KPMG Chartered Accountants (SA) v Securefin Limited and Another

Securefin Ltd, an offshore investment vehicle, entered into a scheme to acquire and re‑engineer Old Mutual insurance policies for profit, funded by loans from BHF Bank. KNA Insurance & Investment Brokers acted as Securefin’s procurement agent. As part of the funding and security structure, KPMG Chartered Accountants (SA) was appointed as an independent verification agent to verify policy tranches, including the acquisition costs and maturity values, before Securefin could draw down funds from the bank. Alexander of KNA later perpetrated fraud by misrepresenting acquisition costs, causing Securefin significant losses. Securefin alleged that KPMG breached its contractual obligations by failing properly to verify acquisition prices. KPMG denied liability, disputing the existence, validity and interpretation of the verification contract, and raised defences of error and uncertainty.

The appeal was dismissed with costs, including the costs of three counsel.

The case is a leading authority in South African law on contractual interpretation and the limited role of expert and extrinsic evidence. It firmly reaffirmed that interpretation is a matter for the court, not witnesses, and curtailed the practice of adducing expert evidence to interpret contracts. It also clarified the meaning of ‘verify’ in commercial contracts, emphasising substantive checking rather than passive acceptance.