The recent Victorian Court of Appeal decision in Shakespeare Partners Pty Ltd v Transonic Travel Pty Ltd [2026] VSCA 96 is an important one for vendors, purchasers, their accountants and their other professional advisers involved in business sales and acquisitions.
The case confirmed that professional advisers may be exposed to liability for misleading or deceptive conduct under the Australian Consumer Law, even if they are not a party to the sale contract, where they are sufficiently involved in the preparation or communication of misleading transaction documents.
For accountants and advisers, the key message is clear: if you know (or ought to know) that financial information being used in a transaction is unreliable, uncertain or cannot be verified, you must say so clearly and in writing.
Background
The case arose from the acquisition of a 60% shareholding in Keygate Holdings Pty Ltd, which operated the “Asia Escapes” travel business. The vendor represented that the business’ client accounts were fully funded and that its accounts gave an accurate picture of its financial position.
The business received money upfront from customers for travel bookings, which were intended to be held in client accounts until the travel occurred, or otherwise available to refund customers if travel was cancelled. However, after the COVID-19 pandemic caused widespread travel cancellations, it became apparent that there was a significant shortfall in the client funds available to meet refund claims.
The purchaser’s parent company, Helloworld, ultimately paid substantial customer refunds and other business expenses. The purchaser and Helloworld then brought claims against the vendor, the vendor’s controller and the vendor’s accountant, Shakespeare Partners.
What did the Court decide?
At trial, the Supreme Court found that the vendor had breached contractual warranties and engaged in misleading or deceptive conduct. The Court also found that Shakespeare Partners, as the vendor’s accountant, was “involved in” those contraventions for the purposes of accessorial liability under the Australian Consumer Law.
On appeal, the Victorian Court of Appeal largely upheld the findings of liability against Shakespeare Partners. The Court accepted that the accountant, through its director, knew the essential facts that made the relevant representations misleading: in particular, that the client funds liability could not be reliably determined because of deficiencies in the accounting records and processes.
Importantly, the Court held that it was not necessary for the accountant to know the precise amount of the shortfall. It was sufficient that the accountant knew, or was wilfully blind to the fact, that the relevant client funds figures were materially unreliable and could not be verified with sufficient certainty.
The Court also found that Shakespeare Partners had sufficient practical involvement in the contraventions because it had prepared relevant accounts, participated in the due diligence process, seen drafts of the share sale agreement and vendor confirmation letter, and failed to correct or qualify information it knew was unreliable.
Why uncertainty can still be misleading
One of the most important aspects of the decision is the Court’s treatment of uncertainty.
The representations were misleading not only because there was in fact a shortfall in client funds, but also because the true client funds position could not be reliably determined at all. The Court accepted that, where a vendor represents that client accounts are fully funded but the underlying systems and records cannot verify that position, the representation may be false or misleading.
This is an important warning for anyone involved in a transaction. If a financial representation cannot be properly verified, it should not be made without appropriate qualifications.
A compilation engagement is not a complete shield
Shakespeare Partners argued that it prepared accounts on a compilation basis. That is, the scope of their engagement did not include auditing or independently verifying financials, and the client was responsible for the information provided.
However, the Court held that this did not protect the accountant from liability. The issue was not simply the nature of the accountant’s engagement; the issue was that the accountant knew the relevant financial information was unreliable, prepared documents used in the transaction process and failed to clearly warn or qualify the information being provided.
Key takeaways
Business sale transactions rely heavily on financial statement and accounts, due diligence responses and completion confirmations. If misleading, those documents can have significant legal consequences.
For business vendors, the case is a reminder that any warranties, confirmations or statements about the business’ financial position must be properly supported. For purchasers, due diligence should not stop at identifying a risk.
The decision is particularly important for accountants, bookkeepers, financial advisers and other professional advisers involved in business sale transactions. The risk of misleading or deceptive conduct does not sit only with the contracting parties. Advisers who prepare, review or contribute to transaction materials may also be exposed if they know the underlying information is unreliable and fail to clearly qualify it.
The safest approach is transparency. If there is a known issue, uncertainty or limitation in the financial information, it should be disclosed clearly before the transaction documents are signed.
Need legal advice or assistance with a business sale or acquisition?
We regularly assist vendors, purchasers and professional advisers with business sale transactions, due diligence, transaction documents, advice and risk management.
If you are preparing to buy, merge or sell a business, or if you are an adviser involved in a transaction and are concerned about your role or potential exposure, our Commercial & Business Division can provide tailored advice and support.
Please contact us to discuss how we can assist.
