WK Construction (Pty) Ltd v Moores Rowland and Others

WK Construction (Pty) Ltd suffered extensive fraud perpetrated by its financial director, Mr Shaun Maartens, between 2006 and 2013, resulting in a net loss exceeding R54 million. The fraud was concealed through manipulation of the company’s accounting systems, including the posting of private expenses to closed project accounts. Mazars (collectively referring to Moores Rowland, Mazars Moores Rowland, and Mazars) acted as WK Construction’s auditors during the relevant period and issued unqualified audit reports without detecting or reporting the fraud. After uncovering the fraud by August 2013, WK Construction instituted action against Mazars in August 2016 for breach of contract and professional negligence. Mazars raised a special plea that the claim had prescribed under the Prescription Act 68 of 1969.

The appeal was dismissed with costs. The special plea of prescription was correctly upheld, extinguishing WK Construction’s claim against Mazars.

The case clarifies the application of section 12(3) of the Prescription Act in professional negligence claims, particularly against auditors. It confirms that prescription begins when a creditor has knowledge of facts giving rise to a reasonable suspicion of negligence, not when the creditor has full evidence, expert opinion, or certainty that the primary wrongdoer cannot make restitution. The judgment reinforces a creditor’s duty to act diligently once suspicious facts are known.