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[2004] ZAFSHC 52
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RCG Trade & Finance (Pty) Ltd v Rowland (LA128/2003) [2004] ZAFSHC 52 (27 May 2004)
IN THE HIGH
COURT OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case
No.: LA128/2003
In
the matter between:
R
C G TRADE & FINANCE (PTY) LTD
Plaintiff
and
MOORES
ROWLAND
Defendant
___________________________________________________________
CORAM:
BECKLEY,
J
___________________________________________________________
HEARD
ON:
21 MAY 2004
___________________________________________________________
DELIVERED
ON:
27 MAY 2004
___________________________________________________________
In this matter the three exceptions taken by the
defendant against the amended particulars of claim were upheld on 14
May 2003. The
plaintiff now seeks leave to appeal against that order.
In the Notice of Appeal a particular line of argument is suggested
based
on the pleadings as they stand at present, namely:
âTrade Up Front was one of the financiers to which Peldins was
indebted â¦. Accordingly Trade Up Front was nominated and specified
third party in the pleadings â¦. Applying these criteria, Trade Up
Front had
locus standi in iudicio
to sue the defendant â¦.
Plaintiff acquired the claims which Trade Up Front have against
Peldins by cession â¦. Plaintiff, having
stepped into the shoes of
Trade Up Front, as its cessionary, acquired the
locus standi in
iudicio
to sue the defendant.â
This
ground of appeal was not relied upon by Mr Fischer at the time when
the application was argued; the reason why it was not argued
by Mr
Fischer is probably because the entire argument is without merit,
having regard to the fact that what was ceded to the plaintiff
consisted of claims against Peldins and not any claims against the
defendant.
Regarding to the first and second exceptions, Mr Fischer
submitted that the proximity test applied by the Court
a
quo
was too stringent and that, on a proper
interpretation of section 20(9)(b)(i) of the Public Accountants and
Auditors Board Act, Act
No. 80 of 1991, and in particular the words
âor any other transaction of a similar nature, with the client or
any other personâ
the particulars words used in section 20(9)(b)(i)
are not in accordance with such stringent test. I do not agree. In
several cases
it has been found that, in context and having regard to
the common law, the particular section means that an auditor will
only be
liable if the auditor knew (or should have known) that the
report would be used by the client to induce a specific third party
(
in casu
the
plaintiff) to enter into a specific transaction and that the
particular third party would rely on the report. See
NPC
ELECTRONICS LTD v S TAITZ, KAPLAN AND CO.
1998 (1) All SA 390
(W) at 405d;
RCG
TRADE & FINANCE (PTY) LTD v MOORES ROWLAND
,
2003 (1) All SA 732
(O) at 738
; and see also
AXIAM HOLDINGS LTD v DELOITTE & TOUCHE
,
unreported judgment in the WLD, Case No. 03/9331, delivered on 26
April 2004 at p.8.
I am not convinced that there is a reasonable
possibility that another Court may find that the interpretation of
this Court referred
to above, is too stringent.
Regarding the third exception, Mr Fischer submitted that
the Court
a quo
erred
in finding that the allegation that the defendants were to prove that
the financial statements were correct in all respects
was too wide
and submitted that that was just another way of stating that the
statements were a correct reflection of the affairs
of the company.
Section 300(i) and section 301(1) of the Companies Act,
No. 61 of 1973, refer to the auditorâs duty to state that in his
opinion
the statements fairly present the financial position of the
company. I do not think that âfairlyâ should be equated with
âcorrect
in all respectsâ, and therefore hold that, as far as the
third exception is concerned, the requirements to grant leave to
appeal
have not been met.
In
the result the application is refused with costs.
________________
A.P.
BECKLEY, J
On
Behalf of Plaintiff:
Mr
P.U. Fischer
instructed
by
Lovius-Block
On
Behalf of Defendant:
Mr
T. Plewman
instructed
by
Claude
Reid Inc.
/scd