INSURESR PASOP: Extension of vicarious liability?
Authors: Ayanda Nondwana – Director & Zinhle Mokoena – Candidate Attorney
In cases where an employee commits a delict whilst solely or partially about the business of the employer, the application of the principle of vicarious liability generally presents no problem. Difficulties arise when the employee commits an intentional wrong entirely for his or her own purposes, these are called deviation cases. In this event, it is necessary to define which acts fall within an employee’s “scope of employment”.
The common law test for vicarious liability in deviation cases was developed in the Minister of Police v Rabie 1986 (1) SA 117 (A). The court held that in deciding whether an act by an employee falls outside the course or scope of his employment, the employee’s intention is an important factor- this test is subjective. On the other hand, if there is a sufficiently close link between the employee's acts for his own interest/purpose and the business of his master - the master may yet held liable -this is an objective test. Rabie was re-affirmed by the Constitutional Court in K v Minister of Safety & Security 2005 (6) SA 319 (CC).
In a recent Supreme Court of Appeal judgement in Stallion Security (Pty) Limited v Van Staden, the court was once again confronted with this issue involving private parties. In this case, the employer (Stallion Security) was sued by the dependent of the deceased for loss of support as a result of an unlawful act committed by its employee. The deceased was not an employee of Stallion Security but an employee of a client of Stallion Security. The brief facts of the case are as follows:
Khumalo (employee) was employed by Stallion (the employer) as a site supervisor. His duties included regular inspection of the security guards on duty. In doing so, he was also required to make unannounced visits to the premises after business hours. Khumalo was also, tasked with inspecting the interior of the building, particularly to ensure that the emergency exits were closed at night (they were opened during the day for ventilation purposes). Khumalo was provided with a bypass or override key which allowed access to the office area without the use of the biometric system and as a result there was no record. The override key was also intended to be used to gain access to the office area in the event of a power failure. Only Khumalo was entrusted with this override key.
The deceased was a financial manager of the client of Stallion and often worked late. Khumalo knew that the client kept a petty cash box in the office area. He decided to rob the deceased and to attempt to locate the petty cash box. For this purpose, he hired a firearm from a co-employee. The deceased did not have access to the petty cash box and, offered to give Khumalo money in his personal bank account, which required them to drive to the nearest shopping complex. Khumalo’s version stated that upon arrival he realized that the deceased was going to call the police, so he shot and killed him.
The relevant issue that the court dealt with in this matter was whether Khumalo was acting within his course and scope of employment and if so, whether Stallion could be held vicariously liable for the damages claimed.
The court held that there was a sufficient link between the business of Stallion and the death of the deceased. Put differently, the court found that Stallion created the risk of harm based on the following grounds:
Stallion furnished Khumalo with much more than a mere opportunity to commit the wrongs in question as it enabled him to enter and exit from the office area without detection or concern;
Khumalo was so enabled by the intimate knowledge of the layout and the security services at the premises; the instruction to make unannounced visits to the premises at any time; the knowledge that the deceased would be working late; and, most importantly, the possession of the override key to the office area to commit the crime. This risk rendered the deceased vulnerable and produced the robbery and consequently the murder;
Stallion undertook the contractual duty to provide 24-hour access control services at the premises and placed Khumalo in charge of discharging this responsibility.
The court remarked that in determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained, the following factors are considered and variable with the nature of each case, namely:
the opportunity that the enterprise afforded the employee to abuse his or her power;
the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee);
the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise;
the extent of power conferred on the employee in relation to the victim; and
the vulnerability of potential victims to wrongful exercise of the employee’s power.
The court held that there is a significant link between Stallion’s business and the harm suffered by the deceased’s wife.
These legal principles confirm that the question whether an employee’s acts fall within his course and scope of employment may not be reduced to a mere ‘but for’ causation analysis. Something more than a mere opportunity or ‘but for’ causal link is required. Courts have to consider the role that should be played by the creation of the risk of harm by the business of the employer as 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. If a link is established, the employer may be held liable for the harm caused. Each matter would be determined from its own facts to determine whether the extension of vicarious liability would be applicable having regard to the policy considerations and the Constitution.
This case has far-reaching implications for the insured and the insurers who underwrite different classes of insurance particularly liability insurance. While the test to establish vicarious liability is objective, it is also dynamic and depends on other factors not within the control of the employer, i.e. public policy. Insurers need to take cognisance of this development (extension of vicarious liability) in our law as it now applicable in the private sector. The earlier judgments referred to above dealt with the State. It goes without saying, the liability policies need to be reviewed to ensure that the insurers are mindful of the current extended principles of vicarious liability and decide whether they have appetite to underwrite this risk. From Stallion, it appears that the risk is not easily determinable.
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