Ess Kay Electronics Pte Ltd and Another v First National Bank of Southern Africa Ltd

The appellants, two Singapore companies trading in electronic equipment, sold goods to a purported South African buyer who presented banker’s drafts as payment. The drafts were later dishonoured. The drafts were forged by Mr Wildig, an employee of the respondent bank, who abused his access to blank draft forms and colluded with a third party for personal gain. Relying on faxed copies of the drafts and the reputation of the bank, the appellants released the bills of lading, resulting in delivery of the goods without payment. The appellants sued the bank, alleging it was vicariously liable for Wildig’s fraudulent misrepresentations.

The appeal was dismissed with costs, and the judgment of the trial court absolving the bank from liability was upheld.

The case is a leading authority on the limits of vicarious liability for employee fraud in South African law. It clarifies that misuse of an employee’s position and facilities does not, without more, establish liability, and it reinforces the separation between policy considerations and the legal requirements of the vicarious liability rule. The judgment also provides guidance on ostensible authority in fraud cases.