Absa Bank Limited v Bond Equipment (Pretoria) (Pty) Limited

Bond Equipment (Pretoria) (Pty) Ltd was owed money by state entities, which paid the debts by issuing crossed cheques endorsed "not transferable" or "not negotiable" in favour of the company. An employee of Bond Equipment, Steyn, who was authorised to receive cheques on behalf of the company, stole thirteen cheques and unlawfully deposited them into a bank account he controlled at Absa Bank under a similar name. Absa, acting as collecting bank, collected and paid out the cheques for Steyn’s account despite the absence of endorsement by the true owner. Bond Equipment sued Absa in delict for negligent collection of the cheques. Absa admitted negligence but contended that it was absolved from liability because Bond Equipment was vicariously liable for Steyn’s theft.

The appeal was dismissed with costs, and the judgment in favour of Bond Equipment for the full face value of the cheques was upheld.

This case is a leading South African authority on the limits of vicarious liability, particularly in cases involving theft by an employee from his or her employer. It clarifies that an employer is not vicariously liable where an employee steals the employer’s own property purely for personal gain, even if the employment created the opportunity for the theft. The judgment is also significant in banking law for reaffirming the delictual liability of collecting banks that negligently collect crossed cheques for persons not entitled to them.