A former director of the national firm Slater and Gordon has insisted that intelligence gathered from a secret meeting about a potential acquisition target was ‘subsumed into the morass’ of other information available.

Ken Fowlie, one of the key figures negotiating the 2015 deal to buy the legal services division of Quindell for £637m , admitted he was briefed on the meeting but said this made no impact on the ongoing acquisition talks.

Fowlie appeared as a witness on Thursday in a conspiracy and breach of contract claim by Quindell (now called Watchstone) against its own former advisers PwC. It is alleged that the offer price reduced by £63m because of the intelligence gathered at a coffee meeting between PwC partner Ian Green and Gareth Davies from Greenhill,  corporate advisers to Slater and Gordon, in January 2015. The deal – which turned out to be disastrous – was completed four months later.

Slater and Gordon, which is now under entirely different ownership, is engaged as a Part 20 defendant under a full indemnity provided by Watchstone. Watchstone’s claims are all denied.

The court heard that Slater and Gordon’s former Australian parent company (the firm changed ownership in 2017) felt ‘frustrated’ that it could not get access to a report by PwC into Quindell’s true position. The Big Four firm had been retained as part of 'Project Goldfish' to deal with financial difficulties at the listed company.

Fowlie said in cross examination that Davies had briefed senior figures from Slater and Gordon the day after he met with Green. He admitted that Slater and Gordon did not tell Quindell that it had this new intelligence, but argued that was only because it had been assumed PwC would not have shared anything without Quindell’s authority.

Tim Lord KC, for Watchstone, suggested to Fowlie that the information being shared to Slater and Gordon ‘must have caused a bit of excitement or anticipation in the room, that Greenhill had found a route in’. Fowlie replied: ‘I don’t recall.’

The court saw a notebook entry from Fowlie from the briefing with Davies referring to PwC. Again he was pressed on why the firm opted not to tell Quindell that this was happening, to which Fowlie responded: ‘It was not the case that we would talk to Quindell about everything that we were doing in respect of the diligence process.’

Lord said: ‘I am putting to you that you would have known on the 16 January [the briefing date] that the information Mr Davies was relaying about his PwC meeting was confidential to Quindell.’

Fowlie replied: ‘I accept the information was confidential in the sense it was commercial in confidence. I had no reason to think, given the gatekeepers that sat between me and the information, that it was not properly shared with me given it had come from a PwC person.’

The court heard that Fowlie spoke to the Slater and Gordon's then managing director Andrew Grech the following weekend and it was likely he would have mentioned the Davies information.

Fowlie agreed that the intelligence gathered from the PwC meeting informed the firm’s strategy in acquisition talks but stated there was ‘nothing illicit’ in that.

The Slater and Gordon board met at the end of January, a meeting at which a member of Greenhill was in attendance. One of the pre-meeting notes made reference to ‘PwC intelligence’, and Lord submitted that the only source for such an item would have been the meeting with Davies.

The court heard that this meeting was told that Quindell was ‘running out of cash’. Fowlie, in his witness statement, said that in mid-January he believed the company was ‘not a business which was especially vulnerable’.

Asked about this apparent contradiction, Fowlie said his opinion had not changed during the month. He and others at Slater and Gordon were aware of Quindell’s problems before the PwC meeting. ‘It was apparent to us and to others in the market that Quindell had cashflow challenges,’ he said. ‘But that didn’t mean it was a distressed business. There were operational opportunities to alleviate those cash challenges in respect of hearing loss [claims] and given the position of the business in size and scale.’

Fowlie will return on Monday to finish giving evidence, after which Grech will appear as a witness. The hearing continues.