Doing the books is not running the business: High Court rejects R5 million claim against accountants
The Western Cape High Court has dismissed, with costs, a liquidators’ application to make two accountants personally liable for R5 013 500 of a failed transport group’s debt.
The liquidators of Germani Transport, a road freight group that went into liquidation with a R22,2 million shortfall to creditors, relied on section 424 of the Companies Act 61 of 1973. The section allows a court to make any person who was “knowingly a party” to the reckless or fraudulent carrying on of a company’s business personally liable for its debts.
In a judgment delivered on 19 October 2026, Acting Judge Janisch held that the liquidators had not shown that either accountant was a party to carrying on Germani’s business. The court found that the accountant who compiled Germani’s financial statements did so after the fact, from records kept by the company’s own bookkeepers, while the owner took the decisions. “The fact that [he], as an accountant, knew of those transactions does not elevate him to an active participant in the business of Germani,” the court said.
Johan Victor Attorneys & Litigators acted for the two accountants.
R1 trucks and a R22 million shortfall
Germani, a long- and short-haul freight business operating from the Strand and Springs, had turnover of about R138 million in the year to February 2018. From 2009, paid-off trucks and trailers were sold for R1 each to a related close corporation, Expidor 155 CC, while Germani kept using them. By March 2019, 107 trailers and 17 trucks had moved across. Germani was finally liquidated on 1 August 2019, and creditors proved claims of R27,2 million.
The liquidators first sought to hold the accountants and their firm liable for all the debts of four entities in the group. By the hearing they had dropped the claim against the firm and reduced the amount to R5 013 500, the claimed value of the vehicles sold.
Knowing is not taking part
The court’s central finding was that an outside adviser becomes a party to a company’s business only through collusion. Recording transactions, or knowing about them, is not enough. Acting Judge Janisch distinguished between directors, who can be held liable simply for standing by because they owe the company a duty to protect it, and outside advisers, who must have taken some active step in the conduct complained of.
The wrong business, the wrong figure, the wrong procedure
The claim also ran into difficulty on the debts themselves. Section 424 is entity specific, and the only debts the liquidators proved were Germani’s, while the later vehicle sales and bank payments were the business of related entities. The order collapsing those entities into Germani took effect only from 24 October 2023.
The R5 013 500 figure did not hold up either. It did not match the bank reconciliation and left out more than R3,8 million that appeared to have been paid back for Germani’s benefit, and the court said it could not have granted an order in that amount even if liability had been proved.
The liquidators had also chosen to proceed on affidavit, despite factual disputes they could have foreseen after an enquiry lasting almost two years, and asked for a referral to trial only once the court raised it. The court dismissed the application instead.
The application was launched on 17 July 2025, almost three years after the enquiry’s final sitting. The court noted that a fresh action may face a prescription defence but made no finding on whether it would succeed. It also struck out five paragraphs of the liquidators’ founding affidavit as hearsay.
What the court did not decide
The court did not decide whether the vehicle transfers were reckless or fraudulent. It said provisionally that a company selling valuable assets for a nominal amount is unlikely to be acting in its own interests.
Not a blanket protection
Victor cautioned that the judgment is not a blanket protection for the profession. No causal link is needed between the conduct and the debts, and an accountant may still be exposed for recklessly failing in core duties, such as revenue verification, asset impairment or the going concern assessment. Advisers to close corporations face a lower bar under section 64 of the Close Corporations Act, which also covers gross negligence.
Extra roles also count. The court distinguished between the accountant’s work and what he did as a trustee who issued invoices for the related close corporation.
Victor said accountants should define their role in an engagement letter, keep their working papers and take advice early when a client in financial difficulty starts moving assets.
Comment from Johan Victor
“Most accountants assume one of two things when a client’s company fails. Either they have nothing to worry about, or they are next in line,” says Johan Victor, Founder and Principal Attorney at Johan Victor Attorneys & Litigators. “Section 424 can reach anyone, not only directors. But it reaches conduct, not titles. Every accountant knows things about a client’s business. Knowledge is the job. It is not participation.”
“Section 424 claims turn on who did what, when and why, often over years. They are rarely suited to affidavits. A liquidator who chooses motion over action, with the clock running, takes the risk that comes with that choice.”
“Trustee, signatory, member’s representative, director. Each hat is judged on its own. If you wear more than one, know which one you have on when you sign. And take advice before a section 417 enquiry, not after, because what you say there can be used against you.”
“An accountant who does an accountant’s work honestly should not have to fear that a client’s failure automatically becomes his own.”
The period within which leave to appeal may be sought had not expired at the date of publication. The judgment is Cooper NO and Others v Van Dyk and Others, Western Cape Division, Cape Town, case number 2025-115921.
Related reading: Johan Victor’s commentary, Am I next? When an accountant answers for a client’s debts, and our Legal Q&A, Personal liability for company debts.