Slater & Gordon: £2.7m in costs paid to PwC
Watchstone – the company once known as Quindell – has paid out £5.3m in legal costs in large part due to its failed claim over Slater & Gordon’s acquisition of Quindell’s legal division in 2015.
In May 2023, Mr Justice Jacobs rejected its argument [1] that accountancy firm PwC used confidential information to reduce the amount paid by Slater & Gordon by £63m.
Watchstone now exists solely as a vehicle to pursue legacy litigation matters and is listed on the Acquis Stock Exchange, which is primarily aimed at growth companies.
Its annual results for 2023, released this week, show that it made a loss after tax of £7.1m in 2023 as a result of the ruling in this case and settlement in Canada of a dispute between former Quindell subsidiary Hubio, an insurance tech business, and Aviva Canada.
Watchstone spent £2.6m on its own lawyers (up from £2.1m in 2022) and £2.7m in settling PwC’s legal fees.
Its solicitors for the PwC case were Dorsey & Whitney, instructing Tim Lord KC and Watson Pringle. PwC used Dentons, instructing Richard Handyside KC and Rebecca Loveridge.
In a joint statement, non-executive chairman Richard Rose and chief executive Stefan Borson – the only people still on the payroll following the PwC decision – said the High Court had refused Watchstone leave to appeal.
The Canada settlement, meanwhile, was “at a lower level than previously hoped”. But, they said, “given the litigation risk and the position of the group in respect of other matters, it was considered the best commercial outcome available”.
The outstanding case concerns the VAT treatment of certain supplies made by Ingenie Services, which was Quindell’s telematics business.
Both the First-tier Tribunal and Upper Tribunal found in favour of HM Revenue & Customs but Watchstone has been granted permission to appeal to the Court of Appeal. It has made provision for £71,000 in legal fees.
The company has been steadily returning its money to shareholders and currently holds net assets of £6.5m, representing around 14p per share.
The joint statement said: “We now look to conclude the final litigation asset and return the assets of the group to shareholders in due course. We would like to thank our shareholders for their support during 2023 and patience whilst we work to realise maximum value from our remaining assets.”
Slater & Gordon sued Watchstone in deceit and breach of warranty but it settled on the eve of trial [2] in 2019 for just £11m, or less than 2% of the value of the claim.