Credit Lyonnais Bank Nederland NV (now Generale Bank Nederland NV) v Export Credits Guarantee Department

An employer is vicariously liable for a joint tort only where all conduct necessary to establish the employee's liability occurred in the course of that employment. The employer cannot be made liable by combining the employee's authorised acts with another joint tortfeasor's acts which, if performed by the employee, would have fallen outside the course of employment.

A lawful act of assistance does not become a separate, stand-alone tort merely because it was intended to facilitate another person's deceit. Procurement and common design may create joint or secondary liability for the underlying tort, but they do not remove the requirement that the relevant tortious conduct be within the employee's employment.

The Bank bought bills of exchange connected with fictitious export transactions. The Export Credits Guarantee Department issued specific bankers' guarantees. Its employee, Mr Pillai, acted with Mr Chong pursuant to a common design to deceive the Bank, and was personally liable as a joint tortfeasor. The issue of the guarantees was within his employment, but the forged documents and deceptive acts by which the Bank was deceived were not.

Longmore J held that the Department was not liable: [1996] 1 Lloyd's Rep. 200. The Court of Appeal dismissed the Bank's appeal: [1998] 1 Lloyd's Rep. 19. The House considered whether an employer is vicariously liable simply because an employee's act of assistance, rather than the deceit itself, was performed in the course of employment.

1. Appeal dismissed unanimously. Lord Woolf M.R. delivered the leading speech. Lords Slynn, Steyn, Clyde and Millett agreed.
2. Per Lord Woolf, vicarious liability depends on the employee having committed the wrong in the course of employment. In a joint tort, the combined conduct must be sufficient to constitute the tort in the course of the employee's employment. It is immaterial whether the necessary acts were performed by one tortfeasor or shared between them.
3. The Department could not be liable by combining Mr Pillai's authorised involvement in issuing the guarantees with Mr Chong's deceitful acts. If Mr Pillai himself had performed those additional acts, they would have been outside his employment. His authorised acts, viewed alone, were not an actionable deceit against the Bank.
4. Lord Woolf rejected the proposed stand-alone tort of intentionally assisting another's violation of a third party's rights. The authorities on procurement, common design and secondary liability made a procurer jointly liable for the underlying actionable wrong. They did not make otherwise lawful assistance independently tortious merely because it was intended to facilitate deceit.
5. The Court declined to develop a new primary tort merely to extend an employer's vicarious liability. Since the Department was not liable, Lord Woolf did not decide the Department's alternative argument that the Bank's own recklessness broke the chain of causation.

• House of Lords: dismissed the Bank's appeal: [2000] 1 AC 486 .
• Court of Appeal: dismissed the Bank's appeal from Longmore J: [1998] 1 Lloyd's Rep. 19.
• High Court: Longmore J held that the Department was not liable to the Bank: [1996] 1 Lloyd's Rep. 200.