In February 2020, the Johannesburg High Court held that the failure by a security company to warn its clients that criminals were impersonating its employees to uplift cash, constitutes an omission of crucial information which provides grounds for an action for damages in delict.
The plaintiff’s claim arose out of a bogus pick-up scheme whereby criminals impersonated security guards and proceeded to fraudulently perform cash collection services at the premises of the claimants. The claimants unwittingly handed over substantial sums of money to the impersonators, believing the impersonators to be legitimate employees of the security company.
The defendant was aware of prior incidents in which its clients and other cash in transit providers had been targeted in a similar manner. They did not warn the plaintiffs of this, as they alleged that it was public knowledge that incidents had occurred where criminals had stolen money by fraudulently pretending to be associated with the defendant or other security service providers in the industry.
Despite discernible differences in the imposter’s identification card, vehicle and electronic collection box, the court found no contributory negligence on behalf of the employees of the plaintiffs. Based on the moral duty, the defendant had to inform the plaintiffs of this potential danger. As a result of the defendant’s failure to do so, the employees had a false sense of security about the defendant’s procedures. The defendant’s moral duty to inform their clients of the recent fraud schemes was exacerbated by the fundamental rights to life, liberty and security of the person, as contained in section 10 and 12 of the Constitution. As a private security company, the security company has a greater public interest in ensuring their clients are aware of all potential risks of fraud, as they play a remunerated role of crime prevention. If the employees of the plaintiff had been warned regarding the general risk against potential fraud by way of imposters, the employees would have had an increase in awareness of the red flags when dealing with G4S security guards.
The court indicated that moral and legal convictions of the community demanded that where a security company is aware that criminals are impersonating their employees and its procedures, this formed the basis for a delictual duty. Accordingly, the failure to warn its clients of the hidden danger constitutes an omission, which grounds an action in delict. They failed to provide their client with an opportunity to demand an increase in security measures or consider alternative private security providers. Thus, the defence of contributory negligence on part of the employees failed as a defence for the defendant.
This case is prima facie evidence that the courts have an empathetic approach to those victims of fraudulent conduct and place a more stringent duty on businesses to improve communication with their clients and disclose all information regarding the security of their business by way of formal communication. The judgment stretches the limits of wrongfulness and the excuse for contributory negligence.
This case is Zandspruit Cash and Carry (Pty) Ltd v G4S Cash Solutions SA (Pty) Ltd 2020 JDR 0292 (GJ) (Case no 25057/2018)
First published by: Financial Institutions Legal Snapshot
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