Price Waterhouse Coopers Inc and Others v National Potato Co-Operative Ltd

The respondent, a primary agricultural co‑operative, sued its former auditors, the Price Waterhouse firms, for damages exceeding R300 million arising from alleged negligent audits over many years. Lacking funds to pursue the litigation, the co‑operative entered into arrangements with a third party, Farmers Indemnity Fund (Pty) Ltd (FIF), in terms of which FIF financed the litigation in return for a percentage share of the proceeds. The arrangements included an initial sale and cession of the claim (later cancelled) and a subsequent litigation funding (assistance) agreement under which FIF would fund the action in exchange for 45% of the proceeds. Price Waterhouse amended its plea to contend that these arrangements were champertous, contrary to public policy, and therefore constituted a defence to the claim.

The appeal was dismissed. The alleged champertous nature of the funding agreement did not bar the respondent’s claim, and the litigation was allowed to proceed. A special adverse costs order was made against the appellants’ attorney in relation to procedural misconduct concerning the record.

This is the leading South African authority on champerty and third‑party litigation funding. It modernised the common‑law approach by holding that such agreements are not automatically contrary to public policy and confirmed that defendants cannot rely on alleged champerty as a substantive defence. The case is central to the development of litigation funding in South Africa and links public policy analysis to constitutional values, particularly access to courts.