The listed company formerly known as Quindell is in court this week alleging that the national firm Slater and Gordon benefitted from a conspiracy involving its own advisers to wipe £63m off its sale value.

Opening submissions began last week as Watchstone Group alleged breach of contract, breach of confidence, breach of fiduciary duty and unlawful means conspiracy against its former adviser, Big Four accountancy firm PwC, which is the first defendant in the case. Slater and Gordon is engaged as a Part 20 defendant under a full indemnity provided by Watchstone. Watchstone's claims are all denied.

The dispute centres on the £637m sale to Slater and Gordon of Quindell’s professional services division in 2015. Watchstone alleges that an individual referred to in disclosed documents as the ‘head of PwC restructuring’ had a secret meeting with corporate advisers to Slater and Gordon during the negotiations, at which it was disclosed that Quindell would run out of cash in mid-2015 and that the law firm should bid for the entire plc and break it up. It is further alleged that confidential details of Quindell’s plans were disclosed during this meeting.

Watchstone submits that at one point Slater and Gordon was willing to pay £700m for the division. But, following the disclosure of information about the company, Andrew Grech, group managing director of Slater and Gordon’s listed Australian parent, ‘ultimately stood firm at £640m’. Emails from the team advising Slater and Gordon suggest the information supplied at the meeting ‘was extremely helpful’ and this was then fed into the strategy and tactics of negotiations.

Tim Lord QC, for Watchstone, said: ‘S&G was influenced and emboldened in taking that stance [of offering a lower sum] by [Grech’s] knowledge of the confidential information from PwC and its knowledge that Quindell was not aware that S&G was in possession of that information.’

Watchstone says its loss can be calculated by the difference between what Slater and Gordon was willing to pay and the sum ultimately paid. It found out about a meeting and possible disclosure of information only because a note of it appeared in third-party disclosure in litigation between Watchstone and Slater and Gordon – a case in which, ironically, Slater and Gordon was suing Watchstone over the nature of the 2015 sale (proceedings were settled shortly before trial in 2019).

PwC has submitted to the court it was common ground that its head of business recovery Ian Green met Gareth Davies, a representative of corporate adviser Greenhill, for a coffee in January 2015. But Green was not a member of the project team in the sale and regarded the meeting as ’insignificant’ – and thus made no notes.

PwC said Green did not pass any confidential information to Davies, and any information about Quindell’s financial situation they did discuss was already known to Slater and Gordon. Quindell’s cash difficulties were in the public domain from at least April 2014, and its cashflow issues were widely reported in the media.

The transaction turned out to be disastrous for Slater and Gordon, which subsequently wrote down the goodwill on the division from around £558m to zero. The firm was passed to new ownership in 2017 and has no links to its Australian parent company beyond the name.

Green and Grech are both due to appear as witnesses in the case in the next two days, along with Ken Fowlie, who was chief executive of the Australian operations of SGL and a member of its board.