The plaintiff (a pension fund) sued five defendants, including Kingdom Bank Limited (fifth defendant). For over three years, two employees of the pension fund (first and second defendants) stole money by identifying pensioners due lump sum benefits and colluding with two bank employees (third and fourth defendants) to open fraudulent bank accounts in the pensioners' names. The stolen amount totaled US$926,392.72. The bank employees facilitated storage of the stolen funds in these fictitious accounts at the bank's branches, after which all four employees would withdraw and share the proceeds. The pension fund sued the bank on two grounds: (1) vicarious liability for the bank employees' actions, and (2) alternatively, negligence in failing to implement proper customer verification, Know Your Customer (KYC) policies, internal controls, and anti-money laundering measures. The bank filed an exception that the declaration disclosed no cause of action against it.
The exception was upheld. The plaintiff's claim against the fifth defendant (Kingdom Bank Limited) was dismissed with costs.
1. An employer is not vicariously liable for theft committed by another party's employees merely because the employer's own employees facilitated storage and distribution of stolen proceeds. Vicarious liability for theft requires that the stolen property was entrusted to the care of the thieving employee. 2. Merely providing an opportunity for wrongdoing (by employing a rogue employee) does not create vicarious liability. 3. A bank owes no duty of care in negligence to a non-customer with whom it has no contractual or special relationship, even if the bank's internal systems are allegedly deficient. 4. Breach of statutory obligations (such as anti-money laundering requirements) does not automatically create civil liability to third parties in the absence of a causal nexus between the breach and the loss suffered. 5. For a declaration to disclose a cause of action, it must plead facts which, if proven, would establish unlawfulness, fault, causation and damages. The "but for" test of causation requires that the wrongful conduct must be the proximate cause of the loss.
The court observed that the pension fund might have been better advised to sue its own auditors who failed to detect the theft by its employees for over three years, rather than seeking to hold the bank liable. The court also noted the confusion caused by imprecise pleadings that failed to identify the specific statutory provisions relied upon, with both counsel referring to repealed provisions of the Bank Use Promotion Act rather than the current Money Laundering and Proceeds of Crime Act. The court emphasized the importance of elegance and precision in pleadings, particularly when relying on statutory provisions. The court characterized any alleged breach of statutory obligations by the bank as "criminality in the air" in relation to the pension fund, analogous to "negligence in the air".
This case clarifies the limits of vicarious liability in Zimbabwean law, particularly that an employer is not vicariously liable where its employees merely facilitate (rather than commit) theft of another party's property. It emphasizes that vicarious liability requires that stolen goods must have been entrusted to the employee who committed the theft. The case also addresses the requirement of a duty of care in negligence claims, confirming that in the absence of a contractual or special relationship, a bank does not owe a duty of care to non-customers even where it may have breached internal controls or statutory obligations. The judgment reinforces principles of causation in delict, requiring a direct and proximate causal link between the wrongful conduct and the loss suffered. It also demonstrates the importance of precise pleadings, particularly when relying on statutory provisions.