Itzikowitz v Absa Bank Limited

Gary Itzikowitz was the sole shareholder of Compass Projects (Pty) Ltd, which held 17.29% of the shares in Quantum Properties Group Ltd (QPG). QPG owned 100% of A Million UP (Pty) Ltd (AMU). Absa Bank was the banker to AMU and QPG and had extended substantial loan facilities to AMU. After AMU was placed under final liquidation at Absa’s instance, Absa sued Itzikowitz on a R20 million suretyship he had signed for AMU’s debts. Itzikowitz raised two counterclaims. Counterclaim A was a delictual claim for pure economic loss, alleging that Absa’s intentional or negligent conduct caused AMU’s collapse and resulted in the diminution of the value of his indirect shareholding. Counterclaim B relied on sections 218(2) and 22(1) of the Companies Act 71 of 2008. Absa excepted to both counterclaims. The High Court upheld the exception to counterclaim A but allowed counterclaim B to proceed. Itzikowitz appealed against the striking out of counterclaim A, and Absa cross-appealed against the dismissal of its exception to counterclaim B.

The appeal against the upholding of the exception to counterclaim A was dismissed with costs. The cross-appeal was struck from the roll with costs. The High Court order was effectively confirmed, save that the appellant was afforded 15 days to deliver a notice to amend counterclaim A, if so advised.

The case is a leading South African authority reaffirming the rule against reflective loss and clarifying that shareholders cannot recover for diminution in share value where the loss merely reflects harm suffered by the company. It aligns South African law with established common-law principles and limits earlier High Court decisions that had suggested broader shareholder standing. It also confirms the cautious approach to pure economic loss and the continued importance of separate corporate personality.