Accountancy Age, 28 Apr 2010
High Court orders damages against PwC, although just a fraction of litigants' original claim
Four businessmen who sued Big Four firm PwC for £35m have won damages worth just a fraction of that figure at London's High Court.
Derek Dennard, Michael Gearon, Graham Turner and Colin Peter Dixon sued the corporate giant for compensation after alleging their interest in 11 PFI projects had been negligently undervalued.
In January 2006, the four sold shares in Ryhurst Limited, a vehicle they had used to bid for PFI projects which involved the building and operating of health care facilities.
They accepted £5.5m from a subsidiary of Barclays Bank after a valuation by PWC in May 2005.
But the bank sold the shares on just 11 months later for around £40m, an increase of 736%.
All four businessmen said that sum represented the true open-market value, and sued PwC for the difference.
Mr Justice Vos - who ruled PwC in "breach of the valuation engagement" - said that Dennard, Gearon, Turner and Dixon were entitled to £427,000 in total damages between them for their "loss of chance".
Lawyers for PwC had said that Barclays were in a strong bargaining position when it bought the shares because, under certain rights it had, it could have ensured it was the only potential bidder.
Mr Justice Vos said that, even though PwC undervalued the shares, the highest price Barclays would have gone to was £6.5m, and even then, there was only a 75% chance that would have been the case.
He described the bank as a "tough" bidder, adding it took months for it to be persuaded to increase previous offers it had made, and then it only did so cautiously.
Dennard, of Grove Road, Penshurst, Tonbridge; and Turner and Gearon, of Colemans Hatch, Hartfield, East Sussex, set up the Rydon Group in the 1970s. Dixon, of Ryst Wood Road, Forest Row, East Sussex, became its managing director in the 1990s.
The group - which specialised in construction and property development projects - was sold at the same time as Ryhurst Ltd, but for £40m, with Dennard and Turner receiving more than £12m each, and Gearon £7.2m.
PwC said in a statement to Accountancy Age: "Clearly, we are disappointed that Mr Justice Vos found against us on one small judgmental part of our work but we are pleased that the rest of our work has been vindicated and with the cost award that was made in our favour. We are considering our position in respect of an appeal."
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