RCG Trade & Finance (Pty) Ltd v Rowland (LA128/2003) [2004] ZAFSHC 52 (27 May 2004)

RCG Trade & Finance (Pty) Ltd v Rowland (LA128/2003) [2004] ZAFSHC 52 (27 May 2004)

The court found that the applicant did not acquire locus standi to sue the defendant, as the cession only related to claims against Peldins and not the defendant. The proximity test applied under section 20(9)(b)(i) was not too stringent, as liability for auditors arises only where it is foreseeable that a specific third party would rely on the report for a specific transaction. The requirement that defendants prove the financial statements were correct in all respects was too wide and not supported by the statutory provisions, which require only that the statements fairly present the financial position. Consequently, there was no reasonable prospect that another court would reach a...

Citation
[2004] ZAFSHC 52
Parties
Applicant: RCG Trade & Finance (Pty) Ltd; Respondent: Moores Rowland
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
27 May 2004
Case Number
LA128/2003
Procedural Posture
Leave to Appeal / Application for Leave to Appeal After Exceptions Upheld
Outcome
Application for leave to appeal refused with costs.
Judges
A.P. Beckley
Legal Topics
Leave to Appeal, Exceptions to Pleadings, Auditor Liability, Cession of Claims
Civil Procedure Commercial and Corporate Leave to Appeal Exceptions to Pleadings Auditor Liability Cession of Claims

Case Brief

Summary, issues, holding and outcome

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Parties

RCG Trade & Finance (Pty) Ltd

Applicant

Moores Rowland

Respondent

Procedural Posture

Leave to Appeal / Application for Leave to Appeal After Exceptions Upheld

Legal Issues

  1. 1 Whether the plaintiff has locus standi to sue the defendant based on cession of claims against a third party.
  2. 2 Whether the proximity test applied under section 20(9)(b)(i) of the Public Accountants and Auditors Board Act was too stringent.
  3. 3 Whether the requirement that defendants prove financial statements were correct in all respects was too wide.

Ratio Decidendi

The court found that the applicant did not acquire locus standi to sue the defendant, as the cession only related to claims against Peldins and not the defendant. The proximity test applied under section 20(9)(b)(i) was not too stringent, as liability for auditors arises only where it is foreseeable that a specific third party would rely on the report for a specific transaction. The requirement that defendants prove the financial statements were correct in all respects was too wide and not supported by the statutory provisions, which require only that the statements fairly present the financial position. Consequently, there was no reasonable prospect that another court would reach a...

Court Disposition

Application for leave to appeal refused with costs.

Orders

  • The application for leave to appeal is refused.
  • The applicant is ordered to pay the costs of the application.