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South Africa: Supreme Court of Appeal |
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THE SUPREME COURT OF APPEAL
OF SOUTH
AFRICA
CASE NUMBER: 580/98
In the matter between:
ABSA BANK
LIMITED APPELLANT
AND
BOND EQUIPMENT (PRETORIA)
(PTY) LIMITED RESPONDENT
CORAM : SMALBERGER, HARMS, SCHUTZ, ZULMAN JJA
et MPATI AJA
DATE OF HEARING : 8
SEPTEMBER 2000
DATE OF JUDGMENT : 29 SEPTEMBER
2000
Delictual action for damages against collecting bank guilty
of negligence - vicarious liability of claimant for wrongful action of
its
employee in regard to the proceeds of cheques of the employer wrongfully stolen
by the employee for his own benefit.
JUDGMENT
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 (cf 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] 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 (17th 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] 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
(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
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