PwC and Cattles settle £1.6bn auditors’ negligence claim

PricewaterhouseCoopers (PwC) and financial services group Cattles have settled their mammoth professional negligence dispute just days before arguments were set to be heard in the High Court.

The case was expected to be one of the highest-value auditors’ negligence cases to be brought for some time with PwC facing a £1.6bn claim.

No details have yet emerged on the settlement or its value.

The case arose from the collapse of lender Welcome Finance, a subsidiary of Cattles. Creditors to Cattles alleged PwC was negligent in its audit of Welcome’s accounts for the financial years ending 2006 and 2007 and that the loan book of Welcome – Cattles’ biggest unit – was much weaker than stated.

Cattles suspended lending through Welcome in 2009 and closed it to new business.

PwC had previously dragged Deloitte and KPMG into its defence against the lawsuit.

The trial was originally set for 5 October. It featured in The Lawyer’s Top 20 Cases 2015, which said the case was likely to revisit and clarify the law relating to claims against auditors – ahead of a predicted wave of auditors’ negligence cases relating to the collapses of other corporates in the wake of the financial crisis.

Lawyers for both sides attended a hearing on Monday (12 October), though the trial proper had yet to begin.

The presiding judge was Mr Justice Burton. 

A spokesperson for PwC said: ““Cattles, Welcome Financial Services and PwC confirm that they have resolved the claims between them. The terms are confidential.”

The legal lineup:

For the claimants, Cattles plc

7KBW’s Jonathan Gaisman QC, Rebecca Sabben-Clare QC, Josephine Higgs and Adam Turner instructed by Ashurst partner James Levy

For the defendants, PricewaterhouseCoopers

4 New Square’s Justin Fenwick QC and Graham Chapman QC, Brick Court Chambers’ Mark Hapgood QC and Thomas Plewman SC, and One Essex Court’s Alexander Polley instructed by Taylor Wessing partner Andrew Howell