D Held per Nienaber JA as to the materiality of the promissory note that an

D held per nienaber ja as to the materiality of the

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D Held (per Nienaber JA), as to the materiality of the promissory note, that an item which might otherwise not be regarded as an audit risk (and hence as material) may become material precisely because it stood out, or ought to have done so, as being anomalous, unusual or illegal and as such demanding of further investigation. This was particularly so where, as in the instant case, it was indicative of a recurring irregularity or a flaw in the system, or of dishonesty. E Materiality could not be judged in isolation: it did not depend merely on the magnitude of the item relative to the whole but also on its actual or potential implications relative to the other items or relative to the future. In the instant case the stale promissory note had been an anomaly that had called for further investigation. In the absence of a satisfactory explanation from appellant's management it could have been a pointer to other irregularities in the appellant's F books of account, and as such it was material. (Paragraph [29] of Nienaber JA's judgment at 572F - I.) Held , further, that it followed that there had been a duty on the respondent to verify the note. Its failure to do so was in the circumstances negligent and constituted a breach of contract, and the Court a quo had erred in finding to the contrary. (Paragraph [32] of Nienaber JA's judgment at 574A/B - B/C.) G Held , further, as to the significance of the outstanding deposits, that all the expert witnesses were agreed that the respondent was remiss in not examining these deposits and in not insisting on an explanation from appellant's management. To this extent it appeared to be common cause that the respondent did not give the aspect of its audit the attention it deserved and accordingly that it was negligent and hence in breach of its contract with the H appellant in this respect as well. (Paragraph [37] of Nienaber JA's judgment at 576F - H.) Held , further, as to causation, that had the absence of the promissory note been discovered, the significance of the outstanding deposits appreciated, these peculiarities reported and the respondent realised that something was seriously out of kilter, the scale thereof would have driven the respondent I firstly to seek corroboration of any possible explanation M might have furnished, and secondly to reconcile the cash book, the receipts, and the deposits reflected on the bank statements. Had this been done it Page 4 of 68 THOROUGHBRED BREEDERS' ASSOCIATION v PRICE WATERHOUSE 2001 (... 03/07/2017 ...
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would have revealed the other discrepancies and the thefts would have been discovered. The further thefts would have been averted and the appellant would not have suffered the loss. (Paragraph [45] of Nienaber JA's judgment at 579A/B - C/D.) J 2001 (4) SA p556 Held , further, as to the issue of remoteness, that the 'contemplation' of the parties was the minimum desideratum A common to both the 'general' and 'special' damages recoverable in the contractual context. Even at the lesser threshold of general
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