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South Africa decisions
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Forty Squares (Pty) Ltd and Others v GL Palmer and Company (2023/110502) [2025] ZAGPJHC 37 (24 January 2025)
The High Court dismissed an exception to delictual claims against an auditor, holding the pleadings were sufficient to proceed to trial.
Hollard Insurance Company Ltd and Others v Insure Group Management Ltd (in liquidation) and Others (21/43014) [2023] ZAGPJHC 371 (25 April 2023)
The High Court upheld exceptions against delict claims by insurers against an auditor and compliance officer, finding no properly pleaded duty or causation.
Maguwada and Others v KPMG Services (Pty) Limited SA (22014/2019) [2021] ZAGPPHC 267 (6 May 2021)
The court held that the plaintiffs' claim is for pure economic loss arising from an alleged negligent misstatement by KPMG in the audit of VBS Mutual Bank. South African law does not recognize a general duty of care owed by auditors to employees of the audited company for such losses. The court found that imposing liability on auditors in these circumstances would create indeterminate liability, contrary to public and legal policy. The particulars of claim failed to establish wrongfulness or a legal duty owed by KPMG to the plaintiffs, and the damages claimed were not sufficiently particulari…
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De Bruyn v Steinhoff International Holdings N.V. and Others (29290/2018) [2020] ZAGPJHC 145; 2022 (1) SA 442 (GJ) (26 June 2020)
The court found that the applicant's proposed class action did not raise a triable issue in law. Under South African company law, directors' fiduciary duties and auditors' statutory duties are owed to the company, not to shareholders, except in special circumstances not pleaded here. The common law does not recognize a direct claim by shareholders for pure economic loss resulting from misstatements in financial statements or audit reports. Statutory claims under the Companies Act, including sections 218(2) and 20(6), do not confer a right of action on shareholders for their own losses in thes…
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Meechan and Another v VGA Chartered Accountants Partnership t/a PKF (VGA) Chartered Accountants (7999/2019) [2020] ZAGPJHC 53; [2020] 2 All SA 510 (GJ) (28 February 2020)
The court held that the plaintiffs' amended particulars of claim did not disclose a cause of action against the defendant. The financial report relied upon by the plaintiffs was addressed solely to the members of the parent foundation, FMLAM, and did not mention FMLR or the plaintiffs. The alleged representations were not contained in the report, and the plaintiffs could not rely on extrinsic evidence to modify its meaning. The court found that no duty of care was owed by the defendant to the plaintiffs, as there was no proximate relationship, dependence, or vulnerability; the plaintiffs, as…
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Hlumisa Investment Holdings (RF) Limited and Another v Kirkinis and Others (100390/2015) [2018] ZAGPPHC 676; 2019 (4) SA 569 (GP) (31 August 2018)
High Court exception upheld against shareholder claims for reflective loss and negligent audit misstatements.
PriceWaterhouseCoopers Inc and Others v National Potato Co-operative Ltd and Another (451/12) [2015] ZASCA 2; [2015] 2 All SA 403 (SCA) (4 March 2015)
The Supreme Court of Appeal held that the auditor-client relationship was contractual, but NPC failed to prove breach, causation, or recoverable loss.
Triumphy Safety Glass CC v Willoughby And Associates (2012/14899) [2014] ZAGPJHC 356 (28 November 2014)
The court held that the plaintiff's particulars of claim, while not perfect in their formulation and lacking some detail, are not so vague and embarrassing as to prevent the defendant from pleading. The discrepancies between the engagement letter and the pleaded obligations are matters of emphasis and do not amount to material contradiction or prejudice. The allegations regarding the modus operandi of the fraud and the quantification of damages, although capable of greater particularity, are sufficient for the defendant to plead and can be clarified through requests for further particulars fo…
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Cape Empowerment Trust Ltd v Fisher Hoffman Sithole (200/11) [2013] ZASCA 16; [2013] 2 All SA 629 (SCA); 2013 (5) SA 183 (SCA) (20 March 2013)
The Supreme Court of Appeal held that, although the respondent auditor was grossly negligent in issuing a false profit certificate, the appellant failed to establish the elements of wrongfulness and legal causation required for delictual liability for pure economic loss. The court found that the appellant had contractual remedies and safety nets, such as warranties and a due diligence investigation, which it failed to utilize. The appellant's own conduct in allowing the agreement to lapse and subsequently reinstating it for tax benefits rendered it the author of its own misfortune and broke t…
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Baird's Renaissance (Pty) Ltd v PKF (Johannesburg) Inc (09/2434) [2009] ZAGPJHC 62 (19 November 2009)
High Court upheld exceptions to a claim against auditors, finding the particulars vague and embarrassing because the alleged frauds were not pleaded with sufficient detail.
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