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PwC named in ‘conspiracy’ counterclaim by Watchstone

Watchstone Group has filed a counterclaim against Slater & Gordon (S&G) for damages of at least £63m plus exemplary damages, interest and costs for breach of confidence, inducing breach of contract, and unlawful means conspiracy. The counterclaim alleges the recent discovery via third party disclosure of an illicit back channel that Greenhill & Co, a corporate finance adviser to S&G, procured during the period of due diligence and negotiation with Watchstone's then group restructuring and technical accounting adviser, PwC.

Watchstone claims that Greenhill established a 'back-channel' with PwC, Watchstone's trusted adviser by a series of secret meetings between representatives of Greenhill and PwC, at which it unlawfully obtained confidential information.

The counterclaim is the latest stage of a saga that has been running since 2015 when S&G purchased Watchstone’s (then Quindell’s) professional services division for £637m. Two years on, S&G sued Watchstone, alleging that the true value of the business had been misrepresented. That action followed the discovery of accounting irregularities by PwC and a writedown of £450m in the value of the acquired business. 

Watchstone informed the Court that it had not been told by S&G (including in its disclosure and witness statements) or anyone else about the back-channel and was therefore unaware that its confidential information had been provided to Greenhill and S&G until July 2019 almost three years after S&G's claim was first threatened.

Mr Justice Bryan ordered that Watchstone's claims in relation to the back channel, including its counterclaim, are to be heard at the same time as the trial of S&G's claims starting on 21 October 2019.

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