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[2000] ZASCA 59
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Absa Bank Ltd v Bond Equipment (Pretoria) (Pty) Limited (580/98) [2000] ZASCA 59; 2001 (1) SA 372 (SCA) ; [2001] 1 All SA 1 (A); (2001) 22 ILJ 95 (SCA) (29 September 2000)
REPORTABLE
Case
No: 580/98
In
the matter between:
ABSA
BANK LIMITED
Appellant
and
BOND
EQUIPMENT (PRETORIA) (PTY) LIMITED Respondent
Coram: SMALBERGER, HARMS, SCHUTZ, ZULMAN JJA and
MPATI
AJA
Heard: 8 SEPTEMBER 2000
Delivered: SEPTEMBER 2000
Subject: Vicarious
responsibility of plaintiff for theft by employee
JUDGMENT
HARMS
JA/
HARMS
JA:
[1] Although I am in agreement with
Zulman JA that the appeal should be dismissed, my reasons are
different. I agree as a general
proposition that the act of an
employee who steals from his employer is the very antithesis of an
act carried out in the course
and scope of his employment, but I
expressly wish to refrain from laying down a general principle that
an employer can never
be responsible for the intentional wrongful
act of an employee which causes the employer loss. Whether the
judgment in
Greater
Johannesburg Transitional Metropolitan Council v Absa Bank Ltd t/a
Volkskas Bank
1997
(2) SA 591
(W) is correct in this regard we need not consider,
especially since the judgment did not focus on the question and
because all
the salient facts do not necessarily appear from the
report.
[2] It
is not necessary to repeat the agreed facts since they have been set
out in Zulman JA's judgment (in par 3) and that of
Willis AJ in the
court below (at 66A - 67B). Two of the questions of law are
interrelated and they are (a) whether the plaintiff
is in law
vicariously liable for the actions of Steyn (its employee who stole
the cheques) and (b) whether the Bank is liable
to the plaintiff for
any negligent actions performed by its employees in view of Steyn's
conduct as described in the stated case.
[3] In order to answer these
questions, it is necessary to understand the defence upon which the
Bank wishes to rely. Its case
is that Steyn, acting within the
course and scope of his employment with the plaintiff, stole the
cheques after they had come
into his possession; since Steyn was so
acting as employee, the plaintiff is vicariously “liable”
for his intentional
wrongful act; the Bank's employees were merely
negligent in collecting the cheques on Steyn's behalf; a plaintiff
who acts with
dolus
(albeit through an employee) cannot claim damages from a negligent
defendant; therefore the Bank cannot be held liable for the
plaintiff's loss.
[4] In the court below Willis AJ had
some difficulty with the formulation of question (a) and redrafted
it by asking whether the
plaintiff is in law vicariously liable
to
the defendant
for
the actions of Steyn (at 67I). Both the formulation and the
original question tend to obscure the issue. A plaintiff can
never
be “liable” to another for a delict committed against
him. The theft was not a delict vis-à-vis the
Bank and
vicarious liability on the part of the plaintiff can therefore not
arise. The question which should have been posed
is whether the
plaintiff is answerable or responsible for the theft by Steyn, in
other words, whether his (intentional) wrongdoing
can be taken into
account in reducing or expunging the liability of the concurrent
wrongdoer (the Bank).
[5] In
Morris
v C W Martin & Sons Ltd
[1966] 1 QB 716
(CA) 733, Diplock LJ pointed out that there is
sometimes a confusion between two distinct lines of authority: that
of the frolicsome
coachman and that of the dishonest servant. As I
understand the stated case and counsel's argument, we are concerned
in this
matter with the latter and not with a so-called deviation
case (
Minister of
Law and Order v Ngobo
[1992] ZASCA 172
;
1992 (4) SA 822
(A) 827C). In seeking to impose vicarious
responsibility to the plaintiff, the Bank does not rely upon the
facts set out in
par 8 of the stated case but concedes that Steyn,
in depositing the cheques (and thereby committing a fraud against
the Bank)
and in appropriating the proceeds (a delict against the
plaintiff) did not act within the course and scope of his
employment.
[6] The classic formulation of the
principle underlying vicarious responsibility is to be found in
Mkize v Martens
1914 AD 382
at 390 where Innes CJ stated that:
“
(A) master is answerable for
the torts of his servant committed in the course of his employment,
bearing in mind that an act done
by a servant solely for his own
interests and purposes, and outside his authority, is not done in
the course of his employment,
even though it may have been done
during his employment.”
This
principle has to be applied to the scant facts before us. They are:
Steyn was duly authorised to accept delivery of the
cheques on
behalf of the plaintiff, when he stole the cheques he was an
employee of the plaintiff and the opportunity to steal
the cheques
arose during the course and scope of his employment. These facts
show merely that the theft was committed during
Steyn's employment,
solely for his own interest and purposes and outside the scope of
his authority. As was said by Malan J
in a somewhat similar case -
“
What
he did was unauthorised and criminal. . . . He misused his
position and defrauded his employer and the bank. None of this
had
any connection with the duties he was empowered or authorised to
perform. It is not a case of an improper execution of his
duties: he
was not performing his duties at all.”
(
Columbus
Joint Venture v Absa Bank Ltd
2000 (2) SA 491
(W) 512H - I.)
[7] Willis
AJ also came to the conclusion that the plaintiff is not responsible
for the acts of Steyn. In this regard he relied
upon the so-called
“control” test and concluded (at 69A - B) -
“
By
reason of the fact that arising from the theft of the cheques by
Steyn from the plaintiff, the plaintiff lost control over
Steyn's
dealing with the cheques, I am of the view that the plaintiff cannot
be held vicariously liable for Steyn's conduct after
the theft of
the cheques.”
In the light of the way the argument
developed on appeal this approach does not assist. The Bank relied
only upon the theft of
the cheques and not upon Steyn's later
conduct. But the Bank's argument leads it into a deeper quagmire.
The theft
per se
brought about no loss to the plaintiff, only a potential loss. If
Steyn's involvement had ended there and the cheques had been
deposited and the proceeds appropriated by a third party, no
responsibility for any ensuing loss could have been attributed to
the plaintiff. The position is no different where Steyn deposited
and appropriated the proceeds of the cheques outside the course
and
scope of his authority. The actual cause of the plaintiff's loss is
therefore not something for which the plaintiff can
be held
responsible.
[8] This conclusion disposes at the
same time of the other outstanding question of law, namely whether
the
plaintiff's
conduct (presumably the theft by Steyn) was the proximate cause of
the plaintiff's loss. Willis AJ did not answer the question
as
phrased but dealt with question whether the
Bank's
conduct rendered it causally liable to the plaintiff (at 71D - F).
It is not necessary to say more about this since his ultimate
conclusion was in any event correct.
__________________
L
T C HARMS
JUDGE
OF APPEAL
AGREE:
SMALBERGER
JA
SCHUTZ JA
MPATI AJA
ZULMAN
JA
[1]
The respondent (the plaintiff), a customer of the appellant bank
(the defendant), instituted an action for damages against
the
defendant. In its particulars of claim the plaintiff alleged that
it was the true owner of thirteen crossed cheques endorsed
either
“not transferable” or “not negotiable”.
Possession of the cheques was obtained by an employee
of the
plaintiff (Steyn) who unlawfully deposited them to an account
conducted by Steyn under the name of Bond Equipment (Pretoria).
The
plaintiff’s name is Bond Equipment (Pretoria) (Pty) Ltd. The
cheques were collected for payment by the defendant
not for the
plaintiff but for Bond Equipment (Pretoria), notwithstanding the
absence of any endorsement by the plaintiff.
The action was founded in delict and based on the defendants’
negligent conduct in collecting payment as aforesaid.
(
Cf
Indac Electronics (Pty) Ltd v Volkskas Bank Ltd
1992(1) SA 783 (A).) The essential defence was ultimately that the
defendant was absolved from liability for its negligence
because the
plaintiff was vicariously liable for Steyn’s conduct.
[2]
The parties reached agreement on certain facts which were recorded
in a written statement. The court
a
quo
was requested to answer various questions arising from these facts
in terms of Rule 33(4). Willis AJ granted judgment for the
plaintiff for the full amount of its agreed loss, being the face
value of the cheques. The judgment is reported
sub
nom Bond Equipment (Pretoria) (Pty) Ltd v Absa Bank Ltd
1999(2)
SA 63 (W). The present appeal is with the leave of the Court
a
quo
.
[3]
The statement of agreed facts reads as follows:-
“
1. The South African
Defence Force/National Defence Force/the Defendant (‘the
debtors’) were indebted to pay certain
amounts to the
Plaintiff (‘the debts’).
2. In settlement of the debts,
the debtors drew cheques Annexures ‘B’ to ‘N’
to the summons. All the
cheques except Annexure ‘D’
were delivered to A J Steyn (Steyn) Plaintiff’s duly
authorised employee at the
office of the Chief Payment Officer,
Department of Finance, Poyntons Building, Kerk Street West,
Pretoria. Annexure ‘D’
was delivered to Steyn at Trust
Bank, Andries Street, Pretoria.
3. The particulars of these
cheques are as follows:
3.1 They were all drawn as
reflected on the copies of the cheques which are annexed as
annexures ‘B’ to ‘N’
to the summons
respectively.
3.2 They were all crossed and
endorsed either ‘not transferable’ or ‘not
negotiable’.
3.3 The cheques crossed and
endorsed “not negotiable” were at no stage endorsed or
negotiated by the Plaintiff.
3.4 The cheque Annexure ‘I’
was endorsed by Steyn without Plaintiff’s knowledge or
authority.
4. Steyn obtained possession of
the cheques and unlawfully caused them to be deposited to the
account of ‘Bond Equipment
(Pretoria)’ an account
conducted by Steyn under this name with the Defendant.
5. The Defendant as collecting
bank owed the true owner of the cheques a duty to take care that it
did not negligently collect
payment of the cheques for the benefit
of anyone not entitled thereto.
6. The Defendant collected
payment of all of the cheques for Bond Equipment (Pretoria).
7. The banks on which the cheques
were drawn honoured the cheques in circumstances which do not render
these banks liable against
the Plaintiff or the debtors.
8. The depositing for collection
of the cheques by Steyn and the unlawful appropriation by him of the
proceeds thereof were delicts
committed by Steyn.
9. Should the first question of
law be answered affirmatively then the
quantum
of the Plaintiff’s loss suffered as a result of the
aforementioned facts is the aggregate total of the face value of the
cheques being an amount of R219 783,74.
10. The Plaintiff has instituted
action against the Defendant. Steyn is not a party to these
proceedings and the Plaintiff has
not instituted any civil action
against Steyn.
11. When Steyn stole the cheques
from the Plaintiff he was an employee of the [Plaintiff] and the
opportunity to steal the cheques
arose during the course and scope
of such employment. The cheques so received and stolen by Steyn
were not reflected in the
Plaintiff’s records as having been
received by the Plaintiff and it was only between March and April
1996 that Plaintiff
became aware of the thefts.”
[4]
Six questions of law arising from the agreed statement of facts
were formulated by the parties. Only the answers given by
the court
a
quo
to three of these questions are challenged on appeal. The three
questions are:-
1. Is the Plaintiff in
law vicariously liable for the actions of Steyn?
2. Is the Defendant’s
conduct as set out above the proximate cause of the Plaintiff’s
loss?
3. Is the Defendant liable to the
Plaintiff for any negligent actions performed by its employees in
view of Steyn’s conduct
as aforesaid?
The court
a
quo
answered the second question affirmatively and the first and third
negatively.
[5]
The standard test for vicarious liability of a master for the
delict of a servant is whether the delict was committed by the
employee while acting in the course and scope of his employment.
The inquiry is frequently said to be whether at the relevant
time
the employee was about the affairs, or business, or doing the work
of, the employer (see for example,
Minister
of Police v Rabie
1986(1)
SA 117 (A) at 132 G;
Minister
of Law and Order v Ngobo
1992(4) SA 822(A) at 827B). It should not be overlooked, however,
that the affairs of the employer must relate to what the
employee
was generally employed or specifically instructed to do. Provided
that the employee was engaged in activity reasonably
necessary to
achieve either objective, the employer will be liable even where the
employee acts contrary to express instructions
(see for example,
Estate
van der Byl v Swanepoel
1927 AD 141
at 145-146, 151-152). It is also clear that it is not
every act committed by an employee during the time of his
employment
which is for his own benefit or the achievement of his
own goals which falls outside the course and scope of his
employment.
(
Viljoen
v Smith
1997(1) SA 309 (A) at 315 F-G.) A master is not responsible for the
private and personal acts of his servant, unconnected with
the
latter’s employment, even if done during the time of his
employment and with the permission of the employer. The act
causing
damage must have been done by the servant in his capacity
qua
servant and not as an independent individual. (See for example
Feldman
(Pty) Ltd v Mall
,
1945 AD 733
at 742 and
H.K.
Manufacturing Co (Pty) Ltd v Sadowitz
1965 (3) SA 328
(C) at 336 A.)
The test in
this latter regard was formulated by Jansen JA in
Minister
of Police v Rabie
(supra) at 134 D-E as follows:-
“
It
seems clear that an act done by a servant solely for his own
interests and purposes, although occasioned by his employment,
may
fall outside the course or scope of his employment, and that in
deciding whether an act by the servant does so fall, some
reference
is to be made to the servant’s intention (c
f
Estate van der Byl v Swanepoel
1927 AD 141
at 150). The test is in this regard subjective. On the
other hand, if there is nevertheless a sufficiently close link
between
the servant’s act for his own interests and purposes
and the business of his master, the master may yet be liable. This
is an objective test. And it may be useful to add that according to
the
Salmond
test (cited by Greenberg JA in
Feldman
(Pty) Ltd v Mall
1945 AD 733
at 774).
‘
a master ....... is liable
even for acts which he has not authorized provided that they are so
connected with acts which he has
authorized that they may rightly be
regarded as modes - although improper modes - of doing them ......’
”
Tindall JA put
the matter as follows in the
locus
classicus
on the vicarious liability of an employer for the deeds of an
employee, in
Feldman
(Pty) Ltd v Mall,
supra
at 756 - 757:
“
In
my view the test to be applied is whether the circumstances of the
particular case show that the servant’s digression
is so great
in respect of space and time that it cannot reasonably be held that
he is still exercising the functions to which
he was appointed; if
this is the case the master is not liable. It seems to me not
practicable to formulate the test in more
precise terms; I can see
no escape from the conclusion that ultimately the question resolves
itself into one of degree and
in each particular case the matter of
degree will determine whether the servant can be said to have ceased
to exercise the functions
to which he was appointed.”
(See
also the remarks of Watermeyer CJ at 742 and Davis AJA at 784).
The effect of the “two tier test”, as postulated
by
Jansen JA, is that an employer will only escape liability if his
employee had the subjective intention of promoting solely
his own
interests and that the employee, objectively speaking, completely
disassociated himself from the affairs of his employer
when
committing the act.
The nature and
extent of the deviation is a critical factor. Once the deviation is
such that it cannot reasonably be held that
the employee is still
exercising the functions to which he was appointed, or still
carrying out some instruction of his employer,
the latter will cease
to be liable. Whether that stage has been reached is essentially a
question of fact (see for example
Feldman (Pty) Ltd v Mall
(supra) at 756-7;
Union Government v Hawkins
1944 AD 556
at 563;
Viljoen
v Smith,
(supra) at 316 E - 317A). The answer in each case will depend upon
a close examination of the facts. The same is true of the
enquiry
as to whether the deviation has ceased and the employee has resumed
the business of his employer.
[6]
As far as social policy may have a bearing on the matter (cf the
remarks of Corbett JA in
Mhlongo
and Another NO v Minister of Police
1978(2) SA 551 (A) at 567 H), it seems to me to be beyond doubt that
it would not be sound social policy to hold an innocent
master
liable or responsible to a third party, where his dishonest servant
steals the master’s own property, as is the
situation in this
case. This is especially so where there is no suggestion that the
master was in any way negligent in the selection
of Steyn.
[7]
English law has undoubtedly had an influence on the decisions of
our courts in the field of vicarious liability. (See for
example
Mkize
v Martens
1914 AD 382
at 391 and 400;
Feldman
(Pty) Ltd v Mall,
(supra)
at pp 736, 765, 776 and 778;
Midway
Two Engineering and Construction Services v Transnet Bpk
1998(3) SA 17 (SCA) at 22 B-C.) The English courts, at one time
held that an employer could never be liable for a theft committed
by
his employee on the grounds that the act of stealing must
necessarily be an act outside the scope of his employment (see for
example
Cheshire
v Bailey
[1905] 1KB 237). This approach has changed. The position is now
that theft by an employee to whom goods were entrusted is
in fact an
improper mode of performing what the employee was employed to do
with the result that his employer could be held liable
to third
parties for such theft. (See for example
Morris
v C W Martin and Sons Ltd
[1966] 1 QB 716
in which the opinion expressed in
Lloyd
v Grace, Smith & Co
[1912] UKHL 1
;
[1912] AC 716
(HL) was accepted. See also Atiyah
-
Vicarious Liability in the Law of Torts
(1967 edition) pp 199 - 200.) More recently the Privy Council in a
bailment case involving the loss of a third party’s
goods
entrusted to a bailee made it clear that it was incorrect to hold
that an employer could never be liable for a dishonest
act on the
part of his employee (
Port
Swettenham Authority v T. W. Wu and Co. (M) SDN. BHD
.
[1979] AC 580
; see also
Clerk
and Lindsell
on
Torts
(17
th
edition) (1995) p 187). It would however seem that the English
cases confine the employer’s liability to situations where
the goods of a third party were in some way entrusted to the
employee (see for example
Photo
Production Ltd v Securicor Transport
Ltd
[1980] UKHL 2
;
[1980] AC 827)
and not to situations where the servant steals goods
belonging to his master. Furthermore, the mere fact that the
employment
provided the opportunity for the theft will not be
sufficient. It would appear that in English law even today there is
no authority
for holding the employer vicariously liable or
responsible in a case such as is before us.
[8]
Against this background I turn to consider the fundamental
question in issue in this appeal, namely, whether on the common
cause facts, as they emerge from the stated case, the court
a quo
was correct in concluding that Steyn was not acting in the course
and scope of his employment with the plaintiff at the relevant
time
and that the plaintiff is accordingly not vicariously liable or
responsible for his wrongful conduct.
[9]
If proper regard is had to the agreed facts I am of the view
that:-
Neither on the
subjective approach nor on the objective one can it be said that
Steyn acted within the course and scope of his
employment in
depositing the cheques into an account other than that of his
employer, so that he could thereafter appropriate
the proceeds for
himself. To use the classic phrase, said to have first been
mentioned in
Joel
v Morison
(1834) 6
CAR & P
502
[1835] EngR 77
;
(172 ER 1338)
, Steyn was engaged on a “frolic of his
own”. Steyn never subjectively intended to act on behalf of
the plaintiff.
Moreover, objectively seen, no link was
established, whether close or otherwise, between what Steyn did and
his authorised
functions. What he did was unauthorised and criminal.
Indeed the act of a servant who steals his master’s property
whilst
employed by his master is the very antithesis of an act
carried out in the course and scope of the servant’s
employment.
Steyn misused his position to steal from an innocent
plaintiff and to defraud a negligent defendant. None of this,
despite
the fact that it might have been one of Steyn’s duties
to deposit cheques collected for his employer into his employer’s
bank account, had any connection with the duties that he was in fact
empowered or authorised to perform; at the relevant time
he was not
performing his duties at all. In stealing the cheques and
subsequently depositing them for his own account Steyn
had
abandoned and completely disengaged himself from his employment with
the plaintiff. The plaintiff cannot therefore be
held vicariously
liable for Steyn’s criminal acts. (See for example
Ess
Kay Electronics PTE Ltd and Another v First National Bank of
Southern Africa Ltd
1998(4) SA 1102 (W) at 1109 F-G;
Columbus
Joint Venture v Absa Bank Ltd
2000(2) SA 491 (W) at 512 F-I and
Energy
Measurements (Pty) Ltd v First National Bank of South Africa Ltd
[2000] 2 All SA 396
(W) at 431 - 435 paras 144 to 155.)
[10]
In
Greater
Johannesburg Transitional Metropolitan Council v Absa Bank Ltd t/a
Volkskas Bank
1997(2) SA 591 (W)
600
F - H, Goldstein J held the defendant bank liable for a fraud
perpetrated by one of its employees. In that case an employee
was
engaged in the precise work that her employer required her to carry
out, namely to check cheques and deposit slips presented
to her
employer. Pursuant to an unlawful conspiracy with her husband, who
was an employee of the plaintiff, she improperly inserted
one of the
cheques that he had stolen amongst others to be cleared, so as to
obtain the benefit of the proceeds of the cheque
for herself. The
Greater
Johannesburg Transitional Metropolitan Council
case is relied upon by the defendant in support of its contention
that in the present matter, Steyn was acting in the course
and
scope of his employment with the plaintiff, much in the same way as
the employee’s husband had acted. It seems to
me that the
vicarious liability of the plaintiff as the employer of the thief
who occupied a similar position to that occupied
by Steyn in the
instant case, was never an issue specifically considered by the
court and it played no part in the apportionment
ordered by the
court in terms of the provisions of the Apportionment of Damages Act
34 of 1956.
[11]
At common law the defendant and Steyn are concurrent wrongdoers
who caused the same loss to the plaintiff. The fact that Steyn
committed the wrongful acts of theft and fraud with intent or
dolus,
whilst
the defendant’s delict lay in the negligence or
culpa
of its employees, is not relevant. The plaintiff is entitled to
hold either the defendant or Steyn liable in full for its admitted
loss. (See
Lloyd-Gray
Lithographers (Pty) Ltd v Nedcor Bank Ltd t/a Nedbank
1998(2) SA 667 (W) upheld on appeal for somewhat different reasons
in
Nedcor
Bank Ltd t/a Nedbank v
Lloyd-Gray
Lithographers (Pty) Ltd
SCA Case No 267/98 - judgment delivered on 7 September 2000). Once
the plaintiff is not liable or responsible for Steyn’s
conduct, the plaintiff in no sense caused the loss that it suffered.
This conclusion disposes of questions 2 and 3 referred to
in
paragraph
[4]
above.
[12]
The appeal is therefore dismissed with costs.
R
H ZULMAN JA