shares between November 2014 and January 2015 shortly after he left the company.
Watchstone said its solicitors have written to the defendants' solicitors in order to find deficiencies in the counterclaim but, if the claim is maintained, it will "defend itself vigorously" and proceed with the share purchase agreement proceedings.