ABSA Bank Ltd. v Bond Equipment (Pretoria) (Pty) Ltd. (580/98) [2000] ZASCA 38; 2001 (1) SA 372 (SCA) ; [2001] 1 All SA 1 (A); (2001) 22 ILJ 95 (SCA) (8 September 2000)

REPORTABLE

Case No: 580/98

In the matter between:ABSA BANK LIMITED AppellantandBOND 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.

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L T C HARMS JUDGE OF APPEALAGREE:SMALBERGER JASCHUTZ JAMPATI AJA