The chief constable of Police Scotland has reached a settlement in a multi-million pound claim over the malicious prosecution of the former administrators of Rangers in connection with the collapsed club fraud case.

Representatives of David Whitehouse and Paul Clark of Duff and Phelps have confirmed that an agreement has been reached "extra-judicially".  The sum involved has not been disclosed.

Mr Whitehouse and Mr Clark were subjected to criminal proceedings with others in the wake of Craig Whyte's purchase of Rangers from Sir David Murray for a £1 and its subsequent sale before a judge dismissed the charges.

Mr Whitehouse, of Cheshire, then brought a damages claim against the Lord Advocate James Wolffe QC and the former chief constable of Police Scotland, Phil Gormley, for £9m. Mr Clark, of Surrey, sued for £5m.  In August the total claim was said to have gone up to £21m.

Mr Whitehouse and Mr Clark's actions stemmed from their alleged treatment by the police and prosecution authorities.

The Lord Advocate has previously admitted malicious prosecution and a breach of human rights in the investigation while the administrators sought to clear their names.

Alistair Duncan QC for Police Scotland said: "The parties have come to a mutually satisfactory resolution of the dispute. I don't propose to say any more than that."

Roddy Dunlop QC for Mr Whitehouse said they were "significant and welcome developments".

He added: "At previous hearings there have been significant concessions by the Lord Advocate, which led to an acceptance of liability for the losses arising from the matters complained of both for Mr Clark and Mr Whitehouse.

"That left outstanding the involvement of the Chief Constable and I am pleased to say for Mr Whitehouse and also for Mr Clark, the claims have now been settled extra-judicially."

He said he was not in a position to invite Judge Lord Tyre to "dispose of the matter" formally. But he anticipated it would happen soon.

"In any event, your lordship can proceed on the basis that the Chief Constable will play no more part in these proceedings. And in particular, the case against him will not require to be explored at proof."

The damages claim will continue against the Lord Advocate. Mr Dunlop said that there were moves to "mediate" but no resolution had yet been reached.

The Herald:

Mr Whitehouse and Mr Clark

"For the meantime your lordship has to proceed on the basis that this proof is running, if that changes, the parties will advise your lordship as soon as possible," Mr Dunlop added. 

It means that a case that was due to be heard over six weeks will be halved.

It comes after Judge Lord Tyre criticised the police at the end of September for an unwillingness to co-operate over the malicious prosecution of the former administrators.

The Court of Session heard at the end of September from Iain Ferguson QC for Mr Clark that "all the main [police] players have refused to be precognosed". They were officers who were principally in charge of the investigation.

The advocate for Police Scotland, Alastair Duncan QC, said then that there was still a dispute in the case and there were statements from 25 officers to consider.

He said there has not been a bar and no instruction for police officers not to co-operate.

But he said here were "serious allegations" made against individual police officers and that it had been left to individual officers in those circumstances to provide precognitions and witness statements were available.

Judge Lord Tyre then said: "It may be serious, that's the nature of it, but at some stage they are going to have to answer them one way or another.

"To my mind it is, well, disappointing would be a mild word, that the police as public servants are not willing to co-operate and assist with this process without being forced to do so by giving evidence in court.

"Simply the fact the allegations are serious is not an excuse. They should be in a position to tell their side of the story."

In the latest hearing over the settlement, Mr Ferguson, for Mr Clark said: "It is accepted that any proof required will be limited to the question of the quantum [amount] of damages only, so to that extent matters have moved on since the last hearing."

Last month Judge Lord Tyre ordered the payment of £350,000 to Mr Whitehouse and £250,000 to Mr Clark as an interim payment after Crown lawyers admitted much of the prosecution against them was "malicious" and conducted without "probable cause".

Gerry Moynihan QC, for the Lord Advocate, has previously stated that the Crown is totally liable in Mr Whitehouse's case.

He said the Crown accepted liability for “malicious prosecution”, but not from before the men first appeared in court on petition in November 2014.

Mr Ferguson previously described the government's actions in pursuit of the men as "nothing short of a disgrace".

The case comes three years after former Rangers owner Craig Whyte, who was the last man standing in the fraud conspiracy case, was acquitted of taking over the club by fraud at the end of a seven-week trial.

It is claimed that at no stage was there any justification for their detention, committal or prosecution and that the Crown never had sufficient evidence for any of the charges it brought.

Mr Whitehouse and Mr Clark won a ruling from a specially convened bench of five judges at the Court of Session in Edinburgh last year that the Lord Advocate did not have absolute immunity from a civil damages claim in such circumstances.

The latest developments come four years after London-based legal firm Holman Fenwick Willan, who were acting for Duff and Phelps, was awarded £500,000 costs after police and prosecutors were found by the High Court in London to have "abused state powers" by carrying out an illegal raid and seizing privileged documents in connection with the failed Rangers fraud case.

It emerged in August that former Rangers director Imran Ahmad was to receive a public apology from the head of Scotland's prosecution service and significant damages after he was wrongly pursued prosecution on fraud charges.

He initially wanted £2m in damages but it is understood he is now claiming tens of millions of pounds.

Former Rangers chief executive Charles Green is also suing Police Scotland for wrongful arrest after charges against him were dropped.

In June, last year, the Herald revealed the Crown Office paid compensation estimated at £80,000 to Mr Whitehouse and his wife over the granting of a restraint order over his assets which Scotland's chief legal officer admitted was "wrongful".

The Whitehouses had said that the granting of a restraint order in connection with the Rangers fraud case, which was eventually reversed, led to a loss in a particular investment opportunity, issues with making financial transactions and that they suffered a "loss of reputation, anxiety and distress".

A judgment by Lord Brodie over the release of papers involved in the case, revealed that the Lord Advocate admitted that actions in applying for the restraint order against the Whitehouses in December, 2015 were "wrongful in the respect of a failure to discharge the duty of disclosure and candour as found by the judge when recalling the order". The Lord Advocate at the time was Lord Mulholland.

Lord Glennie, one of Scotland's senior judges reversed the granting by Lord Clarke of a Proceeds of Crime restraint order over the assets of Mr Whitehouse and his wife.

In his ruling, Lord Glennie said the court were previously not told that there had been a period of 13 months of suspicion-free activity while Mr Whitehouse, who was Manchester-based managing director with Duff and Phelps, was subject of the Rangers fraud investigation.

He said the Crown were responsible for "a clear and very serious breach of the duty of disclosure and candour" in getting the restraint order.

The Crown Office had claimed Mr Whitehouse had benefitted from the proceeds of crime having been paid personally £3.1m for the administration, and that he had had a share of the proceeds of MCR, a UK-based restructuring and turnaround firm which was bought over by Duff and Phelps, which had advised Mr Whyte on his controversial takeover.

One of the key tenets of the Crown case was Mr Whyte's scheme in advance of the takeover, to sell off rights to three years of future season tickets to investment firm Ticketus in a bid to raise £24 million and pay off debt as part of a share purchase agreement with Sir David Murray.

Lord Glennie in his judgment had said he had been shown documents by Mr Whitehouse's QC that make it clear administration fees were paid to his employer Duff and Phelps.

The civil claim case continues.