PriceWaterhouseCoopers Inc and Others v National Potato Co-operative Ltd and Another

The National Potato Co-operative Ltd (NPC), an agricultural co‑operative, sued its former auditors, a succession of four auditing partnerships collectively referred to as PWC, for damages allegedly suffered between 1984 and 1997. NPC claimed that PWC negligently performed annual audits by failing to identify and report reckless mismanagement of credit granted to NPC’s members, and by approving financial statements that inadequately provided for bad and doubtful debts. NPC alleged that proper audits would have revealed that it was effectively insolvent and would have prompted remedial action. Instead, NPC continued trading and later wrote off substantial bad debts. The High Court (Botha J) upheld NPC’s claims and awarded damages exceeding R62 million. PWC appealed to the Supreme Court of Appeal.

The appeals by the auditors were upheld. The High Court’s judgments and damages awards were set aside and replaced with an order dismissing NPC’s claim with costs. The cross‑appeal by NPC was dismissed. Various prior costs orders in NPC’s favour were overturned, and NPC and the litigation funder were ordered to pay costs.

This case is a leading South African authority on auditor liability, causation in professional negligence claims, and the limits of recoverable losses. It clarifies that auditors are not insurers against business failure and that trading losses are not recoverable without proof of a causal link to audit reports. The judgment is also significant for its guidance on expert evidence, attribution of knowledge to corporate entities for prescription purposes, and judicial control of complex, document‑heavy trials.