Shakespeare Partners v Transonic Travel: Accountant Liability for Misleading Financial Information in a Business Sale 

When can an accountant be liable for misleading financial information used in a business sale? 

An accountant may be liable where it knows the essential facts that make transaction information misleading, and nevertheless participates in preparing, approving, or communicating it. In Shakespeare Partners Pty Ltd v Transonic Travel Pty Ltd & Ors [2026] VSCA 96, the Victorian Court of Appeal upheld findings of accessorial liability under sections 2 and 18 of the Australian Consumer Law. The decision shows that accountant liability in business sales can arise from knowing, practical involvement in a vendor’s misleading financial representations. 

Liability was not imposed for a mere accounting mistake, simply because Shakespeare Partners was the accountant, or because its work was used in the transaction. The Court held that the accountant knew, or was wilfully blind to, systemic deficiencies which meant the client-funds liability could not be reliably determined, and the financial figures materially understated it. It did not need to know the precise amount of the shortfall. 

What happened in Shakespeare Partners v Transonic Travel? 

Transonic Travel Pty Ltd, a Helloworld Travel Ltd subsidiary, acquired 60 per cent of Keygate Holdings Pty Ltd from Tilakee Nominees Pty Ltd in May 2018. Keygate operated Asia Escapes, a wholesale travel business selling packages through travel agents. 

Customers paid upfront for travel bookings. Keygate was to hold those funds in client accounts until it paid suppliers and transferred its commission or refund them if travel was cancelled. 

Through the share sale agreement, vendor confirmation letter, and due-diligence material, Tilakee represented that Keygate’s financial statements accurately disclosed its position and that the client accounts were fully funded. 

Shakespeare Partners had acted as Keygate’s accountant since 2011. It prepared financial information, supplied documents, and helped answer questions during business sale due diligence. It also saw transaction documents used to convey Keygate’s financial position. 

When the COVID-19 pandemic caused bookings to cease and widespread cancellations prompted refund claims, a substantial client-funds shortfall became apparent. Transonic and Helloworld then pursued the vendor, its director, and Shakespeare Partners. 

How did the case reach the Victorian Court of Appeal? 

At first instance, in Transonic Travel Pty Ltd v Tilakee Nominees Pty Ltd [2024] VSC 86, Garde J found that Tilakee breached contractual warranties and that Tilakee and Mr Adams made four misleading representations under section 18 of the Australian Consumer Law. Shakespeare Partners was found “involved in” each contravention. The judge also found that it made a separate misleading representation directly, although no additional damages were awarded for that conduct. 

The judge ordered Tilakee, Mr Adams, and Shakespeare Partners to pay approximately $5.015 million, plus interest. Shakespeare Partners sought leave to appeal, challenging the accessorial-liability findings, aspects of the representations, the damages assessment, and the refusal to apply proportionate liability. 

What legal rules governed the accountant’s liability? 

Section 18 of the Australian Consumer Law prohibits conduct in trade or commerce that is misleading or deceptive, or likely to mislead or deceive. Under section 2, a person may be “involved” in another party’s contravention by aiding, abetting, counselling, or procuring it, inducing it, or being knowingly concerned in it. Section 236 permits recovery of loss suffered because of the contravention. 

As confirmed in Productivity Partners Pty Ltd v Australian Competition and Consumer Commission (2024) 281 CLR 338, an accessory must intentionally participate with knowledge of the essential facts constituting the contravention. Accountant accessorial liability could not rest on carelessness or what the accountant objectively ought to have known. Actual knowledge was required, although wilful blindness could support an inference of that knowledge. 

Part VIA of the Competition and Consumer Act 2010 (Cth) governs proportionate liability under the ACL for relevant economic-loss claims. Where concurrent wrongdoers caused the same loss, the court must determine each defendant’s proportionate responsibility and limit liability accordingly. 

What did the Court of Appeal decide? 

The appeal required the Court to consider whether Shakespeare Partners knew the essential facts that made the vendor’s representations misleading and whether its conduct amounted to practical participation in those contraventions. The Court also considered the effect of the compilation wording and disclaimers, proportionate liability and which losses were recoverable under section 236. 

The Court rejected Shakespeare Partners’ challenges to the findings that it was involved in the four contraventions by Tilakee and Mr Adams. Its accessorial liability was therefore upheld, and the compilation wording did not alter that conclusion. The Court did not determine whether Shakespeare Partners had also made its own direct misleading representation because no separate damages had been awarded for it. 

The appeal nevertheless succeeded materially on damages and apportionment. The original judgment of $5,015,259.29 plus interest was replaced with a judgment of $2,547,677.46 plus interest. Shakespeare Partners was allocated 40 per cent responsibility, limiting its liability to $1,019,070.98 plus interest, while Tilakee and Mr Adams bore 60 per cent. 

In the separate costs judgment, Shakespeare Partners Pty Ltd v Transonic Travel Pty Ltd & Ors [No 2] [2026] VSCA 144, the respondents were ordered to pay 60 per cent of Shakespeare Partners’ appeal costs. This reflected its failure on liability but substantial success on damages and apportionment. 

Why was the accountant liable for the misleading representations? 

What did the accountant need to know? 

The essential fact was either a material client-funds shortfall or systemic deficiencies preventing reliable determination of the liability. Shakespeare Partners did not need to know the precise amount. Actual knowledge was required, although wilful blindness could support an inference of that knowledge. What the accountant ought to have known was insufficient. 

Why did systemic accounting deficiencies matter? 

Keygate lacked a reliable client-funds ledger, its Calypso system could not generate an accurate report, and Shakespeare Partners’ “movements approach” carried a high risk of error. Mr Thompson knew those limitations, that client funds were Keygate’s largest liability and that the management accounts contained outdated client-funds information. This supported the finding that he knew or was wilfully blind to whether materially reliable statements could be made. 

Why did participation in the transaction matter? 

Shakespeare Partners prepared company, management accounts, and May 2018 trial balance. It contributed documents and responses to due diligence, received drafts of the share sale agreement, and saw the vendor confirmation letter. Mr Thompson knew that the client accounts were represented as fully funded but suggested no qualification. This was practical participation in communicating misleading financial information, not liability based on professional status or passive association. 

Why did the disclaimers not determine the result? 

The accounts disclosed their compilation basis, management’s responsibility for the information and the absence of assurance from Shakespeare Partners. That engagement scope did not determine the statutory issue given the accountant’s knowledge and conduct. Parties cannot contract out of section 18, and a disclaimer will not necessarily cure knowing participation in misleading conduct. The decision does not make disclaimers irrelevant: their effect depends on their wording, context, and the conduct considered as a whole. 

How did proportionate liability and causation reduce the damages? 

An accessory may be a concurrent wrongdoer where its acts or omissions caused the same loss. The Court therefore applied proportionate liability under the ACL. It weighed Shakespeare Partners’ role and knowledge against the greater responsibility of Tilakee and Mr Adams, who made the representations and benefited from the sale, while Mr Adams had misused client funds. Responsibility was apportioned 40 per cent to Shakespeare Partners and 60 per cent to Tilakee and Mr Adams. 

A “no transaction” claim means the purchaser would not have entered the transaction without the misleading conduct. Its usual measure compares the price paid with the asset’s true value when acquired. The Court upheld acquisition loss of $1,230,260. Customer refunds were recoverable consequential loss but were reduced from $2,547,677.46 to $1,317,417.46 because both awards reflected the same client-funds shortfall. 

Operating expenses of $1,237,321.83 were excluded because the pandemic-driven collapse in travel, rather than the contraventions, caused them. Section 236 is compensatory: each loss must be causally connected to the contravention and cannot duplicate another award. 

What does the decision mean for business sales and professional advisers? 

Transaction figures should be tested against the systems and records producing them. Vendors and directors should ensure that accounts, warranties, completion confirmations, and due-diligence responses are supportable. Known uncertainty or limitations should be disclosed, and any misleading impression corrected before material is circulated or signed. When selling or transferring a business, responsibility for preparing, checking and approving financial material should be clearly allocated. 

For purchasers, business sale due diligence should examine underlying records rather than simply repeat headline figures. Client money, deferred revenue, refunds, and other liabilities may require closer scrutiny where separate systems are used. Warranties, completion confirmations, and data-room material should be checked for inconsistencies. 

Accountants, bookkeepers, and other advisers should state known qualifications clearly and avoid allowing their work to convey greater certainty than the records justify. Instructions, advice, emails, and working papers may later show what was known, checked, and disclosed. 

If a dispute emerges, parties should preserve transaction records and obtain early advice about misleading or deceptive conduct claims, contribution, proportionate liability and professional-indemnity notification requirements. Accountant liability in business sales remains fact-specific. It depends on the representation, the adviser’s actual knowledge and participation, reliance, causation, and the evidence, not merely on an error in financial material. 

What are the limits of the Shakespeare Partners decision? 

The decision is fact-specific. It does not make accountants guarantors, and an accounting or due-diligence error alone will not establish accessorial liability. The claimant must prove actual knowledge of the essential facts and intentional, practical participation, not merely what the adviser ought to have known. 

Disclaimers may affect the overall meaning of communication but are not determinative here. Reliance and causation must be established for each head of loss, while proportionate liability may limit a wrongdoer’s responsibility. 

The decision is authority from the Victorian Court of Appeal. As of 3 September 2026, no later appellate or judicial treatment has been identified, but its status should be checked again immediately before publication. 

Frequently Asked Questions 

When should legal advice be sought about misleading financial information in a business sale? 

Concerns about the reliability of transaction information should be assessed before completion where possible, or promptly after a dispute emerges. Early advice can clarify the representations made, an adviser’s actual knowledge and participation, the available evidence, causation, and the possible operation of proportionate liability. 

Our commercial litigation team assists vendors, purchasers, directors and professional advisers with business-sale disputes, misleading or deceptive conduct claims, professional-liability issues, urgent risk assessment, negotiation and litigation. To discuss the circumstances of a transaction or claim, book a consultation. 

This article is general information only and not legal advice. For advice specific to your circumstances, please contact our team.