By Stef de Gouveia and Saul Mayers
Background
Fujitsu Services Core (Pty) Ltd (the “Plaintiff”) purchased and imported a consignment of laptops and accessories and engaged the services of Schenker South Africa (Pty) Ltd (the “Defendant”) to assist it as its freight forwarding agent pursuant to the commercial agreement (the “Agreement”) concluded between the parties.
The Plaintiff claimed delictual damages from the Defendant based on the theft by an employee of the Defendant in respect of certain goods which were imported and belonging to the Plaintiff. The employee in question was issued with the necessary documentation to collect the goods from the airport on behalf of the Plaintiff and the Defendant. While attending to the collection of the said goods, the employee disappeared with the goods, which goods were subsequently never delivered to the Plaintiff.
The Defendant denied being vicariously liable for the damages caused by its employee and contended that in any event, if any liability would have ordinarily arisen, it was excluded in terms of the Agreement.
Court held
The High Court of South Africa, Gauteng Local Division (the “Court”) first considered whether the Defendant was vicariously liable to the Plaintiff for the Defendant’s employee’s intentional misconduct in stealing the goods belonging to the Plaintiff.
The Court confirmed the general rule that an employer is vicariously liable for the wrongful acts or omissions of its employee, if such wrongful acts were committed within the course and scope of the employee’s employment, or whilst the employee was engaged in any activity incidental to its employment with its employer.
The Court however found that this case constituted a “deviation case” as the employee was not acting in the course and scope of his employment by virtue of the fact he was not acting in the interests of his employer, and was by all accounts instead “on a frolic of his own”.
Following the constitutional era, there have been a number of significant judgments relating to vicarious liability, with the applicable legal principles culminating in the recent Supreme Court of Appeal judgement, Stallion Security (Pty) Ltd v Van Staden 2020 (1) SA 64 (the “SCA”).
The SCA confirmed that the test to be applied in such “deviation cases” is “whether the wrongful act was sufficiently related to the conduct authorised by the employer to justify the imposition of vicarious liability and that, in the determination of the sufficiency of the connection, the employer’s creation or enhancement of the risk and the wrong complained of may be relevant.”
In determining whether there is a sufficiently close link, and in light of the SCA’s judgment, the Court was required to consider whether the employer created the risk of harm that eventuated. Whether the employer created the risk of the harm that materialised must be determined objectively.
The Court took the following into consideration:
- the employee was employed as a cargo drawer and therefore enjoyed unfettered access to the cargo area to uplift and remove goods;
- the employee was given a specific security clearance and the necessary customs and clearing documentation;
- on the date of the theft, the employee was instructed and directed by the Defendant to collect the laptops and he followed the usual protocol for collections in doing so;
- the employee gained access to the goods by relying on his Schenker-issued security clearance and Schenker-issued clearance documents; and
- the employee therefore ostensibly performed the same procedures and went through the same motions as he would have done for a lawful collection.
The Court concluded that the risk of the theft arising from the responsibilities conferred on the employee by the Defendant demonstrated a sufficiently close link between the theft and the lawful business the employee carried out on behalf of the Defendant. In addition, the Court found that a finding of vicarious liability should follow as a policy consideration which included the opportunity that the Defendant afforded the employee and all the powers conferred on the employee.
After concluding that the Defendant was vicariously liable, the Court then turned to consider whether the Agreement excluded liability.
The Court emphasised that limitations to liability should be strictly interpreted and that agreements should not be allowed to restrict liability, especially if they were to arise outside of the contract, unless expressly provided for. The Court found that the employee was not executing the Agreement in its ordinary course when he stole the goods.
The exemption clause relied on by the Defendant related to damages arising from the breach of the Agreement which did not apply in these circumstances, given that the theft was an act outside the performance of the Agreement. The Court’s interpretation of the relevant clauses of the Agreement was that it envisaged loss or damages arising from the services rendered by the Defendant to the Plaintiff and that the loss in this case arose independent from the performance by the employee pursuant to the Agreement.
The Court concluded that the clear wording of the Agreement showed that the parties did not contemplate that the Agreement would encompass a delictual claim based on theft, as was the case in these circumstances. It was therefore found that the Defendant’s liability was not excluded by the exclusion clauses of the Agreement between the parties.
Judgment was granted in favour of the Plaintiff for payment of the amount claimed, including interest.
Value
This case demonstrates the significant impact an employee’s wrongful and intentional conduct may have on an employer. The test for vicarious liability in “deviation cases” is such that it might be difficult to demonstrate that there is an insufficient link between the conduct and the business of the employer, particularly when the conduct amounts to theft. The terms of commercial agreements are therefore key to the protection of employers from vicarious liability.
