A judge has dismissed a claim that national firm Slater and Gordon was passed confidential information which caused it to chop £63m off the price of an acquisition.

Mr Justice Jacobs rejected an allegation in Watchstone Group PLC v PricewaterhouseCoopers LLP that an adviser to the firm had been given insider knowledge from Big Four firm PwC which caused a rethink on the amount offered to buy Quindell’s legal business. PwC had previously been engaged by Quindell in relation to the company’s financial situation.

The deal went through in May 2015 for an upfront purchase price of around £645m. But Quindell (now Watchstone) sued the accountant for breach of contract, breach of confidence, breach of fiduciary duty and unlawful means conspiracy. Watchstone argued that information gleaned from a meeting four months previously between PwC’s Ian Green and Gareth Davies, from S&G adviser Greenhill, was fed into negotiations about a possible acquisition, ultimately reducing the eventual offer price.

But the judge concluded that S&G was never briefed on this meeting and found no evidence it was discussed in the immediate aftermath. In any case there was little of significance that came from it, with S&G not influenced by any negative feedback on Quindell.

Jacobs added: ‘[Watchstone] have failed to prove that any of that information had any impact on the negotiations which took place, and which reached fruition. And they have failed to prove that, but for the alleged breach of confidence, there was a real and substantial chance of a higher offer by S&G than the one that was finally made and agreed upon.’

The judge said Green was a ‘responsible and honest former accountant’ and there was no suggestion he had any history of acting with professional impropriety. On the other hand, Davies’ conduct ‘gives rise to serious question-marks as to his integrity’, and in any case, Watchstone had not called him as a witness to contradict Green’s evidence.

The judge said Ken Fowlie, chief executive for the Australian operations of S&G at the time, gave ‘thoughtful, fair and careful answers’ to questions about how knowledge of Quindell’s financial situation developed. On the key issue of whether he was told in any detail about the January meeting and whether this affected S&G’s approach, his accepted evidence was that he was not given or shown any email about what Davies and Green discussed and he had no recollection of anything important being said by Mr Davies at a later meeting.

Andrew Grech, S&G's former managing director, told the court he knew nothing about the January meeting. As with Fowlie, the judge noted Grech was an ‘honest and impressive witness whose evidence on the key issues was truthful and reliable’.

Jacobs dismissed Watchstone’s claim against PwC on the basis that it had not established that Green passed on confidential information. Even if he had, the claim failed on causation grounds. Since PwC had no liability, an additional claim by PwC against S&G did not arise and therefore was also dismissed.

The aftermath of the Quindell deal was disastrous for Slater and Gordon. Its parent company’s share price collapsed and the UK business was subsequently sold to new owners. A claim with Watchstone Group was settled in 2019. 

 

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