2 October 2019 by Dispute Resolution Alert

Vicarious liability of an employer when an employee commits an intentional wrong entirely for his/her own purpose

Since as early as Roman times, it has been the case that an employer is vicariously liable for a wrong committed by an employee during the course or scope of his or her employment. The liability of an employer, however, under circumstances where an employee commits an intentional wrong entirely for his or her own purpose, is a very different kettle of fish. There have been many judgments, over the years (both in South Africa and abroad), which have developed the policy and principles applied in such matters.

In a judgment recently handed down by our Supreme Court of Appeal (SCA) in the matter of Stallion Security (Pty) Limited v van Staden (526/2018) [2019] ZASCA 127 (27 September 2019), the SCA, in a unanimous judgment, held that the considerations to be taken into account for purposes of determining the vicarious liability of an employer should be further developed, so as to recognise that the creation of risk of harm, by an employer may, in appropriate cases, constitute a relevant consideration in giving rise to a sufficiently close link between the harm caused by the employee and the business of the employer, justifying vicarious liability on the part of the employer (even when the employee in fact acted entirely for his or her own purpose).

In the Stallion matter, an employee of that entity, Mr Khumalo, had been appointed by Stallion as a site supervisor in relation to certain security services provided by Stallion, in terms of a contract with a Bidvest entity. Mr Khumalo, as site manager, was provided with a bypass or override key in relation to Bidvest’s biometric system, so as to enable him to perform his duties. Using his knowledge of what he came to know of the Bidvest premises (and those employed at the premises), Mr Khumalo gained access to the office area, forced an employee of Bidvest, Mr van Staden, to transfer money to his (Mr Khumalo’s) personal bank account, and then shot and killed Mr van Staden.

Mr van Staden’s surviving spouse pursued a claim for delictual damages against Stallion, founded on vicarious liability for the wrong committed by Mr Khumalo. Self-evidently, the intentional wrongs of Mr Khumalo were committed entirely for his own purpose. The question to be determined, however, was whether, on the facts of this matter, a sufficiently close link existed between the wrongful act of the employee (on the one hand) and the business or enterprise of the employer (on the other).

The SCA concluded that South African law “should be further developed to recognise that the creation of risk of harm by an employer may, in an appropriate case, constitute a relevant consideration in giving rise to a sufficiently close link between the harm caused by the employee and the business of the employer. Whether the employer had created the risk of the harm that materialised, must be determined objectively”.

In this instance, and after analysing the relevant facts, the court found that Stallion had furnished Mr Khumalo with much more than a “mere opportunity” to commit the wrongs in question. It had enabled him to enter into and exit from the office area without detection; it had afforded Mr Khumalo the intimate knowledge of the layout and the security services at the premises. In addition, it was by virtue of his employment with Stallion that Mr Khumalo was in possession of the override key to the office area. That special position created a material risk that Mr Khumalo might abuse his powers. That risk rendered the deceased vulnerable and produced the robbery and consequentially the murder.

The fact that Stallion had placed Mr Khumalo in charge of discharging the contractual burden which Stallion had undertaken, provided a significant normative link between Stallion’s business and the harm suffered by Ms van Staden. For that reason, the court held that there was a sufficiently close link between the business of Stallion and the death of the deceased. Stallion was, accordingly, held to be vicariously liable for the conduct of Mr Khumalo.

Whilst it might not seem that this development in our law is necessarily a seismic shift from the approach previously adopted by our courts, the development is, nonetheless, sufficiently significant to warrant a careful analysis of the extent to which it might impact upon corporates and employers, from the perspective of potential liability to third parties, arising from the misconduct of employees. Indeed, it may be sage for employers to engage with their insurance advisers or brokers, with a view to ensuring that they have appropriate cover in place to mitigate the risk associated with extended forms of misconduct, on the part of employees, which might result in liability to third parties.

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