National Bank of Australasia Ltd v Mason

The National Bank of Australasia Ltd (the Bank) appealed to the High Court of Australia against a judgment of the Supreme Court of Victoria. The dispute concerned the Bank's liability for a loss incurred by Mr. Mason, a customer, due to a fraudulent scheme perpetrated by one of the Bank's employees. Mr. Mason had entrusted funds to the employee for investment, but the employee misappropriated these funds.

The central legal issue before the High Court was whether the Bank was vicariously liable for the fraudulent acts of its employee. Specifically, the court had to determine if the employee's fraudulent conduct occurred within the scope of their employment, even though the acts themselves were unauthorised and criminal. This involved considering the nature of the employee's duties and the relationship between those duties and the fraudulent acts.

The High Court, in allowing the appeal, held that the Bank was not vicariously liable. The majority reasoned that the employee's fraudulent conduct, while facilitated by their position within the Bank, was not so closely connected with their authorised duties as to render the Bank liable. The employee was not acting in furtherance of the Bank's business or in a manner that could be reasonably regarded as incidental to their employment. Instead, the employee was pursuing a personal fraudulent scheme, and the Bank derived no benefit from these unauthorised acts. The court distinguished this situation from cases where an employee's unauthorised acts are so closely connected to their authorised duties that they are considered to be within the scope of employment.

The High Court ordered that the appeal be allowed and the judgment of the Supreme Court of Victoria be set aside.