Chantrey Vellacott thrashes out £5m bill

Chantrey Vellacott and its insurers were facing a £5m bill for costs this
week, after a court claim against the mid-tier firm collapsed, as did the
company bringing the case.

Negligence claims worth £150m against the firm, revealed in Accountancy
last month, were thrown out of the High Court, but the firm is now
battling to recoup costs.

Just four weeks into the case, Convergence, the telecom company bringing the
action, has entered into administration. It had made assurances that it could
afford to take part in the trial.

Convergence claimed that Chantrey Vellacott’s actions had cost the company
the opportunity to win a $100m (£51m) contract.

The trial was thrown out by Mr Justice Rimer after four weeks of what was
expected to be a five month case. Chantrey Vellacott, headed by managing partner
Mike Tovey, is now effectively a creditor of Convergence, as the judge ruled the
firm is also owed £263,000 fees for its advice to the company.

The negligence action had formed a counter-claim against the firm’s fee

Mr Justice Rimer ruled that the firm’s costs – believed to be in the region
of £5m – should be paid by the claimant, however it is unclear how Chantrey
Vellacott will seek to claim this money from Convergence’s administrators. The
costs are currently covered by its insurers.

Convergence administrators Stephen Goderski and Geoffrey Martin were given
the opportunity to carry on with the legal action, which they declined. Mr
Justice Rimer then struck out all claims against Chantrey Vellacott and awarded
the firm’s legal costs to be paid by Convergence’s administrators.

‘In my judgment, there is plainly jurisdiction to strike out the defences and
counterclaims in the circumstances which have arisen and such an order would
appear to me to be plainly a just order to make,’ said Mr Justice Rimer.

‘This is a complete vindication of the firm’s view throughout that the claims
for damages of approximately £150m were absolutely unfounded,’ said a spokesman
for Chantrey Vellacott.

The firm was initially approached by Convergence in 1996 for corporate
restructuring advice.

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