The liability of banks for undeposited funds in the event of bank robbery – Part II

The liability of banks for undeposited funds in the event of bank robbery – II
Natasha Y. E. Asare, ACIB

The test of foreseeability

The concept of a duty of care has its origination in the concept of foreseeability. The foreseeability test poses the question of “whether a reasonable man would have foreseen a damage or injury to others resulting from his conduct and would have ordinarily provided against it?”

Thus, from this premise a reasonable man would assert that the nature of banking business by virtue of its cash dealings, would generally attract criminal activities of which armed robbery is probable and foreseeable. As such a reasonable man (the bank being an artificial person) would provide against it by ensuring its premises are safe for the purposes of the contract.

The test of proximity

Per the proximity test a duty of care arises if there is such proximity between persons or properties of the party that want of care might occasion damage by one to the other.

It can be averred that there is sufficient proximity between the bank and persons that patronize their services such that lack of due care on the side of the bank would result in damage to the parties. The parties here do not include contractual parties only but what the law also categorizes as Invitees.

Per the law, contractual visitors are persons who enter the premises in pursuance of a contract. An account owing customer can be characterized as a contractual visitor. Under the Tort of Negligence, the bank as an Occupier has a duty to its Contractual visitors to ensure that the premises are safe for the purposes of the contract.

This may either be explicitly stated or implied as a term in the contract. In the case of Frances v. Cockrell, the defendant (being the Occupier) engaged the services of an independent contractor to erect stands for the accommodation of persons who wished to watch a steeplechase race. The plaintiff who was part of the attendants got injured when the stand, as a result of being negligently done, collapsed. Although neither the plaintiff nor the defendant knew that the stand had been improperly constructed it was held that there was an Implied warranty in the contract that due care was used in the stands construction as such the defendant was liable for a breach of duty.

By implication although the Occupier had outsourced a contractor (as banks outsource security guards) he was held liable for breach of duty to ensure the premise was safe for the purpose of the contract.

Similarly, in Maclenan v. Segar it was held that by the contractual relationship existing between an innkeeper and a guest, there is an implied warranty by the keeper that the premises were as safe as reasonable care and skill on the part of anyone could make them.

On the other hand, Invitee customers are those that visit the premises for a mutual economic interest. E.g., persons who are at the bank to open an account, persons who are at the bank to collect remittances or money transfers among others.

Per the law the duty an Occupier owes to Invitees is a duty to exercise reasonable care to prevent Injury from unusual danger which he knows or ought to know. A danger is unusual if it is not customary to have such a danger. It is not customary for a bank to have no security thus even if management was unaware that the security guard at post is always busy on errands and the policeman absented himself on a particular day, the law would hold the bank liable as they ought to know of this unusual danger.

Therefore, per the proximity test the bank essentially shares a sufficiently close proximity with its contractual and invitee customers and as such owes a duty to exercise reasonable care and skill in making its premises safe.

The test of fairness, just and reasonability 

The last test to establish a duty of care as an Occupier under Caparo Industries Plc v. Dickman is the Test of Fairness, just and reasonability. The question is “per public policy is it fair, just and reasonable to impose a duty of care on the banks in terms of provision of adequate security at their premises?”

In Pannett v. McGuiness & Co the court held that it was not good enough for a construction company to only get its workers to chase away kids whenever they were about to operate their machine (which happened to be a danger to children but attractive to them). A construction company with all its resource and profit is expected to do better (e.g., by appropriately fencing its enclave to keep the kids out).

Similarly, in the case of Herrington v. British Railway Board[1] Lord Reid intimated that an Occupier’s duty to even a trespasser must vary according to his knowledge, ability and resources. Flowing from this, banks with all their resources and profit are expected to provide a certain standard of security; failure of which would be an inditement on it in society’s eyes. Thus, per public policy it is fair, just and reasonable to impose a duty on the banks to exercise reasonable care and skill to keep its premises safe for the purpose of its business. Therefore, having established that the Bank owes its customer a duty of care with regard to providing a safe environment for its purposes, have they faulted in this?

Proving a breach of the duty of care

Therefore, where a customer robbed of his cash in a bank can prove that there was a weakness or lapse in the security system of the bank (such as an absent Police or Security guards abandoning their post to engage in duties outside of their main duties as earlier sighted ) as is “intermittently sighted” in most banks in Ghana for which probable reason Service Ambassadors were employed to assist in banking halls, the customer may likely establish a breach of duty of care on the part of the bank. Now having established that the bank faulted, how sure can one be…that the robbery and its damaging effects would still not have occurred in the absence of security lapses?

Proving damages resulting from breach

 Finally, the plaintiff must prove that the damages suffered is as a result of the bank’s failure to provide reasonable and adequate security. As such, would the robbery have occurred, and the customer suffer damages if not for the poor security? An affirmative answer to this would implicate liability on the bank. Albeit how can one prove beyond reasonable doubt the exact amount of cash that was stolen?

How can the amount stolen be established?

In this event how can the amount robbed be objectively accessed? It is submitted that the plaintiff would need to prove that on the balance of probabilities the customer had on him a said amount and the judge would have to pass judgement on the financial damages as a matter of fact as against a matter of law. This is because in respect to civil suits a plaintiff need not prove beyond reasonable doubt.


So, is your cash on you safe once you enter the premises of a bank? Reasonably it is. This is because banks are generally aware of the probability of the risks of these robberies and have instituted top-notch security systems to mitigate it.

According to the Federal Bureau of Investigation (FBI), about 99% of banks victimized by robberies have security systems in place such as CCTV (video surveillance), properly functioning alarm systems, on-duty guards (Police and Private security guards), electronic tracking devices as well as others[2]

However, I submit that in the face of an increase in bank robberies there is the need for banks to lift their standard of security and deal with lapses (e.g., by ensuring that outsourced Police and security guards are well trained on the job, there is effective supervision of their duties by Branch Management directly and via CCTV footage, and overall, these are policed by the Compliance Unit of the Bank). This is especially so in light of the fact that, per the import of the foregoing discourse, the traditional belief (as taught in most business programmes) that a bank is not liable for undeposited funds during a bank robbery is rather misconceived.

The author is a professional banker with extensive and rich experience in Customer Management. She has a vested interest in Banking and Law, with certifications in Corporate Risk Banking and Management, Business Administration, Banking and Finance, Psychology and Bachelors of Laws (LLB)-final year and currently works with Consolidated Bank Ghana (CBG). Readers may send comments, questions or suggestions if any to [email protected]


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